MOSCOW, February 26 /PRNewswire-FirstCall/ --
- Consolidated Revenues up 36% Year-on-Year to $640.2 Million
- Adjusted OIBDA(1)(2) up 27% Year-on-Year to $280.2 Million
- Adjusted net Income(1) up 30% Year-on-Year to $176.1 Million
- Adjusted Earnings per Share(1) up 29% Year-on-Year to $1.11
CTC Media, Inc. ("CTC Media" or "the Company") (NASDAQ: CTCM), the
leading independent media company in Russia, today announced its unaudited
consolidated financial results for the fourth quarter and year ended December
31, 2008.
Three Months Year
Ended December 31, Ended December
(US$ 000's 2007 2008 Change 2007 2008 Change
except per
share data)
Total operating
revenues $161,704 $187,348 15.9% $472,056 $640,171 35.6%
Total operating
expenses
(before
impairment
charge) (3) (76,863) (94,636) 23.1% (278,995) (373,307) 33.8%
Adjusted OIBDA
(1)(2) 92,752 96,537 4.1% 220,422 280,243 27.1%
Adjusted OIBDA
margin (1)(2) 57.4% 51.5% (5.9%) 46.7% 43.8% (2.9%)
Non-cash
intangible
asset
impairment
charge - 232,683 - 232,683
Reported
OIBDA(2) 92,752 (136,146) (246.8%) 220,422 47,560 (78.4%)
Reported OIBDA
margin (2) 57.4% (72.7%)(130.1%) 46.7% 7.4% (39.3%)
Adjusted net
income (1) 59,699 64,635 8.3% 135,913 176,133 29.6%
Adjusted
diluted
earnings per
share (1) $0.38 $0.41 7.9% $0.86 $1.11 29.1%
Reported net
income 59,699 (89,044) (249.2%) 135,913 22,454 (83.5%)
Reported
diluted
earnings per
share $0.38 $(0.57) (250.0%) $0.86 $0.14 (83.7%)
(1) All adjusted numbers are non-GAAP financial measures reported before
the effect of an impairment of intangible assets relating to DTV
our Group in Russia, Channel 31 in Kazakhstan and broadcasting group
in Moldova. Please see the accompanying financial tables at the end
of this release for a reconciliation of adjusted OIBDA to OIBDA,
adjusted net income to GAAP reported net income and adjusted diluted
earnings per share to GAAP reported earnings per share.
(2) OIBDA is defined as operating income before depreciation and
amortization (exclusive of amortization of programming rights and
sublicensing rights). OIBDA margin is defined as OIBDA divided by
total operating revenues. Both OIBDA and OIBDA margin are non-GAAP
financial measures. Please see the accompanying financial tables at
the end of this release for a reconciliation of OIBDA to operating
income and OIBDA margin to operating income margin.
(3) Total operating expenses (before impairment charge) is a non-GAAP
financial measure that excludes an impairment of intangible assets
charge relating to our DTV Group in Russia, Channel 31 in Kazakhstan
and broadcasting group in Moldova. Please see the accompanying
financial tables at the end of this release for a reconciliation of
total operating expenses (before impairment charge) to GAAP total
operating expenses.
Full Year Financial Highlights
- Consolidated revenues up 35.6% year-on-year to $640.2 million
- Adjusted OIBDA up 27.1% year-on-year to $280.2 million, with an
adjusted OIBDA margin of 43.8%
- Adjusted net income up 29.6% year-on-year to $176.1 million
- Adjusted fully diluted earnings per share up 29.1% year-on-year to
$1.11
- $232.7 million aggregate non-cash charge arising from impairment of
intangible assets of DTV Group in Russia, Channel 31 in Kazakhstan and
broadcasting group in Moldova
Full Year Operating Highlights
- Average combined 4+ audience share in Russia up year-on-year from 11%
in 2007 to 13% in 2008
- Year-on-year increase in year-end technical penetration of CTC,
Domashny and DTV networks to 87.5% (from 87.4%), 71.0% (from 64.8%),
and 61.0% (from 54.4%), respectively
- Acquisition of DTV Group Russia for $395 million in April 2008
- Acquisition of Channel 31 in Kazakhstan for $65 million in February
2008 and successful re-launch in CTC format in April 2008
- Acquisition of 51% of Teledixi SRL and Muzic Ramil SRL broadcasting
group in Moldova for $4 million in October 2008
- Integration of Costafilm and Soho Media production companies and
development of in-house content production
- Securing of $135 million syndicated loan facility in June 2008
Anton Kudryashov, Chief Executive Officer of CTC Media, commented:
"2008 was another year of high sales and profit growth for CTC Media, as well as a year in which we substantially expanded the group's operations. Sales were up 36% year-on-year, adjusted OIBDA was up 27%, and we achieved a 44% margin, all of which is in-line with the guidance that we provided in October. Executing on our strategic development plan, we have expanded from a Russian business with two networks to an international company with three complementary networks in Russia and new broadcasting operations in Kazakhstan, Uzbekistan and Moldova, while also adding significant content production capabilities through the integration of Costafilm and Soho Media. We have also continued to successfully invest in our core programming schedules, which has resulted in further audience and market share gains for our networks."
"The operating environment deteriorated in the second half of the year due to the financial crisis and wider economic slowdown that has affected all markets. Advertising markets are being particularly impacted by this deterioration. Television is however continuing to increase its share of total advertising spend and CTC Media is more strongly positioned among its peers than ever. In light of the changed market conditions, we have acted to adjust our cost base by reducing expenditure and investment levels across the board. We are actively engaged in negotiations with the domestic and international content producers in order to reduce the forward cost but maintain the quality of the programming that we broadcast. Furthermore, we were in a net cash position at the end of the year, with most of our cash held in dollars."
