SBS Broadcasting SA Reports Fourth Quarter Results FOURTH QUARTER
Net Revenues increased by 8% Station Operating Cash Flow increased
by 27% Adjusted EBITDA increased by 32% Net income of euro 37.6
million or euro 1.19 per share LUXEMBOURG, March 7
/PRNewswire-FirstCall/ -- SBS Broadcasting SA (Nasdaq: SBTV;
Euronext Amsterdam N.V.: SBS) today reported financial results for
the three months and year ended December 31, 2004. Results, which
are attached, are in thousands of euros (except per share data)
converted from local currencies. The following report should be
read in conjunction with the accompanying, unaudited financial
statements. Financial highlights are as follows: Three months ended
December 31, 2003 2004 % change Net revenue euro 195,881 euro
211,227 7.8% Station operating cash flow (1) 41,067 52,000 26.6%
Adjusted EBITDA (2) 36,271 47,763 31.7% Operating income 23,592
39,182 66.1% Net income (3) 2,637 37,566 Net income per common
share euro 0.09 euro 1.19 Weighted average common shares 29,158
31,542 Cash provided by operating activities (4) 51,684 51,427
Station operating cash flow margin (5) 21.0% 24.6% Adjusted EBITDA
margin (5) 18.5% 22.6% Year ended December 31, 2003 2004 % change
Net revenue euro 581,691 euro 678,277 16.6% Station operating cash
flow (1) 88,160 119,589 35.6% Adjusted EBITDA (2) 73,051 104,335
42.8% Operating income 43,205 72,926 68.8% Net income (3) 30,270
49,784 Net income per common share euro 1.05 euro 1.59 Weighted
average common shares 28,754 31,268 Cash provided by operating
activities (4) 78,880 57,325 Station operating cash flow margin (5)
15.2% 17.6% Adjusted EBITDA margin (5) 12.6% 15.4% (1) Station
operating cash flow ("STOCF") is defined as operating income plus
corporate expenses, non-cash compensation, depreciation and
amortization expenses (see below). (2) Adjusted EBITDA is defined
as operating income plus non-cash compensation, depreciation and
amortization (see below). (3) The net income for the year ended
December 31, 2003 includes a non-cash investment gain of euro 29.2
million realized on the Veronica transaction completed on September
1, 2003. The net income for the year ended December 31, 2004
includes non-recurring investment gains of euro 9.8 million and
non-recurring tax benefits of euro 9.9 million. (4) Cash provided
by operating activities for the year ended December 31, 2003,
includes a non-recurring cash benefit of euro 26 million from
prepaid subscription fees in our print operations, which were
consolidated from September 1, 2003. (5) Station operating cash
flow margin is STOCF expressed as a percentage of net revenue, and
adjusted EBITDA margin is adjusted EBITDA expressed as a percentage
of net revenue. Commenting on the results, Markus Tellenbach, SBS's
Chief Executive Officer, said: "With more than euro 100 million of
EBITDA in 2004 the Company's operating and financial performance
exceeded our expectations and we are in a strong position to build
on those gains this year. In 2004 we continued to improve our
operating performance while also investing in complementary
activities to drive growth. As a result our revenue growth
continues to outpace the market with increased viewing shares in
most of our markets as we develop new revenue streams by leveraging
our broadcasting assets. "Through the launch of new digital
channels across our footprint and the acquisition of the C More
Group we are strategically diversifying our revenue streams through
the addition of subscription services that utilize our management
and operating infrastructure. As we integrate these new assets and
implement our business plan we will seek to continue to increase
profitability. With a sound balance sheet, our pan-European
footprint and improving cash flows, we are well-positioned to take
advantage of the increasing adoption of digital technologies in our
markets and to seek prudent expansion opportunities such as our
recent investments in the fast-growing Romanian television and
radio market." Recent Developments Pay TV On February 9, 2005, the
Company announced that it had agreed to acquire all of the shares
of C More Group AB ("C More") for euro 269.6 million in cash. The
acquired net assets of C More include approximately euro 20 million
in cash at December 31, 2004. Competition authority approvals have
been obtained and the acquisition is expected to close on March 8,
2005. The sellers are primarily private equity funds represented by
Baker Capital and Nordic Capital. C More is the leading Nordic pay
entertainment provider, with over 770,000 subscribers in Sweden,
Norway, Finland and Denmark. As the only provider of both premium
sports and premium movies in the Nordic region, which it provides
under the Canal+ and C More brands, C More enjoys market-leading
positions in Sweden, Norway and Finland. The channels are
distributed primarily by direct- to-home satellite (DTH), cable,
broadband and, increasingly, by digital terrestrial transmission
(DTT). In 2004, C More Group had revenues of SEK 1,657 million
(euro 181 million) from channel subscriptions and other sources. C
More has had positive net income for the last three years and has
no debt. On March 7, 2005, we entered into a euro 300 million
unsecured bridge facility agreement with ABN Amro Bank N.V. and
then drew down euro 210 million in order to finance in part our
acquisition of C More Group AB for euro 269.6 million (which is
expected to close March 8, 2005). We are planning to finance the
remainder of the purchase price from the Company's cash balances.
Amounts outstanding under the bridge facility bear interest at a
rate of EURIBOR plus 0.7% per annum. The bridge facility has a term
of six-months. We intend to repay amounts borrowed under the bridge
facility through a syndicated bank loan or by issuing debt
securities or both, subject to market conditions. Romania On March
1, 2005, we increased our equity stake in Prima TV to 86%,
following the purchase of an additional 48.8% indirect equity stake
and Prima TV debt for euro 7.8 million from Romanian Investment and
Development srl, which is owned by Cristian Burci, SBS's former
Romanian partner in Prima TV. SBS has held a minority ownership
interest in Prima TV since July 2001 and originally invested in
Prima TV in March 2000. We also acquired Romania's leading FM radio
network Kiss FM, and FM radio network Radio Star from MG Media
Group Holding S.A. for a total of euro 22.5 million on a debt-free
basis. The radio acquisition is subject to the post- closing
condition of approval from competition authorities. Greece In
October 2004, the Greek Council of State granted several
applications for the annulment of all 15 four-year FM radio
licenses awarded by the Greek Ministry of Press and Mass Media in
March 2002. Among these is the license granted to Lampsi, our FM
station in Athens. The Council of State's judgment was based on a
number of alleged deficiencies in the license tender process (and,
with respect to Lampsi, on the grounds that Lampsi's ownership
structure did not comply with Greek media law as then in effect).
