As filed with the Securities and Exchange Commission on May 15, 2000
================================================================================
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Antenna TV S.A.
(Translation of registrant's name into English)
Kifissias Avenue 10-12
Maroussi 151 25
Athens, Greece
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-______________.
================================================================================
<PAGE>
This report (the "Quarterly Report") sets forth certain information
regarding the financial condition and results of operations of Antenna TV S.A.,
a Greek societe anonyme (the "Company"), for the fiscal quarter ended March 31,
2000.
The unaudited financial statements included in this Quarterly Report,
in the opinion of management, reflect all necessary adjustments (which include
only normal recurring adjustments) necessary for a fair presentation of the
financial position, the results of operations and cash flows for the periods
presented. The unaudited financial information included in this Quarterly Report
has been prepared in accordance with U.S. generally accepted accounting
principles.
For a description of the Company's accounting policies, see Notes to
Financial Statements in the Company's Annual Report on Form 20-F for the year
ended December 31, 1999.
i
<PAGE>
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
Consolidated Statements of Operations for the three months ended
March 31, 1999 and 2000...............................................1
Consolidated Balance Sheets as of December 31, 1999 and March 31, 2000....2
Consolidated Statement of Shareholders' Equity for the three months
ended March 31, 2000..................................................4
Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and 2000...............................................5
Notes to the Consolidated Financial Statements............................7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.............................20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.....................................................27
PART II. OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS.......................30
ITEM 5. OTHER INFORMATION...............................................30
ii
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
ANTENNA TV S.A.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 1999 and 2000
(In thousands of drachmae and U.S. dollars, except earnings per share)
<TABLE>
<CAPTION>
Unaudited Three Months
Notes Ended March 31,
--------- ----------------------------------------
1999 2000
-------------- -----------------------
(GRD) (GRD) ($)
<S> <C> <C> <C>
Advertising revenue.................. 7,623,947 8,924,921 25,518
Related party revenue................ 3 417,830 312,326 893
Publication revenue.................. - 1,946,079 5,564
Other revenue........................ 171,264 331,708 948
-------------- ------------ ---------
Total net revenue.................... 8,213,041 11,515,034 32,923
-------------- ------------ ---------
Cost of sales........................ 1,426,861 3,516,736 10,055
Selling, general and administrative
expenses.......................... 1,359,603 1,523,302 4,355
Amortization of programming costs.... 3,137,669 3,148,751 9,003
Depreciation and amortization........ 167,295 380,593 1,088
-------------- ------------ ---------
Operating income..................... 2,121,613 2,945,652 8,422
Interest income...................... 214,310 760,341 2,174
Interest expense..................... (899,379) (1,124,677) (3,216)
Foreign exchange gains (losses), net. 9 89,596 (1,408,669) (4,028)
Equity in net income of unconsolidated
affiliate......................... 15,385 2,677 8
Related party commission income...... 3 145,316 47,875 137
Other expense, net................... 11 (292,895) (7,238) (21)
Minority interest in loss of
consolidated entity, net.......... - 37,990 109
-------------- ------------ ---------
Earnings before income taxes......... 1,393,946 1,253,951 3,585
Provision for income taxes........... 7 626,509 503,991 1,441
-------------- ------------ ---------
Net income........................... 767,437 749,960 2,144
============== ============ =========
Basic and diluted earnings per share. 38.7 37.8 0.1
============== ============ =========
</TABLE>
Exchange rate used for the convenience translation of the March 31, 2000
balances is GRD 349.75 to $1.00.
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
ANTENNA TV S.A.
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and March 31, 2000
(In thousands of drachmae and U.S. dollars, except earning per share)
<TABLE>
<CAPTION>
Unaudited
December 31, March 31,
------------------------ -----------------------
Notes 1999 1999 2000 2000
------- ----------- ---------- ----------- ----------
(GRD) ($) (GRD) ($)
<S> <C> <C> <C> <C> <C>
ASSETS
- --------------------------------------------------------
Current assets:
Cash and cash equivalents....................... 31,772,162 90,842 26,178,634 74,850
Restricted cash................................. 425,266 1,216 320,521 916
Accounts receivable, less allowance for doubtful
accounts of GRD 1,834,794 in 1999 and GRD
1,879,189 in March 2000...................... 21,873,360 62,540 25,234,141 72,149
Inventories..................................... 438,006 1,252 744,442 2,128
Due from related parties........................ 3 3,300,360 9,436 3,349,446 9,577
Programming costs, net.......................... 4 11,824,168 33,808 12,094,085 34,579
Advances to related parties..................... 3 156,660 448 160,460 459
Advances to third parties...................... 1,201,061 3,434 1,285,212 3,675
Prepaid expenses and other current assets....... 89,214 255 36,240 104
Income and withholding tax advances............. 780,264 2,231 763,257 2,182
----------- ---------- ----------- ----------
Total current assets......................... 71,860,521 205,462 70,166,438 200,618
----------- ---------- ----------- ----------
Investment in unconsolidated affiliate.................. 75,806 217 - -
Property and equipment, net............................. 3,475,745 9,938 4,080,292 11,666
Broadcast, transmission and printing equipment
under capital leases, net........................... 1,649,742 4,717 1,584,994 4,532
Deferred charges, net................................... 1,677,084 4,795 1,620,399 4,633
Programming costs, excluding current portion............ 4 7,652,672 21,880 7,826,789 22,378
Other receivable less allowance for doubtful accounts
and fair value of GRD 480,000 in 1999 and GRD
522,050 in March 2000............................... 272,998 781 226,448 647
Due from related party.................................. 3 3,276,667 9,369 3,258,801 9,318
Advances to related parties............................. 3 173,137 495 150,137 429
Intangible assets, net.................................. 5 970,561 2,775 1,005,702 2,875
Deferred tax assets..................................... 7 396,702 1,134 347,967 995
Other assets............................................ 6 137,849 394 3,144,830 8,992
----------- ---------- ----------- ----------
Total assets........................................ 91,619,484 261,957 93,412,797 267,083
=========== ========== =========== ==========
</TABLE>
Exchange rate used for the convenience translation of the December 31, 1999 and
March 31, 2000 balances is GRD 349.75 to $1.00.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
ANTENNA TV S.A.
