BERMUDA
|
98-0438382
|
(State
or other jurisdiction of incorporation and organization)
|
(IRS
Employer Identification No.)
|
Clarendon
House, Church Street, Hamilton
|
HM
11 Bermuda
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer S
|
Accelerated filer £ | Non-accelerated filer £ | Smaller reporting company £ |
Class
|
Outstanding
as of April 24, 2009
|
Class
A Common Stock, par value $0.08
|
36,024,273
|
Class
B Common Stock, par value $0.08
|
6,312,839
|
Page
|
|
Part
I. Financial information
|
|
4
|
|
6
|
|
8
|
|
9
|
|
10
|
|
50
|
|
89
|
|
91
|
|
Part
II. Other Information
|
|
92
|
|
92
|
|
101
|
|
101
|
|
102
|
March 31,
2009
|
December 31,
2008
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 306,553 | $ | 107,433 | ||||
Accounts
receivable (net of allowance) (Note 6)
|
163,993 | 221,450 | ||||||
Program
rights, net
|
63,825 | 67,787 | ||||||
Other
current assets (Note 7)
|
107,792 | 98,086 | ||||||
Total
current assets
|
642,163 | 494,756 | ||||||
Non-current
assets
|
||||||||
Investments
|
16,559 | 16,559 | ||||||
Property,
plant and equipment, net (Note 8)
|
184,907 | 206,667 | ||||||
Program
rights, net
|
114,149 | 113,596 | ||||||
Goodwill
(Note 4)
|
976,100 | 1,041,041 | ||||||
Broadcast
licenses and other intangible assets, net (Note 4)
|
369,450 | 514,732 | ||||||
Other
non-current assets (Note 7)
|
21,149 | 19,265 | ||||||
Total
non-current assets
|
1,682,314 | 1,911,860 | ||||||
Total
assets
|
$ | 2,324,477 | $ | 2,406,616 |
March 31,
2009
|
December 31,
2008
|
|||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued liabilities (Note 9)
|
$ | 152,321 | $ | 174,885 | ||||
Credit
facilities and obligations under capital leases (Note 10)
|
65,853 | 36,502 | ||||||
Other
current liabilities (Note 11)
|
24,367 | 17,286 | ||||||
Total
current liabilities
|
242,541 | 228,673 | ||||||
Non-current
liabilities
|
||||||||
Credit
facilities and obligations under capital leases (Note 10)
|
243,956 | 38,758 | ||||||
Senior
Debt (Note 5)
|
909,028 | 928,525 | ||||||
Other
non-current liabilities (Note 11)
|
91,817 | 112,215 | ||||||
Total
non-current liabilities
|
1,244,801 | 1,079,498 | ||||||
Commitments
and contingencies (Note 19)
|
||||||||
EQUITY:
|
||||||||
CME
Ltd. shareholders’ equity:
|
||||||||
Nil
shares of Preferred Stock of $0.08 each (December 31, 2008 –
nil)
|
- | - | ||||||
36,024,273
shares of Class A Common Stock of $0.08 each (December 31, 2008
–36,024,273)
|
2,882 | 2,882 | ||||||
6,312,839
shares of Class B Common Stock of $0.08 each (December 31, 2008 –
6,312,839)
|
505 | 505 | ||||||
Additional
paid-in capital
|
1,105,107 | 1,126,617 | ||||||
Accumulated
deficit
|
(281,274 | ) | (236,836 | ) | ||||
Accumulated
other comprehensive income
|
9,357 | 202,090 | ||||||
Total
CME Ltd. shareholders’ equity
|
836,577 | 1,095,258 | ||||||
Noncontrolling
interests
|
558 | 3,187 | ||||||
Total
equity
|
837,135 | 1,098,445 | ||||||
Total
liabilities and equity
|
$ | 2,324,477 | $ | 2,406,616 |
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Net
revenues
|
$ | 141,221 | $ | 223,023 | ||||
Operating
expenses:
|
||||||||
Operating
costs
|
29,393 | 33,015 | ||||||
Cost
of programming
|
74,922 | 94,087 | ||||||
Depreciation
of station property, plant and equipment
|
11,616 | 12,114 | ||||||
Amortization
of broadcast licenses and other intangibles (Note 4)
|
6,101 | 7,670 | ||||||
Cost
of revenues
|
122,032 | 146,886 | ||||||
Selling,
general and administrative expenses
|
21,828 | 30,664 | ||||||
Impairment
charge (Note 4)
|
81,843 | - | ||||||
Operating
(loss) / income
|
(84,482 | ) | 45,473 | |||||
Interest
income
|
744 | 2,180 | ||||||
Interest
expense (Note 16)
|
(21,428 | ) | (15,229 | ) | ||||
Foreign
currency exchange gain / (loss), net
|
39,264 | (17,428 | ) | |||||
Change
in fair value of derivatives (Note 12)
|
6,130 | (10,258 | ) | |||||
Other
income
|
99 | 651 | ||||||
(Loss)
/ income from continuing operations before tax
|
(59,673 | ) | 5,389 | |||||
Income
tax credit
|
12,995 | 10,283 | ||||||
(Loss)
/ income from continuing operations
|
(46,678 | ) | 15,672 | |||||
Discontinued
Operations, net of tax (Note 18)
|
(262 | ) | (750 | ) | ||||
Net
(loss) / income
|
(46,940 | ) | 14,922 | |||||
Net
(income) / loss attributable to noncontrolling interests
|
2,502 | (477 | ) | |||||
Net
(loss) / income attributable to CME Ltd.
|
$ | (44,438 | ) | $ | 14,445 | |||
Net
(loss) / income
|
(46,940 | ) | 14,922 | |||||
Currency
translation adjustment
|
(192,860 | ) | 191,467 | |||||
Obligation
to repurchase shares
|
- | 488 | ||||||
Comprehensive
(loss) / income
|
$ | (239,800 | ) | $ | 206,877 | |||
Comprehensive
loss / (income) attributable to noncontrolling interests
|
2,629 | (1,025 | ) | |||||
Comprehensive
(loss) / income attributable to CME Ltd.
|
$ | (237,171 | ) | $ | 205,852 |
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
PER
SHARE DATA (Note 15):
|
||||||||
Net
income / (loss) per share:
|
||||||||
Continuing
operations - Basic
|
$ | (1.04 | ) | $ | 0.36 | |||
Continuing
operations - Diluted
|
(1.04 | ) | 0.35 | |||||
Discontinued
operations – Basic
|
(0.01 | ) | (0.02 | ) | ||||
Discontinued
operations - Diluted
|
(0.01 | ) | (0.01 | ) | ||||
Net
(loss) / income attributable to CME Ltd common shareholders –
Basic
|
(1.05 | ) | 0.34 | |||||
Net
(loss) / income attributable to CME Ltd common shareholders –
Diluted
|
$ | (1.05 | ) | $ | 0.34 | |||
Weighted
average common shares used in computing per share amounts
(000’s):
|
||||||||
Basic
|
42,337 | 42,316 | ||||||
Diluted
|
42,337 | 42,732 |
CME
Ltd. Shareholders
|
||||||||||||||||||||||||||||||||||||
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Additional
|
Accumulated
Other
|
Total
|
||||||||||||||||||||||||||||||||
Number
of shares
|
Par
value
|
Number
of shares
|
Par
value
|
Paid-In
Capital
|
Retained
Earnings
|
Comprehensive
Income
|
Noncontrolling
Interest
|
Shareholders’
Equity
|
||||||||||||||||||||||||||||
BALANCE,
December 31, 2008
|
36,024,273 | $ | 2,882 | 6,312,839 | $ | 505 | $ | 1,126,617 | $ | (236,836 | ) | $ | 202,090 | $ | 3,187 | $ | 1,098,445 | |||||||||||||||||||
Stock-based
compensation
|
- | - | - | - | 1,663 | - | - | - | 1,663 | |||||||||||||||||||||||||||
Acquisition
of KINO non-controlling interest
|
- | - | - | - | (23,173 | ) | - | - | - | (23,173 | ) | |||||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (44,438 | ) | - | (2,502 | ) | (46,940 | ) | ||||||||||||||||||||||||
Currency
translation adjustment
|
- | - | - | - | - | - | (192,733 | ) | (127 | ) | (192,860 | ) | ||||||||||||||||||||||||
BALANCE, March 31,
2009
|
36,024,273 | $ | 2,882 | 6,312,839 | $ | 505 | $ | 1,105,107 | $ | (281,274 | ) | $ | 9,357 | $ | 558 | $ | 837,135 |
CME
Ltd. Shareholders
|
||||||||||||||||||||||||||||||||||||
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Additional
|
Accumulated
Other
|
Total
|
||||||||||||||||||||||||||||||||
Number
of shares
|
Par
value
|
Number
of shares
|
Par
value
|
Paid-In
Capital
|
Retained
Earnings
|
Comprehensive
Income
|
Noncontrolling
Interest
|
Shareholders’
Equity
|
||||||||||||||||||||||||||||
BALANCE,
December 31, 2007
|
36,003,198 | $ | 2,880 | 6,312,839 | $ | 505 | $ | 1,051,336 | $ | 54,871 | $ | 290,216 | 23,154 | $ | 1,422,962 | |||||||||||||||||||||
Stock-based
compensation
|
- | - | - | - | 1,856 | - | - | - | 1,856 | |||||||||||||||||||||||||||
Stock
options exercised
|
125 | - | - | - | 9 | - | - | - | 9 | |||||||||||||||||||||||||||
Purchase
of capped call options
|
- | - | - | - | (63,318 | ) | - | - | - | (63,318 | ) | |||||||||||||||||||||||||
Bifurcation
of equity option embedded in convertible notes
|
- | - | - | - | 108,085 | - | - | - | 108,085 | |||||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 14,445 | - | 477 | 14,922 | |||||||||||||||||||||||||||
Currency
translation adjustment
|
- | - | - | - | - | 190,919 | 548 | 191,467 | ||||||||||||||||||||||||||||
Obligation
to repurchase shares
|
- | - | - | - | - | - | 488 | - | 488 | |||||||||||||||||||||||||||
BALANCE, March 31,
2008
|
36,003,323 | $ | 2,880 | 6,312,839 | $ | 505 | $ | 1,097,968 | $ | 69,316 | $ | 481,623 | $ | 24,179 | $ | 1,676,471 |
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
(loss) / income
|
$ | (44,438 | ) | $ | 14,445 | |||
Adjustments
to reconcile net (loss) / income to net cash generated from
operating activities:
|
||||||||
Loss
from discontinued operations (Note 18])
|
262 | 750 | ||||||
Depreciation
and amortization
|
64,263 | 73,365 | ||||||
Impairment
charge (Note 4)
|
81,843 | - | ||||||
Loss
on disposal of fixed assets
|
258 | - | ||||||
Stock-based
compensation (Note 14)
|
1,547 | 1,813 | ||||||
Noncontrolling
interest in (loss) / income of consolidated subsidiaries
|
(2,502 | ) | 477 | |||||
Change
in fair value of derivatives (Note 12)
|
(6,130 | ) | 10,258 | |||||
Foreign
currency exchange (gain) / loss, net
|
(39,264 | ) | 17,428 | |||||
Net
change in (net of effects of acquisitions and disposals of
businesses):
|
||||||||
Accounts
receivable
|
38,296 | 16,540 | ||||||
Program
rights
|
(50,665 | ) | (79,433 | ) | ||||
Other
assets
|
(15,384 | ) | (7,270 | ) | ||||
Other
accounts payable and accrued liabilities
|
17,923 | 28,887 | ||||||
Income
taxes payable
|
(3,900 | ) | (6,075 | ) | ||||
Deferred
taxes
|
(10,823 | ) | 8,946 | |||||
VAT
and other taxes payable
|
(8,738 | ) | 4,487 | |||||
Net
cash generated from continuing operating activities
|
22,548 | 84,618 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property, plant and equipment
|
(7,822 | ) | (23,721 | ) | ||||
Disposal
of property, plant and equipment
|
665 | 99 | ||||||
Investments
in subsidiaries and unconsolidated affiliates
|
(22,776 | ) | - | |||||
Net
cash used in continuing investing activities
|
(29,933 | ) | (23,622 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net
proceeds from issuance of Convertible Notes
|
- | 463,812 | ||||||
Proceeds
from credit facilities
|
260,970 | - | ||||||
Payment
of credit facilities and capital leases
|
(36,316 | ) | (1,046 | ) | ||||
Purchase
of capped call options
|
- | (63,318 | ) | |||||
Excess
tax benefits from share-based payment arrangements
|
116 | 43 | ||||||
Proceeds
from exercise of stock options
|
- | 9 | ||||||
Dividends
paid to minority shareholders
|
- | (1,230 | ) | |||||
Net
cash received from continuing financing activities
|
224,770 | 398,270 | ||||||
NET
CASH USED IN DISCONTINUED ACTIVITIES - OPERATING
|
(1,294 | ) | (2,237 | ) | ||||
NET
CASH USED IN DISCONTINUED ACTIVITIES - INVESTING
|
- | (121 | ) | |||||
Impact
of exchange rate fluctuations on cash
|
(16,971 | ) | (5,178 | ) | ||||
Net
increase in cash and cash equivalents
|
199,120 | 451,730 | ||||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
107,433 | 142,826 | ||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 306,553 | $ | 594,556 |
Company
Name
|
Effective
Voting
Interest
|
Jurisdiction
of
Organization
|
Type
of Affiliate
|
Top
Tone Media S.A.
