BERMUDA
|
98-0438382
|
(State
or other jurisdiction of incorporation and organization)
|
(IRS
Employer Identification No.)
|
Clarendon
House, Church Street, Hamilton
|
HM
CX Bermuda
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer x
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Document
|
Location
in Form 10-K in Which Document is Incorporated
|
Registrant's
Proxy Statement for the Annual General Meeting of Shareholders
to be held
on June 5, 2007
|
Part
III
|
Page
|
||
PART
I
|
||
4
|
||
30
|
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37
|
||
38
|
||
39
|
||
42
|
||
PART
II
|
||
43
|
||
44
|
||
48
|
||
95
|
||
97
|
||
174
|
||
174
|
||
175
|
||
PART
III
|
||
176
|
||
176
|
||
176
|
||
176
|
||
176
|
||
PART
IV
|
||
177
|
||
182
|
Company
Name
|
Effective
Voting Interest
|
Share
of Profits
|
Type
of Affiliate
|
TV
Channels
|
Croatia
|
||||
License
Company:
|
||||
Nova
TV d.d. (“Nova TV (Croatia)”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
NOVA
TV (Croatia)
|
Czech
Republic
|
||||
License
Companies:
|
||||
CET
21 spol s.r.o. (“CET 21”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
TV
NOVA
(Czech
Republic)
|
Galaxie
Sport s.r.o. (“Galaxie Sport”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
GALAXIE
SPORT
|
Romania
|
||||
Operating
Companies:
|
||||
Media
Pro International S.A. (“MPI”)
|
90.0%
|
90.0%
|
Consolidated
Subsidiary
|
|
Media
Vision S.R.L. (“Media Vision”)
|
75.0%
|
75.0%
|
Consolidated
Subsidiary
|
|
License
Company:
|
||||
Pro
TV S.A. (“Pro TV”)
|
90.0%
|
90.0%
|
Consolidated
Subsidiary
|
PRO
TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL
|
Slovak
Republic
|
||||
Operating
Company:
|
||||
Slovenska
televizna spolocnost s r.o. (“STS”)
|
89.8%
|
80.0%
|
Consolidated
Subsidiary
|
|
License
Company:
|
||||
MARKIZA-SLOVAKIA
s.r.o. (“Markiza”)
|
80.0%
|
0.1%
|
Consolidated
Subsidiary
|
MARKIZA
TV
|
Company Name |
Effective
Voting Interest
|
Share
of Profits
|
Type
of Affiliate
|
TV
Channels
|
Slovenia
|
||||
Operating
Company:
|
||||
Produkcija
Plus d.o.o. (“Pro Plus”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
|
License
Companies:
|
||||
Pop
TV d.o.o. (“Pop TV”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
POP
TV
|
Kanal
A d.o.o. (“Kanal A”)
|
100.0%
|
100.0%
|
Consolidated
Subsidiary
|
KANAL
A
|
Ukraine
|
||||
Operating
Companies:
|
||||
Innova
Film GmbH (“Innova”)
|
60.0%
|
60.0%
|
Consolidated
Subsidiary
|
|
International
Media Services Ltd. (“IMS”)
|
60.0%
|
60.0%
|
Consolidated
Subsidiary
|
|
Foreign
Enterprise “Inter-Media” (“Inter-Media”)
|
60.0%
|
60.0%
|
Consolidated
Subsidiary
|
|
License
Company:
|
||||
Studio
1+1 LLC (“Studio 1+1”)
|
18.0%
|
60.0%
|
Consolidated
Variable Interest Entity
|
STUDIO
1+1
|
Gravis
LLC (“Gravis”)
|
60.4%
|
60.4%
|
Consolidated
Subsidiary
|
KINO
and CITI
|
Country
|
TV
Channels
|
Launch
Date
|
Technical
Reach (1)
|
2006
Audience Share (2)
|
Market
Rank (2)
|
Croatia
|
NOVA
TV (Croatia)
|
August
2000 (3)
|
90%
|
15%
|
4
|
Czech
Republic
|
TV
NOVA (Czech Rep)
|
February
1994 (4)
|
100%
|
42%
|
1
|
GALAXIE
SPORT
|
April
2002 (5)
|
35%
(6)
|
Not
Measured
|
Not
Measured
|
|
Romania
|
PRO
TV
|
December
1995
|
82%
|
16%
|
2
|
ACASA
|
February
1998
|
73%
|
8%
|
4
|
|
PRO
CINEMA
|
April
2004
|
53%
|
1%
|
16
|
|
Slovak
Republic
|
MARKIZA
TV
|
August
1996
|
86%
|
34%
|
1
|
Slovenia
|
POP
TV
|
December
1995
|
93%
|
29%
|
1
|
KANAL
A
|
October
1991
(7)
|
90%
|
9%
|
3
|
|
Ukraine
|
STUDIO
1+1
|
January
1997
|
95%
|
18%
|
2
|
KINO
|
July
2006
|
41.3%
|
0.2%
|
23
|
|
CITI
|
December
2006
|
11.7%
|
0.1%
|
32
|
|
(1)
|
“Technical
Reach” is a measurement of the percentage of a country’s population that
is able to receive the signals of the indicated channels. Source:
Internal
estimates supplied by each country's operations. Each of our stations
in
the relevant country has estimated its own technical reach based
on the
location, power and frequency of each of its transmitters and the
local
population density and geography around that transmitter. The technical
reach calculation is separate from the independent third party measurement
that determines audience share.
|
(2) |
National
all day audience share and rank. Source: Croatia: Peoplemeters
AGB Media
Services, Czech Republic: ATO - Mediaresearch / GFK, Romania:
Peoplemeters
Taylor Nelson Sofres, Slovak Republic: PMT / TNS SK, Slovenia:
Peoplemeters AGB Media Services, Ukraine: Peoplemeters GFK USM.
There are
four stations ranked in Croatia, four in the Czech Republic,
twenty eight
in Romania, six in the Slovak Republic, four in Slovenia, and
six
significant stations ranked in
Ukraine.
|
(3)
|
We
acquired NOVA TV (Croatia) in July
2004.
|
(4)
|
We
acquired TV NOVA (Czech Republic) in May
2005.
|
(5)
|
We
acquired GALAXIE SPORT in September
2005.
|
(6)
|
35%
technical reach in the Czech Republic. In addition, GALAXIE SPORT
has a
technical reach of 48% in the Slovak
Republic.
|
(7)
|
We
acquired KANAL A in October 2000.
|
Country
|
Population
(in
millions)
(1)
|
Technical
Reach
(in
millions)
(2)
|
Television
Households
(in
millions)
(3)
|
Per
Capita GDP 2006 US$
(4)
|
Cable
Penetration
(3)
|
Croatia
|
4.4
|
4.0
|
1.4
|
$
9,318
|
16%
|
Czech
Republic
|
10.2
|
10.2
|
3.9
|
$
13,971
|
26%
|
Romania
|
20.9
|
17.1
|
6.9
|
$
5,458
|
61%
|
Slovak
Republic
|
5.4
|
4.6
|
1.6
|
$
10,231
|
39%
|
Slovenia
|
2.0
|
1.9
|
0.7
|
$
18,342
|
61%
|
Ukraine
|
46.7
|
44.4
|
18.5
|
$
2,027
|
19%
|
Total
|
89.6
|
82.2
|
33.0
|
(1)
|
Source:
National Statistical Office in each
Country.
|
(2)
|
Source:
Internal estimates supplied by each country's operations. Each of
our
operations has estimated its own technical reach based on the location,
power and frequency of each of its transmitters and the local population
density and geography around that transmitter. The technical reach
is
separate from the independent third party measurement that determines
audience shares.
|
(3)
|
Source:
Informa Telecoms and Media (August 2006 data), ZenithOptimedia. A
Television Household is a residential dwelling with one or more television
sets. Cable Penetration refers to the percentage of Television Households
that subscribe to television services via cable
channels.
|
(4)
|
Source:
ING (November 2006 data).
|
Croatia
|
The
license of NOVA TV (Croatia) expires in April 2010.
|
Czech
Republic
|
The
license of TV NOVA (Czech Republic) expires in January 2017. The
GALAXIE
SPORT license expires in March 2014.
|
Romania
|
Licenses
expire on dates ranging from March 2007 to January
2016.
|
Slovak
Republic
|
The
license of MARKIZA TV in the Slovak Republic expires in September
2019.
|
Slovenia
|
The
licenses of POP TV and KANAL A expire in August 2012.
|
Ukraine
|
The
15-hour prime time and off prime time license of STUDIO 1+1 expires
in
December 2016. The license to broadcast for the remaining nine hours
in
off prime expires in August 2014. Licenses held by Ukrpromtorg expire
on
dates ranging from November 2008 to July
2016.
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
All
day
|
15.3%
|
15.6%
|
12.0%
|
13.6%
|
15.3%
|
Prime
time
|
-
|
12.7%
|
10.9%
|
13.3%
|
17.1%
|
Source
: 2006, 2005, 2004 and 2003 - AGB Media Services
|
|||||
Source
: 2002 - CATI - phone recall research
|
|||||
No
independent data is available for 2002 prime
time.
|
Main
Television Channels
|
Ownership
|
Year
of first transmission
|
Signal
distribution
|
Audience
share (2006)
|
Technical
reach
|
HRT
1
|
Public
Television
|
1956
|
Terrestrial
/ satellite / cable
|
34.3%
|
99%
|
RTL
|
Bertelsmann
|
2004
|
Terrestrial
/ satellite / cable
|
24.6%
|
95%
|
HRT
2
|
Public
Television
|
1972
|
Terrestrial
/ satellite / cable
|
17.8%
|
99%
|
NOVA
TV (Croatia)
|
CME
|
2000
|
Terrestrial
/ satellite / cable
|
15.3%
|
90%
|
Others
|
8.0%
|
||||
100.0%
|
|||||
Source
: AGB Puls and CME
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
All
day
|
44.2%
|
43.4%
|
42.2%
|
40.9%
|
41.6%
|
Prime
time
|
48.3%
|
45.8%
|
44.9%
|
42.3%
|
44.5%
|
Source:
ATO - Mediaresearch
|
Main
Television
Channels
|
Ownership
|
Year
of first
transmission
|
Signal
distribution
|
Audience
share
(2006)
|
Technical
reach
|
TV
NOVA (Czech Republic)
|
CME
|
1994
|
Terrestrial
|
41.6%
|
100%
|
CT
1
|
Public
Television
|
1953
|
Terrestrial
|
21.4%
|
100%
|
TV
Prima
|
Modern
Times Group/Local owners
|
1993
|
Terrestrial
/ satellite
|
20.3%
|
95%
|
CT
2
|
Public
Television
|
1970
|
Terrestrial
|
9.4%
|
99%
|
Others
|
7.2%
|
||||
100.0%
|
|||||
Source:
CME and Ceske radiokomunikace; ATO -
Mediaresearch
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
PRO
TV
|
|||||
All
day
|
14.9%
|
15.4%
|
15.8%
|
15.7%
|
15.6%
|
Prime
time
|
16.3%
|
17.1%
|
17.2%
|
16.6%
|
17.0%
|
ACASA
|
|||||
All
day
|
6.0%
|
6.6%
|
7.4%
|
8.1%
|
7.7%
|
Prime
time
|
6.8%
|
7.8%
|
7.7%
|
9.1%
|
8.1%
|
PRO
CINEMA
|
|||||
All
day
|
-
|
-
|
0.6%
|
0.8%
|
1.0%
|
Prime
time
|
-
|
-
|
0.6%
|
0.7%
|
0.9%
|
Source:
Peoplemeters Taylor Nelson Sofres
|
Main
Television
Channels
|
Ownership
|
Year
of first
transmission
|
Signal
distribution
|
Audience
share
(2006)
|
Technical
reach
|
TVR
1
|
Public
Television
|
1956
|
Terrestrial
/ satellite / cable
|
16.8%
|
99%
|
PRO
TV
|
CME
|
1995
|
Terrestrial
/ satellite / cable
|
15.6%
|
82%
|
Antena
1
|
Local
owner
|
1993
|
Terrestrial
/ satellite / cable
|
13.4%
|
82%
|
ACASA
|
CME
|
1998
|
Satellite
/ cable
|
7.7%
|
73%
|
TVR
2
|
Public
Television
|
1968
|
Terrestrial
/ satellite / cable
|
5.3%
|
94%
|
Prima
TV
|
SBS
|
1994
|
Terrestrial
/ satellite / cable
|
4.2%
|
79%
|
PRO
CINEMA
|
CME
|
2004
|
Satellite
/ cable
|
1.0%
|
53%
|
Others
|
36.0%
|
||||
100.0%
|
|||||
Source
: Peoplemeters Taylor Nelson Sofres
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
All
day
|
48.2%
|
45.8%
|
39.6%
|
31.1%
|
33.8%
|
Prime
time
|
47.4%
|
45.5%
|
40.0%
|
32.8%
|
35.9%
|
Source:
TNS
|
Main
Television
Channels
|
Ownership
|
Year
of first
transmission
|
Signal
distribution
|
Audience
share
(2006)
|
Technical
reach
|
MARKIZA
TV
|
CME
|
1996
|
Terrestrial
|
33.8%
|
86%
|
STV
1
|
Public
Television
|
1956
|
Terrestrial
|
18.4%
|
99%
|
TV
JOJ
|
Local
owner
|
2002
|
Terrestrial
|
15.6%
|
73%
|
STV
2
|
Public
Television
|
1969
|
Terrestrial
|
6.2%
|
97%
|
Others
|
26.0%
|
||||
100.0%
|
|||||
Source
: Informa Telecoms and Media, Visio
/
MVK, PMT / TNS SK and CME
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
POP
TV
|
|||||
All
day
|
29.2%
|
29.5%
|
27.6%
|
27.3%
|
28.7%
|
Prime
time
|
32.3%
|
34.0%
|
31.9%
|
32.2%
|
34.3%
|
KANAL
A
|
|||||
All
day
|
11.0%
|
10.2%
|
8.3%
|
8.5%
|
9.0%
|
Prime
time
|
11.0%
|
10.9%
|
9.4%
|
9.8%
|
9.9%
|
Source:
AGB Nielsen Media Research
|
Main
Television
Channels
|
Ownership
|
Year
of first
transmission
|
Signal
distribution
|
Audience
share
(2006)
|
Technical
reach
|
POP
TV
|
CME
|
1995
|
Terrestrial
/ cable
|
28.7%
|
93%
|
SLO
1
|
Public
Television
|
1958
|
Terrestrial
/ satellite / cable
|
23.1%
|
100%
|
SLO
2
|
Public
Television
|
1967
|
Terrestrial
/ satellite / cable
|
8.9%
|
99%
|
KANAL
A
|
CME
|
1991
|
Terrestrial
/ cable
|
9.0%
|
90%
|
Others
|
30.3%
|
||||
100.0%
|
|||||
Source
: Media Services AGB and CME
Research
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
All
day
|
22.2%
|
19.1%
|
20.9%
|
20.0%
|
18.3%
|
Prime
time
|
27.4%
|
25.8%
|
26.9%
|
22.2%
|
23.1%
|
Source:
GFK USM
|
Main
Television
Channels
|
Ownership
|
Year
of first
transmission
|
Signal
distribution
|
Audience
share
(2006)
|
Technical
reach
|
Inter
|
Local
owners
|
1996
|
Terrestrial
/ satellite / cable
|
20.4%
|
99%
|
STUDIO
1+1
|
CME
|
1995
|
Terrestrial
/ satellite / cable
|
18.3%
|
95%
|
Novy
Kanal
|
Local
owners
|
1998
|
Terrestrial
|
8.4%
|
88%
|
ICTV
|
Local
owners
|
1992
|
Terrestrial
|
7.3%
|
90%
|
STB
|
Local
owners
|
1997
|
Terrestrial
|
6.0%
|
89%
|
UT-1
|
Public
Television
|
1965
|
Terrestrial
/ cable
|
2.1%
|
96%
|
Others
|
37.5%
|
||||
100.0%
|
|||||
Source
: GFK USM and CME Research
|
ITEM 1A. |
RISK
FACTORS
|
·
|
Additional
demands placed on our senior management, who are also responsible
for
managing our existing operations;
|
·
|
Increased
overall operating complexity of our business, requiring greater personnel
and other resources;
|
·
|
Difficulties
of expanding beyond our core expertise, in the event that we acquire
content providers or other ancillary
businesses;
|
·
|
Significant
initial cash expenditures to acquire and integrate new businesses;
and
|
·
|
In
the event that debt is incurred to finance acquisitions, additional
debt
service costs related thereto as well as limitations that may arise
under
our Senior Notes and the EBRD Loan
Agreement.
|
ITEM 1B. |
UNRESOLVED
STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
Location
|
Property
|
Use
|
Hamilton,
Bermuda
|
Leased
office
|
Registered
Office, Corporate
|
Amsterdam,
Netherlands
|
Leased
office
|
Corporate
Office, Corporate
|
London,
United Kingdom
|
Leased
office
|
Administrative
Center, Corporate
|
Zagreb,
Croatia
|
Owned
and leased buildings
|
Office
and studio space, NOVA TV (Croatia)
|
Prague,
Czech Republic
|
Owned
buildings and leased buildings
|
Office
and studio space, TV NOVA (Czech Republic)
|
Bucharest
and other key cities within Romania
|
Owned
and leased buildings
|
Office
and studio space, PRO TV
|
Bratislava,
Slovak Republic
|
Owned
buildings
|
Office
and studio space, MARKIZA TV
|
Ljubljana,
Slovenia
|
Owned
buildings and leased buildings
|
Office
and studio space, POP TV and KANAL A
|
Kiev,
Ukraine
|
Owned
and leased buildings
|
Office
space, STUDIO 1+1. Office and studio space, KINO, CITI
|
Kirovograd,
Ukraine
|
Leased
buildings
|
Office
and studio space, KINO, CITI
|
Surrounding
suburbs of Kiev, Ukraine
|
Leased
offices
|
Studio
space, STUDIO 1+1
|
Zug,
Switzerland
|
Leased
office
|
Office
space, IMS
|
ITEM 3. |
LEGAL
PROCEEDINGS
|
ITEM 4. |
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
ITEM 5. |
MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS
AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
Price
Period
|
High
(US$ / Share)
|
Low
(US$ / Share)
|
2006
|
||
First
Quarter
|
71.87
|
56.73
|
Second
Quarter
|
71.35
|
52.90
|
Third
Quarter
|
68.47
|
53.62
|
Fourth
Quarter
|
77.69
|
67.50
|
2005
|
||
First
Quarter
|
56.08
|
34.90
|
Second
Quarter
|
50.70
|
40.04
|
Third
Quarter
|
55.79
|
47.10
|
Fourth
Quarter
|
59.00
|
44.72
|
Value of US$ 100 invested at December 31, 2002 as of December 31, 2006: | ||||
Central
European Media Enterprises Ltd.
|
$
|
1,217.39
|
||
NASDAQ
Composite Index
|
$
|
209.62
|
||
Dow
Jones World Broadcasting Index (1)
|
$
|
180.85
|
ITEM 6. |
SELECTED
FINANCIAL DATA
|
For
the Years Ended December 31,
|
||||||||||||||||
2006
|
2005
(as
restated)
(3,4)
|
2004
(as
restated)
(4)
|
2003
(as
restated)
(4)
|
2002
(as
restated)
(4)
|
||||||||||||
(US$
000’s, except per share data)
|
||||||||||||||||
CONSOLIDATED
STATEMENT OF OPERATIONS DATA:
|
||||||||||||||||
Net
revenues
|
$
|
603,115
|
$
|
400,978
|
$
|
182,339
|
$
|
124,978
|
$
|
99,143
|
||||||
Operating
income / (loss)
|
140,674
|
52,196
|
18,671
|
(4,410
|
)
|
1,466
|
||||||||||
Net
income / (loss) from continuing operations
|
25,287
|
42,835
|
15,938
|
(24,201
|
)
|
(25,106
|
)
|
|||||||||
(Loss)
/ income on discontinued operations (1)
|
(4,863
|
)
|
(513
|
)
|
2,524
|
370,213
|
10,922
|
|||||||||
Net
income / (loss)
|
$
|
20,424
|
$
|
42,322
|
$
|
18,462
|
$
|
346,012
|
$
|
(14,184
|
)
|
|||||
PER
SHARE DATA: (2)
|
||||||||||||||||
Net
income / (loss) per common share from:
|
||||||||||||||||
Continuing
operations - basic
|
$
|
0.63
|
$
|
1.24
|
$
|
0.57
|
$
|
(0.91
|
)
|
$
|
(0.95
|
)
|
||||
Continuing
operations - diluted
|
0.62
|
1.21
|
0.55
|
(0.91
|
)
|
(0.95
|
)
|
|||||||||
Discontinued
operations - basic
|
(0.12
|
)
|
(0.01
|
)
|
0.09
|
13.97
|
0.41
|
|||||||||
Discontinued
operations - diluted
|
(0.12
|
)
|
(0.01
|
)
|
0.09
|
13.97
|
0.41
|
|||||||||
Net
income / (loss) - basic
|
0.51
|
1.22
|
0.66
|
13.06
|
(0.54
|
)
|
||||||||||
Net
income / (loss) - diluted
|
$
|
0.50
|
$
|
1.19
|
$
|
0.63
|
$
|
13.06
|
$
|
(0.54
|
)
|
|||||
Weighted
average common shares used in computing per share amounts
(000’s)
|
||||||||||||||||
Basic
|
40,027
|
34,664
|
27,871
|
26,492
|
26,451
|
|||||||||||
Diluted
|
40,600
|
35,430
|
29,100
|
26,492
|
26,451
|
|||||||||||
CONSOLIDATED
BALANCE SHEET DATA:
|
||||||||||||||||
Current
assets
|
$
|
413,616
|
$
|
286,926
|
$
|
265,049
|
$
|
266,891
|
$
|
109,558
|
||||||
Non-current
assets
|
|
1,405,384
|
1,101,924
|
179,590
|
101,861
|
74,464
|
||||||||||
Total
assets
|
$ |
1,819,000
|
$ |
1,388,850
|
$ |
444,639
|
$ |
368,752
|
$ |
184,022
|
||||||
Current
liabilities
|
182,961
|
206,961
|
109,745
|
71,116
|
77,156
|
|||||||||||
Non-current
liabilities
|
574,084
|
488,099
|
18,965
|
23,118
|
200,723
|
|||||||||||
Minority
interests
|
26,189
|
13,237
|
4,861
|
994
|
2,019
|
|||||||||||
Shareholders’
equity / (deficit)
|
1,035,766
|
680,553
|
311,068
|
273,524
|
(95,876
|
)
|
||||||||||
Total
liabilities and shareholders’ equity
|
$
|
1,819,000
|
$
|
1,388,850
|
$
|
444,639
|
$
|
368,752
|
$
|
184,022
|
As
reported
previously
|
Adjustment
|
As
restated
|
||||||||
Balance
Sheet (as of December 31, 2002)
|
|
|||||||||
Additional
paid-in capital at December 31, 2002
|
$ |
359,342
|
$ |
6,939
|
$ |
366,281
|
||||
Accumulated
deficit at December 31, 2002
|
(452,
011
|
) |
(6,939
|
)
|
(458,950
|
) | ||||
Balance
Sheet (as of December 31, 2003)
|
||||||||||
Additional
paid-in capital at December 31, 2003
|
$
|
372,662
|
$
|
6,939
|
$
|
379,601
|
||||
Accumulated
deficit at December 31, 2003
|
(105,999
|
)
|
(6,939
|
)
|
(112,938
|
)
|
||||
Balance
Sheet (as of December 31, 2004)
|
||||||||||
Additional
paid-in capital at December 31, 2004
|
$
|
387,305
|
$
|
7,008
|
$
|
394,313
|
||||
Retained
deficit at December 31, 2004
|
(87,468
|
)
|
(7,008
|
)
|
(94,476
|
)
|
||||
Balance
Sheet (as of December 31, 2005)
|
||||||||||
Additional
paid-in capital at December 31, 2005
|
$ |
746,880
|
$ |
7,181
|
$ |
754,061
|
||||
Retained
deficit at December 31, 2005
|
(44,973
|
)
|
(7,181
|
)
|
(52,154
|
)
|
Statement
of Operations (for the Year Ended December 31,
2004)
|
||||||||||
Corporate
operating costs
|
(29,185
|
)
|
(69
|
)
|
(29,254
|
)
|
||||
Operating
income
|
18,740
|
(69
|
)
|
18,671
|
||||||
Income
from continuing operations
|
16,007
|
(69
|
)
|
15,938
|
||||||
Net
income
|
18,531
|
(69
|
)
|
18,462
|
||||||
Net
income from continuing operations per share - Basic
|
0.57
|
0.00
|
0.57
|
|||||||
Net
income per share - Basic
|
0.66
|
0.00
|
0.66
|
|||||||
Statement
of Operations (for the Year Ended December 31,
2005)
|
||||||||||
Corporate
operating costs
|
(25,374
|
)
|
(173
|
)
|
(25,547
|
)
|
||||
Operating
income
|
52,369
|
(173
|
)
|
52,196
|
||||||
Income
from continuing operations
|
43,008
|
(173
|
)
|
42,835
|
||||||
Net
income
|
42,495
|
(173
|
)
|
42,322
|
||||||
Net
income from continuing operations per share - Basic
|
1.24
|
0.00
|
1.24
|
|||||||
Net
income per share - Basic
|
1.23
|
0.00
|
1.22
|
Adjustment
(US$
000’s)
|
||||
December
31, 1994
|
$
|
47
|
||
December
31, 1995
|
548
|
|||
December
31, 1996
|
1,632
|
|||
December
31, 1997
|
2,504
|
|||
December
31, 1998
|
1,719
|
|||
December
31, 1999
|
400
|
|||
December
31, 2000
|
89
|
|||
December
31, 2001
|
-
|
|||
6,939 |
ITEM 7. |
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
I.
|
Executive
Summary
|
II.
|
General
Market Information
|
III.
|
Analysis
of Segment Results
|
IV.
|
Analysis
of the Results of Consolidated Operations
|
V.
|
Liquidity
and Capital Resources
|
VI.
|
Critical
Accounting Policies and Estimates
|
VII.
|
Related
Party Matters
|
·
|
We
improved the financial performance of our core stations (Romania,
Slovak
Republic, Slovenia and Ukraine) by delivering an increase in Segment
Net
Revenues of 30% and Segment EBITDA of 39% from
2005;
|
·
|
On
January 11, 2006, we completed the acquisition of a 65.5% interest
in
Ukrpromtorg 2003 LLC (“Ukrpromtorg”),
which owns 92.2% of Gravis LLC, the operator of the GRAVIS channel
and
CHANNEL 7 in Kiev as well as two other local channels in Ukraine,
for a
total investment of approximately US$ 7.4 million (for further information
see Item 8, Note 4, “Acquisitions and Disposals,
Ukraine”);
|
·
|
On
January 23, 2006, we completed the acquisition of control of our
Slovak
Republic operations and increased our economic interest from 70.0%
to
80.0% for total consideration of approximately US$ 29.8 million.
