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Focus Media Reports Fourth Quarter and Full Year 2009 Results
Mar 16, 2010 (04:03 PM EDT)


SHANGHAI, March 16 /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, 2009.

Basis of Presentation

The results of the internet business have been restated in this earning release to reflect the disposal of certain subsidiaries which have been classified as discontinued operations for all periods presented.

    Highlights for Fourth Quarter 2009:
    -- Total net revenue for fourth quarter 2009 was $144.3 million, of which
       the aggregate net revenue for the LCD display network, in-store network
       and poster frame network was $98.3 million, surpassing the Company's
       previous guidance of $92 million and the aggregate net revenue for the
       movie theatre and outdoor traditional billboard network and Internet
       advertising services was $46.0 million, surpassing the Company's
       previous guidance of $39 million.
    -- GAAP net loss attributable to Focus Media was $52.5 million or a loss
       of $0.39 per fully diluted ADS, compared to net loss attributable to
       Focus Media of $127.6 million for the third quarter of 2009 or a loss
       of $0.99 per fully diluted ADS and net loss attributable to Focus Media
       of $802.5 million for the fourth quarter of 2008 or a loss of $6.24 per
       fully diluted ADS.
    -- Non-GAAP net income attributable to Focus Media for the fourth quarter
       of 2009 was $34.7 million or an income of $0.26 per ADS, compared to
       non-GAAP net income attributable to Focus Media of $7.9 million for the
       third quarter of 2009 or an income of $0.06 per ADS and non-GAAP net
       income of $50.0 million for the fourth quarter of 2008 or an income of
       $0.39 per ADS.
    -- Net cashflow from operations in the fourth quarter of 2009 was
       $72.3 million, an increase of 96% from $ 36.8 million in the third
       quarter of 2009.

    Highlights for Full Year 2009:
    -- Total net revenue for full year 2009 was $505.0 million, declining 21%
       from $642.3 million for full year 2008, substantially due to
       unfavorable macro-economic condition and strategic reorganization
       related to several lines of our businesses. The aggregate net revenue
       for the LCD display network, in-store network and poster frame network
       for full year 2009 was $338.1 million, declining 25% from
       $450.6 million for full year 2008. The aggregate net revenue for the
       movie theatre and outdoor traditional billboard network and Internet
       advertising services was $166.9 million, declining 13% from
       $191.7 million for full year 2008.
    -- GAAP net loss attributable to Focus Media was $208.8 million for full
       year 2009 or a loss of $1.61 per fully diluted ADS, compared to net
       loss attributable to Focus Media of $770.7 million for full year 2008,
       or a loss of $5.98 per fully diluted ADS.
    -- Non-GAAP net income attributable to Focus Media for full year 2009 was
       $89.4 million or an income of $0.69 per ADS, compared to non-GAAP net
       income attributable to Focus Media of $221.9 million for full year 2008
       or an income of $1.72 per ADS.

Highlights for Balance Sheet and Cash Flow Results of Fourth Quarter and Full Year 2009:

    -- Cash and cash equivalents was $568.2 million as of December 31, 2009,
       including the subscription price of $142.4 million received from
       Chairman and CEO Mr. Jason Jiang for purchase of 75,000,000 newly
       issued shares in our Company, and representing an increase of 48% from
       $383.1 million as of September 30, 2009.
    -- Net accounts receivable for the LCD display network, in-store network
       and poster frame network was $96.1 million as of December 31, 2009, a
       decline of 16% from $114.3 million as of September 30, 2009. Days sales
       outstanding on a rolling basis was 88 days in the fourth quarter of
       2009 versus 118 days for the third quarter of 2009.
    -- Net accounts receivable for the movie theatre and outdoor traditional
       billboard network and Internet advertising services was $76.6 million
       as of December 31, 2009.
    -- Net cashflow from operations in full year 2009 was $160.7 million, as
       compared to $168.4 million in full year 2008.
    -- Capital expenditures were $1.0 million and $10.7 million for the fourth
       quarter of 2009 and full year 2009 respectively.
    -- Earn-out payments related to historical acquisitions paid in the fourth
       quarter of 2009 were $19.3 million, of which $10.7 million was
       attributable to the poster frame network and LCD display network and
       $8.6 million was attributable to the traditional outdoor billboard and
       internet businesses. For full year 2009, total earn-out payments
       related to historical acquisitions paid were $92.4 million, of which
       $62.3 million was attributable to the poster frame network and LCD
       display network and $30.1 million was attributable to traditional
       outdoor billboard and internet businesses.

