EX-99.1 2 exhibit1.htm EX-99.1 Exhibit  EX-99.1

Exhibit 99.1

Focus Media Reports Third Quarter 2011 Results

SHANGHAI, China, Nov 17, 2011 – Focus Media Holding Limited (Nasdaq: FMCN), China’s largest out-of-home lifestyle interactive targeted digital media group, today announced its unaudited financial results for the third quarter ended September 30, 2011.

Highlights for Third Quarter 2011:

    l Total net revenue for the third quarter of 2011 was $210.7 million, of which

l Aggregate net revenue from the LCD display network (including the movie theater network), in-store network and poster frame network was $196.1 million, which exceeded by approximately 11% the mid-point of the Company’s guidance range of $175-177 million. This represented year-on-year growth of 53% from $128.4 million for the third quarter of 2010 and quarter-on-quarter growth of 18% from $166.1 million for the second quarter of 2011.

l Net revenue from the traditional outdoor billboard network for the third quarter of 2011 was $14.6 million, which exceeded by approximately 22% the midpoint of the Company’s guidance of $11-13 million. This represented year-on-year growth of 64% from $8.9 million for the third quarter of 2010 and quarter-on-quarter growth of 13% from $12.9 million for the second quarter of 2011.

    l GAAP net income attributable to Focus Media for the third quarter of 2011 was $62.2 million, representing an increase of 45% from $42.8 million for the second quarter of 2011 and 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.).

    l Non-GAAP net income attributable to Focus Media for the third quarter of 2011 was $82.7 million, exceeding the mid-point of the Company’s guidance range of $68-$70 million by 20%, representing year-on-year growth of 60% from non-GAAP net income attributable to Focus Media of $51.8 million for the third quarter of 2010 and quarter-on-quarter growth of 31% from non-GAAP net income attributable to Focus Media of $62.9 million for the second quarter of 2011. Please see the sections on “Use of Non-GAAP Financial Measures” and “Reconciliation of GAAP to non-GAAP” elsewhere in this announcement for more information about the non-GAAP measures referred to within this announcement.

    l GAAP net income attributable to Focus Media per fully diluted ADS for the third quarter of 2011 was $0.44, comparing to $0.76 per fully diluted ADS in the third quarter of 2010 which was boosted by one-off income of $79.0 million resulting from the sale of our Internet business and representing a growth of 47% from $0.30 per fully diluted ADS for the second quarter of 2011.

    l Non-GAAP net income attributable to Focus Media per fully diluted ADS for the third quarter of 2011 was $0.59, representing year-on year growth of 69% from $0.35 per fully diluted ADS for the third quarter of 2010 and quarter-on-quarter growth of 34% from $0.44 for the second quarter of 2011.

Highlights for Balance Sheet and Cash Flow Results of Third Quarter 2011:

    l Cash, cash equivalents and short-term investments were $639.9 million as of September 30, 2011, increasing by 8% from $590.9 million as of June 30, 2011.

    l Short term bank loan was $30 million as of September 30 2011 which was used to finance a portion of the Company’s share repurchases during the quarter. Operationally, the Company generates cash inflow in Renminbi onshore and offshore bank loans are used to increase our offshore USD base cash resources.

    l Net cash inflow from operating activities in the third quarter of 2011 was $86.3 million, an increase of 71% from $50.6 million for the second quarter of 2011 and more than doubled the $34.2 million for the third quarter of 2010.

    l Net accounts receivable for the LCD display network (including the movie theater network), in-store network and poster frame network was $215.3 million as of September 30, 2011, an increase of 17% from $184.8 million as of June 30, 2011 as a result of sequential increase of revenues. Days sales outstanding were 85 days in the third quarter of 2011 versus 87 days for the second quarter of 2011

    l Capital expenditures were $6.1 million for the third quarter of 2011, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities in China.

    l Cash used in the purchase of subsidiaries in the third quarter of 2011 was $4.1 million, primarily attributable to acquisitions in the poster frame network and the traditional outdoor billboard network as part of our ongoing strategy to expand into additional cities for poster frame network and increasing media resources in the traditional outdoor billboard network.

    l Cash used for repurchasing shares in the third quarter of 2011 was $66.1 million.