As a
result of this transaction, we began consolidating the results of
our
Slovak Republic operations from January 2006 (for further information
see
Item 8, Note 4, “Acquisitions and Disposals, Slovak
Republic”);
|
·
|
Effective
February 1, 2006, Vaclav Mika was appointed General Director for
the
MARKIZA TV channel;
|
·
|
On
February 17, 2006, we purchased an additional 5% of Pro TV, MPI and
Media
Vision from Adrian Sarbu for consideration of US$ 27.2 million (for
further information, see Item 8, Note 4, “Acquisitions and Disposals,
Romania”). We now own a 90% voting and economic interest in Pro TV and MPI
and a 75% voting and economic interest in Media
Vision;
|
·
|
On
March 7, 2006, the Slovak Republic Media Council extended the broadcasting
license of TV MARKIZA for an additional 12 years, until September
2019;
|
·
|
On
March 29, 2006, we completed the public offering of 2,530,000 shares
of
our Class A Common Stock and raised net proceeds of approximately
US$
168.7 million;
|
·
|
On
July 1, 2006, we launched a new entertainment channel in Ukraine,
KINO,
targeted at a young demographic. In the period since being
launched, KINO
has secured a national 14-49 prime time audience share of approximately
0.33%, and an average share in the Kiev area of
1.87%;
|
·
|
On
July 19, 2006, the Ukrainian Media Council issued a decision to extend
the
15-hour broadcasting license of Studio 1+1 for a ten-year period
to
December 29, 2016;
|
·
|
On
August 11, 2006, we completed the acquisition of a 10.0% stake in
Media
Pro, a group of Romanian companies with operations in the fields
of
publishing, information, printing, cinema, entertainment and radio
(for
further information see Item 8, Note 4, “Acquisitions and Disposals,
Romania and Note 6, “Investments”);
|
·
|
During
the third quarter 2006, we commenced a voluntary review of our stock
option granting practices covering the period from 1994 to 2002.
The
review found certain instances of administrative and procedural
deficiencies that occurred in the period between 1994 and 1998, but
found
no evidence from which it could be concluded that any errors were
the
result of deliberate or intentional misconduct. We have restated
our
historic financial statements to correct these errors (for further
information see Item 8, Note 2 “Restatement”);
and
|
·
|
On
December 1, 2006, we launched a new entertainment channel in Ukraine,
CITI, targeted at a young demographic. In the period since being
launched,
CITI has secured an average 14-49 prime time audience share of
approximately 1.77% in the Kiev
region.
|
·
|
On
July 28, 2006, the term of Michael Garin’s employment agreement to serve
as Chief Executive Officer was extended from 2008 to
2010;
|
·
|
On
August 1, 2006, we concluded an agreement with Adrian Sarbu in
connection
with his appointment in February 2006 to oversee our operations
in the
Czech and Slovak Republics in addition to his existing responsibilities
as
general director of our operations in
Romania;
|
·
|
On
August 3, 2006, Robert E. Burke announced his intention to step
down as
the Company’s President and Chief Operating Officer effective October 1,
2006; and
|
·
|
On
October 5, 2006, the term of Marina Williams’ agreement to serve as
Executive Vice President was extended from 2008 to
2010.
|
·
|
Pursuing
sub-regional efficiencies, especially in the area of local programming
between Slovenia and Croatia and between the Czech and Slovak
Republics;
|
·
|
Supporting
the growth of television advertising in our markets through increased
development and through the launch or acquisition of additional channels
to expand our advertising inventory and target niche
audiences;
|
·
|
Leveraging
our existing brands and assets to develop new revenue opportunities,
including in the creation and distribution of programming and in
the new
media sectors; and
|
·
|
Continuing
to expand our footprint into additional Central and Eastern European
markets when financially prudent opportunities
arise.
|
·
|
Continuing
the program of effectiveness improvements in our operations in the
Czech
Republic and the Slovak Republic which were identified in
2006.
|
·
|
Continuing
the development of our new Ukraine channels KINO and CITI which were
launched in 2006.
|
·
|
Further
development of our non-broadcast activities, in particular through
our New
Media project which is coordinated across our
markets.
|
·
|
Acquisition
of additional shares in our operations in Ukraine, the Slovak Republic
and
Romania if the opportunity arises.
|
·
|
Expansion
of our footprint within our existing markets or in adjacent markets
if
suitable acquisition opportunities
materialize.
|
·
|
Continuing
to invest in the development of our Croatia operations.
|
Country
|
2006
Rating
|
Detail
of 2006 Rating
|
2005
Rating
|
2004
Rating
|
2003
Rating
|
Croatia
|
A4
|
An
already patchy payment record could be further worsened by a deteriorating
political and economic environment. Nevertheless, the probability
of a
default is still acceptable.
|
A4
|
A4
|
A4
|
Czech
Republic
|
A2
|
Default
probability is still weak even in the case when one country's political
and economic environment or the payment record of companies is not
as good
as in A1-rated countries.
|
A2
|
A2
|
A3
|
Romania
|
A4
|
An
already patchy payment record could be further worsened by a deteriorating
political and economic environment. Nevertheless, the probability
of a
default is still acceptable.
|
A4
|
B
|
B
|
Slovak
Republic
|
A3
|
Adverse
political or economic circumstances may lead to a worsening payment
record
that is already lower than the previous categories, although the
probability of a payment default is still low.
|
A3
|
A3
|
A3
|
Slovenia
|
A1
|
The
steady political and economic environment has positive effects on
an
already good payment record of companies. Very weak default
probability.
|
A2
|
A2
|
A2
|
Ukraine
|
C
|
A
very unsteady political and economic environment could deteriorate
an
already bad payment record.
|
C
|
C
|
C
|
Country
|
Population
(in
millions)
(1)
|
Per
Capita
GDP
2006
(2)
|
Total
Advertising
Spending
per Capita 2006 (US$)
(3)
|
Total
Advertising
Spending
as a % of GDP 2006
(3)
|
TV
Advertising
Spending
per
Capita (US$)
(3)
|
TV
Advertising Spending as
a
% of Total Advertising Spending
(3)
|
|||||||||||||
|
|||||||||||||||||||
Croatia
|
4.4
|
|
$
|
9,318
|
|
$
|
57.0
|
|
|
0.61
|
%
|
$
|
28.6
|
|
|
50
|
%
|
||
Czech
Republic
|
|
|
10.2
|
|
$
|
13,971
|
|
$
|
77.5
|
|
|
0.55
|
%
|
$
|
30.9
|
|
|
40
|
%
|
Romania
|
|
|
20.9
|
|
$
|
5,458
|
|
$
|
19.1
|
|
|
0.35
|
%
|
$
|
11.4
|
|
|
60
|
%
|
Slovak
Republic
|
|
|
5.4
|
|
$
|
10,231
|
|
$
|
40.3
|
|
|
0.39
|
%
|
$
|
20.1
|
|
|
50
|
%
|
Slovenia
|
|
|
2.0
|
|
$
|
18,342
|
|
$
|
64.0
|
|
|
0.35
|
%
|
$
|
36.5
|
|
|
57
|
%
|
Ukraine
|
|
|
46.7
|
|
$
|
2,027
|
|
$
|
9.9
|
|
|
0.49
|
%
|
$
|
5.3
|
|
|
53
|
%
|
(1)
|
Source:
Global Insight Country Analysis (2006
data).
|
(2)
|
Source:
ING (November 2006 data).
|
(3)
|
Source:
CME estimates.
|
Country
|
Population
(in
millions)
(1)
|
Per
Capita
GDP
2006
(2)
|
Total
Advertising Spending per Capita 2006
(US$)
(3)
|
Total
Advertising Spending as a % of GDP
2006
(3)
|
TV
Advertising
Spending
per
Capita (US$)
(3)
|
TV
Advertising
Spending
as
a
% of Total
Advertising
Spending (3)
|
|||||||||||||
|
|||||||||||||||||||
Greece
|
11.1
|
$
|
20,802
|
$
|
235
|
1.13
|
%
|
$
|
73
|
31
|
%
|
||||||||
Hungary
|
10.1
|
$
|
13,299
|
$
|
133
|
1.00
|
%
|
$
|
85
|
64
|
%
|
||||||||
Italy
|
58.1
|
$
|
31,534
|
$
|
170
|
0.54
|
%
|
$
|
93
|
55
|
%
|
||||||||
Poland
|
38.5
|
$
|
8,327
|
$
|
37
|
0.44
|
%
|
$
|
19
|
51
|
%
|
||||||||
Russia
|
143.2
|
$
|
8,086
|
$
|
46
|
0.57
|
%
|
$
|
22
|
48
|
%
|
||||||||
Turkey
|
73.2
|
$
|
5,522
|
$
|
26
|
0.47
|
%
|
$
|
17
|
65
|
%
|
||||||||
UK
|
59.7
|
$
|
42,629
|
$
|
329
|
0.77
|
%
|
$
|
89
|
27
|
%
|
||||||||
USA
|
298.2
|
$
|
45,970
|
$
|
528
|
1.15
|
%
|
$
|
196
|
37
|
%
|
(1)
|
Source:
ZenithOptimedia (December 2006)
|
(2)
|
Source:
ING (November 2006 data).
|
(3)
|
Source:
CME estimates.
|
Country
|
2002
|
2003
|
2004
|
2005
|
2006
|
Croatia
|
110
- 120
|
115
- 125
|
120
- 130
|
||
Czech
Republic
|
260
- 270
|
285
- 295
|
310
- 320
|
||
Romania
|
65
- 75
|
85
- 95
|
110
- 120
|
165
- 175
|
235
- 245
|
Slovak
Republic
|
40
- 50
|
60
- 70
|
80
- 90
|
90
- 100
|
105
- 115
|
Slovenia
|
45
- 55
|
45
- 55
|
55
- 65
|
60
- 70
|
65
- 75
|
Ukraine
|
85
- 100
|
100
- 115
|
130
- 140
|
180
- 190
|
240
- 250
|
Market
sizes are quoted at US dollar exchange rates applicable at the
end of each
year.
|
Country
|
2002
|
2003
|
2004
|
2005
|
2006
|
Croatia
|
(1
- 3%)
|
2
-
5%
|
|||
Czech
Republic
|
3
-
5%
|
0
-
1%
|
|||
Romania
|
42
- 55%
|
22
- 20%
|
28
- 34%
|
32
- 37%
|
|
Slovak
Republic
|
16
- 18%
|
14
- 16%
|
8
-10%
|
5
-
7%
|
|
Slovenia
|
(11
- 13%)
|
8
-
11%
|
9
-
11%
|
6
-
8%
|
|
Ukraine
|
24
- 29%
|
11
- 18%
|
35
- 42%
|
28
- 31%
|
|
·
|
expenses
presented as corporate operating costs in our consolidated statement
of
operations and comprehensive
income;
|
·
|
stock-based
compensation charges;
|
·
|
foreign
currency exchange gains and losses;
|
·
|
change
in fair value of derivatives; and
|
·
|
certain
unusual or infrequent items (e.g., extraordinary gains and losses,
impairments of assets or investments, gain on sale of unconsolidated
affiliates).
|
SEGMENT
FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
(1)
|
2005
|
(1)
|
2004
|
(1)
|
||||||||||||||
Segment
Net Revenues
|
|||||||||||||||||||
Croatia
(NOVA TV) (2)
|
$
|
22,310
|
4
|
%
|
$
|
22,030
|
5
|
%
|
$
|
9,757
|
4
|
%
|
|||||||
Czech
Republic (TV NOVA, GALAXIE SPORT)
(3)
|
208,387
|
34
|
%
|
154,010
|
33
|
%
|
-
|
-
|
%
|
||||||||||
Romania
(4)
|
148,616
|
25
|
%
|
103,321
|
22
|
%
|
76,463
|
31
|
%
|
||||||||||
Slovak
Republic (MARKIZA TV) (5)
|
73,420
|
12
|
%
|
64,266
|
14
|
%
|
61,576
|
25
|
%
|
||||||||||
Slovenia
(POP TV and KANAL A)
|
54,534
|
9
|
%
|
48,770
|
10
|
%
|
45,388
|
18
|
%
|
||||||||||
Ukraine
(STUDIO 1+1)
|
96,413
|
16
|
%
|
72,847
|
16
|
%
|
53,351
|
22
|
%
|
||||||||||
Ukraine
(KINO, CITI) (7)
|
1,195
|
0
|
%
|
-
|
-
|
-
|
-
|
||||||||||||
Total
Segment Net Revenues
|
$
|
604,875
|
100
|
%
|
$
|
465,244
|
100
|
%
|
$
|
246,535
|
100
|
%
|
|||||||
Represented
by:
|
|||||||||||||||||||
Broadcast
operations
|
$
|
601,885
|
100
|
%
|
$
|
463,030
|
100
|
%
|
$
|
245,970
|
100
|
%
|
|||||||
Non-broadcast
operations
|
2,990
|
0
|
%
|
2,214
|
0
|
%
|
565
|
0
|
%
|
||||||||||
Total
Segment Net Revenues
|
$
|
604,875
|
100
|
%
|
$
|
465,244
|
100
|
%
|
$
|
246,535
|
100
|
%
|
|||||||
Segment
EBITDA
|
|||||||||||||||||||
Croatia
(NOVA TV) (2)
|
$
|
(14,413
|
)
|
(7
|
)%
|
$
|
(15,866
|
)
|
(10
|
)%
|
$
|
(3,756
|
)
|
(5
|
)%
|
||||
Czech
Republic (TV NOVA, GALAXIE SPORT) (3)
|
100,488
|
46
|
%
|
71,544
|
45
|
%
|
-
|
-
|
%
|
||||||||||
Romania
(4)
|
65,860
|
30
|
%
|
43,803
|
28
|
%
|
25,198
|
34
|
%
|
||||||||||
Slovak
Republic (MARKIZA TV) (5)
|
20,805
|
10
|
%
|
17,240
|
11
|
%
|
18,975
|
25
|
%
|
||||||||||
Slovenia
(POP TV and KANAL A)
|
19,842
|
9
|
%
|
19,337
|
12
|
%
|
19,077
|
26
|
%
|
||||||||||
Ukraine
(STUDIO 1+1)
|
29,973
|
14
|
%
|
21,803
|
14
|
%
|
14,729
|
20
|
%
|
||||||||||
Ukraine
(KINO, CITI) (7)
|
(3,713
|
)
|
(2
|
%)
|
-
|
-
|
-
|
-
|
|||||||||||
Total
Segment EBITDA
|
$
|
218,842
|
100
|
%
|
$
|
157,861
|
100
|
%
|
$
|
74,223
|
100
|
%
|
|||||||
Represented
by:
|
|||||||||||||||||||
Broadcast
operations
|
$
|
219,128
|
100
|
%
|
$
|
157,520
|
100
|
%
|
$
|
74,195
|
100
|
%
|
|||||||
Non-broadcast
operations
|
(286
|
)
|
0
|
%
|
341
|
0
|
%
|
28
|
0
|
%
|
|||||||||
Total
Segment EBITDA
|
$
|
218,842
|
100
|
%
|
$
|
157,861
|
100
|
%
|
$
|
74,223
|
100
|
%
|
|||||||
Segment
EBITDA Margin (6)
|
36
|
%
|
34
|
%
|
30
|
%
|
(1) |
Percentage
of Total Segment Net Revenue / Total Segment
EBITDA
|
(2) |
We
acquired our Croatia operations in July
2004
|
(3) |
We
acquired our Czech Republic operations (TV NOVA) in May 2005 and
GALAXIE
SPORT in September 2005
|
(4) |
Romanian
networks are PRO TV, PRO CINEMA, ACASA and PRO TV INTERNATIONAL
for the
years ended December 31, 2006 and 2005, and PRO TV, PRO CINEMA,
ACASA, PRO
TV INTERNATIONAL, PRO FM and INFOPRO for the year ended December
31,
2004
|
(5) |
Our
Slovak Republic operations were accounted for as an equity affiliate
until
January 23, 2006
|
(6) |
We
define Segment EBITDA margin as the ratio of Segment EBITDA to
Segment Net
Revenue
|
(7) |
We
acquired our Ukraine (KINO, CITI) operations on January 11,
2006
|
CROATIA
SEGMENT FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000's)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
(1)
|
Movement
|
||||||||||||||
Spot
revenues
|
$
|
16,442
|
$
|
15,954
|
$
|
488
|
$
|
15,954
|
$
|
5,746
|
$
|
10,208
|
|||||||
Non-spot
revenues
|
5,868
|
6,076
|
(208
|
)
|
6,076
|
4,011
|
2,065
|
||||||||||||
Segment
Net Revenues
|
$
|
22,310
|
$
|
22,030
|
$
|
280
|
$
|
22,030
|
$
|
9,757
|
$
|
12,273
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
22,298
|
$
|
22,030
|
$
|
268
|
$
|
22,030
|
$
|
9,757
|
$
|
12,273
|
|||||||
Non-broadcast
operations
|
12
|
-
|
12
|
-
|
-
|
-
|
|||||||||||||
Segment
Net Revenues
|
$
|
22,310
|
$
|
22,030
|
$
|
280
|
$
|
22,030
|
$
|
9,757
|
$
|
12,273
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA
|
$
|
(14,413
|
)
|
$
|
(15,866
|
)
|
$
|
1,453
|
$
|
(15,866
|
)
|
$
|
(3,756
|
)
|
$
|
(12,110
|
)
|
||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
(14,302
|
)
|
$
|
(15,866
|
)
|
$
|
1,564
|
$
|
(15,866
|
)
|
$
|
(3,756
|
)
|
$
|
(12,110
|
)
|
||
Non-broadcast
operations
|
(111
|
)
|
-
|
(111
|
)
|
-
|
-
|
-
|
|||||||||||
Segment
EBITDA
|
$
|
(14,413
|
)
|
$
|
(15,886
|
)
|
$
|
1,453
|
$
|
(15,886
|
)
|
$
|
(3,756
|
)
|
$
|
(12,110
|
)
|
||
|
|||||||||||||||||||
Segment
EBITDA Margin
|
(65
|
)%
|
(72
|
)%
|
7
|
%
|
(72
|
)%
|
(38
|
)%
|
(34
|
)%
|
|||||||
(1)
2004 Results are presented from acquisition in July
2004
|
·
|
Segment
Net Revenues
for the year ended December 31, 2006 increased by US$ 0.3 million,
or 1%,
compared to 2005. In local currency, Segment Net Revenues decreased
by 1%.
Spot revenues increased by US$ 0.5 million, or 3%, as a result
of price
increases which offset the impact of the lower volume of GRPs sold.
The
lower volume of GRPs sold was a result of competitor price reductions
and
the expiration of legacy deals. Non-spot revenues decreased by
US$ 0.2
million, or 3%, as a result of lower levels of barter revenues
as some
contracts were forgone in accordance with our policy to minimize
barter
transactions and decreased levels of sponsorship, which were partially
offset by an increase in short message service (“SMS”), teletext and
telesales revenues.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 was a loss of US$ 14.4 million,
compared
to a loss of US$ 15.9 million for the year ended December 31, 2005.
In
local currency, Segment EBITDA increased by
11%.
|
CZECH
REPUBLIC SEGMENT FINANCIAL INFORMATION
|
||||||||||
For
the Years Ended December 31, (US$ 000's)
|
||||||||||
2006
|
2005
(1)
|
Movement
|
||||||||
Spot
revenues
|
$
|
181,965
|
$
|
133,250
|
$
|
48,715
|
||||
Non-spot
revenues
|
26,422
|
20,760
|
5,662
|
|||||||
Segment
Net Revenues
|
$
|
208,387
|
$
|
154,010
|
$
|
54,377
|
||||
|
||||||||||
Represented
by
|
|
|||||||||
Broadcast
operations
|
$
|
207,671
|
$
|
153,626
|
$
|
54,045
|
||||
Non-broadcast
operations
|
716
|
384
|
332
|
|||||||
Segment
Net Revenues
|
$
|
208,387
|
$
|
154,010
|
$
|
54,377
|
||||
|
||||||||||
Segment
EBITDA
|
$
|
100,488
|
$
|
71,544
|
$
|
28,944
|
||||
|
||||||||||
Represented
by
|
||||||||||
Broadcast
operations
|
$
|
100,724
|
$
|
71,742
|
$
|
28,982
|
||||
Non-broadcast
operations
|
(236
|
)
|
(198
|
)
|
(38
|
)
|
||||
Segment
EBITDA
|
$
|
100,488
|
$
|
71,544
|
$
|
28,944
|
||||
Segment
EBITDA Margin
|
48
|
%
|
46
|
%
|
2
|
%
|
·
|
Segment
Net Revenues
for the year ended December 31, 2006 were US$ 208.4 million compared
to
US$ 154.0 million for the period from acquisition to December 31,
2005. We
acquired the TV Nova (Czech Republic) group on May 2, 2005 and accordingly
our results of operations for the year ended December 31, 2005 reflect
our
ownership from that date. Based on management estimates, we believe
that
Segment Net Revenues for the year ended December 31, 2005, including
the
period prior to our ownership from January 1, 2005 through May 1,
2005
were approximately US$ 235 million. This decrease in Segment Net
Revenues
can be primarily attributed to the initial reaction of advertisers
to the
implementation of our new sales policy, which led to a decrease in
the
number of GRPs sold.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 was US$ 100.5 million compared
to US$
71.5 million for the period from acquisition to December 31, 2005.
|
ROMANIA
SEGMENT FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000's)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Spot
revenues
|
$
|
140,242
|
$
|
97,915
|
$
|
42,327
|
$
|
97,915
|
$
|
72,895
|
$
|
25,020
|
|||||||
Non-spot
revenues
|
8,374
|
5,406
|
2,968
|
5,406
|
3,568
|
1,838
|
|||||||||||||
Segment
Net Revenues
|
$
|
148,616
|
$
|
103,321
|
$
|
45,295
|
$
|
103,321
|
$
|
76,463
|
$
|
26,858
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
148,616
|
$
|
103,321
|
$
|
45,295
|
$
|
103,321
|
$
|
76,463
|
$
|
26,858
|
|||||||
Non-broadcast
operations
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Segment
Net Revenues
|
$
|
148,616
|
$
|
103,321
|
$
|
45,295
|
$
|
103.321
|
$
|
76,463
|
$
|
26,858
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA
|
$
|
65,860
|
$
|
43,803
|
$
|
22,057
|
$
|
43,803
|
$
|
25,198
|
$
|
18,605
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
65,976
|
$
|
43,803
|
$
|
22,173
|
$
|
43,803
|
$
|
25,198
|
$
|
18,605
|
|||||||
Non-broadcast
operations
|
(116
|
)
|
-
|
(116
|
)
|
-
|
-
|
-
|
|||||||||||
Segment
EBITDA
|
$
|
65,860
|
$
|
43,803
|
$
|
22,057
|
$
|
43,803
|
$
|
25,198
|
$
|
18,605
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA Margin
|
44
|
%
|
42
|
%
|
2
|
%
|
42
|
%
|
33
|
%
|
9
|
%
|
|||||||
·
|
Segment
Net Revenues for
the year ended December 31, 2006 increased
by US$ 45.3 million, or 44%, compared to the year ended December
31, 2005.