|
80.0%
|
Luxembourg
|
Subsidiary
|
TV2
EOOD (“TV2”)
|
80.0%
|
Bulgaria
|
Subsidiary
|
Top
Tone Media Bulgaria EOOD
|
80.0%
|
Bulgaria
|
Subsidiary
|
Zopal
S.A.
|
80.0%
|
Luxembourg
|
Subsidiary
|
LG
Consult EOOD
|
80.0%
|
Bulgaria
|
Subsidiary
|
Ring
TV EAD (“Ring TV”)
|
80.0%
|
Bulgaria
|
Subsidiary
|
Nova
TV d.d. (“Nova TV (Croatia)”)
|
100.0%
|
Croatia
|
Subsidiary
|
Operativna
Kompanija d.o.o.
|
100.0%
|
Croatia
|
Subsidiary
|
Media
House d.o.o.
|
100.0%
|
Croatia
|
Subsidiary
|
Internet
Dnevnik d.o.o.
|
76.0%
|
Croatia
|
Subsidiary
|
CET
21 spol. s r.o. (“CET 21”)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
Jyxo,
s.r.o. (“Jyxo”)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
BLOG
Internet, s.r.o. (“Blog“)
|
100.0%
|
Czech
Republic
|
Subsidiary
|
CME
Romania B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
Media
Pro International S.A. (“MPI”)
|
95.0%
|
Romania
|
Subsidiary
|
Media
Vision S.R.L (“Media Vision”)
|
95.0%
|
Romania
|
Subsidiary
|
Music
Television System S.R.L. (“MTS”)
|
95.0%
|
Romania
|
Subsidiary
|
Pro
TV S.A. (“Pro TV”)
|
95.0%
|
Romania
|
Subsidiary
|
Sport
Radio TV Media S.R.L (“Sport.ro”)
|
95.0%
|
Romania
|
Subsidiary
|
Campus
Radio S.R.L.
|
19.01%
|
Romania
|
Equity-Accounted
Affiliate
|
Media
Pro Management S.A. (“Media Pro”)
|
8.7%
|
Romania
|
Cost
investment
|
Media
Pro B.V.
|
10.0%
|
Netherlands
|
Cost
investment
|
CME
Slovak Holdings B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
A.R.J.,
a.s.
|
100.0%
|
Slovak
Republic
|
Subsidiary
|
MARKIZA-SLOVAKIA spol.
s r.o. (“Markiza”)
|
100.0%
|
Slovak
Republic
|
Subsidiary
|
GAMATEX
spol s r.o.
|
100.0%
|
Slovak
Republic
|
Subsidiary
(in liquidation)
|
Company
Name
|
Effective
Voting
Interest
|
Jurisdiction
of
Organization
|
Type
of Affiliate
|
A.D.A.M.
a.s.
|
100.0%
|
Slovak
Republic
|
Subsidiary
(in liquidation)
|
MEDIA
INVEST, spol. sr.o. (“Media Invest”)
|
100.0%
|
Slovak
Republic
|
Subsidiary
|
EMAIL.SK
s.r.o.
|
80.0%
|
Slovak
Republic
|
Subsidiary
|
PMT,
s.r.o.
|
31.5%
|
Slovak
Republic
|
Cost
investment
|
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
|
TELEVIDEO
d.o.o. (trading as TV Pika)
|
20.0%
|
Slovenia
|
Equity-Accounted
Affiliate
|
International
Media Services Ltd.
|
100.0%
|
Bermuda
|
Subsidiary
|
CME
Ukraine Holding GmbH
|
100.0%
|
Austria
|
Subsidiary
|
Innova
Film GmbH
|
100.0%
|
Germany
|
Subsidiary
|
CME
Cyprus Holding Ltd.
|
100.0%
|
Cyprus
|
Subsidiary
|
TV
Media Planet Ltd.
|
100.0%
|
Cyprus
|
Subsidiary
|
1+1
Production
|
100.0%
|
Ukraine
|
Subsidiary
|
Studio
1+1 LLC (“Studio 1+1”)
|
100.0%
|
Ukraine
|
Subsidiary
|
Ukrainian
Media Services LLC
|
99.9%
|
Ukraine
|
Subsidiary
|
Grizard
Investments Limited.
|
100.0%
|
Cyprus
|
Subsidiary
|
Grintwood
Investments Limited
|
100.0%
|
Cyprus
|
Subsidiary
|
CME
Ukraine Holding B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
Ukrpromtorg-2003
LLC (“Ukrpromtorg”)
|
100.0%
|
Ukraine
|
Subsidiary
|
Gravis-Kino
LLC (“Gravis-Kino”)
|
100.0%
|
Ukraine
|
Subsidiary
|
Nart
LLC
|
100.0%
|
Ukraine
|
Subsidiary
|
TV
Stimul LLC (“TV Stimul”)
|
100.0%
|
Ukraine
|
Subsidiary
|
TOR
LLC (“Tor”)
|
100.0%
|
Ukraine
|
Subsidiary
|
ZHYSA
LLC (“Zhysa”)
|
100.0%
|
Ukraine
|
Subsidiary
|
Glavred-Media
LLC (“Glavred”)
|
10.0%
|
Ukraine
|
Cost
Investment
|
Central
European Media Enterprises N.V.
|
100.0%
|
Netherlands
Antilles
|
Subsidiary
|
Central
European Media Enterprises II B.V.
|
100.0%
|
Netherlands
Antilles
|
Subsidiary
|
CME
Media Enterprises B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
CME
Programming B.V.
|
100.0%
|
Netherlands
|
Subsidiary
|
CME
Development Corporation
|
100.0%
|
Delaware
(USA)
|
Subsidiary
|
CME
Media Services Limited
|
100.0%
|
United
Kingdom
|
Subsidiary
|
CME
SR d.o.o.
|
100.0%
|
Serbia
|
Subsidiary
|
For
the three months ended March 31, 2009
|
||||
Net
loss attributable to CME Ltd. as reported
|
$ | (44,438 | ) | |
Deduct:
noncontrolling interest income recognized since the adoption of FAS
160
|
(1,846 | ) | ||
Pro
Forma net loss
|
$ | (46,284 | ) | |
Net
loss per share – Basic (As reported)
|
$ | (1.05 | ) | |
Net
loss per share – Basic (Pro Forma)
|
$ | (1.09 | ) | |
Net
loss per share – Diluted (As reported)
|
$ | (1.05 | ) | |
Net
loss per share – Diluted (Pro Forma)
|
$ | (1.09 | ) |
For
the Three Months ended March 31, 2008
|
||||||||||||||||
Impact
of adopting
|
||||||||||||||||
As
reported
|
FSP
APB 14-1
|
FAS
160
|
As
Adjusted
|
|||||||||||||
Consolidated
Statement of Operations
|
||||||||||||||||
Interest
expense
|
$ | (14,250 | ) | $ | (979 | ) (1) | $ | - | $ | (15,229 | ) | |||||
Minority
interest in income of consolidated subsidiaries (2)
|
(1,025 | ) | - | 548 | (477 | ) | ||||||||||
As
at December 31, 2008
|
||||||||||||||||
Impact
of adopting
|
||||||||||||||||
As
reported
|
FSP
APB 14-1
|
FAS
160
|
As
Adjusted
|
|||||||||||||
Consolidated
Balance Sheet
|
||||||||||||||||
Other
current assets
|
$ | 98,725 | $ | (639 | ) | $ | - | $ | 98,086 | |||||||
Other
non-current assets
|
20,743 | (1,478 | ) | - | 19,265 | |||||||||||
Senior
Debt
|
1,024,721 | (96,196 | ) | - | 928,525 | |||||||||||
Additional
paid-in capital
|
1,018,532 | 108,085 | - | 1,126,617 | ||||||||||||
Accumulated
deficit
|
(224,086 | ) | (14,006 | ) | 1,256 | (236,836 | ) | |||||||||
Accumulated
Other Comprehensive Income
|
$ | 203,346 | $ | - | $ | (1,256 | ) | $ | 202,090 |
Balance
December 31,
2008
|
Additions
|
Impairment
charge
|
Foreign
currency movement
|
Balance
March 31,
2009
|
||||||||||||||||
Croatia
|
$ | 739 | $ | - | $ | - | $ | (53 | ) | $ | 686 | |||||||||
Czech
Republic
|
888,936 | - | - | (52,692 | ) | 836,244 | ||||||||||||||
Romania
|
72,336 | - | - | (7,981 | ) | 64,355 | ||||||||||||||
Slovak
Republic
|
61,642 | - | - | (3,454 | ) | 58,188 | ||||||||||||||
Slovenia
|
17,388 | - | - | (761 | ) | 16,627 | ||||||||||||||
Total
|
$ | 1,041,041 | $ | - | $ | - | $ | (64,941 | ) | $ | 976,100 |
Indefinite-Lived
Broadcast Licenses
|
Amortized
Broadcast Licenses
|
Trademarks
|
Customer
Relationships
|
Other
|
Total
|
|||||||||||||||||||
Balance,
December 31, 2008
|
$ | 59,856 | $ | 282,058 | $ | 97,047 | $ | 68,280 | $ | 7,491 | $ | 514,732 | ||||||||||||
Additions
|
- | - | - | - | - | - | ||||||||||||||||||
Impairment
|
- | (75,788 | ) | (76 | ) | - | (4,882 | ) | (80,746 | ) | ||||||||||||||
Amortization
|
- | (3,913 | ) | (103 | ) | (1,700 | ) | (385 | ) | (6,101 | ) | |||||||||||||
Foreign
currency movements
|
(5,803 | ) | (31,075 | ) | (16,302 | ) | (4,676 | ) | (579 | ) | (58,435 | ) | ||||||||||||
Balance,
March 31, 2009
|
$ | 54,053 | $ | 171,282 | $ | 80,566 | $ | 61,904 | $ | 1,645 | $ | 369,450 |
March
31,
2009
|
December 31,
2008
|
|||||||
Gross
value
|
$ | 404,726 | $ | 549,140 | ||||
Accumulated
amortization
|
(89,329 | ) | (94,264 | ) | ||||
Net
book value of amortized intangible assets
|
$ | 315,397 | $ | 454,876 | ||||
Indefinite-lived
broadcast licenses
|
54,053 | 59,856 | ||||||
Total
broadcast licenses and other intangible assets, net
|
$ | 369,450 | $ | 514,732 |
Amortized
Trademarks
|
Amortized
Broadcast Licenses
|
Other
Intangible Assets
|
Other
Assets
|
Total
|
||||||||||||||||
Bulgaria
|
$ | 76 | $ | 75,788 | $ | 4,882 | $ | 1,097 | $ | 81,843 |
|
·
|
A
continued reduction in the short and medium economic projections for our
markets by external analysts fuelled by a widespread perception that
Central and Eastern Europe will be among the regions most heavily impacted
by the global economic crisis and growing sentiment that recovery will
take longer than expected;
|
|
·
|
increasing
reluctance of advertisers to make spending commitments, which has had a
larger than expected impact on both the proportion of our advertising
inventory we can sell and a reduction in the prices we can
achieve;
|
|
·
|
continued
significant volatility in the price of our shares of Class A common stock
during most of the quarter;
|
|
·
|
continued
high sovereign debt yields in our markets, suggesting a fundamental
re-pricing of risk by investors;
and
|
|
·
|
an
escalation of the economic crisis in Ukraine, including the downgrading of
its sovereign credit rating to CCC+ by Standard &
Poors.
