SBS Broadcasting SA Reports First Quarter 2005 Results - Net
Revenue up by 24% LUXEMBOURG, May 23 /PRNewswire-FirstCall/ -- SBS
Broadcasting SA (Nasdaq: SBTV; Euronext Amsterdam N.V.: SBS) today
reported financial results for the three months ended March 31,
2005. Results, which are attached, are in thousands of euro (except
share and 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 March 31, 2004 2005 % change
(unaudited) (unaudited) Net revenue(1) euro 140,674 euro 175,067
24% Adjusted EBITDA(1)(2) 4,613 8,144 77% Operating income
(loss)(1) (2,522) 188 - Net loss (3,906) (3,091) 21% Net loss per
common share euro (0.13) euro (0.10) 23% Weighted average common
shares (000) 31,075 31,963 Cash provided by (used in) operating
activities (11,411) 11,712 Adjusted EBITDA margin(3) 3.3% 4.7% 42%
(1) Excluding the impact of our newly acquired businesses, C More,
Prima TV and the Romanian Radio stations, and the recently launched
television stations, The Voice TV, VijfTV and Irisz, net revenue
increased euro 18,133, or 13%, adjusted EBITDA increased euro
5,592, or 121%, and operating income (loss) improved euro 5,027.
(2) Adjusted EBITDA is defined as operating income (loss) plus
non-cash compensation, depreciation and amortization expenses (see
page 9). (3) Adjusted EBITDA margin is adjusted EBITDA expressed as
a percentage of net revenue. Commenting on the results, Markus
Tellenbach, Chief Executive Officer of SBS, said: "In the first
quarter we continued to improve our operating performance and our
revenue growth outpaced the market in most of our territories. We
also continued to invest in popular programming, start-up
operations and complementary activities. Through the successful
launch of new digital channels and the acquisition of the C More
Group we are rapidly expanding and diversifying our revenue
streams. Moreover, we are executing this growth strategy in a
manner that enables us to continue to expand our cash generating
ability. "With the successful conclusion of our recent euro 325
million bank refinancing, we have repaid our C More acquisition
debt and defeased and called for redemption our 12% Senior Notes.
We will benefit from the significant reduction in interest rates
compared to our 12% Senior Notes, that was achieved based on our
strengthened balance sheet and improving cash flows. As we are not
heavily leveraged based on our cash flows and total net debt, we
are in a strong position to capitalize on the rapidly developing
digital content market while continuing to seek prudent expansion
opportunities to drive growth." Recent Developments 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
for euro 7,800 from Romanian Investment and Development srl. 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
22,500 on a debt-free basis. Premium Pay On March 8, 2005, we
acquired all of the shares of C More Group AB for euro 269,600 in
cash. The acquired net assets of C More included approximately euro
20,000 in cash at December 31, 2004. The sellers were 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 a 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 1,657,000 (euro 181,000) from channel subscriptions
and other sources. C More has had positive net income for the last
three years and has no debt. Financing On March 7, 2005, we entered
into a euro 300,000 unsecured bridge facility agreement with ABN
AMRO Bank N.V. ("ABN AMRO") and then drew down euro 210,000 in
order to finance in part our acquisition of C More. We financed the
remainder of the purchase price from the Company's cash balances.
Amounts outstanding under the bridge facility bore interest at a
rate of EURIBOR plus 0.7% per annum. The bridge facility had a term
of six-months. On May 12, 2005, we entered into a euro 325,000
secured syndicated multicurrency revolving credit facility (the
"Facility") with ABN AMRO, Citigroup Global Markets Limited,
Deutsche Bank AG London and The Royal Bank of Scotland plc, as lead
arrangers. In connection with the Facility, we called for
redemption all of our 12% Senior Notes due 2008 (the "Senior
Notes"), which had an outstanding principal amount of euro 103,655.
