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Focus Media Reports Third Quarter 2007 Results


编辑:K8 时间:2018-11-05


Third Quarter Revenue Increased by 149.6% and Net Income Increased by 72.6% Year-over-year

SHANGHAI, China, Nov. 20 /Xinhua-PRNewswire/ -- Focus Media Holding Limited (Nasdaq: FMCN), China’s largest digital media group, today announced its unaudited financial results for the third quarter ended September 30, 2007.

Highlights for third Quarter 2007:

-- Total revenues grew 149.6% year-over-year and 33.6% quarter-over-

quarter to $151.4 million.

-- Net income for the third quarter was $46.6 million, up 72.6% year-over-

year and 23.6% quarter-over-quarter. Fully diluted net income per ADS

for the third quarter of 2007 was $0.37. Focus Media also provides

operating margin, net income and earnings per ADS on a non-GAAP basis

that exclude non-cash share-based compensation expense and acquired

intangible assets amortization expense to enable investors to better

assess the Company’s operating performance. The non-GAAP measures are

described below and reconciled to the corresponding GAAP measure in the

section below titled “Use of non-GAAP Financial Measures”. Net

income, excluding non-cash share-based compensation expenses and

amortization of acquired intangible assets resulting from acquisitions

(non-GAAP) for the third quarter was $54.6 million or $0.43 per fully

diluted ADS.

-- In the third quarter of 2007, digital out-of-home advertising revenue

was $94.7 million, up 23.3% quarter-over-quarter.

-- Advertising service revenue from our commercial location network,

including revenue from our LCD display networks, outdoor digital and

non-digital billboard networks (also referred to as our iStreet

Network) and movie theater advertising network, grew 67.7% year-

over-year and 26.5% quarter-over quarter to $64.6 million.

-- Advertising service revenue from our in-store network was $7.1

million, down 2.1% year-over-year and 2.2% quarter-over-quarter, due

to the relatively more competitive environment in our in-store

business.

-- Advertising service revenue from our in-elevator poster frame

network grew 104.4% year-over-year and 24.3% quarter-over-quarter to

$23.1 million.

-- Mobile handset advertising revenue grew 298.9% year-over-year and 28.9%

quarter-over-quarter, to $14.0 million in the third quarter 2007.

-- Internet advertising revenue was $42.5 million in the third quarter of

2007, up 68.5% quarter-over-quarter.

“We have achieved another record quarterly revenue and profit in the third quarter 2007. During the quarter, we saw robust advertising demand for our digital media offerings. Our Internet advertising business grew strongly in the quarter after several small acquisitions to strengthen the market leadership of Allyes. Although the gross margin of our Internet advertising business was lower than the previous quarter due to the consolidation of newly acquired entities, we believe the gross margin of our Internet business will trend up in the future as we leverage Allyes’ strong technology platform to improve the operations of these acquired businesses. We are well positioned to capitalize on the expected strong demand growth in the China advertising market in 2008,” said Jason Jiang, CEO of Focus Media. “In addition, our mobile handset advertising business continues to demonstrate strong growth potential. We believe its highly targeted ad delivery to mobile users based on demographic or location-based information is increasingly gaining acceptance by advertisers. In order to maximize shareholder value, we are evaluating a potential option for a separate listing of our mobile handset advertising business in Hong Kong or the United States.”

Third Quarter Financial Results

For the third quarter of 2007, Focus Media reported total revenues of $151.4 million, an increase of 149.6% compared to $60.6 million for the third quarter of 2006, and an increase of 33.6% compared to $113.3 million for the second quarter of 2007.

Our total digital out-of-home advertising revenue was $94.7 million in the third quarter of 2007, an increase of 66.1% from $57.0 million in the third quarter of 2006 and a sequential increase of 23.3% from $76.9 million in the second quarter of 2007. In the third quarter of 2007, commercial location advertising revenue was $64.6 million, contributing 68.2% of total digital out-of-home advertising revenue. Advertising service revenue from our in-store network was $7.1 million, or 7.5% of total digital out-of-home advertising revenue. Advertising service revenue from our in-elevator poster frame network placed primarily in the elevators of residential complexes was $23.1 million in the third quarter of 2007, or 24.3% of total digital out-of-home advertising revenue.