Spot revenues increased by US$ 42.3 million or 43%, and non-spot
revenues
increased by US$ 3.0 million, or
55%.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 increased by US$ 22.1 million, or
50%,
compared to the year ended December 31, 2005, resulting in an EBITDA
margin of 44%, compared to 42% in
2005.
|
SLOVAK
REPUBLIC SEGMENT FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Spot
revenues
|
$
|
69,336
|
$
|
60,004
|
$
|
9,332
|
$
|
60,004
|
$
|
57,125
|
$
|
2,879
|
|||||||
Non-spot
revenues
|
4,084
|
4,262
|
(178
|
)
|
4,262
|
4,451
|
(189
|
)
|
|||||||||||
Segment
Net Revenues
|
$
|
73,420
|
$
|
64,266
|
$
|
9,154
|
$
|
64,266
|
$
|
61,576
|
$
|
2,690
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
73,266
|
$
|
64,266
|
$
|
9,000
|
$
|
64,266
|
$
|
61,576
|
$
|
2,690
|
|||||||
Non-broadcast
operations
|
154
|
-
|
154
|
-
|
-
|
-
|
|||||||||||||
Segment
Net Revenues
|
$
|
73,420
|
$
|
64,266
|
$
|
9,154
|
$
|
64,266
|
$
|
61,576
|
$
|
2,690
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA
|
$
|
20,805
|
$
|
17,240
|
$
|
3,565
|
$
|
17,240
|
$
|
18,975
|
$
|
(1,735
|
)
|
||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
20,879
|
$
|
17,240
|
$
|
3,639
|
$
|
17,240
|
$
|
18,975
|
$
|
(1,735
|
)
|
||||||
Non-broadcast
operations
|
(74
|
)
|
-
|
(74
|
)
|
-
|
-
|
-
|
|||||||||||
Segment
EBITDA
|
$
|
20,805
|
$
|
17,240
|
$
|
3,565
|
$
|
17,240
|
$
|
18,975
|
$
|
(1,735
|
)
|
||||||
|
|||||||||||||||||||
Segment
EBITDA Margin
|
28
|
%
|
27
|
%
|
1
|
%
|
27
|
%
|
31
|
%
|
(4
|
)%
|
|||||||
·
|
Segment
Net Revenues for
the year ended December 31, 2006 increased by US$ 9.2 million,
or 14%,
compared to the year ended December 31, 2005, due to a combination
of
favorable exchange rate movements, new entrants into the market
and
increased advertising spending from existing clients, specifically
health
insurance companies and financial service providers. In local currency,
Segment Net Revenues increased by 5%. The increase in Segment Net
Revenues
was due to an increase of US$ 9.3 million, or 16%, in spot revenues
partially offset by a decline of US$ 0.2 million, or 4%, in non-spot
revenues. Both the volume of advertising spots sold by MARKIZA
TV and the
average revenue per thirty-second spot increased compared to
2005.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 increased by US$ 3.6 million, or
21%,
compared to 2005, and the EBITDA margin increased from 27% in 2005
to 28%
in 2006. Local currency EBITDA increased by 21% in 2006 compared
to
2005.
|
SLOVENIA
SEGMENT FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Spot
revenues
|
$
|
50,682
|
$
|
45,594
|
$
|
5,088
|
$
|
45,594
|
$
|
43,765
|
$
|
1,829
|
|||||||
Non-spot
revenues
|
3,852
|
3,176
|
676
|
3,176
|
1,623
|
1,553
|
|||||||||||||
Segment
Net Revenues
|
$
|
54,534
|
$
|
48,770
|
$
|
5,764
|
$
|
48,770
|
$
|
45,388
|
$
|
3,382
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
52,426
|
$
|
46,940
|
$
|
5,486
|
$
|
46,940
|
$
|
44,823
|
$
|
2,117
|
|||||||
Non-broadcast
operations
|
2,108
|
1,830
|
278
|
1,830
|
565
|
1,265
|
|||||||||||||
Segment
Net Revenues
|
$
|
54,534
|
$
|
48,770
|
$
|
5,764
|
$
|
48,770
|
$
|
45,388
|
$
|
3,382
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA
|
$
|
19,842
|
$
|
19,337
|
$
|
505
|
$
|
19,337
|
$
|
19,077
|
$
|
260
|
|||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
19,518
|
$
|
18,797
|
$
|
721
|
$
|
18,797
|
$
|
19,049
|
$
|
(252
|
)
|
||||||
Non-broadcast
operations
|
324
|
540
|
(216
|
)
|
540
|
28
|
512
|
||||||||||||
Segment
EBITDA
|
$
|
19,842
|
$
|
19,337
|
$
|
505
|
$
|
19,337
|
$
|
19,077
|
$
|
260
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA Margin
|
36
|
%
|
40
|
%
|
(4
|
)%
|
40
|
%
|
42
|
%
|
(2
|
)%
|
|||||||
·
|
Segment
Net Revenues
for the year ended December 31, 2006 increased by US$ 5.8 million,
or 12%,
compared to the year ended December 31, 2005. In local currency,
Segment
Net Revenues increased by 10%.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 increased by US$ 0.5 million, or
3%,
compared to the year ended December 31, 2005. In local currency,
Segment
EBITDA increased by 1%. EBITDA margin decreased from 40% in 2005
to 36% in
2006.
|
UKRAINE
(STUDIO 1+1) FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Spot
revenues
|
$
|
86,042
|
$
|
63,911
|
$
|
22,131
|
$
|
63,911
|
$
|
49,982
|
$
|
13,929
|
|||||||
Non-spot
revenues
|
10,371
|
8,936
|
1,435
|
8,936
|
3,369
|
5,567
|
|||||||||||||
Segment
Net Revenues
|
$
|
96,413
|
$
|
72,847
|
$
|
23,566
|
$
|
72,847
|
$
|
53,351
|
$
|
19,496
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
96,413
|
$
|
72,847
|
$
|
23,566
|
$
|
72,847
|
$
|
53,351
|
$
|
19,496
|
|||||||
Non-broadcast
operations
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Segment
Net Revenues
|
$
|
96,413
|
$
|
72,847
|
$
|
23,566
|
$
|
72,847
|
$
|
53,351
|
$
|
19,496
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA
|
$
|
29,973
|
$
|
21,803
|
$
|
8,170
|
$
|
21,803
|
$
|
14,729
|
$
|
7,074
|
|||||||
|
|||||||||||||||||||
Represented
by
|
|||||||||||||||||||
Broadcast
operations
|
$
|
30,045
|
$
|
21,803
|
$
|
8,242
|
$
|
21,803
|
$
|
14,729
|
$
|
7,074
|
|||||||
Non-broadcast
operations
|
(72
|
)
|
-
|
(72
|
)
|
-
|
-
|
-
|
|||||||||||
Segment
EBITDA
|
$
|
29,973
|
$
|
21,803
|
$
|
8,170
|
$
|
21,803
|
$
|
14,729
|
$
|
7,074
|
|||||||
|
|||||||||||||||||||
Segment
EBITDA Margin
|
31
|
%
|
30
|
%
|
1
|
%
|
30
|
%
|
28
|
%
|
2
|
%
|
|||||||
·
|
Segment
Net Revenues for
the year ended December 31, 2006 increased by US$ 23.6 million, or
32%,
compared to the year ended December 31, 2005. Spot revenues increased
by
US$ 22.1 million, or 35%, and non-spot revenues increased by US$
1.4
million, or 16%.
|
·
|
Segment
EBITDA for
the year ended December 31, 2006 increased by US$ 8.2 million, or
37%,
compared to the year ended December 31, 2005, resulting in an EBITDA
margin of 31% compared to 30% in
2005.
|
For
the Year Ended December 31, (US$ 000's)
|
|||||||
2006
|
|||||||
Spot
revenues
|
$
|
549
|
|||||
Non-spot
revenues
|
646
|
||||||
Segment
Net Revenues
|
$
|
1,195
|
|||||
|
|||||||
Represented
by
|
|||||||
Broadcast
operations
|
$
|
1,195
|
|||||
Non-broadcast
operations
|
0
|
||||||
Segment
Net Revenues
|
$
|
1,195
|
|||||
|
|||||||
Segment
EBITDA
|
$
|
(3,713
|
)
|
||||
|
|||||||
Represented
by
|
|||||||
Broadcast
operations
|
$
|
(3,713
|
)
|
||||
Non-broadcast
operations
|
-
|
||||||
Segment EBITDA | $ | (3,713 | ) | ||||
Segment EBITA Margin | (311 | )% | |||||
·
|
Segment
Net Revenues for
KINO and CITI, for the period from acquisition on January 11, 2006
to
December 31, 2006, were US$ 1.2
million.
|
·
|
Segment
EBITDA for
KINO and CITI, for the period from acquisition on January 11, 2006 to
December 31, 2006, was a loss of US$ 3.7 million. Costs charged
in
arriving at Segment EBITDA for the period ended December 31, 2006
were US$
4.9 million. Cost of programming was US$ 2.6 million, including
US$ 1.5
million of acquired foreign programs for the KINO channel and US$
0.9
million of production expenses for the CITI channel, mainly related
to the
salaries of production employees. Other operating costs were US$
1.4
million and comprised salary costs of US$ 0.9 million and broadcast
operating expenses of US$ 0.5 million. Selling, general and administrative
expenses amounted to US$ 0.9
million.
|
For
the Years Ended December 31, (US$ 000’s)
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Production
expenses
|
$
|
110,948
|
$
|
67,366
|
$
|
29,458
|
||||
Program
amortization
|
116,561
|
81,471
|
42,335
|
|||||||
Cost
of programming
|
$
|
227,509
|
$
|
148,837
|
$
|
71,793
|
·
|
The
inclusion of US$ 25.8 million of programming costs from our Slovak
Republic operations, which were consolidated from January 23, 2006,
having
previously been accounted for as an equity
affiliate;
|
·
|
US$
21.8 million of additional programming costs from our Romania operations;
|
·
|
US$
10.8 million of additional programming costs from our Ukraine (STUDIO
1+1)
operations;
|
·
|
US$
9.8 million of additional programming costs from our Czech Republic
operations, which are included for the entire twelve month periods
rather
than for the period from acquisition on May 2, 2005 in the prior
year;
|
·
|
US$
6.8 million of additional programming costs from our Slovenia
operations;
|
·
|
US$
2.6 million of additional programming costs from our newly acquired
Ukraine (KINO, CITI) operations;
and
|
·
|
US$
1.1 million of additional programming costs from our Croatia
operations.
|
For
the Years Ended December 31, (US$ 000's)
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Program
amortization:
|
||||||||||
Croatia
(NOVA TV)
|
$
|
14,237
|
$
|
16,373
|
$
|
3,695
|
||||
Czech
Republic (TV NOVA, GALAXIE SPORT)
|
27,170
|
19,154
|
-
|
|||||||
Romania
(PRO TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL)
|
30,610
|
20,132
|
18,215
|
|||||||
Slovak
Republic (MARKIZA TV) (post-acquisition)
|
7,539
|
-
|
-
|
|||||||
Slovenia
(POP TV and KANAL A)
|
7,164
|
5,517
|
5,117
|
|||||||
Ukraine
(STUDIO 1+1)
|
28,354
|
20,295
|
15,308
|
|||||||
Ukraine
(KINO, CITI)
|
1,487
|
-
|
-
|
|||||||
116,561
|
81,471
|
42,335
|
||||||||
Slovak
Republic (MARKIZA TV) (pre-acquisition)
|
1,735
|
6,970
|
9,038
|
|||||||
$
|
118,296
|
$
|
88,441
|
$
|
51,373
|
|||||
Cash
paid for programming:
|
||||||||||
Croatia
(NOVA TV)
|
$
|
17,165
|
$
|
16,062
|
$
|
3,076
|
||||
Czech
Republic (TV NOVA, GALAXIE SPORT)
|
28,237
|
26,027
|
-
|
|||||||
Romania
(PRO TV, ACASA, PRO CINEMA and PRO TV INTERNATIONAL)
|
48,277
|
40,279
|
22,164
|
|||||||
Slovenia
(POP TV and KANAL A)
|
7,067
|
6,200
|
5,177
|
|||||||
Ukraine
(STUDIO 1+1)
|
38,419
|
27,019
|
21,022
|
|||||||
Ukraine
(KINO, CITI)
|
1,096
|
-
|
-
|
|||||||
140,261
|
115,587
|
51,439
|
||||||||
Slovak
Republic (MARKIZA TV)
|
12,598
|
10,692
|
8,120
|
|||||||
$
|
152,859
|
$
|
126,279
|
$
|
59,559
|
Consolidated
Net Revenues
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Croatia
|
$ |
22,310
|
$
|
22,030
|
$
|
280
|
$
|
22,030
|
$
|
9,757
|
$
|
12,273
|
|||||||
Czech
Republic
|
208,387
|
154,010
|
54,377
|
154,010
|
-
|
154,010
|
|||||||||||||
Romania
|
148,616
|
103,321
|
45,295
|
103,321
|
73,843
|
29,478
|
|||||||||||||
Slovakia
|
71,660
|
-
|
71,660
|
-
|
-
|
-
|
|||||||||||||
Slovenia
|
54,534
|
48,770
|
5,764
|
48,770
|
45,388
|
3,382
|
|||||||||||||
Ukraine
(STUDIO 1+1)
|
96,413
|
72,847
|
23,566
|
72,847
|
53,351
|
19,496
|
|||||||||||||
Ukraine
(KINO, CITI)
|
1,195
|
-
|
1,195
|
-
|
-
|
-
|
|||||||||||||
Total
Consolidated Net Revenues
|
$
|
603,115
|
$
|
400,978
|
$
|
202,137
|
$
|
400,978
|
$
|
182,339
|
$
|
218,639
|
·
|
A
US$ 0.3 million increase in the net revenues of our Croatia operations
as
described above in Item 7, III “Analysis of Segment
Results”;
|
·
|
A
US$ 54.4 million, or 35.3%, increase in the net revenues of our Czech
Republic operations as described in Item 7, III “Analysis of Segment
Results”;
|
·
|
A
US$ 45.3 million, or 43.8%, increase in the net revenues of our Romania
operations as described above in Item 7, III “Analysis of Segment
Results”;
|
·
|
The
inclusion of US$ 71.7 million of net revenues from our newly consolidated
Slovak Republic operations as described in Item 7, III “Analysis of
Segment Results”;
|
·
|
A
US$ 5.8 million, or 11.8%, increase in the net revenues of our Slovenia
operations as described above in Item 7, III “Analysis of Segment
Results”;
|
·
|
A
US$ 23.6 million, or 32.4%, increase in the net revenues of our Ukraine
(STUDIO 1+1) operations as described above in Item 7, III “Analysis of
Segment Results”; and
|
·
|
The
inclusion of US$ 1.2 million of net revenues from our newly consolidated
Ukraine (KINO, CITI) operations as described in Item7, III “Analysis of
Segment Results”.
|
Consolidated
Operating Expenses
|
|||||||||||||||||||
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Operating
costs
|
$
|
90,060
|
$
|
65,138
|
$
|
24,922
|
$
|
65,138
|
$
|
33,615
|
$
|
31,523
|
|||||||
Cost
of programming
|
227,509
|
148,837
|
78,672
|
148,837
|
71,793
|
77,044
|
|||||||||||||
Station
selling, general and administrative expenses
|
65,412
|
46,382
|
19,030
|
46,382
|
22,112
|
24,270
|
|||||||||||||
Depreciation
of station property, plant and equipment
|
25,795
|
16,367
|
9,428
|
16,367
|
6,429
|
9,938
|
|||||||||||||
Amortization
of broadcast licenses and other intangibles
|
18,813
|
11,180
|
7,633
|
11,180
|
465
|
10,715
|
|||||||||||||
Corporate
operating costs
|
34,104
|
25,547
|
8,557
|
25,547
|
29,254
|
(3,707
|
)
|
||||||||||||
Impairment
Charge
|
748
|
35,331
|
(34,583
|
)
|
35,331
|
-
|
35,331
|
||||||||||||
Total
Operating Expenses
|
$
|
462,441
|
$
|
348,782
|
$
|
113,659
|
$
|
348,782
|
$
|
163,668
|
$
|
185,114
|
·
|
A
US$ 1.1 million, or 12%, decrease in the station operating costs
of our
Croatia operations as described in Item 7, III “Analysis of Segment
Results”;
|
·
|
Operating
costs of our Czech Republic operations increasing by US$ 11.1 million,
or
74.8%, as described in Item 7, III “Analysis of Segment
Results”;
|
·
|
Operating
costs of our Romania operations decreasing by US$ 1.2 million, or
7%, as
described in Item 7, III “Analysis of Segment
Results”;
|
·
|
The
inclusion of US$ 15.2 million of additional station operating costs
relating to our newly consolidated Slovak Republic
operations;
|
·
|
Operating
costs of our Slovenia operations decreasing by US$ 2.0 million, or
17%, as
described in Item 7, III “Analysis of Segment
Results”;
|
·
|
Operating
costs of our Ukraine (STUDIO 1+1) operations increasing by
US$ 1.5 million, or 11.9%, as described in Item 7, III “Analysis of
Segment Results”; and
|
·
|
The
inclusion of US$ 1.4 million of additional station operating costs
relating to our new Ukraine (KINO, CITI)
operations.
|
·
|
A
US$ 1.1 million, or 5%, increase in the programming costs of our
Croatia
operations as described in Item 7, III “Analysis of Segment
Results”;
|
·
|
A
US$ 9.9 million, or 19.6%, increase in the programming costs of our
Czech
Republic operations as described in Item 7, III “Analysis of Segment
Results;
|
·
|
A
US$ 21.7 million, or 61.8%, increase in the programming costs of
our
Romania operations as described in Item 7, III “Analysis of Segment
Results”;
|
·
|
The
inclusion of US$ 25.8 million of additional programming costs relating
to
our newly consolidated Slovak Republic
operations;
|
·
|
A
US$ 6.8 million, or 52.3%, increase in the programming costs of our
Slovenia operations station operating costs and expenses of our Slovenia
operations as described in Item 7, III “Analysis of Segment Results”;
and
|
·
|
A
US$ 10.8 million, or 36.3%, increase in the programming costs of our
Ukraine (STUDIO 1+1) operations as described in Item 7, III “Analysis of
Segment Results”; and
|
·
|
The
inclusion of US$ 2.6 million of additional programming costs from our
new Ukraine (KINO, CITI) operations as described in Item 7, III “Analysis
of Segment Results”.
|
·
|
A
US$ 1.2 million, or 15%, decrease in the station selling, general
and
administrative expenses of our Croatia operations as described in
Item 7,
III “Analysis of Segment Results”;
|
·
|
A
US$ 4.4 million, or 26.3%, increase in the station selling, general
and
administrative expenses of our Czech Republic operations as described
in
Item 7, III “Analysis of Segment
Results”;
|
·
|
A
US$ 2.7 million, or 33.8%, increase in the station selling, general
and
administrative expenses of our Romania operations as described in
Item 7,
III “Analysis of Segment Results”;
|
·
|
The
inclusion of US$ 8.5 million of station selling, general and
administrative expenses from our newly consolidated Slovak Republic
operations;
|
·
|
A
US$ 0.5 million, or 10.9%, increase in the station selling, general
and
administrative expenses of our Slovenia operations as described in
Item 7,
III “Analysis of Segment Results”;
|
·
|
A
US$ 3.1 million, or 35.9%, increase in the station selling, general
and administrative expenses of our Ukraine (STUDIO 1+1) operations
as
described in Item 7, III “Analysis of Segment Results”;
and
|
·
|
The
inclusion of US$ 0.9 million of station selling, general and
administrative expenses from our new Ukraine (KINO, CITI) operation
as
described in Item 7, III “Analysis of Segment Results”;
|
·
|
A
US$ 2.2 million, or 38%, increase in the depreciation costs of our
Czech
Republic due to depreciation of newly acquired production equipment
assets;
|
·
|
A
US$ 1.3 million, or 38%, increase in the depreciation costs of our
Romania
operations due to depreciation of newly acquired production equipment
assets;
|
·
|
The
inclusion of US$ 3.2 million of additional depreciation relating
to our
newly consolidated Slovak Republic
operations;
|
·
|
A
US$ 1.1 million, or 36%, increase in the depreciation costs of our
Slovenia operations as a result of depreciation of newly acquired
digital
production and editing equipment
assets;
|
·
|
A
US$ 1.2 million, or 76%, increase in the depreciation costs of our
Ukraine (STUDIO 1+1) operations due to depreciation of newly acquired
studio equipment assets; and
|
·
|
The
inclusion of US$ 0.4 million of additional depreciation costs of our
newly acquired Ukraine (KINO, CITI)
operations.
|
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Corporate
operating costs (excluding non-cash stock-based
compensation)
|
$ |
30,529
|
$
|
22,420
|
$ |
8,109
|
$
|
22,420
|
$
|
19,083
|
$ |
3,337
|
|||||||
Non-cash
stock-based compensation(1)
|
3,575
|
3,127
|
448
|
3,127
|
10,171
|
(7,044
|
)
|
||||||||||||
Corporate
operating costs (including non-cash stock-based
compensation)
|
$ |
34,104
|
$
|
25,547
|
$ |
8,557
|
$
|
25,547
|
$
|
29,254
|
$ |
(3,707
|
)
|
·
|
an
increase in legal expenses in connection with our investments in
Ukraine
and legal proceedings in respect of our Ukraine operations;
|
·
|
professional
fees incurred in reviewing our historic stock option granting
practices;
|
·
|
an
increase in staff-related costs caused by an increase in corporate
staff
as we brought in-house, certain activities that had previously been
outsourced; and
|
·
|
an
increase in business development expenses.
|
·
|
an
increase in staff-related costs caused by an increase in corporate
staff ,
and temporary staff costs relating to the acquisition of the TV Nova
(Czech Republic) group; and
|
·
|
an
increase in professional fees in respect of legal, tax and press
and
public relations expenses relating to advice in connection with our
investment in Ukraine, legal proceedings in respect of our Ukraine
operations and in connection with the acquisition of our Czech Republic
operations and subsequent listing on the Prague Stock Exchange together
with an increase in investor relations activity;
|
·
|
a
decrease in business development expenses.
|
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Operating
income
|
$ |
140,674
|
$ |
52,196
|
$ |
88,478
|
$ |
52,196
|
$ |
18,671
|
$ |
33,525
|
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Interest
income
|
$ |
6,365
|
$ |
4,124
|
$ |
2,241
|
$ |
4,124
|
$ |
4,318
|
$ |
(194
|
)
|
||||||
Interest
expense
|
(44,228
|
)
|
(29,387
|
)
|
(14,841
|
)
|
(29,387
|
)
|
(1,203
|
)
|
(28,184
|
)
|
|||||||
Foreign
currency exchange (loss)/gain, net
|
(44,908
|
)
|
37,968
|
(82,876
|
)
|
37,968
|
(574
|
)
|
38,542
|
||||||||||
Other
income/(expense)
|
3,038
|
(4,705
|
)
|
7,743
|
(4,705
|
)
|
(698
|
)
|
(4,007
|
)
|
|||||||||
Change
in fair value of derivatives
|
(12,539
|
)
|
-
|
(12,539
|
)
|
- | - | - | |||||||||||
Provision
for income taxes
|
(14,962
|
)
|
(16,691
|
)
|
1,729
|
(16,691
|
)
|
(11,089
|
)
|
(5,602
|
)
|
||||||||
Minority
interest in income of consolidated subsidiaries
|
(13,602
|
)
|
(8,908
|
)
|
(4,694
|
)
|
(8,908
|
)
|
(4,106
|
)
|
(4,802
|
)
|
|||||||
Equity
in (loss)/income of unconsolidated affiliates
|
(730
|
)
|
8,238
|
(8,968
|
)
|
8,238
|
10,619
|
(2,381
|
)
|
||||||||||
Gain
on sale of unconsolidated affiliate
|
6,179
|
-
|
6,179
|
-
|
-
|
-
|
|||||||||||||
Discontinued
operations
|
(4,863
|
)
|
(513
|
)
|
(4,350
|
)
|
(513
|
)
|
2,524
|
(3,037
|
)
|
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Slovak
Republic operations
|
$ |
(737
|
)
|
$
|
8,240
|
$ |
(8,977
|
)
|
$
|
8,240
|
$
|
10,382
|
$
|
(2,142
|
)
|
||||
Romania
operations
|
7
|
(2
|
)
|
9
|
(2
|
)
|
237
|
(239
|
)
|
||||||||||
Slovenia
operations
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Equity
in (loss)/income of unconsolidated affiliates
|
$ |
(730
|
)
|
$
|
8,238
|
$ |
(8,968
|
)
|
$
|
8,238
|
$
|
10,619
|
$
|
(2,381
|
)
|
For
the Years Ended December 31, (US$ 000’s)
|
|||||||||||||||||||
2006
|
2005
|
Movement
|
2005
|
2004
|
Movement
|
||||||||||||||
Gain
on disposal of discontinued operations
|
$ |
-
|
$
|
164
|
$ |
(164
|
)
|
$
|
164
|
$
|
146
|
$ |
18
|
||||||
Tax
on disposal of discontinued operations
|
(4,863
|
)
|
(677
|
)
|
(4,186
|
)
|
(677
|
)
|
2,378
|
(3,055
|
)
|
||||||||
Discontinued
operations
|
$ |
(4,863
|
)
|
$
|
(513
|
)
|
$ |
(4,350
|
)
|
$
|
(513
|
)
|
$
|
2,524
|
$ |
(3,037
|
)
|
Summarized
Consolidated Balance Sheet (US$ 000’s)
|
December
31,
2006
|
December
31,
2005
|
Movement
|
|||||||
Current
assets
|
$
|
413,616
|
$
|
286,926
|
$
|
126,690,
|
||||
Non-current
assets
|
1,405,384
|
1,101,924
|
303,460
|
|||||||
Current
liabilities
|
182,961
|
206,961
|
(24,000
|
)
|
||||||
Non-current
liabilities
|
574,084
|
488,099
|
85,985
|
|||||||
Minority
interests in consolidated subsidiaries
|
26,189
|
13,237
|
12,952
|
|||||||
Shareholders’
equity
|
|
1,035,766
|
|
680,553
|
355,213
|
(US$
000’s)
|
For
the Years Ended December 31,
|
|||||||||
2006
|
2005
|
2004
|
||||||||
Net
cash generated from continuing operating activities
|
$
|
73,395
|
$
|
3,544
|
$
|
2,415
|
||||
Net
cash used in continuing investing activities
|
(126,955
|
)
|
(298,803
|
)
|
(57,009
|
)
|
||||
Net
cash received from financing activities
|
132,400
|
225,359
|
1,886
|
|||||||
Net
cash used in discontinued operations - operating
activities
|
(1,690
|
)
|
(2,000
|
)
|
(9,463
|
)
|
||||
Net
cash received from discontinued operations - investing
activities
|
-
|
-
|
20,349
|
|||||||
Impact
of exchange rate fluctuations on cash
|
(2,904
|
)
|
(9,010
|
)
|
2,144
|
|||||
Net
increase /
(decrease) in cash and cash equivalents
|
$
|
74,246
|
$
|
(80,910
|
)
|
$
|
(39,678
|
)
|
·
|
Capital
expenditure of US$ 60.4 million, largely in respect of the expansion
of
our broadcasting facilities and equipment in Romania and the Czech
Republic;
|
·
|
A
payment of US$ 30.1 million in connection with our acquisition
of ARJ (see
Item 8, Note 4, “Acquisitions and Disposals, Slovak
Republic”);
|
·
|
A
payment of US$ 27.2 million in connection with the 5% increase
in our
holding of our Romanian operations (see Item 8, Note 4, “Acquisitions and
Disposals, Romania”);
|
·
|
A
payment of EUR 8.0 million (approximately US$ 10.3 million) in
connection
with our acquisition of our 10% stake in Media Pro (see Item 8,
Note 6,
“Investments”); and
|
·
|
A
payment of a further US$ 2.0 million following completion of our
acquisition of a 65.5% stake in Ukrpromtorg-2003 LLC (see Item
8, Note 4,
“Acquisitions and Disposals,
Ukraine”).
|
·
|
Total
cash payments of US$ 218.1 million (net of cash acquired of US$
35.6
million) for the acquisition of the TV Nova (Czech Republic) group
in May
2005 (see item 8, Note 4, “Acquisitions and Disposals, Czech Republic”).