Holders of the Senior Notes will receive a redemption price of 106%
of the principal amount of the Senior Notes plus accrued and unpaid
interest on the Senior Notes on the redemption date, which will be
June 15, 2005. We deposited with the trustee for the Senior Notes
cash sufficient to fund the redemption and thereby defeased the
covenants contained in the indenture for the Senior Notes until
their redemption. We funded the defeasance and redemption of the
Senior Notes with funds drawn under the Facility and we utilized
the remaining amounts under the Facility and a portion of our cash
reserves to fully repay euro 210,000 and accrued interest due under
the euro 300,000 bridge facility with ABN AMRO. The Facility is a
fully revolving facility with a term of five years, although we
have the right during the first twelve months to request a one-
year extension. Amounts borrowed under the Facility bear interest
at a rate of EURIBOR plus a margin based on our senior net debt
leverage ratio. The initial margin is 0.75%. To provide security,
the Company and certain of its subsidiaries have pledged shares of
certain wholly owned group companies in Belgium, The Netherlands,
Norway, Sweden and the United Kingdom. Certain wholly owned
subsidiaries in these jurisdictions also guarantee the Facility.
Financial Statements We prepare our financial statements in euro
and in accordance with accounting principles generally accepted in
the United States ("U.S. GAAP"). Our consolidated broadcasting
operations generate revenues primarily in euro, Hungarian forint,
Swedish kronor, Norwegian kroner and Danish kroner and incur
substantial operating expenses in these currencies. We also incur
significant operating expenses for programming in U.S. 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
transactions in currencies other than the functional currency of
the entity involved are reflected in the results of operations as
foreign exchange gain (loss). In the discussions of the results for
the three months ended March 31, 2005 compared to the three months
ended March 31, 2004, we divide our operations into four segments:
(1) "Television operations", which include: * SBS6, NET5 and
Veronica (in The Netherlands) and jointly referred to as "our Dutch
Television operations"; * TV2 and, since September 2004, Irisz (in
Hungary) and jointly referred to as "our Hungarian Television
operations"; * Kanal 5 (in Sweden); * VT4 and, since October 2004,
VijfTV (in Flemish Belgium) and jointly referred to as "our Belgian
Television operations"; * TVNorge (in Norway); * TvDanmark and
Kanal 5 (in Denmark) and jointly referred to as "our Danish
Television operations"; * since March 1, 2005, Prima TV (in
Romania); * since August 2004, The Voice TV (in Denmark, Norway,
Sweden and Finland); and * other related operations that are not
material. (2) "Premium pay operations", which include C More Group
AB in Sweden, Norway, Finland and Denmark. We acquired C More on
March 8, 2005 and, accordingly, the results of operations have been
reflected in our consolidated financial statements since that date.
(3) "Radio operations", which include: * Mix Megapol, The Voice,
Radio City, 106.7 Rockklassiker, Studio 107.5, Vinyl and Lugna
Melodier (in Sweden) and jointly referred to as "our Swedish 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"; * The Voice and
Radio 2 (in Denmark) and jointly referred to as "our Danish Radio
operations"; * Radio 1 and The Voice (in Norway) and jointly
referred to as "our Norwegian Radio operations"; * Since March 1,
2005, KISS FM and Radio STAR (in Romania) and jointly referred to
as "our Romanian Radio operations"; and Lampsi (in Greece). (4)
"Print operations", which include the Veronica Magazine and the
Satellite Magazine in The Netherlands. Results from Prima TV in
Romania, through February 28, 2005, are not included in the
operations referred to above, but are included in equity in income
(loss) from unconsolidated subsidiaries. From July 2001 until
February 28, 2005, we held a minority interest in the station and
were unable to exercise control over the operations. Since March 1,
2005, we have consolidated Prima TV's operations to reflect our 86%
controlling interest. 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. The consolidated statements of operations and balance
sheet have been prepared on the basis of a preliminary purchase
price allocation of the acquisitions completed during the first
quarter of 2005. We expect the final purchase price allocation to
be completed during the second quarter. Operating Expenses as a
Percentage of Revenue We monitor our operating expenses as a
percentage of our net revenue as part of our cost management
efforts. We rely on this measurement, in particular, to help plan
and implement the expansion of our existing businesses and the
development of new revenue streams. The following table shows our
operating expenses as a percentage of net revenues for the periods
indicated. Three months ended March 31, 2004 2005 Net revenue
100.0% 100.0% Operating expenses: Station operating expenses 74.0%
70.1% Selling, general and administrative expenses 20.3% 22.7%
Corporate expenses 2.4% 2.5% Adjusted EBITDA margin 3.3% 4.7%
Non-cash compensation 0.6% 0.2% Depreciation and amortization 4.5%
4.3% Operating income (loss) margin (1.8%) 0.2% Three months ended
March 31, 2005 compared to three months ended March 31, 2004 Net
Revenue Net revenue increased euro 34,393, or 24%, from euro
140,674 in 2004 to euro 175,067 in 2005. Our newly acquired
businesses, C More, Prima TV and the Romanian Radio stations, and
the recently launched television stations, The Voice TV, VijfTV and
Irisz, had combined net revenue of euro 16,260. Excluding our new
businesses, our net revenue increased euro 18,133, or 13%. The net
revenue increased euro 18,857, or 16%, at our Television operations
mainly due to increased net revenue of euro 3,697, or 22%, at our
Hungarian Television operations, due to an increased television
advertising market and increased viewing shares mainly driven by
the introduction of a new daily soap on TV2. TVNorge and Kanal 5
had increased revenue of euro 3,430, or 30%, and euro 3,421, or
17%, respectively, mainly due to increased viewing shares driven by
new programming investments such as the Royal League (Scandinavian
football) and a co-produced version of Big Brother. Our Dutch
Television operations had increased net revenue of euro 2,178, or
5%, mainly due to an increase in the television advertising market.
