Central European Media Enterprises Reports 2006 Fourth Quarter and Full-Year Results

Central European Media Enterprises Reports 2006 Fourth Quarter and Full-Year Results

FOURTH QUARTER - Net Revenues Increase 41% - Operating Income Improves $31.0 Million to $73.9 Million - Segment(1) EBITDA Increases 38%

FULL-YEAR - Net Revenues Increase 50% - Operating Income grows $88.5 Million to $140.7 Million - Segment(1) EBITDA Increases 39%

HAMILTON, Bermuda, March 1 /PRNewswire-FirstCall/ -- Central European Media Enterprises Ltd. (CME) (Nasdaq/Prague Stock Exchange: CETV) today announced financial results for the three months and year ended December 31, 2006.

Compared to the fourth quarter of 2005, consolidated net revenues for the fourth quarter of 2006 increased 41% to $214.3 million. Operating income for the quarter increased $31.0 million to $73.9 million. In the quarter, net income from continuing operations declined $3.5 million, and fully diluted earnings per share in respect of continuing operations decreased by $0.13 to $0.64. Compared to the fourth quarter of 2005, Segment(1) EBITDA for the quarter increased 38% to $96.8 million.

Compared to the year ended December 31, 2005, consolidated net revenues for the year ended December 31, 2006 increased 50% to $603.1 million. Operating income increased $88.5 million to $140.7 million. Net income from continuing operations decreased $17.5 million to $25.3 million, and fully diluted earnings per share in respect of continuing operations decreased $0.59 to $0.62. Compared to the year ended December 31, 2005, Segment(1) EBITDA for the year ended December 31, 2006 increased 39% to $218.8 million. Our consolidated results for 2006 include TV Nova in the Czech Republic, which we acquired on May 2, 2005, and Markiza in the Slovak Republic, which was not consolidated in 2005.

Michael Garin, Chief Executive Officer of CME, said, "2006 was a spectacular year especially for a company whose principal business is focused on traditional media. While western companies struggle with their future, we increased our Segment Net Revenues by 30% and Segment EBITDA by 39% and expect to continue to meet the high expectations of our shareholders. It is particularly gratifying that we have delivered record breaking audience share results which can be attributed to the operating management who oversee our activities."

(1) Segment Data, Segment Net Revenues and Segment EBITDA are all non
US-GAAP measures For further details, including a reconciliation to
the most directly comparable US-GAAP financial measures, see
'Reconciliation Between Consolidated Statements of Operations and
Segment Data (non US-GAAP)' below. We define Segment EBITDA margin as
Segment EBITDA expressed as a percentage of Segment Net Revenue.

Consolidated Results for the Three Months Ended December 31, 2006

Consolidated Net Revenues for the three months ended December 31, 2006 increased by 41% to $214.3 million from $152.5 million for the three months ended December 31, 2005. Operating income for the quarter was $73.9 million compared to $42.9 million for the three months ended December 31, 2005. Net income for the quarter was $26.2 million compared to $34.6 million for the three months ended December 31, 2005. Fully diluted earnings per share for the three months ended December 31, 2006 decreased $0.26 to $0.64.

Headline Consolidated Results for the three months ended December 31, 2006 and 2005 were:

CONSOLIDATED RESULTS (Unaudited)
For the Three Months Ended December 31,
(US $000's)
2006 2005 $ change % change
Net revenues $ 214,290 $ 152,498 $ 61,792 41%
Operating income (1) $ 73,887 $ 42,920 $ 30,967 72%
Net income from
continuing operations (1) $ 26,232 $ 29,689 $ (3,457) (12)%
Net income (1) $ 26,232 $ 34,552 $ (8,320) (24)%
Fully diluted earnings
per share from continuing
operations $ 0.64 $ 0.77 $ (0.13) (17)%
Fully diluted earnings
per share $ 0.64 $ 0.90 $ (0.26) (29)%

(1) 2005 has been restated; for further details see page 4.