The Greek Council of State judgment was not subject to appeal under
Greek law and, accordingly, in December 2004, SBS filed a complaint
with the EC Commission on the grounds that the Greek rules on media
ownership infringe EU law. In January 2005, Greece adopted an
additional law relating to disclosure of ownership interests in
Greek radio stations, which had the effect of eliminating
altogether the ability of a listed company to have any such
ownership interest. Because of SBS's ownership interest in Lampsi,
Lampsi is unable to satisfy the requirements of Greek law with
respect to licensing requirements. In response to these
developments, SBS intends to supplement its December 2004 EC
complaint to also include an objection to the January 2005 law on
the same grounds. Although Greek law is unclear, it appears that
the affected radio stations, including Lampsi, will be able to
continue their broadcasts until the Greek Ministry initiates a new
radio license tender process (expected to occur in the second half
of 2005), and provided they participate in the tender process,
until the award of the new licenses. Because the Greek government
is obliged to adhere to EU law, SBS believes that Lampsi should be
able to participate in the upcoming tender process. Sweden On
December 20, 2004, we increased our ownership in our Swedish Radio
operations from 51% to 59% through a cash capital contribution of
SEK 40 million (euro 4.4 million). Other On October 20, 2004, we
sold our investment in Telitas AS for a cash consideration of euro
2.8 million. We recorded an investment gain of euro 2.7 million on
this sale. In December 2004, we exercised 1.7 million warrants that
were exercisable into common shares of Lions Gate Entertainment
Corp. until December 31, 2004 at an exercise price of $5 per share.
In the three months and year ended December 31, 2004, we recorded
investment gains of euro 2.0 million and euro 7.0 million,
respectively, on these warrants and related exercise and sale of
the common shares. Financial Statements We prepare our financial
statements in euro and in accordance with accounting principles
generally accepted in the US ("US GAAP"). Our consolidated
financial statements for the three months and year ended December
31, 2003 were affected by the sale of our 30.4% equity interest in
TVN and TVN7 in Poland in December 2003; and by the acquisition of
the Print operations from Veronica Holding B.V. in September 2003,
the acquisition of Radio operations in Norway and Denmark in
September 2003, and the merger of our Swedish Radio operations with
Bonnier Radio AB in October 2003 (the "2003 Acquired Operations").
Our consolidated financial statements were also affected by the
launch of our first digital television stations under the brand,
The Voice TV, in Denmark, Norway, Sweden and Finland starting in
August 2004, and by the launch of Irisz in Hungary in September
2004 and VijfTV in Belgium in October 2004. The launch of the six
stations had a negative impact on operating income of euro 6.6
million for the year ended December 31, 2004. Our consolidated
broadcasting operations generate revenues primarily in Norwegian
kroner, Swedish kronor, Danish kroner, Hungarian forint and euro
and incur substantial operating expenses in these currencies. We
also incur significant operating expenses for programming in US
dollars. Balance sheet accounts are translated from foreign
currencies into euro at the period-end exchange rates and statement
of operations accounts are translated at the weighted average
exchange rates for the period. Any resulting balance sheet
translation adjustments are recorded as accumulated other
comprehensive income (loss) within shareholders' equity. Currency
translation adjustments relating to our transactions and those of
our subsidiaries in currencies other than the functional currency
of the entity involved are reflected in the results of operations.
In the discussions of the results for the three months and year
ended December 31, 2004 compared to the three months and year ended
December 31, 2003, we divide our operations into three segments:
"Television operations", which include: TVNorge (in Norway), Kanal
5 (in Sweden), TvDanmark and Kanal 5 (in Denmark) and jointly
referred to as "our Danish Television operations"; VT4 and, from
October 2004, VijfTV (in Flemish Belgium) and jointly referred to
as "our Belgian Television operations"; SBS6, NET5 and Veronica (in
The Netherlands) and jointly referred to as "our Dutch Television
operations"; TV2 and, from September 2004, Irisz (in Hungary) and
jointly referred to as "our Hungarian Television operations"; from
August 2004, The Voice TV (in Denmark, Norway, Sweden and Finland);
and other related operations that are not material. "Radio
operations", which include: The Voice, Pop FM and, from September
2003, Radio 2 and Nyhedsradioen 24/7 (in Denmark) and jointly
referred to as "our Danish Radio operations"; The Voice in
Stockholm, Radio City in Gothenburg and Malmoe, 106.7 Rockklassiker
and Studio 107.5 in Stockholm, and, from October 2003, Mix Megapol,
Vinyl and Lugna Melodier (in Sweden) and jointly referred to as
"our Swedish Radio operations"; from September 2003, Radio 1 and
The Voice (in Norway) and jointly referred to as "our Norwegian
Radio operations"; KISS FM, Radio City, Radio Sata, Radio Mega,
Radio 957, Radio Jyvaskyla and Iskelmaradio (in Finland) and
jointly referred to as "our Finnish Radio operations"; and Lampsi
(in Greece). "Print operations", which include the Veronica
Magazine and the Satellite Magazine in the Netherlands. We acquired
these magazines on September 1, 2003, and accordingly, the results
of operations have been reflected in our consolidated financial
statements since that date. Results from TVN and TVN7 in Poland
(through December 2, 2003), Prima TV in Romania, and ATV in Austria
(through December 4, 2003) are not included in the operations
referred to above, but are included in equity in income (loss) from
unconsolidated subsidiaries. These are subsidiaries in which we
hold an interest of less than half of the voting rights or are
otherwise unable to exercise control over the operations. When
analyzing results within the different categories of operations for
any particular period, the sums of the individual items reported
within each category may differ from the total reported for such
category. Differences are primarily attributable to corporate
charges, eliminations between categories and items attributable to
entities that are not separately disclosed but are included within
the totals for the different categories. Operating Expenses as a
Percentage of Net Revenue Three months ended Year ended December
31, December 31, 2003 2004 2003 2004 Net revenue 100.0% 100.0%
100.0% 100.0% Operating expenses: Station operating expenses 61.3%