|
|
·
|
The
impact of a number of possible scenarios for the downturn in, and eventual
recovery of, the Czech economy in general and the television advertising
market in particular. These scenarios included the timing and magnitude of
future growth in the market, and the speed of convergence with Western
European markets.
|
|
·
|
Other
available indications of fair value, such as Company-specific and
peer-group earnings multiples and analysts’
consensuses.
|
|
·
|
Comparing
the market capitalization implied by the aggregate fair value of all of
our reporting units to our actual market capitalization during the quarter
and considering whether the small resulting premium was a reasonable
indication of the premium an acquirer would be prepared to pay to obtain
control. We also noted that this implied control premium was consistent
with the price to be paid by TW Media Holdings LLC (“TWMH”) for their
investment in our shares (see note 13 “Shareholders’
Equity”).
|
|
·
|
Whether
the decline in our share price could have reflected factors other than the
underlying value of our assets. The sharp decline and subsequent partial
recovery in our share price during, and after, the quarter coincided with
the with a decline in the market generally, and increased investor concern
over the macro economic environment in Eastern Europe in
particular.
|
|
·
|
Our
experience of historical acquisition activity in the region, including the
premia applied to broadcasting assets with dominant positions in their
respective markets.
|
Measurement
|
Valuation
Method
|
Recoverability
of cash flows
|
Undiscounted
future cash flows
|
Fair
value of broadcast licenses
|
Build-out
method
|
Fair
value of trademarks
|
Relief
from royalty method
|
Fair
value of reporting units
|
Discounted
cash flow model
|
10%
Adverse Change in
|
Long-Lived
Assets
|
Indefinite-Lived
Trademarks
|
Indefinite-Lived
Broadcast Licenses
|
Goodwill
|
Cost
of Capital
|
None
|
Ukraine
|
Slovenia
|
Czech
Republic
|
Total
Advertising
|
Croatia
|
None
|
Slovenia
|
Croatia
|
Market
|
Slovak
Republic
|
Czech
Republic
|
||
Slovak
Republic
|
||||
Slovenia
|
||||
Market
Share
|
Croatia
|
None
|
Slovenia
|
Croatia
|
Slovak
Republic
|
Czech
Republic
|
|||
Slovak
Republic
|
||||
Slovenia
|
||||
Forecast
Operating
|
Croatia
|
Not
applicable
|
Slovenia
|
Croatia
|
Costs
|
Slovak
Republic
|
Czech
Republic
|
||
Slovak
Republic
|
||||
Slovenia
|
||||
Forecast
Capital Expenditure
|
None
|
Not
applicable
|
Slovenia
|
None
|
Perpetuity
Growth Rate
|
Not
applicable
|
None
|
None
|
None
|
Carrying
Value
|
Fair
Value
|
|||||||||||||||
March 31,
2009
|
December 31,
2008
|
March 31,
2009
|
December 31,
2008
|
|||||||||||||
EUR
245.0 million 8.25% Senior Notes
|
$ | 326,046 | $ | 340,966 | $ | 257,576 | $ | 233,562 | ||||||||
EUR
150.0 million Floating Rate Senior Notes
|
199,620 | 208,755 | 114,782 | 125,253 | ||||||||||||
USD
475.0 million 3.5% Senior Convertible Notes
|
383,362 | 378,804 | 268,375 | 230,375 | ||||||||||||
$ | 909,028 | $ | 928,525 | $ | 640,733 | $ | 589,190 |
From:
|
Fixed
Rate Notes
Redemption
Price
|
|||
May
15, 2009 to May 14, 2010
|
104.125 | % | ||
May
15, 2010 to May 14, 2011
|
102.063 | % | ||
May
15, 2011 and thereafter
|
100.000 | % |
From:
|
Floating
Rate Notes
Redemption
Price
|
|||
May
14, 2009
|
101.000 | % | ||
May
15, 2009 and thereafter
|
100.000 | % |
Stock
price
|
Shares
issued on conversion of Convertible Notes
|
Shares
received on exercise of capped call options
|
Net
shares issued
|
Value
of shares issued (US$ ‘000)
|
||||||||||||||
$ |
105.00
and below
|
- | - | - | $ | - | ||||||||||||
110.00 | (205,628 | ) | 133,658 | (71,970 | ) | (7,917 | ) | |||||||||||
120.00 | (565,476 | ) | 367,559 | (197,917 | ) | (23,750 | ) | |||||||||||
130.00 | (869,963 | ) | 565,475 | (304,488 | ) | (39,583 | ) | |||||||||||
140.00 | (1,130,951 | ) | 735,118 | (395,833 | ) | (55,417 | ) | |||||||||||
151.20 | (1,382,274 | ) | 898,478 | (483,796 | ) | (73,150 | ) | |||||||||||
$ | 200.00 | (2,148,807 | ) | 679,248 | (1,469,559 | ) | $ | (293,912 | ) |
March 31,
2009
|
December 31,
2008
|
|||||||
Third-party
customers
|
$ | 168,131 | $ | 227,253 | ||||
Less
allowance for bad debts and credit notes
|
(15,298 | ) | (14,663 | ) | ||||
Related
parties
|
11,292 | 8,913 | ||||||
Less
allowance for bad debts and credit notes
|
(132 | ) | (53 | ) | ||||
Total
accounts receivable
|
$ | 163,993 | $ | 221,450 |
March 31,
2009
|
December 31,
2008
|
|||||||
Current:
|
||||||||
Prepaid
programming
|
$ | 49,494 | $ | 54,301 | ||||
Productions
in progress
|
17,184 | 14,080 | ||||||
Other
prepaid expenses
|
14,390 | 7,286 | ||||||
Income
taxes recoverable
|
10,092 | 1,216 | ||||||
Deferred
tax
|
6,624 | 5,898 | ||||||
Capitalized
debt costs
|
4,662 | 4,636 | ||||||
VAT
recoverable
|
3,911 | 3,460 | ||||||
Restricted
cash
|
739 | 821 | ||||||
Assets
held for sale
|
- | 5,484 | ||||||
Other
|
696 | 904 | ||||||
Total
other current assets
|
$ | 107,792 | $ | 98,086 | ||||
March 31,
2009
|
December 31,
2008
|
|||||||
Non-current:
|
||||||||
Capitalized
debt costs
|
$ | 12,110 | $ | 13,282 | ||||
Deferred
tax
|
4,291 | 2,108 | ||||||
Other
|
4,748 | 3,875 | ||||||
Total
other non-current assets
|
$ | 21,149 | $ | 19,265 |
March 31,
2009
|
December 31,
2008
|
|||||||
Land
and buildings
|
$ | 87,664 | $ | 92,421 | ||||
Station
machinery, fixtures and equipment
|
172,944 | 190,090 | ||||||
Other
equipment
|
30,752 | 35,470 | ||||||
Software
licenses
|
29,229 | 30,219 | ||||||
Construction
in progress
|
10,902 | 11,293 | ||||||
Total
cost
|
$ | 331,491 | $ | 359,493 | ||||
Less: Accumulated
depreciation
|
(146,584 | ) | (152,826 | ) | ||||
Total
net book value
|
$ | 184,907 | $ | 206,667 | ||||
Assets
held under capital leases (included in the above)
|
||||||||
Land
and buildings
|
$ | 5,599 | $ | 5,855 | ||||
Station
machinery, fixtures and equipment
|
1,397 | 1,917 | ||||||
Total
cost
|
6,996 | 7,772 | ||||||
Less: Accumulated
depreciation
|
(1,528 | ) | (1,644 | ) | ||||
Net
book value
|
$ | 5,468 | $ | 6,128 |
March 31,
2009
|
December 31,
2008
|
|||||||
Accounts
payable
|
$ | 27,795 | $ | 35,778 | ||||
Programming
liabilities
|
37,073 | 44,251 | ||||||
Duties
and other taxes payable
|
21,970 | 22,635 | ||||||
Accrued
staff costs
|
16,454 | 27,318 | ||||||
Accrued
interest payable
|
16,286 | 10,531 | ||||||
Income
taxes payable
|
2,082 | 7,399 | ||||||
Accrued
production costs
|
6,885 | 6,531 | ||||||
Authors’
rights
|
3,617 | 4,734 | ||||||
Other
accrued liabilities
|
20,159 | 15,708 | ||||||
Total
accounts payable and accrued liabilities
|
$ | 152,321 | $ | 174,885 |
March 31,
2009
|
December 31,
2008
|
||||||||
Credit
facilities:
|
|||||||||
Corporate
|
(a)
– (b)
|
$ | 199,625 | $ | 57,180 | ||||
Czech
Republic
|
(c)
– (e)
|
70,508 | 12,923 | ||||||
Romania
|
(f)
|
- | 104 | ||||||
Slovak
Republic
|
(g)
|
- | - | ||||||
Slovenia
|
(h)
|
34,933 | - | ||||||
Ukraine
|
(i)
|
164 | 172 | ||||||
Total
credit facilities
|
$ | 305,230 | $ | 70,379 | |||||
Capital
leases:
|
|||||||||
Bulgaria
operations, net of interest
|
$ | 744 | $ | 689 | |||||
Romania
operations, net of interest
|
221 | 289 | |||||||
Slovak
Republic operations, net of interest
|
- | 36 | |||||||
Slovenia
operations, net of interest
|
3,614 | 3,867 | |||||||
Total
capital leases
|
$ | 4,579 | $ | 4,881 | |||||
Total
credit facilities and capital leases
|
$ | 309,809 | $ | 75,260 | |||||
Less
current maturities
|
(65,853 | ) | (36,502 | ) | |||||
Total
non-current maturities
|
$ | 243,956 | $ | 38,758 |
2009
|
$ | 65,045 | ||
2010
|
160,337 | |||
2011
|
79,848 | |||
2012
|
326,046 | |||
2013
|
383,362 | |||
2014
and thereafter
|
199,620 | |||
Total
|
$ | 1,214,258 |
2009
|
667 | |||
2010
|
737 | |||
2011
|
636 | |||
2012
|
602 | |||
2013
|
2,465 | |||
2014
and thereafter
|
774 | |||
$ | 5,881 | |||
Less:
amount representing interest
|
(1,302 | ) | ||
Present
value of net minimum lease payments
|
$ | 4,579 |
March 31,
2009
|
December 31,
2008
|
|||||||
Current:
|
||||||||
Deferred
revenue
|
$ | 18,052 | $ | 7,684 | ||||
Consideration
payable – Bulgaria
|
4,500 | 4,500 | ||||||
Consideration
payable - Romania
|
- | 724 | ||||||
Onerous
contracts
|
1,389 | 1,994 | ||||||
Deferred
tax
|
426 | 177 | ||||||
Liabilities
held for sale
|
- | 2,207 | ||||||
Total
other current liabilities
|
$ | 24,367 | $ | 17,286 | ||||
March 31,
2009
|
December 31,
2008
|
|||||||
Non-current:
|
||||||||
Deferred
tax
|
$ | 70,047 | $ | 89,126 | ||||
Program
rights
|
15,048 | 9,922 | ||||||
Fair
value of derivatives
|
3,752 | 9,882 | ||||||
Consideration
payable – Czech Republic
|
1,314 | 1,396 | ||||||
Income
taxes payable
|
1,030 | 1,070 | ||||||
Other
|
626 | 819 | ||||||
Total
other non-current liabilities
|
$ | 91,817 | $ | 112,215 |
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted
instruments.