Jason Jiang, Chairman and Chief Executive Officer of Focus Media said, “We reached two important historical milestones in the third quarter of 2011. Not only did we achieve record high total revenue in our core business, but we also opened up a new chapter in the history of the Company whereby we have taken our media into an interactive age. Driven by positive secular domestic consumption trend in the PRC, we believe for the rest of the year and 2012 advertising demand for our media will continue to be healthy and robust. Over the next several years, leveraging our media interactive capability, we will strive to retain our brand advertising leadership in the industry as well as endeavor to become one of the key default promotional media platforms in the PRC.”

Kit Low, the Company Executive Director and Chief Financial Officer added, “In the third quarter of 2011, the Company achieved aggregate net revenue year on year growth in our LCD display (including the movie theater network), in-store and poster frame businesses of 53%. GAAP net income attributable to Focus Media and non-GAAP net income attributable to Focus Media for the third quarter of 2011 was $62.2 million and $82.7 million, respectively. We achieved a positive net cash inflow from operating activities after deducting the purchase of equipment and subsidiaries of $76.1 million in the third quarter of 2011 as compared to a net cash inflow of $37.3 million in the second quarter of 2011 and a net cash inflow of $23.8 million in the third quarter of 2010. In the first three quarters of 2011, the Company cumulatively generated net cash inflow from operating activities net of capital expenditure and acquisitions of subsidiaries of $118.5 million.”

Third Quarter 2011 financial results

Advertising net revenue from the LCD display network (including the movie theatre network) was $133.6 million for the third quarter of 2011, representing an increase of 54% from $86.8 million for the third quarter of 2010 and an increase of 18% from $113.0 million for the second quarter of 2011.

Advertising net revenue from the poster frame network was $46.6 million for the third quarter of 2011, representing an increase of 45% from $32.2 million for the third quarter of 2010 and an increase of 22% from $38.2 million for the second quarter of 2011.

Advertising net revenue from the in-store network was $15.9 million for the third quarter of 2011, representing an increase of 69% from $9.4 million for the third quarter of 2010 and an increase of 7% from $14.9 million for the second quarter of 2011.

As of September 30, 2011, the total installed base of LCD displays in our LCD display network was 178,382 nationwide, including 169,810 displays through our directly owned networks, and 8,572 displays through our regional distributors, as compared to total LCD displays of 169,798 as of June 30, 2011. The total number of non-digital frames available for use in our poster frame network was 391,304 as of September 30, 2011, as compared to 354,945 as of June 30, 2011. In addition, as of September 30, 2011, we had 34,711 digital frames installed in our poster frame network, a slight decrease from 35,217 as of June 30, 2011 due to optimization of the network. The total number of displays installed in our in-store network was 50,696 as of September 30, 2011, as compared to 50,129 as of June 30, 2011.

Advertising net revenue from the traditional outdoor billboard network was $14.6 million for the third quarter of 2011, representing an increase of 64% from $8.9 million for the third quarter of 2010 and an increase of 13% from $12.9 million for the second quarter of 2011.

Non-GAAP gross profit from the LCD display network (including the movie theatre network) for the third quarter of 2011 was $105.9 million, representing an increase of 61% from $65.6 million for the third quarter of 2010 and an increase of 18% from $89.7 million for the second quarter of 2011.

Non-GAAP gross profit from the poster frame network for the third quarter of 2011 was $19.6 million, representing an increase of 61% from $12.2 million for the third quarter of 2010 and an increase of 61% from $12.2 million for the second quarter of 2011.

Non-GAAP gross profit from the in-store network for the third quarter of 2011 was $10.0 million, almost tripling the $3.4 million for the third quarter of 2010 and an increase of 9% from $9.2 million for the second quarter of 2011.

Non-GAAP gross profit from the traditional outdoor billboard network for the third quarter of 2011 was $3.2 million, representing an increase of 39% from $2.3 million for the third quarter of 2010 and representing a decrease of 11% from $3.6 million for the second quarter of 2011.

Non-GAAP operating expense for the third quarter of 2011 was $46.9 million, representing an increase of 46% from $32.2 million for the third quarter of 2010, which was mainly attributable to: 1) an increase of bad debt provision expenses in the amount of $3.6 million in the third quarter of 2011; 2) an increase of sales commission expenses resulted from revenue growth; and 3) an increase of employees’ salary and welfare in the amount of $2.2 million in the third quarter of 2011; and 4) the Company incurred the disposal loss for fixed assets in the amount of $1.6 million in the third quarter of 2011 to prepare for upgrading most of the screens in seven major cities into the next generation interactive screens for the fourth quarter of 2011. It also represented a slight increase of 2% from $45.9 million for the second quarter of 2011.