58.5% 66.7% 63.6% Selling, general and administrative expenses
17.7% 16.9% 18.1% 18.8% Corporate expenses 2.4% 2.0% 2.6% 2.2%
Non-cash compensation 2.3% 0.2% 0.9% 0.4% Depreciation and
Amortization 4.2% 3.9% 4.3% 4.2% Three months ended December 31,
2004 compared to three months ended December 31, 2003 Net Revenue
Net revenue increased euro 15.3 million, or 8%, from euro 195.9
million for the three months ended December 31, 2003 to euro 211.2
million for the three months ended December 31, 2004. The net
revenues increased euro 12.1 million, or 7%, at our Television
operations, mainly due to increased net revenues of euro 3.6
million, or 20%, at our Belgian Television operations, mainly due
to the increased viewing shares at VT4 and the launch of VijfTV on
October 1, 2004. The net revenues increased euro 3.5 million, or
15%, at Kanal 5, and euro 2.9 million, or 11%, at our Hungarian
Television operations, mainly due to an increased television
advertising market. Each of our Danish Television operations and TV
Norge had increased net revenues of euro 1.3 million representing
12% and 8%, respectively. Such increases were partly offset by
decreased net revenues of euro 1.8 million, or 3%, at our Dutch
television operations, mainly due to a decrease in television
advertising market. Our Radio operations net revenues increased
euro 1.5 million, or 9%, mainly due to increased net revenues of
euro 1.7 million, or 72%, at our Norwegian Radio operations, euro
0.4 million, or 8%, at our Swedish operations and euro 0.3 million,
or 25%, at Lampsi. This increase was partly offset by decreased net
revenues at our Danish Radio operations of euro 0.9 million, or
21%, mainly due to a decrease in the Danish radio advertising
market and a decrease in cable fees of approximately euro 0.4
million. Our Print operations had increased net revenues of euro
1.7 million, or 11%, mainly due to increased subscription income
reflecting increased prices. Station Operating Expenses Station
operating expenses increased euro 3.5 million, or 3%, from euro
120.1 million for the three months ended December 31, 2003 to euro
123.6 million for the three months ended December 31, 2004, mainly
due to programming expenses at our newly launched television
stations. Excluding such expenses, our station operating expenses
decreased euro 1.4 million, or 1%. Station operating expenses
expressed as a percentage of net revenues were 61.3% and 58.5% for
the three months ended December 31, 2003 and 2004, respectively.
Our Television operations had increased station operating expenses
of euro 3.8 million, or 4%, for the three months ended December 31,
2004, compared to the three months ended December 31, 2003, mainly
due to programming expenses at our newly launched VijfTV, Irisz and
The Voice TV of euro 2.9 million, euro 1.0 million and euro 1.0
million, respectively. Our Radio operations had increased station
operating expenses of euro 0.5 million, or 7%, mainly due to
expenses at our Finnish and Norwegian Radio operations. Our Print
operations had decreased print and distribution expenses of euro
0.7 million, or 8%, mainly due to reduced printing expenses.
Selling, General and Administrative Expenses Selling, general and
administrative expenses increased euro 0.9 million, or 3%, from
euro 34.7 million for the three months ended December 31, 2003 to
euro 35.6 million for the three months ended December 31, 2004,
mainly due to expenses of euro 1.3 million at our newly launched
television stations. Excluding such expenses, our selling, general
and administrative expenses decreased euro 0.4 million, or 1%.
Selling, general and administrative expenses expressed as a
percentage of net revenues were 17.7% and 16.9% for the three
months ended December 31, 2003 and 2004, respectively. Corporate
Expenses Corporate expenses decreased euro 0.6 million, or 12%,
from euro 4.8 million for the three months ended December 31, 2003
to euro 4.2 million for the three months ended December 31, 2004,
mainly due to lower performance bonuses. Corporate expenses
expressed as a percentage of net revenues were 2.4% and 2.0% for
the three months ended December 31, 2003 and 2004, respectively.
Non-cash Compensation Non-cash compensation decreased euro 4.0
million from euro 4.4 million for the three months ended December
31, 2003 to euro 0.4 million for the three months ended December
31, 2004. The decrease was mainly due to the absence in 2004 of
stock options subject to variable accounting treatment. Non-cash
compensation expressed as a percentage of net revenues was 2.3% and
0.2% for the three months ended December 31, 2003 and 2004,
respectively. Depreciation and Amortization Expenses Depreciation
and amortization expenses decreased euro 0.1 million, or 1%, from
euro 8.2 million for the three months ended December 31, 2003 to
euro 8.1 million for the three months ended December 31, 2004,
mainly due to reduced depreciation of production equipment used for
local productions. Depreciation and amortization expenses expressed
as a percentage of net revenues were 4.2% and 3.9% for the three
months ended December 31, 2003 and 2004, respectively. Operating
Income Operating income increased euro 15.6 million, or 66%, from
euro 23.6 million for the three months ended December 31, 2003 to
euro 39.2 million for the three months ended December 31, 2004,
mainly due to an increase of euro 8.3 million at our Television
operations, and a decrease in non-cash compensation of euro 4.0
million. The increase at our Television operations was primarily
attributable to increased operating income at our Dutch Television
operations of euro 5.9 million, and at our Danish Television
operations of euro 2.4 million. Our Radio operations had a lower
operating loss of euro 0.3 million, or 47%, mainly due to decreased
operating losses of euro 0.9 million at our Swedish Radio
operations and improved operating income of euro 0.5 million at our
Norwegian Radio operations. Such decreases were partly offset by
increased operating losses at our Danish Radio operations of euro
0.8 million. Our Print operations had increased operating income of
euro 2.4 million, or 134%, mainly due to increased subscription
fees and lower printing cost. Equity in Income (Loss) from
Unconsolidated Subsidiaries Equity in income (loss) from
unconsolidated subsidiaries improved euro 3.5 million from a loss
of euro 3.0 million for the three months ended December 31, 2003 to
an income of euro 0.5 million for the three months ended December
31, 2004, mainly due to an impairment charge of euro 2.8 million
recorded in 2003 on our investment in TVN in Poland. Net Interest
Expense Net interest expense decreased euro 4.8 million, or 66%
from euro 7.2 million for the three months ended December 31, 2003
to euro 2.4 million for the three months ended December 31, 2004.
