FULL YEAR- Net revenues
increased 5% at actual and constant rates to US$ 638.0 million
-- Operating income increased 18% (17% at constant
rates) to US$ 111.6 million -- OIBDA improved 22%
(21% at constant rates) to US$ 150.0 million -
Central European Media Enterprises Ltd. (“CME” or the “Company”)
(NASDAQ:CETV) (Prague Stock Exchange:CETV) today announced
financial results for the full year and three months ended
December 31, 2016.
Operational and financial highlights:
- The television advertising markets across our six countries
increased an estimated 6% at constant rates in 2016.
- TV advertising revenues increased 5% at actual and constant
rates in 2016 driven by improvement in four out of six countries,
including our three largest markets, the Czech Republic, Romania
and the Slovak Republic.
- Carriage fees and subscription revenues increased 8% at actual
rates and 9% at constant rates due primarily to growth in the
number of subscribers reported by carriers, as well as high
definition channels and new channels available exclusively on their
platforms.
- Costs charged in arriving at OIBDA were broadly flat at actual
and constant rates, even though spending on popular local content
increased, as this investment was mostly offset by savings in
foreign fiction as well as reducing other operating and overhead
costs.
- A focus on controlling costs while improving revenues led to
OIBDA growth of 22% at actual rates and 21% at constant rates and
OIBDA margin expansion of more than 300 basis points in 2016.
- Operating income increased 18% at actual rates and 17% at
constant rates in 2016 primarily reflecting the year-on-year
increase in OIBDA, excluding the US$ 12.0 million benefit in
operating income in 2015 from the reversal of charges related to
tax audits in Romania.
- Unlevered free cash flow in 2016 increased 30% at actual rates,
reflecting the improvement in OIBDA, but cash flows from operations
declined because we paid more interest in cash and elected to pay a
total of US$ 37.4 million of Guarantee Fees in cash, including US$
27.5 million of Guarantee Fees previously paid in kind.
Michael Del Nin, co-Chief Executive Officer,
commented: "We ended the year on a high note, with the biggest
quarterly OIBDA result the Company has seen in five years, driving
our highest fourth quarter OIBDA margin in almost a decade.
Our full year results exceeded our most recent guidance, and in
just three years we have grown OIBDA by almost US$ 200 million even
with significant FX headwinds. This reflects significant progress
in executing our strategy, and positions the company for continued
growth in 2017 and beyond."
Christoph Mainusch, co-Chief Executive Officer,
added: "We remained audience share leaders during 2016, and
improved our relative position in all day in four countries, by
leveraging our competitive advantages and making targeted
investments in local programming amid heavy competition. Local
content continues to attract larger audiences, so we continually
refine our program grids and intend to maintain targeted
investments in popular programming to remain the best partner for
advertising on television."
In this release we refer to several non-GAAP
financial measures, including OIBDA, OIBDA margin, free cash flow,
unlevered free cash flow and constant currency percentage
movements. Please see “Non-GAAP Financial Measures” below for
additional information, including definitions and reconciliations
to US GAAP financial measures.
Consolidated results for the years ended
December 31, 2016 and 2015 were:
|
RESULTS |
(US$ 000's,
except per share data) |
For the Year Ended December 31, |
|
2016 |
|
2015 |
|
% Actual |
|
% Lfl (1) |
Net revenues |
$ |
638,013 |
|
|
$ |
605,841 |
|
|
5.3% |
|
|
5.4% |
|
Operating income |
111,589 |
|
|
94,583 |
|
|
18.0% |
|
|
17.3% |
|
Operating margin |
17.5% |
|
|
15.6% |
|
|
1.9
p.p. |
|
|
1.8
p.p. |
|
OIBDA |
150,049 |
|
|
122,815 |
|
|
22.2% |
|
|
21.4% |
|
OIBDA margin |
23.5% |
|
|
20.3% |
|
|
3.2
p.p. |
|
|
3.1
p.p. |
|
Loss on extinguishment
of debt |
(150,158) |
|
|
— |
|
|
NM
(2) |
|