CONSOLIDATED BALANCE SHEETS
As of December 31, 1999 and March 31, 2000
(In thousands of drachmae and U.S. dollars, except earnings per share)
<TABLE>
<CAPTION>
Unaudited
December 31, March 31,
----------------------- -----------------------
Notes 1999 1999 2000 2000
------- ----------- ---------- ----------- ----------
(GRD) ($) (GRD) ($)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Bank overdrafts and short-term borrowings........... 3,278,111 9,373 3,762,315 10,757
Current portion of obligations under capital leases. 385,856 1,103 376,656 1,077
Trade accounts, notes and cheques payable........... 9,793,645 28,002 9,291,835 26,567
Program license payable............................. 2,538,945 7,259 2,008,297 5,742
Payable to related parties.......................... 3 68,823 197 - -
Customer advances................................... 327,370 936 358,898 1,026
Accrued interest.................................... 1,411,003 4,034 585,613 1,674
Accrued expenses and other current liabilities...... 4,184,880 11,966 4,039,621 11,550
Income taxes payable................................ 237,525 679 363,889 1,040
Deferred tax liability.............................. 7 1,965,298 5,619 2,248,820 6,430
Current portion of other long-term liability........ 1,003,116 2,868 904,716 2,587
----------- ---------- ----------- ----------
Total current liabilities....................... 25,194,572 72,036 23,940,660 68,450
----------- ---------- ----------- ----------
Long-term liabilities:
Long-term debt...................................... 8 36,479,831 104,303 38,911,153 111,254
Long-term obligations under capital leases.......... 704,971 2,016 668,702 1,912
Deferred tax liability.............................. 7 1,599,096 4,572 1,723,455 4,928
Other long-term liability........................... 532,483 1,522 319,483 913
Payable to related parties.......................... 3 185,000 529 185,000 529
Employee retirement benefits........................ 520,832 1,489 541,578 1,548
Long-term provisions................................ 203,270 581 211,367 604
----------- ---------- ----------- ----------
Total liabilities............................... 65,420,055 187,048 66,501,398 190,138
----------- ---------- ----------- ----------
Minority Interests...................................... 650,969 1,861 612,979 1,753
----------- ---------- ----------- ----------
Shareholders' equity:
Share capital....................................... 1,984,944 5,675 1,984,944 5,675
Additional paid-in capital.......................... 28,714,904 82,101 28,714,904 82,101
Accumulated (deficit)............................... (5,151,388) (14,728) (4,401,428) (12,584)
----------- ---------- ----------- ----------
Total shareholders' equity.............................. 25,548,460 73,048 26,298,420 75,192
----------- ---------- ----------- ----------
Commitments and contingencies:
Total liabilities and shareholders' equity...... 91,619,484 261,957 93,412,797 267,083
=========== ========== =========== ==========
</TABLE>
Exchange rate used for the convenience translation of the December 31, 1999
and March 31, 2000 balances is GRD 349.75 to $1.00.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
ANTENNA TV S.A.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the year ended December 31, 1999 and the three months ended March 31, 2000
(In thousands of drachmae)
<TABLE>
<CAPTION>
Accumulated (Deficit) Retained
Earnings
----------------------------------------
Legal,
Tax
Free Accumulated
Additional and (Deficit)
Share Paid in Other Retained Grand
Capital Capital Reserves Earnings Total Total
------------ ------------ ----------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999.............. 1,984,944 28,714,904 2,852,605 (8,003,993) (5,151,388) 25,548,460
Net income for the three
months (unaudited).............. - - - 749,960 749,960 749,960
------------ ------------ ----------- -------------- ----------- ------------
Balance, March 31, 2000
(unaudited)............................. 1,984,944 28,714,904 2,852,605 (7,254,033) (4,401,428) 26,298,420
============ ============ =========== ============== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
ANTENNA TV S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999 and 2000
(In thousands of drachmae and U.S. dollars)
<TABLE>
<CAPTION>
Unaudited March 31,
------------------------------------------
1999 2000
---------- -------------------------
(GRD) (GRD) ($)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income................................................. 767,437 749,960 2,144
Adjustments to reconcile net income to net cash:
Deferred income taxes.................................... 588,695 459,010 1,312
Minority interest in loss of consolidated entity......... - (37,990) (109)
Equity in net income of unconsolidated affiliate......... (15,385) (2,677) (8)
Amortization and write-off of debt issuance
expenses................................................. 112,492 56,685 162
Amortization of premium on foreign exchange
contract and loss on option............................ 854,584 - -
Depreciation of property and equipment and
capital leases and amortization of programming
costs, goodwill and other intangibles.................. 3,304,964 3,529,344 10,091
Provision for other long-term obligations................ 18,295 8,097 23
Provision for employee retirement benefits............... 8,608 16,996 49
Change in current assets and liabilities:
(Increase) in accounts and other receivable.......... (1,985,559) (3,046,926) (8,712)
(Increase) in due from related parties............... (448,490) (242,468) (693)
(Increase) in programming costs...................... (3,360,720) (3,680,429) (10,523)
(Increase) decrease in prepaid and licensed
programming expenditures........................... (65,011) 87,644 251
(Decrease) in trade accounts, notes and
cheques payable.................................... (377,417) (565,802) (1,618)
Increase (decrease) in licensed program payable...... 30,208 (530,648) (1,517)
Increase in inventories.............................. - (306,436) (876)
(Decrease) in accrued expenses and other
liabilities........................................ (3,619,757) (1,327,812) (3,796)
Increase in income taxes payable..................... - 13,342 38
Other, net........................................... (438,209) 90,574 259
---------- ----------- ----------
Total adjustments............................... (5,392,702) (5,479,496) (15,667)
---------- ----------- ----------
Net cash (used) in operating activities....................... (4,625,265) (4,729,536) (13,523)
---------- ----------- ----------
Cash flows from investing activities:
