Crown Media Holdings Announces Operating Results for Year-End and Fourth Quarter 2004.GREENWOOD Greenwood. 1 City (1990 pop. 26,265), Johnson co., central Ind.; settled 1822, inc. as a city 1960. A residential suburb of Indianapolis, Greenwood is in a retail shopping area. Manufactures include motor vehicle parts and metal products. VILLAGE, Colo. -- Crown Media Holdings, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CRWNE) today reported its operating results for the three months and year ended December December: see month. 31, 2004. Operating Highlights for the Quarter and the Year --Revenue growth. Crown Media's total net revenue in the fourth quarter of 2004 increased 3% to $71.3 million, from $69.2 million in the prior year's fourth quarter. Advertising revenues for the quarter totaled $37.6 million, an increase of 20% from the fourth quarter of 2003. For the full year, Crown Media's total net revenue increased 16% to $241.3 million from $207.5 million in the prior year, and advertising revenues increased 32% to $129.1 million as compared to $98.1 million in 2003. --Subscriber increase. Hallmark hallmark, mark impressed on silverwork or goldwork to signify official approval of the standard of purity of the metal, also called plate mark. The hallmark was introduced by statute in England in 1300 and enforced by the Goldsmiths' Hall, London. Channel subscribers increased 9% to 124.0 million worldwide as of December 31, 2004, from 113.3 million subscribers as of December 31, 2003. The channel ended the year with 64.6 million subscribers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and 59.4 million international subscribers across 152 countries. Subscribers to our domestic channel increased 15%, and subscribers to our international channels increased 4% over the fourth quarter 2003. Subsequent to year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. , Hallmark Channel continued to expand its distribution and now reaches approximately 67.7 million subscribers in the United States. For 2004, Hallmark Channel ranked as the fastest growing entertainment channel in the U.S. among all 73 measured cable networks according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Nielsen Noun 1. Nielsen - Danish composer (1865-1931) Carl August Nielsen, Carl Nielsen . --U.S. ratings success. For the first time ever, Hallmark Channel ranked as a top ten U.S. network for a full year, based on an average total day household rating of 0.6 which tied the network with 6 other channels in the tenth position for 2004. This achievement was due in part to the tremendous success of Hallmark Channel's Holiday Movie Premieres in the fourth quarter, which broke all previous network records, delivering unparalleled value to advertisers and pushing Hallmark Channel to its highest quarter, month, week and day in its history. --International transaction. On April 26th, Crown Media announced that a group of investors consisting of Providence Equity Partners Providence Equity Partners is a private equity firm headquartered in Providence, Rhode Island that focuses on investments in media and telecommunications. It is one of the largest private investment firms specializing in equity investments in media and communications companies. , 3i and the U.K. television executive David Elstein David Keith Elstein (born 14 November 1944), is currently chairman of Sparrowhawk Media, owners of the Hallmark channel. He is also Chairman of DCD Media. Previously he launched Channel 5, worked for Sky as head of programming and held a position as a senior editor at the acquired the Company's international business for a purchase price of $242.0 million, subject to adjustments. "This past year Hallmark Channel continued to make significant strides in several key areas," stated David Evans David Evans may mean:
"To date in 2005, we have completed the sale of the international business and have applied the proceeds to reduce our debt and improve our overall capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. . This transaction will enable us to fully dedicate ded·i·cate tr.v. ded·i·cat·ed, ded·i·cat·ing, ded·i·cates 1. To set apart for a deity or for religious purposes; consecrate. 2. our resources to the continued success of our U.S. channel, which has had an excellent start to the year with the airing of our original Mystery Wheel series. These Friday Friday: see Sabbath; week. Friday young Indian rescued by Crusoe and kept as servant and companion. [Br. Lit.: Robinson Crusoe] See : Servant night premieres have been delivering strong ratings and higher impressions in our key demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. , sustaining the momentum developed in the fourth quarter with our holiday originals. The advertising market for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. has been strong, and we are very excited about the slate of approximately 60 hours of original programming we have lined up for the year. We expect to end the year with over 70 million subscribers in the U.S. with continued growth in advertising revenues, generating positive Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and, as a result of the sale of our international business, positive cash flow for 2005." Financial Results Historical financial information is provided in tables at the end of this release. Operating Results Crown Media reported revenue of $71.3 million for the fourth quarter of 2004, a 