Jason Jiang, Chairman and CEO of Focus Media said, "After going through a year of restructuring, Focus Media has substantially resolved its past problems and re-entered on to a path of sustainable growth. At the same time, the Chinese advertising market recovery has presented us with very attractive development opportunities. We believe we are well positioned to achieve meaningful cash flow and earnings growth in 2010. Starting in 2010, Focus Media will focus on dedicating our resources to developing networks in lower tier cities for our LCD, Poster frame as well as in-store networks. We believe the investment we are making in lower tier cities will help to lay the foundation of growth for Focus Media over the next three to five years. Separately, we will offer incentives to motivate internet and outdoor billboard management so as to promote sustainable long term development of the respective business segments."

Kit Low, CFO added, "Our fourth quarter 2009 results demonstrate the robust execution capability of the Focus Media team as well as the significant positive operating leverage of the Focus Media business model. In the fourth quarter 2009 the Company generated a free cash flow of $43.0 million on $34.7 million of non-GAAP net income with operating cashflow of $72.3 million, versus an investing cashflow of $29.3 million. We expect this trend of positive cashflow generation to continue as the Company leverages the 2010 uptrend of the Chinese advertising market."

Fourth Quarter 2009 financial results

Advertising net revenue from the LCD display network was $64.1 million for the fourth quarter of 2009, an increase of 14% from $56.0 million for the third quarter of 2009 and an increase of 8% from $59.3 million for the fourth quarter of 2008.

Advertising net revenue from the poster frame network was $26.8 million for the fourth quarter of 2009, an increase of 21% from $22.1 million for the third quarter of 2009 but a decline of 32% from $39.2 million for the fourth quarter of 2008.

Advertising net revenue from the in-store network was $7.4 million for the fourth quarter of 2009, slightly decreasing from $7.6 million for the third quarter of 2009 and decreasing by 22% from $9.5 million for the fourth quarter of 2008.

As of December 31, 2009, the total installed base of LCD displays in our LCD display network was 131,006 nationwide, including 125,595 displays through our directly owned networks, and 5,411 displays through our regional distributors, as compared to 130,890 as of September 30, 2009. The total number of non-digital frames available for sale in our poster frame network was 225,104 as of December 31, 2009, as compared to 225,762 as of September 30, 2009. In addition, as of December 31, 2009, we had 35,972 digital frames installed in our poster frame network, as compared to 36,539 as of September 30, 2009. The total number of displays installed in our in-store network was 44,517 as of December 31, 2009, as compared to 45,195 as of September 30, 2009.

Advertising net revenue from the movie theater and traditional outdoor billboard network was $12.6 million for the fourth quarter of 2009, relatively constant compared to $12.5 million for the third quarter of 2009 and a 42% decrease compared to $21.6 million for the fourth quarter of 2008 due to restructuring in traditional outdoor billboard network in the third quarter of 2009.

Internet advertising service net revenue was $33.4 million in the fourth quarter of 2009, increased by 18% as compared to $28.2 million for the third quarter of 2009, and 25% as compared to $26.7 million for the fourth quarter of 2008.

Non-GAAP gross profit for the LCD display network for the fourth quarter of 2009 was $50.6 million, representing an increase of 50% from $33.7 million for the third quarter of 2009 and an increase of 15% from $44.0 million for the fourth quarter of 2008.

Non-GAAP gross profit for the poster frame network for the fourth quarter of 2009 was $10.8 million, representing a significant increase over $1.7 million for the third quarter of 2009 but a decrease of 55% from $23.8 million for the fourth quarter of 2008.

Non-GAAP gross profit for the in-store network for the fourth quarter of 2009 was $5.0 million, compared to non-GAAP gross loss of $3.3 million for the third quarter of 2009 primarily due to the Company's settling of a rental dispute in the fourth quarter and releasing the corresponding rental liabilities accrued in the previous periods and compared to non-GAAP gross profit of $0.5 million for the fourth quarter of 2008 as the Company managed to lower rental costs in the business.