Consolidated Results for the Year Ended December 31, 2006

Consolidated Net Revenues for the year ended December 31, 2006 increased by 50% to $603.1 million from $401.0 million for the year ended December 31, 2005. Operating income for the year was $140.7 million compared to $52.2 million for the year ended December 31, 2005. Net income for the year was $20.4 million compared to $42.3 million for the year ended December 31, 2005. Fully diluted earnings per share decreased from $1.19 to $0.50 for the year ended December 31, 2006.

Headline Consolidated Results for the years ended December 31, 2006 and 2005 were:

CONSOLIDATED RESULTS
For the Year Ended December 31,
(US $000's)
2006 2005 $ change % change
Net revenues $ 603,115 $ 400,978 $ 202,137 50%
Operating income (1) $ 140,674 $ 52,196 $ 88,478 170%
Net income from
continuing operations (1) $ 25,287 $ 42,835 $ (17,548) (41)%
Net income (1) $ 20,424 $ 42,322 $ (21,898) (52)%
Fully diluted earnings per
share from continuing
operations $ 0.62 $ 1.21 $ (0.59) (49)%
Fully diluted earnings per
share $ 0.50 $ 1.19 $ (0.69) (58)%

(1) 2005 has been restated; for further details see page 4.

Segment(1) Results

We evaluate the performance of our television operations based on Segment(1) Net Revenues and EBITDA (earnings before interest, taxes, depreciation and amortization).

Segment(1) Results for the Three Months Ended December 31, 2006

For the three months ended December 31, 2006 Total Segment(1) Net Revenues increased 24% to $214.3 million from $172.8 million for the three months ended December 31, 2005. Total Segment(1) EBITDA for the three months ended December 31, 2006 increased 38% to $96.8 million from $70.2 million in the three months ended December 31, 2005. Segment(1) EBITDA Margin for the three months ended December 31, 2006 was 45% compared to 41% for the three months ended December 31, 2005.

Our Total Segment(1) Net Revenues, Total Segment(1) EBITDA and Segment(1) EBITDA margin for the three months ended December 31, 2006 and 2005 were:

SEGMENT (1) RESULTS (Unaudited)
For the Three Months Ended December 31,
(US $000's)
2006 2005 $ change % change
Total Segment Net Revenues $ 214,290 $ 172,774 $ 41,516 24%
Total Segment EBITDA $ 96,772 $ 70,241 $ 26,531 38%
Segment EBITDA Margin 45% 41%

Segment(1) Results for the Year Ended December 31, 2006

For the year ended December 31, 2006, Total Segment(1) Net Revenues increased 30% to $604.9 million from $465.2 million for the year ended December 31, 2005. Total Segment(1) EBITDA for the year ended December 31, 2006 increased 39% to $218.8 million from $157.9 million in the year ended December 31, 2005. Segment(1) EBITDA Margins for the year ended December 31, 2006 and 2005 were 36% and 34%, respectively.

Our Total Segment(1) Net Revenues, Total Segment(1) EBITDA and Segment(1) EBITDA margin for the year ended December 31, 2006 and 2005 were:

SEGMENT (1) RESULTS (Unaudited)
For the Year Ended December 31,
(US $000's)
2006 2005 $ change % change
Total Segment Net Revenues $ 604,875 $ 465,244 $ 139,631 30%
Total Segment EBITDA $ 218,842 $ 157,861 $ 60,981 39%
Segment EBITDA Margin 36% 34%

(1) Segment Data, Segment Net Revenues and Segment EBITDA are all non
US-GAAP measures For further details, including a reconciliation to
the most directly comparable US-GAAP financial measures, see
'Reconciliation Between Consolidated Statements of Operations and
Segment Data (non US-GAAP)' below. We define Segment EBITDA margin as
Segment EBITDA expressed as a percentage of Segment Net Revenue.

