Focus Media Reports First Quarter Results.docx

Focus Media Reports First Quarter Results.docx

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FocusMediaReportsFirstQuarterResults

FocusMediaReportsFirstQuarter2007Results

FirstQuarterRevenueIncreasedby75.4%andNetIncome

Increasedby72.7%Year-over-year

SHANGHAI,China,May17/Xinhua-PRNewswire/--FocusMediaHoldingLimited（Nasdaq:

FMCN）,China'slargestout-of-homemulti-platformlife-stylemediacompany,todayannounceditsunauditedfinancialresultsforthefirstquarterendedMarch31,2007.

Highlightsforfirstquarter2007:

--Totalrevenuesgrew75.4%year-over-yearto$58.1million.

--Netincomeforthefirstquarterwas$16.3millioncomparedto$9.4

millionforthethreemonthsendedMarch31,2006,growing72.7%year-

over-year.FullydilutednetincomeperADSforthefirstquarterof

2007was$0.15.FocusMediaalsoprovidesoperatingmargin,netincome

andearningsperADSonanon-GAAPbasisthatexcludenon-cashshare-

basedcompensationexpenseandacquiredintangibleassetsamortization

expensetoenableinvestorstobetterassesstheCompany'soperating

performance.Thenon-GAAPmeasuresaredescribedbelowandreconciled

tothecorrespondingGAAPmeasureinthesectionbelowtitled"Useof

non-GAAPFinancialMeasures".Netincome,excludingnon-cashshare-

basedcompensationexpensesandamortizationofacquiredintangible

assetsresultingfromacquisitions（non-GAAP）forthefirstquarterwas

$22.7millionor$0.21perfullydilutedADS.,aboveourguidancerange

of$20millionto$21million.

--OurCommercialLocationNetwork

--Advertisingservicerevenuefromourcommerciallocationnetwork,

includingrevenuefromouroutdoorLEDnetwork（alsoreferredtoas

ouriStreetNetwork）andmovietheateradvertisingnetwork,grew

50.8%year-over-yearto$32.4million.

--ForourPremierOfficeBuildingChannelA（"PremierChannelA"）,

averageadvertisingrevenueper30-secondequivalenttimeslot

（"ASP"）inFocusMedia'sTier-ICities（Beijing,Shanghai,

GuangzhouandShenzhen）was$12,092inthefirstquarter2007,down

from$13,507inthefourthquarterof2006,ascertaintimeslots

weresoldatahigherdiscountduetotheless-favorableaudience

trafficduringtheholidayseason.

--OurIn-storeNetwork

--Advertisingservicerevenuefromourin-storenetworkgrew26.1%

year-over-yearto$6.7millioninthefirstquarterof2007.

--Thetotalnumberofhypermarketscoveredbyourin-storenetworkas

ofMarch31,2007increasedto1,196from1,100asofDecember31,

2006.Substantiallyalloftherevenuefromourin-storenetwork

duringthisperiodwasderivedfromourLCDnetworkinhypermarkets.

--OurIn-elevatorPosterFrameNetwork

--Advertisingservicerevenuefromourin-elevatorposterframe

networkgrew108.8%year-over-yearto$12.7millioninthefirst

quarter2007.

--Thetotalnumberofframesavailableforsalewas124,542asof

March31,2007,ascomparedto99,784asofDecember31,2006.

--FocusMediaWireless

--AdvertisingservicerevenuefromFocusMediaWirelesswas$6.0

millioninthefirstquarter2007,ascomparedto$3.5millionin

thefourthquarter2006.

--Otherrevenues

--Inthefirstquarter2007,wederived$0.4millioninthe

advertisingequipmentsalesrevenuesfromsalestoourregional

distributorsandlicensingfeefromourpartnerinMalaysia.

Commentingonthefirstquarter2007results,ChiefExecutiveOfficerJasonJiangsaid,"Asexpected,ourbusinesseswereimpactedbytheChineseNewYearholidayinthefirstquarterof2007.However,allofourbusinesseshaspostedsolidgrowthyear-over-year.Wehavealsoseenasolidsalesreboundinsalesintothesecondquarter.Mostimportantlyduringthefirstquarterof2007,wecompletedtheacquisitionofAllyes,China'slargestinternetadvertisingagencyandtherefore,establishedasolidpositioninChina'sfastgrowingInternetadvertisingmarket.WeexpectAllyestocontributesignificantlytoourfuturegrowth."

FirstQuarterFinancialResults

Forthefirstquarterof2007,FocusMediareportedtotalrevenuesof$58.1million,anincreaseof75.4%comparedto$33.1millionforthefirstquarterof2006,butadecreaseof14.9%comparedto$68.3millionforthefourthquarterof2006,duetoindustryseasonalityandtheChineseNewYearholidayduringthefirstquarter.

CommercialLocationNetwork

Forthecommerciallocationnetwork,advertisingservicerevenue,includingrevenuefromouroutdoorLEDnetworkandmovietheateradvertisingnetwork,was$32.4millioninthefirstquarterof2007,anincreaseof50.8%from$21.5millioninthefirstquarterof2006.

Thetotalnumberofdisplaysinstalledonourcommerciallocationnetworkinourdirectlyoperatedcitieswas83,256asofMarch31,2007,increasingfrom80,263asofDecember31,2006,whilethenumberofdisplaysinnetworksoperatedbyourregionaldistributorswas4,010asofMarch31,2007.