Our Danish Television operations had an increase in net revenue of
euro 1,678, or 17%, mainly due to increased viewing shares at Kanal
5 (Denmark) driven by the broadcast of the Royal League and other
sports programs. Our Belgian Television operations had increased
net revenue of euro 1,507, or 11%, approximately half of which came
from newly launched VijfTV. The increase in net revenue at VT4 was
6%, mainly due to an increase in viewer-interactive TV programming
revenues, which are generated when viewers pay premium telephone
rates to interact with programs. Our Radio operations net revenue
increased euro 1,219, or 10%, mainly due to net revenue of euro 549
at the newly acquired Romanian Radio operations, which we have
consolidated from March 1, 2005. Excluding such revenue, net
revenue increased euro 670, or 6%, mainly due to increased net
revenue at our Norwegian Radio operations, arising from sales
agreements with other radio stations. Our Print operations had
increased net revenues of euro 1,146, or 8%, mainly due to
increased subscription income coming from a combination of an
increase in subscribers and an increase in magazine prices. Station
Operating Expenses Station operating expenses increased euro
18,657, or 18%, from euro 104,135 in 2004 to euro 122,792 in 2005.
Our newly acquired businesses, C More, Prima TV and the Romanian
Radio stations, and the recently launched television stations, The
Voice TV, VijfTV and Irisz, had station operating expenses of euro
11,797. Excluding such expenses, our station operating expenses
increased euro 6,860, or 7%. Station operating expenses expressed
as a percentage of net revenues were 74.0% and 70.1% in 2004 and
2005, respectively. The station operating expenses increased euro
12,598, or 14%, at our Television operations, mainly due to
programming expenses of euro 4,853 at our recently launched
television stations and Prima TV. Excluding such expenses, our
station operating expenses increased euro 7,745, or 9%, mainly due
to our programming investments in Royal League, the new daily soap
at TV2 and a co- produced Big Brother show in Norway and Sweden.
Our Dutch Television operations and VT4 had decreased station
operating expenses of euro 871 and euro 126, respectively. Our
Radio operations had decreased station operating expenses of euro
299, or 5%, mainly due to cost savings of euro 716 at our Danish
Radio operations as a result of the closing of our news station and
POP FM. Such savings were partly offset by station operating
expenses of euro 134 at the newly acquired Romanian Radio
operations. Our Print operations had decreased expenses of euro
452, or 5%, mainly due to reduced printing cost. Selling, General
and Administrative Expenses Selling, general and administrative
expenses increased euro 11,320, or 40%, from euro 28,489 in 2004 to
euro 39,809 in 2005. Our newly acquired businesses, C More, Prima
TV and the Romanian Radio stations, and the recently launched
television stations, The Voice TV, VijfTV and Irisz, had selling,
general and administrative expenses of euro 6,524. Excluding such
expenses, our selling, general and administrative operating
expenses increased euro 4,796, or 17%. Selling, general and
administrative expenses expressed as a percentage of net revenues
were 20.3% and 22.7% in 2004 and 2005, respectively. Our Television
operations had increased selling, general and administrative
expenses of euro 4,321, or 22%, mainly due to increased marketing
expenses at Kanal 5, TVNorge and TV2 related to the promotion of
new programming initiatives. Our Radio operations had increased
selling, general and administrative expenses of euro 120, or 2%,
due to expenses of euro 157 at the newly acquired Romanian Radio
operations. Excluding such expenses selling, general and
administrative expenses decreased by euro 37. Our Print operations
had increased selling, general and administrative expenses of euro
1,106, or 48%, mainly due to increased promotion activities to
increase the number of subscribers. Corporate Expenses Corporate
expenses increased euro 885 from euro 3,437 in 2004 to euro 4,322
in 2005, mainly due to an increase in headcount and expenses
related to Sarbanes-Oxley compliance work. Corporate expenses
expressed as a percentage of net revenues were 2.4% and 2.5% in
2004 and 2005, respectively. Non-cash Compensation In 2004 we
recorded non-cash compensation of euro 794, mainly related to the
impact of our increasing share price on options to purchase 466,667
shares of common stock previously granted to certain of our
employees. These options are subject to variable accounting
treatment, unlike the rest of our share incentives. In 2005 we
recorded non-cash compensation of euro 345, mainly related to
options to purchase 66,667 of the options to purchase shares of
common stock still subject to variable accounting treatment.