Operating Review
Three Months Year
Ended December 31, Ended December 31,
(US$ 000's ) 2007 2008 Change 2007 2008 Change
Operating revenues:
CTC Network $104,211 $115,547 10.9% $321,030 $412,614 28.5%
Domashny Network 13,750 19,166 39.4% 39,077 64,142 64.1%
DTV Network n/a 13,463 n/a n/a 35,868 n/a
CTC Station Group 37,381 27,669 (26.0%) 95,315 95,033 (0.3%)
Domashny Station
Group 6,362 4,655 (26.8%) 16,634 16,003 (3.8%)
DTV Station Group n/a 1,734 n/a n/a 5,069 n/a
CIS Group n/a 4,950 n/a n/a 10,930 n/a
Production Group n/a 164 n/a n/a 512 n/a
Total operating
revenues $161,704 $187,348 15.9% $472,056 $640,171 35.6%
CTC Media's total operating revenues grew by 15.9% year-on-year to $187.3 (from $161.7) million in the fourth quarter and by 35.6% to $640.2 (from $472.1) million for the full year. The increase reflected the continued growth of the Russian television advertising market and higher advertising prices, which were partly driven by a decrease in the amount of advertising permitted to be broadcast under Russian law from January 1, 2008. The results were also impacted by the consolidation of DTV Group in Russia, CIS Group and Production Group which added a combined total of $20.3 million of operating revenues in the fourth quarter and $52.4 million for the full year.
The value of the Russian ruble began to materially depreciate against the US dollar in August 2008. Because advertising is primarily placed in rubles in Russia and the Company's reporting currency is the US dollar, this exchange rate movement negatively impacted the Company's reported year-on-year advertising revenue growth in the fourth quarter by approximately 9%. However, the full year impact of this exchange rate movement was marginally positive and accounted for approximately 2% of the year-on-year advertising revenue growth.
The year-on-year development in advertising revenues for the Television Station Groups, when compared with Networks, was adversely impacted by a decrease in the relative amount of advertising sold by the Company's owned and operated stations. This was due to the increase in advertising rates and the resulting shift by advertisers of their advertising budgets to national rather than local campaigns. Television Station Group revenues in 2008 were also adversely impacted by a higher effective commission rate paid to Video International (15% in 2008 versus 4% in 2007).
Share of Viewing in Target Demographics
Average Audience Shares (%)
Q4 2007 Q3 2008 Q4 2008 FY 2007 FY 2008
CTC Network (all 6-54) 11.6 12.0 12.3 11.3 11.8
Domashny Network (females
25-60) 2.5 2.8 2.8 2.4 2.8
DTV Network (all 18+) 1.7 1.8 1.9 1.8 1.8
Channel 31 (all 6-54) 6.6 16.6 16.6 n/a 13.4
CTC, Domashny, DTV and Channel 31 all demonstrated year-on-year target audience share growth in the fourth quarter, which was primarily driven by the success of the fall season schedules, as well as increased technical penetration for the Domashny and DTV Networks. The prime-time audience share drivers on the flagship CTC Network were the Daddy's Girls sitcom and Ranetki series, both of which were produced in-house by Costafilm. Domashny's prime- time audience share was boosted by re-runs of the CTC hit show Born Not Pretty and a foreign crime investigation series, while DTV featured ratings winners including Silent Witness, CSI and Marital Fiction (Brachnoe Chtivo).
DTV is being repositioned in 2009 to focus on 25-54 year-old female and male viewers, with a programming concept based around the crime investigative genre, which will include quality foreign series and movies as well as locally produced content.
The audience measurement system in Russia was modified effective January 1, 2009 following an updated census that demonstrated changes in the demographic profile of Russia's population. The census showed that the relative percentage of children, particularly teenagers, in the overall population has decreased due to a significant decline in the birth rate between 1990 and 1995. The Company currently expects that this modification in the audience measurement system may decrease CTC Network's target audience share by up to 0.7 percentage points.
The following table sets forth the Company's consolidated operating expenses for the fourth quarter and full year 2008 before the asset impairment charge referred to above:
Three Months Year
Ended December 31, Ended December 31,
(US$ 000's) 2007 2008 Change 2007 2008 Change
Operating expenses
(before impairment
charge):
Direct operating
expenses $5,193 $9,753 87.8% $18,794 $33,727 79.5%
Selling, general and
administrative
expenses 16,288 23,404 43.7% 69,680 97,201 39.5%
Amortization of
programming rights 44,979 56,328 25.2% 153,531 220,557 43.7%
Amortization of
sublicensing rights 2,492 1,326 (46.8%) 9,629 8,443 (12.3%)
Depreciation and
amortization 7,911 3,825 (51.6%) 27,361 13,379 (51.1%)
Total operating
expenses (before
impairment charge) $76,863 $94,636 23.1% $278,995 $373,307 33.8%
Underlying or organic consolidated operating expenses increased by 7.3% year-on-year to $82.5 (from $76.9) million in the fourth quarter and by 17.6% to $328.1 (from $279.0) million for the full year, when excluding DTV Group, CIS Group and Production Group companies, which were acquired and consolidated in 2008. These newly acquired businesses added $12.1 million to fourth quarter 2008 total operating expenses and $45.2 million for the full year.