Deposit for the right of acquisition....................... - (3,000,000) (8,577)
Acquisition of subsidiary, net of cash..................... - (42,065) (120)
</TABLE>
5
<PAGE>
ANTENNA TV S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1999 and 2000
(In thousands of drachmae and U.S. dollars)
<TABLE>
<CAPTION>
Unaudited March 31,
------------------------------------------
1999 2000
---------- -------------------------
(GRD) (GRD) ($)
<S> <C> <C> <C>
Dividends received......................................... - 70,890 203
Purchase of fixed assets................................... (69,753) (867,619) (2,481)
---------- ----------- ----------
Net cash (used) in investing activities....................... (69,753) (3,838,794) (10,975)
---------- ----------- ----------
Cash flows from financing activities:
Issuance of common shares.................................. 25,356,339 - -
Redemption of Senior Notes................................. (1,185,994) - -
Increase in bank overdrafts and short term borrowings, net. 15,297 484,204 1,384
(Increase) decrease in restricted cash..................... (264,398) 104,745 300
Repayments of capital lease obligations.................... (57,891) (45,469) (130)
---------- ----------- ----------
Net cash provided by financing activities..................... 23,863,353 543,480 1,554
---------- ----------- ----------
Effect of exchange rate changes on cash....................... 2,496,463 2,431,322 6,952
Increase (decrease) in cash................................... 21,664,798 (5,593,528) (15,992)
Cash at beginning of year..................................... 11,300,087 31,772,162 90,842
---------- ----------- ----------
Cash at end of year........................................... 32,964,885 26,178,634 74,850
========== =========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest..................................... 1,646,684 1,950,067 5,576
Cash paid for income taxes................................. - - -
</TABLE>
Exchange rate used for the convenience translation of the March 31, 2000
balances is GRD 349.75 to $1.00.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
ANTENNA TV S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
I. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements and related notes at March 31,
2000 and for the three months ended March 31, 1999 and 2000 are unaudited and
prepared in conformity with the accounting principles applied in the Company's
Annual Report on Form 20-F for the fiscal year ended December 31, 1999. In the
opinion of management, such interim financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the results for such periods. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year or any other interim period.
Acquisitions of Entities Under Common Control
On May 6, 1999, the Company acquired the following interests: a 51%
interest in Audiotex S.A. ("Audiotex"), a company that generates revenue from
the sale of audiotext (for a purchase price of $7.25 million); a 99.97% interest
in Antenna R.T. Enterprises ("Antenna Radio"), which owns Antenna FM (97.1 FM),
a combination news/talk and music radio station serving the greater Athens area
(for a purchase price of $16.25 million plus the assumption of approximately
$5.2 million of indebtedness); a 100% interest in Antenna Spoudastiki Ltd.
("Antenna Spoudastiki"), which operates a training center for journalists and
other media personnel (for a purchase price of $6.0 million); and a 100%
interest in Pacific Broadcast Distribution Ltd. ("Pacific Broadcast"), which
rebroadcasts the Company's programming in Australia through a joint venture (for
a purchase price of $3.5 million). Each of the companies whose interests were
acquired was previously affiliated with or controlled by members of the family
of Mr. Minos Kyriakou, the Company's Chairman and Chief Executive Officer.
These business combinations were among companies under common control
and have been accounted for "as if" a pooling of interest had occurred for
periods subsequent to September 1, 1998, the date that the companies came under
common control for accounting purposes. Accordingly, the balance sheet as at
December 31, 1998 and the consolidated statements of operations, cash flows and
shareholders' equity for the year ended December 31, 1998 have been restated.
Because the business combinations are among companies under common control they
have been consolidated based upon their book value and historical results of
operations, respectively. The cash amounts paid for the companies acquired, in
excess of their book values, have been treated as a dividend to the selling
shareholders.
The total purchase price of all the businesses amounted to $38.2
million, comprised of cash consideration of $33.0 million and the assumption of
$5.2 million of debt. The total cash purchase price of GRD 10,040 million
exceeded the book value of the acquired companies by GRD 11,969 million ($34.2
million), resulting in a deemed dividend to the shareholders.
7
<PAGE>
Acquisitions of Unrelated Businesses
On October 27, 1999, Antenna T.V. purchased a 51% interest in Daphne
Communications S.A. ("Daphne"), a Greek publishing company, for a total
consideration of GRD 1,210 million. This acquisition was accounted for using the
purchase method and, accordingly, the net assets acquired have been recorded at
their fair value and the results of their operations are included from the date
of acquisition. Based on estimates of fair value, GRD 300 million has been
allocated to net tangible assets, GRD 200 million to magazine rights and GRD 787
million to goodwill.
On February 7, 2000 Antenna TV acquired the 49% interest in Audiotex
that it did not already own from Legion International S.A., a Lagardere Group
company, for total consideration of GRD 55 million and an increase in the
royalty fee to Legion International S.A. from 7.5% to 12% of Audiotex's annual
revenue for 10 years. The term of the amended royalty agreement is from January
1, 2000 to January 1, 2010. This acquisition was accounted for using the
purchase method and, accordingly, the net assets acquired have been recorded at
their fair value and the results of their operations are included from the date
of acquisition. Based on estimates of fair value, GRD 53 million has been
allocated to goodwill. The incremental increase in the royalty payment of 4.5%
for the next five years and the payment of a 12% royalty fee for an additional
five years represents the additional consideration payable for the acquired
interest and will be recorded as an additional element of the cost of the
acquired entity (i.e., goodwill) and will be amortized over 10 years.