|
Level
2
|
Quoted
prices in markets that are not considered to be active or financial
instruments for which all significant inputs are observable, either
directly or indirectly.
|
Level
3
|
Prices
or valuations that require inputs that are both significant to the fair
value measurement and unobservable.
|
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Stock-based
compensation
|
$ | 1,547 | $ | 1,813 | ||||
Income
tax benefit recognized
|
113 | 180 |
Shares
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term (years)
|
Aggregate
Intrinsic Value
|
|||||||||||||
Outstanding
at January 1, 2009
|
1,439,042 | $ | 50.81 | 6.17 | 1,458 | |||||||||||
Granted
|
- | - | ||||||||||||||
Exercised
|
- | - | ||||||||||||||
Forfeited
|
(13,125 | ) | 79.35 | |||||||||||||
Outstanding
at March 31, 2009
|
1,425,917 | 50.54 | 5.91 | 281 | ||||||||||||
Vested
or expected to vest
|
1,363,176 | 50.31 | 5.97 | 281 | ||||||||||||
Exercisable
at March 31, 2009
|
852,855 | 44.05 | 5.14 | 281 |
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Net
(loss) / income from continuing operations attributable for CME Ltd.
shareholders
|
$ | (44,176 | ) | $ | $ 15,195 | |||
Net
loss from discontinued operations
|
(262 | ) | (750 | ) | ||||
Net
(loss) / income attributable to CME Ltd. Shareholders
|
$ | (44,438 | ) | $ | 14,445 | |||
Weighted
average outstanding shares of Common Stock (000’s)
|
42,337 | 42,316 | ||||||
Dilutive
effect of employee stock options (000’s)
|
- | 416 | ||||||
Common
Stock and Common Stock equivalents (000’s)
|
42,337 | 42,732 | ||||||
Income
/ (loss) per share:
|
||||||||
Basic
|
$ | (1.05 | ) | $ | 0.34 | |||
Diluted
|
$ | (1.05 | ) | $ | 0.34 |
For
the Three Months Ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Interest
on Senior Notes
|
$ | 9,408 | $ | 11,315 | ||||
Interest
on Convertible Notes
|
4,156 | 970 | ||||||
Interest
on EBRD loan
|
1,268 | - | ||||||
Interest
on capital leases
|
85 | 95 | ||||||
Other
interest and fees
|
823 | 958 | ||||||
$ | 15,740 | $ | 13,338 | |||||
Amortization
of capitalized debt issuance costs
|
1,130 | 861 | ||||||
Amortization
of debt issuance discount
|
4,558 | 1,030 | ||||||
$ | 5,688 | $ | 1,891 | |||||
Total
interest expense
|
$ | 21,428 | $ | 15,229 |
·
|
foreign
currency exchange gains and losses;
|
·
|
changes
in fair value of derivatives; and
|
·
|
certain
unusual or infrequent items (e.g., impairments of assets or
investments).
|
For
the Three Months Ended March 31,
|
||||||||
Net
Revenues (1)
|
2009
|
2008
|
||||||
Bulgaria
(2)
|
$ | 596 | $ | - | ||||
Croatia
|
10,203 | 11,534 | ||||||
Czech
Republic
|
56,127 | 85,558 | ||||||
Romania
|
35,689 | 57,996 | ||||||
Slovak
Republic
|
20,571 | 26,234 | ||||||
Slovenia
|
13,134 | 17,951 | ||||||
Ukraine
|
4,901 | 23,750 | ||||||
Total
Operating Segments
|
$ | 141,221 | $ | 223,023 | ||||
Corporate
|
- | - | ||||||
Total
|
$ | 141,221 | $ | 223,023 |
(1)
|
All
net revenues are derived from external customers. There are no
inter-segmental revenues.
|
For
the Three Months Ended March 31,
|
||||||||
EBITDA
|
2009
|
2008
|
||||||
Bulgaria
(1)
|
$ | (6,730 | ) | $ | - | |||
Croatia
|
(43 | ) | (2,730 | ) | ||||
Czech
Republic
|
24,893 | 43,845 | ||||||
Romania
|
7,147 | 23,376 | ||||||
Slovak
Republic
|
3,728 | 9,137 | ||||||
Slovenia
|
3,010 | 4,340 | ||||||
Ukraine
|
(12,280 | ) | (2,694 | ) | ||||
Total
Operating Segments
|
$ | 19,725 | $ | 75,274 | ||||
Corporate
|
(4,259 | ) | (9,806 | ) | ||||
Total
|
$ | 15,466 | $ | 65,468 |
(1)
|
We
acquired our Bulgaria operations on August 1,
2008.
|
For
the Three Months Ended March 31,
|
||||||||
Depreciation
|
2009
|
2008
|
||||||
Bulgaria
(1)
|
$ | 535 | $ | - | ||||
Croatia
|
1,069 | 1,410 | ||||||
Czech
Republic
|
3,695 | 4,622 | ||||||
Romania
|
2,751 | 2,672 | ||||||
Slovak
Republic
|
1,636 | 1,383 | ||||||
Slovenia
|
1,426 | 1,283 | ||||||
Ukraine
|
504 | 744 | ||||||
Total
Operating Segments
|
$ | 11,616 | $ | 12,114 | ||||
Corporate
|
388 | 211 | ||||||
Total
|
$ | 12,004 | $ | 12,325 |
(1)
|
We
acquired our Bulgaria operations on August 1,
2008.
|
For
the Three Months Ended March 31,
|
||||||||
Amortization
of intangible assets
|
2009
|
2008
|
||||||
Bulgaria
(1)
|
$ | 1,545 | $ | - | ||||
Croatia
|
- | - | ||||||
Czech
Republic
|
2,414 | 5,524 | ||||||
Romania
|
591 | 869 | ||||||
Slovak
Republic
|
1,137 | 1,193 | ||||||
Slovenia
|
- | - | ||||||
Ukraine
|
414 | 84 | ||||||
Total
Operating Segments
|
$ | 6,101 | $ | 7,670 | ||||
Corporate
|
- | - | ||||||
Total
|
$ | 6,101 | $ | 7,670 |
(1)
|
We
acquired our Bulgaria operations on August 1,
2008.
|
For
the Three Months Ended March 31,
|
||||||||
Impairment
charges
|
2009
|
2008
|
||||||
Bulgaria
(1)
|
$ | 81,843 | $ | - | ||||
Croatia
|
- | - | ||||||
Czech
Republic
|
- | - | ||||||
Romania
|
- | - | ||||||
Slovak
Republic
|
- | - | ||||||
Slovenia
|
- | - | ||||||
Ukraine
|
- | - | ||||||
Total
Operating Segments
|
$ | 81,843 | $ | - | ||||
Corporate
|
- | - | ||||||
Total
|
$ | 81,843 | $ | - |
(1)
|
We
acquired our Bulgaria operations on August 1,
2008.
|
For
the Three Months Ended March 31,
|
||||||||
Operating
(loss) / income
|
2009
|
2008
|
||||||
Bulgaria
(1)
|
$ | (90,653 | ) | $ | - | |||
Croatia
|
(1,112 | ) | (4,140 | ) | ||||
Czech
Republic
|
18,784 | 33,699 | ||||||
Romania
|
3,805 | 19,835 | ||||||
Slovak
Republic
|
955 | 6,561 | ||||||
Slovenia
|
1,584 | 3,057 | ||||||
Ukraine
|
(13,198 | ) | (3,522 | ) | ||||
Total
Operating Segments
|
$ | (79,835 | ) | $ | 55,490 | |||
Corporate
|
(4,647 | ) | (10,017 | ) | ||||
Total
|
$ | (84,482 | ) | $ | 45,473 |
(1)
|
We
acquired our Bulgaria operations on August 1,
2008.