The year-on-year increase in direct operating expenses primarily reflected the consolidation of DTV Group from April 2008 (adding $1.8 million in the fourth quarter and $5.9 million for the full year) and CIS Group from March 2008 (adding $0.7 million in the fourth quarter and $1.9 million for the full year), as well as wage inflation and the greater scale of the Company. The year-on-year increase in the fourth quarter also reflected higher transmission and maintenance costs at the Domashny and CTC owned-and-operated stations, as well as a $1.1 million provision by CTC Network relating to prepayments for certain programming rights.
The year-on-year increase in selling, general and administrative expenses was again primarily due to the consolidation of DTV Group (adding $2.2 million in the fourth quarter and $6.1 million for the full year), CIS Group (adding $1.8 million in the fourth quarter and $5.9 million for the full year), and the Costafilm and Soho Media production companies (adding $0.5 million in the fourth quarter and $3.7 million for the full year). Salaries and benefits rose in line with inflation and the increase in overall headcount, while expenses related to the Company's stock-based compensation scheme increased year-on-year to $4.0 (from $3.4) million in the fourth quarter and $15.2 (from $13.0) million for the full year principally due to issuing new stock options during the year.
Programming expenses increased year-on-year as a percentage of total revenues to 30.1% (from 27.8%) in the fourth quarter and 34.5% (from 32.5%) for the full year. The growth reflected higher programming costs at CTC and Domashny for foreign movies and Russian-produced series and shows, as well as the impact of the consolidation of DTV Group (adding $4.0 million in the fourth quarter and $11.2 million for the full year) and CIS Group (adding $1.9 million in the fourth quarter and $4.9 million for the full year). The results also included the impact of the change in amortization policy for Russian produced series with twenty or more episodes with effect from the second quarter of 2008, which increased the cost base by $2 million in the fourth quarter and by $9 million for the full year. Programming impairment charges increased year-on-year to $4.9 (from $2.6) million in the fourth quarter and $16.6 (from $5.7) million for the full year following a revision of forward revenue expectations from certain programming rights due to the current economic uncertainty (an effect of about $2.7 million) and due to the underperformance of three Russian series launched in the first half of 2008.
Depreciation and amortization charges were reduced year-on-year due to a change in the way in which the Company accounts for its broadcasting licenses. As of January 1, 2008, CTC Media no longer amortizes the cost of its broadcasting licenses over five years but treats them as intangible assets with an indefinite life that are subject to annual impairment tests.
Following the latest annual asset impairment test around the financial year end, the Company has recognized an aggregate $232.7 million non-cash charge for the impairment of the Company's intangible assets, of which $95.6 million relates to DTV Group in Russia, $132.9 million relates to Channel 31 in Kazakhstan and $4.2 million relates to the broadcasting group in Moldova. The impairment charge relates to broadcasting licenses and trademarks at DTV Group, to broadcasting licenses and goodwill at Channel 31 and to the broadcasting license at our broadcasting group in Moldova. The impairment reflects changes in the market conditions and outlook from those that prevailed when the assets were acquired.
Consolidated OIBDA, when adjusted to exclude the abovementioned impairment charge, increased by 4.1% year-on-year to $96.5 (from $92.8) million in the fourth quarter and by 27.1% to $280.2 (from $220.4) million for the full year. The adjusted consolidated OIBDA margin declined year-on year to 51.5% (from 57.4%) in the fourth quarter and to 43.8% (from 46.7%) for the full year.
Consolidated operating income, again when adjusted to exclude the impairment charge, was up 9.3% year-on-year to $92.7 (from $84.8) million in the fourth quarter, and by 38.2% to $266.9 (from $193.1) million for the full year.
The Company reported foreign currency exchange rate losses of $17.1 million in the quarter and $28.9 million for the full year due to the impact of the weakening of the Russian ruble on the Company's US dollar denominated liabilities.
The Company reported net interest expenses of $2.0 million in the quarter and $3.2 million for the full year, compared to net interest income of $3.7 million and $11.0 million for the respective periods in 2007. The development reflected the increase in borrowing levels in 2008 following the arrangement and full utilization of a $135 million term credit facility in June 2008.
Income before tax, when adjusted to exclude the impairment charge, of $74.3 (2007: $86.3) million in the quarter and $237.1 (2007: $204.9) million for the full year. Adjusted income tax expense amounted to $1.7 (2007: $24.1) million in the quarter and $50.2 (2007: $63.2) million for the full year. The lower adjusted effective tax rate of 2% (2007: 28%) in the fourth quarter and 21% (2007: 31%) for the full year primarily reflected the impact of the decrease in the statutory income tax rates in Russia (from 24% to 20%) and Kazakhstan (from 30% to 20%) from the beginning of 2009 on the Company's deferred taxes assets and liabilities, which resulted in the recognition of a $19.0 million income tax benefit in the fourth quarter.
Consolidated net income, when adjusted to exclude the impact of the impairment charge, was up 8.3% year-on-year to $64.6 (from $59.7) million in the fourth quarter and up 29.6% to $176.1 (from $135.9) million for the full year. Adjusted fully diluted earnings per share increased year-on-year to $0.41 (from $0.38) in the fourth quarter and to $1.11 (from $0.86) for the full year.
Cash Flow
The Company's net cash flow from operations increased by 18.0% year-on- year to $185.9 (from $158.0) million in 2008.
