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Form 8-K CENTRAL EUROPEAN MEDIA For: Apr 29

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April 29, 2015 8:38 AM EDT


 
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: April 29, 2015

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(Exact name of registrant as specified in its charter)

BERMUDA
0-24796
98-0438382
 
 
 
(State or other jurisdiction of incorporation and organisation)
(Commission File Number)
(IRS Employer Identification No.)
 
 
 
O'Hara House, 3 Bermudiana Road, Hamilton, Bermuda
 
HM 08
(Address of principal executive offices)
 
(Zip Code)

Registrant's telephone number, including area code: (441) 296-1431

Not applicable
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 





Item 2.02. Results of Operations and Financial Condition
We issued a press release announcing the results for the three months ended March 31, 2015.
The press release is furnished as Exhibit 99.1 and incorporated herein by reference. Such information, including the Exhibits attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The press release includes financial measures which are not presented in accordance with US GAAP. Management believes that the presentation of the non-GAAP financial measures provides useful information to investors regarding the Company's results of operations because we use these non-GAAP financial measures to assess operational efficiencies and these measures also form the basis of bonus incentives for executive management and throughout the Company.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
99.1     Press Release, dated April 29, 2015 (furnished only)





Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

Date:
April 29, 2015
 
 
/s/ David Sturgeon
 
 
 
 
David Sturgeon
 
 
 
 
Executive Vice President and Chief Financial Officer
Principal Financial Officer and Principal Accounting Officer





 
 
 
 
 
Exhibit 99.1
 

 
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
REPORTS RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2015

- Net revenues increased 9% at constant rates to US$ 126.1 million -
- OIBDA improved US$ 14.8 million to US$ 11.4 million -
- Free cash flow grew US$ 14.5 million to US$ 23.3 million -



HAMILTON, BERMUDA, April 29, 2015 - Central European Media Enterprises Ltd. (“CME” or the “Company”) (NASDAQ/Prague Stock Exchange - CETV) today announced financial results for the three months ended March 31, 2015.

Net revenues for the first quarter ended March 31, 2015 increased 9% at constant rates to US$ 126.1 million, led by 9% like-for-like growth in our television advertising revenues. OIBDA (as defined below) for the first quarter ended March 31, 2015 improved US$ 14.8 million to US$ 11.4 million as the strong revenue growth, combined with a leaner cost structure, increased profitability. Free cash flow grew US$ 14.5 million to US$ 23.3 million reflecting both the improvement in OIBDA and lower cash interest payments.

Michael Del Nin, Co-Chief Executive Officer, commented: "The results for this quarter demonstrate that the momentum that we built during last year has continued into 2015. We are particularly pleased with the breadth of the operating improvement, which was apparent across a number of our markets and has delivered a meaningful increase in OIBDA over last year despite the significant strengthening of the dollar."

Christoph Mainusch, Co-Chief Executive Officer, added: "We have maintained our audience share leadership while controlling overall costs. We intend to continue leveraging popular local content to maximize the reach we provide in excess of our commercial competitors, which should further improve our television advertising revenues when sustained economic growth resumes in the countries in which we operate."

OIBDA, which includes amortization and impairment of program rights, is determined as operating income / (loss) before depreciation, amortization of intangible assets and impairments of assets and certain unusual or infrequent items that are not considered by our chief operating decision makers when evaluating our performance as defined in "Segment Data and Non-GAAP Financial Measures" below.

Costs charged in arriving at OIBDA for the three months ended March 31, 2015 exclude a charge of US$ 18.2 million, which we recorded in the first quarter, related to an ongoing tax audit at Pro TV in Romania. We anticipate that the tax audit of Pro TV will be completed during the second quarter, and it is likely that there will be additional charges, which may be material, but it is currently not possible to estimate how much they will be.






- continued -






Consolidated Results for the Three Months Ended March 31, 2015

Net revenues for the three months ended March 31, 2015 were US$ 126.1 million compared to US$ 140.7 million for the three months ended March 31, 2014. Operating loss for the three months ended March 31, 2015 was US$ (17.2) million compared to an operating loss of US$ (14.7) million for the three months ended March 31, 2014. Loss from continuing operations for the three months ended March 31, 2015 was US$ (70.2) million compared to US$ (41.0) million in 2014. Fully diluted loss from continuing operations per share for the three months ended March 31, 2015 was US$ (0.51) compared to US$ (0.30) for the three months ended March 31, 2014.