Non-GAAP gross profit for the movie theater and traditional outdoor billboard networks for the fourth quarter of 2009 was $2.5 million, representing a 32% decline from $3.7 million for the third quarter of 2009 and a 66% decline from $7.3 million for the fourth quarter of 2008, mainly due to the restructuring in the traditional outdoor billboard network as one subsidiary was disposed in late third quarter of 2009.

Non-GAAP gross profit from our Internet advertising services for the fourth quarter of 2009 was $6.0 million, a slight increase from $5.6 million for the third quarter of 2009 and from $5.3 million for the fourth quarter of 2008.

Non-GAAP operating expense for the fourth quarter of 2009 was $33.9 million, increasing by 14% from $29.8 million for the third quarter of 2009 and 7% from $31.8 million for the fourth quarter of 2008.

Business Outlook for First Quarter 2010

The Company provides the following guidance with respect to the first quarter ending March 31, 2010:

Net revenues for LCD display networks, in-store networks and poster frame networks are expected to be in the range of $78-80 million, the mid-point of which would represent year-on-year growth of 23%. Net revenues for the movie theatre and traditional outdoor billboard and internet advertising services are expected to be in the range of $37-39 million. Company non-GAAP net income is expected to be in the range of $20-23 million.

Based on the existing business outlook, the Company expects earn-out payment remaining in 2010 to be no more than $40 million.

Announced Share Repurchase Program

On Feb 2, 2010, Focus Media announced that its board of directors has approved a share repurchase program up to $200 million. The Company expects to implement this share repurchase program over the course of the next 12 months post announcement, in a manner consistent with market conditions and the interest of the shareholders and in compliance with the Company's securities trading policy. Focus Media's board of directors will review the share repurchase program periodically, and may authorize adjustment of its terms and size accordingly. Focus Media plans to fund repurchases made under this program from its available cash balance.

Management Buy-Out in Internet Division

Certain Allyes employees and management and directors and certain members of the Company's management and directors recently entered into a definitive agreement with the Company and Allyes in January 2010 to buy-out an aggregate 38% interest in Allyes from the Company. Pursuant to the terms of the agreements, the purchasing Allyes and Company management members paid an aggregate $13.3 million for a 38% interest of Allyes, when taking into account offshore and onshore transactions. The purchase price to management took into account various factors including the disposition of various smaller Internet divisions during the fourth quarter of 2009 and the results of an independent third-party valuation report, however the Company is currently assessing the accounting implications of the transaction. The transaction was approved by all independent directors on the board. This transaction was part of initiatives being taken by the Company to incentivize management to enhance the future business model of Allyes and thereby to seek long term sustainable growth for the company and investors.

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 operating expenses, non-GAAP operating profit (loss) and non-GAAP net income, all excluding share-based compensation expenses, amortization of acquired intangible assets, loss from disposal of previously acquired subsidiaries, impairment charges of certain assets, including acquired intangible assets, goodwill, impairment and termination charges related to ceasing expansion of digital poster frame networks and boat-based advertising platform, write-off of receivables from ex-shareholders of disposed business and one-off charges from expensing IPO expenditures as a result of termination of IPO process of Allyes. 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)

                                       Three months ended December 31, 2009
                                           GAAP       (1)     (2)     (3)

    Gross Profit
    LCD display network                    49,498      285     839      --
    Poster Frame network                    9,148       --   1,646      --
    In-store network                        5,001       --      --      --
    Internet advertising                    5,778       --     207      --
    Movie Theater & Outdoor Billboard
     network                                2,046       --     443      --
    Total Gross Profit                     71,471      285   3,135      --

    Operating Expense                      86,258  (34,779) (1,254)     --

    Operating (loss) profit               (14,787)  35,064   4,389      --

    Net income (loss) attributable to
     Focus Media
                                          (52,499)  35,064   4,672  31,103


                                              (4)      (5)     (6)  Non-
                                                                    GAAP
    Gross Profit
    LCD display network                        --       --      --  50,622
    Poster Frame network                       --       --      --  10,794
    In-store network                           --       --      --   5,001
    Internet advertising                       --       --      --   5,985
    Movie Theater & Outdoor Billboard
     network                                   --       --      --   2,489
    Total Gross Profit                         --       --      --  74,891