|
NM
(2) |
|
Net loss attributable
to CME Ltd. |
(180,291) |
|
|
(114,901) |
|
|
(56.9)% |
|
|
(58.0)% |
|
Net loss attributable
to CME Ltd. per share - basic and diluted |
$ |
(1.28) |
|
|
$ |
(0.90) |
|
|
(42.2)% |
|
|
(43.8)% |
|
Consolidated results for the three months ended
December 31, 2016 and 2015 were:
|
RESULTS |
(US$ 000's,
except per share data) |
For the Three Months Ended December
31, |
|
2016 |
|
2015 |
|
% Actual |
|
% Lfl (1) |
Net revenues |
$ |
207,101 |
|
|
$ |
195,552 |
|
|
5.9% |
|
|
6.8% |
|
Operating income |
51,551 |
|
|
46,528 |
|
|
10.8% |
|
|
11.8% |
|
Operating margin |
24.9% |
|
|
23.8% |
|
|
1.1
p.p. |
|
|
1.1
p.p. |
|
OIBDA |
61,295 |
|
|
56,203 |
|
|
9.1% |
|
|
10.0% |
|
OIBDA margin |
29.6% |
|
|
28.7% |
|
|
0.9
p.p. |
|
|
0.9
p.p. |
|
Net income / (loss)
attributable to CME Ltd. |
21,088 |
|
|
(11,427) |
|
|
NM
(2) |
|
|
NM
(2) |
|
Net income / (loss)
attributable to CME Ltd. per share - basic |
0.07 |
|
|
(0.11) |
|
|
NM
(2) |
|
|
NM
(2) |
|
Net income / (loss)
attributable to CME Ltd. per share - diluted |
$ |
0.06 |
|
|
$ |
(0.11) |
|
|
NM
(2) |
|
|
NM
(2) |
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
Teleconference and Audio Webcast
Details
CME will host a teleconference and audio webcast
to discuss its fourth quarter and full year results on Thursday,
February 9, 2017 at 9:00 a.m. New York time (2:00 p.m. London time
and 3:00 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 +1 212 444 0895 ten minutes prior to
the start time and reference passcode 4720289. The conference call
will be audio webcasted live 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.
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 CME's Annual Report on Form 10-K for the period
ended December 31, 2016 as well as the following: the effect of
global economic uncertainty and Eurozone instability in our markets
and the extent, timing and duration of any recovery; levels of
television advertising spending and the rate of development of the
advertising markets in the countries in which we operate; the
extent to which our liquidity constraints and debt service
obligations restrict our business; our exposure to additional tax
liabilities as well as liabilities resulting from regulatory or
legal proceedings initiated against us; our ability to refinance
our existing indebtedness; our success in continuing our
initiatives to diversify and enhance our revenue streams; our
ability to make cost-effective investments in our television
businesses, including investments in programming; our ability to
develop and acquire necessary programming and attract audiences;
and changes in the political and regulatory environments where we
operate and in the application of relevant laws and
regulations.
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 Annual
Report on Form 10-K for the period ended December 31, 2016,
which was filed with the Securities and Exchange Commission on
February 9, 2017. 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 Annual Report on Form 10-K for the year ended
December 31, 2016, which was filed with the Securities and
Exchange Commission on February 9, 2017.
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 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 36 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 (Nova,
Nova 2, Nova Cinema, Nova Sport 1, Nova Sport 2, Nova
International, Nova Action and Nova Gold), 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, Markíza International, 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”.
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(US$ 000's, except per share
data) |
|
|
For the Year Ended |
|
December 31, |
|
2016 |
|
|
2015 |
|
Net
revenues |
638,013 |
|
|
605,841 |
|
Operating
expenses: |
|
|
|
Content costs |
306,013 |
|
|
292,602 |
|
Other operating
costs |
69,353 |
|
|
69,727 |
|
Depreciation of
property, plant and equipment |
30,190 |
|
|
27,943 |
|
Amortization of
broadcast licenses and other intangibles |
8,270 |
|
|
12,271 |
|
Cost of
revenues |
413,826 |
|
|
402,543 |
|
Selling, general and