The remainder of the total purchase price of US$ 909.5 million
consisted
of non-cash items, including:
|
·
|
the
issuance of 3.5 million shares of Class A Common Stock (US$ 120.9
million);
|
·
|
the
incurrence of US$ 491.7 million of short-term indebtedness to PPF
(which
was repaid in cash on May 5, 2005);
|
·
|
forgiveness
of a US$ 18.5 million balance categorized as “Other Receivable” in our
Consolidated Balance Sheet as at December 31, 2004;
and
|
·
|
the
placement of US$ 24.7 million of cash into escrow as the second
and final
payment to Mr. Krsak;
|
·
|
A
payment of US$ 20.0 million in connection with the 5% increase in
our
holding of our Romania operations;
|
·
|
A
payment of US$ 2.1 million in connection with our acquisition of
Galaxie
Sport;
|
·
|
A
payment of Euro 4.7 million (approximately US$ 5.7 million) to acquire
the
remaining 3.15% interest in Pro Plus;
|
·
|
Advance
payments of US$ 5.1 million with respect to our acquisition of a
65.5%
interest in Ukrpromtorg 2003 LLC (see Item 8, Note 4, “Acquisitions and
Disposals, Ukraine”);
|
·
|
Capital
expenditures of approximately US$ 26.5 million, primarily related
to
upgrades of broadcasting facilities and production equipment;
and
|
·
|
A
net increase in restricted cash of US$ 18.6 million, of which US$
24.6
million was a result of the acquisition of the TV Nova (Czech Republic)
group, US$ 0.7 million of other increases, and a reduction of US$
6.7
million being the second payment for our acquisition of our Croatia
operations.
|
·
|
Receipt
of approximately US$ 168.7 million (net of fees) from a public offering
of
2,530,000 shares of our Class A Common Stock;
|
·
|
Receipts
of US$ 36.7 million from drawing on credit facilities in Czech Republic
and Slovenia, largely to finance the acquisition of ARJ and the increased
investment in our Romania operations;
and
|
·
|
Repayment
of US$ 75.3 million of amounts drawn under the same credit
facilities.
|
·
|
Net
proceeds of approximately US$ 465.1 million from the issuance of
our
Senior Notes (see Item 8, Note 7, “Senior Notes”). The proceeds from this
loan were used to finance part of the acquisition of the TV Nova
(Czech
Republic) group;
|
·
|
Net
proceeds from the issuance of Class A Common Stock of approximately
US$
236.5 million, of which US$ 230.6 million was raised from the issuance
of
5.4 million shares of Class A Common Stock, the proceeds of which
were
used for our acquisition of the TV Nova (Czech Republic) group and
approximately US$ 5.9 million from stock option
exercises;
|
·
|
Proceeds
from borrowing of our Czech Republic operations (US$ 42.7 million)
and our
Slovenia operations (US$ 23.2 million). US$ 41.6 million of the proceeds
from the borrowings of our Czech Republic operations were used to
repay
the settlement liability discussed in Operating Activities above;
|
·
|
Repayments
of indebtedness by our Czech Republic operations (US$ 8.0 million),
our
Slovenia operations (US$ 31.7 million) and our Croatia operations
(US$ 0.3
million); and
|
·
|
Repayments
of short-term indebtedness to PPF for the purchase of the TV Nova
(Czech
Republic) group (US$ 491.7 million) and Galaxie Sport (US$ 3.0
million).
|
Operating
segment (US$ 000's)
|
December
31,
2006
|
December
31,
2005
|
|||||
Croatia
|
$
|
67,623
|
$
|
40,166
|
|||
Czech
Republic
|
434,897
|
441,569
|
|||||
Romania
|
25,620
|
28,873
|
|||||
Slovak
Republic
|
23,670
|
88
|
|||||
Slovenia
|
-
|
39
|
|||||
Ukraine
(STUDIO 1+1)
|
-
|
10,617
|
|||||
Ukraine
(KINO, CITI)
|
4,621
|
-
|
|||||
Total
|
$
|
556,431
|
$
|
521,352
|
Contractual
Obligations
|
Payments
due by period (US$ 000’s)
|
|||||||||||||||
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than 5 years
|
||||||||||||
Long-Term
Debt - principal
|
$
|
501,816
|
$
|
12,350
|
$
|
1,870
|
$
|
305
|
$
|
487,291
|
||||||
Long-Term
Debt - interest
|
266,857
|
41,895
|
83,839
|
83,635
|
57,488
|
|||||||||||
Capital
Lease Obligations
|
6,735
|
998
|
1,450
|
864
|
3,423
|
|||||||||||
Operating
Leases
|
7,729
|
3,983
|
2,567
|
1,179
|
-
|
|||||||||||
Unconditional
Purchase Obligations
|
124,895
|
115,668
|
9,064
|
13
|
150
|
|||||||||||
Other
Long-Term Obligations
|
25,089
|
21,981
|
3,108
|
-
|
-
|
|||||||||||
Total
Contractual Obligations
|
$
|
933,121
|
$
|
196,875
|
$
|
101,898
|
$
|
85,996
|
$
|
548,352
|
December
31, 2006 (US$
000’s)
|
|||||||
Corporate
|
(1)
- (2)
|
|
$
|
487,291
|
|||
Croatia
operations
|
(3)
|
|
847
|
||||
Czech
Republic operations
|
(4)
- (6)
|
|
11,975
|
||||
Slovenia
operations
|
(7)
|
|
-
|
||||
Ukraine
operations
|
(8)
|
|
1,703
|
||||
Total
|
$
|
501,816
|
(1)
|
In
May 2005, we issued Senior Notes in the aggregate principal amount
of EUR
370.0 million consisting of EUR 245.0 million of 8.25% Senior Notes
due
May 2012 and EUR 125.0 million of floating rate Senior Notes due
May 2012,
which bear interest at six-month Euro Inter-Bank Offered Rate (“EURIBOR”)
plus 5.50% (9.23% was applicable at December 31, 2006). Interest
is
payable semi-annually in arrears on each May 15 and November
15.
|
(2) |
On
July 21, 2006, we entered into a five-year revolving loan agreement
for
EUR 100.0 million (approximately US$ 131.7 million) arranged by the
European Bank for Reconstruction and Development (the “Loan”). ING Bank
N.V. (“ING”) and Ceska Sporitelna, a.s. (“CS”) are participating in the
facility for up to EUR 50.0 million in aggregate. Initial drawings
up to
EUR 100.0 million will be used for certain specified projects in
Central
and Eastern Europe.
|
(3) |
A
total of EUR 0.6 million (approximately
US$ 0.8 million) was drawn down under two loan agreements our Croatia
operations have with Hypo Alpe-Adria-Bank d.d. These
loans bear a variable interest rate of three-month EURIBOR plus 2.50%
and
are repayable in quarterly instalments until April 1, 2011. As at
December
31, 2006, an aggregate rate of 6.00% applied to these loans.
These loan facilities are secured by certain fixed assets of OK,
which as
at September 30, 2006 have a carrying amount of approximately US$
0.1
million.
|
(4) |
CET
21 has a four-year credit facility of CZK 1.2 billion (approximately
US$
57.5 million) with Ceska Sporitelna, a.s. (“CS”). The final repayment date
is October 31, 2009. This facility may, at the option of CET 21,
be drawn
in CZK, US$ or EUR and bears interest at the three-month, six-month
or
twelve-month London Inter-Bank Offered Rate (“LIBOR”), EURIBOR or Prague
Inter-Bank Offered Rate (“PRIBOR”) rate plus 1.95%. This facility is
secured by a pledge of receivables, which are also subject to a factoring
arrangement with Factoring Ceska Sporitelna, a.s., a subsidiary of
CS. As
at December 31, 2006, there were no drawings under this facility.
|
(5) |
CET
21 has a working capital credit facility of CZK 250.0 million
(approximately US$ 12.0 million) with CS, which matures on April
30, 2007.
This working capital facility bears interest at the three-month PRIBOR
rate plus 1.65%. A preliminary agreement has been reached to extend
this
facility for 12 months from maturity. This facility is secured by
a pledge
of receivables, which are also subject to a factoring arrangement
with
Factoring Ceska Sporitelna, a.s. As at December 31, 2006, the full
CZK
250.0 million (approximately US$ 12.0 million) was drawn under this
facility bearing interest at an aggregate 4.20% (the applicable
three-month PRIBOR rate at December 31, 2006 was
2.55%).
|
(6) |
As
at December 31, 2006, there were no drawings under a CZK 600.0 million
(approximately US$ 28.7 million) factoring facility with Factoring
Ceska
Sporitelna, a.s., a subsidiary of CS. This facility is available
until
March 31, 2010 and bears interest at the rate of one-month PRIBOR
plus
1.40% for the period that actively assigned accounts receivable are
outstanding.
|
(7) |
A
revolving five-year facility agreement was entered into by Pro Plus
for up
to EUR 37.5 million (approximately US$ 49.4 million) in aggregate
principal amount with ING Bank N.V., Nova Ljubljanska Banka d.d.,
Ljubljana and Bank Austria Creditanstalt d.d., Ljubljana. The facility
availability amortizes by 10.0% each year for four years commencing
one
year after signing, with 60.0% repayable after five years. This facility
is secured by a pledge of the bank accounts of Pro Plus, the assignment
of
certain receivables, a pledge of our interest in Pro Plus and a guarantee
of our wholly-owned subsidiary CME Media Enterprises B.V. Loans drawn
under this facility will bear interest at a rate of EURIBOR for the
period
of drawing plus a margin of between 2.10% and 3.60% that varies according
to the ratio of consolidated net debt to consolidated broadcasting
cash
flow for Pro Plus. As at December 31, 2006, there were no drawings
under
this revolving facility.
|
(8)
|
On
August 16, 2006 and November 6, 2006, our Ukraine (KINO, CITI)
operations
entered into US$ 0.9 million and US$ 0.6 million, three-year loans
with
Glavred-Media,
LLC,
the minority shareholder in Ukrpromtorg. These loans are unsecured
and
bear interest at 9.0%. Our partners have also extended short-term
non-interest bearing loans to our Ukraine (KINO, CITI) operations
amounting to US$ 0.2 million.
|
ITEM 7A. |
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Expected
Maturity Dates
|
2007
|
2008
|
2009
|
2010
|
2011
|
Thereafter
|
|||||||||||||
Total
Debt in Euro (000's)
|
|||||||||||||||||||
Fixed
Rate
|
245,000
|
||||||||||||||||||
Average
Interest Rate
|
8.25
|
%
|
|||||||||||||||||
Variable
Rate
|
130
|
137
|
144
|
153
|
80
|
125,000
|
|||||||||||||
Average
Interest Rate
|
5.50
|
%
|
5.50
|
%
|
5.50
|
%
|
5.50
|
%
|
5.50
|
%
|
8.57
|
%
|
|||||||
Total
Debt in US$ (000's)
|
|||||||||||||||||||
Fixed
Rate
|
1,500
|
||||||||||||||||||
Average
Interest Rate
|
2.74
|
%
|
|||||||||||||||||
Total
Debt in CZK (000's)
|
|||||||||||||||||||
Fixed
Rate
|
|||||||||||||||||||
Average
Interest Rate
|
|||||||||||||||||||
Variable
Rate
|
250,000
|
||||||||||||||||||
Average
Interest Rate
|
4.20
|
%
|
Yearly
interest charge if interest rates increase by
(US$
000s):
|
||||||||||||||||||||||
Value
of Debt as at December 31, 2006 (US$ 000's)
|
Interest
Rate as at December 31, 2006
|
Yearly
Interest
Charge
(US$
000’s)
|
1%
|
2%
|
3%
|
4%
|
5%
|
|||||||||||||||
165,472
(EUR
125.6 million)
|
4.73%
- 8.57
|
%
|
15,242
|
16,896
|
18,551
|
20,206
|
21,860
|
23,515
|
||||||||||||||
11,975
(CZK
250.0 million)
|
4.20
|
%
|
503
|
623
|
742
|
862
|
982
|
1,102
|
||||||||||||||
Total
|
15,745
|
17,519
|
19,293
|
21,068
|
22,842
|
24,617
|
ITEM 8. |
FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA
|
|
December
31,
2006
|
December
31,
2005
|
|||||
(as
restated, see Note
2)
|
|||||||
ASSETS
|
|
||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
145,904
|
$
|
71,658
|
|||
Restricted
cash (Note 8)
|
4,954
|
34,172
|
|||||
Accounts
receivable, net (Note 9)
|
152,505
|
97,396
|
|||||
Income
taxes receivable
|
3,053
|
9,930
|
|||||
Program
rights
|
59,645
|
34,914
|
|||||
Other
current assets (Note 10)
|
47,555
|
38,856
|
|||||
Total
current assets
|
413,616
|
286,926
|
|||||
Non-current
assets
|
|||||||
Investments
(Note 6)
|
19,214
|
23,936
|
|||||
Acquisition
costs (Note 4)
|
-
|
5,118
|
|||||
Property,
plant and equipment, net (Note 11)
|
115,805
|
58,897
|
|||||
Program
rights
|
76,638
|
33,081
|
|||||
Goodwill
(Note 5)
|
905,580
|
746,583
|
|||||
Broadcast
licenses, net (Note 5)
|
198,730
|
171,591
|
|||||
Other
intangible assets, net (Note 5)
|
71,942
|
47,658
|
|||||
Other
non-current assets (Note 10)
|
17,475
|
15,060
|
|||||
Total
non-current assets
|
1,405,384
|
1,101,924
|
|||||
Total
assets
|
$
|
1,819,000
|
$
|
1,388,850
|
December
31,
2006
|
December
31,
2005
|
||||||
(as
restated, see Note 2)
|
|||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
||||||
Current
liabilities
|
|||||||
Accounts
payable and accrued liabilities (Note 12)
|
$
|
119,717
|
$
|
84,849
|
|||
Duties
and other taxes payable
|
31,707
|
27,654
|
|||||
Income
taxes payable (Note 16)
|
12,434
|
21,894
|
|||||
Credit
facilities and obligations under capital leases (Note 13)
|
13,057
|
43,566
|
|||||
Deferred
consideration - Croatia (Note 8)
|
4,010
|
3,591
|
|||||
Deferred
consideration - Czech Republic (Note 4)
|
-
|
24,402
|
|||||
Deferred
consideration - Ukraine (Note 4)
|
200
|
-
|
|||||
Deferred
tax (Note 16)
|
1,836
|
1,005
|
|||||
Total
current liabilities
|
182,961
|
206,961
|
|||||
Non-current
liabilities
|
|||||||
Credit
facilities and obligations under capital leases (Note 13)
|
6,359
|
4,740
|
|||||
Senior
Notes (Note 7)
|
487,291
|
436,424
|
|||||
Income
taxes payable (Note 16)
|
3,000
|
681
|
|||||
Deferred
tax (Note 16)
|
58,092
|
42,149
|
|||||
Other
non-current liabilities
|
19,342
|
4,105
|
|||||
Total
non-current liabilities
|
574,084
|
488,099
|
|||||
Commitments
and contingencies (Note 21)
|
|||||||
Minority
interests in consolidated subsidiaries
|
26,189
|
13,237
|
|||||
SHAREHOLDERS'
EQUITY (Note 15):
|
|||||||
Nil
shares of Preferred Stock of $0.08 each (2005 - nil)
|
-
|
-
|
|||||
34,412,138
shares of Class A Common Stock of $0.08 each (2005 - 31,032,994)
|
2,753
|
2,482
|
|||||
6,312,839
shares of Class B Common Stock of $0.08 each (2005 -
6,966,533)
|
505
|
558
|
|||||
Additional
paid-in capital
|
931,108
|
754,061
|
|||||
Accumulated
deficit
|
(31,730
|
)
|
(52,154
|
)
|
|||
Accumulated
other comprehensive income / (loss)
|
133,130
|
(24,394
|
)
|
||||
Total
shareholders’ equity
|
1,035,766
|
680,553
|
|||||
Total
liabilities and shareholders’ equity
|
$ |
1,819,000
|
$
|
1,388,850
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(as
restated, see Note 2)
|
(as
restated, see Note 2)
|
|||||||||
Net
revenues
|
$
|
603,115
|
$
|
400,978
|
$
|
182,339
|
||||
Operating
costs
|
90,060
|
65,138
|
33,615
|
|||||||
Cost
of programming
|
227,509
|
148,837
|
71,793
|
|||||||
Depreciation
of station property, plant & equipment
|
25,795
|
16,367
|
6,429
|
|||||||
Amortization
of broadcast licenses and other intangibles (Note 5)
|
18,813
|
11,180
|
465
|
|||||||
Cost
of revenues
|
362,177
|
241,522
|
112,302
|
|||||||
Station
selling, general and administrative expenses
|
65,412
|
46,382
|
22,112
|
|||||||
Corporate
operating costs
|
34,104
|
25,547
|
29,254
|
|||||||
Impairment
charge (Note 5)
|
748
|
35,331
|
-
|
|||||||
Operating
income
|
140,674
|
52,196
|
18,671
|
|||||||
Interest
income
|
6,365
|
4,124
|
4,318
|
|||||||
Interest
expense
|
(44,228
|
)
|
(29,387
|
)
|
(1,203
|
)
|
||||
Foreign
currency exchange (loss) / gain, net
|
(44,908
|
)
|
37,968
|
(574
|
)
|
|||||
Change
in fair value of derivatives
|
(12,539
|
)
|
-
|
-
|
||||||
Other
income / (expense)
|
3,038
|
(4,705
|
)
|
(698
|
)
|
|||||
Income
before provision for income taxes, minority interest, equity in income
of
unconsolidated affiliates and discontinued
operations
|
48,402
|
60,196
|
20,514
|
|||||||
Provision
for income taxes (Note 16)
|
(14,962
|
)
|
(16,691
|
)
|
(11,089
|
)
|
||||
Income
before minority interest, equity in income of unconsolidated affiliates
and discontinued operations
|
33,440
|
43,505
|
9,425
|
|||||||
Minority
interest in income of consolidated subsidiaries
|
(13,602
|
)
|
(8,908
|
)
|
(4,106
|
)
|
||||
Equity
in (loss) / income of unconsolidated affiliates (Note 6)
|
(730
|
)
|
8,238
|
10,619
|
||||||
Gain
on sale of unconsolidated affiliate (Note 6)
|
6,179
|
-
|
-
|
|||||||
Net
income from continuing operations
|
25,287
|
42,835
|
15,938
|
|||||||
Discontinued
operations (Note 20):
|
||||||||||
Pre-tax
income from discontinued operations (Czech Republic)
|
-
|
164
|
146
|
|||||||
Tax
on disposal of discontinued operations (Czech Republic)
|
(4,863
|
)
|
(677
|
)
|
2,378
|
|||||
Net
(loss) / income from discontinued operations
|
(4,863
|
)
|
(513
|
)
|
2,524
|
|||||
Net
income
|
$
|
20,424
|
$
|
42,322
|
$
|
18,462
|
||||
Currency
translation adjustment, net
|
157,524
|
(33,354
|
)
|
4,228
|
||||||
Total
comprehensive income
|
$
|
177,948
|
$
|
8,968
|
$
|
22,690
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(as
restated, see Note 2)
|
(as
restated, see Note 2)
|
|||||||||
PER
SHARE DATA (Note
18):
|
||||||||||
Net
income/(loss) per share:
|
||||||||||
Continuing
operations - Basic
|
$
|
0.63
|
$
|
1.24
|
$
|
0.57
|
||||
Continuing
operations - Diluted
|
0.62
|
1.21
|
0.55
|
|||||||
Discontinued
operations - Basic
|
(0.12
|
)
|
(0.01
|
)
|
0.09
|
|||||
Discontinued
operations - Diluted
|
(0.12
|
)
|
(0.01
|
)
|
0.09
|
|||||
Net
income - Basic
|
0.51
|
1.22
|
0.66
|
|||||||
Net
income - Diluted
|
$
|
0.50
|
$
|
1.19
|
$
|
0.63
|
||||
Weighted
average common shares used in computing per share amounts
(000’s):
|
||||||||||
Basic
|
40,027
|
34,664
|
27,871
|
|||||||
Diluted
|
40,600
|
35,430
|
29,100
|
Class
A Common Stock
|
Class
B Common Stock
|
Accumulated
|
|||||||||||||||||||||||
Number
of shares
|
Par
value
|
Number
of shares
|
Par
value
|
Additional
Paid-In Capital
|
Accumulated
Deficit
|
Other
Comprehensive Income/(Loss)
|
Total
Shareholders' Equity
|
||||||||||||||||||
BALANCE,
December 31, 2003 (as restated, See Note 2)
|
19,269,766
|
$
|
1,542
|
7,334,768
|
$
|
587
|
$
|
379,601
|
$
|
(112,938
|
)
|
$
|
4,732
|
$
|
273,524
|
||||||||||
Stock-based
Compensation
|
-
|
-
|
-
|
-
|
10,171
|
-
|
-
|
10,171
|
|||||||||||||||||
Stock
options exercised
|
1,083,634
|
87
|
-
|
-
|
2,853
|
-
|
-
|
2,940
|
|||||||||||||||||
Warrants
exercised
|
696,000
|
55
|
-
|
-
|
1,688
|
-
|
-
|
1,743
|
|||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
18,462
|
-
|
18,462
|
|||||||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
4,228
|
4,228
|
|||||||||||||||||
BALANCE,
December 31, 2004 (as restated, See Note 2)
|
21,049,400
|
$
|
1,684
|
7,334,768
|
$
|
587
|
$
|
394,313
|
$
|
(94,476
|
)
|
$
|
8,960
|
$
|
311,068
|
||||||||||
Stock-based
Compensation
|
-
|
-
|
-
|
-
|
3,127
|
-
|
-
|
3,127
|
|||||||||||||||||
Shares
issued to PPF
|
3,500,000
|
280
|
-
|
-
|
120,603
|
-
|
-
|
120,883
|
|||||||||||||||||
Shares
issued, net of fees
|
5,405,000
|
432
|
-