CTC Media spent $409.0 (2007: $34.8) million on the acquisition of businesses during the year, which primarily included the acquisitions of DTV Group and Channel 31 Group. Capital expenditure amounted to $10.1 (2007: $5.6) million, which was equivalent to 1.6% of total operating revenues.
Cash flow from financing activities amounted to $20.6 (2007: $0.7) million for the full year and included a net change in borrowings of $24.8 million, which primarily reflected the drawing down of the $135 million term credit facility in June 2008. The $110.2 million of cash flow from financing activities comprised the $65.4 million repayment of indebtedness owing from the DTV Group to MTG in connection with the Company's acquisition of DTV Group as well as the scheduled repayment of $33.8 million of the new loan facility in the fourth quarter and $11.0 million prepayment in the third quarter of 2008.
The Company's cash and cash equivalents therefore declined by $209.0 million during 2008 to $98.1 million at the end of the year.
Borrowings
The Company's total borrowings amounted to $90.6 (2007: $0.2) million at the end of the reporting period. The Company had a net cash position, which is defined as interest bearing liabilities less cash and cash equivalents, of $7.5 (2007: $306.9) million at the end of the year, which compared to a net debt position of $70.3 million at the end of the third quarter of 2008.
2009 Guidance
The Company previously provided full year US dollar revenue and OIBDA margin guidance on a quarterly basis. In light of the aforementioned deterioration in the operating environment due to the financial crisis and wider economic slowdown that has affected all markets, and the significant depreciation of the Russian ruble operating currency against the US dollar reporting currency, the Company is not currently providing formal guidance for 2009. This policy will continue to be reviewed on a regular basis moving forward in the context of market conditions and outlook, as well as the performance of the Company.
Conference Call
The Company will also host a conference call to discuss its fourth quarter and full year 2008 financial results today, Thursday, February 26, 2009, at 9:00 a.m. ET, (5:00 p.m.Moscow time, 2:00 p.m.London time). To access the conference call, please dial +1-718-247-0886 (US/International) or +44(0)20-7806-1955 (UK/International). The pass code for the call is 3916418. A live webcast of the conference call will also be available via the investor relations section of the Company's corporate web site - http://www.ctcmedia.ru/investors. The webcast will also be archived on the Company's web site for two weeks.
Use of Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with US GAAP, the Company uses the following non-GAAP financial measures: OIBDA (on a consolidated and segment basis), adjusted OIBDA (on a consolidated and segment basis), total operating expenses (before impairment charge), adjusted operating income, adjusted net income before tax, adjusted income tax expense, adjusted net income and adjusted diluted earnings per share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the accompanying financial tables included at the end of this release.
The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain expenses that may not be indicative of its recurring core business operating results, meaning its operating performance excluding certain non-cash charges. These metrics are used by management to further its understanding of the Company's operating performance in the ordinary, ongoing and customary course of operations. The Company also believes that these metrics provide investors and equity analysts with a useful basis for analyzing operating performance against historical data and the results of comparable companies.
OIBDA and OIBDA margin. OIBDA is defined as operating income before depreciation and amortization (exclusive of amortization of programming rights and sublicensing rights). OIBDA margin is defined as OIBDA divided by total operating revenues. The most directly comparable GAAP measures to the non-GAAP measures of OIBDA and OIBDA margin are operating income and operating income margin, respectively. Unlike operating income, OIBDA excludes depreciation and amortization, other than amortization of programming rights and sublicensing rights. The purchase of programming rights is the Company's most significant expenditure that enables it to generate revenues and OIBDA includes the impact of the amortization of these rights. Expenditures for capital items such as property, plant and equipment have a materially less significant impact on the Company's ability to generate revenues. For this reason, the Company excludes the related depreciation expense for these items from OIBDA. Moreover, a significant portion of its intangible assets were acquired in business acquisitions. The amortization of intangible assets is therefore also excluded from OIBDA.
Adjusted financial measures. As described above, in the fourth quarter of 2008, CTC Media recognized an aggregate $232.7 million non-cash charge for impairment of certain intangible assets acquired in connection with three acquisitions made in 2008. CTC Media uses adjusted OIBDA (on a consolidated and segment basis), total operating expenses (before impairment charge), adjusted operating income, adjusted net income before tax, adjusted income tax expense, adjusted net income and adjusted diluted earnings per share, each of which has been adjusted to exclude this impairment charge, so as to permit management to assess the operational performance of the business for the fourth quarter and full year 2008 as compared to prior periods and to create comparable results for future reporting periods.
About CTC Media, Inc.
CTC Media is a leading independent media company in Russia. It owns and operates the CTC television network, with its signal carried by more than 350 affiliate stations, including 20 owned-and-operated stations; the Domashny television network, with its signal carried by over 250 affiliate stations, including 12 owned-and-operated stations; and the DTV television network, with its signal carried by affiliate stations including four owned-and-operated stations. CTC Media owns two TV content production companies, Costafilm and Soho Media, and operates Channel 31 in Kazakhstan and TV companies in Uzbekistan and Moldova. The company's common stock is traded on The NASDAQ Global Select Market under the symbol "CTCM". For more information on CTC Media, please visit http://www.ctcmedia.ru.