administrative expenses |
112,598 |
|
|
107,001 |
|
Restructuring
costs |
— |
|
|
1,714 |
|
Operating
income |
111,589 |
|
|
94,583 |
|
Interest expense |
(132,224) |
|
|
(171,444) |
|
Loss on extinguishment
of debt |
(150,158) |
|
|
— |
|
Non-operating expenses,
net |
(2,487) |
|
|
(25,939) |
|
Loss before
tax |
(173,280) |
|
|
(102,800) |
|
(Provision) / Credit
for income taxes |
(7,317) |
|
|
515 |
|
Loss from
continuing operations |
(180,597) |
|
|
(102,285) |
|
Loss from discontinued
operations, net of tax |
— |
|
|
(13,287) |
|
Net
loss |
(180,597) |
|
|
(115,572) |
|
Net loss attributable
to noncontrolling interests |
306 |
|
|
671 |
|
Net loss
attributable to CME Ltd. |
$ |
(180,291) |
|
|
$ |
(114,901) |
|
|
|
|
|
PER SHARE DATA: |
|
|
|
Net loss per
share: |
|
|
|
Net loss attributable
to CME Ltd. per share - basic and diluted |
$ |
(1.28) |
|
|
$ |
(0.90) |
|
|
|
|
|
Weighted average common
shares used in computing per share amounts (000's): |
|
|
|
Basic and diluted |
151,017 |
|
|
146,866 |
|
|
|
|
|
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(continued) |
(US$ 000's, except per share
data) |
|
|
For the Three Months Ended |
|
December 31, |
|
2016 |
|
|
2015 |
|
Net
revenues |
$ |
207,101 |
|
|
$ |
195,552 |
|
Operating
expenses: |
|
|
|
Content costs |
92,266 |
|
|
88,892 |
|
Other operating
costs |
17,936 |
|
|
18,087 |
|
Depreciation of
property, plant and equipment |
7,721 |
|
|
7,032 |
|
Amortization of
broadcast licenses and other intangibles |
2,023 |
|
|
2,643 |
|
Cost of
revenues |
119,946 |
|
|
116,654 |
|
Selling, general and
administrative expenses |
35,604 |
|
|
31,985 |
|
Restructuring
costs |
— |
|
|
385 |
|
Operating
income |
51,551 |
|
|
46,528 |
|
Interest expense |
(25,889) |
|
|
(45,582) |
|
Non-operating expense,
net |
(4,123) |
|
|
(3,817) |
|
Income / (loss)
before tax |
21,539 |
|
|
(2,871) |
|
(Provision) / Credit
for income taxes |
(370) |
|
|
4,008 |
|
Income from
continuing operations |
21,169 |
|
|
1,137 |
|
Loss from discontinued
operations, net of tax |
— |
|
|
(12,418) |
|
Net income /
(loss) |
21,169 |
|
|
(11,281) |
|
Income attributable to
noncontrolling interests |
(81) |
|
|
(146) |
|
Net income /
(loss) attributable to CME Ltd. |
$ |
21,088 |
|
|
$ |
(11,427) |
|
|
|
|
|
PER SHARE DATA: |
|
|
|
Net income / (loss) per
share: |
|
|
|
Net income / (loss)
attributable to CME Ltd. per share - basic |
$ |
0.07 |
|
|
$ |
(0.11) |
|
Net income / (loss)
attributable to CME Ltd. per share - diluted |
$ |
0.06 |
|
|
$ |
(0.11) |
|
|
|
|
|
Weighted average common
shares used in computing per share amounts (000's): |
|
|
|
Basic |
154,349 |
|
|
147,054 |
|
Diluted |
219,450 |
|
|
147,054 |
|
|
|
|
|
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(US$ 000's) |
|
|
December 31, 2016 |
|
|
December 31, 2015 |
|
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
43,459 |
|
|
$ |
61,679 |
|
Other current
assets |
296,961 |
|
|
296,605 |
|
Total current
assets |
340,420 |
|
|
358,284 |
|
Property, plant and
equipment, net |
109,089 |
|
|
108,522 |
|
Goodwill and other
intangible assets, net |
919,765 |
|
|
942,478 |
|
Other non-current
assets |
21,443 |
|
|
31,133 |
|
Total
assets |
$ |
1,390,717 |
|
|
$ |
1,440,417 |
|
LIABILITIES AND
EQUITY |
|
|
|
Accounts payable and
accrued liabilities |
$ |
160,981 |
|
|
$ |
134,705 |
|
Current portion of
long-term debt and other financing arrangements |
1,494 |
|
|
1,155 |
|
Other current
liabilities |
9,089 |
|
|
10,448 |
|
Total current
liabilities |
171,564 |
|
|
146,308 |
|
Long-term portion of
long-term debt and other financing arrangements |
1,002,028 |
|
|
908,521 |
|
Other non-current
liabilities |
68,758 |
|
|
65,749 |
|
Total
liabilities |
$ |
1,242,350 |
|
|
$ |
1,120,578 |
|
|
|
|
|
Series B Convertible
Redeemable Preferred Stock |
254,899 |
|
|
241,198 |
|
|
|
|
|
EQUITY |
|
|
|
Common Stock |
11,476 |
|
|
10,864 |
|
Additional paid-in
capital |
1,910,244 |
|
|
1,914,050 |
|
Accumulated
deficit |
(1,785,536) |
|
|
(1,605,245) |
|
Accumulated other
comprehensive loss |
(243,988) |
|
|
(242,409) |
|
Total CME Ltd.