|
Total
assets (1):
|
March 31,
2009
|
December 31,
2008
|
||||||
Bulgaria
|
$ | 19,115 | $ | 107,805 | ||||
Croatia
|
46,193 | 50,431 | ||||||
Czech
Republic
|
1,245,879 | 1,306,997 | ||||||
Romania
|
343,788 | 387,845 | ||||||
Slovak
Republic
|
230,110 | 240,899 | ||||||
Slovenia
|
90,751 | 93,022 | ||||||
Ukraine
|
91,629 | 129,590 | ||||||
$ | 2,067,465 | $ | 2,316,589 | |||||
Corporate
|
257,012 | 84,543 | ||||||
Total
|
$ | 2,324,477 | $ | 2,401,132 | ||||
Reconciliation
to condensed consolidated balance sheets:
|
||||||||
Assets
held for sale (2)
|
- | 5,484 | ||||||
Total
assets
|
$ | 2,324,477 | $ | 2,406,616 |
(1)
|
Segment
assets exclude any inter-company investments, loans, payables and
receivables.
|
(2)
|
Assets
held for sale represent the CITI channel, which was disposed of in
February 2009.
|
Long-lived
assets (1):
|
March 31,
2009
|
December 31,
2008
|
||||||
Bulgaria
|
$ | 5,979 | $ | 6,404 | ||||
Croatia
|
11,953 | 13,450 | ||||||
Czech
Republic
|
57,162 | 61,463 | ||||||
Romania
|
44,970 | 52,193 | ||||||
Slovak
Republic
|
36,647 | 40,025 | ||||||
Slovenia
|
22,863 | 24,932 | ||||||
Ukraine
|
4,562 | 7,083 | ||||||
$ | 184,136 | $ | 205,550 | |||||
Corporate
|
771 | 1,117 | ||||||
Total
long-lived assets
|
$ | 184,907 | $ | 206,667 |
(1)
|
Reflects
property, plant and equipment.
|
March 31, 2009
|
||||
Bulgaria
|
$ | 49,306 | ||
Croatia
|
27,614 | |||
Czech
Republic
|
102,262 | |||
Romania
|
171,135 | |||
Slovak
Republic
|
47,978 | |||
Slovenia
|
20,664 | |||
Ukraine
|
15,523 | |||
Total
|
$ | 434,482 |
March 31,
2009
|
||||
2009
|
4,320 | |||
2010
|
4,766 | |||
2011
|
2,898 | |||
2012
|
1,931 | |||
2013
|
3,840 | |||
2014
and thereafter
|
1,597 | |||
Total
|
$ | 19,352 |
Bulgaria
|
The
analog license of TV2 expires in February
2010.
|
Croatia
|
The
analog license of NOVA TV (Croatia) expires in March
2010.
|
Czech
Republic
|
The
terrestrial license of TV NOVA (Czech Republic) expires in January 2025
and the satellite license of TV NOVA (Czech Republic) expires in December
2020. The NOVA SPORT cable and satellite license expires in September
2020. The satellite license for NOVA CINEMA expires in November
2019.
|
Romania
|
Analog,
cable and satellite licenses expire on dates ranging from May
2009 to April 2018.
|
Slovak
Republic
|
The
analog license of TV MARKIZA expires in September
2019.
|
Slovenia
|
The
analog licenses of POP TV and KANAL A expire in August
2012.
|
Ukraine
|
The
15-hour prime time and off prime time analog license of STUDIO 1+1 expires
in December 2016. The analog license to broadcast for the remaining nine
hours in off prime time expires in July 2014. The satellite license
expires in April 2018. Analog and satellite licenses for the KINO channel
expire on dates ranging from March 2010 to July
2016.
|
I.
|
Forward-looking
Statements
|
II.
|
Executive
Summary
|
III.
|
Analysis
of Segment Results
|
IV.
|
Analysis
of the Results of Consolidated
Operations
|
V.
|
Liquidity
and Capital Resources
|
VI.
|
Critical
Accounting Policies and
Estimates
|
For
the Three Months Ended March 31,
(US$
000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Net
revenues
|
$ | 141,221 | $ | 223,023 | (36.7 | )% | ||||||
Operating
(loss) / income
|
(84,482 | ) | 45,473 |
Nm
|
(1)
|
|||||||
Net
(loss) / income
|
$ | (46,940 | ) | $ | 14,922 |
Nm
|
(1)
|
|||||
Net
cash (used in) / generated by continuing operating
activities
|
$ | 22,548 | $ | 84,618 | ( 73.4 | )% |
|
·
|
we
intend to reorganize our operating structure into three areas -
(broadcast) channel operations, content, and internet – to leverage our
content strengths to develop a significant new revenue source over the
medium term; and
|
|
·
|
as
this structure becomes established, we intend to continue our
transformation from a television broadcaster to a broad based media
company by capitalizing on our core strengths and expanding our revenue
base into five main sources: advertising, subscription, content
distribution, internet and management
services.
|
|
·
|
we
will continue developing our Bulgaria and Ukraine operations in a
controlled manner to secure consistent performance and a leading position
in those markets; and.
|
|
·
|
we
will assess opportunities arising from current economic conditions to
launch, acquire or operate additional channels and internet operations in
our region in order to expand our offerings, target niche audiences and
increase our advertising inventory when financially
prudent.
|
·
|
foreign
currency exchange gains and losses;
|
·
|
change
in fair value of derivatives; and
|
·
|
certain
unusual or infrequent items (e.g. impairments of assets or
investments).
|
SEGMENT
FINANCIAL INFORMATION
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
2009
|
(1)
|
2008
|
(1)
|
|||||||||||||
Net
Revenues
|
||||||||||||||||
Bulgaria
(TV2, RING TV) (2)
|
$ | 596 | - | % | $ | - | - | % | ||||||||
Croatia
(NOVA TV)
|
10,203 | 7 | % | 11,534 | 5 | % | ||||||||||
Czech
Republic (TV NOVA, NOVA CINEMA and NOVA SPORT)
|
56,127 | 40 | % | 85,558 | 38 | % | ||||||||||
Romania
(3)
|
35,689 | 25 | % | 57,996 | 26 | % | ||||||||||
Slovak
Republic (TV MARKIZA)
|
20,571 | 15 | % | 26,234 | 12 | % | ||||||||||
Slovenia
(POP TV, KANAL A)
|
13,134 | 9 | % | 17,951 | 8 | % | ||||||||||
Ukraine
(STUDIO 1+1, KINO) (4)
|
4,901 | 4 | % | 23,750 | 11 | % | ||||||||||
Total
Net Revenues
|
$ | 141,221 | 100 | % | $ | 223,023 | 100 | % | ||||||||
Represented
by:
|
||||||||||||||||
Broadcast
operations
|
139,433 | 99 | % | $ | 221,050 | 99 | % | |||||||||
Non-broadcast
operations
|
1,788 | 1 | % | 1,973 | 1 | % | ||||||||||
Total
Net Revenues
|
$ | 141,221 | 100 | % | $ | 223,023 | 100 | % | ||||||||
EBITDA
|
||||||||||||||||
Bulgaria
(TV2, RING TV) (2)
|
$ | (6,730 | ) | (44 | )% | $ | - | - | % | |||||||
Croatia
(NOVA TV)
|
(43 | ) | - | % | (2,730 | ) | (4 | )% | ||||||||
Czech
Republic (TV NOVA, NOVA CINEMA and NOVA SPORT)
|
24,893 | 161 | % | 43,845 | 66 | % | ||||||||||
Romania
(3)
|
7,147 | 46 | % | 23,376 | 36 | % | ||||||||||
Slovak
Republic (TV MARKIZA)
|
3,728 | 24 | % | 9,137 | 14 | % | ||||||||||
Slovenia
(POP TV and KANAL A)
|
3,010 | 20 | % | 4,340 | 7 | % | ||||||||||
Ukraine
(STUDIO 1+1, KINO) (4)
|
(12,280 | ) | (79 | )% | (2,694 | ) | (4 | )% | ||||||||
$ | 19,725 | $ | 75,274 | |||||||||||||
Corporate
|
(4,259 | ) | (28 | )% | (9,806 | ) | (15 | )% | ||||||||
Total
EBITDA
|
$ | 15,466 | 100 | % | $ | 65,468 | 100 | % | ||||||||
Represented
by:
|
||||||||||||||||
Broadcast
operations
|
$ | 21,611 | 139 | % | $ | 76,752 | 117 | % | ||||||||
Non-broadcast
operations
|
(1,886 | ) | (11 | )% | (1,478 | ) | (2 | )% | ||||||||
Corporate
|
(4,259 | ) | (28 | )% | (9,806 | ) | (15 | )% | ||||||||
Total
EBITDA
|
$ | 15,466 | 100 | % | $ | 65,468 | 100 | % | ||||||||
EBITDA
Margin (5)
|
11 | % | 29 | % |
For
the three months ended March 31, 2009
|
||||
All
day audience share
|
2.4 | % | ||
All
day ratings
|
0.3 | % | ||
Prime
time audience share
|
2.3 | % | ||
Prime
time ratings
|
0.7 | % |
BULGARIA
FINANICIAL INFORMATION
|
|||||
For
the three months ended March 31, 2009
(US$
000’s)
|
|||||
Spot revenues | $ | 219 | |||
Non-spot
revenues
|
377 | ||||
Net
Revenues
|
$ | 596 | |||
Represented
by:
|
|||||
Broadcast
operations
|
$ | 596 | |||
Non-broadcast
operations
|
- | ||||
Net
Revenues
|
$ | 596 | |||
EBITDA
|
$ | (6,730 | ) | ||
Represented
by:
|
|||||
Broadcast
operations
|
$ | (6,670 | ) | ||
Non-broadcast
operations
|
(60 | ) | |||
EBITDA
|
$ | (6,730 | ) | ||
EBITDA
Margin
|
Nm
|
·
|
Net Revenues for the
three months ended March 31, 2009 were US$ 0.6 million. Spot revenues were
US$ 0.2 million. Non-spot revenues were US$ 0.4 million, primarily from
cable revenues.
|
·
|
EBITDA losses for the
three months ended March 31, 2009 were US$ 6.7 million. We incurred
programming costs of US$ 4.7 million, other operating costs of US$ 1.4
million and selling, general and administrative costs of US$ 1.3
million.
|
For
the Three Months Ended March 31,
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
All
day audience share
|
22.6 | % | 23.1 | % | (0.5 | )% | ||||||
All
day ratings
|
4.4 | % | 4.1 | % | 0.3 | % | ||||||
Prime
time audience share
|
25.7 | % | 26.4 | % | (0.7 | )% | ||||||
Prime
time ratings
|
11.0 | % | 10.7 | % | 0.3 | % |
CROATIA
FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 8,213 | $ | 9,662 | (15.0 | )% | 1.4 | % | ||||||||
Non-spot
revenues
|
1,990 | 1,872 | 6.3 | % | 26.9 | % | ||||||||||
Net
Revenues
|
$ | 10,203 | $ | 11,534 | (11.5 | )% | 5.5 | % | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 10,080 | $ | 11,405 | (11.6 | )% | 5.4 | % | ||||||||
Non-broadcast
operations
|
123 | 129 | (4.7 | )% | 14.1 | % | ||||||||||
Net
Revenues
|
$ | 10,203 | $ | 11,534 | (11.5 | )% | 5.5 | % | ||||||||
EBITDA
|
$ | (43 | ) | $ | (2,730 | ) | 98.4 | % | 98.2 | % | ||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 228 | $ | (2,587 | ) | 108.8 | % | 109.9 | % | |||||||
Non-broadcast
operations
|
(271 | ) | (143 | ) | (89.5 | )% | (126.7 | )% | ||||||||
EBITDA
|
$ | (43 | ) | $ | (2,730 | ) | 98.4 | % | 98.2 | % | ||||||
EBITDA
Margin
|
(0 | ) % | (24 | )% | 24 | % | 24 | % | ||||||||
·
|
Net Revenues for the
three months ended March 31, 2009 decreased by 12%, compared to the three
months ended March 31, 2008. In constant currency, Net Revenues
increased by 6%. Spot revenues for the three months ended March
31, 2009 increased by 1% in constant currency compared to the same period
in 2008. This is as a result of an increase in the volume of GRPs sold in
off prime time, which more than offset a weakening in prices as a result
of market conditions. Non-spot revenues increased by 27% in
constant currency in the three months ended March 31, 2009 compared to the
same period in 2008.