Caution Concerning Forward Looking Statements
Certain statements in this press release that are not based on historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which include, among other things, the impact the current unfavorable macroeconomic outlook in Russia may have on the size of the Russian television advertising market in 2009 and the split of advertising sales between the national and local markets, and the impact that the recent change in the Russian advertising measurement system may have on the future audience share of CTC Network, reflect the Company's current expectations concerning future results and events. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of CTC Media to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual future results to differ from those expressed by forward-looking statements include, among others, continued depreciation of the value of the Russian ruble compared to the US dollar, changes in the size of the Russian television advertising market, particularly in light of the current economic instability in Russia and globally; the Company's ability to deliver audience share, particularly in primetime, to its advertisers; free-to-air television remaining a significant advertising forum in Russia; the Company's reliance on a single television advertising sales house for substantially all of its revenues; and restrictions on foreign involvement in the Russian television business. These and other risks are described in the "Risk Factors" section of CTC Media's quarterly report on Form 10-Q filed with the SEC on October 31, 2008. Other unknown or unpredictable factors could have material adverse effects on CTC Media's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed herein may not occur. You are cautioned not to place undue reliance on these forward-looking statements. CTC Media does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
CTC MEDIA, INC, AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of US dollars, except share and per share data)
Three months ended Year ended
December 31, December 31,
2007 2008 2007 2008
REVENUES:
Advertising $ 156,649 $ 183,091 $ 452,669 $ 623,336
Sublicensing 4,350 3,415 17,006 14,016
Other revenue 705 842 2,381 2,819
Total operating
revenues 161,704 187,348 472,056 640,171
EXPENSES:
Direct operating
expenses
(exclusive of
amortization of
programming
rights and
sublicensing
rights, shown
below, exclusive
of depreciation
and amortization
of $24,652 and
$10,030 in 2007
and 2008,
respectively;
and inclusive of
stock-based
compensation of
$665 and $852 in
2007 and 2008,
respectively) (5,193) (9,753) (18,794) (33,727)
Selling, general
and
administrative
(exclusive of
depreciation and
amortization of
$2,709 and
$3,350 in 2007
and 2008,
respectively;
and inclusive of
stock based
compensation of
$13,029 and
$15,231 in 2007
and 2008,
respectively) (16,288) (23,404) (69,680) (97,201)
Amortization of
programming
rights (44,979) (56,328) (153,531) (220,557)
Amortization of
sublicensing
rights (2,492) (1,326) (9,629) (8,443)
Depreciation and
amortization
(exclusive of
amortization of
programming
rights and
sublicensing
rights) (7,911) (3,825) (27,361) (13,379)
Impairment loss - (232,683) - (232,683)
Total operating
expenses $ (76,863) $ (327,319) $(278,995) $(605,990)
OPERATING INCOME
(LOSS) 84,841 (139,971) 193,061 34,181
FOREIGN CURRENCY
GAINS (LOSSES) 126 (17,089) 151 (28,861)
INTEREST INCOME 3,684 966 11,002 6,221
INTEREST EXPENSE (1) (2,926) (3) (9,434)
GAINS ON SALE OF
BUSINESSES - - 747 -
OTHER
NON-OPERATING
INCOME (LOSSES),
net 320 156 1,168 776
EQUITY IN INCOME
OF INVESTEE
COMPANIES (2,692) 447 (1,195) 1,511
Income (loss)
before income
tax and minority
interest 86,278 (158,417) 204,931 4,394
INCOME TAX
(EXPENSE)
BENEFIT (24,147) 28,678 (63,176) (19,874)
INCOME
ATTRIBUTABLE TO
MINORITY
INTEREST (2,432) 40,695 (5,842) 37,934
NET INCOME
(LOSS) $ 59,699 $ (89,004) $ 135,913 $22,454
Net income
(loss)
attributable to
common
stockholders $ 59,699 $ (89,004) $ 135,913 $22,454
Net income per
share
attributable to
common
stockholders -
basic $ 0.39 $ (0.59) $ 0.90 $0.15
Net income per
share
attributable to
common
stockholders -
diluted $ 0.38 $ (0.57) $ 0.86 $0.14
Weighted average
common shares
outstanding -
basic 151,956,598 152,155,213 151,731,780 152,146,559
Weighted average
common shares
outstanding -
diluted 158,603,987 156,987,869 158,311,967 158,187,922
CTC MEDIA, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of US dollars)
Year ended December 31,
2007 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 135,913 22,454
Adjustments to reconcile net income to net cash
provided by operating activities:
Deferred tax expense (benefit) (14,699) (66,142)
Depreciation and amortization 27,361 13,379
Amortization of programming rights 153,351 220,557
Amortization of sublicensing rights 9,629 8,443
Stock based compensation expense 13,694 16,083
Gain on disposal of property and equipment (662) -
Gain on sale of businesses (747) -
Equity in (income) loss of unconsolidated investees 1,195 (1,511)
Income attributable to minority interest 5,842 (37,934)
Foreign currency (gains) losses (151) 28,861
Impairment loss - 232,683
Changes in operating assets and liabilities:
Trade accounts receivable 124 (26,692)
Prepayments 3,025 (14,366)
Other assets 2,330 8,503
Accounts payable and accrued liabilities 2,049 863