OIBDA for the three months ended March 31, 2015 was US$ 11.4 million compared to US$ (3.4) million in the same period ended March 31, 2014. OIBDA margin1 for the three months ended March 31, 2015 was 9.1% compared to (2.4)% for the three months ended March 31, 2014.

Headline consolidated results for the three months ended March 31, 2015 and March 31, 2014 were:

(US$ 000's)
For the Three Months Ended March 31,
(unaudited)
2015

 
2014

 
% Actual

 
% Lfl2

Net revenues
$
126,133

 
$
140,705

 
(10.4
)%
 
9.1
 %
OIBDA
11,448

 
(3,395
)
 
NM3

 
NM3

Operating loss
(17,239
)
 
(14,682
)
 
(17.4
)%
 
(36.1
)%
Loss from continuing operations
(70,243
)
 
(41,000
)
 
(71.3
)%
 
(112.8
)%
Fully diluted loss from continuing operations per share
$
(0.51
)
 
$
(0.30
)
 
(70.0
)%
 
(104.0
)%


1OIBDA margin is defined as the ratio of OIBDA to net revenues as defined in "Segment Data and Non-GAAP Financial Measures" below.
2 % Lfl (like-for-like) variance reflects the impact of applying the current period average exchange rates to the prior period revenues and costs.
3Number is not meaningful.





Teleconference and Audio Webcast Details

CME will host a teleconference and audio webcast to discuss its first quarter results on Wednesday, April 29, 2015 at 9 a.m. New York time (2 p.m. London and 3 p.m. Prague time). The audio webcast and teleconference will refer to presentation slides which will be available on CME's website at www.cme.net prior to the call.

To access the teleconference, U.S. and international callers may dial +1-785-424-1666 ten minutes prior to the start time and reference passcode CETVQ115. The conference call will be audio webcasted via www.cme.net. It can be heard on iPads, iPhones and a range of devices supporting Android and Windows operating systems.

A digital audio replay will be available for two weeks following the call at www.cme.net.
















Page 2 of 8


 

Forward-Looking and Cautionary Statements

This press release contains forward-looking statements. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated.  Forward-looking statements reflect our current views with respect to future events and because our business is subject to such risks and uncertainties, actual results, our strategic plan, our financial position, results of operations and cash flows could differ materially from those described in or contemplated by the forward-looking statements.

Important factors that contribute to such risks include, but are not limited to, those factors set forth under "Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2015 as well as the following: the success of our efforts to increase our revenues and recapture advertising market share in the Czech Republic; levels of television advertising spending and the rate of development of the advertising markets in the countries in which we operate; the effect of the global economic slowdown and Eurozone instability in our markets and the extent and timing of any recovery; the extent to which our liquidity constraints and debt service obligations restrict our business; our ability to refinance our existing indebtedness; our exposure to additional tax liabilities; our success in continuing our initiatives to diversify and enhance our revenue streams; our ability to make cost-effective investments in television broadcast operations, including investments in programming; our ability to develop and acquire necessary programming and attract audiences; changes in the political and regulatory environments where we operate and application of relevant laws and regulations; and the timely renewal of broadcasting licenses and our ability to obtain additional frequencies and licenses.

The foregoing review of important factors should not be construed as exhaustive. For a more detailed description of these uncertainties and other factors, please see the "Risk Factors" and “Forward-looking Statements” sections in CME's Quarterly Report on Form 10-Q for the period ended March 31, 2015. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise.

This press release should be read in conjunction with our Quarterly Report on Form 10-Q for the period ended March 31, 2015, which was filed with the Securities and Exchange Commission on April 29, 2015.

We make available free of charge on our website at www.cme.net our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Please note that we may announce material information using SEC filings, press releases, public conference calls, webcasts and posts to the Investors section of our website, www.cme.net. In the future, we will continue to use these channels to communicate important information about CME and our operations. Information that we post on our website could be deemed material. Therefore, we encourage investors, the media, our customers and others interested in CME to review the information we post at www.cme.net.