As of September 30, 2007, the total installed base of LCD displays in our commercial location network was 95,398 nationwide, including 90,375 displays through our directly owned networks, and 5,023 displays through our regional distributors. In the third quarter of 2007, we continued to expand the installed base of our hypermarkets to 1,266 stores as of September 30, 2007 from 1,205 hypermarkets as of June 30, 2007. Our in-store network also covers 695 supermarkets and 2,080 convenience stores as of September 30, 2007. The number of displays installed in our in-store network increased to 43,315 as of September 30, 2007 compared to 41,322 as of June 30, 2007. The total number of non-digital frames available for sale on our poster frame network was 163,455 as of September 30, 2007. In addition, as of September 30, 2007, we had installed 7,150 digital 2.0 frames, mainly in Beijing, Shanghai, Guangzhou and Shenzhen.

Mobile Advertising Business

Advertising service revenue from Focus Media Wireless in the third quarter of 2007 was $14.0 million, up 298.9% from $3.5 million in the third quarter of 2006 and 28.9% from $10.9 million in the second quarter of 2007.

Internet Advertising Business

Internet advertising service revenue was $42.5 million in the third quarter of 2007, up 68.5% from $25.2 million in the second quarter of 2007. Digital marketing service accounted for 94.0% of the total Internet advertising revenue. Rich Media, pay-for-performance and technology solutions accounted for the remaining 6.0%.

Gross profit for the third quarter of 2007 was $77.1 million, representing an increase of 99.9% compared to $38.6 million for the corresponding period a year ago and a 24.7% increase compared to $61.8 million in the second quarter 2007. In the third quarter 2007, gross margin for our digital out-of-home business was 62.7%. Within our digital out-of-home advertising networks, commercial location network gross margin was 64.7%, in-store network gross margin was 17.7%, and the in-elevator poster frame network gross margin was 71.1%. Commercial location gross margin was impacted by the acquisition of a leading outdoor billboard operator in China, which operates over 200 highly attractive outdoor billboard locations in major commercial centers in China. Excluding the non-digital outdoor billboard business we acquired in the second quarter of 2007, commercial location gross margin would have been 74.6%. We plan to upgrade some of these sites to digital LED billboards upon expiration of the current contracts with advertisers. The acquisition provides Focus Media with a stronger strategic position for the growth of outdoor digital billboard business in the future. The gross margin for our mobile advertising business was 56.2% in the third quarter of 2007. The gross margin for our Internet advertising business was 23.0% in the third quarter 2007, lower than the previous quarter due to several small acquisitions to strengthen the market leadership of Allyes. Blended gross margin for the company for the third quarter was 50.9%, as compared to 54.6% in the second quarter of 2007, primarily due to the contribution of the lower-margin Internet advertising business and in-store business.

In the third quarter of 2007, operating expenses totaled $30.0 million, including $1.1 million in acquired intangible asset amortization resulting from acquisitions and non-cash share-based compensation expense of $4.4 million. Operating expenses as a percentage of total revenues in the third quarter 2007 was 19.8%, as compared to 20.9% in the previous quarter. Selling and marketing expenses in the third quarter totaled $19.1 million including $2.4 million in share compensation expense, or 12.6% of total revenues. General and administrative expense in the third quarter was $12.1 million including $2.0 million in share-based compensation expense, or 8.0% of total revenues. Our operating margin in the third quarter of 2007 was 31.1%, as compared to 33.7% in the second quarter 2007. Excluding non-cash share-based compensation expense and acquired intangible asset amortization expense, operating margin (non-GAAP) was 36.4% in the third quarter 2007. Operating expenses in the third quarter of 2007 also include a one-time expense of approximately $2.1 million relating to the recent Audit Committee inquiry.

Net income for the third quarter of 2007 was $46.6 million, an increase of 72.6% compared to $27.0 million for the same period in 2006, and 23.6% compared to $37.7 million for the second quarter of 2007. Fully diluted net income per ADS for the third quarter of 2007 was $0.37. Net income excluding non-cash share-based compensation expense and acquired intangible assets amortization expense resulting from acquisitions (non-GAAP) in the third quarter of 2007 was $54.6 million, or $0.43 per fully diluted ADS.

Other Recent Developments

In November 2007, Focus Media and certain of its shareholders, consisting mainly of the former shareholders of Framedia, Dotad and Allyes, completed a secondary offering. In this offering, Focus Media sold 5,000,000 ADSs of newly issued shares and various selling shareholders sold 8,720,873 ADSs to the public.