3% increase from $69.2 million for the fourth quarter of 2003. Subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. fee revenue in the fourth quarter increased 26% to $22.0 million, from $17.5 million in the prior year's quarter, primarily because of the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of free carriage carriage, wheeled vehicle, in modern usage restricted to passenger vehicles that are drawn or pushed, especially by animals. Carriages date from the Bronze Age; early forms included the two-wheeled cart and four-wheeled wagon for transporting goods. periods with our domestic channel distributors. Advertising revenue increased 20% to $37.6 million during the quarter, from $31.2 million in the fourth quarter of 2003, reflecting increased distribution, higher ratings for our channels and higher advertising rates, primarily in our domestic market. Licensing fees for our film library decreased to $11.4 million during the quarter, from $20.4 million in the prior year's quarter, due to a decrease in international sales from softer market conditions and uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the sale of the international business and international rights to the film assets. Crown Media reported revenue of $241.3 million for the year ended December 31, 2004, a 16% increase from $207.5 million in 2003. Subscriber fee revenue in the year increased 19% to $82.1 million, from $68.9 million in the prior year. Advertising revenue increased 32% to $129.1 million during the year ended December 31, 2004, from $98.1 million in the same period of 2003. Licensing fees for our library decreased to $29.3 million during the year ended December 31, 2004, from $40.4 million in the prior year. For the fourth quarter of 2004, cost of services increased to $148.8 million from $63.5 million during the same quarter of 2003. The majority of this increase is the result of non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges in the amount of $60.0 million related to our film assets and technical operations primarily in connection with the disposal of our international assets. Within cost of services, programming expenses increased 39% quarter over quarter to $43.6 million. For the three months ended December 31, 2004, amortization of film assets increased to $22.8 million from $15.2 million during the same quarter of 2003 as a result of the impairment of our film assets and related recalculation re·cal·cu·late tr.v. re·cal·cu·lat·ed, re·cal·cu·lat·ing, re·cal·cu·lates To calculate again, especially in order to eliminate errors or to incorporate additional factors or data. of amortization for the full year as required by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Subscriber acquisition fee amortization expense for the quarter increased to $7.9 million from $6.2 million in 2003. Operating costs operating costs npl → gastos mpl operacionales , which include playback Playback could mean:
removal of most of the comb of day-old chickens. See also decombing. and subtitling, transponder A receiver/transmitter on a communications satellite. It receives a microwave signal from earth (uplink), amplifies it and retransmits it back to earth at a different frequency (downlink). A satellite has several transponders. and interstitial In a separate window. See interstitial ad. (World-Wide Web) interstitial - A World-Wide Web page that appears before the expected content page. Interstitials can be used for advertising (intermercial, transition ad) or to confirm that the user is old enough to view the expenses, increased 40% from $9.5 million to $13.3 million for the fourth quarter of 2004, as a result of an increase in bad debt expense and an impairment of subtitling and dubbing assets related to the Company's exit from one of its international markets. Selling, general and administrative expenses increased to $23.7 million for the three months ended December 31, 2004, from $17.5 million in the year earlier period primarily due to the recognition of expense related to the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: of restricted stock units Restricted stock units Similar to restricted stock. However, the unit represents a promise that employees will receive stock in the future. The units do not pay dividends until the stock is vested. . Marketing expenses increased to $7.0 million for the three months ended December 31, 2004, from $6.8 million in the year earlier period. For the year ended December 31, 2004, total cost of services increased to $378.5 million from $222.1 million during the same period of 2003. The majority of this increase is the result of non-cash impairment charges in the amount of $117.9 million related to our film assets and technical operations primarily in connection with the disposal of our international assets. Within cost of services, programming expenses increased 26% period over period to $137.2 million. For the year ended December 31, 2004, amortization of film assets increased to $47.2 million from $40.2 million during the same period of 2003 as a result of a decrease in ultimate revenue anticipated to be earned from third parties and the value of internal use of our film assets. Subscriber acquisition fee amortization expense was $26.9 million in 2004 versus $25.3 million in 2003. Operating costs, which include playback, dubbing and subtitling, transponder and interstitial expenses, increased 3% from $43.3 million in 2003 to $44.4 million