Restatement

As previously announced, subsequent to the issuance of our financial statements as of and for the period ended June 30, 2006 we initiated a voluntary review of our historical stock option granting practices for the period from 1994 to 2002. Our Audit Committee conducted the review with the assistance of independent legal counsel and an independent accounting firm. The Audit Committee found certain instances of administrative and procedural deficiencies that resulted in incorrect accounting measurement dates and other incorrect accounting, but found no evidence from which it could be concluded that the errors were the result of deliberate or intentional misconduct. These accounting errors resulted from grants made to grantees where the list of grantees and/or shares allocated to them were not sufficiently definitive for the grant to be deemed final as of the reported measurement date as well as from a small number of grants made to employees and non-employees that had been accounted for incorrectly. Errors were discovered in the accounting for grants made in the period between 1994 and 1998; we believe the impact of these instances to be immaterial for each prior year and they neither relate to nor have an impact on the current period.

We concluded that correcting the error in the financial statements for year ended December 31, 2006 would be material; therefore in accordance with SAB 108, we have restated our historic financial statements. The restatement is immaterial to the prior years.

The restatement above had the impact on our previously presented financial information as set out below. All amounts are in US$ 000's except per share data:

As reported Adjustment As restated

Retained deficit at December 31, 2005 (44,973) (7,181) (52,154)
Additional paid-in capital at December
31, 2005 746,880 7,181 754,061

Corporate operating costs for the three
months ended December 31, 2005 (9,392) (47) (9,439)

Corporate operating costs for the year
ended December 31, 2005 (25,374) (173) (25,547)

The company will host a teleconference to discuss its fourth quarter and full-year 2006 results on Thursday, March 1, 2007 at 9:30 a.m. New York time (2:30 p.m. London time and 3:30 p.m. Prague time). The teleconference will refer to presentation slides which will be available on CME's website www.cetv-net.com prior to the call. To access the teleconference, please dial +1 973-321-1024 (U.S. and International callers) ten minutes prior to the start time. The conference call will be broadcast live via www.cetv-net.com. If you cannot listen to the teleconference at its scheduled time, there will be a replay available for two weeks following the call that can be accessed by dialing +1 973-341-3080 (U.S. and International callers), passcode: 8437260. A digital audio replay in mp3 format will also be archived on the Company's website.

Forward-Looking and Cautionary Statements

This report contains forward-looking statements, including the impact of legal proceedings in Croatia and Ukraine, the results of additional investment in Croatia and Ukraine, the implementation of an advertising sales strategy in the Czech Republic and cost reductions in the Czech and Slovak Republics, our ability to develop and implement multi-channel strategies generally, the growth of television advertising in our markets, the future economic conditions in our markets, future investments in television broadcast operations, the growth potential of advertising spending in our markets, and other business strategies and commitments. For these statements and all other forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or are otherwise beyond our control and some of which might not even be anticipated. Future events and actual results, affecting our strategic plan as well as our financial position, results of operations and cash flows, could differ materially from those described in or contemplated by the forward-looking statements. Important factors that contribute to such risks include, but are not limited to, the general regulatory environments where we operate and application of relevant laws and regulations, the renewals of broadcasting licenses, our ability to implement strategies regarding sales and multi- channel distribution, the rate of development of advertising markets in countries where we operate, our ability to acquire necessary programming and the ability to attract audiences, our ability to obtain additional frequencies and licenses, and general market and economic conditions in these countries as well as in the United States and Western Europe.

This press release should be read in conjunction with our Form 10-K for the year ended December 31, 2006, which was filed with the Securities and Exchange Commission on March 1 2007. The Company makes available, free of charge, on our website at http://www.cetv-net.com/ our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

CME is a TV broadcasting company operating leading networks in six Central and Eastern European countries with an aggregate population of approximately 90 million people. The Company's television stations are located in Croatia (Nova TV), Czech Republic (TV Nova, Galaxie Sport), Romania (PRO TV, Acasa, PRO Cinema, PRO TV International), Slovakia (Markiza), Slovenia (POP TV, Kanal A) and Ukraine (Studio 1+1, Studio 1+1 International, Kino, Citi). CME is traded on the NASDAQ and the Prague Stock Exchange under the ticker symbol "CETV".