shareholders' (deficit) / equity |
(107,804) |
|
|
77,260 |
|
Noncontrolling
interests |
1,272 |
|
|
1,381 |
|
Total (deficit)
/ equity |
$ |
(106,532) |
|
|
$ |
78,641 |
|
Total
liabilities and equity |
$ |
1,390,717 |
|
|
$ |
1,440,417 |
|
|
|
|
|
|
|
|
|
CENTRAL EUROPEAN MEDIA ENTERPRISES
LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(US$ 000's) |
|
|
For the Year Ended |
|
|
December 31, |
|
|
2016 |
|
|
2015 |
|
Net cash generated from
operating activities |
33,917 |
|
|
85,877 |
|
Net cash used in
investing activities |
(29,356) |
|
|
(30,426) |
|
Net cash used in by
financing activities |
(22,743) |
|
|
(28,906) |
|
Net cash provided by
discontinued operations |
1,194 |
|
|
3,503 |
|
Impact of exchange rate
fluctuations on cash and cash equivalents |
(1,232) |
|
|
(2,667) |
|
Net (decrease)
/ increase in cash and cash equivalents |
$ |
(18,220) |
|
|
$ |
27,381 |
|
|
|
|
|
Supplemental
disclosure of cash flow information: |
|
|
|
Cash paid for interest
(includes mandatory cash-pay guarantee fees) |
$ |
53,982 |
|
|
$ |
18,457 |
|
Cash paid for guarantee
fees that may be paid in kind |
$ |
37,440 |
|
|
$ |
— |
|
Cash paid for income
taxes, net of refunds |
$ |
290 |
|
|
$ |
805 |
|
|
|
|
|
Supplemental
disclosure of non-cash items: |
|
|
|
Interest and related
guarantee fees paid in kind |
$ |
45,289 |
|
|
$ |
81,529 |
|
Accretion on Series B
Convertible Redeemable Preferred Stock |
$ |
13,701 |
|
|
$ |
17,272 |
|
|
|
|
|
|
|
|
|
Segment Data
We manage our business on a geographical basis,
with six reporting segments: Bulgaria, Croatia, the Czech Republic,
Romania, the Slovak Republic and Slovenia. These segments reflect
how CME Ltd.’s operating performance is evaluated by our chief
operating decision makers, who we have identified as our co-Chief
Executive Officers, how operations are managed by segment managers,
and the structure of our internal financial reporting.
We evaluate our consolidated results and the
performance of our segments based on net revenues and OIBDA.
Stock-based compensation and certain other items are not allocated
to our segments for purposes of evaluating their performance and
therefore are not included in their respective OIBDA. Intersegment
revenues and profits have been eliminated in consolidation.
