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CTC Media Financial Results for the Second Quarter Ended June 30, 2011

(August 05, 2011)

MOSCOW, Aug. 5, 2011 (GLOBE NEWSWIRE) -- CTC Media, Inc. ("CTC Media" or "the Company") (Nasdaq:CTCM), Russia's leading independent media company, today announced its unaudited consolidated financial results for the second quarter ended June 30, 2011.


















































































 

Three Months

Three Months

 

 

Ended June 30, 2010

Ended June 30, 2011

Change 

(US$ 000's except per share data)

as

reported

comparable-basis,

non-GAAP(1)

as

reported

as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Total operating revenues

$130,499

$148,047

$204,484

57%

38%

Total operating expenses

(97,690)

(115,238)

(142,739)

46%

24%

OIBDA(2)

36,167

36,167

65,954

82%

82%

OIBDA margin(3)

27.7%

24.4%

32.3%

 

 

Net income attributable to CTC Media, Inc. stockholders

20,904

20,904

38,468

84%

84%

Diluted earnings per share

$0.13

$0.13

$0.24

85%

85%























































































 

 

 

 

 

Six Months

Six Months

 

 

Ended June 30, 2010

Ended June 30, 2011

Change 

(US$ 000's except per share data)

as

reported

comparable-basis,

non-GAAP

as

reported

as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Total operating revenues

$253,699

$287,549

$370,024

46%

29%

Total operating expenses

(184,615)

(218,465)

(272,351)

48%

25%

OIBDA

75,819

75,819

105,818

40%

40%

OIBDA margin

29.9%

26.4%

28.6 %

 

 

Net income attributable to CTC Media, Inc. stockholders

46,103

46,103

61,260

33%

33%

Diluted earnings per share

$0.30

$0.30

$0.39

30%

30%


(1) Comparable-basis, non-GAAP Q2 and H1 2010 financials are provided in order to facilitate period-to-period comparisons of the Company's results following the implementation of the Company's new model of advertising sales. Please see the accompanying financial tables at the end of this release for a reconciliation of these non-GAAP financial measures to the most comparable US GAAP financial measures.



(2) OIBDA is defined as operating income before depreciation and amortization (excluding amortization of programming rights and sublicensing rights).


(3) 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.




Q2 FINANCIAL HIGHLIGHTS




  • Total revenues up 28% year-on-year in ruble terms on a comparable basis to $204.5 million


  • Russian advertising revenues up 30% year-on-year in ruble terms on a comparable basis


  • OIBDA up 82% year-on-year in US dollar terms to $66.0 million, with an increased OIBDA margin of 32.3%


  • Fully diluted earnings per share up 85% year-on-year to $0.24 (Q2 2010: $0.13)


  • Net cash position(1) of $129.5 million at the end of the period


  • The Board of Directors currently intends to pay increased aggregate cash dividends of $130 million in 2011 and has declared a cash dividend in the third quarter of $0.22 per share (or approximately $35 million in the aggregate) to be paid on or about October 30, 2011 to shareholders of record as of September 1, 2011


  • Reiterated full year outlook of an approximate 20% year-on-year increase in total operating revenues in ruble terms on a comparable basis for the full year; an OIBDA margin of between 34% and 36% (equivalent to between 38% and 40% under the terms of the pre-existing sales structure); and capital expenditure (excluding acquisitions) of up to $25 million in 2011



OPERATING HIGHLIGHTS




  • Combined Russian national inventory 100% sold-out for Q2 and over 90% sold-out for the full year


  • Launch of CTC-international channel on Time Warner Cable and Russian Media Group platforms in May 2011


  • Launch of new digital broadcasting complex in Moscow in July 2011


  • Establishment of new unified content production company 'Story First Production' to merge Costafilm and Soho Media platforms under a single subsidiary


  • Videomore.ru received an average of 120,000 unique visitors per day in Q2


  • Videomore.ru is now available on iPhone, Android and iOS platforms, D-link's Boxee digital media player, and Facebook and Vkontakte social networks


  • Channel 31 in Kazakhstan recorded an all-time high quarterly average target audience share of 15.8%


  • Acquisition of 7 regional television stations in 6 Russian cities in H1 primarily to improve technical reach of DTV and Domashny Networks



(1) Net cash position is defined as cash, cash equivalents and short-term investments less interest bearing liabilities.