On September 28, 2007, Mr. David Ying Zhang was appointed to Focus Media’s board of directors as an independent director. Mr. Zhang is the managing director and head of the Beijing office of WI Harper, a private equity fund. With the appointment of Mr. Zhang, Focus Media’s board regained a majority of independent directors.

BUSINESS OUTLOOK

The Company estimates its total revenues for the forth quarter of 2007 will range from $160 million to $170 million. Fourth quarter 2007 net income excluding share-based compensation expense and intangible assets amortization expense resulting from acquisitions (non-GAAP) is expected to be between $62 million and $64 million or $0.48 to $0.50 per fully diluted ADS based on 129 million total ADS-equivalent average shares outstanding.

USE OF NON-GAAP FINANCIAL MEASURES

In addition to Focus Media’s consolidated financial results under GAAP, the Company also provides non-GAAP financial measures, including non-GAAP operating margin, non-GAAP net income and non-GAAP earnings per fully diluted ADS, all excluding non-cash share-based compensation and acquired intangible asset amortization expense resulting from acquisitions. The Company believes that these non-GAAP financial measures provide investors with another method for assessing Focus Media’s operating results in a manner that is focused on the performance of its ongoing operations. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP results with non-GAAP results 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 share data)

(Unaudited)

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-6-30 2007-9-30 2006-9-30

GAAP net

income

attributable

to

shareholders $46,613 $27,005 $37,715 $100,620 $53,109

Amortization

of acquired

intangible

assets 3,287 1,577 2,672 7,891 4,070

Share-based

compensation 4,679 1,569 4,919 14,115 4,932

Non-GAAP

net income $54,579 $30,151 $45,306 $122,626 $62,111

GAAP income

per ADS

- basic $0.38 $0.26 $0.33 $0.87 $0.54

GAAP income

per ADS

- diluted $0.37 $0.25 $0.32 $0.84 $0.52

Non-GAAP

income per

ADS - basic $0.45 $0.29 $0.39 $1.06 $0.63

Non-GAAP

income per

ADS - diluted $0.43 $0.28 $0.38 $1.03 $0.61

Shares

used in

calculating

basic

GAAP/

Non-GAAP

income

per ADS 122,250,042 105,113,194 115,701,382 115,883,549 98,232,890

Shares

used in

calculating

diluted

GAAP/

Non-GAAP

income

per ADS 126,370,818 109,293,170 119,385,064 119,471,360 102,375,332

GAAP

income

from

operations $47,122 $25,839 $38,164 $99,730 $51,970

Amortization

of acquired

intangible

assets 3,287 1,577 2,672 7,891 4,070

Share-based

compensation 4,679 1,569 4,919 14,115 4,932

Non-GAAP

income

from

operations $55,088 $28,985 $45,755 $121,736 $60,972

Non-GAAP

operating

margin 36.4 % 47.8 % 40.4 % 37.8 % 42.4 %

TODAY’S CONFERENCE CALL

Focus Media will host a conference call to discuss the third quarter 2007 financial results and forth quarter 2007 business outlook at 8:00 p.m. U.S. Eastern Time on November 19, 2007 (5:00 p.m. U.S. Pacific Time on November 19, 2007; 9:00 a.m. Beijing/Hong Kong time on November 20, 2007). The dial-in details for the live conference call are: U.S. Toll Free Number +1-800-884-5695, Hong Kong dial-in number +852-3002-1672, International dial-in number +1-617-786-2960; Pass code 26895957.

A replay of the call will be available from November 19, 2007 until November 26, 2007 (US Eastern Time). The dial-in details for the replay are: U.S. Toll Free Number +1-888-286-8010; international dial-in number +1-617-801-6888; pass code 78870211. A webcast of this call will also be available live and archived on Focus Media’s website at http://ir.focusmedia.cn .

ABOUT FOCUS MEDIA HOLDING LIMITED

Focus Media Holding Limited (Nasdaq: FMCN) is China’s leading 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, and is also a leading provider of mobile handset advertising and Internet marketing solutions in China. 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, mobile handset advertising networks and Internet advertising platforms. As of September 30, 2007, Focus Media’s digital out-of-home advertising network had approximately 95,398 LCD display in its commercial location network, approximately 43,315 LCD displays in its in-store network and 170,605 advertising in-elevator poster frames, installed in over 90 cities throughout China, and approximately 200 outdoor LED billboard displays in Shanghai. For more information about Focus Media, please visit our website at http://ir.focusmedia.cn .