Below are tables showing our net revenues and
OIBDA by segment for the three and twelve months ended
December 31, 2016 and 2015:
|
For the Year Ended December 31, |
(US
$000's) |
2016 |
|
2015 |
|
%Act |
|
%Lfl(1) |
Net
revenues |
|
|
|
|
|
|
|
Bulgaria |
$ |
72,651 |
|
|
$ |
73,090 |
|
|
(0.6)% |
|
|
(0.3)% |
|
Croatia |
55,607 |
|
|
55,912 |
|
|
(0.5)% |
|
|
(1.6)% |
|
Czech Republic |
190,372 |
|
|
182,636 |
|
|
4.2% |
|
|
3.5% |
|
Romania |
172,951 |
|
|
157,578 |
|
|
9.8% |
|
|
11.3% |
|
Slovak Republic |
90,549 |
|
|
84,434 |
|
|
7.2% |
|
|
7.5% |
|
Slovenia |
56,912 |
|
|
54,233 |
|
|
4.9% |
|
|
5.2% |
|
Intersegment
revenues |
(1,029) |
|
|
(2,042) |
|
|
NM (2) |
|
|
NM (2) |
|
Total net
revenues |
$ |
638,013 |
|
|
$ |
605,841 |
|
|
5.3% |
|
|
5.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December
31, |
(US
$000's) |
2016 |
|
2015 |
|
%Act |
|
%Lfl(1) |
Net
revenues |
|
|
|
|
|
|
|
Bulgaria |
$ |
22,548 |
|
|
$ |
22,213 |
|
|
1.5% |
|
|
2.2% |
|
Croatia |
17,570 |
|
|
17,728 |
|
|
(0.9)% |
|
|
(1.3)% |
|
Czech Republic |
61,814 |
|
|
59,965 |
|
|
3.1% |
|
|
3.5% |
|
Romania |
54,682 |
|
|
48,017 |
|
|
13.9% |
|
|
16.2% |
|
Slovak Republic |
31,083 |
|
|
29,437 |
|
|
5.6% |
|
|
6.3% |
|
Slovenia |
19,588 |
|
|
19,084 |
|
|
2.6% |
|
|
3.3% |
|
Intersegment
revenues |
(184) |
|
|
(892) |
|
|
NM
(2) |
|
|
NM
(2) |
|
Total net
revenues |
$ |
207,101 |
|
|
$ |
195,552 |
|
|
5.9% |
|
|
6.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
|
|
|
For the Year Ended December 31, |
(US
$000's) |
2016 |
|
2015 |
|
%Act |
|
%Lfl(1) |
OIBDA |
|
|
|
|
|
|
|
Bulgaria |
$ |
12,242 |
|
|
$ |
15,479 |
|
|
(20.9)% |
|
|
(20.7)% |
|
Croatia |
8,578 |
|
|
7,880 |
|
|
8.9% |
|
|
5.6% |
|
Czech Republic |
77,018 |
|
|
71,697 |
|
|
7.4% |
|
|
6.2% |
|
Romania |
62,016 |
|
|
41,176 |
|
|
50.6% |
|
|
51.7% |
|
Slovak Republic |
15,947 |
|
|
10,585 |
|
|
50.7% |
|
|
47.8% |
|
Slovenia |
4,801 |
|
|
6,057 |
|
|
(20.7)% |
|
|
(20.6)% |
|
Elimination |
2 |
|
|
(229) |
|
|
NM (2) |
|
|
NM (2) |
|
Total Operating
Segments |
$ |
180,604 |
|
|
$ |
152,645 |
|
|
18.3% |
|
|
17.7% |
|
Central |
(30,555) |
|
|
(29,830) |
|
|
(2.4)% |
|
|
(2.4)% |
|
Total
OIBDA |
$ |
150,049 |
|
|
$ |
122,815 |
|
|
22.2% |
|
|
21.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December
31, |
(US
$000's) |
2016 |
|
2015 |
|
%Act |
|
%Lfl(1) |
OIBDA |
|
|
|
|
|
|
|
Bulgaria |
$ |
3,276 |
|
|
$ |
7,013 |
|
|
(53.3)% |
|
|
(52.9)% |
|
Croatia |
3,192 |
|
|
1,955 |
|
|
63.3% |
|
|
61.9% |
|
Czech Republic |
30,665 |
|
|
27,885 |
|
|
10.0% |
|
|
10.5% |
|
Romania |
16,986 |
|
|
15,443 |
|
|
10.0% |
|
|
12.1% |
|
Slovak Republic |
10,779 |
|
|
6,745 |
|
|
59.8% |
|
|
60.4% |
|
Slovenia |
4,631 |
|
|
6,290 |
|
|
(26.4)% |
|
|
(25.8)% |
|
Elimination |
59 |
|
|
31 |
|
|
NM (2) |
|
|
NM (2) |
|
Total Operating
Segments |
$ |
69,588 |
|
|
$ |
65,362 |
|
|
6.5% |
|
|
7.4% |
|
Central |
(8,293) |
|
|
(9,159) |
|
|
9.5% |
|
|
9.0% |
|
Total
OIBDA |
$ |
61,295 |
|
|
$ |
56,203 |
|
|
9.1% |
|
|
10.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) % Lfl (like-for-like) variance reflects the impact of
applying the current period average exchange rates to the prior
period revenues and costs.(2) Number is not meaningful.
Non-GAAP Financial Measures
In this release we refer to several non-GAAP
financial measures, including OIBDA, OIBDA margin, free cash flow
and unlevered free cash flow. We believe that each of these metrics
is useful to investors for the reasons outlined below. Non-GAAP
financial measures may not be comparable to similar measures
reported by other companies. Non-GAAP financial measures
should be evaluated in conjunction with, and are not a substitute
for, US GAAP financial measures.