Anton Kudryashov, Chief Executive Officer of CTC Media, commented, "We have fully captured the growth in the Russian TV advertising market in the second quarter, with healthy demand levels and rising prices for our premium audiences. Our national Russian TV advertising market share and blended power ratio have remained stable despite the higher audience shares achieved by the smaller non free-to-air TV channels. Our Russian channels were 100% sold-out in the second quarter, and are now over 90% sold-out for the full year at significantly higher prices than in 2010.



"The Russian Spring schedule performed well while our key formats were on air, and our soon to be launched Fall schedule includes prime-time premieres across various genres including original productions, adaptations of successful international formats, and new seasons of hit series. In addition, we will refresh the DTV format with a new programming and communications platform in October. Channel 31 in Kazakhstan has performed ahead of expectations with substantially increased ratings driving a 68% year-on-year increase in CIS revenues in US dollar terms. 



"The investments that we have made in our internal sales house and state-of-the-art broadcasting facility will ensure that we are well-positioned to capitalize further on the growth and development of the Russian broadcasting industry. The new play-out facility, which is the first of its kind in Russia, is able to program and broadcast up to 21 independent channels and meet all of the Company's broadcasting requirements from a single location. The facility's flexible cross-platform distribution and content digitalization capabilities will also contribute to the growth of Videomore, which has already attracted 10 million unique users." 



"OIBDA was up 82% year-on-year, with an increased margin of 32.3% in the second quarter, and net income attributable to CTC Media stockholders was up 84% year-on-year.



"We reiterate our full year outlook for approximately 20% year-on-year like-for-like revenue growth in ruble terms. We also continue to expect to deliver a full year OIBDA margin of between 34% and 36%, which is equivalent to between 38% and 40% under the terms of the pre-existing sales structure. We also expect full year CAPEX, excluding acquisitions, to amount to up to $25 million.



"We paid out an increased quarterly cash dividend of $35 million in the second quarter and intend to pay further quarterly dividends for the third and fourth quarters. Our anticipated total full-year dividend payments would therefore be up year-on-year to $130 million, which reflects the high levels of cash generation and conversion in the business. We continue to invest in the development of our existing operations, as well as to seek and review new opportunities to expand our presence in Russia and the CIS."



Changes in the Advertising Sales Structure in 2011 and Related Changes in Accounting Treatment



Prior to 2011, advertising on CTC Media's television channels in Russia was not generally placed directly by advertisers. Video International, one of the largest sales houses in Russia, placed this advertising on an exclusive basis under agency agreements. Advertising placed through Video International historically accounted for substantially all of CTC Media's advertising revenues. Based on such relationships with advertisers and Video International in place prior to 2011, the Company recognized the commissions paid to Video International as a reduction of revenue as opposed to a cost incurred (i.e., the Company reported revenues on a net basis).



Effective from January 1, 2011, the Company has terminated all of its agency agreements with Video International, and developed a new structure for the sale of advertising on its channels. The Company's own sales house now serves as the exclusive advertising sales agent for all of its networks in Russia. At the same time, the Company agreed a new model of cooperation with Video International based on the licensing of specialized advertising software by Video International to CTC Media's internal sales house, together with the provision by Video International of related software maintenance, analytical support and consulting services. CTC Media's internal sales house is primarily responsible for all of its national and regional advertising sales, with the exception of advertising sales to local clients of its regional stations, which continue to be placed through Video International.