SAFE HARBOR: FORWARD-LOOKING STATEMENTS

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the Business Outlook section and quotations from management in this press release, as well as Focus Media’s strategic and operational plans, contain forward-looking statements. Focus Media may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 20-F and 6-K., in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Focus Media’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in Focus Media’s filings with the U.S. Securities and Exchange Commission, including its registration statements on Form F-1, F-3, F-6 and 20-F, in each case as amended. Focus Media does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in thousands)

2007-9-30 2006-12-31

ASSETS

Current assets

Cash and cash equivalents $190,243 $164,611

Investment in equity securities 51,961 --

Accounts receivables, net 169,800 61,614

Inventories 2,449 519

Prepaid expenses and other current

assets 20,109 5,199

Deposit paid for acquisition of

subsidiaries 43,423 3,526

Amount due from related parties 4,240 7,853

Rental deposits 31,333 --

Total current assets $513,558 $243,322

Rental Deposits 3,290 11,833

Equipment, net 83,617 70,250

Acquired intangible assets, net 74,219 34,717

Goodwill 928,450 739,744

Other long term assets 35,430 6,376

Total assets $1,638,564 $1,106,242

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short term debt $-- $2,769

Accounts payable 48,344 5,987

Accrued expenses and other current

liabilities 95,261 38,674

Income taxes payable 12,560 4,060

Amount due to related parties 7,948 347

Deferred tax liabilities 1,125 --

Total current liabilities $165,238 $51,837

Deferred tax liabilities 6,218 3,303

Total liabilities $171,456 $55,140

Minority interests 496 358

Shareholders’ equity

Ordinary shares 31 27

Additional paid in capital 1,247,971 709,196

Acquisition consideration to be --

issued 237,879

Retained earnings 195,347 96,195

Accumulated other comprehensive

income 23,263 7,447

Total shareholders’ equity $1,466,612 $1,050,744

Total liabilities and shareholders’

equity $1,638,564 $1,106,242

Focus Media Holding Limited

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. Dollar in thousands, except share data)

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-6-30 2007-9-30 2006-9-30

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)

Gross

revenues

(note 3):

Digital

out-of-home

Commercial

locations $70,173 $42,581 $55,368 $160,459 $99,448

In-store

network 7,813 8,002 7,998 23,137 21,055

In-elevator

poster

frame

network 25,121 12,386 20,347 59,322 29,780

Mobile

handset

advertising 14,627 3,801 11,268 31,915 7,166

Internet

advertising 44,234 -- 26,418 70,652 --

Other

revenue 117 90 305 803 780

Total

gross

revenues 162,085 66,860 121,704 346,288 158,229

Less:

Sales

taxes 10,693 6,213 8,429 24,281 14,320

Total

revenues 151,392 60,647 113,275 322,007 143,909

Cost of

revenues

(note 4):

Digital

out-of-home

Commercial

locations 22,825 11,428 17,868 53,591 31,141

In-store

network 5,832 4,616 5,187 16,046 12,983

In-elevator

poster

frame

network 6,656 3,732 5,265 16,667 9,746

Mobile

handset

advertising 6,145 2,219 4,569 13,468 4,624

Internet

advertising 32,718 -- 18,405 51,123 --

Total

advertising

service

costs 74,176 21,995 51,294 150,895 58,494

Other

costs 121 80 138 424 392

Total cost

of revenues 74,297 22,075 51,432 151,319 58,886

Gross profit 77,095 38,572 61,843 170,688 85,023

Operating

expenses:

General

and

administrative

(note 4) 12,095 5,956 11,646 32,424 16,650

Selling

and

marketing

(note 4) 19,081 6,782 13,154 42,121 16,565

Other

operating

income (1,203) (5) (1,121) (3,587) (162)

Total

operating

expenses 29,973 12,733 23,679 70,958 33,053

Income

from

operations 47,122 25,839 38,164 99,730 51,970

Interest

income, net 1,595 1,070 1,870 6,158 2,563

Other

income

(expenses),

net 5 (176) 12 109 (655)