    Operating Expense                     (14,027)  (4,351)  2,067  33,914

    Operating (loss) profit                14,027    4,351  (2,067) 40,977

    Net income (loss) attributable to
     Focus Media
                                           14,027    4,351  (2,067) 34,651

    (1). Share-based compensation, of which $ 14.6 million was attributable to
         LCD display network, poster frame network and in-store network and
         $20.5 million was attributable to cancellation of stock options in
         internet business.
    (2). Amortization of acquired intangible assets.
    (3). Loss from impairment and disposal of previously acquired subsidiaries,
         all attributable to internet business.
    (4). Impairment charges of goodwill as a result of earn-out payments in
         poster frame business.
    (5). Write-off of receivables from ex-shareholders of disposed business.
    (6). Settlement of disputed liabilities in previously disposed wireless
         business.


                                    Three months ended September 30, 2009
                                               GAAP       (1)     (2)
    Gross Profit
    LCD display network                       17,177      306   3,607
    Poster Frame network                     (30,420)      --   5,131
    In-store network                          (3,844)      --      --
    Internet advertising                      (2,964)      --     393
    Movie Theater & Outdoor Billboard
     network                                   3,001       --     663
    Total Gross Profit                       (17,050)     306   9,794

    Operating Expense                        105,234   (8,467) (2,969)

    Operating profit (loss)                 (122,284)   8,773  12,763

    Net income (loss) attributable to Focus
     Media                                  (127,598)   8,773  13,865


                                                 (3)      (4)     (5)   Non-
                                                                        GAAP
    Gross Profit
    LCD display network                           --    3,169   9,462  33,721
    Poster Frame network                          --       --  26,983   1,694
    In-store network                              --       --     516  (3,328)
    Internet advertising                          --    8,185      --   5,614
    Movie Theater & Outdoor Billboard
     network                                      --       --      --   3,664
    Total Gross Profit                            --   11,354  36,961  41,365

    Operating Expense                        (16,649) (45,456) (1,872) 29,821

    Operating profit (loss)                   16,649   56,810  38,833  11,544

    Net income (loss) attributable to Focus
     Media                                    25,944   57,300  29,593   7,877

    (1). Share-based compensation.
    (2). Amortization of acquired intangible assets.
    (3). Loss from disposal of previously acquired subsidiaries, of which loss
         from disposal of subsidiaries was $3.7 million, loss from partial
         disposal of equity interests in subsidiaries was $14.9 million and
         loss from impairment of certain other assets was $7.3 million.
    (4). Impairment charges of certain assets, including acquired intangible
         assets and goodwill.
    (5). Impairment and termination charges related to ceasing expansion of
         digital poster frame networks and boat-based advertising platform.


                                         Three months ended December 31, 2008
                                             GAAP       (1)     (2)       (3)
    Gross Profit
    LCD display network                     27,217      314     865        --
    Poster Frame network                    21,572       --   2,257        --
    In-store network                        (3,397)      --     897      (248)
    Internet advertising                     4,483       --     814        --
    Movie Theater & Outdoor Billboard
     network                                 6,339       --     976        --
    `Total Gross Profit                     56,214      314   5,809      (248)

    Operating Expense                      844,395  (12,330) (3,333) (193,822)

    Operating profit (loss)               (788,181)  12,644   9,142   193,574

    Net income (loss) attributable to
     Focus Media                          (802,490)  12,644  10,611   208,238


                                              (4)      (5)     (6)   Non-GAAP
    Gross Profit
    LCD display network                         --   15,574      --    43,970
    Poster Frame network                        --       --      --    23,829
    In-store network                            --    3,290      --       542
    Internet advertising                        --       --      --     5,297
    Movie Theater & Outdoor Billboard
     network                                    --       --      --     7,315
    `Total Gross Profit                         --   18,864      --    80,953

    Operating Expense                     (600,878)      --  (2,200)   31,832

    Operating profit (loss)                600,878   18,864   2,200    49,121

    Net income (loss) attributable to
     Focus Media                           599,965   18,864   2,200    50,032

    (1). Share-based compensation.
    (2). Amortization of acquired intangible assets.
    (3). Loss from disposal of previously acquired subsidiaries.
    (4). Impairment charges of certain assets, including acquired intangible
         assets and goodwill.
    (5). Impairment charges of fixed assets.
    (6). Write-off of receivables from ex-shareholders of disposed business.