The decrease was primarily attributable to the absence in 2004 of a
euro 2.2 million non-cash loss on an interest rate swap related to
our 12% Senior Notes, the absence of interest expenses related to
the 7% Convertible Notes converted in December 2003, and lower
interest on our 12% Senior Notes reflecting the redemption of euro
31 million of the notes. Foreign Exchange Gains Foreign exchange
gains decreased euro 2.0 million from euro 3.6 million for the
three months ended December 31, 2003 to euro 1.6 million for the
three months ended December 31, 2004, primarily attributable to
lower currency gains in 2004 on our US dollar-denominated
liabilities. Investment Gain (Loss) We recorded an investment gain
of euro 4.8 million in the three months ended December 31, 2004,
mainly due to a gain of euro 2.7 million on the sale of our
investment in Telitas AS, and a euro 2.0 million gain on the 1.7
million warrants and related exercise and sale of common shares of
Lions Gate Entertainment Corp. in December 2004 at an exercise
price of $5 per share. In the three months ended December 31, 2003,
we recorded a euro 0.9 million reduction of the non-cash investment
gain recognized on the Veronica transaction completed on September
1, 2003 to properly reflect updated purchase price adjustments.
Loss on Extinguishment of Debt In the three months ended December
31, 2003, we recorded a loss of euro 0.2 million on the
extinguishment of $11.4 million face value of our 7% Convertible
Subordinated Notes. No debt was extinguished in the three months
ended December 31, 2004. Other Expenses, Net Other expenses, net,
decreased euro 0.2 million from euro 0.7 million for the three
months ended December 31, 2003 to euro 0.5 million for the three
months ended December 31, 2004. Income Taxes Income taxes decreased
euro 10.0 million from an expense of euro 9.4 million for the three
months ended December 31, 2003 to a tax benefit of euro 0.6 million
for the three months ended December 31, 2004, mainly due to a euro
6.9 million reduction of the valuation allowances for our deferred
tax assets and a tax benefit of euro 3.0 million from a decrease of
the corporate income tax rates applicable to our Dutch Television
operations. Net Income As a result of the foregoing, our net income
increased euro 35.0 million from euro 2.6 million for the three
months ended December 31, 2003 to euro 37.6 million for the three
months ended December 31, 2004. Without the non- recurring
investment gains and tax benefits recorded in the three months
ended December 31, 2004, the net income increased euro 20.4
million, from euro 2.6 million for the three months ended December
31, 2003 to euro 23.0 million for the three months ended December
31, 2004. Year ended December 31, 2004 compared to year ended
December 31, 2003 Net Revenue Net revenue increased euro 96.6
million, or 17%, from euro 581.7 million for the year ended
December 31, 2003 to euro 678.3 million for the year ended December
31, 2004. The increase in net revenues at our Television operations
was euro 42.1 million, or 8%, mainly due to increased net revenues
of euro 14.0 million, or 18%, at our Hungarian Television
operations due to an increased television advertising market. Our
Belgian Television operations had increased net revenues of euro
11.4 million, or 21%, and Kanal 5 had increased net revenues of
euro 5.3 million, or 6%, mainly due to increased viewing shares.
Our Dutch Television operations had increased net revenues of euro
4.3 million, or 2%, despite an unchanged television advertising
market. Our Danish Television operations had increased net revenues
of euro 4.1 million, or 10%, in line with the increase in the
television advertising market. Despite a weakening of the Norwegian
kroner against the euro, TVNorge had increased net revenues of euro
1.7 million, or 3%. In the local currency, net revenues increased
8%, mainly due to an increase in the television advertising market.
Our Radio operations net revenues increased euro 12.0 million, or
26%, mainly due to revenues at our 2003 Acquired Operations. Our
Print operations, acquired in September 2003, had net revenues of
euro 63.4 million for the year ended December 31, 2004, compared to
net revenues of euro 21.0 million for the four months ended
December 31, 2003. Station Operating Expenses Station operating
expenses increased euro 43.3 million, or 11%, from euro 388.2
million for the year ended December 31, 2003 to euro 431.5 million
for the year ended December 31, 2004, mainly due to expenses at our
2003 Acquired Operations and at our newly launched television
stations. Station operating expenses expressed as a percentage of
net revenues were 66.7% and 63.6% for the years ended December 31,
2003 and 2004, respectively. Station operating expenses at our
Television operations increased euro 13.4 million, or 4%, mainly
due to programming expenses at our newly launched VijfTV, Irisz and
The Voice TV of euro 2.9 million, euro 1.0 million and euro 2.0
million, respectively. Excluding the expenses at our newly launched
stations, the Television operations had increased station operating
expenses of euro 7.6 million, or 2%, mainly due to increased
programming expenses of euro 3.0 million, or 8%, at Kanal 5 and
euro 2.4 million, or 6%, at VT4. Our Radio operations had increased
station operating expenses of euro 7.5 million, or 40%, mainly due
to expenses at our 2003 Acquired Operations. Our Print operations
had print and distribution expenses of euro 35.0 million for the
year ended December 31, 2004, compared to euro 12.6 million for the
four months ended December 31, 2003. Selling, General and
Administrative Expenses Selling, general and administrative
expenses increased euro 21.8 million, or 21%, from euro 105.4
million for the year ended December 31, 2003 to euro 127.2 million
for the year ended December 31, 2004, primarily attributable to
expenses at our 2003 Acquired Operations and expenses at our
recently launched stations. Excluding such increases, the selling,
general and administrative expenses increased euro 4.7 million, or
4%. Selling, general and administrative expenses expressed as a
percentage of net revenues were 18.1% and 18.8% for the years ended
December 31, 2003 and 2004, respectively. As our Radio operations
typically have relatively higher selling, general and
administrative expenses compared to our Television and Print
operations, the increase in expenses expressed as a percentage of
net revenue reflects the higher proportion of expenses related to
our Radio operations due to the 2003 Acquired Operations. Corporate
Expenses Corporate expenses increased euro 0.2 million, or 1%, from
euro 15.1 million for the year ended December 31, 2003 to euro 15.3
million for the year ended December 31, 2004, mainly due to
expenses related to Sarbanes-Oxley compliance work. Such increases
were partly offset by lower performance bonuses. Corporate expenses
expressed as a percentage of net revenues were 2.6% and 2.2% for
the years ended December 31, 2003 and 2004, respectively. Non-cash
Compensation Non-cash compensation decreased euro 2.0 million from
euro 5.0 million for the year ended December 31, 2003 to euro 3.0
million for the year ended December 31, 2004. The decrease was
mainly due to the absence in 2004 of stock options subject to
variable accounting treatment. Non-cash compensation expressed as a
percentage of net revenues was 0.9% and 0.4% for the years ended
December 31, 2003 and 2004, respectively. Depreciation and
Amortization Expenses Depreciation and amortization expenses
increased euro 3.5 million, or 14%, from euro 24.9 million for the
year ended December 31, 2003 to euro 28.4 million for the year