|
·
|
EBITDA losses for the
three months ended March 31, 2009 decreased by 98% compared to the three
months ended March 31, 2008. In constant currency, Segment
EBITDA losses decreased by 98%.
|
For
the Three Months Ended March 31,
|
||||||||||||
2009(1)
|
2008
|
Movement
|
||||||||||
All
day audience share
|
44.0 | % | 41.7 | % | 2.3 | % | ||||||
All
day ratings
|
5.5 | % | 5.1 | % | 0.4 | % | ||||||
Prime
time audience share
|
47.9 | % | 45.9 | % | 2.0 | % | ||||||
Prime
time ratings
|
15.1 | % | 14.6 | % | 0.5 | % |
CZECH
REPUBLIC FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 50,199 | $ | 77,603 | (35.3 | )% | (18.1 | )% | ||||||||
Non-spot
revenues
|
5,928 | 7,955 | (25.5 | )% | (6.1 | )% | ||||||||||
Net
Revenues
|
$ | 56,127 | $ | 85,558 | (34.4 | )% | (17.0 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 55,456 | $ | 85,383 | (35.1 | )% | (17.8 | )% | ||||||||
Non-broadcast
operations
|
671 | 175 |
Nm(3)
|
Nm(3)
|
||||||||||||
Net
Revenues
|
$ | 56,127 | $ | 85,558 | (34.4 | )% | (17.0 | )% | ||||||||
EBITDA
|
$ | 24,893 | $ | 43,845 | (43.2 | )% | (27.7 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 25,587 | $ | 44,236 | (42.2 | )% | (26.3 | )% | ||||||||
Non-broadcast
operations
|
(694 | ) | (391 | ) | (77.5 | )% | (124.7 | )% | ||||||||
EBITDA
|
$ | 24,893 | $ | 43,845 | (43.2 | )% | (27.7 | )% | ||||||||
EBITDA
Margin
|
44 | % | 51 | % | (7 | )% | (7 | )% | ||||||||
·
|
Net Revenues for the
three months ended March 31, 2009 decreased by 34% compared to the three
months ended March 31, 2008. In constant currency, Net Revenues decreased
by 17%. Spot revenues for the three months ended March 31, 2009 decreased
by 18% in constant currency compared to the three months ended March 31,
2008 due to a decrease in price and the volume of GRPs sold as a result of
the weaker market. Non-spot revenue revenues decreased by 6% in
constant currency.
|
·
|
EBITDA for the three
months ended March 31, 2009 decreased by 43% compared to the three months
ended March 31, 2008, resulting in an EBITDA margin of 44% compared to 51%
in the same period in 2008. In constant currency, EBITDA
decreased by 28%.
|
For
the Three Months Ended March 31,
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
All
day audience share
|
27.8 | % | 29.0 | % | (1.2 | )% | ||||||
All
day ratings
|
5.1 | % | 5.1 | % | 0.0 | % | ||||||
Prime
time audience share
|
34.3 | % | 33.3 | % | 1.0 | % | ||||||
Prime
time ratings
|
13.2 | % | 12.4 | % | 0.8 | % |
ROMANIA
FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 30,511 | $ | 53,032 | (42.5 | )% | (23.6 | )% | ||||||||
Non-spot
revenues
|
5,178 | 4,964 | 4.3 | % | 38.7 | % | ||||||||||
Net
Revenues
|
$ | 35,689 | $ | 57,996 | (38.5 | )% | (18.3 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 35,558 | $ | 57,799 | (38.5 | )% | (18.3 | )% | ||||||||
Non-broadcast
operations
|
131 | 197 | (33.5 | )% | (10.7 | )% | ||||||||||
Net
Revenues
|
$ | 35,689 | $ | 57,996 | (38.5 | )% | (18.3 | )% | ||||||||
EBITDA
|
$ | 7,147 | $ | 23,376 | (69.4 | )% | (59.3 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 7,525 | $ | 23,566 | (68.1 | )% | (57.5 | )% | ||||||||
Non-broadcast
operations
|
(378 | ) | (190 | ) | (98.9 | )% | 160.0 | % | ||||||||
EBITDA
|
$ | 7,147 | $ | 23,376 | (69.4 | )% | (59.3 | )% | ||||||||
EBITDA
Margin
|
20 | % | 40 | % | (20 | )% | (20 | )% | ||||||||
·
|
Net Revenues
for the three months
ended March 31, 2009 decreased by 39%, compared to the three months ended
March 31, 2008. In constant currency, Net Revenues decreased by 18%, spot
revenues decreased by 24% and non-spot revenues increased by 39%. The
decrease in net spot revenues is attributable to decreases in price and
the volume of GRPs sold. We sold a lower proportion of the GRPs
that we generated in the three months ended March 31, 2009 than in the
same period in 2008 as a result of the continued reduction in advertiser
spending. The increase in non-spot revenue was primarily due to increased
cable tariff revenue generated by PRO TV INTERNATIONAL, SPORT.RO, PRO
CINEMA and MTV ROMANIA.
|
·
|
EBITDA for the three
months ended March 31, 2009 decreased by 69%, compared to the three months
ended March 31, 2008, resulting in an EBITDA margin of 20%, compared to
40% in the same period in 2008. In constant currency, EBITDA decreased by
59%.
|
For
the Three Months Ended March 31,
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
All
day audience share
|
31.5 | % | 36.7 | % | (5.2 | )% | ||||||
All
day ratings
|
4.7 | % | 5.4 | % | (0.7 | )% | ||||||
Prime
time audience share
|
32.7 | % | 39.1 | % | (6.4 | )% | ||||||
Prime
time ratings
|
11.9 | % | 14.1 | % | (2.2 | )% |
SLOVAK
REPUBLIC FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 19,171 | $ | 24,479 | (21.7 | )% | (16.9 | )% | ||||||||
Non-spot
revenues
|
1,400 | 1,755 | (20.2 | )% | (14.2 | )% | ||||||||||
Net
Revenues
|
$ | 20,571 | $ | 26,234 | (21.6 | )% | (16.7 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 20,463 | $ | 26,213 | (21.9 | )% | (17.1 | )% | ||||||||
Non-broadcast
operations
|
108 | 21 |
Nm(3)
|
Nm(3)
|
||||||||||||
Net
Revenues
|
$ | 20,571 | $ | 26,234 | (21.6 | )% | (16.7 | )% | ||||||||
EBITDA
|
$ | 3,728 | $ | 9,137 | (59.2 | )% | (55.9 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 3,970 | $ | 9,380 | (57.7 | )% | (54.3 | )% | ||||||||
Non-broadcast
operations
|
(242 | ) | (243 | ) | (0.4 | )% | 4.9 | % | ||||||||
EBITDA
|
$ | 3,728 | $ | 9,137 | (59.2 | )% | (55.9 | )% | ||||||||
EBITDA
Margin
|
18 | % | 35 | % | (17 | )% | (16 | )% | ||||||||
·
|
Net Revenues for the
three months ended March 31, 2009 decreased by 22% compared to the three
months ended March 31, 2008. In constant currency, Net Revenues decreased
by 17%. The decrease in spot revenues was mainly due to a lower volume of
GRPs sold and a decrease in our pricing to remain competitive in the
declining television advertising market. Non-spot revenues
decreased by 14% in constant currency in the three months ended March 31,
2009 compared to the three months ended March 31, 2008 primarily due to
lower sponsorship revenues.
|
·
|
EBITDA for the three
months ended March 31, 2009 decreased by 59% compared to the three months
ended March 31, 2008, and the EBITDA margin decreased from 35% to 18%. In
constant currency, EBITDA decreased by
56%.
|
For
the Three Months Ended March 31,
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
All
day audience share
|
37.3 | % | 38.1 | % | (0.8 | )% | ||||||
All
day ratings
|
3.9 | % | 4.2 | % | (0.3 | )% | ||||||
Prime
time audience share
|
46.8 | % | 45.4 | % | 1.4 | % | ||||||
Prime
time ratings
|
12.9 | % | 12.4 | % | 0.5 | % |
SLOVENIA
FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 11,645 | $ | 15,307 | (23.9 | )% | (11.2 | )% | ||||||||
Non-spot
revenues
|
1,489 | 2,644 | (43.7 | )% | (34.0 | )% | ||||||||||
Net
Revenues
|
$ | 13,134 | $ | 17,951 | (26.8 | )% | (14.6 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 12,410 | $ | 16,500 | (24.8 | )% | (12.2 | )% | ||||||||
Non-broadcast
operations
|
724 | 1,451 | (50.1 | )% | (41.7 | )% | ||||||||||
Net
Revenues
|
$ | 13,134 | $ | 17,951 | (26.8 | )% | (14.6 | )% | ||||||||
EBITDA
|
$ | 3,010 | $ | 4,340 | (30.6 | )% | (18.2 | )% | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 2,927 | $ | 4,652 | (37.1 | )% | (26.0 | )% | ||||||||
Non-broadcast
operations
|
83 | (312 | ) | 126.6 | % | (129.8 | )% | |||||||||
EBITDA
|
$ | 3,010 | $ | 4,340 | (30.6 | )% | (18.2 | )% | ||||||||
EBITDA
Margin
|
23 | % | 24 | % | (1 | )% | (1 | )% | ||||||||
·
|
Net Revenues for the
three months ended March 31, 2009 decreased by 27% compared to the three
months ended March 31, 2008. In constant currency, Net Revenues
decreased by 15%. Spot revenues decreased by 11% in the three months ended
March 31, 2009 in constant currency compared to 2008, due to decreased
spending from existing customers and lower pricing as a result of a
difficult trading environment. Non-spot revenues decreased by
34% in constant currency compared to the three months ended March 31,
2008, primarily driven by lower sponsorship and telephone voting
revenues.
|
·
|
EBITDA for the three
months ended March 31, 2009 decreased by 31% compared to the three months
ended March 31, 2008. In constant currency, EBITDA decreased by 18% while
EBITDA margin decreased by 1% to
23%.