Deferred revenue (3,537) 4,033
Other liabilities 2,161 20,983
Dividends received from equity investees 2,427 1,421
Acquisition of programming and sublicensing rights (176,802) (245,684)
Net cash provided by operating activities 158,023 185,937
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (5,076) (4,804)
Acquisitions of intangibles (564) (5,261)
Acquisitions of businesses, net of cash acquired (34,833) (408,967)
Proceeds from sale of businesses, net of cash
disposed 827 -
Proceeds from sale of property and equipment 2,055 -
Other - -
Net cash used in investing activities (37,591) (419,032)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 6,582 1,849
Proceeds from loans - 135,000
Repayments of loans - (110,193)
(Increase) decrease in restricted cash (60) (30)
Dividends paid to minority interest (5,789) (6,031)
Net cash provided by financing activities 733 20,595
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH 9,366 3,482
EQUIVALENTS
Net increase (decrease) in cash and cash equivalents 130,531 (209,018)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 176,542 307,073
CASH AND CASH EQUIVALENTS AT END OF PERIOD 307,073 98,055
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid - 16,508
Income tax paid 75,296 93,159
CTC MEDIA, INC, AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands of US dollars, except share and per share data)
December 31,
2007 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $307,073 $98,055
Trade accounts receivable, net of allowance
for doubtful accounts (2007-$435; 2008-$1,355)
(including accounts receivable from related
parties: 2007-$2,138; 2008-$832) 11,690 33,670
Taxes reclaimable 4,843 8,171
Prepayments (including prepayments to related
parties: 2007-$1,990; 2008 - $518) 35,128 29,005
Programming rights, net 63,023 71,976
Deferred tax assets 12,938 14,166
Other current assets 3,342 7,720
TOTAL CURRENT ASSETS 438,037 262,763
RESTRICTED CASH 180 210
PROPERTY AND EQUIPMENT, net 24,768 22,722
INTANGIBLE ASSETS, net:
Broadcasting licenses 74,254 166,173
Cable network connections 77 25,205
Trade names 6,828 17,587
Network affiliation agreements 1,333 9,214
Other intangible assets 724 1,244
Net intangible assets 83,216 219,423
GOODWILL 78,674 223,027
PROGRAMMING RIGHTS, net 36,161 48,031
SUBLICENSING RIGHTS, net 2,591 1,221
INVESTMENTS IN AND ADVANCES TO INVESTEES 6,557 5,311
PREPAYMENTS 12,026 6,238
DEFERRED TAX ASSETS 11,326 15,154
OTHER NON-CURRENT ASSETS 1,144 2,729
TOTAL ASSETS $694,680 $806,829
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable (including accounts payable
to related parties: 2007-$516; 2008-$55) 25,846 41,025
Accrued liabilities 4,653 41,573
Taxes payable 14,507 30,154
Short-term loans and interest accrued - 62,165
Deferred revenue 11,866 14,683
Deferred tax liabilities 1,350 2,778
TOTAL CURRENT LIABILITIES 58,222 192,378
LONG TERM LOANS 224 28,438
DEFERRED TAX LIABILITIES 21,160 38,943
MINORITY INTEREST 3,182 2,481
COMMITMENTS AND CONTINGENCIES (Note 16) - -
STOCKHOLDERS' EQUITY:
Common stock: $0.01 par value; shares
authorized 175,772,173; shares issued and
outstanding 2007-152,124,096; 2008-152,155,213) 1,521 1,522
Additional paid-in capital 348,752 365,362
Retained earnings 209,867 232,321
Accumulated other comprehensive income 51,752 (54,616)
TOTAL STOCKHOLDERS' EQUITY 611,892 544,589
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $694,680 $806,829
CTC MEDIA, INC. AND SUBSIDIARIES
UNAUDITED SEGMENT FINANCIAL INFORMATION
(in thousands of US dollars)
Three months ended December 31, 2007
Operating
revenue
from Operating Depreciation
external Intersegment income/ and
customers revenue (loss) amortization
CTC Network $104,211 $207 $60,281 $(254)
Domashny Network 13,750 - 3,749 (166)
DTV Network - - - -
CTC Television Station
Group 37,381 - 27,770 (3,026)
Domashny Television
Station Group 6,362 399 233 (3,934)
DTV Television Station
Group - - - -
CIS Group - - - -
Production Group - - - -
Corporate Office - - (7,192) (531)
Business segment results $161,704 $606 $84,841 $(7,911)
Eliminations and other - (606) - -
Consolidated results $161,704 $- $84,841 $(7,911)
Continued....
OIBDA
adjusted
for
Impairment impairment Capital
loss OIBDA loss expenditures
CTC Network $- $60,535 $60,535 $(396)
Domashny Network - 3,915 3,915 (121)
DTV Network - - - -
CTC Television Station
Group - 30,796 30,796 (405)
Domashny Television
Station Group - 4,167 4,167 (703)
DTV Television Station
Group - - - -
CIS Group - - - -
Production Group - - - -
Corporate Office - (6,661) (6,661) (67)
Business segment results $- $92,752 $92,752 $(1,692)
Eliminations and other - - - -
Consolidated results $- $92,752 $92,752 $(1,692)
Three months ended December 31, 2008
Operating
revenue
from Operating Depreciation
external Intersegment income/ and
customers revenue (loss) amortization
CTC Network $115,547 $435 $63,615 $(211)
Domashny Network 19,166 4 7,998 (147)
DTV Network 13,463 8 (2,462) (1,435)
CTC Television Station
Group 27,669 340 20,418 (516)
Domashny Television
Station Group 4,655 254 1,732 (578)
DTV Television Station
Group 1,734 145 (88,056) (601)
CIS Group 4,950 - (136,816) (258)
Production Group 164 25,007 5,049 (8)
Corporate Office - - (8,935) (71)
Business segment results $187,348 $26,193 $(137,457) $(3,825)
Eliminations and other - (26,193) (2,514) -
Consolidated results $187,348 $- $(139,971) $(3,825)
Continued....