With effect from January 1, 2011 and following the change in the sales structure, as well as the change of CTC Media's contractual terms with Video International, CTC Media reports its Russian advertising revenues, excluding regional advertising revenues from local clients, based on the amounts billed by CTC Media to advertisers on a gross basis. Fees payable to Video International for the use of advertising software, related maintenance, analytical support and consulting services are included in selling, general and administrative expenses in CTC Media's consolidated statement of income statements. Revenues from regional advertising sales to local clients continue to be recorded net of agency commissions payable under the agency agreements with Video International.



This press release presents selected comparable-basis non-GAAP financial measures for the second quarter and first half of 2010. CTC Media is presenting this comparable-basis historical financial information in order to assist analysts and investors by facilitating period-to-period comparisons of the Company's results following the implementation of the Company's new model of advertising sales. The reconciliation of comparable-basis non-GAAP financial measures to the US GAAP financial measures is provided at the end of this press release.



Unaudited comparable-basis, non-GAAP summary financial information for full year 2009, full year 2010 and each quarter of 2010 is available from the Company's website at http://www.ctcmedia.ru/investors/Financial_Results/comparable_financials.



Operating Review



Share of Viewing


































































 

 Average Audience Shares (%)

 

Q2 2010 

H1 2010

Q1 2011

Q2 2011

H1 2011

 

 

 

 

 

 

CTC Network (all 6-54)

11.5

12.1

11.2

11.1

11.1

CTC Network (all 14-44)

12.4

12.8

12.0

11.7

11.8

Domashny Network (women 25-60)

3.5

3.2

2.8

3.1

3.0

DTV Network (all 25-54)

2.1

2.1

2.0

2.1

2.0

Channel 31 (all 6-54)

12.2

11.2

14.8

15.8

15.2




The CTC Network's average target audience share was down year-on-year in the second quarter following increased competition in June and the end of the first season of the "Boarding School" hit series at the end of May. All free-to-air TV channels were also negatively impacted by increased non-free-to-air viewership, which was up year-on-year in the second quarter from 9.5% to 11.9% among 6 to 54 years-olds.



The Domashny Network's target audience share was also down year-on-year in the second quarter, but was up quarter-on-quarter. The year-on-year decline in Domashny's target audience share was primarily due to increased competition and higher non-free-to-air TV channels' viewership.



The DTV Network's target audience share was stable year-on-year in the second quarter and up quarter-on-quarter. Work on the positioning of DTV and its programming grid is on-going and a new programming and communications platform will be introduced in October 2011, which will center around a more provocative theme and on-air presence.



Channel 31's average target audience share was substantially up year-on-year and also up quarter-on-quarter. This is the highest ever quarterly audience share recorded for the channel. The year-on-year increase was primarily due to the success of Turkish and Korean prime time series, as well as higher ratings for own-produced Kazakh-language entertainment shows.















































































Revenues

 

 

Three Months

Three Months

 

 

 

Ended June  30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

as

reported

comparable-basis,

 non-GAAP

 

 

 

 

 

 

Operating revenues:

 

 

 

 

 

Advertising revenue

$124,912

$142,460

$199,945

60%

40%

Sublicensing and own production revenue

5,316

5,316

3,597

-32%

-32%

Other revenue

271

271

942

248%

248%

Total operating revenues

$130,499

$148,047

$204,484

57%

38%

















































































 

 

 

 

 

 

Six Months

Six Months

 

 

 

Ended June  30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Operating revenues:

 

 

 

 

 

Advertising revenue

$241,895

$275,745

$363,050

50%

32%

Sublicensing and own production revenue

11,255

11,255

5,459

-51%

-51%

Other revenue

549

549

1,515

176%

176%

Total operating revenues

$253,699

$287,549

$370,024

46%

29%




Total operating revenues were up 38% year-on-year in the second quarter in US dollar terms and up 28% in ruble terms, each on a comparable basis, which primarily reflected the growth of the Russian television advertising market and growth in the other markets where the Company operates, resulting in higher pricing levels. This was partially offset by lower year-on-year target audience shares for the CTC and Domashny channels. Russian advertising sales accounted for approximately 95% of second quarter total operating revenues and were up 30% year-on-year in ruble terms on a comparable basis.