Non-cash compensation expressed as a percentage of net revenues was
0.6% and 0.2% in 2004 and 2005, respectively. Depreciation and
Amortization Expenses Depreciation and amortization expenses
increased euro 1,270, or 20%, from euro 6,341 in 2004 to euro 7,611
in 2005, mainly due to increased amortization expenses associated
with our broadcasting licenses in Hungary and Radio Sweden.
Amortization also increased due to amortization of intangible
assets recorded on the acquisition of 49% of TVNorge in 2004.
Depreciation and amortization expenses expressed as a percentage of
net revenues were 4.5% and 4.3% in 2004 and 2005, respectively.
Operating Income (Loss) Operating income (loss) improved euro 2,710
from a loss of euro 2,522 in 2004 to an income of euro 188 in 2005.
Despite operating losses of euro 2,921 at our recently launched
television stations, The Voice TV, VijfTV and Irisz, our Television
operations improved operating income by euro 1,027 from euro 2,364
in 2004 to euro 3,391 in 2005. The increase was mainly due to
increased operating income of euro 2,353 at our Dutch Television
operations driven by the growth in the Dutch television advertising
market. Our Premium pay operations, which were consolidated from
March 8, 2005, had operating income of euro 494. Our Radio
operations reduced operating losses by euro 1,096 from euro 3,223
in 2004 to euro 2,127 in 2005, mainly due to reduced losses of euro
675 at our Danish Radio operations. Our Print operations increased
operating income by euro 529 from euro 2,568 in 2004 to euro 3,097
in 2005. Equity in Income (Loss) from Unconsolidated Subsidiaries
Equity in loss from unconsolidated subsidiaries increased euro 21,
from euro 576 in 2004 to euro 597 in 2005. The majority of these
losses relates to our investment in Prima TV, which has been
consolidated since March 1, 2005. Net Interest Expense Net interest
expense increased euro 1,264, or 67%, from euro 1,897 in 2004 to
euro 3,161 in 2005. The increase was mainly due to the absence of a
euro 1,681 non- cash gain in 2004 on an interest rate swap related
to our 12% Senior Notes. Foreign Exchange Gain Foreign exchange
gain decreased euro 461, from euro 775 in 2004 to euro 314 in 2005.
The foreign exchange gain in both years relates mainly to our U.S.
dollar- denominated program liabilities. Investment Gain In 2005 we
recorded a gain of euro 61 on the sale of our equity interest in
QXL.com. We recorded no investment gains in 2004. Other Expenses,
Net Other expenses, net, increased euro 604, from euro 547 in 2004
to euro 1,151 in 2005, mainly due to written-off project costs in
2005. Income Taxes In 2005 we recorded an income tax benefit of
euro 1,155 corresponding to a 27% effective tax rate applied to our
pre-tax loss. In 2004 we recorded an income tax expense of euro
251, mainly related to pre-tax income in VT4 and Lampsi. Net Loss
As a result of the foregoing, our net loss decreased euro 815, from
a loss of euro 3,906 in 2004 to a loss of euro 3,091 in 2005.