OIBDA
adjusted
for
Impairment impairment Capital
CTC Network loss OIBDA loss expenditures
Domashny Network $- $63,826 $63,826 $(140)
DTV Network - 8,145 8,145 (79)
CTC Television Station
Group (7,743) (1,027) 6,716 (108)
Domashny Television
Station Group - 20,934 20,934 (277)
DTV Television Station
Group - 2,310 2,310 (106)
CIS Group (87,889) (87,455) 434 (114)
Production Group (137,051) (136,558) 493 (375)
Corporate Office - 5,057 5,057 -
Business segment results - (8,864) 8,864) (98)
Eliminations and other $(232,683) $(133,632) $99,051 $(1,297)
Consolidated results - (2,514) (2,514) -
$(232,683) $(136,146) $96,537 $(1,297)
(Continued on the next page)
CTC MEDIA, INC. AND SUBSIDIARIES
UNAUDITED SEGMENT FINANCIAL INFORMATION (Continued)
(in thousands of US dollars)
Year ended December 31, 2007
Operating
revenue
from Operating Depreciation
external Intersegment income/ and
customers revenue (loss) amortization
CTC Network $321,030 $487 $166,249 $(1,002)
Domashny Network 39,077 - 5,349 (631)
DTV Network - - - -
CTC Television Station
Group 95,315 992 56,966 (9,243)
Domashny Television
Station Group 16,634 837 (7,977) (14,380)
DTV Television Station
Group - - - -
CIS Group - - - -
Production Group - - - -
Corporate Office - - (27,526) (2,105)
Business segment results $472,056 $2,316 $193,061 $(27,361)
Eliminations and other - (2,316) - -
Consolidated results $472,056 $- $193,061 $(27,361)
Continued....
CTC Network OIBDA
adjusted
for
Impairment impairment Capital
loss OIBDA loss expenditures
Domashny Network $- $167,251 $167,251 $(973)
DTV Network - 5,980 5,980 (231)
CTC Television Station
Group - - - -
Domashny Television
Station Group - 66,209 66,209 (2,048)
DTV Television Station
Group - 6,403 6,403 (2,027)
CIS Group - - - -
Production Group - - - -
Corporate Office - - - -
Business segment results - (25,421) (25,421) (361)
Eliminations and other $- $220,422 $220,422 $(5,640)
Consolidated results - - - -
$- $220,422 $220,422 $(5,640)
Year ended December 31, 2008
Operating
revenue
from Operating Depreciation
external Intersegment income/ and
customers revenue (loss) amortization
CTC Network $412,614 $4,516 $207,382 $(963)
Domashny Network 64,142 13 18,868 (656)
DTV Network 35,868 16 7,286 (2,332)
CTC Television Station
Group 95,033 1,704 60,384 (2,106)
Domashny Television
Station Group 16,003 1,069 2,552 (2,538)
DTV Television Station
Group 5,069 368 (89,811) (2,330)
CIS Group 10,930 - (139,712) (880)
Production Group 512 47,103 5,302 (52)
Corporate Office - - (34,824) (1,522)
Business segment results $640,171 $54,789 $37,427 $(13,379)
Eliminations and other - (54,789) (3,246) -
Consolidated results $640,171 $- $34,181 $(13,379)
Continued....
OIBDA
adjusted
for
Impairment impairment Capital
loss OIBDA loss expenditures
CTC Network $- $208,345 $208,345 $(1,021)
Domashny Network - 19,524 19,524 (163)
DTV Network (7,743) 9,618 17,361 (515)
CTC Television Station
Group - 62,490 62,490 (4,966)
Domashny Television
Station Group - 5,090 5,090 (2,133)
DTV Television Station
Group (87,889) (87,481) 408 (145)
CIS Group (137,051) (138,832) (1,781) (594)
Production Group - 5,354 5,354 -
Corporate Office - (33,302) (33,302) (528)
Business segment results $(232,683) $50,806 $283,489 $(10,065)
Eliminations and other - (3,246) (3,246) -
Consolidated results $(232,683) $47,560 $280,243 $(10,065)
CTC MEDIA, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED OIBDA TO
CONSOLIDATED OPERATING INCOME
Three months ended Year ended
December 31, December 31,
2007 2008 2007 2008
(in thousands of US dollars)
OIBDA $92,752 $(136,146) $220,422 $47,560
Depreciation and amortization
(exclusive of amortization of
programming rights and sublicensing
rights) (7,911) (3,825) (27,361) (13,379)
Operating income $84,841 $(139,971) $193,061 $34,181
CTC MEDIA, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED OIBDA MARGIN TO
CONSOLIDATED OPERATING INCOME MARGIN
Three months ended Year ended
December 31, December 31,
2007 2008 2007 2008
OIBDA margin 57.4% (72.7%) 46.7% 7.4%
Depreciation and amortization (exclusive
of amortization of programming rights
and sublicensing rights) as a percentage
of total operating revenues (4.9%) (2.0%) (5.8%) (2.1%)
Operating income margin 52.5% (74.7%) 40.9% 5.3%
CTC MEDIA, INC. AND SUBSIDIARIES
RECONCILIATION OF CONSOLIDATED ADJUSTED OIBDA AND OTHER
ADJUSTED FINANCIAL MEASURES TO
CONSOLIDATED OIBDA AND OTHER CORRESPONDING CONSOLIDATED GAAP
FINANCIAL MEASURES, RESPECTIVELY
Income
Before
Income
Total Tax and
(US$ 000's except per share Operating Operating Minority
data) OIBDA Expenses Income Interest
Three Months ended December
31, 2008
Adjusted non-US GAAP results $96,537 $(94,636) $92,712 $74,266
Impact of non-cash intangible
asset impairment charge (232,683) (232,683) (232,683) (232,683)
Results as reported
(under US GAAP, except for
OIBDA which is a non-GAAP
financial measure) (136,146) (327,319) (139,971) (158,417)
Year ended December 31, 2008
Adjusted non-US GAAP results $280,243 $(373,307) $266,864 $237,077
Impact of non-cash intangible
asset impairment charge (232,683) (232,683) (232,683) (232,683)
Results as reported
(under US GAAP, except for
OIBDA which is a non-US GAAP
financial measure) 47,560 (605,990) 34,181 4,394
Continued....