Net cash inflow from operating activities in the third quarter of 2011 was $86.3 million, increasing by 71% from $50.6 million for the second quarter of 2011 and more than doubling the $34.2 million for the third quarter of 2010.  

Net cash used in investing activities for the third quarter of 2011 was $28.1 million. In the third quarter of 2011, the Company incurred capital expenditures of $6.1 million, mostly attributable to upgrading our LCD screens into interactive screens in seven major cities in China, as well as consideration payments of $4.1 million for our poster frame and traditional outdoor billboard related acquisitions, and net investments of $14.9 million in short-term investments (as part of our ongoing effort to improve our interest income by depositing some cash into longer term dated deposits).

Business Outlook for Fourth Quarter 2011

The Company provides the following guidance with respect to the fourth quarter ending December 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 $212-$214 million, the mid-point of which would represent year-on-year growth of 45% and quarter-on-quarter growth of 9%. Net revenues for the non-core business (the traditional outdoor billboard network) are expected to be in the range of $14-$16 million. The Company’s non-GAAP net income is expected to be in the range of $88-$90 million. The Company estimates the weighted average ADS outstanding for the calculation of fully diluted earnings per ADS in the fourth quarter is 140 million, assuming no further share repurchases during the quarter.

Announced Share Repurchase Program

On October 3, 2011, Focus Media announced an increase in the size of its share repurchase program to US$650 million from $450 million. As of November 17, 2011, the Company has cumulatively spent approximately $355 million in share repurchases.

Foreign Currency Translation

The reporting currency of the Company is US dollar. The financial records of the Company’s subsidiaries are maintained in its local currency, the Renminbi (“RMB”), which is the functional currency. Assets and liabilities are translated at the exchange rate as of September 30, 2011, which was $1 to RMB6.3549. Equity accounts are translated at historical exchange rates and revenues, expenses, gains and losses are translated using the average rate for the third quarter of 2011, which was $1 to RMB6.4132. 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 ADS, all excluding share-based compensation expenses, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries, loss from equity method investee and impairment charges of goodwill. 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 and the reconciliation items mostly include share-based compensation expenses, amortization of acquired intangible assets, profit or loss from disposal of previously acquired subsidiaries, loss from equity method investee and goodwill 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. Dollars in thousands, except share and per-share data)
(Unaudited)

                                         
    Three months ended September 30, 2011
    GAAP   (1)   (2)   (3)   Non-GAAP
Gross Profit
                                       
LCD display and other:
    104,586       200       1,112             105,898  
—LCD display network
    98,196       200       1,101             99,497  
—Movie theater network
    6,390             11             6,401  
Poster frame network
    18,588             989             19,577  
In—store network
    10,022                         10,022  
Traditional outdoor billboard network
    2,364             818             3,182  
 
                                       
Total Gross Profit
    135,560       200       2,919             138,679  
 
                                       
General and administrative
    32,588       (14,424 )                 18,164  
Selling and marketing
    32,594       (933 )     (1,051 )           30,610  
Other operating income, net
    (1,919 )                       (1,919 )
 
                                       
Total operating expense
    63,263       (15,357 )     (1,051 )           46,855  
 
                                       
Operating profit from continuing operations
    72,297       15,557       3,970             91,824  
Profit before tax from continuing operations
    77,692       15,557       3,970             97,219  
Net profit from continuing operations
    62,666       15,557       3,970       985       83,178  
Net profit from discontinued operations
                            -  
Net income attributable to Focus Media
    62,229       15,557       3,970       985       82,741  
 
                                       
Basic net income from continuing operations per ADS
    0.47                               0.62  
Diluted net income from continuing operations per ADS
    0.45                               0.59  
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
    0.47                               0.62  
Diluted net income attributable to Focus Media per ADS
    0.44                               0.59  
 
                                       
ADS used in calculating basic income per ADS
    133,718,768                               133,718,768  
 
                                       
ADS used in calculating diluted income per ADS
    139,866,888                               139,866,888  
 
                                       

(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from equity method investee (VisionChina)