Adjusted EBITDA We use the key indicator of operating income before
depreciation, amortization and non-cash compensation ("adjusted
EBITDA"), along with adjusted EBITDA margin, primarily to evaluate
the group's and our individual subsidiaries' operating performance,
and for planning and forecasting future business operations. These
key indicators provide investors the opportunity to evaluate the
group's performance as it is viewed by management. Although other
companies in the broadcast industry may present other financial
measures, we believe that adjusted EBITDA and adjusted EBITDA
margin provide some comparability in analyzing the operating
performance of companies in our industry. Adjusted EBITDA and
adjusted EBITDA margin exclude depreciation and amortization
expenses in order to eliminate the impact of generally long-term
capital investments that cannot be significantly influenced by our
management on a short-term basis. The measures also exclude
non-cash compensation because it does not reflect the operating
results that we achieve from servicing our customers. There are
material limitations to using measures such as adjusted EBITDA and
adjusted EBITDA margin, including the aforementioned difficulties
associated with comparing these performance measures as we
calculate them to similar performance measures presented by other
companies, and the fact that these performance measures do not take
into account significant items, such as depreciation and
amortization. Adjusted EBITDA should be considered in addition to,
but not as a substitute for, other measures of financial
performance reported in accordance with U.S. GAAP, such as
operating income and net income. Management believes that when used
in this fashion adjusted EBITDA and adjusted EBITDA margin can be
useful tools despite their limitations. We provide below, on a
consolidated basis, a reconciliation of the non-GAAP term adjusted
EBITDA to operating income (loss), which is the most directly
comparable U.S. GAAP financial measure, for the three months ended
March 31, 2004 and 2005. Three months ended March 31, 2004 2005
Operating income (loss) euro (2,522) euro 188 Add: Non-cash
compensation 794 345 Depreciation 3,133 3,566 Amortization 3,208
4,045 Adjusted EBITDA euro 4,613 euro 8,144 Adjusted EBITDA
increased euro 3,531, or 77%, from euro 4,613 euro 8, in 2005. The
following table shows the changes in the adjusted EBITDA by
segment: Three months ended March 31, 2004 2005 Television
operations euro 6,238 euro 8,176 Premium pay operations -- 588
Radio operations (1,784) (386) Print operations 3,596 4,088 Cash
corporate expenses (3,437) (4,322) Adjusted EBITDA euro 4,613 euro
8,144 Despite losses of euro 2,778 at our recently launched
television stations, The Voice TV, VijfTV and Irisz, our Television
operations improved adjusted EBITDA by euro 1,938 to euro 8,176.
The improvement was mainly due to improved results from our Dutch
Television operations. Our Premium pay operations, which were
consolidated from March 8, 2005, generated adjusted EBITDA of euro
588. Our Radio operations improved adjusted EBITDA by euro 1,398,
mainly due to decreasing losses in our Danish and Norwegian Radio
operations. Our Print operations improved adjusted EBITDA by euro
492 to euro 4,088. Cash Flow Cash provided by operations was euro
11,712 in 2005, compared to cash used in operations of euro 11,411
in 2004. The improvement, euro 23,123, was primarily due to timing
differences related to programming payments. Cash used in investing
activities was euro 296,536 in 2005, compared to euro 2,645 in
2004. The increase was mainly due to our investments in C More,
Prima TV and the Romanian radio operations. Cash provided by
financing activities was euro 219,686 in 2005, compared to euro
1,814 in 2004. The change mainly reflects the euro 210,000 drawn on
the bridge facility to fund the C More acquisition and the proceeds
of euro 8,811 from stock options exercised in 2005. Forward-Looking
Statements Some of the statements in this press release are
forward-looking, including, without limitation: the statement that
our revenue growth outpaced the market in most of our territories;
the statement that through the successful launch of new digital
channels and the acquisition of the C More Group we are rapidly
expanding and diversifying our revenue streams; the statement that
we are executing this growth strategy in a manner that enables us
to continue to expand our cash generating ability; the statement
that the Company will benefit from the significant reduction in
interest rates compared to our 12% Senior Notes that was achieved
based on our strengthened balance sheet and improving cash flows;
the statement that as we are not heavily leveraged based on our
cash flows and total net debt, we are in a strong position to
capitalize on the rapidly developing digital content market while
continuing to seek prudent expansion opportunities to drive growth;
and the statement that holders of the Senior Notes will receive a
redemption price of 106% of the principal amount of the Senior
Notes plus accrued and unpaid interest on the Senior Notes on the
redemption date, which will be June 15, 2005. These forward-looking
statements include statements relating to our future performance,
competition, trends and anticipated developments in the television
and radio broadcasting, and publishing 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 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 the advertising and
subscription spending growth; the effects of competition; our
ability to reduce costs; the timely development and acceptance of
our new channels, stations and/or services; the effects of
technological changes in broadcasting technology; 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. Conference Call
The Company will host a teleconference to discuss its results on
Monday, May 23, 2005 at 10:30 am New York Time, which is 4:30 pm
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 webcast on the
Company's website. If you cannot listen to the teleconference at
its scheduled time, there will be a replay available through May
30, 2005 that can be accessed by dialing +1-877-519-4471 (U.S.