Income Diluted
(US$ 000's except per share Tax Minority Net Earnings
data) Expense Interest Income per share
Three Months ended December
31, 2008
Adjusted non-US GAAP results $(1,653) $(7,978) $64,675 $0.41
Impact of non-cash
intangible asset impairment
charge 30,331 48,673 (153,679) (0.98)
Results as reported
(under US GAAP, except for
OIBDA which is a non-GAAP
financial measure) 28,678 40,695 (89,004) (0.57)
Year ended December 31, 2008
Adjusted non-US GAAP results $(50,205) $(10,739) $176,133 $1.11
Impact of non-cash
intangible asset impairment
charge 30,331 48,673 (153,679) (0.97)
Results as reported
(under US GAAP, except for
OIBDA which is a non-US GAAP
financial measure) (19,874) 37,934 22,454 0.14
CTC MEDIA, INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED SEGMENT OIBDA TO SEGMENT OIBDA
Three Months Ended December 31, 2008
Impact of non-cash
intangible
asset impairment
(US$ 000's) Adjusted OIBDA charge OIBDA
CTC Network $63,826 - $63,826
Domashny Network $8,145 - $8,145
DTV Network $6,716 $(7,743) $(1,027)
CTC Television
Station Group $20,934 - $20,934
Domashny Television
Station Group $2,310 - $2,310
DTV Television
Station Group $434 $(87,889) $(87,455)
CIS Group $493 $(137,051) $(136,558)
Production Group $5,057 - $5,057
Corporate $(8,864) - $(8,864)
Business Segment
Results $99,051 $(232,683) $(133,632)
Eliminations and
Other $(2,514) - $(2,514)
Consolidated Results $96,537 $(232,683) $(136,146)
Year Ended December 31, 2008
Impact of non-cash
intangible
asset impairment
(US$ 000's) Adjusted OIBDA charge OIBDA
CTC Network $208,345 - $208,345
Domashny Network $19,524 - $19,524
DTV Network $17,361 $(7,743) $9,618
CTC Television
Station Group $62,490 - $62,490
Domashny Television
Station Group $5,090 - $5,090
DTV Television
Station Group $408 $(87,889) $(87,481)
CIS Group $(1,781) $(137,051) $(138,832)
Production Group $5,354 - $5,354
Corporate $(33,302) - $(33,302)
Business Segment
Result $283,489 $(232,683) $50,806
Eliminations and
Other $(3,246) - $(3,246)
Consolidated Results $280,243 $(232,683) $47,560
CTC MEDIA, INC. AND SUBSIDIARIES
RECONCILIATION OF SEGMENT OIBDA TO SEGMENT OPERATING INCOME
Three Months Ended December 31, 2008
Depreciation and
amortization
(exclusive of
amortization of
OIBDA programming rights Operating income
and sublicensing
(US$ 000's) rights)
CTC Network $63,826 $(211) $63,615
Domashny Network $8,145 $(147) $7,998
DTV Network $(1,027) $(1,435) $(2,462)
CTC Television
Station Group $20,934 $(516) $20,418
Domashny Television
Station Group $2,310 $(578) $1,732
DTV Television
Station Group $(87,455) $(601) $(88,056)
CIS Group $(136,558) $(258) $(136,816)
Production Group $5,057 $(8) $5,049
Corporate $(8,864) $(71) $(8,935)
Business Segment
Results $(133,632) $(3,825) $(137,457)
Eliminations and
Other $(2,514) - $(2,514)
Consolidated Results $(136,146) $(3,825) $(139,971)
Year Ended December 31, 2008
Depreciation and
amortization
(exclusive of
amortization of
OIBDA programming rights Operating income
and sublicensing
(US$ 000's) rights)
CTC Network $208,345 $(963) $207,382
Domashny Network $19,524 $(656) $18,868
DTV Network $9,618 $(2,332) $7,286
CTC Television
Station Group $62,490 $(2,106) $60,384
Domashny Television
Station Group $5,090 $(2,538) $2,552
DTV Television
Station Group $(87,481) $(2,330) $(89,811)
CIS Group $(138,832) $(880) $(139,712)
Production Group $5,354 $(52) $5,302
Corporate $(33,302) $(1,522) $(34,824)
Business Segment
Results $50,806 $(13,379) $37,427
Eliminations and
Other $(3,246) - $(3,246)
Consolidated Results $47,560 $(13,379) $34,181
For further information, please visithttp://www.ctcmedia.ru or contact:
CTC Media, Inc.
Investor Relations
Ekaterina Ostrova or
Ekaterina Tsukanova
Tel: +7-495-783-3650
ir@ctcmedia.ru
Media Relations
Angelika Larionova
Tel: +7-495-785-6333
pr@ctcmedia.ru