The Company's sublicensing and own-production revenue was down 32% year-on-year in US dollar terms, which was primarily due to lower sales of content to broadcasters in Ukraine. As previously indicated, the sublicensing and own-production revenue comparables were exceptionally high in 2010 and will not be repeated in 2011.



























































































































 

Three Months

Three Months

 

 

 

Ended June 30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Operating revenues by segment(1):

 

 

 

 

 

CTC Network

$81,256

$92,622

$127,829

57%

38%

Domashny Network

15,919

18,083

24,320

53%

34%

DTV Network

9,940

11,222

15,905

60%

42%

CTC Television Station Group

16,594

18,837

25,360

53%

35%

Domashny Television Station Group

2,577

2,944

4,063

58%

38%

DTV Station Television Group

973

1,099

1,827

88%

66%

CIS Group

2,872

2,872

4,813

68%

68%

Production Group

265

265

44

-83%

-83%

CTC-International

103

103

323

214%

214%

Total operating revenues

$130,499

$148,047

$204,484

57%

38%


 (1) Segment revenues are shown from external customers only, net of intercompany revenues of $10.5 million in the second quarter of 2010 and $12.4 million in the second quarter of 2011 that primarily related to revenues from the Production Group that have been eliminated in the consolidation of the Company's revenues.



























































































































 

Six Months

Six Months

 

 

 

Ended June 30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Operating revenues by segment(1):

 

 

 

 

 

CTC Network

$163,895

$186,799

$236,121

44%

26%

Domashny Network

29,351

33,344

44,068

50%

32%

DTV Network

19,824

22,235

28,576

44%

29%

CTC Television Station Group

28,722

32,471

43,219

50%

33%

Domashny Television Station Group

4,258

4,840

6,692

57%

38%

DTV Station Television Group

1,647

1,858

2,881

75%

55%

CIS Group

5,137

5,137

7,892

54%

54%

Production Group

659

659

66

-90%

-90%

CTC-International

206

206

509

147%

147%

Total operating revenues

$253,699

$287,549

$370,024

46%

29%


 (1) Segment revenues are shown from external customers only, net of intercompany revenues of $19.3 million in the first six months of 2010 and $16.3 million in the first six months of 2011, primarily related to revenues from the Production Group that have been eliminated in the consolidation of the Company's revenues.



The CIS Group, which accounted for 2% of revenues in the quarter, reported a 68% year-on-year increase in sales in US dollar terms. This primarily reflected higher target audience shares and advertising prices for Channel 31 in Kazakhstan, as well as the lower commission rate payable to Video International for the placement of advertising on Channel 31 in 2011 compared to 2010.



Expenses



Total operating expenses were up 24% year-on-year in the second quarter in US dollar terms on a comparable basis and up 15% in ruble terms, which primarily reflected the year-on-year increase in programming amortization costs and selling, general and administrative expenses.



Direct operating expenses increased 18% year-on-year in US dollar terms and 9% in ruble terms, largely as a result of increased transmission fees and broadcasting expenses relating to regional stations acquired after the second quarter of 2010.



On a comparable basis, selling, general and administrative expenses were up 24% year-on-year in US dollar terms and up 15% year-on-year in ruble terms. On a comparable basis, the increase was primarily due to higher salaries and benefits and higher rent and utility expenses associated with the move to a new principal office location in Moscow. Compensation payable to Video International, which is included in selling, general and administrative expenses in the 2011 periods, amounted to $22.2 million in the second quarter of 2011, compared to agency commission fees of $17.5 million paid to Video International in respect of national and regional advertising revenues from Moscow-based clients in the second quarter of 2010.



































































































 

 

 

 

Three Months

 

 

Three Months

 

 

 

Ended June  30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

to as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Direct operating expenses