Audiotext's revenues for the year ended December 31, 1999 were GRD 855 million.
Assuming revenues of the same amount over the next 10 years, the additional
consideration paid would be approximately GRD 706. However, the ultimate amount
will only be determined at the end of each period. The additional elements of
cost will be recorded when the contingency is resolved and the consideration is
issuable.
On March 2, 2000, the Company entered into an agreement with MEAGA S.A.
a Greek company which is listed on the Athens Stock Exchange, to acquire
approximately 70% of MEAGA, subject to the completion of due diligence by
Antenna and receipt of regulatory approvals and consents. In connection with
this transaction, MEAGA will sell its existing businesses to third party
purchasers and the proceeds will be applied to repay all outstanding
indebtedness of MEAGA. As a result, just prior to the acquisition, MEAGA will
have no assets or liabilities. In exchange for its interest in MEAGA, Antenna
will transfer stakes in four of its subsidiaries, Antenna Radio, Antenna
Spoudastiki, Audiotex and Daphne, to MEAGA. Following the completion of the
acquisition, the assets and liabilities of MEAGA will be comprised of the
historical book values of the businesses contributed by Antenna. The
consolidated financial statements of Antenna TV will reflect a charge to
recognize the cost of the disposition of the interest transferred to the
minority shareholders and a corresponding recognition of a minority interest in
the consolidated balance sheet. Regulatory approvals and consents for this
transaction have not yet been obtained.
Principles of Consolidation
The consolidated financial statements of the Company include all of its
significant majority-owned subsidiaries. Affiliated companies in which the
Company does not own a controlling interest or for which the minority
shareholders have significant veto rights over operating decisions are accounted
for using the equity method.
8
<PAGE>
Deferred Charges
The expenses incurred in connection with the issuance and distribution
of the Company's 9% Senior Notes due 2007 (the "Senior Notes"), issued on August
12, 1997, were capitalized and are being amortized over the term of the Senior
Notes. Amortization for the three months ended March 31, 1999 and 2000 totaled
GRD 57 million and GRD 57 million, respectively, and is included in interest
expense in the accompanying unaudited consolidated statements of operations for
the three months ended March 31, 1999 and 2000.
Foreign Exchange Contracts
Antenna enters into foreign exchange contracts to manage its exposure
to foreign currency exchange and interest rate risks. Financial instruments are
recorded on the balance sheet at their fair values unless they meet, for
accounting purposes, certain hedging criteria. A foreign exchange contract is
considered a hedge of an identifiable foreign currency commitment if (i) the
contract is designated as, and is effective as, a hedge of currency commitment
and (ii) the foreign currency commitment is firm. Gains and losses on foreign
exchange contracts meeting these hedge accounting criteria are deferred and
included in the measurement of the related foreign currency transaction. Losses
are not deferred if, however, it is estimated that the deferral would lead to
recognition of losses in later periods.
Antenna was a party to an $87 million forward contract with the Royal
Bank of Scotland, to hedge elements of its currency exposure on a portion of the
principal and interest payable of its U.S. dollar denominated debt. The term of
the contract covered the period from May 15, 1998 to May 15, 1999. The forward
rate was 334 drachmae to the dollar and the spot rate on the contract's
effective date was 310 drachmae to the dollar. The premium (representing the
difference between the spot rate on the contract's effective date and the
forward rate), aggregating GRD 2,088 million, was amortized over the term of the
contract. Of this amount, GRD 522 million was recognized for the three months
ended March 31, 1999. There was no amortization for the three months ended March
31, 2000 as the forward contract expired on May 15, 1999. In addition, foreign
exchange gains or losses on the Company's non-drachma denominated indebtedness
(currently, the Senior Notes) were partially offset by corresponding losses or
gains on the forward contract's notional amount.
Options
Antenna was a party to an option agreement with the Royal Bank of
Scotland to sell $104 million at a rate of 280 drachmae to the dollar in May
1999. The option had a maturity date that coincided with the maturity of the
foreign exchange contract described above. The option was recorded on the
balance sheet at its fair market value and was marked to market each accounting
period with the resulting gain or loss being reflected in the consolidated
statements of operations. During the three months ended March 31, 1999, GRD 333
million was recorded as part of the foreign exchange loss in the statement of
operations. There was no mark to market adjustment for the three months ended
March 31, 2000 because the option matured on May 15, 1999.
II. Translations of Drachmae into U.S. Dollars
The financial statements are stated in drachmae. The translations of
drachmae into U.S. Dollars are included solely for the convenience of the
reader, using the noon buying rate in New York on March 31, 2000, which was GRD
349.75 to $1.00. The convenience translations should
9
<PAGE>
not be construed as representations that the drachmae amounts have been, could
have been, or could in the future be, converted into U.S. Dollars at this or any
other rate of exchange.
III. Due from Related Parties
The Company sells advertising spots, licensing and distribution rights
to certain related parties in the ordinary course of business. Furthermore, the
Company also derives revenue from related parties by charging fees for the use
of the Company's production facilities and technical and administrative services
for the production of infomercials. Such related parties consist of companies
which have common ownership and/or management with the Company. The Company
believes that, in each case, the terms of such transactions are no less
favorable than those that would be attainable by the Company in the ordinary
course from unaffiliated third parties under similar circumstances.