                                                    Twelve months ended
                                                    December 31, 2009
                                     GAAP      (1)     (2)      (3)      (4)
    Gross Profit
    LCD display network            133,042    1,504   4,446       --    3,168
    Poster Frame network             3,561       --   6,778       --       --
    In-store network                 6,176       --      15       --       --
    Internet advertising             9,150       --   2,239       --    8,746
    Movie Theater & Outdoor
     Billboard network              13,972       --   2,945       --       --
    Total Gross Profit             165,901    1,504  16,423       --   11,914

    Operating Expense              320,551  (61,153) (6,563) (17,861) (94,775)

    Operating profit (loss)       (154,650)  62,657  22,986   17,861  106,689

    Net income (loss)
     attributable to Focus Media  (208,762)  62,657  27,279   58,259  113,046


                                      (5)      (6)     (7)     (8)   Non-GAAP

    Gross Profit
    LCD display network              9,462       --      --       --  151,622
    Poster Frame network            26,983       --      --       --   37,322
    In-store network                   516       --      --       --    6,707
    Internet advertising                --       --      --       --   20,135
    Movie Theater & Outdoor
     Billboard network                  --       --      --       --   16,917
    Total Gross Profit              36,961       --      --       --  232,703

    Operating Expense               (1,872)  (6,879) (2,466)   2,067  131,049

    Operating profit (loss)         38,833    6,879   2,466   (2,067) 101,654

    Net income (loss)
     attributable to Focus Media    29,593    6,879   2,466   (2,067)  89,350


    (1). Share-based compensation, of which $34.7 million was attributable to
         LCD display network, poster frame network and in-store network and
         $28.0 million was attributable to internet division.
    (2). Amortization of acquired intangible assets.
    (3). Loss from disposal of previously acquired subsidiaries.
    (4). Impairment charges of certain assets, including acquired intangible
         assets and goodwill.
    (5). Impairment charges of fixed assets.
    (6). Write-off of receivables from ex-shareholders of disposed business.
    (7). One-off charges from expensing IPO expenditures as a result of
         termination of IPO process of Allyes.
    (8). Settlement of disputed liabilities in previously disposed wireless
         business


                                        Twelve months ended December 31, 2008
                                           GAAP       (1)      (2)       (3)
    Gross Profit
    LCD display network                   163,537    1,476    3,711        --
    Poster Frame network                   86,935       --    9,571        --
    In-store network                       (1,115)      --    3,533      (248)
    Internet advertising                   25,510       --    3,482        --
    Movie Theater & Outdoor Billboard
     network                               20,235       --    3,845        --
    Total Gross Profit                    295,102    1,476   24,142      (248)

    Operating Expense                     964,185  (41,023) (11,053) (193,822)

    Operating profit (loss)              (669,083)  42,499   35,195   193,574

    Net income (loss) attributable to
     Focus Media                         (770,688)  42,499   40,980   288,121


                                             (4)      (5)      (6)   Non-GAAP
    Gross Profit
    LCD display network                        --   15,574       --   184,298
    Poster Frame network                       --       --       --    96,506
    In-store network                           --    3,290       --     5,460
    Internet advertising                       --       --       --    28,992
    Movie Theater & Outdoor Billboard
     network                                   --       --       --    24,080
    Total Gross Profit                         --   18,864       --   339,336

    Operating Expense                    (600,878)      --   (2,200)  115,209

    Operating profit (loss)               600,878   18,864    2,200   224,127

    Net income (loss) attributable to
     Focus Media                          599,965   18,864    2,200   221,941

    (1). Share-based compensation.
    (2). Amortization of acquired intangible assets.
    (3). Loss from disposal of previously acquired subsidiaries.
    (4). Impairment charges of certain assets, including acquired intangible
         assets and goodwill.
    (5). Impairment charges of fixed assets.
    (6). Write-off of receivables from ex-shareholders of disposed business.

CONFERENCE CALL

The Company will host a conference call to discuss the fourth quarter and full year 2009 results at 9:00 p.m. U.S. Eastern Time on March 16, 2010 (6:00 p.m. U.S. Pacific Time on March 16, 2010 and 9:00 a.m. Beijing/Hong Kong Time on March 17, 2010). The dial-in details for the live conference call are set forth below: U.S. Toll Free Number +1.800.510.0219, Hong Kong dial-in number +852.3002.1672, International dial-in number +1.617.614.3451; Pass code: 27499071.