$9,107

$9,107

$10,757

18%

18%

Selling, general & administrative expenses

17,200

34,748

43,171

151%

24%

Stock-based compensation expenses

8,473

8,473

8,617

2%

2%

Amortization of programming rights

58,328

58,328

75,474

29%

29%

Amortization of sublicensing rights and own production cost

1,224

1,224

511

-58%

-58%

Depreciation & amortization

3,358

3,358

4,209

25%

25%

Total operating expenses

$97,690

$115,238

$142,739

46%

24%


































































































 

 

 

 

Six Months

 

 

Six Months

 

 

 

Ended June 30, 2010

Ended June 30, 2011

Change

(US$ 000's)

as

reported

comparable-basis,

non-GAAP

as

reported

to as

reported

comparable-basis,

non-GAAP

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Direct operating expenses

$18,931

$18,931

$21,467

13%

13%

Selling, general & administrative expenses

32,777

66,627

80,867

147%

21%

Stock-based compensation expenses

15,803

15,803

14,836

-6%

-6%

Amortization of programming rights

107,789

107,789

146,211

36%

36%

Amortization of sublicensing rights and own production cost

2,580

2,580

825

-68%

-68%

Depreciation & amortization

6,735

6,735

8,145

21%

21%

Total operating expenses

$184,615

$218,465

$272,351

48%

25%


Programming expenses were up 30% year-on-year in US dollar terms and up 20% in ruble terms in the second quarter, which primarily reflected a more expensive programming mix for the Company's Russian channels.



Amortization of programming rights for the CTC channel increased 27% year-on-year in US dollar terms and 17% in ruble terms in the second quarter. Amortization of programming rights for the Domashny channel increased 40% year-on-year in US dollar terms and 30% in ruble terms in the second quarter. Amortization of programming rights for the DTV channel increased 20% year-on-year in US dollar terms and by 11% in ruble terms in the second quarter.



Sublicensing and own production costs were down 58% year-on-year in US dollar terms and down 61% year-on-year in ruble terms in the second quarter and reflected the year-on-year decrease in corresponding revenues and the reduced cost of internally produced series and sitcoms sold to Ukraine, including the sale of fully amortized content.



CTC Media therefore reported consolidated OIBDA of $66.0 million in the second quarter (Q2 2010: $36.2 million). The OIBDA margin was 32.3% for the quarter (Q2 2010: 27.7%).



Net interest income was $1.3 million in the second quarter of 2011, compared to net interest income of $0.8 million for the same period of 2010. The Company reported foreign currency gain of $0.6 million in the second quarter of 2011, compared to a foreign currency gain of $1.2 million in the second quarter of 2010.



Pre-tax income therefore increased by 83% year-on-year to $64.0 million in the second quarter (Q2 2010: $35.0 million).



CTC Media's effective tax rate was 37% in the second quarter (Q2 2010: 38%).



Net income attributable to CTC Media, Inc. stockholders therefore increased by 84% year-on-year to $38.5 million in the second quarter (Q2 2010: $20.9 million), and fully diluted earnings per share increased to $0.24 (Q2 2010: $0.13).



Cash Flow



The Company's net cash flow from operating activities totaled $38.6 million for the first six months of 2011 (H1 2010: $50.7 million) and reflected the net effect of increased advertising sales and higher cash expenditure for the acquisition of programming and sublicensing rights.



Net cash used in investing activities totaled $9.6 million (H1 2010: 81.3 million) and primarily related to $27.1 million of net cash receipts from deposits offset by $6.4 million paid in earn-outs relating to the acquisition of Costafilm and $14.5 million paid in relation to the acquisition of regional television stations.



Cash used in financing activities amounted to $58.0 million in the first half of 2011 (H1 2010: $25.6 million) and included the payment of $59.7 million in cash dividends to the Company's stockholders. CTC Media also received $5.2 million from the exercise of stock options by the Company's employees.



The Company's cash and cash equivalents and short-term investments amounted to $129.5 million at June 30, 2011, compared to $131.4 million at the end of the second quarter of 2010 and to $163.7 million at the end of the first quarter of 2011.