Balances from related companies are as follows:
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
------------------------------
(in thousands)
<S> <C> <C>
Accounts Receivable
Current:
Antenna Satellite TV (USA) Inc.......................... 1,882,116 2,203,566
Audiotex................................................ 76,208 -
Epikinonia Ltd.......................................... 314,172 186,205
Antenna Satellite Radio................................. 58,655 64,539
Antenna TV Ltd. (Cyprus)................................ 938,770 895,136
Catalogue Auctions Hellas S.A........................... 30,439 -
--------- ---------
3,300,360 3,349,446
========= =========
Long-term:
Antenna Satellite TV (USA) Inc.......................... 3,276,667 3,258,801
========= =========
Advances
Current:
Catalogue Auctions Hellas S.A........................... 156,660 160,460
========= =========
Long-term:
Antenna TV Ltd. (Cyprus)................................ 120,979 120,979
Epikinonia Ltd.......................................... 34,158 6,158
JVFM-Epikinonia......................................... 18,000 23,000
--------- ---------
173,137 150,137
========= =========
Accounts payable
Current:
Payable to minority shareholders of Daphne.............. 68,823 -
========= =========
Long-term:
Payable to minority shareholders of Daphne.............. 185,000 185,000
========= =========
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
----------------------------------
1999 2000
----------------------------------
<S> <C> <C>
Revenue (in thousands)
Epikinonia Ltd. (Production facilities and technical and
administrative services)................................ 97,665 149,000
Antenna Satellite TV (USA) Inc. (License fees)............. 245,456 72,450
Antenna Satellite Radio.................................... - 9,018
Antenna TV Ltd. (Cyprus) (Royalties)....................... 74,709 81,858
------- -------
417,830 312,326
Audiotex (Related party commission income)................. 145,316 47,875
------- -------
563,146 360,201
======= =======
</TABLE>
IV. Programming Costs
The following table sets forth the components of the programming costs,
net of amortization:
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Produced programming.............................. 13,929,446 14,953,861
Purchased sports rights........................... 1,861,640 1,368,903
Licensed program rights........................... 2,016,979 1,960,526
Prepaid license program rights.................... 845,979 818,991
Prepaid produced programs and sports.............. 822,796 818,593
----------------------- -----------------------
19,476,840 19,920,874
Less: current portion............................. (11,824,168) (12,094,085)
----------------------- -----------------------
7,652,672 7,826,789
======================= =======================
</TABLE>
V. Intangibles
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Goodwill.......................................... 786,561 839,295
Magazine rights................................... 200,000 200,000
---------- ----------
986,561 1,039,295
Accumulated amortization.......................... (16,000) (33,593)
---------- ----------
970,561 1,005,702
========== ==========
</TABLE>
VI. Other Assets
Other assets are analyzed as follows:
11
<PAGE>
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Advance for the right to acquire an interest in
Macedonia TV...................................... - 3,000,000
Guarantee deposits................................ 137,849 144,830
---------- ----------
137,849 3,144,830
========== ==========
</TABLE>
On February 24, 2000 the Company advanced GRD 3 billion in exchange for
the right to acquire a controlling interest in Macedonia TV, one of the six
Greek commercial TV broadcasters with a nationwide license. This right gives
Antenna the ability to acquire a 51% interest in Macedonia TV from its three
shareholders for a total consideration equal to the advance payment. The Company
may acquire this interest within the next three years, but may only do so if and
when Greek law permits a broadcaster and/or its shareholders to own or control
two licensed free to air television broadcast companies. If the interest is not
acquired, Antenna will be refunded all amounts paid and will be granted a right
of first refusal over any future transfers of the 51% interest.
VII. Deferred Income Taxes
The deferred income taxes relate to the temporary differences between
the book values and the tax bases of assets and liabilities. Significant
components of the Company's deferred tax liabilities and assets as at December
31, 1999 and March 31, 2000 are summarized below (the tax rate in effect at
December 31, 1999 and March 31, 2000 was 40%):
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Deferred tax liabilities
Intangible and tangible assets......................... 200,000 190,600
Programming costs...................................... 4,250,918 4,877,370
Reserves............................................... 430,348 430,348
Reserves taxed in a special way........................ 233,826 233,826
Deferred charges....................................... 299,383 322,056
Leased assets.......................................... 519,016 496,619
Deferred interest on finance leases.................... 5,936 2,450
Customer advances and accounts payable................. 528,673 521,248
Accrued expenses and other liabilities................. 29,359 29,360
---------- ----------
Gross deferred tax liabilities............................. 6,497,459 7,103,877
========== ==========
Deferred tax assets
Property and equipment................................. 32,718 31,503
Start up costs......................................... 1,134,659 1,120,102
Long term liability.................................... 17,600 17,600
Long term lease liability.............................. 165,265 147,547
Short-term lease liability............................. 130,962 127,893
Long-term receivables.................................. 1,209,309 1,209,309
Deferred revenue....................................... 5,000 4,300
Accounts receivable.................................... 555,788 596,158
Employee retirement benefits........................... 208,333 215,131
Other assets........................................... 407,126 596,977
Other provisions....................................... 233,532 237,132
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Accrued expenses and other............................. 329,413 275,855
Net operating losses................................... 93,350 93,350
---------- ----------
Gross deferred tax assets.................................. 4,523,055 4,672,857
---------- ----------
Less: valuation allowance.................................. (1,193,288) (1,193,288)
---------- ----------
Net deferred tax liability................................. (3,167,692) (3,624,308)
========== ==========
</TABLE>
Long term receivables give rise to a tax asset principally due to
certain long-term agreements that have not satisfied all of the revenue
recognition criteria of SFAS No. 53. Such agreements, however, are taxable by
the local Greek authorities.