A replay of the call will be available from March 16, 2010 12:00 pm until March 24, 2010 (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 19117078. 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) 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, 2009, Focus Media's digital out-of-home advertising network had approximately 131,000 LCD displays in its LCD display network and approximately 261,000 advertising in-elevator poster and digital frames, installed in over 90 cities throughout China. 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)

                                                2009-12-31        2008-12-31
    ASSETS
    Current assets
    Cash and cash equivalents                      568,159           142,434
    Held-to-maturity investment                     29,290                --
    Accounts receivable, net                       172,752           135,270
    Prepaid expenses and other current
     assets                                         24,506            15,117
    Deposit paid for acquisition of
     subsidiaries                                    4,860            29,676
    Rental deposits                                 29,640            10,090
    Other current assets                             4,579             7,938
    Assets held-for-sale, current                       --           467,046
    Total current assets                           833,786           807,571
    Rental deposits, non-current                     1,570               133
    Equipment, net                                  77,661             6,292
    Acquired intangible assets, net                 51,777            77,713
    Goodwill                                       410,369            30,700
    Other long term assets                          18,279            10,736
    Assets held-for-sale, non-current                   --           599,149
    Total assets                                 1,393,442         1,532,294

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
     Accounts payable                               53,340            67,905
     Accrued expenses and other current
      liabilities                                  101,870            61,911
     Income taxes payable                           27,017            12,622
     Amount due to related parties                   2,231            15,687
    Liabilities held-for-sale, current                  --           160,739
    Deferred tax liabilities                        12,077                --
    Total current liabilities                      196,535           318,864
    Liabilities held-for-sale, non
     current                                            --             1,959
    Deferred tax liabilities                         5,435            11,581
    Total liabilities                              201,970           332,404

    Shareholders' equity
     Ordinary shares                                    36                32
     Additional paid in capital                  1,868,172         1,659,833
     Accumulated deficit                          (742,731)         (533,969)
     Accumulated other comprehensive
      income                                        64,167            71,888
    Total shareholders' equity                   1,189,644         1,197,784
     Noncontrolling interests                        1,828             2,106
     Total equity                                1,191,472         1,199,890
    Total liabilities and equity                 1,393,442         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
                                         2009-12-31   2009-09-30   2008-12-31
    Revenues
    LCD display network                      70,660       60,509       65,908
    In-store network                          8,173        8,450       10,503
    Poster Frame network                     29,310       24,155       43,021
    Movie Theater & Outdoor Billboard
     network                                 12,866       12,802       22,380
    Internet advertising                     34,863       29,437       28,311
    Total gross revenues                    155,872      135,353      170,123
    Less: Sales taxes                        11,524        8,912       13,745
    Total net revenue (note)                144,348      126,441      156,378

    Cost of revenues
    LCD display network                      14,623       38,830       32,036
    In-store network                          2,388       11,490       12,927
    Poster Frame network                     17,649       52,550       17,655
    Movie Theater & Outdoor Billboard
     network                                 10,550        9,486       15,307
    Internet advertising                     27,667       31,135       22,239
    Total cost of revenues                   72,877      143,491      100,164
    Gross profit (loss)                      71,471      (17,050)      56,214

    Operating expenses
    General and administrative               45,226       19,690       30,013
    Selling and marketing                    28,416       32,948       27,595
    Impairment loss                          14,027       37,232      596,069
    Other operating expenses (income),
     net                                     (1,411)      15,364      190,718
    Total operating expenses                 86,258      105,234      844,395

    Operating loss                          (14,787)    (122,284)    (788,181)
    Interest income                           1,382        1,012        2,303
    Loss from continuing operations
     before income taxes                    (13,405)    (121,272)    (785,878)
    Provision for income taxes                5,336       (4,833)       7,066
    Net loss from continuing operations     (18,741)    (116,439)    (792,944)

    Net loss from discontinued
     operations, net of tax                 (33,434)      (8,201)     (11,792)
    Net loss                                (52,175)    (124,640)    (804,736)
    Less: Net income(loss) attributable
     to noncontrolling interests                324        2,958       (2,246)
    Net loss attributable to Focus
     Media                                  (52,499)    (127,598)    (802,490)

