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| 8-K - CENTRAL EUROPEAN MEDIA ENTERPRISES LTD FORM 8-K - CENTRAL EUROPEAN MEDIA ENTERPRISES LTD | a8-koctober182017.htm |
Exhibit 99.1
CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
Segment Data
On July 9, 2017, we entered into a framework agreement with Slovenia Broadband S.à r.l. (the "Purchaser"), a wholly owned subsidiary of United Group B.V., relating to the sale of our Croatia and Slovenia operations for cash consideration of EUR 230.0 million (approximately US$ 262.5 million as at July 9, 2017), subject to customary working capital adjustments. We expect the transaction to close by late 2017 or early 2018, subject to obtaining regulatory approvals and other customary closing conditions. If the transaction is terminated by either party because the transaction has not closed prior by December 31, 2017 (which date may be extended under certain circumstances to March 31, 2018), we would receive a termination fee of EUR 7.0 million (approximately US$ 8.0 million as at July 9, 2017), subject to certain exceptions, including if the requisite regulatory approvals have not been obtained as a result of the Purchaser being required to make specified material divestitures as a condition to any requisite regulatory approvals.
We have recast all quarterly periods from the first half of 2017 and the year ended December 31, 2016 to present the results of these businesses as discontinued operations in our consolidated statements of operations and comprehensive income. These changes had no effect on net income / loss for these periods, as reported in our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2017 filed with the SEC on July 25, 2017 and in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 9, 2017. Segment net revenue and OIBDA has been recast in each quarter presented to include only the results of continuing operations.
We manage our business on a geographical basis, now with four operating segments: Bulgaria, the Czech Republic, Romania and the Slovak Republic, which are also our reportable segments and our main operating countries. 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.
Our segments generate revenues primarily from the sale of advertising and sponsorship on our channels. This is supplemented by revenues from cable and satellite television service providers to carry our channels on their platforms and from revenues through the sale of distribution rights to third parties. Intersegment revenues and profits have been eliminated in consolidation.
We evaluate 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-Chief Executive Officers 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 segments is OIBDA margin. OIBDA margin is the ratio of OIBDA to net revenues. OIBDA may not be comparable to similar measures reported by other companies.
Below are tables showing our recast net revenues and OIBDA by segment for the six months ended June 30, 2017 and twelve months ended December 31, 2016, as well as each quarterly period thereof.
(unaudited) | |||||||||||
For the Three Months Ended, (US$ 000's) | For the Six Months Ended, (US$ 000's) | ||||||||||
Net revenues | March 31, 2017 | June 30, 2017 | June 30, 2017 | ||||||||
Bulgaria | $ | 15,305 | $ | 20,774 | $ | 36,079 | |||||
Czech Republic | 39,474 | 53,371 | 92,845 | ||||||||
Romania | 38,944 | 48,570 | 87,514 | ||||||||
Slovak Republic | 18,340 | 24,624 | 42,964 | ||||||||
Intersegment revenues (1) | (331 | ) | (444 | ) | (775 | ) | |||||
Total net revenues | $ | 111,732 | $ | 146,895 | $ | 258,627 | |||||
(1) Reflects revenues earned from the sale of content to other country segments. All other revenues are third party revenues.
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CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
(US$ 000’s)
(unaudited) | |||||||||||||||||||
For the Three Months Ended, | For the Year Ended, | ||||||||||||||||||
Net revenues | March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | December 31, 2016 | ||||||||||||||
Bulgaria | $ | 15,859 | $ | 20,455 | $ | 13,789 | $ | 22,548 | $ | 72,651 | |||||||||
Czech Republic | 38,608 | 50,919 | 39,031 | 61,814 | 190,372 | ||||||||||||||
Romania | 32,370 | 48,929 | 36,970 | 54,682 | 172,951 | ||||||||||||||
Slovak Republic | 19,062 | 22,540 | 17,864 | 31,083 | 90,549 | ||||||||||||||
Intersegment revenues (1) | (82 | ) | (40 | ) | (127 | ) | (100 | ) | (349 | ) | |||||||||
Total net revenues | $ | 105,817 | $ | 142,803 | $ | 107,527 | $ | 170,027 | $ | 526,174 | |||||||||
(1) Reflects revenues earned from the sale of content to other country segments. All other revenues are third party revenues.