callers) or +1-973-341- 3080 (International callers), passcode
5989479. The webcast will be archived on the Company's 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. For further information
visit: http://www.sbsbroadcasting.com/ SBS BROADCASTING SA
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands of
euro, except share and per share data) Three months ended March 31,
2004 2005 Net revenue euro 140,674 euro 175,067 Operating expenses:
Station operating expenses (exclusive of depreciation and
amortization) 104,135 122,792 Selling, general and administrative
expenses (exclusive of depreciation and amortization) 28,489 39,809
Corporate expenses 3,437 4,322 Non-cash compensation 794 345
Depreciation 3,133 3,566 Amortization 3,208 4,045 Total operating
expenses 143,196 174,879 Operating income (loss) (2,522) 188 Equity
in loss from unconsolidated subsidiaries (576) (597) Interest
income 1,072 933 Interest expense (2,969) (4,094) Foreign exchange
gain 775 314 Investment gain -- 61 Other expense, net (547) (1,151)
Loss before income taxes and minority interest (4,767) (4,346)
Income taxes (251) 1,155 Loss before minority interest (5,018)
(3,191) Minority interest in losses, net 1,112 100 Net loss euro
(3,906) euro (3,091) Net loss per common share (basic and diluted)
euro (0.13) euro (0.10) Weighted average common shares (thousands)
31,075 31,963 SBS BROADCASTING SA CONSOLIDATED CONDENSED BALANCE
SHEETS (in thousands of euro) December 31, March 31, ASSETS 2004
2005 Current assets: Cash and cash equivalents euro 196,033 euro
129,666 Short-term investments 354 252 Trade accounts receivable,
net of allowance for doubtful accounts of euro 5,070 (euro 4,294 in
2004) 88,398 101,586 Accounts receivable, affiliates 1,475 1,583
Restricted cash and cash in escrow 2,451 1,636 Program rights
inventory, current 117,544 144,431 Deferred tax assets, current
2,372 11,509 Other current assets 23,702 43,519 Total current
assets 432,329 434,182 Buildings, improvements, technical and other
equipment, net of accumulated depreciation 41,256 43,519 Goodwill
and other intangible assets, net of accumulated amortization
245,274 499,809 Program rights inventory, non-current 62,928 73,940
Deferred financing cost, net of accumulated amortization 2,600
3,290 Investments in and advances to unconsolidated subsidiaries
5,972 3,299 Other assets 388 614 Total assets euro 790,747 euro
1,058,653 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable euro 33,698 euro 39,715 Accrued expenses 66,702
75,606 Program rights payable, current 46,674 73,774 Income taxes
payable 3,763 3,068 Current portion of long-term debt 2,550 8,815
Deferred income, current 40,785 41,506 Deferred taxes, current
9,271 9,613 Other current liabilities 19,780 23,137 Total current
liabilities 223,223 275,234 Program rights payable, non-current
22,651 32,103 Bridge facility -- 210,000 12% senior notes due 2008
103,655 103,655 Other long-term debt 6,784 153 Deferred tax,
non-current 23,109 22,447 Other non-current liabilities 7,588 8,093
Minority interest 58,791 58,873 Shareholders' equity: Common Shares
(authorized 75,000,000 issued 32,241,729 (31,780,895 in 2004) at
par value euro 2.00) 63,562 64,483 Additional paid-in capital
683,678 691,793 Accumulated deficit (394,965) (398,056) Unearned
compensation (1,376) (1,258) Accumulated other comprehensive loss
(5,953) (8,867) Total shareholders' equity 344,946 348,095 Total
liabilities and shareholders' equity euro 790,747 euro 1,058,653
SBS BROADCASTING SA CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (in thousands of euro) Three months ended March 31,
2004 2005 Cash flows from operating activities: Net loss euro