CME is a media and entertainment company operating leading businesses in six Central and Eastern European markets with an aggregate population of approximately 50 million people. CME broadcasts 33 television channels in Bulgaria (bTV, bTV Cinema, bTV Comedy, bTV Action, bTV Lady and Ring.bg), Croatia (Nova TV, Doma, Nova World and MiniTV), the Czech Republic (TV Nova, Nova Cinema, Nova Sport, Fanda, Smichov and Telka), Romania (PRO TV, PRO TV International, Acasa, Acasa Gold, PRO Cinema, Sport.ro, MTV Romania, PRO TV Chisinau and Acasa in Moldova), the Slovak Republic (TV Markíza, Doma and Dajto), and Slovenia (POP TV, Kanal A, Brio, Oto and Kino). CME is traded on the NASDAQ Global Select Market and the Prague Stock Exchange under the ticker symbol “CETV”.

###

For additional information, please visit www.cme.net or contact:

Mark Kobal
Head of Investor Relations
Central European Media Enterprises
+420 242 465 576



Page 3 of 8


CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ 000's, except per share data)
(unaudited)

 
For the Three Months Ended March 31,
 
2015

 
2014

Net revenues
$
126,133

 
$
140,705

Operating expenses:
 

 
 

Content costs
71,290

 
86,821

Other operating costs
17,038

 
21,471

Depreciation of property, plant and equipment
7,001

 
8,060

Amortization of broadcast licenses and other intangibles
3,499

 
3,227

Cost of revenues
98,828

 
119,579

Selling, general and administrative expenses
43,901

 
30,480

Restructuring costs
643

 
5,328

Operating loss
(17,239
)
 
(14,682
)
Interest expense, net
(40,006
)
 
(27,799
)
Foreign currency exchange loss, net
(11,489
)
 
(630
)
Change in fair value of derivatives
(1,010
)
 
(50
)
Other (expense) / income, net
(354
)
 
35

Loss before tax
(70,098
)
 
(43,126
)
(Provision) / credit for income taxes
(145
)
 
2,126

Loss from continuing operations
(70,243
)
 
(41,000
)
Loss from discontinued operations, net of tax
(3,288
)
 
(7,633
)
Net loss
(73,531
)
 
(48,633
)
Net loss attributable to noncontrolling interests
257

 
717

Net loss attributable to CME Ltd.
$
(73,274
)
 
$
(47,916
)
 
 

 
 

PER SHARE DATA:
 

 
 

Net loss per share attributable to CME Ltd.:
 

 
 

Continuing operations - Basic and diluted
$
(0.51
)
 
$
(0.30
)
Discontinued operations - Basic and diluted
(0.02
)
 
(0.05
)
Net loss per share - Basic and diluted
(0.53
)
 
(0.35
)
 
 

 
 

Weighted average common shares used in computing per share amounts (000's):
 

 
 

Basic and diluted
146,606

 
146,374







Page 4 of 8


CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(US$ 000's)
(unaudited)


 
March 31, 2015

 
December 31, 2014

ASSETS
 
 
 
Cash and cash equivalents
$
53,289

 
$
34,298

Other current assets
266,562

 
310,705

Assets held for sale
16,145

 
29,866

Total current assets
335,996

 
374,869

Property, plant and equipment, net
99,794

 
114,335

Goodwill and other intangible assets, net
767,874

 
864,776

Other non-current assets
231,231

 
265,380

Total assets
$
1,434,895

 
$
1,619,360

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Accounts payable and accrued liabilities
$
167,973

 
$
179,224

Current portion of long-term debt and other financing arrangements
255,569

 
252,859

Other current liabilities
24,572

 
7,812

Liabilities held for sale
6,035

 
10,632

Total current liabilities
454,149

 
450,527

Long-term portion of long-term debt and other financing arrangements
592,546

 
621,240

Other non-current liabilities
64,586

 
46,485

Total liabilities
$
1,111,281

 
$
1,118,252

 
 
 
 
Series B Convertible Redeemable Preferred Stock
$
228,067

 
$
223,926

 
 
 
 
EQUITY
 

 
 

Common Stock
$
10,831

 
$
10,827

Additional paid-in capital
1,925,183

 
1,928,920

Accumulated deficit
(1,563,618
)
 
(1,490,344
)
Accumulated other comprehensive loss
(275,086
)
 
(169,609
)
Total CME Ltd. shareholders' equity
97,310

 
279,794

Noncontrolling interests
(1,763
)
 
(2,612
)
Total equity
95,547

 
277,182

Total liabilities and equity
$
1,434,895

 
$
1,619,360


 




Page 5 of 8


CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$ 000's)
(unaudited)

 


 
For the Three Months Ended March 31,
 
2015

 
2014

Net cash generated from continuing operating activities
$
30,755

 
$
17,746

Net cash used in continuing investing activities
(7,429
)
 