|
-
|
230,172
|
-
|
-
|
230,604
|
|||||||||||||||||
Stock
options exercised
|
710,359
|
57
|
-
|
-
|
5,846
|
-
|
-
|
5,903
|
|||||||||||||||||
Conversion
of Class B to Class A Common Stock
|
368,235
|
29
|
(368,235
|
)
|
(29
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
42,322
|
-
|
42,322
|
|||||||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(33,354
|
)
|
(33,354
|
)
|
|||||||||||||||
BALANCE,
December 31, 2005 (as restated, See Note 2)
|
31,032,994
|
$
|
2,482
|
6,966,533
|
$
|
558
|
$
|
754,061
|
$
|
(52,154
|
)
|
$
|
(24,394
|
)
|
$
|
680,553
|
|||||||||
Stock-based
Compensation
|
-
|
-
|
-
|
-
|
4,898
|
-
|
-
|
4,898
|
|||||||||||||||||
Shares
issued, net of fees
|
2,530,000
|
202
|
-
|
-
|
168,452
|
-
|
-
|
168,654
|
|||||||||||||||||
Stock
options exercised
|
95,450
|
8
|
100,000
|
8
|
3,697
|
-
|
-
|
3,713
|
|||||||||||||||||
Conversion
of Class B to Class A Common Stock
|
753,694
|
61
|
(753,694
|
)
|
(61
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
20,424
|
-
|
20,424
|
|||||||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
157,524
|
157,524
|
|||||||||||||||||
BALANCE,
December 31, 2006
|
34,412,138
|
$
|
2,753
|
6,312,839
|
$
|
505
|
$
|
931,108
|
$
|
(31,730
|
)
|
$
|
133,130
|
$
|
1,035,766
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(as
restated, see Note 2)
|
(as
restated, see Note 2)
|
|||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
income
|
$
|
20,424
|
$
|
42,322
|
$
|
18,462
|
||||
Adjustments
to reconcile net income to net cash generated from/(used in) operating
activities:
|
||||||||||
(Income)/loss
from discontinued operations (Note 20)
|
4,
863
|
513
|
(2,524
|
)
|
||||||
Equity
in income of unconsolidated affiliates, net of dividends
received
|
730
|
3,454
|
(4,340
|
)
|
||||||
Gain
on sale of unconsolidated affiliate (Note 6)
|
(6,179
|
)
|
-
|
-
|
||||||
Depreciation
and amortization
|
164,479
|
110,846
|
49,357
|
|||||||
Impairment
charge (Note 5)
|
748
|
35,331
|
-
|
|||||||
Loss
on disposal of fixed assets
|
1,292
|
685
|
18
|
|||||||
Stock-based
compensation (Note 17)
|
3,575
|
3,127
|
10,171
|
|||||||
Minority
interest in income of consolidated subsidiaries
|
13,602
|
8,908
|
4,106
|
|||||||
Change
in fair value of derivative instruments (Note 14)
|
12,539
|
-
|
-
|
|||||||
Foreign
currency exchange loss / (gain), net
|
44,908
|
(37,968
|
)
|
574
|
||||||
Net
change in (net of effects of acquisitions and disposals of
businesses):
|
||||||||||
Accounts
receivable
|
(42,270
|
)
|
1,693
|
(9,100
|
)
|
|||||
Program
rights
|
(173,345
|
)
|
(110,364
|
)
|
(45,446
|
)
|
||||
Other
assets
|
(6,417
|
)
|
11,989
|
(4,912
|
)
|
|||||
Settlement
liability (Note 12)
|
(10,007
|
)
|
(41,606
|
)
|
-
|
|||||
Other
accounts payable and accrued liabilities
|
26,915
|
(13,642
|
)
|
(13,611
|
)
|
|||||
Income
taxes payable
|
(1,697
|
)
|
9,597
|
548
|
||||||
Deferred
taxes
|
9,705
|
(17,271
|
)
|
-
|
||||||
VAT
and other taxes payable
|
9,530
|
(4,070
|
)
|
(888
|
)
|
|||||
Net
cash generated from continuing operating
activities
|
73,395
|
3,544
|
2,415
|
|||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES:
|
||||||||||
Net
change in restricted cash
|
5,516
|
(19,521
|
)
|
(10,145
|
)
|
|||||
Purchase
of property, plant and equipment
|
(60,387
|
)
|
(26,548
|
)
|
(10,808
|
)
|
||||
Proceeds
from disposal of property, plant and equipment
|
19
|
125
|
72
|
|||||||
Investments
in subsidiaries and unconsolidated affiliates
|
(72,603
|
)
|
(35,305
|
)
|
(35,800
|
)
|
||||
Partial
consideration for acquisition of TV Nova (Czech Republic)
group
|
-
|
(218,054
|
)
|
-
|
||||||
Proceeds
from partial disposal of investment
|
-
|
-
|
42
|
|||||||
Repayment
of loans and advances to related parties
|
500
|
500
|
400
|
|||||||
License
costs, other assets and intangible assets
|
-
|
-
|
(770
|
)
|
||||||
Net
cash used in continuing investing activities
|
(126,955
|
)
|
(298,803
|
)
|
(57,009
|
)
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(as
restated, see Note 2)
|
(as
restated, see Note 2)
|
|||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Net
proceeds from issuance of Senior Notes
|
-
|
465,120
|
-
|
|||||||
Proceeds
from credit facilities
|
36,681
|
65,902
|
-
|
|||||||
Payment
of credit facilities and capital leases
|
(75,263
|
)
|
(41,243
|
)
|
(2,797
|
)
|
||||
Repayment
of loans from unconsolidated affiliates
|
-
|
(5,827
|
)
|
-
|
||||||
Repayment
of notes for acquisition of TV Nova (Czech Republic) group
|
-
|
(491,703
|
)
|
-
|
||||||
Repayment
of liabilities on acquisition of Galaxie Sport
|
-
|
(3,000
|
)
|
-
|
||||||
Proceeds
from exercise of stock options and warrants
|
3,713
|
5,903
|
4,683
|
|||||||
Issuance
of Class A Common Stock
|
168,654
|
230,604
|
-
|
|||||||
Dividends
paid to minority shareholders
|
(1,385
|
)
|
(397
|
)
|
-
|
|||||
Net
cash received from financing activities
|
132,400
|
225,359
|
1,886
|
|||||||
NET
CASH USED IN DISCONTINUED OPERATIONS-OPERATING
|
(1,690
|
)
|
(2,000
|
)
|
(9,463
|
)
|
||||
NET
CASH RECEIVED FROM DISCONTINUED OPERATIONS-INVESTING
|
-
|
-
|
20,349
|
|||||||
Impact
of exchange rate fluctuations on cash
|
(2,904
|
)
|
(9,010
|
)
|
2,144
|
|||||
Net
increase/(decrease) in cash and cash equivalents
|
74,246
|
(80,910
|
)
|
(39,678
|
)
|
|||||
CASH
AND CASH EQUIVALENTS, beginning of year
|
71,658
|
152,568
|
192,246
|
|||||||
CASH
AND CASH EQUIVALENTS, end of year
|
$
|
145,904
|
$
|
71,658
|
$
|
152,568
|
||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||||
Cash
paid for interest
|
$
|
41,038
|
$
|
19,402
|
$
|
581
|
||||
Cash
paid for income taxes (net of refunds)
|
$
|
35,831
|
$
|
10,066
|
$
|
18,920
|
||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
|
||||||||||
Exchange
of 3.5 million shares of Class A Common Stock (Note 4)
|
$
|
-
|
$
|
120,883
|
$
|
-
|
||||
Notes
taken out for acquisition of TV Nova (Czech Republic) group (Note
4)
|
$
|
-
|
$
|
491,703
|
$
|
-
|
||||
Exchange
of Other receivable (Note 4)
|
$
|
-
|
$
|
18,541
|
$
|
-
|
||||
Purchase
of Krsak interest financed with payable (Note 4)
|
$
|
27,591
|
$
|
24,683
|
$
|
-
|
||||
Purchase
of share of Romania operations through settlement of loans receivable
(Note 4)
|
$
|
-
|
$
|
-
|
$
|
3,400
|
||||
Acquisition
of property, plant and equipment under capital lease
|
$
|
702
|
$
|
4,967
|
$
|
333
|
Company
Name
|
Effective
Voting
Interest
|
Jurisdiction
of Organization
|
Type
of Affiliate (1)
|
Nova
TV d.d. (“Nova TV (Croatia)”)
|
100.0%
|
Croatia
|
Subsidiary
|
Operativna
Kompanija d.o.o. (“OK”)
|
100.0%
|
Croatia
|
Subsidiary
|
Media
House d.o.o.
|
100.0%
|
Croatia
|
Subsidiary
|
CME
Media Investments s.r.o.
|
100.0%
|
Czech
Republic
|
Subsidiary
|
VILJA
a.s. (“Vilja”)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
CET
21 spol. s.r.o. (“CET 21”)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
ERIKA,
a.s.
|
100.0%
|
Czech
Republic
|
Subsidiary
|
MEDIA
CAPITOL, a.s.
|
100.0%
|
Czech
Republic
|
Subsidiary
|
NOVA-V.I.P.,
a.s.
|
100.0%
|
Czech
Republic
|
Subsidiary
(in liquidation)
|
HARTIC,
a.s.
|
100.0%
|
Czech
Republic
|
Subsidiary
|
Galaxie
Sport s.r.o. (“Galaxie Sport”)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
Media
Pro International S.A. (“MPI”)
|
90.0%
|
Romania
|
Subsidiary
|
Media
Vision S.R.L. (“Media Vision”)
|
75.0%
|
Romania
|
Subsidiary
|
MPI
Romania B.V.
|
90.0%
|
Netherlands
|
Subsidiary
|
Pro
TV S.A. (“Pro TV”)
|
90.0%
|
Romania
|
Subsidiary
|
Sport
Radio TV Media S.R.L. (“TV Sport”)
|
18.0%
|
Romania
|
Equity-Accounted
Affiliate
|
Media
Pro B.V
|
10.0%
|
Netherlands
|
Cost
investment
|
Media
Pro Management S.A.
|
10.0%
|
Romania
|
Cost
investment
|
A.R.J.,
a.s. (“ARJ”)
|
100.0%
|
Slovak
Republic
|
Subsidiary
|
Slovenska
televizna spolocnost, s.r.o. (“STS”)
|
89.8%
|
Slovak
Republic
|
Subsidiary
|
MARKIZA-SLOVAKIA,
spol. s.r.o. (“Markiza”)
|
80.0%
|
Slovak
Republic
|
Subsidiary
|
GAMATEX,
spol. s.r.o.
|
89.8%
|
Slovak
Republic
|
Subsidiary
(in liquidation)
|
A.D.A.M.
a.s.
|
89.8%
|
Slovak
Republic
|
Subsidiary
(in liquidation)
|
Company
Name
|
Effective
Voting
Interest
|
Jurisdiction
of Organization
|
Type
of Affiliate (1)
|
MMTV
1 d.o.o.
|
100.0%
|
Slovenia
|
Subsidiary
|
Produkcija
Plus d.o.o. (“Pro Plus”)
|
100.0%
|
Slovenia
|
Subsidiary
|
POP
TV d.o.o. (“Pop TV”)
|
100.0%
|
Slovenia
|
Subsidiary
|
Kanal
A d.o.o. (“Kanal A”)
|
100.0%
|
Slovenia
|
Subsidiary
|
Euro
3 TV d.o.o
|
42.0%
|
Slovenia
|
Equity-Accounted
Affiliate
|
MTC
Holding d.o.o.
|
24.0%
|
Slovenia
|
Equity-Accounted
Affiliate (in liquidation)
|
International
Media Services Ltd. (“IMS”)
|
60.0%
|
Bermuda
|
Subsidiary
|
Innova
Film GmbH (“Innova”)
|
60.0%
|
Germany
|
Subsidiary
|
Foreign
Enterprise “Inter-Media” (“Inter-Media”)
|
60.0%
|
Ukraine
|
Subsidiary
|
TV
Media Planet Ltd.
|
60.0%
|
Cyprus
|
Subsidiary
|
Studio
1+1 LLC (“Studio 1+1”)
|
18.0%
|
Ukraine
|
Consolidated
Variable Interest Entity
|
Ukrainian Media
Services LLC
|
99.0%
|
Ukraine
|
Subsidiary
|
Ukrpromtorg
-2003 LLC
|
65.5%
|
Ukraine
|
Subsidiary
|
Gravis
LLC
|
60.4%
|
Ukraine
|
Subsidiary
|
Delta
JSC
|
60.4%
|
Ukraine
|
Subsidiary
|
Nart
LLC
|
65.5%
|
Ukraine
|
Subsidiary
|
TV
Stimul LLC
|
49.1%
|
Ukraine
|
Equity-Accounted
Affiliate
|
CME
Media Enterprises B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
CME
Czech Republic II B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
CME
Romania B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
Central
European Media Enterprises N.V.
|
100.0%
|
Netherlands
Antilles
|
Subsidiary
|
Central
European Media Enterprises II B.V.
|
100.0%
|
Netherlands
Antilles
|
Subsidiary
|
CME
SR d.o.o.
|
100.0%
|
Serbia
|
Subsidiary
|
CME
Ukraine Holding GmbH
|
100.0%
|
Austria
|
Subsidiary
|
CME
Cyprus Holding Ltd.
|
100.0%
|
Cyprus
|
Subsidiary
|
CME
Development Corporation
|
100.0%
|
Delaware
|
Subsidiary
|
(1)
|
All
subsidiaries have been consolidated in our Consolidated Financial
Statements. All equity-accounted affiliates have been accounted for
using
the equity method. All cost investments have been accounted for using
the
cost method.
|
(2)
|
For
further information, see Note 3, “Summary of Significant Accounting
Policies”.
|
As
reported previously
|
Adjustment
|
As
restated
|
||||||||
Balance
Sheet (as of December 31, 2003)
|
||||||||||
Additional
paid-in capital at December 31, 2003
|
$
|
372,662
|
$
|
6,939
|
$
|
379,601
|
||||
Accumulated
deficit at December 31, 2003
|
(105,999
|
)
|
(6,939
|
)
|
(112,938
|
)
|
||||
Balance
Sheet (as of December 31, 2004)
|
||||||||||
Additional
paid-in capital at December 31, 2004
|
$
|
387,305
|
$
|
7,008
|
$
|
394,313
|
||||
Accumulated
deficit at December 31, 2004
|
(87,468
|
)
|
(7,008
|
)
|
(94,476
|
)
|
||||
Balance
Sheet (as of December 31, 2005)
|
||||||||||
Additional
paid-in capital at December 31, 2005
|
746,880
|
7,181
|
754,061
|
|||||||
Accumulated
deficit at December 31, 2005
|
(44,973
|
)
|
(7,181
|
)
|
(52,154
|
)
|
||||
Statement
of Operations (for the Year Ended December 31,
2004)
|
||||||||||
Corporate
operating costs
|
(29,185
|
)
|
(69
|
)
|
(29,254
|
)
|
||||
Operating
income
|
18,740
|
(69
|
)
|
18,671
|
||||||
Income
from continuing operations
|
16,007
|
(69
|
)
|
15,938
|
||||||
Net
income
|
18,531
|
(69
|
)
|
18,462
|
||||||
Net
income from continuing operations per share - Basic
|
0.57
|
0.00
|
0.57
|
|||||||
Net
income per share - Basic
|
0.66
|
0.00
|
0.66
|
As reported
previously
|
Adjusted
|
As
restated
|
||||||||
Statement
of Operations (for the Year Ended December 31,
2005)
|
||||||||||
Corporate
operating costs
|
(25,374
|
)
|
(173
|
)
|
(25,547
|
)
|
||||
Operating
income
|
52,369
|
(173
|
)
|
52,196
|
||||||
Income
from continuing operations
|
43,008
|
(173
|
)
|
42,835
|
||||||
Net
income
|
42,495
|
(173
|
)
|
42,322
|
||||||
Net
income from continuing operations per share - Basic
|
1.24
|
0.00
|
1.24
|
|||||||
Net
income per share - Basic
|
1.23
|
0.00
|
1.22
|
December
31,
2006
|
December
31,
2005
|
||||||
Balance
Sheet:
|
|||||||
Current
assets
|
$
|
22,802
|
$
|
18,475
|
|||
Non-current
assets
|
5,126
|
1,315
|
|||||
Current
liabilities
|
(10,534
|
)
|
(9,678
|
)
|
|||
Non-current
liabilities
|
-
|
(106
|
)
|
||||
Minority
interest
|
(6,958
|
)
|
(4,002
|
)
|
|||
Net
Assets
|
$
|
10,436
|
$
|
6,004
|
For
the year ended
|
||||||||||
December
31,
2006
|
December
31,
2005
|
December
31,
2004
|
||||||||
Statement
of Operations:
|
||||||||||
Net
revenues
|
$
|
83,759
|
$
|
62,586
|
$
|
43,903
|
||||
Operating
income
|
11,816
|
12,401
|
6,001
|
|||||||
Net
income
|
$
|
4,428
|
$
|
5,423
|
$
|
2,985
|
Asset
category
|
Estimated
useful life
|
|||
Land
|
Indefinite
|
|||
Buildings
|
25
years
|
|||
Station
machinery, fixtures and equipment
|
4
- 8 years
|
|||
Other
equipment
|
3
- 8 years
|
|||
Software
licenses
|
3
- 5 years
|
Type
of programming
|
Amortization
%
|
|||||||||||||||
Run
1
|
Run
2
|
|
Run
3
|
Run
4
|
Run
5
|
|||||||||||
Special
blockbuster
|
30
|
%
|
25
|
%
|
20
|
%
|
15
|
%
|
10
|
%
|
||||||
Films
and series, 2 runs
|
65
|
%
|
35
|
%
|
-
|
-
|
-
|
|||||||||
Films
and series, 3 runs
|
60
|
%
|
30
|
%
|
10
|
%
|
-
|
-
|
||||||||
Concerts,
documentaries, film about film, etc.
|
100
|
%
|
-
|
-
|
-
|
-
|
·
|
We
intend to renew the licenses into the foreseeable
future;
|
·
|
We
have precedents of renewals, or reasonable expectation of
renewals;
|
·
|
We
do not expect any substantial cost to be incurred as part of a future
license renewal and no costs have been incurred in the renewals to
date;
|
·
|
We
have not experienced any historical evidence of a compelling challenge
to
our holding these licenses; and
|
·
|
We
do not foresee that the technology used to exploit these licenses
will
undergo significant changes in the foreseeable
future.
|
For
the Years Ended December 31,
|
||||||||||
2005
|
2004
|
|||||||||
Net
income
|
As
Reported
|
$
|
42,322
|
$
|
18,462
|
|||||
Add:
Stock-based compensation expense included in reported net income,
net of
related tax effects
|
As
Reported
|
3,127
|
10,171
|
|||||||
Deduct:
Total stock-based compensation expense determined under fair value
based
method for all awards, net of related tax effects
|
Pro
Forma Expense
|
(3,196
|
)
|
(10,384
|
)
|
|||||
Net
income
|
Pro
Forma
|
$
|
42,253
|
$
|
18,249
|
|||||
Net
income per share - Basic:
|
As
Reported
|
$
|
1.22
|
$
|
0.66
|
|||||
|
Pro
Forma
|
$
|
1.22
|
$
|
0.65
|
|||||
Net
income per share - Diluted:
|
As
Reported
|
$
|
1.19
|
$
|
0.63
|
|||||
|
Pro
Forma
|
$
|
1.19
|
$
|
0.63
|
Fair
Value on Acquisition
|
||||
Cash
|
$
|
35,592
|
||
Receivables
|
56,832
|
|||
Property,
plant and equipment
|
17,379
|
|||
Program
library
|
26,937
|
|||
Intangible
assets subject to amortization (1)
|
178,054
|
|||
Intangible
assets not subject to amortization (2)
|
17,979
|
|||
Goodwill
|
723,503
|
|||
Other
assets
|
23,562
|
|||
Liabilities
|
(122,249
|
)
|
||
Deferred
tax liability
|
(45,933
|
)
|
||
Minority
interest
|
(2,200
|
)
|
||
Total
purchase price (3)
|
$
|
909,456
|
Pro-forma
(unaudited)
|
For
the Years Ended December 31,
|
||||||
2005
|
2004
|
||||||
Net
revenues
|
$
|
483,102
|
$
|
390,139
|
|||
Net
income from continuing operations
|
60,839
|
36,153
|
|||||
Net
income
|
60,326
|
38,677
|
|||||
Per
Share Data:
|
|||||||
Net
income
-
Basic
|
$
|
1.60
|
$
|
1.05
|
|||
Net
income - Diluted
|
$
|
1.57
|
$
|
1.02
|
Fair
Value on Acquisition
|
||||
Intangible
assets subject to amortization (1)
|
$
|
4,655
|
||
Intangible
assets not subject to amortization (2)
|
12,947
|
|||
Goodwill
|
11,376
|
|||
Deferred
tax liability
|
(2,816
|
)
|
||
Minority
interest
|
1,038
|
|||
Total
purchase price
|
$
|
27,200
|
Fair
Value on Acquisition
|
||||
Property,
plant and equipment
|
$
|
870
|
||
Program
library
|
185
|
|||
Other
assets
|
733
|
|||
Intangible
assets subject to amortization (1)
|
8,128
|
|||
Intangible
assets not subject to amortization (2)
|
530
|
|||
Goodwill
|
21,288
|
|||
Deferred
tax liability
|
(1,893
|
)
|
||
Total
purchase price (3)
|
$
|
29,841
|
Fair
Value on Acquisition
|
||||
Property,
plant and equipment
|
$
|
2,615
|
||
Intangible
assets subject to amortization (1)
|
968
|
|||
Other
assets
|
239
|
|||
Goodwill
|
4,627
|
|||
Deferred
tax liability
|
(724
|
)
|
||
Other
liabilities
|
(373
|
)
|
||
Total
purchase price (2)
|
$
|
7,352
|
Balance
Dec
31, 2004
|
Additions
|
Allocation
/ Adjustment (1)
|
Impairment
charge (2)
|
Foreign
currency movement
|
Balance
Dec
31, 2005
|
||||||||||||||
Croatia
|
$
|
31,446
|
$
|
-
|
$
|
(18,817
|
)
|
$
|
(9,706
|
)
|
$
|
(2,228
|
)
|
$
|
695
|
||||
Czech
Republic
|
-
|
727,282
|
-
|
-
|
(20,332
|
)
|
706,950
|
||||||||||||
Romania
|
8,826
|
10,928
|
-
|
-
|
-
|
19,754
|
|||||||||||||
Slovakia
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||
Slovenia
|
14,724
|
2,300
|
-
|
-
|
(1,936
|
)
|
15,088
|
||||||||||||
Ukraine
(STUDIO 1+1)
|
4,096
|
-
|
-
|
-
|
-
|
4,096
|
|||||||||||||
Total
|
$
|
59,092
|
$
|
740,510
|
$
|
(18,817
|
)
|
$
|
(9,706
|
)
|
$
|
(24,496
|
)
|
$
|
746,583
|
Balance
Dec
31, 2005
|
Additions
|
Allocation
/ Adjustment (1)
|
Impairment
charge (2)
|
Foreign
currency movement
|
Balance
Dec
31, 2006
|
||||||||||||||
Croatia
|
$
|
695
|
$
|
-
|
$
|
-
|
$
|
(748
|
)
|
$
|
53
|
$
|
-
|
||||||
Czech
Republic
|
706,950
|
-
|
(7,580
|
)
|
-
|
124,416
|
823,786
|
||||||||||||
Romania
|
19,754
|
11,376
|
-
|
-
|
-
|
31,130
|
|||||||||||||
Slovakia
|
-
|
21,288
|
-
|
-
|
4,195
|
25,483
|
|||||||||||||
Slovenia
|
15,088
|
-
|
-
|
-
|
1,370
|
16,458
|
|||||||||||||
Ukraine
(STUDIO 1+1)
|
4,096
|
-
|
-
|
-
|
-
|
4,096
|
|||||||||||||
Ukraine
(KINO, CITI)
|
-
|
4,627
|
-
|
-
|
-
|
4,627
|
|||||||||||||
Total
|
$
|
746,583
|
$
|
37,291
|
$
|
(7,580
|
)
|
$
|
(748
|
)
|
$
|
130,034
|
$
|
905,580
|
(1)
|
At
the year end, we had not completed our purchase price allocation,
and the
excess of the purchase price over the net book value was preliminarily
allocated to goodwill. After we completed our fair value exercise,
part of
this balance was allocated to other asset and liability
accounts.