Income

before

tax and

minority

interests 48,722 26,733 40,046 105,997 53,878

Income

tax

expense

- Current 2,063 (134) 2,683 5,847 484

- Deferred 46 (183) (365) (452) 189

Total

income

taxes 2,109 (317) 2,318 5,395 673

Income

before

minority

interests 46,613 27,050 37,728 100,602 53,205

Minority

Interests -- 45 13 (18) 96

Net income $46,613 $27,005 $37,715 $100,620 $53,109

Income

per ADS

- basic $0.38 $0.26 $0.33 $0.87 $0.54

Income

per ADS

- diluted $0.37 $0.25 $0.32 $0.84 $0.52

Shares

used in

calculating

basic

income

per ADS 122,250,042 105,113,194 115,701,382 115,883,549 98,232,890

Shares

used in

calculating

diluted

income

per

ADS 126,370,818 109,293,170 119,385,064 119,471,360 102,375,332

Focus Media Holding Limited

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS

(U.S. Dollar in thousands)

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-9-30 2006-9-30

Operating activities:

Net income $46,613 $27,005 $100,620 $53,109

Adjustments to

reconcile net

income to net cash

provided by

operating activities:

Minority interest -- 45 (18) 96

Bad debt provision 320 627 2,736 1,397

Share based

compensation 4,679 1,569 14,115 4,932

Depreciation and

amortization 5,114 3,714 13,222 9,844

Amortization of

acquired intangible

assets 3,287 1,577 7,891 4,070

Changes in assets and

liabilities,

net of effects of

acquisitions (19,174) (5,695) (41,157) (27,214)

Net cash provided by

operating

activities $40,839 $28,842 $97,409 $46,234

Investing activities:

Purchase of equipment

and other long

term assets (11,659) (1,696) (36,924) (13,304)

Acquisition of an

intangible asset -- -- (105) --

Purchase of

subsidiaries, net of

cash acquired 2,334 (35,768) (54,440) (122,827)

Deposits paid to

acquire

subsidiaries (25,004) (2,800) (60,272) (2,800)

Investment in

equity securities (8,830) -- (49,545) --

Net cash used in

investing activities $(43,159) $(40,264) $(201,286) $(138,931)

Financing activities:

Proceeds from issuance

of ordinary shares,

net of issuance costs 475 5,710 120,733 154,390

Proceeds from

short-term debts -- -- -- 24,598

Capital injection from

minority shareholders 40 -- 137 249

Repayment of short-term

debts (394) (23,351) (4,165) (29,402)

Net cash provided by

financing activities $121 $(17,641) $116,705 $149,835

Effect of exchange rate

changes 4,850 1,488 12,805 1,318

Net (decrease) increase

in cash and

cash equivalents $2,651 $(27,575) $25,633 $58,456

Cash and cash

equivalents, beginning

of period 187,592 122,684 164,610 36,653

Cash and cash

equivalents, end of

period $190,243 $95,109 $190,243 $95,109

Supplemental disclosure

of cash flow

information:

Income taxes paid $461 $12 $1,038 $30

Interest paid $6 $218 $6 $245

Supplemental disclosure of non-cash

investing activity:

Acquisition of subsidiaries:

Value of ordinary share

consideration $-- $-- $166,050 $365,660

Accounts payable $6,143 $277 $6,143 $277

Notes:

Note 1: Basic income per ADS is computed by dividing income attributable

to holders of ordinary shares by the weighted average number of

ADS outstanding during the year/period. Diluted income per ADS

reflects the potential dilution that could occur if securities or

other contracts to issue ADS were exercised or converted into ADS.

Note 2: The conversion of Renminbi (“RMB”) amounts into USD amounts is

based on the rate of USD1 = RMB7.5108 on September 28, 2007.

Note 3: Details of net revenues are as follows (U.S. Dollars in thousands):

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-6-30 2007-9-30 2006-9-30

Gross

Advertising

Service

Revenue:

Digital

out-of-home:

Commercial

locations

- Unrelated

parties $70,091 $37,101 $55,321 $157,825 $87,586

- Related

parties 82 5,480 47 2,634 11,862

Total

Commercial

Locations 70,173 42,581 55,368 160,459 99,448

In-store

Network

- Unrelated

parties 7,813 6,610 7,998 21,822 17,617

- Related

parties -- 1,392 -- 1,315 3,438

Total

In-store

network 7,813 8,002 7,998 23,137 21,055

In-elevator

Poster Frame

Network

- Unrelated

parties 25,029 12,386 20,249 59,132 29,780

- Related

parties 92 -- 98 190 --

Total

In-elevator

Poster Frame

Network 25,121 12,386 20,347 59,322 29,780

Mobile

handset

advertising

- Unrelated

parties 14,592 3,801 11,179 31,791 7,166

- Related

parties 35 -- 89 124 --

Total mobile

handset

advertising 14,627 3,801 11,268 31,915 7,166

Internet

advertising

- Unrelated

parties 43,552 -- 26,088 69,640 --

- Related

parties 682 -- 330 1,012 --

Total

internet

advertising 44,234 -- 26,418 70,652 --

Gross

Advertising

Services

Revenue: 161,968 66,770 121,399 345,485 157,449

Less: Sales

taxes:

Digital

out-of-home:

Commercial

locations: 5,584 4,063 4,308 13,166 9,111

In-store

Network 726 763 754 2,168 1,984

In-elevator

Poster Frame

Network 2,058 1,102 1,799 5,042 2,651

Mobile

handset

advertising 602 285 386 1,000 574

Internet

advertising 1,723 -- 1,182 2,905 --

Total sales

taxes: 10,693 6,213 8,429 24,281 14,320

Net

Advertising

Service

Revenue 151,275 60,557 112,970 321,204 143,129

Add: Other

revenue: 117 90 305 803 780

Net revenues: $151,392 $60,647 $113,275 $322,007 $143,909

Note 4: Share based compensations included under SFAS 123R are as follows

(U.S. Dollars in thousands):

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-6-30 2007-9-30 2006-9-30

Cost of

revenues $288 $-- $284 $853 $--

Selling and

marketing 2,374 211 2,084 6,519 889

General and

administrative 2,017 1,358 2,551 6,743 4,043

Sub-total $4,679 $1,569 $4,919 $14,115 $4,932

Note 5: The Company has performed preliminary purchase price allocation on

their acquisition made in the fourth quarters of 2006 and the

first three quarters of 2007 based on an internal valuation

performed by management. The purchase price allocation will be

finalized once the independent valuation analysis is completed.

Note 6: The earnings per ADS is based on the new conversion ratio of 1 ADS

to 5 ordinary shares, effective as of April 11, 2007. The

comparative numbers haven been adjusted to reflect the conversion.

Focus Media Holding Ltd.

Reconciliation of GAAP to Non-GAAP

(U.S. Dollar in thousands, except percentages, share and per-share data)

(Unaudited)

Three months ended Nine months ended

2007-9-30 2006-9-30 2007-6-30 2007-9-30 2006-9-30

GAAP net

income

attributable

to shareholders $46,613 $27,005 $37,715 $100,620 $53,109

Amortization

of acquired

intangible

assets 3,287 1,577 2,672 7,891 4,070

Share-based

compensation 4,679 1,569 4,919 14,115 4,932

Non-GAAP net

income $54,579 $30,151 $45,306 $122,626 $62,111

GAAP income

per ADS

- basic $0.38 $0.26 $0.33 $0.87 $0.54

GAAP income

per ADS

- diluted $0.37 $0.25 $0.32 $0.84 $0.52

Non-GAAP

income per

ADS - basic $0.45 $0.29 $0.39 $1.06 $0.63

Non-GAAP

income per

ADS - diluted $0.43 $0.28 $0.38 $1.03 $0.61

Shares used

in calculating

basic GAAP/

Non-GAAP

income per

ADS 122,250,042 105,113,194 115,701,382 115,883,549 98,232,890

Shares used

in calculating

diluted

GAAP/Non-GAAP

income per

ADS 126,370,818 109,293,170 119,385,064 119,471,360 102,375,332

GAAP income

from

operations $47,122 $25,839 $38,164 $99,730 $51,970

Amortization

of acquired

intangible

assets 3,287 1,577 2,672 7,891 4,070

Share-based

compensation 4,679 1,569 4,919 14,115 4,932

Non-GAAP

income from

operations $55,088 $28,985 $45,755 $121,736 $60,972

Non-GAAP

operating

margin 36.4 % 47.8 % 40.4 % 37.8 % 42.4 %

For more information, please contact:

Jie Chen

Tel: +86-21-3212-4661 x6607

Email: ir@focusmedia.cn

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