    Loss per ADS from continuing
     operations
    -basic                                    (0.14)       (0.90)       (6.17)
    -diluted                                  (0.14)       (0.90)       (6.17)

    Loss per ADS from discontinuing
     operations
    -basic                                    (0.25)       (0.06)       (0.09)
    -diluted                                  (0.25)       (0.06)       (0.09)

    Loss per ADS
    -basic                                    (0.39)       (0.99)       (6.24)
    -diluted                                  (0.39)       (0.99)       (6.24)

    Shares used in calculating basic
     loss per ADS                       134,562,342  129,308,337  128,607,842
    Shares used in calculating diluted
     loss per ADS                       134,562,342  129,308,337  128,607,842


                                               Year ended
                                         2009-12-31   2008-12-31
    Revenues
    LCD display network                     229,424      267,778
    In-store network                         33,538       67,038
    Poster Frame network                    108,526      160,613
    Movie Theater & Outdoor Billboard
     network                                 60,544       80,023
    Internet advertising                    113,183      120,702
    Total gross revenues                    545,215      696,154
    Less: Sales taxes                        40,180       53,818
    Total net revenue (note)                505,035      642,336

    Cost of revenues
    LCD display network                      75,757       79,589
    In-store network                         24,170       61,834
    Poster Frame network                     95,401       59,815
    Movie Theater & Outdoor Billboard
     network                                 45,085       56,944
    Internet advertising                     98,721       89,052
    Total cost of revenues                  339,134      347,234
    Gross profit (loss)                     165,901      295,102

    Operating expenses
    General and administrative              116,216       90,194
    Selling and marketing                   107,184       95,400
    Impairment loss                          86,304      596,069
    Other operating expenses (income),
     net                                     10,847      182,522
    Total operating expenses                320,551      964,185

    Operating loss                         (154,650)    (669,083)
    Interest income                           5,261        7,528
    Loss from continuing operations
     before income taxes                   (149,389)    (661,555)
    Provision for income taxes                9,335       26,785
    Net loss from continuing operations    (158,724)    (688,340)

    Net loss from discontinued
     operations, net of tax                 (46,513)     (82,498)
    Net loss                               (205,237)    (770,838)
    Less: Net income(loss) attributable
     to noncontrolling interests              3,525         (150)
    Net loss attributable to Focus
     Media                                 (208,762)    (770,688)

    Loss per ADS from continuing
     operations
    -basic                                    (1.22)       (5.34)
    -diluted                                  (1.22)       (5.34)

    Loss per ADS from discontinuing
     operations
    -basic                                    (0.36)       (0.64)
    -diluted                                  (0.36)       (0.64)

    Loss per ADS
    -basic                                    (1.61)       (5.98)
    -diluted                                  (1.61)       (5.98)

    Shares used in calculating basic
     loss per ADS                       129,735,639  128,880,565
    Shares used in calculating diluted
     loss per ADS                       129,735,639  128,880,565


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

                                                  Three months ended
                                          2009-12-31  2009-09-30  2008-12-31
    Gross revenues
    LCD display network                       70,660      60,509      65,908
    In-store network                           8,173       8,450      10,503
    Poster Frame network                      29,310      24,155      43,021
    Movie Theater & Outdoor Billboard
     network                                  12,866      12,802      22,380
    Internet advertising                      34,863      29,437      28,311
    Total gross revenues                     155,872     135,353     170,123
    Less: Sales taxes
    LCD display network                        6,539       4,502       6,655
    In-store network                             784         804         973
    Poster Frame network                       2,513       2,025       3,794
    Movie Theater & Outdoor Billboard
     network                                     270         315         734
    Internet advertising                       1,418       1,266       1,589
    Total sales tax                           11,524       8,912      13,745
    Net revenues
    LCD display network                       64,121      56,007      59,253
    In-store network                           7,389       7,646       9,530
    Poster Frame network                      26,797      22,130      39,227
    Movie Theater & Outdoor Billboard
     network                                  12,596      12,487      21,646
    Internet advertising                      33,445      28,171      26,722
    Total net revenues                       144,348     126,441     156,378