|
(2)
|
When
we updated our medium-term forecast models at June 30, 2006 and
2005, we
determined that the forecast future cash flows of our Croatia operations
had decreased compared to our previous forecast. In such circumstances,
SFAS 142 “Goodwill and Other Intangible Assets” requires that the carrying
value of the intangible assets with indefinite lives are compared
to their
fair value to determine whether an impairment exists. If an asset
is
determined to be impaired, the loss is measured as the excess of
the
carrying value over the fair value. As a result of our analysis,
we
recognized an impairment charge of US$ 0.7 million (2005: US$ 9.7
million) relating
to goodwill. A further impairment charge relating to other Long-Lived
Assets was not deemed necessary under the requirements of SFAS
144
“Accounting for the Impairment or Disposal of Long-Lived
Assets”.
|
Indefinite-lived
broadcast licenses
|
Amortized
broadcast licenses
|
Total
|
||||||||
Balance,
December 31, 2004
|
$
|
13,400
|
$
|
1,175
|
$
|
14,575
|
||||
Additions
|
6,639
|
165,576
|
172,215
|
|||||||
Allocation
(1)
|
18,654
|
-
|
18,654
|
|||||||
Amortization
|
-
|
(9,316
|
)
|
(9,316
|
)
|
|||||
Impairment
charge (2)
|
(18,604
|
)
|
-
|
(18,604
|
)
|
|||||
Foreign
currency movements
|
(1,153
|
)
|
(4,780
|
)
|
(5,933
|
)
|
||||
Balance,
December 31, 2005
|
$
|
18,936
|
$
|
152,655
|
$
|
171,591
|
||||
Additions
|
6,475
|
9,033
|
15,508
|
|||||||
Amortization
|
-
|
(15,758
|
)
|
(15,758
|
)
|
|||||
Foreign
currency movements
|
933
|
26,456
|
27,389
|
|||||||
Balance,
December 31, 2006
|
$
|
26,344
|
$
|
172,386
|
$
|
198,730
|
(1)
|
At
the year end, we had not completed our purchase price allocation,
and the
excess of the purchase price over the net book value was preliminarily
allocated to goodwill. After we completed our fair value exercise,
part of
this balance was allocated to other asset and liability
accounts.
|
(2)
|
When
we updated our medium-term forecast models at June 30, 2006 and
2005, we
determined that the forecast future cash flows of our Croatia operations
had decreased compared to our previous forecast. In such circumstances,
SFAS 142 “Goodwill and Other Intangible Assets” requires that the carrying
value of the intangible assets with indefinite lives are compared
to their
fair value to determine whether an impairment exists. If an asset
is
determined to be impaired, the loss is measured as the excess of
the
carrying value over the fair value. As a result of our analysis,
we
recognized an impairment charge of US$ 18.6 million relating to
broadcast
licenses. A further impairment charge relating to other Long-Lived
Assets
was not deemed necessary under the requirements of SFAS 144 “Accounting
for the Impairment or Disposal of Long-Lived
Assets”.
|
December
31,
2006
|
December
31,
2005
|
||||||
Gross
value
|
$
|
201,994
|
$
|
163,628
|
|||
Accumulated
amortization
|
(29,608
|
)
|
(10,973
|
)
|
|||
Total
net book value
|
$
|
172,386
|
$
|
152,655
|
Trademarks
|
Customer
relationships
|
Other
|
Total
|
||||||||||
Balance,
December 31, 2004
|
$
|
10,519
|
$
|
2,237
|
$
|
-
|
$
|
12,756
|
|||||
Additions/Allocations
(1)
|
30,015
|
14,921
|
-
|
44,936
|
|||||||||
Amortization
|
-
|
(1,864
|
)
|
-
|
(1,864
|
)
|
|||||||
Impairment
charge (2)
|
(7,021
|
)
|
-
|
-
|
(7,021
|
)
|
|||||||
Foreign
currency movements
|
(953
|
)
|
(196
|
)
|
-
|
(1,149
|
)
|
||||||
Balance,
December 31, 2005
|
$
|
32,560
|
$
|
15,098
|
$
|
-
|
$
|
47,658
|
|||||
Additions
|
7,695
|
11,975
|
817
|
20,487
|
|||||||||
Amortization
|
-
|
(2,941
|
)
|
(114
|
)
|
(3,055
|
)
|
||||||
Foreign
currency movements
|
3,771
|
3,081
|
-
|
6,852
|
|||||||||
Balance,
December 31, 2006
|
$
|
44,026
|
$
|
27,213
|
$
|
703
|
$
|
71,942
|
(1)
|
At
the year end, we had not completed our purchase price allocation,
and the
excess of the purchase price over the net book value was preliminarily
allocated to goodwill. After we completed our fair value exercise,
part of
this balance was allocated to other asset and liability
accounts.
|
(2)
|
When
we updated our medium-term forecast models at June 30, 2006 and 2005,
we
determined that the forecast future cash flows of our Croatia operations
had decreased compared to our previous forecast. In such circumstances,
SFAS 142 “Goodwill and Other Intangible Assets” requires that the carrying
value of the intangible assets with indefinite lives are compared
to their
fair value to determine whether an impairment exists. If an asset
is
determined to be impaired, the loss is measured as the excess of
the
carrying value over the fair value. As a result of our analysis,
we
recognized an impairment charge of US$ 7 million relating to trademarks.
A
further impairment charge relating to other Long-Lived Assets was
not
deemed necessary under the requirements of SFAS 144 “Accounting for the
Impairment or Disposal of Long-Lived
Assets”.
|
December
31,
2006
|
December
31,
2005
|
||||||
Gross
value
|
$
|
31,852
|
$
|
17,038
|
|||
Accumulated
amortization
|
(4,639
|
)
|
(1,940
|
)
|
|||
Total
net book value
|
$
|
27,213
|
$
|
15,098
|
Type
of Affiliate
|
Effective
Voting
interest
|
December
31,
2006
|
December
31,
2005
|
||||||||||
STS
|
Equity-Accounted
Affiliate
|
49%
|
|
$
|
-
|
$
|
23,886
|
||||||
Radio
Pro
|
Equity-Accounted
Affiliate
|
Various
|
-
|
50
|
|||||||||
Media
Pro
|
Cost
Method Investment
|
10%
|
|
16,569
|
-
|
||||||||
TV
Sport
|
Equity-Accounted
Affiliate
|
18%
|
|
2,645
|
-
|
||||||||
|
$
|
19,214
|
$
|
23,936
|
|
STS
(MARKIZA TV)
|
|||
December
31, 2005
|
||||
Current
assets
|
$
|
23,261
|
||
Non-current
assets
|
18,612
|
|||
Current
liabilities
|
(12,673
|
)
|
||
Non-current
liabilities
|
(125
|
)
|
||
Minority
interest
|
(635
|
)
|
||
Net
Assets
|
$
|
28,440
|
STS
(MARKIZA TV)
|
|||||||
For
the Years Ended December 31,
|
|||||||
2005
|
2004
|
||||||
Net
revenues
|
$
|
64,266
|
$
|
61,576
|
|||
Operating
income
|
14,641
|
15,790
|
|||||
Net
income
|
11,771
|
13,868
|
|||||
Currency
translation adjustment
|
$
|
(3,226
|
)
|
$
|
4,760
|
Carrying
value
|
Fair
value
|
||||||||||||
December
31,
2006
|
December
31,
2005
|
December
31,
2006
|
December
31,
2005
|
||||||||||
Eur
245.0 million 8.25% Senior Notes
|
$
|
322,666
|
$
|
288,984
|
$
|
353,722
|
$
|
323,737
|
|||||
Eur
125.0 million floating rate Senior Notes
|
|
164,625
|
147,440
|
|
170,181
|
156,324
|
|||||||
$
|
487,291
|
$
|
436,424
|
$
|
523,903
|
$
|
480,061
|
From:
|
Eur
245.0 million 8.25%
Senior
Notes
Redemption
Price
|
From:
|
Eur
125.0 million floating
rate
Senior Notes
Redemption
Price
|
|
May
15, 2009 to May 14, 2010
|
104.125%
|
May
15, 2007 to May 14, 2008
|
102.000%
|
|
May
15, 2010 to May 14, 2011
|
102.063%
|
May
15, 2008 to May 14, 2009
|
101.000%
|
|
May
15, 2011 and thereafter
|
100.000%
|
May
15, 2009 and thereafter
|
100.000%
|
December
31,
2006
|
December
31,
2005
|
||||||
Czech
Republic
|
$
|
-
|
$
|
24,554
|
|||
Croatia
|
4,183
|
3,640
|
|||||
Directors’
and officers’ insurance
|
-
|
5,285
|
|||||
Other
|
771
|
693
|
|||||
Total
restricted cash
|
$
|
4,954
|
$
|
34,172
|
December
31,
2006
|
December
31,
2005
|
||||||
Trading:
|
|||||||
Third-party
customers
|
$
|
156,701
|
$
|
103,921
|
|||
Less:
allowance for bad debts and credit notes
|
(11,472
|
)
|
(8,612
|
)
|
|||
Related
parties
|
7,655
|
2,034
|
|||||
Less:
allowance for bad debts and credit notes
|
(798
|
)
|
(265
|
)
|
|||
Total
trading
|
$
|
152,086
|
$
|
97,078
|
|||
Other:
|
|||||||
Third-party
customers
|
$
|
359
|
$
|
257
|
|||
Less:
allowance for bad debts and credit notes
|
(103
|
)
|
(83
|
)
|
|||
Related
parties
|
454
|
434
|
|||||
Less:
allowance for bad debts and credit notes
|
(291
|
)
|
(290
|
)
|
|||
Total
other
|
$
|
419
|
$
|
318
|
|||
Total
accounts receivable
|
$
|
152,505
|
$
|
97,396
|
December
31,
2006
|
December
31,
2005
|
||||||
Current:
|
|||||||
Prepaid
programming
|
$
|
23,072
|
$
|
17,534
|
|||
Other
prepaid expenses
|
13,177
|
6,009
|
|||||
Deferred
tax (Note 16)
|
2,124
|
3,025
|
|||||
VAT
recoverable
|
2,562
|
7,888
|
|||||
Loan
to related party (Note 22)
|
600
|
600
|
|||||
Capitalized
debt costs
|
2,908
|
2,250
|
|||||
Assets
held-for-sale
|
-
|
341
|
|||||
Other
|
3,112
|
1,209
|
|||||
Total
other current assets
|
$
|
47,555
|
$
|
38,856
|
|||
Non-current:
|
|||||||
Capitalized
debt costs
|
$
|
11,264
|
$
|
11,618
|
|||
Loan
to related party (Note 22)
|
1,603
|
1,910
|
|||||
Deferred
tax (Note 16)
|
3,443
|
779
|
|||||
Other
|
1,165
|
753
|
|||||
Total
other non-current assets
|
$
|
17,475
|
$
|
15,060
|
December
31,
2006
|
December
31,
2005
|
||||||
Land
and buildings
|
$
|
52,212
|
$
|
17,548
|
|||
Station
machinery, fixtures and equipment
|
115,238
|
72,017
|
|||||
Other
equipment
|
21,980
|
20,447
|
|||||
Software
licenses
|
15,495
|
8,360
|
|||||
Construction
in progress
|
4,070
|
5,180
|
|||||
Total
cost
|
212,995
|
123,552
|
|||||
Less:
Accumulated depreciation
|
(97,190
|
)
|
(64,655
|
)
|
|||
Total
net book value
|
$
|
115,805
|
$
|
58,897
|
|||
Assets
held under capital leases (included in the above)
|
|||||||
Land
and buildings
|
$
|
5,541
|
$
|
4,980
|
|||
Station
machinery, fixtures and equipment
|
2,330
|
1,434
|
|||||
Total
cost
|
7,871
|
6,414
|
|||||
Less:
Accumulated depreciation
|
(1,877
|
)
|
(1,167
|
)
|
|||
Net
book value
|
$
|
5,994
|
$
|
5,247
|
December
31,
2006
|
December
31,
2005
|
||||||
Accounts
payable
|
$
|
47,447
|
$
|
21,533
|
|||
Programming
liabilities
|
32,316
|
18,891
|
|||||
Deferred
income
|
3,212
|
7,202
|
|||||
Settlement
liability
|
-
|
10,007
|
|||||
Accrued
staff costs
|
12,947
|
9,402
|
|||||
Accrued
production costs
|
7,435
|
5,882
|
|||||
Accrued
interest payable
|
5,375
|
4,483
|
|||||
Accrued
legal costs
|
3,619
|
3,620
|
|||||
Accrued
rent costs
|
1,163
|
82
|
|||||
Other
accrued liabilities
|
6,203
|
3,747
|
|||||
Total
accounts payable and accrued liabilities
|
$
|
119,717
|
$
|
84,849
|
December
31,
2006
|
December
31,
2005
|
|||||||||
Credit
facilities:
|
||||||||||
Corporate
|
(a)
|
|
$
|
-
|
$
|
-
|
||||
Croatia
operations
|
(b)
|
|
847
|
1,135
|
||||||
Czech
Republic operations
|
(c)
- (e)
|
|
11,975
|
42,703
|
||||||
Slovenia
operations
|
(f)
|
|
-
|
-
|
||||||
Ukraine
operations
|
(g)
|
|
1,703
|
-
|
||||||
Total
credit facilities
|
$
|
14,525
|
$
|
43,838
|
||||||
Capital
leases:
|
||||||||||
Croatia
operations, net of interest
|
$
|
19
|
$
|
132
|
||||||
Czech
Republic operations, net of interest
|
-
|
6
|
||||||||
Romania
operations, net of interest
|
495
|
290
|
||||||||
Slovak
Republic operations, net of interest
|
154
|
-
|
||||||||
Slovenia
operations, net of interest
|
4,223
|
4,040
|
||||||||
Total
capital leases
|
$
|
4,891
|
$
|
4,468
|
||||||
Total
credit facilities and capital leases
|
$
|
19,416
|
$
|
48,306
|
||||||
Less
current maturities
|
(13,057
|
)
|
(43,566
|
)
|
||||||
Total
non-current maturities
|
$
|
6,359
|
$
|
4,740
|
2007
|
$
|
12,350
|
||
2008
|
180
|
|||
2009
|
1,690
|
|||
2010
|
305
|
|||
2011
and thereafter
|
487,291
|
|||
Total
|
$
|
501,816
|
2007
|
$
|
998
|
||
2008
|
806
|
|||
2009
|
644
|
|||
2010
|
432
|
|||
2011
|
432
|
|||
2012
and thereafter
|
3,423
|
|||
6,735
|
||||
Less:
amount representing interest
|
(1,844
|
)
|
||
Present
value of net minimum lease payments
|
$
|
4,891
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Domestic
|
$
|
(43,777
|
)
|
$
|
(2,270
|
)
|
$
|
5,127
|
||
Foreign
|
92,179
|
62,466
|
15,387
|
|||||||
$
|
48,402
|
$
|
60,196
|
$
|
20,514
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Income
tax expense from continuing operations
|
$
|
14,962
|
$
|
16,691
|
$
|
11,089
|
||||
Income
tax expense/(benefit) from discontinued operations
|
4,863
|
677
|
(2,378
|
)
|
||||||
Currency
translation adjustment in accumulated other comprehensive
loss
|
22,878
|
(3,266
|
)
|
-
|
||||||
Total
tax charge
|
$
|
42,703
|
$
|
14,102
|
$
|
8,711
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Current
Income tax expense:
|
||||||||||
Domestic
|
$
|
(22,745
|
)
|
$
|
186
|
$
|
2,104
|
|||
Foreign
|
36,009
|
25,512
|
9,047
|
|||||||
$
|
13,264
|
$
|
25,698
|
$
|
11,151
|
|||||
Deferred
tax expense / (benefit):
|
||||||||||
Domestic
|
1,467
|
$
|
(1,467
|
)
|
$
|
-
|
||||
Foreign
|
231
|
(7,540
|
)
|
(62
|
)
|
|||||
$
|
1,698
|
$
|
(9,007
|
)
|
$
|
(62
|
)
|
|||
Provision
for income taxes
|
$
|
14,962
|
$
|
16,691
|
$
|
11,089
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Income
taxes at Netherlands rates (2006: 29.6%, 2005: 31.5%; 2004: 34.5%)
|
$
|
14,326
|
$
|
18,961
|
$
|
7,078
|
||||
Jurisdictional
differences in tax rates
|
(10,432
|
)
|
(15,685
|
)
|
393
|
|||||
Tax
effect of Croatian goodwill impairment
|
149
|
1,983
|
-
|
|||||||
Effect
of change in tax law relating to investment allowances claimed in
previous
years
|
(2,065
|
)
|
-
|
-
|
||||||
Interest
expense disallowed under thin capitalisation provisions
|
6,508
|
-
|
-
|
|||||||
Tax
effect of other permanent differences
|
(656
|
)
|
4,921
|
6,209
|
||||||
Effect
of change in tax rates
|
89
|
620
|
(858
|
)
|
||||||
Change
in valuation allowance
|
6,107
|
5,115
|
(1,366
|
)
|
||||||
Other
|
936
|
776
|
(367
|
)
|
||||||
Provision
for income taxes
|
$
|
14,962
|
$
|
16,691
|
$
|
11,089
|
December
31,
2006
|
December
31,
2005
|
||||||
Assets:
|
|||||||
Tax
benefit of loss carry-forwards and other tax credits
|
$
|
16,880
|
$
|
17,748
|
|||
Programming
rights
|
4,098
|
1,220
|
|||||
Property,
plant and equipment
|
995
|
527
|
|||||
Accrued
expense
|
4,205
|
2,807
|
|||||
Other
|
691
|
722
|
|||||
Gross
deferred tax assets
|
26,869
|
23,024
|
|||||
Valuation
allowance
|
(16,574
|
)
|
(11,934
|
)
|
|||
Net
deferred tax assets
|
$
|
10,295
|
$
|
11,090
|
|||
Liabilities:
|
|||||||
Broadcast
licenses, trademarks and customer relationships
|
$
|
(57,036
|
)
|
$
|
(42,674
|
)
|
|
Property,
plant and equipment
|
(2,936
|
)
|
(4,057
|
)
|
|||
Undistributed
reserves not permanently reinvested
|
-
|
(1,944
|
)
|
||||
Temporary
difference due to timing
|
(4,684
|
)
|
(1,765
|
)
|
|||
Total
deferred tax liabilities
|
$
|
(64,656
|
)
|
$
|
(50,440
|
)
|
|
Net
deferred income tax liability
|
$
|
(54,361
|
)
|
$
|
(39,350
|
)
|
December
31,
2006
|
December
31,
2005
|
||||||
Current
deferred tax assets
|
$
|
2,124
|
$
|
3,025
|
|||
Non-current
deferred tax assets
|
3,443
|
779
|
|||||
$
|
5,567
|
$
|
3,804
|
||||
Current
deferred tax liabilities
|
(1,836
|
)
|
(1,005
|
)
|
|||
Non-current
deferred tax liabilities
|
(58,092
|
)
|
(42,149
|
)
|
|||
$
|
(59,928
|
)
|
$
|
(43,154
|
)
|
||
Net
deferred income tax liability
|
$
|
(54,361
|
)
|
$
|
(39,350
|
)
|
Balance
at December 31, 2005
|
$
|
11,934
|
||
Charged
to costs and expenses
|
6,107
|
|||
Credited
to other accounts
|
(1,168
|
)
|
||
Foreign
exchange
|
(299
|
)
|
||
Balance
at December 31, 2006
|
$
|
16,574
|
Year
|
Total
|
Austria
|
Croatia
|
Czech
Republic
|
Netherlands
|
Slovenia
|
UK
|
Cyprus
|
Ukraine
|
2007
|
9,716
|
9,716
|
|||||||
2008
|
1,064
|
21
|
1,043
|
||||||
2009
|
1,594
|
13
|
1,434
|
147
|
|||||
2010
|
3,729
|
440
|
3,289
|
||||||
2011
|
8,861
|
8,822
|
39
|
||||||
Indefinite
|
15,125
|
11,491
|
198
|
96
|
3,340
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Stock-based
compensation charged under FIN 44
|
$
|
-
|
$
|
918
|
$
|
9,046
|
||||
Stock-based
compensation charged under FAS 123(R) (2005 and 2004: FAS
123)
|
3,575
|
2,209
|
1,125
|
|||||||
Total
stock-based compensation
|
$
|
3,575
|
$
|
3,127
|
$
|
10,171
|
·
|
Expected
forfeitures. FAS
123(R) requires that compensation cost only be calculated on those
instruments that are expected to vest in the future. The number
of options
that actually vest will usually differ from the total number issued
because employees forfeit options when they do not meet the service
conditions stipulated in the agreement. Since all forfeitures result
from
failure to meet service conditions, we have calculated the forfeiture
rate
by reference to the historical employee turnover rate.
|
·
|
Expected
volatility. Expected
volatility has been calculated based on an analysis of the historical
stock price volatility of the company and its peers for the preceeding
6.5
years.
|
·
|
Expected
term. The
expected term of options granted has been calculated following
the
“shortcut” method as outlined in section D 2, question 6 of SEC Staff
Accounting Bulletin No. 107
“Share
Based Compensation” because our options meet the definition of “plain
vanilla” therein.
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Risk-free
interest rate
|
4.76
|
%
|
4.00
|
%
|
3.50
|
%
|
||||
Expected
term (years)
|
5.89
|
6.25
|
6.00
|
|||||||
Expected
volatility
|
43.44
|
%
|
50.56
|
%
|
51.50
|
%
|
||||
Dividend
yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
Weighted-average
fair value
|
$
|
31.67
|
$
|
26.29
|
$
|
12.51
|
2006
|
2005
|
2004
|
|||||||||||||||||
Shares
|
Weighted
Average Exercise Price (US$)
|
Shares
|
Weighted
Average Exercise Price (US$)
|
Shares
|
Weighted
Average Exercise Price (US$)
|
||||||||||||||
Outstanding
at beginning of year
|
1,118,275
|
$
|
22.23
|
1,705,017
|
$
|
12.89
|
2,527,717
|
$
|
7.10
|
||||||||||
Awards
granted
|
388,500
|
65.19
|
194,500
|
49.23
|
419,500
|
23.84
|
|||||||||||||
Awards
exercised
|
(195,450
|
)
|
18.54
|
(685,359
|
)
|
8.08
|
(1,083,634
|
)
|
2.74
|
||||||||||
Awards
forfeited
|
(22,750
|
)
|
40.38
|
(95,883
|
)
|
11.90
|
(158,566
|
)
|
19.11
|
||||||||||
Outstanding
at end of year
|
1,288,575
|
$
|
35.51
|
1,118,275
|
$
|
22.23
|
1,705,017
|
$
|
12.89
|
Options
outstanding
|
|||||||||||||
Range
of exercise prices
|
Shares
|
Average
remaining contractual life (years)
|
Aggregate
intrinsic value (US$)
|
Weighted
average exercise price (US$)
|
|||||||||
$1.00-9.99
|
153,800
|
5.20
|
$ |
10,471
|
$
|
1.92
|
|||||||
$10.00-19.99
|
345,400
|
6.80
|
18,842
|
15.45
|
|||||||||
$20.00-29.99
|
138,000
|
6.45
|
6,518
|
22.76
|
|||||||||
$30.00-39.99
|
75,375
|
7.89
|
2,793
|
32.94
|
|||||||||
$40.00-49.99
|
122,000
|
8.42
|
3,098
|
44.61
|
|||||||||
$50.00-59.99
|
179,500
|
9.22
|
2,219
|
57.64
|
|||||||||
$60.00-69.99
|
98,500
|
5.27
|
863
|
61.24
|
|||||||||
$70.00-79.99
|
176,000
|
9.95
|
(361
|
)
|
72.05
|
||||||||
Total
|
1,288,575
|
7.45
|
$ |
44,443
|
$
|
35.51
|
|||||||
Expected
to vest
|
699,623
|
8.08
|
$ |
15,562
|
$ |
47.76
|
Options
exercisable
|
|||||||||||||
Range
of exercise prices
|
Shares
|
Average
remaining contractual life (years)
|
Aggregate
intrinsic value (US$)
|
Weighted
average exercise price (US$)
|
|||||||||
$1.00-9.99
|
141,000
|
5.19
|
$ |
9,599
|
$
|
1.92
|
|||||||
$10.00-19.99
|
223,400
|
6.73
|
12,401
|
14.49
|
|||||||||
$20.00-29.99
|
78,667
|
5.71
|
3,703
|
22.94
|
|||||||||
$30.00-39.99
|
38,958
|
7.89
|
1,444
|
32.92
|
|||||||||
$40.00-49.99
|
30,500
|
8.42
|
774
|
44.61
|
|||||||||
$50.00-59.99
|
16,375
|
8.97
|
213
|
57.00
|
|||||||||
$60.00-69.99
|
-
|
-
|
-
|
-
|
|||||||||
$70.00-79.99
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
528,900
|
6.42
|
$ |
28,134
|
$
|
16.81
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Net
income available for common shareholders
|
$
|
20,424
|
$
|
42,322
|
$
|
18,462
|
||||
Weighted
average outstanding shares of common stock (000’s)
|
40,027
|
34,664
|
27,871
|
|||||||
Dilutive
effect of employee stock options (000’s)
|
573
|
766
|
1,229
|
|||||||
Common
stock and common stock equivalents
|
$
|
40,600
|
$
|
35,430
|
$
|
29,100
|
||||
Earnings
per share:
|
||||||||||
Basic
|
$
|
0.51
|
$
|
1.22
|
$
|
0.66
|
||||
Diluted
|
$
|
0.50
|
$
|
1.19
|
$
|
0.63
|
·
|
expenses
presented as corporate operating costs in our consolidated statements
of
operations and comprehensive
income;
|
·
|
stock-based
compensation charges;
|
·
|
foreign
currency exchange gains and losses;
|
·
|
change
in fair value of derivatives; and
|
·
|
certain
unusual or infrequent items (e.g., extraordinary gains and losses,
impairments on assets or investments, gain on sale of unconsolidated
affiliates).