(unaudited) | |||||||||||
For the Three Months Ended, | For the Six Months Ended, | ||||||||||
OIBDA and reconciliation of OIBDA to (Loss) / income before tax | March 31, 2017 | June 30, 2017 | June 30, 2017 | ||||||||
Bulgaria | $ | 1,357 | $ | 3,079 | $ | 4,436 | |||||
Czech Republic | 10,959 | 25,553 | 36,512 | ||||||||
Romania | 14,686 | 22,268 | 36,954 | ||||||||
Slovak Republic | 873 | 7,522 | 8,395 | ||||||||
Elimination | (8 | ) | 25 | 17 | |||||||
Total Operating Segments | 27,867 | 58,447 | 86,314 | ||||||||
Corporate | (6,775 | ) | (6,791 | ) | (13,566 | ) | |||||
Total OIBDA | 21,092 | 51,656 | 72,748 | ||||||||
Depreciation of property, plant and equipment | (5,959 | ) | (6,450 | ) | (12,409 | ) | |||||
Amortization of broadcast licenses and other intangibles | (2,109 | ) | (2,053 | ) | (4,162 | ) | |||||
Operating income | 13,024 | 43,153 | 56,177 | ||||||||
Interest expense | (18,993 | ) | (17,428 | ) | (36,421 | ) | |||||
Non-operating income, net | 2,232 | 6,908 | 9,140 | ||||||||
(Loss) / income before tax | $ | (3,737 | ) | $ | 32,633 | $ | 28,896 | ||||
(unaudited) | |||||||||||||||||||
For the Three Months Ended, | For the Year Ended, | ||||||||||||||||||
OIBDA and reconciliation of OIBDA to (Loss) / income before tax | March 31, 2016 | June 30, 2016 | September 30, 2016 | December 31, 2016 | December 31, 2016 | ||||||||||||||
Bulgaria | $ | 1,069 | $ | 5,954 | $ | 1,943 | $ | 3,276 | $ | 12,242 | |||||||||
Czech Republic | 10,074 | 23,099 | 13,180 | 30,665 | 77,018 | ||||||||||||||
Romania | 9,462 | 22,962 | 12,606 | 16,986 | 62,016 | ||||||||||||||
Slovak Republic | 2,393 | 3,158 | (383 | ) | 10,779 | 15,947 | |||||||||||||
Elimination | — | 3 | 6 | (4 | ) | 5 | |||||||||||||
Total Operating Segments | 22,998 | 55,176 | 27,352 | 61,702 | 167,228 | ||||||||||||||
Corporate | (6,509 | ) | (7,537 | ) | (8,028 | ) | (8,246 | ) | (30,320 | ) | |||||||||
Total OIBDA | 16,489 | 47,639 | 19,324 | 53,456 | 136,908 | ||||||||||||||
Depreciation of property, plant and equipment | (5,526 | ) | (5,807 | ) | (5,801 | ) | (5,972 | ) | (23,106 | ) | |||||||||
Amortization of broadcast licenses and other intangibles | (2,060 | ) | (2,114 | ) | (2,073 | ) | (2,023 | ) | (8,270 | ) | |||||||||
Operating income | 8,903 | 39,718 | 11,450 | 45,461 | 105,532 | ||||||||||||||
Interest expense | (43,973 | ) | (24,243 | ) | (22,424 | ) | (20,749 | ) | (111,389 | ) | |||||||||
Loss on extinguishment of debt | — | (150,158 | ) | — | — | (150,158 | ) | ||||||||||||
Non-operating income / (expense), net | 1,103 | 185 | 350 | (3,712 | ) | (2,074 | ) | ||||||||||||
(Loss) / income before tax | $ | (33,967 | ) | $ | (134,498 | ) | $ | (10,624 | ) | $ | 21,000 | $ | (158,089 | ) | |||||
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