                                         
    Three months ended June 30, 2011
    GAAP   (1)   (2)   (3)   Non-GAAP
Gross Profit
                                       
LCD display and other:
    88,382       198       1,130             89,710  
—LCD display network
    85,260       198       1,114             86,572  
—Movie theater network
    3,122             16             3,138  
Poster frame network
    11,080             1,118             12,198  
In—store network
    9,162                         9,162  
Traditional outdoor billboard network
    3,129             449             3,578  
 
                                       
Total Gross Profit
    111,753       198       2,697             114,648  
 
                                       
General and administrative
    30,240       (14,274 )                 15,966  
Selling and marketing
    33,079       (924 )     (1,056 )           31,099  
Other operating income, net
    (1,209 )                       (1,209 )
 
                                       
Total operating expense
    62,110       (15,198 )     (1,056 )           45,856  
 
                                       
Operating profit from continuing operations
    49,643       15,396       3,753             68,792  
Profit before tax from continuing operations
    52,790       15,396       3,753             71,939  
Net profit from continuing operations
    42,863       15,396       3,753       992       63,004  
Net profit from discontinued operations
                             
Net income attributable to Focus Media
    42,804       15,396       3,753       992       62,945  
 
                                       
Basic net income from continuing operations per ADS
    0.32                               0.46  
Diluted net income from continuing operations per ADS
    0.30                               0.45  
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
    0.32                               0.46  
Diluted net income attributable to Focus Media per ADS
    0.30                               0.44  
 
                                       
ADS used in calculating basic income per ADS
    135,624,717                               135,624,717  
 
                                       
ADS used in calculating diluted income per ADS
    141,562,763                               141,562,763  
 
                                       

(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from equity method investee (VisionChina)

                                                 
    Three months ended September 30, 2010
    GAAP   (1)   (2)   (3)   (4)   Non- GAAP
Gross Profit
                                               
LCD display and other:
    64,225       286       1,105                     65,616  
-LCD display network
    63,875       286       1,090                   65,251  
-Movie theater network
    350             15                   365  
Poster frame network
    10,557             1,668                     12,225  
In-store network
    3,411                                 3,411  
Traditional outdoor billboard network
    1,872             431                     2,303  
 
                                               
Total Gross Profit
    80,065       286       3,204                     83,555  
 
                                               
General and administrative
    24,942       (11,526 )                         13,416  
Selling and marketing
    24,474       (1,257 )     (1,036 )                   22,181  
Other operating expenses (income), net
    (2,699 )                         (733 )     (3,432 )
 
                                               
Total operating expense
    46,717       (12,783 )     (1,036 )             (733 )     32,165  
 
                                               
Operating profit from continuing operations
    33,348       13,069       4,240               733       51,390  
Profit before tax from continuing operations
    36,015       13,069       4,240               733       54,057  
Net profit from continuing operations
    33,454       13,069       4,240             733       51,496  
Net profit from discontinued operations
    79,341             22       (79,000 )           363  
Net income attributable to Focus Media
    112,737       13,069       4,262       (79,000 )     733       51,801  
 
                                               
Basic net income from continuing operations per ADS
    0.24                                       0.36  
Diluted net income from continuing operations per ADS
    0.23                                       0.35  
Basic net income from discontinued operations per ADS
    0.56                                       0.00  
Diluted net income from discontinued operations per ADS
    0.54                                       0.00  
Basic net income attributable to Focus Media per ADS
    0.79                                       0.36  
Diluted net income attributable to Focus Media per ADS
    0.76                                       0.35  
 
                                               
ADS used in calculating basic income per ADS
    141,944,371                                       141,944,371  
 
                                               
ADS used in calculating diluted income per ADS
    147,490,755                                       147,490,755  
 
                                               

(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Profit from disposal of the internet business.
(4). Loss from disposal of previously acquired subsidiaries, all attributable to poster frame business.