|
SEGMENT
FINANCIAL INFORMATION
|
|||||||||||||||||||
For
the Years Ended December 31,
|
|||||||||||||||||||
Segment
Net Revenues (1)
|
Segment
EBITDA
|
||||||||||||||||||
2006
|
2005
|
2004
|
2006
|
2005
|
2004
|
||||||||||||||
Country
|
|
|
|
||||||||||||||||
Croatia
(NOVA TV) (2)
|
$
|
22,310
|
$
|
22,030
|
$
|
9,757
|
$
|
(14,413
|
)
|
$
|
(15,866
|
)
|
$
|
(3,756
|
)
|
||||
Czech
Republic (TV NOVA, GALAXIE SPORT) (3)
|
208,387
|
154,010
|
-
|
100,488
|
71,544
|
-
|
|||||||||||||
Romania
(4)
|
148,616
|
103,321
|
76,463
|
65,860
|
43,803
|
25,198
|
|||||||||||||
Slovak
Republic (MARKIZA TV)
|
73,420
|
64,266
|
61,576
|
20,805
|
17,240
|
18,975
|
|||||||||||||
Slovenia
(POP TV and KANAL A)
|
54,534
|
48,770
|
45,388
|
19,842
|
19,337
|
19,077
|
|||||||||||||
Ukraine
(STUDIO 1+1)
|
96,413
|
72,847
|
53,351
|
29,973
|
21,803
|
14,729
|
|||||||||||||
Ukraine
(KINO, CITI) (5)
|
1,195
|
-
|
-
|
(3,713
|
)
|
-
|
-
|
||||||||||||
Total
Segment Data
|
$
|
604,875
|
$
|
465,244
|
$
|
246,535
|
$
|
218,842
|
$
|
157,861
|
$
|
74,223
|
|||||||
Reconciliation
to Consolidated Statement of Operations and Comprehensive
Income:
|
|||||||||||||||||||
Consolidated
Net Revenues / Income before provision for income taxes, minority
interest, equity in income of unconsolidated affiliates and discontinued
operations
|
$
|
603,115
|
$
|
400,978
|
$
|
182,339
|
$
|
48,402
|
$
|
60,196
|
$
|
20,514
|
|||||||
Corporate
operating costs
|
-
|
-
|
-
|
34,104
|
25,547
|
29,254
|
|||||||||||||
Impairment
charge
|
-
|
-
|
-
|
748
|
35,331
|
-
|
|||||||||||||
Unconsolidated
equity affiliates (6)
|
1,760
|
64,266
|
64,196
|
(1,292
|
)
|
17,240
|
19,404
|
||||||||||||
Depreciation
of station property, plant & equipment
|
-
|
-
|
-
|
25,795
|
16,367
|
6,429
|
|||||||||||||
Amortization
of broadcast licenses and other intangibles
|
-
|
18,813
|
11,180
|
465
|
|||||||||||||||
Interest
income
|
-
|
-
|
-
|
(6,365
|
)
|
(4,124
|
)
|
(4,318
|
)
|
||||||||||
Interest
expense
|
-
|
-
|
-
|
44,228
|
29,387
|
1,203
|
|||||||||||||
Change
in fair value of derivatives
|
-
|
-
|
-
|
12,539
|
-
|
-
|
|||||||||||||
Foreign
currency exchange loss / (gain), net
|
-
|
-
|
-
|
44,908
|
(37,968
|
)
|
574
|
||||||||||||
Other
(income) / expense
|
-
|
-
|
-
|
(3,038
|
)
|
4,705
|
698
|
||||||||||||
Total
Segment Data
|
$
|
604,875
|
$
|
465,244
|
$
|
246,535
|
$
|
218,842
|
$
|
157,861
|
$
|
74,223
|
For
the Years Ended December 31,
|
||||||||||
Depreciation
of station property, plant & equipment and amortization of broadcast
licenses and other intangibles:
|
2006
|
2005
|
2004
|
|||||||
Croatia
|
$
|
2,920
|
$
|
2,951
|
$
|
1,173
|
||||
Czech
Republic
|
24,274
|
15,960
|
-
|
|||||||
Romania
|
5,811
|
3,829
|
2,843
|
|||||||
Slovak
Republic
|
4,070
|
2,599
|
1,735
|
|||||||
Slovenia
|
4,004
|
2,947
|
1,654
|
|||||||
Ukraine
(STUDIO 1+1)
|
3,216
|
1,860
|
1,224
|
|||||||
Ukraine
(KINO, CITI)
|
490
|
-
|
-
|
|||||||
Total
|
$
|
44,785
|
$
|
30,146
|
$
|
8,629
|
||||
Reconciliation
to Consolidated Statement of Operations:
|
||||||||||
Unconsolidated
equity affiliates
|
(177
|
)
|
(2,599
|
)
|
(1,735
|
)
|
||||
Total
consolidated depreciation and amortization
|
44,608
|
27,547
|
6,894
|
|||||||
Represented
as follows:
|
||||||||||
Depreciation
of station property, plant & equipment
|
25,795
|
16,367
|
6,429
|
|||||||
Amortization
of broadcast licenses and other intangibles
|
18,813
|
11,180
|
465
|
As
at December 31,
|
||||||||||
Total
assets (1):
|
2006
|
2005
|
2004
|
|||||||
Croatia
|
$
|
30,394
|
$
|
25,017
|
$
|
52,905
|
||||
Czech
Republic
|
1,200,894
|
1,018,253
|
-
|
|||||||
Romania
|
206,850
|
123,699
|
79,622
|
|||||||
Slovak
Republic
|
86,872
|
41,873
|
42,467
|
|||||||
Slovenia
|
67,919
|
62,926
|
64,044
|
|||||||
Ukraine
(STUDIO 1+1)
|
75,020
|
49,438
|
32,706
|
|||||||
Ukraine
(KINO, CITI)
|
13,293
|
-
|
-
|
|||||||
Total
segment assets
|
$
|
1,681,242
|
$
|
1,321,206
|
$
|
271,744
|
||||
Reconciliation
to Consolidated Balance Sheet:
|
||||||||||
Unconsolidated
equity affiliates
|
-
|
(41,873
|
)
|
(42,467
|
)
|
|||||
Corporate
|
137,758
|
109,517
|
215,362
|
|||||||
Total
assets
|
$
|
1,819,000
|
$
|
1,388,850
|
$
|
444,639
|
As
at December 31,
|
||||||||||
Long-lived
assets (1):
|
2006
|
2005
|
2004
|
|||||||
Croatia
|
$
|
6,804
|
$
|
6,264
|
$
|
6,775
|
||||
Czech
Republic
|
28,002
|
16,027
|
-
|
|||||||
Romania
|
32,312
|
13,154
|
9,081
|
|||||||
Slovak
Republic
|
19,498
|
14,245
|
12,818
|
|||||||
Slovenia
|
15,595
|
15,523
|
11,834
|
|||||||
Ukraine
(STUDIO 1+1)
|
7,965
|
7,127
|
3,153
|
|||||||
Ukraine
(KINO, CITI)
|
3,674
|
-
|
-
|
|||||||
Total
long-lived assets
|
$
|
113,850
|
$
|
72,340
|
$
|
43,661
|
||||
Reconciliation
to Consolidated Balance Sheet:
|
||||||||||
Unconsolidated
equity affiliates
|
-
|
(14,245
|
)
|
(12,818
|
)
|
|||||
Corporate
|
1,955
|
802
|
705
|
|||||||
Total
Long-lived assets
|
$
|
115,805
|
$
|
58,897
|
$
|
31,548
|
For
the Years Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Arbitration
related costs
|
$
|
-
|
$
|
164
|
$
|
146
|
||||
Income
on disposal of discontinued operations
|
-
|
164
|
146
|
|||||||
Tax
on disposal of discontinued operations
|
(4,863
|
)
|
(677
|
)
|
2,378
|
|||||
Net
income/(loss) from discontinued operations
|
$
|
(4,863
|
)
|
$
|
(513
|
)
|
$
|
2,524
|
December
31, 2006
|
||||
Croatia
|
$
|
9,916
|
||
Czech
Republic
|
34,657
|
|||
Romania
|
19,426
|
|||
Slovak
Republic
|
10,427
|
|||
Slovenia
|
5,589
|
|||
Ukraine
(STUDIO
1+1)
|
16,859
|
|||
Ukraine
(KINO, CITI)
|
1,094
|
|||
Total
|
$
|
97,968
|
December
31, 2006
|
||||
2007
|
$ |
3,983
|
||
2008
|
1,427
|
|||
2009
|
1,140
|
|||
2010
|
785
|
|||
2011
|
394
|
|||
2012
and thereafter
|
-
|
|||
Total
|
$ |
7,729
|
Croatia
|
The
license of NOVA TV (Croatia) expires in April 2010.
|
Czech
Republic
|
The
license of TV NOVA (Czech Republic) expires in January 2017. The
GALAXIE
SPORT license expires in March 2014.
|
Romania
|
Licenses
expire on dates ranging from March 2007 to February 2016.
|
Slovak
Republic
|
The
license of MARKIZA TV in the Slovak Republic expires in September
2019.
|
Slovenia
|
The
licenses of POP TV and KANAL A expire in August 2012.
|
Ukraine
|
The
15-hour prime time and off prime time license of STUDIO 1+1 expires
in
December 2016. The license to broadcast for the remaining nine hours
in
off prime expires in August 2014. Licenses held by Ukrpromtorg expire
on
dates ranging from November 2008 to July
2016.
|
For
the Year ended December 31, 2006
|
|||||||||||||
First
Quarter
(Unaudited)
|
Second
Quarter
(Unaudited)
|
Third
Quarter
(Unaudited)
|
Fourth
Quarter
(Unaudited)
|
||||||||||
(US$
000’s, except per share data)
|
|||||||||||||
Consolidated
Statement of Operations data:
|
|||||||||||||
Net
revenues
|
$
|
119,754
|
$
|
156,589
|
$
|
112,482
|
$
|
214,290
|
|||||
Cost
of revenue
|
81,424
|
89,571
|
81,088
|
110,094
|
|||||||||
Operating
income / (loss)
|
16,183
|
44,033
|
6,571
|
73,887
|
|||||||||
Net
income / (loss)
|
(18,264
|
)
|
8,522
|
3,934
|
26,232
|
||||||||
Net
income / (loss) per share:
|
|||||||||||||
Basic
EPS
|
$
|
(0.48
|
)
|
$
|
0.21
|
$
|
0.09
|
$
|
0.64
|
||||
Effect
of dilutive securities
|
-
|
-
|
-
|
-
|
|||||||||
Diluted
EPS
|
$
|
(0.48
|
)
|
$
|
0.21
|
$
|
0.09
|
$
|
0.64
|
For
the Year ended December 31, 2005 (1)
|
|||||||||||||
First
Quarter
(Unaudited,
as
restated)
|
Second
Quarter
(Unaudited,
as
restated)
|
Third
Quarter
(Unaudited,
as
restated)
|
Fourth
Quarter
(Unaudited,
as
restated)
|
||||||||||
(US$
000’s, except per share data)
|
|||||||||||||
Consolidated
Statement of Operations data:
|
|||||||||||||
Net
revenues
|
$
|
48,304
|
$
|
113,109
|
$
|
87,067
|
$
|
152,498
|
|||||
Cost
of revenue
|
35,897
|
54,903
|
64,709
|
86,013
|
|||||||||
Operating
income / (loss)
|
(2,353
|
)
|
6,877
|
4,752
|
42,920
|
||||||||
Net
income / (loss)
|
(8,050
|
)
|
25,474
|
(9,654
|
)
|
34,552
|
|||||||
Net
income / (loss) per share:
|
|||||||||||||
Basic
EPS
|
$
|
(0.28
|
)
|
$
|
0.74
|
$
|
(0.25
|
)
|
$
|
0.91
|
|||
Effect
of dilutive securities
|
-
|
(0.02
|
)
|
-
|
(0.01
|
)
|
|||||||
Diluted
EPS
|
$
|
(0.28
|
)
|
$
|
0.72
|
$
|
(0.25
|
)
|
$
|
0.90
|
As
reported previously
|
Adjustment
|
As
restated
|
||||||||
Statement
of Operations (for the Three Months Ended March 31,
2005)
|
||||||||||
Operating
loss
|
(2,252
|
)
|
(101
|
)
|
(2,353
|
)
|
||||
Net
loss
|
(7,949
|
)
|
(101
|
)
|
(8,050
|
)
|
||||
Statement
of Operations (for the Three Months Ended June 30,
2005)
|
||||||||||
Operating
income
|
6,862
|
15
|
6,877
|
|||||||
Net
income
|
25,459
|
15
|
25,474
|
|||||||
Statement
of Operations (for the Three Months Ended September 30,
2005)
|
||||||||||
Operating
income
|
4,792
|
(40
|
)
|
4,752
|
||||||
Net
loss
|
(9,614
|
)
|
(40
|
)
|
(9,654
|
)
|
||||
Statement
of Operations (for the Three Months Ended December 31,
2005)
|
||||||||||
Operating
income
|
42,967
|
(47
|
)
|
42,920
|
||||||
Net
income
|
34,599
|
(47
|
)
|
34,552
|
December
31,
2005
|
December
31,
2004
|
||||||
ASSETS
|
|
|
|||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
5,253
|
$
|
4,601
|
|||
Accounts
receivable (Note 4)
|
9,452
|
18,043
|
|||||
Program
rights
|
5,509
|
1,815
|
|||||
Other
current assets (Note 4)
|
3,047
|
1,089
|
|||||
Total
current assets
|
23,261
|
25,548
|
|||||
Non-current
assets
|
|||||||
Investments
|
4
|
4
|
|||||
Property,
plant and equipment (Note 5)
|
14,245
|
12,818
|
|||||
Program
rights
|
4,156
|
2,722
|
|||||
Intangible
assets (Note 6)
|
46
|
132
|
|||||
Deferred
income tax, non-current (Note 9)
|
161
|
1,243
|
|||||
Total
non-current assets
|
18,612
|
16,919
|
|||||
Total
assets
|
$
|
41,873
|
$
|
42,467
|
December
31,
2005
|
December
31,
2004
|
||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued liabilities (Note 7)
|
$
|
11,481
|
$
|
10,874
|
|||
Duties
and other taxes payable
|
412
|
515
|
|||||
Income
taxes payable
|
-
|
917
|
|||||
Credit
facilities and obligations under capital leases (Note 8)
|
71
|
2,878
|
|||||
Other
current liabilities
|
709
|
261
|
|||||
Total
current liabilities
|
12,673
|
15,445
|
|||||
Non-current
liabilities
|
|||||||
Credit
facilities and obligations under capital leases (Note 8)
|
125
|
149
|
|||||
Total
non-current liabilities
|
125
|
149
|
|||||
Commitments
and contingencies (Note 10)
|
|||||||
Minority
interests in consolidated subsidiaries
|
635
|
371
|
|||||
SHAREHOLDERS'
EQUITY:
|
|||||||
Registered
capital
|
6
|
6
|
|||||
Additional
paid-in capital
|
24,242
|
24,242
|
|||||
Shareholder
loans (Note 11)
|
-
|
(11,061
|
)
|
||||
Retained
earnings
|
4,414
|
10,311
|
|||||
Accumulated
other comprehensive income/ (loss)
|
(222
|
)
|
3,004
|
||||
Total
shareholders’ equity
|
28,440
|
26,502
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
41,873
|
$
|
42,467
|
For
the Years Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Net
revenues
|
$
|
64,266
|
$
|
61,576
|
$
|
50,814
|
||||
Operating
costs
|
7,090
|
6,824
|
5,828
|
|||||||
Cost
of programming
|
22,445
|
20,902
|
19,276
|
|||||||
Depreciation
and amortization
|
2,599
|
1,735
|
1,805
|
|||||||
Selling,
general and administrative expenses
|
17,491
|
16,325
|
13,326
|
|||||||
Total
operating expenses
|
49,625
|
45,786
|
40,235
|
|||||||
Operating
income
|
14,641
|
15,790
|
10,579
|
|||||||
Interest
income
|
588
|
836
|
731
|
|||||||
Interest
expense
|
(134
|
)
|
(200
|
)
|
(285
|
)
|
||||
Foreign
currency exchange gain/(loss), net
|
(258
|
)
|
571
|
932
|
||||||
Other
income
|
245
|
405
|
436
|
|||||||
Income
before provision for income taxes, and minority
interest
|
15,082
|
17,402
|
12,393
|
|||||||
Provision
for income taxes (Note 9)
|
(3,276
|
)
|
(3,511
|
)
|
(3,870
|
)
|
||||
Income
before minority interest
|
11,806
|
13,891
|
8,523
|
|||||||
Minority
interest in income of consolidated subsidiaries
|
(35
|
)
|
(23
|
)
|
-
|
|||||
Net
income
|
11,771
|
13,868
|
8,523
|
|||||||
Currency
translation adjustment, net
|
(3,226
|
)
|
4,760
|
5,315
|
||||||
Total
comprehensive income
|
$
|
8,545
|
$
|
18,628
|
$
|
13,838
|
Registered
Capital
|
Additional
Paid-In Capital
|
Shareholders’
loans
|
Retained
Earnings / (Accumulated Deficit)
|
Accumulated
Other Comprehensive Income/(Loss)
|
Total
Shareholders' Equity
|
||||||||||||||
BALANCE,
December 31, 2002
|
$
|
6
|
$
|
39,326
|
$
|
(4,694
|
)
|
$
|
(12,080
|
)
|
$
|
(7,071
|
)
|
$
|
15,487
|
||||
Shareholders’
loans granted
|
-
|
-
|
(4,298
|
)
|
-
|
-
|
(4,298
|
)
|
|||||||||||
Dividend
distribution
|
-
|
(4,678
|
)
|
-
|
-
|
-
|
(4,678
|
)
|
|||||||||||
Net
income
|
-
|
-
|
-
|
8,523
|
-
|
8,523
|
|||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
5,315
|
5,315
|
|||||||||||||
BALANCE,
December 31, 2003
|
$
|
6
|
$
|
34,648
|
$
|
(8,992
|
)
|
$
|
(3,557
|
)
|
$
|
(1,756
|
)
|
$
|
20,349
|
||||
Shareholders’
loans granted
|
-
|
-
|
(2,069
|
)
|
-
|
-
|
(2,069
|
)
|
|||||||||||
Dividend
distribution
|
-
|
(10,406
|
)
|
-
|
-
|
-
|
(10,406
|
)
|
|||||||||||
Net
income
|
-
|
-
|
-
|
13,868
|
-
|
13,868
|
|||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
4,760
|
4,760
|
|||||||||||||
BALANCE,
December 31, 2004
|
$
|
6
|
$
|
24,242
|
$
|
(11,061
|
)
|
$
|
10,311
|
$
|
3,004
|
$
|
26,502
|
||||||
Shareholders’
loans repaid
|
-
|
-
|
11,061
|
-
|
-
|
11,061
|
|||||||||||||
Dividend
distribution
|
-
|
-
|
-
|
(17,668
|
)
|
-
|
(17,668
|
)
|
|||||||||||
Net
income
|
-
|
-
|
-
|
11,771
|
-
|
11,771
|
|||||||||||||
Currency
translation adjustment
|
-
|
-
|
-
|
-
|
(3,226
|
)
|
(3,226
|
)
|
|||||||||||
BALANCE,
December 31, 2005
|
$
|
6
|
$
|
24,242
|
$
|
-
|
$
|
4,414
|
$
|
(222
|
)
|
$
|
28,440
|
For
the Years Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|||||||||
Net
income
|
$
|
11,771
|
$
|
13,868
|
$
|
8,523
|
||||
Adjustments
to reconcile net income to net cash generated from operating
activities:
|
||||||||||
Depreciation
and amortization
|
9,584
|
10,834
|
11,454
|
|||||||
Receivables
write-off and provision for doubtful accounts receivable
|
101
|
77
|
(35
|
)
|
||||||
(Gain)/loss
on disposal of fixed assets
|
(40
|
)
|
(87
|
)
|
2
|
|||||
Deferred
income taxes
|
769
|
336
|
945
|
|||||||
Net
change in:
|
||||||||||
Accounts
receivable
|
6,790
|
(1,080
|
)
|
(1,969
|
)
|
|||||
Other
assets
|
(1,131
|
)
|
(3
|
)
|
198
|
|||||
Program
rights
|
(11,779
|
)
|
(9,129
|
)
|
(10,124
|
)
|
||||
Accounts
payable and accrued liabilities
|
913
|
109
|
(1,773
|
)
|
||||||
Income
and other taxes payable
|
(1,751
|
)
|
(1,744
|
)
|
2,329
|
|||||
Other
current liabilities
|
440
|
(17
|
)
|
277
|
||||||
Net
cash generated from operating activities
|
15,667
|
13,164
|
9,827
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Purchase
of property, plant and equipment
|
(5,283
|
)
|
(2,110
|
)
|
(942
|
)
|
||||
Proceeds
from disposal of property, plant and equipment
|
54
|
257
|
27
|
|||||||
Investments
in subsidiaries and unconsolidated affiliates
|
-
|
-
|
(3
|
)
|
||||||
Purchase
of other assets and intangibles
|
(154
|
)
|
(26
|
)
|
(212
|
)
|
||||
Net
cash used in investing activities
|
(5,383
|
)
|
(1,879
|
)
|
(1,130
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from credit facilities
|
-
|
105
|
-
|
|||||||
Payment
of credit facilities and capital leases
|
(2,565
|
)
|
(600
|
)
|
(973
|
)
|
||||
Repayment
of loans and advances to shareholders
|
10,104
|
-
|
-
|
|||||||
Loans
and advances to shareholders
|
-
|
(596
|
)
|
(2,955
|
)
|
|||||
Dividends
paid
|
(16,647
|
)
|
(10,329
|
)
|
(4,205
|
)
|
||||
Net
cash used in financing activities
|
(9,108
|
)
|
(11,420
|
)
|
(8,133
|
)
|
||||
Impact
of exchange rate fluctuations on cash
|
(524
|
)
|
657
|
628
|
||||||
Net
increase in cash and cash equivalents
|
652
|
522
|
1,192
|
|||||||
CASH
AND CASH EQUIVALENTS, beginning of year
|
4,601
|
4,079
|
2,887
|
|||||||
CASH
AND CASH EQUIVALENTS, end of year
|
$
|
5,253
|
$
|
4,601
|
$
|
4,079
|
||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||||
Cash
paid for interest
|
$
|
131
|
$
|
200
|
$
|
212
|
||||
Cash
paid for income taxes (net of refunds)
|
$
|
4,108
|
$
|
6,448
|
$
|
847
|
·
|
The
broadcasting of programming (both own production and acquired);
and
|
·
|
The
sale of advertising.
|
Company
Name
|
Voting
Interest
|
Jurisdiction
of Organization
|
Subsidiary
(1)
|
|||
ADAM
a.s.
|
100%
|
Slovakia
|
Subsidiary
|
|||
Gamatex,
spol. s.r.o.
|
100%
|
Slovakia
|
Subsidiary
|
|||
Markiza-Slovakia,
spol. s.r.o. (“Markiza”)
|
-%
|
Slovakia
|
Consolidated
Variable-Interest Entity (2)
|
Consolidated
Balance Sheet Financial Statement Caption
|
As
at December 31, 2005
|
|||||||||
Balance
prior to adjustment
|
Impact
of FIN 46 (R)
|
Adjusted
Balance
|
||||||||
(US$
000's)
|
||||||||||
Total
current assets
|
$
|
22,682
|
$
|
579
|
$
|
23,261
|
||||
Total
assets
|
41,291
|
582
|
41,873
|
|||||||
Total
current liabilities
|
12,726
|
(53
|
)
|
12,673
|
||||||
Total
non-current liabilities
|
125
|
-
|
125
|
|||||||
Minority
interest
|
-
|
635
|
635
|
|||||||
Total
shareholders' equity
|
$
|
28,440
|
$
|
-
|
$
|
28,440
|
Consolidated
Statement of Operations Financial Statement
Caption
|
For
the Twelve Months ended December 31, 2005
|
|||||||||
Balance
prior to adjustment
|
Impact
of FIN 46 (R)
|
Adjusted
Balance
|
||||||||
(US$
000's)
|
||||||||||
Net
revenues
|
$
|
64,266
|
$
|
-
|
$
|
64,266
|
||||
Total
operating expenses
|
49,664
|
(39
|
)
|
49,625
|
||||||
Operating
income
|
14,602
|
39
|
14,641
|
|||||||
Income
before minority interest
|
11,771
|
35
|
11,806
|
|||||||
Net
income
|
$
|
11,771
|
$
|
-
|
$
|
11,771
|
Asset
category
|
Estimated
useful life
|
Land
|
Indefinite
|
Buildings
|
25
years
|
Station
machinery, fixtures and equipment
|
4
-
8 years
|
Other
equipment
|
3
-
8 years
|
Software
licenses
|
3
-
5 years
|
Amortization
%
|
||||||||||||||||
Type
of programming
|
Run
1
|
Run
2
|
Run
3
|
Run
4
|
Run
5
|
|||||||||||
Films
and series, 2 runs
|
65
|
%
|
35
|
%
|
-
|
-
|
-
|
|||||||||
Concerts,
documentaries, film about film, etc.