                                                Year ended
                                          2009-12-31  2008-12-31
    Gross revenues
    LCD display network                      229,424     267,778
    In-store network                          33,538      67,038
    Poster Frame network                     108,526     160,613
    Movie Theater & Outdoor Billboard
     network                                  60,544      80,023
    Internet advertising                     113,183     120,702
    Total gross revenues                     545,215     696,154
    Less: Sales taxes
    LCD display network                       20,625      24,652
    In-store network                           3,192       6,319
    Poster Frame network                       9,564      13,863
    Movie Theater & Outdoor Billboard
     network                                   1,487       2,844
    Internet advertising                       5,312       6,140
    Total sales tax                           40,180      53,818
    Net revenues
    LCD display network                      208,799     243,126
    In-store network                          30,346      60,719
    Poster Frame network                      98,962     146,750
    Movie Theater & Outdoor Billboard
     network                                  59,057      77,179
    Internet advertising                     107,871     114,562
    Total net revenues                       505,035     642,336




                             FOCUS MEDIA HOLDING LIMITED
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
                             (U.S. Dollar in thousands)

                                       Three months ended      Year ended
                                         2009-     2008-     2009-     2008-
                                         12-31     12-31     12-31     12-31
    Operating activities:
    Net loss                            (52,175) (804,736) (205,237) (770,838)
    Adjustments to reconcile net loss
     to net cash provided by operating
     activities:
    Bad debt provision                    5,140     8,597    31,262    15,767
    Share-based compensation             35,064    12,768    62,528    42,615
    Depreciation and amortization         7,933     9,623    35,450    31,337
    Amortization of acquired intangible
     assets                               4,672    10,611    27,279    40,516
    Loss and impairment on disposal of
     equity interest of subsidiaries
     and certain other assets            39,110   189,879    64,931   282,407
    Settlement of disputed liabilities   (2,067)       --    (2,067)       --
    Impairment charges for goodwill,
     acquired intangible assets and
     fixed assets                        14,027   634,420   153,369   619,602
    Loss on disposal of fixed assets        161       304     1,346       698
    Net changes in current assets and
     current liabilities, net of
     effects of acquisitions             20,395    22,102    (8,138)  (93,663)
    Net cash provided by operating
     activities                          72,260    83,568   160,723   168,441

    Investing activities:
    Purchase of equipment and other
     long term assets                      (987)   (7,106)  (10,655)  (72,876)
    Earn-out payment paid to acquire
     subsidiaries                       (19,301)  (14,775)  (92,412) (133,348)
    Investment in a joint venture            --        --        --    (2,970)
    Acquisition of an intangible assets      --        --        --    (1,767)
    Deposits (paid)/refunded in
     connection with acquisition of
     subsidiaries                           330        --       330   (14,270)
    Disposal of subsidiaries             (9,328)       --   (27,316)  (11,694)
    Sales of equity securities and bank
     notes                                   --     7,365       865   187,243
    Purchase of equity securities and
     bank notes                              --        --   (29,257)  (96,113)
    Proceeds received from disposal of
     fixed assets                            --        --       196        --
    Net cash used in investing
     activities                         (29,286)  (14,516) (158,249) (145,795)

    Financing activities:
    Proceeds from short-term bank loans      --        --        --       370
    Repayment of short term bank loans       --        --        --      (370)
    Repayment of short term other loans      --        --        --   (30,041)
    Capital injection from minority
     shareholders                            --        --        --       214
    Proceeds from issuance of ordinary
     shares, net of issuance costs      142,437     1,535   144,499    10,711
    Repurchase of ordinary shares            --   (17,502)       --   (47,500)
    Net cash provided by/(used in)
     financing activities               142,437   (15,967)  144,499   (66,616)
    Effect of exchange rate changes        (359)   (3,342)   (1,729)   16,469

    Net increase (decrease) in cash and
     cash equivalents                   185,052    49,743   145,244   (27,501)
    Cash and cash equivalents,
     beginning of period / year         383,107   373,172   422,915   450,416

    Cash and cash equivalents, end of
     period / year                      568,159   422,915   568,159   422,915

    Supplemental disclosure of cash
     flow information:
    Income taxes paid                     2,787     8,728    12,965    23,712

    Supplemental disclosure of non-cash
     investing activity:
    Acquisition of subsidiaries:
     Accounts payable                    20,326    60,501    20,326    60,501

SOURCE Focus Media Holding Limited