                                         
    Focus Media Holding Ltd. Reconciliation of GAAPto non—GAAP (U.S. Dollars in thousands, except share and per—share data) (Unaudited) Nine months ended September 30, 2011
 
  GAAP     (1 )     (2 )     (3 )   Non— GAAP
 
                                       
Gross Profit
                                       
LCD display and other:
    257,618       593       3,352             261,563  
—LCD display network
    246,338       593       3,309             250,240  
—Movie theater network
    11,280             43             11,323  
Poster frame network
    40,043             3,285             43,328  
In—store network
    22,996                         22,996  
Traditional outdoor billboard network
    6,880             1,712             8,592  
 
                                       
Total Gross Profit
    327,537       593       8,349             336,479  
 
                                       
General and administrative
    89,452       (42,852 )                 46,600  
Selling and marketing
    96,874       (2,775 )     (3,165 )           90,934  
Other operating income, net
    (7,833 )                       (7,833 )
 
                                       
Total operating expense
    178,493       (45,627 )     (3,165 )           129,701  
 
                                       
Operating profit from continuing operations
    149,044       46,220       11,514             206,778  
Profit before tax from continuing operations
    159,947       46,220       11,514             217,681  
Net profit from continuing operations
    125,313       46,220       11,514       4,750       187,797  
Net profit from discontinued operations
                             
Net income attributable to Focus Media
    125,585       46,220       11,514       4,750       188,069  
 
                                       
Basic net income from continuing operations per ADS
    0.93                               1.39  
Diluted net income from continuing operations per ADS
    0.89                               1.34  
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
    0.93                               1.39  
Diluted net income attributable to Focus Media per ADS
    0.89                               1.34  
 
                                       
ADS used in calculating basic income per ADS
    134,972,295                               134,972,295  
 
                                       
ADS used in calculating diluted income per ADS
    140,567,619                               140,567,619  
 
                                       

(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Loss from equity method investee (VisionChina)

                                                 
    Nine months ended September 30, 2010
    GAAP   (1)   (2)   (3)   (4)   Non- GAAP
Gross Profit
                                               
LCD display network and other:
    161,186       848       2,995                   165,029  
-LCD display network
    157,129       848       2,949                   160,926  
-Movie theater network
    4,057             46                   4,103  
Poster frame network
    22,847             4,941                   27,788  
In-store network
    10,600                               10,600  
Traditional outdoor billboard network
    5,420             1,286                   6,706  
 
                                               
Total Gross Profit
    200,053       848       9,222                   210,123  
 
                                               
General and administrative
    62,997       (34,217 )                       28,780  
Selling and marketing
    73,795       (3,732 )     (3,070 )                 66,993  
Impairment loss
    5,736                   (5,736 )            
Other operating (income), net
    (7,848 )                       (2,257 )     (10,105 )
 
                                               
Total operating expense
    134,680       (37,949 )     (3,070 )     (5,736 )     (2,257 )     85,668  
 
                                               
Operating profit from continuing operations
    65,373       38,797       12,292       5,736       2,257       124,455  
Profit before tax from continuing operations
    69,533       38,797       12,292       5,736       3,545       129,903  
Net profit from continuing operations
    55,928       38,797       12,292       5,736       3,545       116,298  
Net profit from discontinued operations
    83,078             766             (79,000 )     4,844  
Net income attributable to Focus Media
    137,119       38,797       13,058       5,736       (75,455 )     119,255  
 
                                               
Basic net income (loss) from continuing operations per ADS
    0.39                                       0.81  
Diluted net income (loss) from continuing operations per ADS
    0.38                                       0.78  
Basic net income (loss) from discontinued operations per ADS
    0.58                                       0.03  
Diluted net income (loss) from discontinued operations per ADS
    0.56                                       0.03  
Basic net income (loss) attributable to Focus Media per ADS
    0.95                                       0.83  
Diluted net income (loss) attributable to Focus Media per ADS
    0.93                                       0.81  
 
                                               
ADS used in calculating basic income per ADS
    143,584,320                                       143,584,320  
 
                                               
ADS used in calculating diluted income per ADS
    148,090,998                                       148,090,998  
 
                                               

(1). Share-based compensation.
(2). Amortization of acquired intangible assets.
(3). Impairment charges of goodwill as a result of earn-out payments in poster frame business.
(4). Net profit from disposal of previously acquired business, including $79M profit from internet disposal and $3.5M loss from the write-off of certain assets of previously acquired subsidiaries.