|
For
the Three Months Ended March 31,2009
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
All
day audience share
|
10.2 | % | 12.5 | % | (2.3 | )% | ||||||
All
day ratings
|
1.6 | % | 1.8 | % | (0.2 | )% | ||||||
Prime
time audience share
|
13.3 | % | 13.3 | % | 0 | % | ||||||
Prime
time ratings
|
4.9 | % | 4.7 | % | 0.2 | % |
UKRAINE
FINANCIAL INFORMATION
|
||||||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||||||
Movement
|
||||||||||||||||
2009
|
2008
|
%
Act(1)
|
%
Lfl(2)
|
|||||||||||||
Spot
revenues
|
$ | 2,594 | $ | 18,626 | (86.1 | )% | - | |||||||||
Non-spot
revenues
|
2,307 | 5,124 | (55.0 | )% | - | |||||||||||
Net
Revenues
|
$ | 4,901 | $ | 23,750 | (79.4 | )% | - | |||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | 4,870 | $ | 23,750 | (79.5 | )% | - | |||||||||
Non-broadcast
operations
|
31 | - | 100.0 | % | - | |||||||||||
Net
Revenues
|
$ | 4,901 | $ | 23,750 | (79.4 | )% | - | |||||||||
EBITDA
|
$ | (12,280 | ) | $ | (2,694 | ) |
Nm
(3)
|
- | ||||||||
Represented
by
|
||||||||||||||||
Broadcast
operations
|
$ | (11,956 | ) | $ | (2,495 | ) |
Nm
(3)
|
- | ||||||||
Non-broadcast
operations
|
(324 | ) | (199 | ) | (62.8 | )% | - | |||||||||
EBITDA
|
$ | (12,280 | ) | $ | (2,694 | ) |
Nm
(3)
|
- | ||||||||
EBITDA
Margin
|
Nm
(3)
|
(11 | )% |
Nm
(3)
|
- | |||||||||||
·
|
Net Revenues for the
three months ended March 31, 2009 decreased by 79% compared to the three
months ended March 31, 2008. Spot revenues decreased by 86% in
the three months ended March 31, 2009, as we faced a combination of a
decline in the television advertising market and strong competition from
the sales house Inter-Reklama, which controls the majority of inventory in
the television market. Non-spot revenues decreased by 55%
compared to the three months ended March 31,
2008.
|
·
|
EBITDA for the three
months ended March 31, 2009 decreased by US$ 9.6 million compared to the
three months ended March 31, 2008.
|
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||
2009
|
2008
|
|||||||
Production
expenses
|
$ | 34,456 | $ | 41,708 | ||||
Program
amortization
|
40,466 | 52,379 | ||||||
Cost
of programming
|
$ | 74,922 | $ | 94,087 |
|
·
|
US$
6.6 million of reduced programming costs from our Czech Republic
operations;
|
|
·
|
US$
3.8 million of reduced programming costs from our Romania
operations;
|
|
·
|
US$
0.5 million of reduced programming costs from our Slovak Republic
operations;
|
|
·
|
US$
7.6 million of reduced programming costs from our Ukraine
operations;
|
|
·
|
US$
2.0 million of reduced programming costs from our Slovenia operations;
and
|
|
·
|
US$
3.3 million of reduced programming costs from our Croatia operations;
offset by
|
|
·
|
US$
4.7 million of programming costs from our Bulgaria
operations.
|
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||
2009
|
2008
|
|||||||
Program
amortization:
|
||||||||
Bulgaria
(TV2, RING TV) (1)
|
$ | 2,297 | $ | - | ||||
Croatia
(NOVA TV)
|
2,544 | 5,855 | ||||||
Czech
Republic (TV NOVA, NOVA CINEMA and NOVA SPORT)
|
9,793 | 13,055 | ||||||
Romania
(2)
|
9,774 | 11,988 | ||||||
Slovak
Republic (TV MARKIZA)
|
5,076 | 3,963 | ||||||
Slovenia
(POP TV and KANAL A)
|
2,974 | 2,956 | ||||||
Ukraine
(STUDIO 1+1, KINO) (3)
|
8,008 | 14,562 | ||||||
$ | 40,466 | $ | 52,379 | |||||
Cash
paid for programming:
|
||||||||
Bulgaria
(TV2, RING TV) (1)
|
$ | 3,492 | $ | - | ||||
Croatia
(NOVA TV)
|
4,205 | $ | 7,423 | |||||
Czech
Republic (TV NOVA, NOVA CINEMA and NOVA SPORT)
|
9,347 | 11,869 | ||||||
Romania
(2)
|
26,617 | 13,866 | ||||||
Slovak
Republic (TV MARKIZA)
|
6,098 | 5,568 | ||||||
Slovenia
(POP TV and KANAL A)
|
2,348 | 2,242 | ||||||
Ukraine
(STUDIO 1+1, KINO) (3)
|
38 | 7,331 | ||||||
$ | 52,145 | $ | 48,299 |
Consolidated
Net Revenues
|
||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Bulgaria
|
$ | 596 | $ | - |
-
|
% | ||||||
Croatia
|
10,203 | 11,534 | (11.5 | )% | ||||||||
Czech
Republic
|
56,127 | 85,558 | (34.8 | )% | ||||||||
Romania
|
35,689 | 57,996 | (38.5 | )% | ||||||||
Slovak
Republic
|
20,571 | 26,234 | (21.6 | )% | ||||||||
Slovenia
|
13,134 | 17,951 | (26.8 | )% | ||||||||
Ukraine
|
4,901 | 23,750 | (79.4 | )% | ||||||||
Total
Net Revenues
|
$ | 141,221 | $ | 223,023 | (36.7 | )% |
Consolidated
Cost of Revenues
|
||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Operating
costs
|
$ | 29,393 | $ | 33,015 | (11.0 | )% | ||||||
Cost
of programming
|
74,922 | 94,087 | (20.4 | )% | ||||||||
Depreciation
of station property, plant and equipment
|
11,616 | 12,114 | (4.1 | )% | ||||||||
Amortization
of broadcast licenses and other intangibles
|
6,101 | 7,670 | (20.5 | )% | ||||||||
Total
Cost of Revenues
|
$ | 122,032 | $ | 146,886 | (16.9 | )% |
Selling,
General and Administrative Expenses
|
||||||||||||
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Bulgaria
|
$ | 1,274 | $ | - | - | % | ||||||
Croatia
|
1,330 | 1,560 | (14.7 | )% | ||||||||
Czech
Republic
|
5,236 | 7,775 | (32.7 | )% | ||||||||
Romania
|
3,069 | 3,815 | (19.6 | )% | ||||||||
Slovak
Republic
|
2,562 | 2,397 | 6.9 | )% | ||||||||
Slovenia
|
1,123 | 2,193 | (48.8 | )% | ||||||||
Ukraine
|
2,587 | 2,907 | (11.0 | )% | ||||||||
Corporate
|
4,647 | 10,017 | (53.6 | )% | ||||||||
Total
Selling, General and Administrative Expenses
|
$ | 21,828 | $ | 30,664 | (28.8 | )% |
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Impairment
charge
|
$ | 81,483 | $ | - | - | % |
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Operating
Income
|
$ | (84,482 | ) | $ | 45,473 |
Nm
|
(1)
|
For
the Three Months Ended March 31, (US$ 000's)
|
||||||||||||
2009
|
2008
|
Movement
|
||||||||||
Interest
income
|
$ | 744 | $ | 2,180 | (65.9 | )% | ||||||
Interest
expense
|
(21,428 | ) | (15,229 | ) | 40.7 | % | ||||||
Foreign
currency exchange gain / (loss), net
|
39,264 | (17,428 | ) | Nm |
(1)
|
|||||||
Change
in fair value of derivatives
|
6,130 | (10,258 | ) | 159.8 | % | |||||||
Other
income
|
99 | 651 | (84.8 | )% | ||||||||
Provision
for income taxes
|
12,995 | 10,283 | 26.4 | % | ||||||||
Discontinued
operations
|
(262 | ) | (750 | ) | (65.1 | )% | ||||||
Noncontrolling
Interest in (loss) / income of consolidated subsidiaries
|
2,502 | (477 | ) | Nm |
(1)
|
|||||||
Currency
Translation Adjustment, net
|
(192,860 | ) | 191,467 | Nm |
(1)
|
Three
months ended March 31,
|
||||||||
2009
|
2008
|
|||||||
Bulgarian
Lev (1)
|
5 | % | - | |||||
Croatian
Kuna
|
8 | % | (8 | )% | ||||
Czech
Koruna
|
6 | % | (11 | )% | ||||
Euro
|
5 | % | (7 | )% | ||||
New
Romanian Lei
|
12 | % | (4 | )% | ||||
Ukraine
Hryvna (2)
|
3 | % | - |
Summarized
Condensed Consolidated Balance Sheet (US$ 000’s)
|
||||||||||||
March 31,
2009
|
December 31,
2008
|
Movement
|
||||||||||
Current
assets
|
$ | 642,163 | $ | 494,756 | 29.8 | % | ||||||
Non-current
assets
|
1,682,314 | 1,911,860 | (12.0 | )% | ||||||||
Current
liabilities
|
242,541 | 228,673 | 6.0 | % | ||||||||
Non-current
liabilities
|
1,244,801 | 1,079,498 | 15.3 | )% | ||||||||
CME
Ltd. shareholders’ equity
|
836,577 | 1,095,258 | (23.6 | )% | ||||||||
Noncontrolling
interests in consolidated subsidiaries
|
$ | 558 | $ | 3,187 | (82.5 | )% |
For the Three Months Ended March 31, (US$ 000's) | ||||||||
2009
|
2008
|
|||||||
Net
cash generated from continuing operating activities
|
$ | 22,548 | $ | 84,618 | ||||
Net
cash used in continuing investing activities
|
(29,933 | ) | (23,622 | ) | ||||
Net
cash received from continuing financing
activities
|
224,770 | 398,270 | ||||||
Net
cash used in discontinued operations – operating
activities
|
(1,294 | ) | (2,237 | ) | ||||
Net
cash used in discontinued operations – investing
activities
|
- | (121 | ) | |||||
Net
increase in cash and cash equivalents
|
$ | 199,120 | $ | 451,730 |
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
|
$ | 1,305,896 | $ | 65,045 | $ | 240,185 | $ | 801,046 | $ | 199,620 | ||||||||||
Long-Term
Debt – interest (1)
|
248,117 | 65,448 | 119,747 | 57,493 | 5,429 | |||||||||||||||
Capital
Lease Obligations
|
5,881 | 1,022 | 1,279 | 1,112 | 2,468 | |||||||||||||||
Operating
Leases
|
19,351 | 5,365 | 7,244 | 3,631 | 3,111 | |||||||||||||||
Unconditional
Purchase Obligations
|
442,728 | 116,711 | 242,262 | 69,020 | 14,735 | |||||||||||||||
Other
Long-Term Obligations
|
931 | 931 | - | - | - | |||||||||||||||
FIN
48 Obligations
|
1,364 | 127 | 1,237 | - | - | |||||||||||||||
Consideration
payable
|
5,889 | 4,500 | 1,389 | - | - | |||||||||||||||
Total
Contractual Obligations
|
$ | 2,030,157 | $ | 259,149 | $ | 613,343 | $ | 932,302 | $ | 225,363 |
March
31, 2009
(US$
000’s)
|
|||||
Corporate
|
(1)
– (4)
|
$ | 1,108,653 | ||
Czech
Republic
|
(5)
– (7)
|
70,508 | |||
Slovak
Republic
|
(8)
|
- | |||
Slovenia
|
(9)
|
34,933 | |||
Ukraine
|
(10)
|
164 | |||
Total
|
$ | 1,214,258 |
(1)
|
As
at March 31, 2009 we had EUR 395.0 million (approximately US$ 525.7
million) of Senior Notes outstanding, comprising EUR 245.0 million
(approximately US$ 326.0 million) of the 2005 Fixed Rate Notes and EUR
150.0 million (approximately US$ 199.6 million) of the 2007 Floating Rate
Notes, which bear interest at six-month Euro Inter-Bank Offered Rate
(“EURIBOR”) plus 1.625%. The applicable rate at March 31, 2009 was
5.934%.