|
100
|
%
|
-
|
-
|
-
|
-
|
December
31,
2005
|
December
31,
2004
|
||||||
Trading:
|
|||||||
Third-party
customers
|
$
|
10,936
|
$
|
19,497
|
|||
Less:
allowance for bad debts and credit notes
|
(1,540
|
)
|
(1,902
|
)
|
|||
Related
parties
|
56
|
448
|
|||||
Total
|
$
|
9,452
|
$
|
18,043
|
December
31,
2005
|
December
31,
2004
|
||||||
Current:
|
|||||||
Prepaid
expenses and advances
|
$
|
621
|
$
|
590
|
|||
Income
tax receivable
|
1,084
|
216
|
|||||
VAT
and other taxes receivable
|
854
|
-
|
|||||
Deferred
income taxes
|
267
|
79
|
|||||
Other
receivables
|
221
|
204
|
|||||
Total
|
$
|
3,047
|
$
|
1,089
|
|||
Non-current:
|
|||||||
Deferred
income taxes
|
$
|
161
|
$
|
1,243
|
|||
Total
|
$
|
161
|
$
|
1,243
|
December
31,
2005
|
December
31,
2004
|
||||||
Land
and buildings
|
$
|
11,771
|
$
|
12,910
|
|||
Machinery,
fixtures and equipment
|
19,734
|
17,945
|
|||||
Other
equipment
|
6,963
|
7,186
|
|||||
Software
|
1,431
|
1,435
|
|||||
Construction
in progress
|
111
|
76
|
|||||
Total
cost
|
40,010
|
39,552
|
|||||
Less:
Accumulated depreciation
|
(25,765
|
)
|
(26,734
|
)
|
|||
Total
net book value
|
$
|
14,245
|
$
|
12,818
|
|||
Assets
held under capital lease (included in the above):
|
|||||||
Other
equipment
|
$
|
429
|
$
|
418
|
|||
Total
costs
|
429
|
418
|
|||||
Less:
Accumulated depreciation
|
(154
|
)
|
(114
|
)
|
|||
Net
book value
|
$
|
275
|
$
|
304
|
December
31,
2005
|
December
31,
2004
|
||||||
Gross
value
|
$
|
577
|
$
|
700
|
|||
Accumulated
amortization
|
(531
|
)
|
(568
|
)
|
|||
Total
net book value
|
$
|
46
|
$
|
132
|
December
31,
2005
|
December
31,
2004
|
||||||
Accounts
payable
|
$
|
3,312
|
$
|
2,650
|
|||
Programming
liabilities
|
3,623
|
3,028
|
|||||
Other
accrued liabilities
|
4,546
|
5,196
|
|||||
$
|
11,481
|
$
|
10,874
|
December
31,
2005
|
December
31,
2004
|
|||||||||
Long-term
loans
|
(a)
|
|
$
|
-
|
$
|
2,807
|
||||
Capital
leases
|
196
|
220
|
||||||||
Total
|
196
|
3,027
|
||||||||
Less
current maturities
|
(71
|
)
|
(2,878
|
)
|
||||||
Total
non-current maturities
|
$
|
125
|
$
|
149
|
2006
|
$
|
90
|
||
2007
|
81
|
|||
2008
|
49
|
|||
2009
|
-
|
|||
2010
|
-
|
|||
2011
and thereafter
|
-
|
|||
Total
|
220
|
|||
Less:
amount representing interest
|
(24
|
)
|
||
Present
value of net minimum lease payments
|
$
|
196
|
For
the Years Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Current
income tax expense
|
$
|
2,507
|
$
|
3,175
|
$
|
2,925
|
||||
Deferred
tax provision
|
769
|
336
|
945
|
|||||||
Provision
for income taxes
|
$
|
3,276
|
$
|
3,511
|
$
|
3,870
|
For
the Years Ended December 31,
|
||||||||||
2005
|
2004
|
2003
|
||||||||
Income
taxes at statutory rates (2005, 2004: 19.0%; 2003: 25.0%)
|
$
|
2,866
|
$
|
3,295
|
$
|
3,098
|
||||
Effect
of change in tax rate
|
-
|
-
|
531
|
|||||||
Tax
effect of permanent differences
|
410
|
216
|
377
|
|||||||
Change
in valuation allowance
|
-
|
-
|
(136
|
)
|
||||||
Provision
for income taxes
|
$
|
3,276
|
$
|
3,511
|
$
|
3,870
|
December
31,
2005
|
December
31,
2004
|
||||||
Assets:
|
|||||||
Property,
plant and equipment
|
$
|
40
|
$
|
185
|
|||
Programs
rights
|
281
|
996
|
|||||
Accounts
receivable
|
113
|
233
|
|||||
Gross
deferred tax assets
|
434
|
1,414
|
|||||
Valuation
allowance
|
-
|
-
|
|||||
Net
deferred tax assets
|
$
|
434
|
$
|
1,414
|
|||
Liabilities:
|
|||||||
Unrealized
foreign exchange, net
|
(6
|
)
|
(83
|
)
|
|||
Other
|
-
|
(9
|
)
|
||||
Total
deferred tax liabilities
|
$
|
(6
|
)
|
$
|
(92
|
)
|
|
Net
deferred income tax assets
|
$
|
428
|
$
|
1,322
|
2006
|
$
|
521
|
||
2007
|
335
|
|||
2008
|
-
|
|||
2009
|
-
|
|||
2010
|
-
|
|||
2011
and thereafter
|
-
|
|||
Total
|
$
|
856
|
|
Payments
due by period
|
|||||||||||||||
|
Total
|
Less
than 1 year
|
2
years
|
3
years
|
More
than 3 years
|
|||||||||||
|
||||||||||||||||
Unconditional
purchase obligations
|
$
|
13,170
|
$
|
13,170
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Station
program rights
|
4,629
|
2,267
|
2,362
|
-
|
-
|
|||||||||||
Other
long-term obligations
|
5,446
|
5,446
|
-
|
-
|
-
|
|||||||||||
|
||||||||||||||||
Total
|
$
|
23,245
|
$
|
20,883
|
$
|
2,362
|
$
|
-
|
$
|
-
|
ITEM 9. |
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
ITEM 9A. |
CONTROLS
AND PROCEDURES
|
ITEM 9B. |
OTHER
INFORMATION
|
ITEM 10. |
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
ITEM 11. |
EXECUTIVE
COMPENSATION
|
ITEM 12. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER
MATTERS
|
ITEM 13. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
|
ITEM 14. |
PRINCIPAL
ACCOUNTANT FEES AND
SERVICES
|
ITEM 15. |
EXHIBITS
AND FINANCIAL STATEMENT
SCHEDULES
|
Exhibit
Number
|
Description
|
|
3.01*
|
Memorandum
of Association (incorporated by reference to Exhibit 3.01 to the
Company's
Registration Statement No. 33-80344 on Form S-1, filed June 17,
1994).
|
|
3.02*
|
Bye-Laws
of Central European Media Enterprises Ltd., as amended, dated as
of May
25, 2000 (incorporated by reference to Exhibit 3.02 to the Company’s
Annual Report on Form 10-K for the fiscal year ending December 31,
2000).
|
|
3.03*
|
Memorandum
of Increase of Share Capital (incorporated by reference to Exhibit
3.03 to
Amendment No. 1 to the Company's Registration Statement No. 33-80344
on
Form S-1, filed August 19, 1994).
|
|
3.04*
|
Memorandum
of Reduction of Share Capital (incorporated by reference to Exhibit
3.04
to Amendment No. 2 to the Company's Registration Statement No. 33-80344
on
Form S-1, filed September 14, 1994).
|
|
3.05*
|
Certificate
of Deposit of Memorandum of Increase of Share Capital executed by
Registrar of Companies on May 20, 1997 (incorporated by reference
to
Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1997).
|
|
4.01*
|
Specimen
Class A Common Stock Certificate (incorporated by reference to Exhibit
4.01 to Amendment No. 1 to the Company's Registration Statement No.
33-80344 on Form S-1, filed August 19, 1994).
|
|
10.01A+*
|
Central
European Media Enterprises Ltd. 1995 Stock Incentive Plan, as amended
and
restated to April 11, 2004 (incorporated by reference to Exhibit
A to the
Company's Proxy Statement dated May 9, 2005).
|
|
10.02*
|
Cooperation
Agreement among CME Media Enterprises B.V., Ion Tiriac and Adrian
Sarbu
(incorporated by reference to Exhibit 10.27 to the Company's Registration
Statement No.33 - 96900 on Form S-1 filed September 13,
1995).
|
|
10.8*
|
Agreement
by and between International Media Services Ltd and Innova Film GmbH,
dated January 23, 1997 (incorporated by reference to Exhibit 10.65
to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996).
|
|
10.10*
|
Amended
and Restated Charter of the Broadcasting Company 'Studio 1+1', dated
January 23, 1997 (incorporated by reference to Exhibit 10.67 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996).
|
|
10.11*
|
Amended
and Restated Foundation Agreement on the Establishment and Operation
of
the Broadcasting Company 'Studio 1+1,' dated January 23, 1997
(incorporated by reference to Exhibit 10.68 to the Company's Annual
Report
on Form 10-K for the fiscal year ended December 31,
1996).
|
|
10.12*
|
Protocol
of the Participants' Assembly of the Broadcasting Company 'Studio
1+1,'
dated January 23, 1997 (incorporated by reference to Exhibit 10.69
to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996).
|
|
10.13*
|
Marketing,
Advertising and Sales Agreement by and between International Media
Services Ltd and Innova Film GmbH, dated January 23, 1997 (incorporated
by
reference to Exhibit 10.70 to the Company's Annual Report on Form
10-K for
the fiscal year ended December 31, 1996).
|
|
10.13A*
|
Amendment
Agreement to Marketing, Advertising and Sales Agreement between Innova
Film GmbH and International Media Services Limited, dated May 7,
1997
(incorporated by reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
1997).
|
|
10.16*
|
Advertising
Sales Agency Agreement between Studio 1+1 and Servland Continental
S.A.
dated March 14, 2001 (incorporated by reference to Exhibit 10.47
to the
Company’s Annual Report on Form 10-K for the fiscal year ending December
31, 2000).
|
|
10.18*+
|
Employment
Agreement between CME Development Corporation and Robert E. Burke
dated
July 6, 2001 (incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended June
30,
2001).
|
|
10.19*
|
Exclusive
Contract of Providing and Broadcasting of Television Signal between
Markiza-Slovakia s.r.o. and Slovenska Televizna Spolocnost s.r.o.
dated
August 30, 1996 (incorporated by reference to Exhibit 10.4 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended
September 30, 2001).
|
10.20*
|
Exclusive
Rights Transfer Agreement between Markiza-Slovakia s.r.o and Slovenska
Televizna Spolocnost s.r.o. dated October 3, 2001 (incorporated by
reference to Exhibit 10.5 to the Company's Quarterly Report on Form
10-Q
for the quarterly period ended September 30, 2001).
|
|
10.21*
|
Key
Agreement Boris Fuchsmann, Alexander Rodniansky, Studio 1+1 Ltd,
Innova
Film GmbH, International Media Services Ltd, Ukraine Advertising
Holding,
CME Ukraine GmbH and CME Ukraine B.V entered into as of December
23, 1998
(incorporated by reference to Exhibit 10.43 to the Company’s Annual Report
on Form 10-K for the fiscal year ending December 31,
2001).
|
|
10.22*
|
Memorandum
of Association of Slovenska televizna spolocnost s.r.o (incorporated
by
reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K for
the fiscal year ending December 31, 2001).
|
|
10.23*
|
Articles
of Association of Slovenska televizna spolocnost s.r.o (incorporated
by
reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K for
the fiscal year ending December 31, 2001).
|
|
10.24*
|
Amended
Memorandum of Association Markiza - Slovakia spol. s.r.o (incorporated
by
reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K for
the fiscal year ending December 31, 2001).
|
|
10.25*
|
Loan
arrangement between Vseobecna userova banka a.s and S.T.S. s.r.o,,
dated
July 24, 2002 (incorporated by reference to Exhibit 10.50 to the
Company's
Quarterly Report on Form 10-Q for the quarterly period ended June
30,
2002).
|
|
10.26*+
|
Employment
Agreement between CME Development Corporation and Wallace Macmillan
dated
March 17, 2003 (incorporated by reference to Exhibit 10.63 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended
March 30, 2003).
|
|
10.27*+
|
Employment
Agreement between Central European Media Enterprises Ltd and Fred
T.
Klinkhammer dated October 21, 2003 (incorporated by reference to
Exhibit
10.63 to the Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 2003).
|
|
10.28*+
|
Employment
Agreement between CME Development Corporation and Michael Garin dated
March 30, 2004 (incorporated by reference to Exhibit 10.63 to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended
March 30, 2004).
|
|
10.29*
|
Agreement
between CME Media Enterprises BV and the Tax and Customs Administration
of
the Netherlands dated March 24, 2004 (incorporated by reference to
the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended
March 31, 2004).
|
|
10.30*
|
CME
Romania BV - Adrian Sarbu Funding and Share Sale Agreement, dated
March
12, 2004 (incorporated by reference to the Company's Quarterly Report
on
Form 10-Q for the quarterly period ended March 31,
2004).
|
|
10.31*
|
Share
sale and purchase agreement of Nova TV d.d. (Croatia), dated July
7, 2004.
(incorporated by reference to the Company's Quarterly Report on Form
10-Q
for the quarterly period ended June 30, 2004).
|
|
10.32*
|
Pro
TV SA put-option between CME Romania BV, Adrian Sarbu and Rootland
Trading
Ltd (incorporated by reference to the Company's Quarterly Report
on Form
10-Q for the quarterly period ended September 30,
2004).
|
|
10.33*
|
MPI
SA put-option between CME Romania BV, Adrian Sarbu and Rootland Trading
Ltd (incorporated by reference to the Company's Quarterly Report
on Form
10-Q for the quarterly period ended September 30,
2004).
|
|
10.34*+
|
Employee
Stock Option Form (a management contract) (incorporated by reference
to
the Company's Quarterly Report on Form 10-Q for the quarterly period
ended
September 30, 2004).
|
|
10.35*+
|
Employment
Agreement between CME Development Corporation and Marina Williams
dated
November 22, 2004.
|
|
10.36*
|
Framework
Agreement CME Media Enterprises BV, Central European Media Enterprises
Ltd. and PPF (Cyprus) Ltd. dated December 13, 2004. (incorporated
by
reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2004).
|
|
10.37*
|
Agreement
on Settlement of Disputes and Transfer of Ownership Interest, dated
February 24, 2005. (incorporated by reference to the Company's Annual
Report on Form 10-K for the period ended December 31,
2004).
|
10.38*
|
Subscription
Agreement between Central European Media Enterprises Ltd. and PPF
(Cyprus)
Ltd. dated May 2, 2005. (incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March
30,
2005).
|
|
10.39*
|
Registration
Rights Agreement between Central European Media Enterprises Ltd.
and PPF
(Cyprus) Ltd. dated May 2, 2005. (incorporated by reference to the
Company's Quarterly Report on Form 10-Q for the quarterly period
ended
March 30, 2005).
|
|
10.40*
|
Deed
of Guarantee among PPF a.s., Central European Media Enterprises Ltd.
and
CME Media Enterprises B.V. dated May 2, 2005. (incorporated by reference
to the Company's Quarterly Report on Form 10-Q for the quarterly
period
ended March 30, 2005).
|
|
10.41*
|
PPF
Group Guarantee among PPF Group N.V., Central European Media Enterprises
Ltd. and CME Media Enterprises B.V. dated May 2, 2005. (incorporated
by
reference to the Company's Quarterly Report on Form 10-Q for the
quarterly
period ended March 30, 2005).
|
|
10.42*
|
Indenture
among Central European Media Enterprises Ltd., Central European Media
Enterprises N.V., and CME Media Enterprises B.V. J.P. Morgan Chase
Bank
N.A., London Branch and J.P. Morgan Bank Luxembourg S.A. dated May
5,
2005. (incorporated by reference to the Company's Quarterly Report
on Form
10-Q for the quarterly period ended March 30, 2005).
|
|
10.43*
|
Euro
37.5 million facility agreement, dated July 29, 2005, between Produkcija
Plus Storitveno Podjetje d.o.o. and ING Bank N.V., Nova Ljubljanska
banka
d.d., and Bank Austria Creditanstalt d.d. (incorporated by reference
to
the Company's Quarterly Report on Form 10-Q for the quarterly period
ended
June 30, 2005).
|
|
10.44*
|
Credit
line agreement No. 2644/05/LCD between Ceska Sporitelna a.s. and
CET 21
spol. s r.o. dated October 27, 2005. (incorporated by reference to
the
Company's Annual Report on Form 10-K for the period ended December
31,
2005).
|
|
10.45*
|
Agreement
for the sale of shares in A.R.J., a.s. between PhDr. Pavol Rusko
and CME
Media Enterprises B.V. dated October 28, 2005. (incorporated by reference
to the Company's Annual Report on Form 10-K for the period ended
December
31, 2005).
|
|
10.46*
|
Agreement
for the sale of shares in A.R.J., a.s. among Media Partner, spol.
s r.o.,,
Salis, s.r.o., CME Media Enterprises B.V., Ing. Milan Fil’o and Mr. Jan
Kovacik dated October 31, 2005. (incorporated by reference to the
Company's Annual Report on Form 10-K for the period ended December
31,
2005).
|
|
10.47*
|
Sale-Purchase
Contract for Shares of Media Pro International S.A. between CME Romania
B.V. and Adrian Sarbu dated February 17, 2006. (incorporated by reference
to the Company's Annual Report on Form 10-K for the period ended
December
31, 2005).
|
|
10.48*
|
Sale-Purchase
Contract for Shares of Pro TV S.A. between CME Romania B.V. and Adrian
Sarbu dated February 17, 2006. (incorporated by reference to the
Company's
Annual Report on Form 10-K for the period ended December 31,
2005).
|
|
10.49*
|
Sale-Purchase
Contract for Shares of Media Vision SRL between CME Romania B.V.
and Media
Pro Pictures S.A. dated February 17, 2006. (incorporated by reference
to
the Company's Annual Report on Form 10-K for the period ended December
31,
2005).
|
|
10.50*
|
Underwriting
Agreement, dated March 23, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2006).
|
|
10.51*
|
Loan
Agreement between Central European Media Enterprises Ltd. and European
Bank for Reconstruction and Development, dated July 21, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.52*
|
Pledge
Agreement on Shares in Central European Media Enterprises N.V. among
Central European Media Enterprises Ltd., European Bank for Reconstruction
and Development and Central European Media Enterprises N.V., dated
July
21, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.53*
|
Pledge
of Shares in CME Media Enterprises B.V. among Central European Media
Enterprises N.V., European Bank for Reconstruction and Development
and CME
Media Enterprises B.V., dated July 21, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30,
2006).
|
10.54*
|
Deed
of Guarantee and Indemnity between Central European Media Enterprises
N.V.
and European Bank for Reconstruction and Development, dated July
21, 2006
(incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.55*
|
Deed
of Guarantee and Indemnity between CME Media Enterprises B.V. and
European
Bank for Reconstruction and Development, dated July 21, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.56*
|
Contract
Assignment between CME Media Enterprises B.V., Central European Media
Enterprises Ltd. and European Bank for Reconstruction and Development,
dated July 21, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.57*+
|
Amendment
of Employment Agreement (dated March 30, 2004) between Michael Garin
and
CME Development Corporation, dated July 28, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.58*+
|
Contract
for the Performance of the Office between CET 21 s.r.o. and Adrian
Sarbu,
dated August 1, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.59*+
|
Letter
Agreement between Central European Media Enterprises Ltd. and Adrian
Sarbu, dated August 1, 2006 (incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2006).
|
|
10.60*+
|
Amended
and Restated Contract of Employment between Marina Williams, Executive
Vice President, and CME Development Corporation, dated October 5,
2006
(incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2006).
|
|
10.61*+
|
Amended
and Restated Contract of Employment between Wallace Macmillan, Chief
Financial Officer, and CME Development Corporation, dated October
6, 2006
(incorporated
by reference to the Company's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2006).
|
|
Agreement
to Provide Advertising Services between Video International-Prioritet
LLC
and Broadcasting Company “Studio 1+1” LLC dated November 30,
2006.
|
||
List
of subsidiaries
|
||
Consents
of Deloitte & Touche LLP and Deloitte Audit
s.r.o.
|
||
Power
of Attorney, dated as of February 24, 2007
|
||
Sarbanes-Oxley
Certification s.302 CEO, dated March 1, 2007
|
||
Sarbanes-Oxley
Certification s.302 CFO, dated March 1, 2007
|
||
Sarbanes-Oxley
Certification - CEO and CFO, dated March 1, 2007 (furnished
only)
|
||
*
|
Previously
filed exhibits
|
|
+
|
Exhibit
is a management contract or compensatory plan
|
|
b)
|
Exhibits:
See (a)(3) above for a listing of the exhibits included as part of
this
report.
|
|
c)
|
Report
of Independent Registered Public Accountants on Schedule II — Schedule of
Valuation Allowances. (See pages S-1 to S-3 of this Form
10-K).
|
Date:
March 1, 2007
|
/s/
Michael Garin
Michael
Garin
Chief
Executive Officer
(Duly
Authorized Officer)
|
|
Date:
March 1, 2007
|
/s/
Wallace Macmillan
Wallace
Macmillan
Vice
President - Finance
(Principal
Financial Officer and Accounting Officer)
|
Signature
|
Title
|
Date
|
||
*
|
Chairman
of the Board of Directors
|
March
1, 2007
|
||
Ronald
S. Lauder
|
||||
*
|
Vice-Chairman
of the Board of Directors
|
March
1, 2007
|
||
Herbert
A. Granath
|
||||
/s/
Michael Garin
Michael
Garin
|
Chief
Executive Officer and Director
(Principal
Executive Officer)
|
March
1, 2007
|
||
/s/
Wallace Macmillan
Wallace
Macmillan
|
Vice
President - Finance
(Principal
Financial Officer and Principal Accounting Officer)
|
March
1, 2007
|
||
*
|
Director
|
March
1, 2007
|
||
Frank
Ehmer
|
||||
*
|
Director
|
March
1, 2007
|
||
Charles
Frank
|
||||
*
|
Director
|
March
1, 2007
|
||
Herbert
Kloiber
|
||||
*
|
Director
|
March
1, 2007
|
||
Alfred
W. Langer
|
||||
*
|
Director
|
March
1, 2007
|
||
Bruce
Maggin
|
||||
*
|
Director
|
March
1, 2007
|
||
Ann
Mather
|
||||
*
|
Director
|
March
1, 2007
|
||
Christian
Stahl
|
||||
*
|
Director
|
March
1, 2007
|
||
Eric
Zinterhofer
|
||||
*
By
/s/
Wallace Macmillan
Wallace
Macmillan
Attorney-in-fact
|
Schedule
II : Schedule of Valuation Allowances
|
S-3
|
Bad
debt and credit note provision
|
Deferred
tax allowance
|
|||
Balance
at December 31, 2003
|
5,625
|
11,846
|
||
Charged
to costs and expenses
|
250
|
(1,366)
|
||
Charged
to other accounts (1)
|
(203)
|
-
|
||
Foreign
exchange
|
468
|
(2,469)
|
||
Balance
at December 31, 2004
|
6,140
|
8,011
|
||
Charged
to costs and expenses
|
1,750
|
5,115
|
||
Charged
to other accounts (1)
|
1,532
|
(185)
|
||
Foreign
exchange
|
(172)
|
(1,007)
|
||
Balance
at December 31, 2005
|
9,250
|
11,934
|
||
Charged
to costs and expenses
|
1,989
|
6,107
|
||
Charged
to other accounts (1)
|
1,540
|
(1,168)
|
||
Foreign
exchange
|
(115)
|
(299)
|
||
Balance
at December 31, 2006
|
12,664
|
16,574
|
(1)
|
Charged
to other accounts for the bad debt and credit note provision consist
primarily of accounts receivable written off and opening balances
of
acquired companies.
|