ended December 31, 2004, mainly due to depreciation and
amortization at our 2003 Acquired Operations. Depreciation and
amortization expenses expressed as a percentage of net revenues
were 4.3% and 4.2% for the years ended December 31, 2003 and 2004,
respectively. Operating Income Operating income increased euro 29.7
million from euro 43.2 million for the year ended December 31, 2003
to euro 72.9 million for the year ended December 31, 2004,
primarily due to increased operating income of euro 26.2 million at
our Television operations. The increase in operating income at our
Television operations was primarily attributable to increased
operating income at our Hungarian Television operations of euro
11.2 million. The increase was also attributable to improved
performance at our Danish Television operations of euro 4.9
million, at our Dutch Television operations of euro 4.1 million and
at our Belgian Television operations of euro 4.0 million. Our Radio
operations had decreased operating income of euro 7.9 million,
mainly due to lower operating income of euro 5.9 million at our
Danish Radio operations due to a decrease in the Danish radio
advertising market and a decrease in cable fees of approximately
euro 1.5 million. Our Print operations had an operating income of
euro 12.1 million for the year ended December 31, 2004, compared to
operating income of euro 2.5 million for the four months ended
December 31, 2003. Equity in Loss from Unconsolidated Subsidiaries
Equity in loss from unconsolidated subsidiaries decreased euro 6.2
million from euro 7.3 million for the year ended December 31, 2003
to euro 1.1 million for the year ended December 31, 2004, mainly
due to a loss of euro 8.9 million recorded in 2003 on the sale of
our investment in TVN in Poland. Net Interest Expense Net interest
expense decreased euro 12.6 million, or 51%, from euro 24.6 million
for the year ended December 31, 2003 to euro 12.0 million for the
year ended December 31, 2004. The decrease was primarily
attributable to the absence in 2004 of interest expense on our 7%
Convertible Subordinated Notes which were repurchased and
extinguished in December 2003. This decrease was also due to the
absence in 2004 of a euro 2.2 million loss on an interest rate swap
related to our 12% Senior Notes. Foreign Exchange Gains Foreign
exchange gains decreased euro 8.4 million, from euro 12.2 million
for the year ended December 31, 2003 to euro 3.8 million for the
year ended December 31, 2004, primarily attributable to a lower
currency gain in 2004 on our US dollar-denominated liabilities.
Investment Gains (Losses) Investment gains decreased euro 19.3
million from euro 29.1 million for the year ended December 31, 2003
to euro 9.8 million for the year ended December 31, 2004, mainly
due to a non-cash investment gain recorded in 2003 on our share of
the transfer of 10% equity interest in our Dutch Television
operations as consideration for the Print operations. In the year
ended December 31, 2004, we recorded an investment gain of euro 7.0
million on the 1.7 million warrants and related exercise into
common shares of Lions Gate Entertainment Corp. and a euro 2.7
million gain on the sale of our investment in Telitas AS. Loss on
Extinguishment of Debt In the year ended December 31, 2003, we
recorded a loss of euro 0.1 million realized on the extinguishment
of $16.4 million face value of our 7% Convertible Subordinated
Notes, compared to a loss of euro 5.1 million recorded in the year
ended December 31, 2004 on the extinguishment of euro 31.0 million
of our 12% Senior Notes. Other Expenses, Net Other expenses, net,
decreased euro 0.4 million from euro 2.6 million for the year ended
December 31, 2003 to euro 2.2 million for the year ended December
31, 2004. Income Taxes Income taxes decreased euro 5.0 million from
euro 12.8 million for the year ended December 31, 2003 to euro 7.8
million for the year ended December 31, 2004, mainly due to a euro
6.9 million reduction of the valuation allowances for our deferred
tax assets and a tax benefit of euro 3.0 million from a decrease of
the corporate income tax rates applicable to our Dutch Television
operations. Net Income As a result of the foregoing, our net income
increased euro 19.5 million from euro 30.3 million for the year
ended December 31, 2003 to euro 49.8 million for the year ended
December 31, 2004. Without the non-cash investment gain on the
Veronica transaction recorded in 2003 and the non-recurring
investment gains and tax benefits recorded in 2004, the net income
increased euro 29.0 million from euro 1.1 million for the year
ended December 31, 2003 to euro 30.1 million for the year ended
December 31, 2004. Station Operating Cash Flow "Station operating
cash flow" is defined as operating income plus corporate expenses,
non-cash compensation, depreciation and amortization expenses. We
believe this key indicator commonly used as a measure of
performance for broadcast companies, is used by investors to
measure a Company's ability to service debt and other cash needs
and provides investors the opportunity to evaluate the Company's
performance as it is viewed by management. Station operating cash
flow is not meant to represent funds available for debt service,
dividends, reinvestment or other discretionary uses. Station
operating cash flow is not, and should not be used as, an indicator
of or an alternative to operating income, net income, or cash flow
from operations as reflected in our consolidated financial
statements and is not a measure of financial performance under US
GAAP. The following table reconciles operating income to station
operating cash flow: Three months ended Year ended December 31,
December 31, 2003 2004 2003 2004 Operating income euro 23,592 euro
39,182 euro 43,205 euro 72,926 Add: Corporate expenses 4,796 4,237
15,109 15,254 Non-cash compensation 4,459 441 4,966 2,995
Depreciation 4,381 3,602 15,120 12,976 Amortization 3,839 4,538
9,760 15,438 Station operating cash flow euro 41,067 euro 52,000
euro 88,160 euro 119,589 Station operating cash flow for the three
months ended December 31, 2004 increased euro 10.9 million, or 27%,
compared to the three months ended December 31, 2003. The
improvement was primarily attributable to increased income at our
Dutch and Danish Television operations of euro 4.8 million and euro
2.1 million, respectively. Our Radio operations had increased
station operating cash flow of euro 0.6 million, and our Print
operations had station operating cash flow of euro 2.8 million. For
the year ended December 31, 2004, station operating cash flow
increased euro 31.4 million, or 36%, compared to the year ended
December 31, 2003. The increase was primarily attributable to
improved performance at our Hungarian and Danish Television
operations of euro 11.3 million and 4.1 million, respectively. Our
Radio operations had decreased station operating cash flow of euro
4.7 million, and our Print operations had increased station
operating cash flow of euro 13.1 million. Disclosure required by
the Indenture for our 12% Senior Notes The following disclosure is
required by the indenture for our 12% Senior Notes, dated as of
September 14, 2001, and as amended July 13, 2001, between SBS
Broadcasting S.A. and The Bank of New York, as trustee (the
"Indenture"). Three months ended Year ended December 31, 2004
December 31, 2004 Restricted Group Adjusted EBITDA (1) (2) euro
44,276 euro 103,501 Unrestricted Group Adjusted EBITDA (1) (2)
3,487 834 Consolidated Adjusted EBITDA (1) (3) euro 47,763 euro
104,335 (1) Adjusted EBITDA represents operating income before
depreciation and amortization expenses and non-cash compensation.