ForourPremierChannelA,whichconsistsprimarilyoftheofficebuildinglocationsonFocusMedia'scommerciallocationnetworkpriortotheTargetMediaacquisition,thetotalnumberof30-secondequivalenttimeslotssold（"SlotsSold"）inthefirstquarterof2007was6,414,ascomparedto8,533inthepreviousquarter.Thenumberof30-secondequivalenttimeslotsavailableforsale（"NetworkCapacity"）inthefirstquarterwas16,320ascomparedto15,939inthefourthquarterof2006.SlotsSoldinTier-ICitieswere1,117inthefirstquarter2007whichimpliesasell-outrate,orSlotsSoldexpressedasapercentageofNetworkCapacity,of89.6%inthefirstquarter2007.ASPintheTier-ICitieswas$12,029inthefirstquarter2007,downfrom$13,507inthefourthquarterof2006,ascertaintimeslotsweresoldatahigherdiscountduringtheholidayperiod.AdvertisingrevenuefromTier-ICitiesforourPremierChannelAaccountsforapproximately60.2%ofthetotalPremierChannelArevenues.SlotsSoldinTier-IICitieswereto5,298inthefirstquarter2007,whichindicatesasell-outrateof35.1%.ThePremierChannelAaccountedforapproximately70%oftotalcommerciallocationadvertisingservicerevenuesinthequarterwhileotherchannels,ouroutdoorLEDnetworkandmovietheateradvertisingbusinesscontributedtheremaining30%.

Otherrevenueinthefirstquarterwas$0.4million,whichincludeadvertisingequipmentsalestoourregionaldistributorsandlicensingfeefromourpartnerinMalaysia

In-storeNetwork

Advertisingservicerevenuefromourin-storenetworkinthefirstquarter2007was$6.7million,anincreaseof26.1%from$5.3millioninthefirstquarter2006.Inthefirstquarter2007,wecontinuedtoexpandtheinstalledbaseofourhypermarketsto1,196storesfrom1,100hypermarketsasofDecember31,2006.Theinstalledbaseofsupermarketsandconveniencestoreswas842and1,897,respectively,asofMarch31,2007.Thenumberofdisplaysinstalledinourin-storenetworkincreasedto40,736asofMarch31,2007comparedto38,742asofDecember31,2006.

Forthein-storenetwork,thetotalnumberof30-secondequivalenttimeslots（onaperweekperstorebasis）soldinthefirstquarterof2007was100,322,ascomparedto97,774inthepreviousquarter.Thenumberof30-secondequivalenttimeslotsavailableforsale,ornetworkcapacity,was360,309,ascomparedto318,342inthepreviousquarter.Thenetworksell-outratewas27.8%basedontheincreasedcapacity.Averageadvertisingrevenueper30-secondequivalenttimeslotperweekperstorewas$67forthein-storenetworkinthefirstquarterof2007,ascomparedto$80asinthefourthquarterof2006duetoseasonality.

PosterFrameNetwork

Advertisingservicerevenuefromourposterframenetworkplacedprimarilyintheelevatorsofresidentialcomplexeswas$12.7millioninthefirstquarterof2007,108.8%from$6.1millioninthefirstquarterof2006.Thetotalnumberofframesavailableforsalewas124,542asofMarch31,2007,ascomparedto99,784asofDecember31,2006.Thenumberofframeslots（onamonthlybasis）soldinthefirstquarter2007increase17.2%to195,603,ascomparedto166,825inthepreviousquarter.Thenetworkcapacitycalculatedbasedonthenumberofframeslots（onamonthlybasis）availableforsaleinthefirstquarterof2007was375,346,ascomparedto294,294inthepreviousquarter.Thenetworksell-outratewas52.1%basedontheincreasedcapacity.Averageadvertisingrevenueperframeslotwas$65permonthinthefirstquarterof2007ascomparedto$83permonthinthefourthquarterof2006duetoseasonality.

AdvertisingonWirelessNetwork

AdvertisingservicerevenuefromFocusMediaWirelessinthefirstquarterof2007was$6.0million,ascomparedto$3.5millioninthefourthquarterof2006.

Inthefirstquarterof2007,forourcommerciallocationandin-storebusinesses,weaddedapproximately187newadvertisingclients,bringingthecumulativenumberofadvertisersontheFocusMediacommerciallocationnetworkandin-storenetworktoapproximately2,800.

Grossprofitforthefirstquarterof2007was$33.7million,representinganincreaseof82.1%comparedto$18.5millionforthecorrespondingperiodayearago.Grossmarginforthefirstquarterwas58.0%,ascomparedto55.8%inthefirstquarterof2006.Inthefirstquarter2007,grossmarginforthecommerciallocationnetwork（includingouroutdoorLEDnetworkandmovietheateradvertisingbusiness）was61.7%;thein-storenetworkgrossmarginwas24.7%;theposterframenetworkgrossmarginwas66.9%;FocusMediawirelessgrossmarginwas56.5%.

Inthefirst-quarterof2007,operatingexpensestotaled$20.5million,including$1.9millioninacquiredintangibleassetamortizationresultingfromacquisitionsandnon-cashshare-basedcompensationexpenseof$4.5milli