(3,906) euro (3,091) Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: Revenue recorded in
exchange for equity investments (703) (1,241) Non-cash compensation
794 345 Depreciation and amortization 6,341 7,611 Equity in loss
from unconsolidated subsidiaries 576 597 Non-cash interest expense
(income) (1,966) 350 Foreign exchange gain on long-term debt (183)
(167) Investment gain -- (61) Deferred tax expense (benefit) 251
(1,155) Minority interest in losses (1,112) (100) Changes in
operating assets and liabilities, net of amounts acquired: Accounts
receivable 10,484 (1,619) Program rights inventory, net (2,124)
18,799 Other current assets 826 2,033 Other non-current assets (43)
(1,229) Accounts payable and accrued expenses (17,117) (7,327)
Deferred income (3,055) (518) Other liabilities (474) (1,515) Cash
provided by (used in) operating activities (11,411) 11,712 Cash
flows from investing activities: Proceeds from sale of short-term
investments -- 163 Cash capital expenditures (2,645) (4,056)
Payments for purchase of acquired businesses, net of cash acquired
-- (292,643) Cash used in investing activities (2,645) (296,536)
Cash flows from financing activities: Proceeds from issuance of
common shares 1,893 8,811 Proceeds from issuance of debt -- 210,000
Net change in restricted cash and cash in escrow 56 1,026 Payment
of long-term debt (135) (151) Cash provided by financing activities
1,814 219,686 Effect of exchange rate changes on cash and cash
equivalents (433) (1,229) Net change in cash and cash equivalents
(12,675) (66,367) Cash and cash equivalents, beginning of period
245,836 196,033 Cash and cash equivalents, end of period euro
233,161 euro 129,666 SBS BROADCASTING SA OPERATING RESULTS BY
SEGMENT (UNAUDITED) (in thousands of euro) Three months ended March
31, 2004 2005 Television Net revenue: SBS6, NET5 and Veronica (in
the Netherlands) euro 41,913 euro 44,091 TV2 & Irisz (in
Hungary) 16,559 20,256 Kanal 5 (in Sweden) 20,148 23,569 VT4 &
VijfTV (in Belgium) 13,990 15,497 TV Norge (in Norway) 11,256
14,686 TV Danmark and Kanal 5 (in Denmark) 9,721 11,399 Prima TV
(in Romania) -- 955 The Voice TV -- 790 Other 765 1,966 Total net
revenue 114,352 133,209 Station operating expenses 88,779 101,377
Selling, general and administrative expenses 19,335 23,656
Depreciation and amortization 3,874 4,785 Total operating expenses
111,988 129,818 Income from segment euro 2,364 euro 3,391 Premium
pay Net revenue: -- euro 13,171 Station operating expenses -- 6,810
Selling, general and administrative expenses -- 5,773 Depreciation
and amortization -- 94 Total operating expenses -- 12,677 Income
from segment -- euro 494 Radio Net revenue: Sweden euro 3,259 euro
3,243 Finland 2,925 3,093 Denmark 2,658 2,724 Norway 1,806 2,332
Romania -- 549 Greece 1,033 959 Total net revenue 11,681 12,900
Station operating expenses 6,627 6,328 Selling, general and
administrative expenses 6,838 6,958 Depreciation and amortization
1,439 1,741 Total operating expenses 14,904 15,027 Loss from
segment euro (3,223) euro (2,127) Print Net revenue: euro 14,641
euro 15,787 Station operating expenses 8,729 8,277 Selling, general
and administrative expenses 2,316 3,422 Depreciation and
amortization 1,028 991 Total operating expenses 12,073 12,690
Income from segment euro 2,568 euro 3,097 Consolidated Net revenue:
euro 140,674 euro 175,067 Income from operating segments 1,709
4,855 Corporate expenses (3,437) (4,322) Non-cash compensation
(794) (345) Operating income (loss) euro (2,522) euro 188
DATASOURCE: SBS Broadcasting SA CONTACT: Investors: Michael
Smargiassi of Brainerd Communicators, Inc., +1-212-986-6667; 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/
Copyright