during the year ended December 31, 2004. Selling, general and administrative expenses increased to $78.0 million for the year ended December 31, 2004, from $61.7 million in the year earlier period. Marketing expenses decreased to $23.9 million for the year ended December 31, 2004, from $24.4 million in the year earlier period. Adjusted EBITDA loss totaled $73.0 million for the fourth quarter of 2004, compared to positive Adjusted EBITDA of $8.6 million positive for the same period last year. Cash used in operating activities totaled $11.5 million for the fourth quarter of 2004 compared to $50.5 million for the same period last year. The net loss for the three month period ended December 31, 2004, totaled $129.0 million, or $1.23 per share, compared to $36.3 million, or $0.35 per share, in the fourth quarter of 2003. The increased net losses in Adjusted EBITDA loss for the quarter are principally due to the non-cash impairment charges noted above. Adjusted EBITDA loss totaled $148.3 million for the year ended December 31, 2004, compared to an Adjusted EBITDA loss of $44.5 million for the same period last year. Cash used in operating activities totaled $55.6 million for the year ended December 31, 2004, compared to $155.2 million for the same period last year. The net loss for the year ended December 31, 2004, totaled $316.8 million, or $3.03 per share, compared to $205.2 million, or $1.96 per share, in the same period last year. The increased net loss and Adjusted EBITDA loss for the year are principally due to the non-cash impairment charges noted above. Conference Call and Webcast to be Held May 27 at 11:00 a.m. ET Crown Media Holdings' management will conduct a conference call this morning at 11:00 a.m. Eastern Time to discuss the results of the fourth quarter and full year 2004. Investors and interested parties may listen to the call via a live webcast accessible through the investor relations' section of the Company's web site at www.hallmarkchannel.com, or by dialing (888) 339-2688 (Domestic) or (617) 847-3007 (International) and requesting the "Crown Media Fourth Quarter Earnings" call. For those listeners accessing the call through the Company's website, please register and download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. audio software at the site at least 15 minutes prior to the start time. The webcast will be archived on the site, while a telephone replay of the call is available for 7 days beginning at 1:00 p.m. Eastern Time, May 27, at 888-286-8010 (Domestic) or 617-801-6888 (international callers), using reservation number 41098263. About Crown Media Holdings Crown Media Holdings, Inc. (NASDAQ: CRWNE) owns and operates cable television channels dedicated to high quality, broad appeal, entertainment programming. The Company currently operates and distributes the Hallmark Channel in the U.S. to 68 million subscribers. Prior to the sale of the international business on April 26, 2005, the international channel was distributed to approximately 60 million subscribers in 152 countries. Through its subsidiary, Crown Media Distribution, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , Crown also distributes titles in the U.S. from its award-winning Adj. 1. award-winning - having received awards; "this award-winning bridge spans a distance of five miles" collection of movies, mini-series mini-series n → serie f de pocos capítulos; miniserie f mini-series n → téléfilm m en plusieurs parties and films for exhibition in a variety of television media including broadcast, cable, video-on-demand The ability to deliver a movie, sports event or other video program to a TV set whenever the customer requests it. Video-on-demand (VOD) typically refers to free and paid programs from the cable TV companies or the telephone companies that offer video over DSL lines. and high definition television. Significant investors in Crown Media Holdings include: Hallmark Entertainment Holdings, Inc., a subsidiary of Hallmark Cards Hallmark Cards, a privately owned American company based in Kansas City, Missouri, is the largest manufacturer of greeting cards in the United States. Approximately 50% of greeting cards sent in the United States every year are manufactured by Hallmark. , Incorporated, Liberty Media Corp., and J.P. Morgan Morgan, American family of financiers and philanthropists. Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking. Partners (BHCA (Busy Hour Call Attempts) The number of times a telephone call is attempted during the busiest hour of the day. See busy hour. ), LP, each through their investments in Hallmark Entertainment Investments Co.; VISN VISN Veterans Integrated Service Network VISN Virtual Integrated Sky Network (Loral Orion) VISN Visual Interactive Support Network Management Corp., a for-profit for-prof·it adj. Established or operated with the intention of making a profit: a for-profit organization. subsidiary of the National Interfaith in·ter·faith adj. Of, relating to, or involving persons of different religious faiths: an interfaith marriage; an interfaith forum. Cable Coalition; and Hughes Electronics Corporation. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements contained in this press release may contain forward-looking statements as contemplated by the 1995 Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and that are based on management's current expectations, estimates and projections. Words such as "expects," "anticipates," "intends," "plans," "believes," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied in the forward-looking statements. Such risks and uncertainties include: competition for distribution of channels, viewers, advertisers, and the acquisition of programming; fluctuations in the availability of programming; fluctuations in demand for the programming Crown Media airs on its channels; and other risks detailed in the Company's filings with the Securities and Exchange Commission, including the Risk Factors stated in the Company's 10-K Report for the year ended December 31, 2004. Crown Media Holdings is not undertaking any obligation to release publicly any updates to any forward looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this release or to reflect the occurrence of unanticipated events. Use of Adjusted EBITDA Crown Media evaluates operating performance based on several factors, including Adjusted EBITDA. Our measure of Adjusted EBITDA differs from the normal definition of EBITDA (earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
prep. Taking into consideration or account; including. impairment charges. We believe Adjusted EBITDA is meaningful because it provides investors a means to evaluate the operating performance of our company on an ongoing basis using criteria criteria (krītēr´ē  ),n. that is used by other companies in our industry and investment bankers Investment Banker A person representing a financial institution that is in the business of raising capital for corporations and municipalities. Notes: An investment banker may not accept deposits or make commercial loans. and analysts who track our industry. We believe that Adjusted EBITDA is a meaningful measure because it represents a transparent view of our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. operating performance and allows our management and investors to readily view operating trends, perform analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. comparisons and benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. our company to similar companies in our industry. Adjusted EBITDA is used by our management to monitor segment operations and to determine the allocation of resources allocation of resources Apportionment of productive assets among different uses. The issue of resource allocation arises as societies seek to balance limited resources (capital, labour, land) against the various and often unlimited wants of their members. to segments. Our credit facility also contains covenants that are based on an adjusted EBITDA measure. Consequently, management views Adjusted EBITDA as a critical measure of our operating performance to meet our debt covenants and monitors this measure closely. We disclose Adjusted EBITDA so that our investors can have some of the same information available to our management to evaluate their investment in our Company. We believe that Adjusted EBITDA provides an indication of the Company's ability to generate cash flows from operating activities since the majority of our non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) are excluded from our calculation of Adjusted EBITDA. A significant portion of the Company's cost structure relates to the amortization of film assets and subscriber acquisition costs, which are significant non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. . The cash costs of acquiring programming and adding subscribers are essentially discretionary expenditures. The adjusted EBITDA calculation allows the Company to assess how much is available to pay debt service and gives a further indication of how much remains to fund discretionary expenditures such as the acquisition of programming or additional subscriber base. However, Adjusted EBITDA should be considered in addition to, not as a substitute for, historical operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. or loss, net loss, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses and other measures of financial performance reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States. Adjusted EBITDA differs significantly from cash flows from operating activities reflected in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statement of cash flows. Cash flow from operating activities is net of interest and taxes paid and is a more comprehensive determination of periodic income on a cash basis, exclusive of non-cash items of income and expenses such as depreciation and amortization. In contrast, Adjusted EBITDA is derived from accrual basis A method of accounting that reflects expenses incurred and income earned for Income Tax purposes for any one year. Taxpayers who use the accrual method must include in their taxable income any money that they have the right to receive as payment for services, once it income and is not reduced for cash invested in working capital. Consequently, Adjusted EBITDA is not affected by the timing of receivable collections or when accrued expenses Accrued Expense An accounting expense recognized in the books before it is paid for. It is a liability, usually current. These expenses are typically periodic and documented upon a company's balance sheet due to the high probability of collection. are paid. We are not aware of any uniform standards for determining EBITDA or our Adjusted EBITDA and believe presentations of EBITDA may not be calculated consistently by different entities in the same or similar businesses.