CONFERENCE CALL

The Company will host a conference call to discuss the third quarter 2011 results at 8:00 p.m. U.S. Eastern Time on November 14, 2011 (5:00 p.m. U.S. Pacific Time on November 14, 2011 and 9:00 a.m. Beijing/Hong Kong Time on November 15, 2011). The dial-in details for the live conference call are set forth below:

International Toll Dial-In Number: + 65.6723.9381

Local Dial-In Number(s):
Hong Kong: +852.2475.0994
United States: +1.718.354.1231

International Toll Free Dial-in Number(s):
China , Domestic Mobile: 400.620.8038
China , Domestic: 800.819.0121
Hong Kong: +852.800.930.346
United States: +1.866.519.4004

Conference ID # 24920812

A replay of the call will be available from November 14, 2011 23:00 until November 22, 2011 10:59pm (US Eastern Time). The dial-in details for the replay are set forth below:

International Toll Dial-In Number: +61.2.8235.5000

Local Dial-In Number(s):
China: 400.692.0026
United States: +1.718.354.1232

International Toll Free Dial-in Number(s):
China North: 10800.714.0386
China South: 10800.140.0386
Hong Kong: +852. 800.901.596
United States: +1.866.214.5335

Conference ID # 24920812

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 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) 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.  As of September 30, 2011, Focus Media’s out-of-home lifestyle interactive digital media network had approximately 178,000 LCD displays in about 100,000 commercial buildings that covered more than 100 cities, 426,000 in-elevator poster and digital picture frames in residential buildings that covered 35 cities, approximately 51,000 LCD displays in more than 2,800 hypermarkets, supermarkets and convenience stores and approximately 2,000 movie screens in about 300 movie theaters throughout China. 

Investor and Media contact:

Jing Lu
Tel: +86 21 22164155
Email: ir@focusmedia.cn

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2

                 
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S Dollars in Thousands)
 
 
    2011-09-30       2011-06-30  
 
  Note 1        
ASSETS
               
Current assets
               
Cash and cash equivalents
    435,322       404,704  
Short-term investments
    204,567       186,198  
Accounts receivable, net
    230,552       200,660  
Prepaid expenses and other current assets
    39,060       44,053  
Deposit paid for acquisition of subsidiaries
          618  
Rental deposits
    56,143       50,557  
Other current assets
    8,098       1,722  
 
               
Total current assets
    973,742       888,512  
Rental deposits, non-current
    4,770       5,722  
Equipment, net
    68,786       65,807  
Acquired intangible assets, net
    26,995       17,553  
Goodwill
    463,894       429,525  
Investment under equity method
    59,148       58,209  
Other long term assets
    17,354       19,273  
Total assets
    1,614,689       1,484,601  
 
               
LIABILITIES AND EQUITY
               
Current liabilities
               
Short-term bank loan
    30,000    
Accounts payable
    22,146       18,330  
Accrued expenses and other current liabilities
    132,625       117,155  
Income taxes payable
    10,943       314  
Amount due to Related parties
    4,175       1,842  
Deferred tax liabilities
    25,172       24,180  
 
               
Total current liabilities
    225,061       161,821  
Long-term payable
    14,051    
Deferred tax liabilities, non-current
    12,617       9,995  
 
               
Total liabilities
    251,729       171,816  
 
               
Equity
               
Ordinary shares
    33       34  
Additional paid in capital
    1,668,269       1,716,322  
Subscription receivable
    (1,236 )      
Accumulated deficit
    (437,368 )     (499,597 )
Accumulated other comprehensive income
    111,447       95,815  
 
               
Total Focus Media equity
    1,341,145       1,312,574  
Noncontrolling interests
    21,815       211  
 
               
Total equity
    1,362,960       1,312,785  
 
               
Total liabilities and equity
    1,614,689       1,484,601  
 
               
                                         
Focus Media Holding Limited
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S Dollar in thousands, except earnings per ADS and ADS data)
 
    Three months ended   Nine months ended
         
 
    2011-09-30       2011-06-30       2010-9-30       2011-09-30       2010-09-30  
 
  Note 1                   Note 1        
Revenues
                                       
LCD display network and other:
    146,169       123,142       96,182       367,770       241,362  
-LCD display network
    132,555       113,518       91,654       336,098       227,137  
-Movie theater network
    13,614       9,624       4,528       31,672       14,225  
In-store network
    17,367       16,339       10,389       44,111       30,875  
Poster frame network
    51,023       41,648       35,496       131,953       90,532  
Traditional outdoor billboard network
    14,886       13,090       9,135       38,598       28,489  
 