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(US$ 000's, except share and per share data)

For the Years Ended December 31,
2006 2005 2004
As As
restated restated

Net revenues $ 603,115 $ 400,978 $ 182,339
Operating costs 90,060 65,138 33,615
Cost of programming 227,509 148,837 71,793
Station selling, general and
administrative expenses 65,412 46,382 22,112
Depreciation of station property, plant
& equipment 25,795 16,367 6,429
Amortization of broadcast licenses and
other intangibles 18,813 11,180 465
Corporate operating costs (including
non-cash stock-based compensation of
$3.6 million, $3.1 million and $10.2
million in 2006, 2005 and 2004,
respectively) 34,104 25,547 29,254
Impairment charge 748 35,331 -
Operating income 140,674 52,196 18,671
Interest income/(expense), net (37,863) (25,263) 3,115
Foreign currency exchange gain/(loss), net (44,908) 37,968 (574)
Change in fair value of derivatives (12,539) - -
Other income/(expense) 3,038 (4,705) (698)
Income before provision for income taxes,
minority interest, equity in income of
unconsolidated affiliates and
discontinued operations 48,402 60,196 20,514
Provision for income taxes (14,962) (16,691) (11,089)
Income before minority interest, equity
in income of unconsolidated affiliates
and discontinued operations 33,440 43,505 9,425
Minority interest in income of
consolidated subsidiaries (13,602) (8,908) (4,106)
Equity in (loss)/income of unconsolidated
affiliates (730) 8,238 10,619
Gain on sale of unconsolidated affiliate 6,179 - -
Net income from continuing operations 25,287 42,835 15,938
Net (loss)/income from discontinued
operations (4,863) (513) 2,524
Net income $ 20,424 $ 42,322 $ 18,462

PER SHARE DATA:
Net income/(loss) per share
Continuing operations - Basic $ 0.63 $ 1.24 $ 0.57
Continuing operations - Diluted 0.62 1.21 0.55
Discontinued operations - Basic (0.12) (0.01) 0.09
Discontinued operations - Diluted (0.12) (0.01) 0.09
Net income - Basic 0.51 1.22 0.66
Net income - Diluted $ 0.50 $ 1.19 $ 0.63

Weighted average common shares used in
computing per share amounts (000s):

Basic 40,027 34,664 27,871
Diluted 40,600 35,430 29,100

CENTRAL EUROPEAN MEDIA ENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS (continued)
(US$ 000's, except share and per share data)(Unaudited)

For the Three Months Ended
December 31,
2006 2005 2004
As As
restated restated

Net revenues $ 214,290 $ 152,498 $ 65,062
Operating costs 18,973 20,405 11,151
Cost of programming 78,321 53,964 24,964
Station selling, general and
administrative expenses 20,224 14,126 7,552
Depreciation of station property, plant
& equipment 7,954 6,300 1,613
Amortization of broadcast licenses and
other intangibles 4,846 5,344 340
Corporate operating costs (including
non-cash stock-based compensation of
$1.2 million, $0.7 million and $3.1
million in 2006, 2005 and 2004,
respectively) 10,085 9,439 8,828
Operating income 73,887 42,920 10,614
Interest (expense)/income, net (9,690) (10,312) 1,399
Foreign currency exchange (loss)/gain, net (19,439) 7,682 215
Change in fair value of derivatives (9,782) - -
Other income/(expense) 3,831 (176) 242
Income before provision for income taxes,
minority interest, equity in income of
unconsolidated affiliates and discontinued
operations 38,807 40,114 12,470
Provision for income taxes (6,151) (8,579) (3,030)
Income before minority interest, equity
in income of unconsolidated affiliates
and discontinued operations 32,656 31,535 9,440
Minority interest in income of
consolidated subsidiaries (6,424) (5,264) (3,496)
Equity in income of unconsolidated
affiliates - 3,418 5,336
Net income from continuing operations 26,232 29,689 11,280
Net income from discontinued operations - 4,863 1,626
Net income $ 26,232 $ 34,552 $ 12,906