Crown Media Holdings, Inc.
Selected Fourth Quarter Unaudited Financial Information
($ in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Subscriber fees $ 21,950 $ 17,468 $ 82,140 $ 68,901
Advertising 36,785 30,898 127,268 96,696
Advertising by Hallmark
Cards 796 350 1,846 1,397
Film asset license fees 11,380 20,421 29,348 40,431
Other revenue 429 20 685 99
---------- ---------- ---------- ----------
Total revenue 71,340 69,157 241,287 207,524
Cost of services:
Affiliate programming 18,179 10,635 52,137 39,369
Non-affiliate programming 25,434 20,795 85,085 69,305
Amortization of film
assets 22,790 15,211 47,197 40,168
Impairment of film assets
and technical facilities 59,960 - 117,891 -
Subscriber acquisition
fee amortization 7,897 6,194 26,939 25,268
Depreciation and
amortization 1,277 1,186 4,825 4,742
Operating costs 13,272 9,471 44,412 43,290
---------- ---------- ---------- ----------
Total cost of services 148,809 63,492 378,486 222,142
Selling, general &
administrative expenses 23,715 17,506 78,003 61,699
Marketing expense 7,006 6,791 23,865 24,436
Reorganization credit (204) (1,757) (483) (1,757)
Depreciation and
amortization 2,104 2,447 9,001 10,066
---------- ---------- ---------- ----------
Loss from operations (110,090) (19,322) (247,585) (109,062)
Loss on early
extinguishment of debt - - - (39,812)
Guaranteed preferred
beneficial interest
accretion - - - (23,218)
Interest expense and other,
net (18,450) (16,638) (66,933) (46,868)
---------- ---------- ---------- ----------
Loss before income taxes (128,540) (35,960) (314,518) (218,960)
Income tax provision (440) (1,057) (2,288) (3,189)
---------- ---------- ---------- ----------
Loss before cumulative
effect of a change
in accounting principle (128,980) (37,017) (316,806) (222,149)
Cumulative effect of change
in accounting principle - 672 - 17,000
---------- ---------- ---------- ----------
Net loss $(128,980) $ (36,345) $(316,806) $(205,149)
---------- ---------- ---------- ----------
Net loss per share, basic
and diluted $ (1.23) $ (0.35) $ (3.03) $ (1.96)
---------- ---------- ---------- ----------
Weighted average shares
outstanding, basic and
diluted 104,533 104,533 104,533 104,484
As of December 31,
-------------------------
2004 2003
-------------------------
ASSETS
Cash and cash equivalents $ 12,102 $ 4,306
Accounts receivable, less allowance for
doubtful accounts of $6,695 and $6,703,
respectively 75,459 61,942
Program license fees - affiliates 40,048 27,127
Program license fees - non-affiliates 78,823 65,571
Subtitling and dubbing 1,143 2,827
Receivable from affiliate 16,644 12,083
Prepaid and other assets 13,887 15,143
-------------------------
Total current assets 238,106 188,999
Accounts receivable, net of current portion 6,798 5,891
Program license fees - affiliates, net of
current portion 59,987 47,748
Program license fees - non-affiliates, net
of current portion 135,372 106,047
Subtitling and dubbing, net of current
portion 1,583 2,020
Film assets, net 599,013 750,737
Subscriber acquisition fees, net 120,013 113,196
Property and equipment, net 32,829 29,235
Goodwill 314,033 314,033
Prepaid and other assets, net of current
portion 5,034 7,841
-------------------------
Total assets $ 1,512,768 $ 1,565,747
-------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued liabilities $ 40,228 $ 32,548
Accrued restricted stock units 13,649 5,906
Subscriber acquisition fees payable 35,223 9,119
License fees payable to affiliates - 30,671
License fees payable to non-affiliates 79,815 87,720
Payables to affiliates 13,512 7,827
Interest payable to HC Crown - 2,655
Interest payable 479 510
Capital lease obligations 2,276 1,559
Deferred revenue 612 2,163
-------------------------
Total current liabilities 185,794 180,678
Accrued liabilities, net of current
portion 21,617 18,906
Subscriber acquisition fees payable 678 1,500