Dividends



The CTC Media Board of Directors currently intends to pay aggregate cash dividends of $130 million in 2011, and has declared a dividend in the third quarter of $0.22 per share, or approximately $35 million in total, which will be paid on or about October 30, 2011 to shareholders of record as at September 1, 2011. Although it is the Board's current intention to declare and pay further dividends in the fourth quarter of 2011, there can be no assurance that such additional dividends will in fact be declared and paid. Any such declaration is at the discretion of the Board and will depend upon factors such as CTC Media's earnings, financial position and cash requirements.



Full Year 2011 Outlook



Over 90% of CTC Media's forecast full-year 2011 Russian national inventory is currently committed at average prices that are significantly higher than in 2010. The Company expects its total operating revenues to increase by approximately 20% year-on-year in ruble terms in 2011, when adjusting the 2010 revenues to exclude the commissions payable to Video International for direct sales of CTC Media's advertising inventory in Russia.



The Company expects to report an OIBDA margin of between 34% and 36% for the full year 2011, which is equivalent to between 38% and 40% under the terms of the advertising sales structure in place prior to 2011.



CTC Media's capital expenditure (excluding acquisitions) is expected to amount to up to $25 million in 2011, and primarily comprise maintenance capital expenditure, as well as investments in the Company's play-out facility and new office space for the Company's internal advertising sales house.



Conference Call



The Company will host a conference call to discuss its 2011 second quarter financial results today, Friday, August 5th, 2011, 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 (631) 510 7498 (US/International)



+44 (0) 1452 555 566 (UK/International)



Pass code: 83818778




A live webcast of the conference call will also be available via the investor relations section of the Company's corporate web site - www.ctcmedia.ru/investors. The webcast will also be archived on the Company's web site for two weeks.



About CTC Media, Inc.



CTC Media is a leading independent media company in Russia, with operations throughout Russia and elsewhere in the CIS. It operates three free-to-air television networks in Russia - CTC, Domashny and DTV - as well as Channel 31 in Kazakhstan and a TV company in Moldova, with a combined potential audience of over 150 million people. The international pay-TV version of the CTC channel is available in North America, Israel and Germany. CTC Media also has its own TV content production capabilities through its subsidiary Story First Production. 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 www.ctcmedia.ru.



The CTC Media, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9587



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) and OIBDA margin. The Company also uses the following unaudited non-GAAP financial information for the historical periods covered on a basis comparable to the reporting in 2011: total operating revenues (on a consolidated and segment basis), advertising revenue, selling, general and administrative expenses, and total operating expenses (on a consolidated and segment basis). 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. 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 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 the Company's intangible assets were acquired in business acquisitions. The amortization of intangible assets is therefore also excluded from OIBDA.



Comparable-basis non-GAAP financial measures. Management uses comparable-basis historical information internally to compare financial results and believes that its presentation provides analysts and investors with additional useful information to understand the Company's performance on a comparable period-to-period basis following the implementation of the Company's new model of advertising sales starting from 2011.  However, this information is not presented in accordance with US GAAP or Article 11 of Regulation S-X, relating to pro forma financial statements.



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 include, among others, statements regarding developments in the volume and pricing of television advertising in the Company's target markets; the Company's anticipated advertising sellout in 2011; the further development of the DTV and Domashny channels; the Company's anticipated operating expenses and capital expenditures in 2011; the Company's expected rate of its full year 2011 OIBDA margin; the Company's expected increase of its total operating revenues in ruble terms in 2011; and the Company's intention to pay further dividends in 2011. These statements 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, the implementation of the Company's own internal sales house structure; depreciation of the value of the Russian ruble compared to the US dollar; changes in the size of the Russian television advertising market; 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; 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 annual report on Form 10-K filed with the SEC on March 1, 2011 and its quarterly report on Form 10-Q filed with the SEC on or about the date hereof.



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

June 30,

Six months ended

June 30,

 

2010

2011

2010

2011

REVENUES:

 

 

 

 

Advertising

$124,912

$199,945

$241,895

$363,050

Sublicensing and own production revenue

5,316

3,597

11,255

5,459

Other revenue

27

Page: 1


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