PER SHARE DATA:
Net income per share
Continuing operations - Basic $ 0.64 $ 0.78 $ 0.40
Continuing operations - Diluted 0.64 0.77 0.38
Discontinued operations - Basic - 0.13 0.06
Discontinued operations - Diluted - 0.13 0.06
Net income - Basic 0.64 0.91 0.46
Net income - Diluted $ 0.64 $ 0.90 $ 0.44

Weighted average common shares used in
computing per share amounts (000s):

Basic 40,725 37,972 28,365
Diluted 41,276 38,554 29,333

Segment Data

We manage our business on a geographic basis, and review the performance of each geographic segment using data that reflects 100% of operating and license company results. Our segments are comprised of Croatia, the Czech Republic, Romania, the Slovak Republic, Slovenia and Ukraine.

We evaluate the performance of our segments based on Segment Net Revenues and Segment EBITDA, which include the results of certain entities (primarily our operations in the Slovak Republic) that were not consolidated until January 23, 2006.

Segment EBITDA is determined as segment net income/loss, which includes costs for program rights amortization, before interest, taxes, depreciation and amortization of broadcast licenses and other intangible assets. Items that are not allocated to our segments for purposes of evaluating their performance, and therefore are not included in Segment EBITDA, include:

* expenses presented as corporate expenses in our consolidated statements
of operations;

* stock-based compensation charges;

* foreign currency exchange gains and losses;

* changes in the fair value of derivatives; and

* certain unusual or infrequent items (e.g., gains and losses/impairments
on assets or investments, gain on sale of unconsolidated affiliates).

We use Segment EBITDA as a component in determining management bonuses.

Below is a table showing our Segment EBITDA by operation and a reconciliation of these figures to our consolidated US GAAP results for the years ended December 31, 2006, 2005 and 2004, and for the three months ended December 31, 2006 and 2005:

Reconciliation Between Consolidated Statements of Operations
and Segment Data (non US-GAAP)

SEGMENT FINANCIAL INFORMATION
For the Years Ended December 31,
(US $000's)
Segment Net Revenues (1) Segment EBITDA
2006 2005 2004 2006 2005 2004
Country
Croatia (NOVA TV)
(2) $22,310 $22,030 $9,757 $(14,413)$(15,866) $(3,756)
Czech Republic
(TV Nova) (3) 208,387 154,010 - 100,488 71,544 -
Romania (4) 148,616 103,321 76,463 65,860 43,803 25,198
Slovak Republic
(MARKIZA TV) 73,420 64,266 61,576 20,805 17,240 18,975
Slovenia (POP TV
and KANAL A) 54,534 48,770 45,388 19,842 19,337 19,077
Ukraine (STUDIO 1+1) 96,413 72,847 53,351 29,973 21,803 14,729
Ukraine (KINO, CITI)
(5) 1,195 - - (3,713) - -
Total Segment Data $604,875 $465,244 $246,535 $218,842 $157,861 $74,223

Reconciliation to
Consolidated
Statement of
Operations:

Consolidated Net
Revenues / Income
before provision
for income taxes,
minority interest,
equity in income of
unconsolidated
affiliates and
discontinued
operations $603,115 $400,978 $182,339 $48,402 $60,196 $20,514
Corporate operating
costs (including
non-cash stock-
based compensation
of $3.6 million,
$3.1 million and
$10.2 million in
2006, 2005 and 2004,
respectively) - - - 34,104 25,547 29,254
Impairment charge - - - 748 35,331 -
Unconsolidated Equity
Affiliates (6) 1,760 64,266 64,196 (1,292) 17,240 19,404
Depreciation of
station assets - - - 25,795 16,367 6,429
Amortization of
broadcast licenses
and other intangibles - - - 18,813 11,180 465
Interest expense/
(income), net - - - 37,863 25,263 (3,115)
Foreign currency
exchange loss/(gain),
net - - - 44,908 (37,968) 574
Change in fair value
of derivatives - - - 12,539 - -
Other (income)/expense - - - (3,038) 4,705 698
Total Segment Data $604,875 $465,244 $246,535 $218,842 $157,861 $74,223

(1) All net revenues are derived from external customers.There are no
inter-segmental revenues.
(2) We acquired our Croatia operations in July 2004.
(3) We acquired our TV NOVA (Czech Republic) operations in May 2005 and
GALAXIE SPORT in September 2005.
(4) Romanian networks are PRO TV, PRO CINEMA, ACASA and PRO TV
INTERNATIONAL for the years ended December 31, 2006 and 2005 and PRO
TV, PRO CINEMA, ACASA, PRO TV INTERNATIONAL, PRO FM and INFOPRO for
the year ended December 31, 2004.
(5) We acquired our Ukraine (KINO, CITI) operations in January 2006.
(6) Our Slovak Republic operations were accounted for as an equity
affiliate until January 23, 2006.

SEGMENT FINANCIAL INFORMATION
For the Three Months Ended December 31,
(US $000's)
Segment Net
Revenues (1) Segment EBITDA
2006 2005 2006 2005
Country
Croatia (NOVA TV) $8,565 $5,239 $(2,774) $(6,319)
Czech Republic (TV Nova) 71,384 65,363 40,916 31,318
Romania (2) 51,679 36,535 26,106 17,834
Slovak Republic (MARKIZA TV) 28,273 20,276 11,547 6,238
Slovenia (POP TV and KANAL A) 19,651 17,261 9,155 9,135
Ukraine (STUDIO 1+1) 34,297 28,100 13,799 12,035
Ukraine (KINO, CITI) (3) 441 - (1,977) -
Total Segment Data $214,290 $172,774 $96,772 $70,241

Reconciliation to Consolidated
Statement of Operations:
Consolidated Net Revenues /
Income before provision for
income taxes, minority interest,
equity in income of unconsolidated
affiliates and discontinued
operations $214,290 $152,498 $38,807 $40,114
Corporate operating costs
(including non-cash stock-
based compensation of $1.2
million and $0.7 million in
2006 and 2005, respectively) - - 10,085 9,439
Unconsolidated Equity Affiliates (4) - 20,276 - 6,238
Depreciation of station assets - - 7,954 6,300
Amortization of broadcast licenses
and other intangibles - - 4,846 5,344
Interest expense, net - - 9,690 10,312
Foreign currency exchange loss/
(gain), net - - 19,439 (7,682)
Change in fair value of derivatives - - 9,782 -
Other (income)/expense - - (3,831) 176
Total Segment Data $214,290 $172,774 $96,772 $70,241

(1) All net revenues are derived from external customers. There are no
inter-segmental revenues.
(2) Romanian networks are PRO TV, PRO CINEMA, ACASA and PRO TV
INTERNATIONAL.
(3) We acquired our Ukraine (KINO, CITI) operations in January 2006.
(4) Our Slovak Republic operations were accounted for as an equity
affiliate until January 23, 2006.

For additional information, please visit www.cetv-net.com

Source: Central European Media Enterprises Ltd.

CONTACT: Romana Tomasova, Director of Corporate Communications, Central
European Media Enterprises, +44-20-7430-5357, romana.tomasova@cme-net.com;
Jonathan Lesko, or Mike Smargiassi, both of Brainerd Communicators, Inc. for
for Central European Media Enterprises, +1-212-986-6667

Web site: http://www.cetv-net.com/

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