Adjusted EBITDA is not a measurement of operating performance
calculated in accordance with US GAAP and should not be considered
a substitute for operating income (loss), net income (loss), cash
flows from operating activities or other income statement data as
determined in accordance with US GAAP, or as a measure of
profitability or liquidity, and Adjusted EBITDA does not
necessarily indicate whether cash flow will be sufficient or
available for cash requirements. Adjusted EBITDA may not be
indicative of our historical operating results nor is it meant to
be predictive of potential future results. Because not all
companies calculate Adjusted EBITDA identically, the presentation
of Adjusted EBITDA may not be comparable to similarly titled
measures of other companies. (2) Unrestricted Group Adjusted EBITDA
only includes the adjusted EBITDA of our Unrestricted Subsidiaries
(as defined in the Indenture). Restricted Group Adjusted EBITDA
only includes the adjusted EBITDA of our Restricted Subsidiaries
(as defined in the Indenture) that are consolidated and thus
excludes the unconsolidated subsidiary Ameron Srl. (Prima TV in
Romania). (3) The following table reconciles operating income to
Adjusted EBITDA: Three months ended Year ended December 31,
December 31, 2003 2004 2003 2004 Operating income euro 23,592 euro
39,182 euro 43,205 euro 72,926 Add: Non-cash compensation 4,459 441
4,966 2,995 Depreciation 4,381 3,602 15,120 12,976 Amortization
3,839 4,538 9,760 15,438 Consolidated Adjusted EBITDA euro 36,271
euro 47,763 euro 73,051 euro 104,335 Cash Flow Cash provided by
operations was euro 57.3 million for the year ended December 31,
2004, compared to euro 78.9 million for the year ended December 31,
2003. The decrease was partly due to a euro 27.5 million reduction
in cash from prepaid subscription fees within our Print operations,
and partly due to a euro 34.8 million decrease related to
prepayments for program rights, settlement of program right
payables and an increase of our program rights inventory. Such
decreases were partly offset by an improved station operating cash
flow of euro 30.4 million. Cash used in investing activities was
euro 74.3 million for the year ended December 31, 2004, compared to
cash provided by investing activities of euro 132.6 million for the
year ended December 31, 2003. The change was mainly due to the sale
in December 2003 of our investment in TVN in Poland, the
acquisition in 2004 of the 49.3% minority interest in TV Norge
(30.8 million), and the cash settlement of the consideration for
the acquisition of Radio 1 in Norway and Radio 2 in Denmark (18.6
million). Cash capital expenditure increased euro 12.5 million from
euro 18.3 million for the year ended December 31, 2003 to euro 30.9
million for the year ended December 31, 2004, mainly due to
relocation of offices in Denmark, Belgium and Norway and the launch
of The Voice TV. Cash used in financing activities was euro 31.3
million for the year ended December 31, 2004, compared to euro 23.6
million for the year ended December 31, 2003. The change mainly
reflects the acquisition and redemption of euro 31.0 million of our
12% Senior Notes in the year ended December 31, 2004 compared to
the acquisition and redemption of all of the 7% Convertible
Subordinated Notes in the year ended December 31, 2003. As a result
of the above, our cash and cash equivalents decreased euro 49.8
million from euro 245.8 million at December 31, 2003 to euro 196.0
million at December 31, 2004. Forward-Looking Statements Some of
the statements in this press release are forward-looking,
including, without limitation: the statement that our revenue
growth continues to outpace the market with increased viewing
shares in most of our markets as we develop new revenue streams by
leveraging our broadcasting assets; the statement that through the
launch of new digital channels across our footprint and the
acquisition of the C More Group we are strategically diversifying
our revenue streams through the addition of subscription services
utilizing our management and operating infrastructure; the
statement that as we integrate these new assets and implement our
business plan we will seek to continue to increase profitability;
the statement that the C More Group AB acquisition is expected to
close March 8, 2005; the statement that we are planning to finance
the remainder of the purchase price for the C More Group AB
acquisition from our cash balances; the statement that we intend to
repay amounts borrowed under the ABN Amro Bank N.V. bridge facility
through a syndicated bank loan or by issuing debt securities or
both; the statement that SBS intends to supplement its December
2004 EC complaint to also include an objection to the January 2005
law on the same grounds; the statement that although Greek law is
unclear, it appears that the affected radio stations, including
Lampsi, will be able to continue their broadcasts until the Greek
Ministry initiates a new radio license tender process (expected to
occur in the second half of 2005), and provided they participate in
the tender process, until the award of the new licenses; and the
statement that because the Greek government is obliged to adhere to
EU law, SBS believes that Lampsi should be able to participate in
the upcoming tender process. These forward-looking statements
include statements relating to our future performance, competition,
trends and anticipated developments in the television and radio
broadcasting industry. In addition, we may make forward-looking
statements in future filings with the Securities and Exchange
Commission, and in written material, press releases and oral
statements issued by us or on our behalf. Forward-looking
statements include statements regarding our intent, belief or
current expectations or those of our directors or officers
(including statements preceded by, followed by or that include
forward-looking terminology such as "may," "will," "should,"
"believes," "expects," "anticipates," "estimates," "continues" or
similar expressions or comparable terminology) with respect to
various matters. It is important to note that our actual results in
the future could differ materially from those anticipated in these
forward-looking statements depending on various important factors.