The classification of deferred income taxes in the accompanying balance
sheets is as follows:
<TABLE>
<CAPTION>
December 31, Unaudited
1999 March 31, 2000
----------------------- -----------------------
(in thousands)
<S> <C> <C>
Net current deferred tax liability......................... (1,965,298) (2,248,820)
========== ==========
Net non-current deferred tax liability..................... (1,599,096) (1,723,455)
========== ==========
Net non-current deferred tax asset......................... 396,702 347,967
========== ==========
</TABLE>
The provision for income taxes reflected in the accompanying statements
of operation is analyzed as follows:
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
-------------------------------------
1999 2000
------------------ ------------------
(in thousands)
<S> <C> <C>
Current..................................................................... 37,814 44,981
Deferred income taxes....................................................... 588,695 459,010
------- -------
Provision income taxes...................................................... 626,509 503,991
======= =======
</TABLE>
The reconciliation of the provision for income taxes to the amount
determined by the application of the Greek statutory tax rate of 40% in 1998 and
1999 to pre-tax income is summarized as follows:
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
-------------------------------------
1999 2000
------------------ ------------------
(in thousands)
<S> <C> <C>
Tax provision at statutory rate............................................. 555,578 501,580
Goodwill amortization....................................................... - 4,450
Interest income............................................................. (39,357) (49,632)
Disallowed prior period expenses and non-deductible general expenses........ 59,230 28,495
Loss not subject to income tax............................................. 49,058 19,098
------- -------
626,509 503,991
======= =======
</TABLE>
13
<PAGE>
Interest income is taxed at a lower rate (15%) than operating income.
Disallowed prior period expenses relate to invoices for goods or services that
were not received prior to the preparation of the tax returns and that relate to
prior year expenses (i.e. invoices received in February that relate to services
rendered in December of prior year). Non-deductible general expenses relate
primarily to certain car, meals and entertainment expenses.
In Greece, amounts reported to the tax authorities are provisional
until such time as the books and records of the entity are inspected by the tax
authorities. Greek tax laws and related regulations are subject to
interpretation by the tax authorities. The Company has been audited by the tax
authorities up to 1992. Management believes that the amounts accrued will be
sufficient to meet its tax obligations.
The ultimate outcome of additional tax assessments may vary from the
amounts accrued, but management believes that any additional tax liability over
and above the amount accrued would not have a material adverse impact on the
Company's results of operations or financial position.
The deferred income taxes relate to the temporary differences between
the book value and tax basis of assets and liabilities. Significant components
of the Company's deferred tax liabilities and assets are analyzed above.
VIII. Long-term Debt
Long-term debt consists of:
<TABLE>
<CAPTION>
Unaudited
December 31, March 31,
1999 2000
------------ ------------
(in thousands)
<S> <C> <C>
Senior Notes due 2007 issued on August 12, 1997. Interest on
the Notes is paid semi-annually in February and
August, commencing February 1, 1998, at a rate of
9% per annum. The Senior Notes are redeemable, in
whole or in part, at the option of the Company at any
time on or after August 1, 2002....................... 36,479,831 38,911,153
</TABLE>
Interest expense relating to the Senior Notes for the three months
ended March 31, 1999 and 2000 totaled GRD 769 million and 903 million,
respectively, and is included in interest expense in the accompanying
consolidated statements of operations.
On March 19, 1999 and March 25, 1999, the Company repurchased GRD 447
million ($1.5 million) and GRD 739 million ($2.4 million), respectively, of the
Senior Notes, with accrued interest of GRD 17 million ($0.05 million) to the
date of repurchase. The early extinguishment of the Senior Notes resulted in a
charge of GRD 19 million ($0.06 million) consisting of the following:
14
<PAGE>
Unaudited
March 31, 1999
------------------------
(in thousands)
Discount on prepayment of Senior Notes.................. 36,890
Write-off of related unamortized debt issuance costs.... (55,809)
------------------------
(18,919)
========================
The indebtedness evidenced by the Senior Notes constitutes a general
unsecured senior obligation of the Company and ranks pari passu in right of
payment with all other senior indebtedness and senior in right of payment to all
subordinated indebtedness of the Company. The indenture with respect to the
Senior Notes contains certain covenants and restrictions that, among other
things, limit the type and amount of additional indebtedness that may be
incurred by the Company and impose certain limitations on investments, loans and
advances, sales or transfers of assets, dividends and other payments, the
ability of the Company to enter into sale-leaseback transactions, certain
transactions with affiliates and certain mergers.
IX. Foreign Exchange gains (losses)
Foreign exchange gains (losses) included in the consolidated statements
of operations are analyzed as follows:
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
-------------------------------------
1999 2000
------------------ ------------------
(in thousands)
<S> <C> <C>
Foreign exchange gain on forward contract representing
difference between balance sheet rate and forward rate
(U.S.$)............................................... 2,065,644 -
Amortization of the premium on foreign exchange contract.. (522,000) -
Mark to market adjustment on option....................... (332,584) -
Unrealized foreign exchange loss on Senior Notes (U.S.$).. (2,496,463) (2,431,322)
Unrealized foreign exchange gain on cash, receivables and
payables denominated in foreign currencies (U.S.$) and
realized (losses) gains on transactions............... 1,374,999 1,022,653
------------------ ------------------
89,596 (1,408,669)
================== ==================
</TABLE>
15
<PAGE>
X. Segment Information
The Company's reportable segments are: Television, Radio, Pay
Television, Journalism and Magazines. The accounting policies of the segments
are the same as those described in the summary of significant accounting
policies. Identifiable assets by segment are those assets that are used in the
operations of that business. Sales are attributed to countries based on selling
location.