We evaluate our consolidated results and the
performance of our segments based on net revenues and OIBDA. We
believe OIBDA is useful to investors because it provides a
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 and unlevered free
cash flow are also used as components in determining management
bonuses.
OIBDA includes amortization and impairment of
program rights and is calculated 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 co-CEOs when evaluating our performance.
Stock-based compensation and certain other items are not allocated
to our segments for purposes of evaluating their performance and
therefore are not included in their respective OIBDA. Our key
performance measure of the efficiency of our consolidated
operations and our segments is OIBDA margin. We define OIBDA margin
as the ratio of OIBDA to net revenues.
We have previously used free cash flow as a
measure of the ability of our operations to generate cash. We
define free cash flow as net cash generated from continuing
operating activities less purchases of property, plant and
equipment, net of disposals of property, plant and equipment and
excluding 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 co-CEOs when evaluating performance.
Following the refinancing transaction completed in April 2016, the
amount of interest and related guarantee fees on our outstanding
indebtedness that is paid in cash has increased. In addition to
this obligation to pay more interest and related Guarantee Fees in
cash, we expect to use cash generated by the business to pay
Guarantee Fees that are payable in kind, including accrued
Guarantee Fees. These cash payments are all reflected in free cash
flow; accordingly we believe unlevered free cash flow, defined as
free cash flow before cash payments for interest and Guarantee
Fees, better illustrates the cash generated by our operations when
comparing periods.
For additional information regarding our
business segments, see Part II, Item 8, Note 19, "Segment
Data" in our Form 10-K.
While our reporting currency is the dollar, our
consolidated revenues and costs are divided across a range of
European currencies and CME Ltd.’s function currency is the Euro.
Given the significant movement of the currencies in the markets in
which we operate against the dollar, we believe that it is useful
to provide percentage movements based on actual (“% Act”)
percentage movements, which includes the effect of foreign
exchange, as well as like-for-like percentage movements (“% Lfl”).
The like-for-like percentage movement references reflect the impact
of applying the current period average exchange rates to the prior
period revenues and costs. Since the difference between
like-for-like and actual percentage movements is solely the impact
of movements in foreign exchange rates, our discussion in this
release includes constant currency percentage movements in order to
highlight those factors influencing operational
performance. The incremental impact of foreign exchange rates
is presented in the tables accompanying such analysis.
|
For the Year |
|
For the Three Months |
(US
$000's) |
Ended December 31, |
|
Ended December 31, |
(unaudited) |
2016 |
|
|
2015 |
|
|
2016 |
|
|
2015 |
|
Operating
income |
$ |
111,589 |
|
|
$ |
94,583 |
|
|
$ |
51,551 |
|
|
$ |
46,528 |
|
Depreciation of
property, plant and equipment |
30,190 |
|
|
27,943 |
|
|
7,721 |
|
|
7,032 |
|
Amortization of
intangible assets |
8,270 |
|
|
12,271 |
|
|
2,023 |
|
|
2,643 |
|
Other items(3) |
— |
|
|
(11,982) |
|
|
— |
|
|
— |
|
Total
OIBDA |
$ |
150,049 |
|
|
$ |
122,815 |
|
|
$ |
61,295 |
|
|
$ |
56,203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) Other items consists solely of the charges related to tax
audits of our Romanian operations, which were accrued in the fourth
quarter of 2014 and fully released in the third quarter of
2015.
|
|
|
For the Year Ended December 31, |
|
2016 |
|
|
2015 |
|
Net cash generated from
operating activities |
$ |
33,917 |
|
|
$ |
85,877 |
|
Capital expenditure,
net of proceeds from disposals |
(29,356) |
|
|
(30,426) |
|
Free cash
flow |
4,561 |
|
|
55,451 |
|
Cash paid for interest
(includes mandatory cash-pay guarantee fees) |
53,982 |
|
|
18,457 |
|
Cash paid for guarantee
fees that may be paid in kind |
37,440 |
|
|
— |
|
Unlevered free
cash flow |
$ |
95,983 |
|
|
$ |
73,908 |
|
|
|
|
|
|
|
|
|
For additional information, please visit www.cme.net or contact:
Mark Kobal
Head of Investor Relations
Central European Media Enterprises
+420 242 465 576
mark.kobal@cme.net
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