Some of these factors include: the effects of, and changes in,
regulation and government policy; the effects of changes in general
economic environment; the effects of changes in foreign exchange
rates; the effects of changes in the advertising spending growth;
the effects of competition; our ability to reduce costs; the timely
development and acceptance of our new channels, stations; the
effects of technological changes in broadcasting; our ability to
integrate recent acquisitions, and, our success at managing the
risks that arise from these factors. All forward-looking statements
in this press release are based on information available to us on
the date hereof. We do not undertake to update any forward-looking
statements that may be made by us or on our behalf, in this press
release or otherwise. Teleconference We will host a teleconference
to discuss our fourth quarter and full year results on Tuesday,
March 8, 2005 at 10:00 a.m. New York Time, which is 4:00 p.m.
Luxembourg Time. To access the teleconference, please dial
+1-973-321-1100 ten minutes prior to the start time. The
teleconference will also be available via live web-cast on our
website, located at http://www.sbsbroadcasting.com/. If you cannot
listen to the teleconference at its scheduled time, there will be a
replay available through March 15, 2005 that can be accessed by
dialing +1-877-519-4471 (U.S. callers) or +1-973-341-3080
(International callers), passcode 5578331. The web-cast will be
archived on our website for two weeks. SBS is a European commercial
television and radio broadcasting company with operations in
Western and Central Europe. Countries where SBS currently has
broadcasting assets include: Belgium (Flanders), Denmark, Finland,
Greece, Hungary, The Netherlands, Norway, Romania and Sweden. In
addition, SBS has publishing operations in The Netherlands. For
further information visit: http://www.sbsbroadcasting.com/, or
contact: Investors: Press: Jonathan Lesko/Michael Smargiassi Jeff
Pryor Brainerd Communicators, Inc. Pryor Associates Tel: +1 212 986
6667 Tel: +1 818 338 3555 Catriona Cockburn Citigate Dewe Rogerson
Tel: +011 44 207 282 2924 SBS BROADCASTING SA CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands of euro, except
per share data) Three months ended Year ended December 31, December
31, 2003 2004 2003 2004 Net revenue euro 195,881 euro 211,227 euro
581,691 euro 678,277 Operating expenses: Station operating expenses
(exclusive of items shown separately below) 120,103 123,575 388,176
431,462 Selling, general and administrative expenses 34,711 35,652
105,355 127,226 Corporate expenses 4,796 4,237 15,109 15,254
Non-cash compensation 4,459 441 4,966 2,995 Depreciation 4,381
3,602 15,120 12,976 Amortization 3,839 4,538 9,760 15,438 Total
operating expenses 172,289 172,045 538,486 605,351 Operating income
23,592 39,182 43,205 72,926 Equity in income (loss) from
unconsolidated subsidiaries (2,953) 512 (7,273) (1,104) Interest
income 797 1,196 1,669 4,117 Interest expense (8,002) (3,621)
(26,288) (16,123) Foreign exchange gain 3,624 1,567 12,167 3,805
Investment gain (loss) (940) 4,795 29,121 9,806 Loss on
extinguishments of debt (249) -- (140) (5,124) Other expense, net
(723) (459) (2,605) (2,239) Income before income taxes and minority
interest 15,146 43,172 49,856 66,064 Income tax (expense)/ benefit
(9,429) 634 (12,750) (7,847) Income before minority interest 5,717
43,806 37,106 58,217 Minority interest in income, net (3,080)
(6,240) (6,836) (8,433) Net income euro 2,637 euro 37,566 euro
30,270 euro 49,784 Net income per common share - basic euro 0.09
euro 1.19 euro 1.05 euro 1.59 Net income per common share - diluted
euro 0.09 euro 1.11 euro 1.04 euro 1.49 Weighted average common
shares - basic 29,158 31,542 28,754 31,268 Weighted average common
shares - diluted 30,752 33,809 29,172 33,337 SBS BROADCASTING SA
CONSOLIDATED BALANCE SHEETS (in thousands of euro, except share
data) December 31, December 31, ASSETS 2003 2004 Current assets:
(unaudited) Cash and cash equivalents euro 245,836 euro 196,033
Short-term investments 528 354 Accounts receivable trade, net of
allowance for doubtful accounts of euro 4,294 (euro 4,990 in 2003)
95,533 88,398 Accounts receivable, affiliates 1,404 1,475
Restricted cash and cash in escrow 1,853 2,451 Program rights
inventory, current 102,880 117,544 Deferred tax assets, current --
4,615 Other current assets 18,149 23,702 Total current assets
466,183 434,572 Buildings, improvements, technical and other
equipment, net of accumulated depreciation 35,581 41,256 Goodwill
149,480 159,603 Other intangible assets, net of accumulated
amortization 73,517 85,671 Program rights inventory, non-current
65,079 62,928 Deferred financing cost, net of accumulated
amortization 4,447 2,600 Investments in and advances to
unconsolidated subsidiaries 3,791 5,972 Deferred tax assets,
non-current -- 3,989 Other assets 1,200 388 Total assets euro
799,278 euro 796,979 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Accounts payable euro 34,537 euro 33,698 Accrued
expenses 65,459 66,702 Program rights payable, current 58,921
46,674 Income taxes payable 4,378 3,763 Current portion of
long-term debt 3,328 2,550 Deferred income, current 41,862 40,785
Other current liabilities 20,031 19,780 Total current liabilities
228,516 213,952 Program rights payable, non-current 31,190 22,651
12% senior notes due 2008 134,700 103,655 Other long-term debt