(8,901
)
Net cash used in continuing financing activities
(851
)
 
(1,168
)
Net cash (used in) / provided by discontinued operations - operating activities
(710
)
 
204

Net cash provided by / (used in) discontinued operations - investing activities
865

 
(29
)
Net cash used in discontinued operations - financing activities
(41
)
 
(516
)
Impact of exchange rate fluctuations on cash and cash equivalents
(3,598
)
 
112

Net increase in cash and cash equivalents
$
18,991

 
$
7,448

 
 

 
 

 
 

 
 

Net cash generated from continuing operating activities
$
30,755

 
$
17,746

Capital expenditure, net of proceeds from disposals
(7,429
)
 
(8,901
)
Free cash flow4
$
23,326

 
$
8,845

 
 

 
 

Supplemental disclosure of cash flow information:
 

 
 

Accretion on Series B Convertible Redeemable Preferred Stock
$
4,141

 
$
3,844


 

























4 See "Segment Data and Non-GAAP Financial Measures" below.


Page 6 of 8


Segment Data and Non-GAAP Financial Measures
We manage our business on a geographical basis, with six reporting segments: Bulgaria, Croatia, the Czech Republic, Romania, the Slovak Republic and Slovenia.
We evaluate the performance of our segments based on net revenues and OIBDA. OIBDA, a non-GAAP measure, which includes amortization and impairment of program rights, is determined as operating income / (loss) before depreciation, amortization of intangible assets and impairments of assets and certain unusual or infrequent items that are not considered by our chief operating decision makers when evaluating our performance. Items that are not allocated to our segments for purposes of evaluating their performance and therefore are not included in their OIBDA, include stock-based compensation and certain other items. Our key performance measure of the efficiency of our segments is OIBDA margin. We define OIBDA margin as the ratio of OIBDA to net revenues. We believe OIBDA is useful to investors because it provides a more meaningful representation of our performance, as it excludes certain items that do not impact either our cash flows or the operating results of our operations. OIBDA is also used as a component in determining management bonuses. Intersegment revenues and profits have been eliminated in consolidation. OIBDA may not be comparable to similar measures reported by other companies. Free cash flow is defined as cash flows from continuing operating activities, less purchases of property, plant and equipment, net of disposals of property, plant and equipment and excludes the cash impact of certain unusual or infrequent items that are not included in costs charged in arriving at OIBDA because they are not considered by our chief operating decision makers when evaluating performance. Free cash flow is useful as a measure of our ability to generate cash.
Below are tables showing our net revenues and OIBDA by segment for the three months ended March 31, 2015 and March 31, 2014, together with a reconciliation of OIBDA to our condensed consolidated statements of operations:
(US$ 000's)
For the Three Months Ended March 31,
(unaudited)
2015

 
2014

Net revenues
 
 
 
Bulgaria
$
16,784

 
$
19,276

Croatia
11,993

 
13,497

Czech Republic
34,965

 
39,033

Romania
33,522

 
36,857

Slovak Republic
17,538

 
18,146

Slovenia
11,480

 
14,261

Intersegment revenues
(149
)
 
(365
)
Total net revenues
$
126,133

 
$
140,705

(US$ 000's)
For the Three Months Ended March 31,
(unaudited)
2015

 
2014

OIBDA
 
 
 
Bulgaria
$
2,198

 
$
(2,746
)
Croatia
1,862

 
671

Czech Republic
10,091

 
2,713

Romania
3,361

 
4,326

Slovak Republic
(145
)
 
(3,162
)
Slovenia
360

 
515

Elimination
(50
)
 
385

Total Operating Segments
17,677

 
2,702

Central
(6,229
)
 
(6,097
)
Total OIBDA
$
11,448

 
$
(3,395
)



Page 7 of 8


(US$ 000's)
For the Three Months Ended March 31,
(unaudited)
2015

 
2014

Reconciliation to condensed consolidated statements of operations:
 
 
 
Total OIBDA:
$
11,448

 
$
(3,395
)
Depreciation of property, plant and equipment
(7,001
)
 
(8,060
)
Amortization of intangible assets
(3,499
)
 
(3,227
)
Other items5
(18,187
)
 
—

Operating loss
(17,239
)
 
(14,682
)

5 Other items for the three months ended March 31, 2015 consists solely of a charge related to the ongoing tax audit of Pro TV in Romania (see our Form 10-Q for the period ended March 31, 2015 for more information).



Page 8 of 8

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