License fees payable to affiliates, net of
current portion 151,980 60,229
License fees payable to non-affiliates,
net of current portion 111,761 82,090
Line of credit and interest payable to HC
Crown 81,067 75,000
Payable to Hallmark Entertainment
affiliates 100,000 100,000
Senior unsecured note to HC Crown,
including accrued interest 460,930 417,083
Credit facility 310,000 300,000
Capital lease obligations, net of current
portion 22,817 7,731
Company obligated mandatorily redeemable
preferred interest 11,488 9,079
-------------------------
Total liabilities 1,458,132 1,252,296
Commitments and contingencies
STOCKHOLDERS' EQUITY
Class A common stock, $.01 par value;
200,000,000 shares authorized;
73,863,037 shares issued and outstanding
as of December 31, 2004 and 2003 739 739
Class B common stock, $.01 par value;
120,000,000 shares authorized;
30,670,422 shares issued and outstanding
as of December 31, 2004 and 2003 307 307
Paid-in capital 1,365,450 1,308,880
Accumulated other comprehensive income 3,434 2,013
Accumulated deficit (1,315,294) (998,488)
-------------------------
Total stockholders' equity 54,636 313,451
-------------------------
Total liabilities and stockholders'
equity $ 1,512,768 $ 1,565,747
-------------------------
Crown Media Holdings, Inc.
Selected Fourth Quarter Unaudited Financial Information
($ in thousands)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net loss $(128,980) $ (36,345) $(316,806) $(205,149)
Amortization of film
assets 22,790 15,211 47,197 40,168
Subscriber acquisition fee
amortization 10,929 8,393 38,253 32,361
Depreciation and
amortization 3,381 3,633 13,826 14,808
Guaranteed preferred
beneficial interest
expense - - - 23,218
Interest expense and
accretion 18,450 16,638 66,933 46,868
Income tax provision 440 1,057 2,288 3,189
---------- ---------- ---------- ----------
Adjusted earnings before
interest, taxes,
depreciation and
amortization $ (72,990) $ 8,587 $(148,309) $ (44,537)
---------- ---------- ---------- ----------
Loss on early
extinguishment of debt - - - 39,812
Cumulative effect of
change in accounting
principle - (672) - (17,000)
Loss on impairment of film
assets and technical
operations 59,960 - 117,891 -
Restricted stock unit and
stock-based compensation 3,169 2,545 11,488 5,912
Programming, subtitling
and dubbing amortization 46,612 33,359 144,109 111,123
Provision for allowance
for doubtful account 1,226 (2,047) 1,297 499
Changes in operating
assets and liabilities:
Additions to program
license fees (119,239) (31,471) (209,386) (209,300)
Additions to subscriber
acquisition fees (21,970) (3,261) (45,070) (5,292)
Increase (decrease) in
subscriber acquisition
fees payable 34,819 (6,307) 25,908 (38,562)
Interest paid (4,168) (4,833) (14,621) (19,855)
Income taxes paid (440) (1,057) (2,288) (3,189)
Changes in other
operating assets and
liabilities, net of
adjustments above 61,543 (45,388) 63,407 25,215
---------- ---------- ---------- ----------
Net cash used in operating
activities $ (11,478) $ (50,545) $ (55,574) $(155,174)
---------- ---------- ---------- ----------
Crown Media Holdings, Inc.
Selected Fourth Quarter Unaudited Financial Information
($ in thousands)
Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
---------- ---------- ---------- ----------
Net cash used in operating
activities $ (11,478) $ (50,545) $ (55,574) $(155,174)
Net cash used in investing
activities (655) (1,623) (1,689) (4,696)
Net cash provided by
financing activities 16,698 53,280 65,006 163,836
Effect of exchange rate
changes on cash (32) 71 53 5
---------- ---------- ---------- ----------
Net increase in cash and
cash equivalents 4,533 1,183 7,796 3,971
Cash equivalents, beginning
of period 7,569 3,123 4,306 335
---------- ---------- ---------- ----------
Cash equivalents, end of
period $ 12,102 $ 4,306 $ 12,102 $ 4,306
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