                                       
Total gross revenues
    229,445       194,219       151,202       582,432       391,258  
Less: Sales taxes
    18,783       15,257       13,850       46,229       34,643  
 
                                       
Total net revenue (note 2)
    210,662       178,962       137,352       536,203       356,615  
 
                                       
Cost of revenues
                                       
LCD display network and other:
    28,965       24,614       22,551       79,392       57,269  
-LCD display network
    22,364       18,630       19,023       60,619       48,455  
-Movie theater network
    6,601       5,984       3,528       18,773       8,814  
In-store network
    5,849       5,774       5,997       17,324       17,339  
Poster frame network
    28,056       27,098       21,670       80,859       59,416  
Traditional outdoor billboard network
    12,232       9,723       7,069       31,091       22,538  
 
                                       
Total cost of revenues
    75,102       67,209       57,287       208,666       156,562  
 
                                       
Gross profit
    135,560       111,753       80,065       327,537       200,053  
 
                                       
Operating expenses
                                       
General and administrative
    32,588       30,240       24,942       89,452       62,997  
Selling and marketing
    32,594       33,079       24,474       96,874       73,795  
Impairment loss
                            5,736  
Other operating income, net
    (1,919 )     (1,209 )     (2,699 )     (7,833 )     (7,848 )
 
                                       
Total operating expenses
    63,263       62,110       46,717       178,493       134,680  
 
                                       
Operating profit
    72,297       49,643       33,348       149,044       65,373  
Interest income
    5,395       3,147       2,667       10,903       5,448  
Investment loss
                            (1,288 )
Income from continuing operations before income taxes
    77,692       52,790       36,015       159,947       69,533  
Provision for income taxes
    14,041       8,935       2,561       29,884       13,605  
Loss from equity method investee
    985       992             4,750       -  
 
                                       
Net income from continuing operations
    62,666       42,863       33,454       125,313       55,928  
Net income from discontinued operations, net of tax
                79,341             83,078  
 
                                       
Net income
    62,666       42,863       112,795       125,313       139,006  
Less: Net income (loss) attributable to noncontrolling interests
    437       59       58       (272 )     1,887  
 
                                       
Net income attributable to Focus Media
    62,229       42,804       112,737       125,585       137,119  
 
                                       
Net income from continuing operations per ADS
                                       
-basic
    0.47       0.32       0.24       0.93       0.39  
-diluted
    0.45       0.30       0.23       0.89       0.38  
Net income from discontinued operations per ADS
                                       
-basic
                0.56             0.58  
-diluted
                0.54             0.56  
Net income attributable to Focus Media per ADS
                                       
-basic
    0.47       0.32       0.79       0.93       0.95  
 
                                       
-diluted
    0.44       0.30       0.76       0.89       0.93  
 
                                       
ADS used in calculating basic income per ADS
    133,718,768       135,624,717       141,944,371       134,972,295       143,584,320  
 
                                       
ADS used in calculating diluted income per ADS
    139,866,888       141,562,763       147,490,755       140,567,619       148,090,998  
 
                                       

Note 1: The Company acquired 51% interests in 4 subsidiaries engaged in outdoor billboard business for an aggregate consideration of approximately $21.4 million in the third quarter of 2011 as part of the traditional outdoor billboard network strategy to expand its media resources. The aggregate consideration is the maximum possible consideration likely to be paid over a three year period base on achieving certain operating targets. The Company has performed a preliminary purchase price allocation to allocate the purchase consideration to the estimated fair values of the assets and liabilities of the subsidiaries acquired as of September 30, 2011. The amounts may be subject to change when the Company finalizes the purchase price allocation, with the assistance of a third-party valuation expert.