<TABLE>
<CAPTION>
Unaudited Three Months Ended March 31, 1999
----------------------------------------------------------------------------------------------------
Pay Journalism
Television Radio Television School
----------------------------------------------------------------------------------------------------
Elimination of
Antenna Antenna Pacific Antenna related party
TV Radio Broadcast Spoudastiki revenue/expenses Total
(Greece) (Greece) (Australia) (Greece) /assets consolidated
---------------- ------------ ---------------- -------------- ------------------- ---------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Advertising revenue............ 7,209,464 414,483 - - 7,623,947
Related party sales............ 691,350 1,788 - - (275,308) 417,830
Other revenue.................. 60,161 - 43,213 67,890 - 171,264
---------------- ------------ ---------------- -------------- ------------------- ---------------
Total revenues................. 7,960,975 416,271 43,213 67,890 (275,308) 8,213,041
Depreciation and amortization 145,970 11,390 8,935 1,000 - 167,295
Amortization of
programming costs........... 3,137,669 - - - - 3,137,669
Operating income............... 2,288,643 72,462 (111,816) 10,169 (137,845) 2,121,613
---------------- ------------ ---------------- -------------- ------------------- ---------------
Equity in net income
of unconsolidated affiliate. 15,385 - - - - 15,385
Related party
commission income........... 137,845 7,471 - - - 145,316
Interest expense, net.......... (633,121) (51,567) (381) - - (685,069)
Foreign exchange
gains (losses), net......... 114,541 (14,496) (10,449) - - 89,596
Other income (expense), net.... (294,846) 1,951 - - - (292,895)
---------------- ------------ ---------------- -------------- ------------------- ---------------
Income (loss) before tax....... 1,628,447 15,821 (122,646) 10,169 (137,845) 1,393,946
Net income (loss).............. 1,012,438 9,071 (122,646) 6,419 - 767,437
---------------- ------------ ---------------- -------------- ------------------- ---------------
Total assets at
March 31, 1999............ 83,018,578 1,886,240 467,343 111,389 (1,394,146) 84,089,404
================ ============ ================ ============== =================== ===============
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Unaudited Three Months Ended March 31, 2000
--------------------------------------------------------------------------------------------------------------
Pay Journalism
Television Radio Television School Magazines
--------------------------------------------------------------------------------------------------------------
Elimination
of related
party
Antenna Antenna Pacific Antenna revenue/
TV Radio Broadcast Spoudastiki Daphne Audiotex expenses/ Total
(Greece) (Greece) (Australia) (Greece) (Greece) (Greece) assets consolidated
------------- ------------ ------------ -------------- ------------- ----------- -------------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advertising
revenue........... 8,195,009 418,779 - - 311,134 - - 8,924,921
Related party sales. 528,907 10,455 - - 699 - (227,735) 312,326
Publication
revenue........... - - - - 1,946,079 - - 1,946,079
Other revenue.......
57,305 9,137 24,789 70,020 59,694 110,763 - 331,708
------------- ------------ ------------ -------------- ------------- ----------- -------------- ------------
Total revenues...... 8,781,221 438,371 24,789 70,020 2,317,606 110,763 (227,735) 11,515,034
Depreciation and
amortization...... 168,601 10,746 8,966 2,124 183,361 6,795 - 380,593
Amortization of
programming costs. 3,148,751 - - - - - - -
------------- ------------ ------------ -------------- ------------- ----------- -------------- ------------
Operating income.... 2,924,521 78,945 4,415 (32,267) 720 (1,231) (29,451) 2,945,652
Equity in net
income of
unconsolidated
affiliate......... 2,677 - - - - - - 2,677
Related party
commission
income............ 47,875 - - - - - - 47,875
Interest expense,
net............... (214,876) 1,021 (1,636) - (148,776) (69) - (364,336)
Foreign exchange
losses, net....... (1,329,150) (29,262) (50,526) - 268 - - (1,408,669)
Other income
(expense), net.... (12,681) 39 - (10) 5,413 - - (7,238)
Minority interest in
loss of
consolidated
subsidiary, net... - - - - 37,990 - - 37,990
------------- ------------ ------------ -------------- ------------- ----------- -------------- ------------
Income (loss)
before tax........ 1,418,367 50,742 (47,746) (32,276) (104,385) (1,301) (29,451) 1,253,951
Net income (loss)... 847,844 16,378 (47,746) (20,108) (77,530) (726) 31,848 749,960
Segment assets
Total assets at
March 31, 2000.. 94,696,179 2,004,174 519,493 155,146 9,760,068 405,925 (14,128,188) 93,412,797
============= ============ ============ ============== ============= =========== ============== ============
</TABLE>
Information with respect to geographical regions is as follows:
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
-------------------------------------
1999 2000
------------------ ------------------
(in thousands)
<S> <C> <C>
Revenue:
Domestic.................................................. 7,849,663 11,326,919
International:
Related parties....................................... 320,165 163,326
Third parties......................................... 43,213 24,789
------------------ ------------------
8,213,041 11,515,034
================== ==================
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
As of December 31, 1999
----------------------------------------------------------------------------------
Pay Journalism
Television Radio Television School Magazines
----------------------------------------------------------------------------------
Antenna Antenna Pacific Antenna
TV Radio Broadcast Spoudastiki Daphne Total
(Greece) (Greece) (Australia) (Greece) (Greece) consolidated
------------- ------------ ------------ -------------- ------------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Long-lived assets:
Domestic............ 9,801,781 114,029 - 21,751 2,486,544 12,424,105
International....... - - 354,054 - - 354,054
<CAPTION>
Unaudited as of March 31, 2000
-------------------------------------------------------------------------------------------------
Pay Journalism
Television Radio Television School Magazines
------------- ------------ ------------ -------------- ------------- ----------- --------------
Antenna Antenna Pacific Antenna
TV Radio Broadcast Spoudastiki Daphne Audiotex Total
(Greece) (Greece) (Australia) (Greece) (Greece) (Greece) consolidated
------------- ------------ ------------ -------------- ------------- ----------- --------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Long-lived assets:
Domestic............ 10,478,630 105,437 - 23,805 2,505,295 33,820 13,146,987
International....... - - 345,088 - - - 345,088
</TABLE>
18
<PAGE>
XI. Other (Expense)
Other expense, net is analyzed as follows:
<TABLE>
<CAPTION>
Unaudited Three Months
Ended March 31,
-------------------------------------
1999 2000
------------------ ------------------
(in thousands)
<S> <C> <C>
Start-up costs related to direct-to-home business..... (257,000) -
Change related to early extinguishment of Senior Notes (18,919) -
Other, net............................................ (16,976) (7,238)
------------------ -----------------
(292,895) (7,238)
================== =================
</TABLE>
XII. Subsequent Events
On April 12, 2000, the Company announced that it had entered into a
memorandum of understanding with Internet Gold International Ltd., a subsidiary
of Internet Gold, to jointly undertake various Internet-related activities.