|
(2)
|
As
at March 31, 2009 we had US$ 475.0 million of Convertible Notes
outstanding that mature on March 15, 2013. Interest is payable
semi-annually in arrears on each March 15 and September
15.
|
(3)
|
On
July 21, 2006, we entered into a five-year revolving loan agreement for
EUR 100.0 million (approximately US$ 133.1 million) arranged by EBRD and
on August 22, 2007, we entered into a second revolving loan agreement for
EUR 50.0 million (approximately US$ 66.5 million) also arranged by EBRD
(collectively the “EBRD Loan”). ING Bank N.V. (“ING”) and Ceska
Sporitelna, a.s. (“CS”) are each participating in the EBRD Loan for EUR
37.5 million (approximately US$ 49.9 million). The EBRD Loan
bears interest at a rate of three-month EURIBOR plus 1.625% on the drawn
amount. A commitment charge of 0.8125% is payable on any undrawn portion
of the EBRD Loan. The available amount of the EBRD Loan amortizes by 15%
every six months from May 2009 to November 2010 and by 40% in May 2011. As
at March 31, 2009, EUR 150.0 million (approximately US$ 199.6 million) was
drawn.
|
(4)
|
We
have an uncommitted multicurrency overdraft facility for EUR 10.0 million
(approximately US$ 13.3 million) from Bank Mendes Gans (“BMG”), a
subsidiary of ING. As at March 31, 2009, the entire facility was undrawn.
Interest is payable at the prevailing money market rate plus 2.00% on the
drawn amount. This facility is part of a cash pooling arrangement with BMG
(the “BMG cash pool”). The cash pooling arrangement enables us to receive
credit across the group in respect of cash balances which our subsidiaries
in The Netherlands, Bulgaria, the Czech Republic, Romania, the Slovak
Republic, Slovenia and Ukraine deposit with BMG. Cash deposited with BMG
by our participating subsidiaries is pledged as security against the
drawings of other subsidiaries up to the amount deposited. As at March 31,
2009, our subsidiaries in the Netherlands had approximately US$ 12.2
million deposited in the BMG cash pool. Our operations in the
Czech Republic, the Slovak Republic, Slovenia and Ukraine had deposited
approximately US$ 22.9 million, US$ 5.7 million, US$ 5.3 million and US$
0.9 million, respectively in the BMG cash pool. Our
Ukraine operations had drawn approximately US$ 0.2 million from the BMG
cash pool as at March 31, 2009.
|
(5)
|
CET
21 had drawn the full CZK 1.2 billion (approximately US$ 58.4 million) of
a credit facility with CS available until December 31,
2010. 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 Offer Rate (“LIBOR”), EURIBOR or Prague
Inter-Bank Offered Rate (“PRIBOR”) rate plus 1.65%; a rate of 2.44%
applied to the balance outstanding at March 31, 2009. A utilization
interest of 0.25% is payable on the undrawn portion of this facility,
which decreases to 0.125% of the undrawn portion if more than 50% of the
loan is drawn. Drawings under this facility are secured by a pledge of
receivables, which are also subject to a factoring arrangement with
Factoring Ceska Sporitelna, a.s. (“FCS”), a subsidiary of
CS.
|
(6)
|
CET
21 has a working capital credit facility of CZK 250.0 million
(approximately US$ 12.2 million) with CS, which matures on December 31,
2010. This working capital facility bears interest at the
three-month PRIBOR rate plus 1.65%. The applicable rate at March 31, 2009
was 2.44% .This facility is secured by a pledge of receivables, which are
also subject to a factoring arrangement with CS. As at March
31, 2009, the full CZK 250.0 million (approximately US$ 12.2 million) was
drawn under this facility.
|
(7)
|
As
at March 31, 2009, there were no drawings under a CZK 300.0 million
(approximately US$ 14.6 million) factoring facility with
CS. This facility is available until June 30, 2011 and bears
interest at the rate of one-month PRIBOR plus 1.40% for the period that
actively assigned accounts receivable are
outstanding.
|
(8)
|
As
at March 31, 2009, our Slovak Republic operations had made no drawings
under a EUR 3.3 million (approximately US$ 4.4 million) overdraft facility
with ING. This can be utilized for short term advances up to
six months at an interest rate of EURIBOR +
2%.
|
(9)
|
In
July 2005 Pro Plus entered into a revolving five-year facility agreement
for up to EUR 37.5 million (approximately US$ 49.9 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 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 March
31, 2009, the full EUR 26.3 million (approximately US$ 34.9 million)
available under this facility was
drawn.
|
(10)
|
Our
Ukraine operations had drawn EUR 0.1 million (approximately US$ 0.2
million) from the BMG cash pool as at March 31,
2009.
|
For
the three months ended March 31, 2009
|
||||
Net
loss attributable to CME Ltd. as reported
|
$ | (44,438 | ) | |
Deduct:
noncontrolling interest income recognized since the adoption of FAS
160
|
(1,846 | ) | ||
Pro
Forma net loss
|
$ | (46,284 | ) | |
Net
loss per share – Basic (As reported)
|
$ | (1.05 | ) | |
Net
loss per share – Basic (Pro Forma)
|
$ | (1.09 | ) | |
Net
loss per share – Diluted (As reported)
|
$ | (1.05 | ) | |
Net
loss per share – Diluted (Pro Forma)
|
$ | (1.09 | ) |
For
the Three Months ended March 31, 2008
|
||||||||||||||||
Impact
of adopting
|
||||||||||||||||
As
reported
|
FSP
APB 14-1
|
FAS
160
|
As
Adjusted
|
|||||||||||||
Consolidated
Statement of Operations
|
||||||||||||||||
Interest
expense
|
$ | (14,250 | ) | $ | (979 | ) (1) | $ | - | $ | (15,229 | ) | |||||
Minority
interest in income of consolidated subsidiaries (2)
|
(1,025 | ) | - | 548 | (477 | ) | ||||||||||
As
at December 31, 2008
|
||||||||||||||||
Impact
of adopting
|
||||||||||||||||
As
reported
|
FSP
APB 14-1
|
FAS
160
|
As
Adjusted
|
|||||||||||||
Consolidated
Balance Sheet
|
||||||||||||||||
Other
current assets
|
$ | 98,725 | $ | (639 | ) | $ | - | $ | 98,086 | |||||||
Other
non-current assets
|
20,743 | (1,478 | ) | - | 19,265 | |||||||||||
Senior
Debt
|
1,024,721 | (96,196 | ) | - | 928,525 | |||||||||||
Additional
paid-in capital
|
1,018,532 | 108,085 | - | 1,126,617 | ||||||||||||
Accumulated
deficit
|
(224,086 | ) | (14,006 | ) | 1,256 | (236,836 | ) | |||||||||
Accumulated
Other Comprehensive Income
|
$ | 203,346 | $ | - | $ | (1,256 | ) | $ | 202,090 |
Expected
Maturity Dates
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
||||||||||||||||||
Total
debt in Euro (000's)
|
||||||||||||||||||||||||
Fixed
rate
|
- | - | - | 245,000 | - | - | ||||||||||||||||||
Average
interest rate (%)
|
- | - | - | 8.25 | % | - | - | |||||||||||||||||
Variable
rate
|
48,750 | 67,500 | 60,000 | - | - | 150,000 | ||||||||||||||||||
Average
interest rate (%)
|
3.36 | % | 3.70 | % | 3.73 | % | - | - | 5.93 | % | ||||||||||||||
Total
debt in US$ (000's)
|
||||||||||||||||||||||||
Fixed
rate
|
- | - | - | - | 475,000 | - | ||||||||||||||||||
Average
interest rate (%)
|
- | - | - | - | 3.5 | % | - | |||||||||||||||||
Total
debt in CZK (000's)
|
||||||||||||||||||||||||
Fixed
rate
|
- | - | - | - | - | - | ||||||||||||||||||
Average
interest rate (%)
|
- | - | - | - | - | - | ||||||||||||||||||
Variable
rate
|
- | 1,450,000 | - | - | - | - | ||||||||||||||||||
Average
interest rate (%)
|
- | 4.09 | % | - | - | - | - |
Yearly
interest charge if interest rates increase by (US$
000s):
|
||||||||||||||||||||||||||||
Value
of Debt as at March 31, 2009
(US$
000's)
|
Interest
Rate as at March 31, 2009
|
Yearly
Interest Charge
(US$
000’s)
|
1 | % | 2 | % | 3 | % | 4 | % | 5 | % | ||||||||||||||||
434,173
(EUR
326.3 million)
|
4.68 | % | 20,328 | 24,669 | 29,010 | 33,351 | 37,692 | 42,033 | ||||||||||||||||||||
70,508
(CZK
1,450.0 million)
|
4.09 | % | 2,884 | 3,589 | 4,294 | 4,999 | 5,704 | 6,409 | ||||||||||||||||||||
Total
|
23,212 | 28,258 | 33,304 | 38,350 | 43,396 | 48,442 |
|
·
|
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
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.
|
10.1
|
Subscription
Agreement, by and between Central European Media Enterprises Ltd. and TW
Media Holdings LLC, dated March 22, 2009.
|
|
10.2
|
Indemnity
Agreement by and among Central European Media Enterprises Ltd., Ronald S.
Lauder and RSL Savannah LLC, dated as of March 22,
2009.
|
|
31.01
|
Certification
of President and Chief Operating Officer pursuant to Exchange Act Rules
13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
31.02
|
Certification
of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.01
|
Certifications
of President and Chief Operating Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (furnished
only).
|
Date:
April 29, 2009
|
/s/ Adrian Sarbu
Adrian
Sarbu
President
and Chief Operating Officer
(Principal
Executive Officer)
|
Date:
April 29, 2009
|
/s/ Wallace Macmillan
Wallace
Macmillan
Chief
Financial Officer
(Principal
Financial Officer and Accounting
Officer)
|
Subscription
Agreement, by and between Central European Media Enterprises Ltd. and TW
Media Holdings LLC, dated March 22, 2009.
|
||
Indemnity
Agreement by and among Central European Media Enterprises Ltd., Ronald S.
Lauder and RSL Savannah LLC, dated as of March 22,
2009.
|
||
Certification
of President and Chief Operating Officer pursuant to Exchange Act Rules
13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
||
Certification
of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
||
Certifications
of President and Chief Operating Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (furnished
only).
|