    Note 2: Details of net revenues by segment are as follows (U.S. Dollars in thousands):

                                         
    Three months ended   Nine months ended
 
    2011-09-30       2011-06-30       2010-09-30       2011-09-30       2010-09-30  
Gross revenues
                                       
LCD display network
    132,555       113,518       91,654       336,098       227,137  
Movie theater network
    13,614       9,624       4,528       31,672       14,225  
In-store network
    17,367       16,339       10,389       44,111       30,875  
Poster frame network
    51,023       41,648       35,496       131,953       90,532  
Traditional outdoor billboard network
    14,886       13,090       9,135       38,598       28,489  
Total gross revenues
    229,445       194,219       151,202       582,432       391,258  
 
                                       
Less: Sales taxes
                                       
LCD display network
    11,995       9,628       8,755       29,141       21,553  
Movie theater network
    623       519       651       1,619       1,354  
In-store network
    1,496       1,403       981       3,791       2,936  
Poster frame network
    4,379       3,470       3,269       11,051       8,269  
Traditional outdoor billboard network
    290       237       194       627       531  
Total sales tax
    18,783       15,257       13,850       46,229       34,643  
 
                                       
Net revenues
                                       
LCD display network
    120,560       103,890       82,899       306,957       205,584  
Movie theater network
    12,991       9,105       3,877       30,053       12,871  
In-store network
    15,871       14,936       9,408       40,320       27,939  
Poster frame network
    46,644       38,178       32,227       120,902       82,263  
Traditional outdoor billboard network
    14,596       12,853       8,941       37,971       27,958  
Total net revenues
    210,662       178,962       137,352       536,203       356,615  
 
                                       
                                 
FOCUS MEDIA HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(U.S. Dollar in thousands)
    Three months ended   Nine months ended
    2011-09-30   2010-09-30   2011-09-30   2010-09-30
Operating activities:
                               
Net income
    62,666       112,795       125,313       139,006  
Adjustments to reconcile net income to net cash provided by operating activities:
                               
Bad debt expenses
    4,466       867       10,258       1,205  
Share-based compensation
    15,557       13,069       46,220       38,797  
Depreciation
    7,291       6,721       21,398       21,792  
Amortization of acquired intangible assets
    3,970       4,262       11,514       13,058  
Profit on disposal of previously acquired subsidiaries
          (79,000 )           (79,000 )
Loss on disposal of equity method investment
                      2,833  
Loss from equity method investee
    985             4,750          
Impairment charges for goodwill, acquired intangible assets and fixed assets
                      5,736  
Write-off of long-term assets
                990        
Others
    1,798       129       1,940       242  
Net changes in current assets and current liabilities, net of effects of acquisitions
    (10,465 )     (24,594 )     (71,018 )     (66,440 )
 
                               
Net cash provided by operating activities
    86,268       34,249       151,365       77,229  
 
                               
Investing activities:
                               
Purchase of equipment and other long term assets
    (6,058 )     (6,675 )     (23,425 )     (11,600 )
Payment paid to acquired subsidiaries
    (4,115 )     (3,767 )     (9,475 )     (26,306 )
Investment in equity method investee
                (61,003 )      
Investment in short-term investments
    (505,921 )     (116,100 )     (937,663 )     (116,100 )
Proceeds from the sale of short-term investments
    490,972             878,037       29,290  
Proceeds received from disposal of fixed assets
    125       166       572       309  
Advances to a related party
    (3,147 )           (3,147 )      
Disposal of subsidiaries
          73,278       7,296       76,067  
Net cash (used in)/provided by investing activities
    (28,144 )     (53,098 )     (148,808 )     (48,340 )
 
                               
Financing activities:
                               
Proceeds received from short-term bank loans
    30,000             30,000        
Cash used for share repurchase
    (66,106 )     (200,000 )     (69,106 )     (236,715 )
Cash collection from (deposit for) share repurchase
          6,265             (36 )
Capital injection from (repayment to) noncontrolling interests
          11       (76 )     10,980  
Proceeds from issuance of ordinary shares,
    1,260       568       1,828       2,387  
Net cash provided by/(used in) financing activities
    (34,846 )     (193,156 )     (37,354 )     (223,384 )
 
                               
Effect of exchange rate changes
    7,340       7,006       15,643       9,589  
 
                               
Net increase (decrease) in cash and cash equivalents
    30,618       (204,999 )     (19,154 )     (184,906 )
Cash and cash equivalents, beginning of period
    404,704       588,252       454,476       568,159  
 
                               
Cash and cash equivalents, end of period
    435,322       383,253       435,322       383,253  
 
                               
Supplemental disclosure of cash flow information:
                               
Income taxes paid
    3,321       3,854       24,612       27,793  
Interest paid
    105             105        
 
                               
Supplemental disclosure of non-cash investing activity:
                               
Accrual for acquisition of subsidiaries
    22,092       7,284       22,092       7,284  
 
                               

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