8,909 6,784 Deferred tax, non-current 27,440 38,612 Other
non-current liabilities 29,405 7,588 Minority interest 61,051
58,791 Shareholders' equity: Common Shares (authorized 75,000,000
issued 31,780,895 (31,016,834 in 2003) at par value euro 2.00)
62,034 63,562 Additional paid-in capital 669,835 683,678
Accumulated deficit (444,749) (394,965) Unearned compensation
(1,499) (1,376) Treasury shares (997 common shares in 2003) (28) --
Accumulated other comprehensive loss) (7,526) (5,953) Total
shareholders' equity 278,067 344,946 Total liabilities and
shareholders' equity euro 799,278 euro 796,979 SBS BROADCASTING SA
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of euro) Year
ended December 31, 2003 2004 Cash flows from operating activities:
(unaudited) Net income euro 30,270 euro 49,784 Adjustments to
reconcile net income to net cash provided by operating activities:
Revenue recorded in exchange for equity investments (4,128) (1,286)
Non-cash compensation 4,966 2,995 Depreciation and amortization
24,880 28,414 Equity in loss from unconsolidated subsidiaries 7,273
1,104 Non-cash interest expense 3,677 912 Foreign exchange gain on
long-term debt (8,274) (134) Investment gain, net (28,835) (9,806)
Loss on extinguishments of debt 140 5,124 Deferred tax expense, net
8,124 1,280 Minority interest in income 6,836 8,434 Changes in
operating assets and liabilities, net of amounts acquired: Accounts
receivable (12,504) 8,304 Accounts receivable, affiliates (98)
(520) Program rights inventory, net 2,825 (31,991) Other current
assets (958) (2,095) Other non-current assets 962 852 Accounts
payable and accrued expenses 20,109 (3,412) Deferred income 25,539
529 Other liabilities (1,924) (1,163) Cash provided by operating
activities 78,880 57,325 Cash flows from investing activities:
Proceeds from sale of short-term investments -- 9,720 Cash capital
expenditure (18,346) (30,875) Net proceeds from sales of equity
interests 143,411 -- Payment for purchase of acquired business, net
of cash acquired 7,576 (53,102) Cash provided by (used in)
investing activities 132,641 (74,257) Cash flows from financing
activities: Net change in short-term borrowings (1,278) -- Proceeds
from issuance of common shares 9,544 12,532 Net change in
restricted cash and cash in escrow (181) (557) Payment of long-term
debt (31,562) (43,255) Payment of capital lease obligation (112) --
Cash used in financing activities (23,589) (31,280) Effect of
exchange rate changes on cash and cash equivalents (9,136) (1,591)
Net change in cash and cash equivalents 178,796 (49,803) Cash and
cash equivalents, beginning of period 67,040 245,836 Cash and cash
equivalents, end of period euro 245,836 euro 196,033 SBS
BROADCASTING SA OPERATING RESULTS BY SEGMENT (UNAUDITED) (in
thousands of euro) Three months ended Year ended December 31,
December 31, Television operations 2003 2004 2003 2004 Net revenue:
TV Norge (in Norway) euro 16,407 euro 17,677 euro 52,549 euro
54,230 Kanal 5 (in Sweden) 24,077 27,603 83,030 88,379 TV Danmark
and Kanal 5 (in Denmark) 11,219 12,553 40,138 44,242 VT4 and VijfTV
(in Belgium) 18,120 21,759 53,461 64,867 SBS6, NET5 and Veronica
(in the Netherlands) 66,945 65,173 201,310 205,631 TV2 and Irisz
(in Hungary) 25,771 28,675 78,623 92,588 Other 1,344 2,553 4,988
6,266 Total net revenue 163,883 175,993 514,099 556,203 Station
operating expenses (exclusive of items shown separately below)
103,553 107,340 356,828 370,196 Selling, general and administrative
expenses 22,948 23,704 79,032 84,773 Depreciation and amortization
5,705 4,923 20,123 16,899 Total operating expenses 132,206 135,967
455,983 471,868 Income from operations euro 31,677 euro 40,026 euro
58,116 euro 84,335 Radio operations Net revenue: Denmark euro 4,294
euro 3,378 euro 14,681 euro 11,343 Sweden 4,617 4,985 10,730 17,284
Norway 2,349 4,053 3,170 10,890 Finland 3,707 3,704 14,329 14,513
Greece 1,096 1,370 3,712 4,526 Other -- 83 -- 108 Total net revenue
16,063 17,573 46,622 58,664 Station operating expenses (exclusive
of items shown separately below) 6,784 7,278 18,727 26,299 Selling,
general and administrative expenses 8,010 8,417 21,170 30,319
Depreciation and amortization 1,873 2,198 4,075 7,294 Total
operating expenses 16,667 17,893 43,972 63,912 Income (loss) from
operations euro (604) euro (320) euro 2,650 euro (5,248) Print
operations Net revenue euro 15,935 euro 17,661 euro 20,970 euro
63,410 Station operating expenses (exclusive of items shown
separately below) 9,766 8,957 12,621 34,967 Selling, general and
administrative expenses 3,753 3,531 5,153 12,134 Depreciation and
amortization 642 1,019 682 4,221 Total operating expenses 14,161
13,507 18,456 51,322 Income from operations euro 1,774 euro 4,154
euro 2,514 euro 12,088 Consolidated Net revenue: euro 195,881 euro
211,227 euro 581,691 euro 678,277 Income from operating segments
32,847 43,860 63,280 91,175 Corporate expenses (4,796) (4,237)
(15,109) (15,254) Non-cash compensation (4,459) (441) (4,966)
(2,995) Operating income euro 23,592 euro 39,182 euro 43,205 euro
72,926 DATASOURCE: SBS Broadcasting SA CONTACT: Investors, Jonathan
Lesko or Michael Smargiassi, both of Brainerd Communicators, Inc.,
+1-212-986-6667; or Press, Jeff Pryor of Pryor Associates,
+1-818-338-3555; or Catriona Cockburn of Citigate Dewe Rogerson,
+44-207-282-2924, all for SBS Broadcasting SA Web site:
http://www.sbsbroadcasting.com/
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