Internet Gold agreed to use its best efforts to cause one or more of the
shareholders of CompuLink Networks S.A., a Greek Internet service provider, to
transfer to the Company a 20% stake in CompuLink for consideration of $1
million, $200,000 of which will be paid in cash and $800,000 of which will be
paid in the form of advertising time on television and radio and in magazines.
The Company and Internet Gold will also form two new joint venturees that will
provide content for the Internet and one new joint venture that will be an
Internet service provider in Cyprus.
19
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Company derives a substantial portion of its revenue from the sale
of advertising (77.5% of total net revenue in the three months ended March 31,
2000). While the Company sells a significant portion of its available
advertising time, it does not sell all of it. The Company uses a variety of
means to utilize unsold advertising time in all time periods (commonly referred
to as "dead time") to improve its operating results and cash flows. Such other
sources include audiotext and infomercials. The Company derives revenue from its
wholly-owned subsidiary, Audiotex, which generates audiotext revenue, and from
an affiliated entity, Epikinonia Ltd., which produces infomercials and pays
Antenna for production and technical support.
The Company also derives revenue from royalties received from
syndicating its own programming. Such programming sales are made to a variety of
users, including a television network in Cyprus (operated by Antenna TV Ltd.
(Cyprus), a company in which the General Manager of the Company is General
Manager), and broadcasters targeting Greek-speaking viewers in the United
States, Canada and Australia. Sales of programming to Greek-speaking viewers are
made in the United States and Canada through an affiliated entity, Antenna
Satellite TV (USA) Inc., and in Australia through the Company's wholly-owned
subsidiary, Pacific Broadcast. In addition, selected news footage is sold to
other news broadcasters around the world. The Company also expects to derive
revenue from various other sources in the future.
In October 1999, the Company acquired a 51% interest in Daphne, a Greek
publishing company, for total consideration of approximately GRD 1.2 billion
($3.6 million) payable in the form of advertising airtime on Antenna's
television and radio networks. The Company also derives revenue from the
publication of a wide variety of Greek magazines focusing on subjects ranging
from style and fashion to parenting, from politics to astrology and from
entertainment to shipping and defense.
The Company's revenue fluctuates throughout the year, with advertising
revenue at its lowest level during the Company's third fiscal quarter
(approximately 9.6% of total net revenue in Fiscal 1999), and at its highest
level during the fourth fiscal quarter (approximately 32.3% of total net revenue
in Fiscal 1999).
Cost of sales includes the costs of acquiring foreign programming and
Greek features, and the cost of gathering, producing and broadcasting news.
Since the acquisition of Daphne in October 1999, cost of sales also includes
publication costs. Selling, general and administrative expenses ("SG&A")
includes payroll costs and sales, marketing and promotion costs, the broadcast
license fee and other operating and administrative expenses.
Programming costs generally either are expensed as cost of sales in the
year incurred or capitalized and amortized over a period of three to four years.
Programs that are expensed in the current period include news programs and a
portion of acquired programming (principally Greek features). For such
programming, substantially all of the value is realized upon the initial
broadcast, either because of the topical nature of the programming or, in the
case of acquired programming, contractual limitations on subsequent broadcasts.
Acquired foreign programs, which have contracts limiting the Company to a
specific number of broadcasts during their term (usually two broadcasts during a
two-or three-year period), are expensed in equal portions each
20
<PAGE>
time the program is broadcast. The costs of other programming, such as series,
soap operas, shows, and made-for-television movies, where substantial value can
be realized through multiple broadcasts or syndication, are capitalized as an
asset and amortized, unless the Company determines during the current period
that a program is unlikely to generate revenue in future periods, in which case
the associated costs are expensed in the current period.
The Company follows U.S. Financial Accounting Standards Board Statement
No. 53 Financial Reporting by Producers and Distributors of Motion Picture Films
("SFAS 53") regarding the amortization of programming production and acquisition
costs. Consequently, all direct and certain indirect production costs (other
than in respect of news and similar programming) are capitalized as investment
in programs. These costs are stated at the lower of unamortized cost or
estimated net realizable value. Under SFAS 53, estimated total production costs
for an individual program or series are amortized in the proportion that the
revenue realized relates to management's estimate of the total future revenue
expected to be generated from such program or series based upon past experience.
Estimates of future revenues are reviewed periodically in relation to historical
revenue trends and the amortization of programming costs is adjusted
accordingly. To the extent such estimates differ from the actual results, such
amortization periods will be adjusted. Such adjustments could have a material
adverse effect on the Company's financial condition and results of operations.
An important component of the Company's strategy for maximizing
operating performance and long-term profitability is to continue making
investments in programming to build up its own programming library. It has
implemented this strategy over the past few years by significantly increasing
its programming expenditures. The Company retains all rights to the programming
in its library and believes that such rights may represent values in excess of
net book value. Such value is demonstrated by the advertising revenue that the
Company generates from rebroadcasting programming produced in prior years and
from programming syndicated to other networks, including, in each case,
programming for which the production costs have been fully amortized. In certain
cases, advertising revenue has exceeded the advertising revenue generated from
the initial broadcast. The Company expects to continue to expand its programming
library and to exploit the library through the airing of reruns and the
distribution and syndication of broadcast rights to third parties. Programming
from the library is broadcast to Greeks abroad through third parties and in the
future will also be broadcast directly. Management will continue to evaluate the
total estimated revenues as new markets are entered and revenues are realized.
In March 1999, the Company raised net proceeds of $86.5 million in an
initial public offering (the "IPO") of 7,700,000 American Depositary Shares
("ADSs"), representing 3,850,000 shares of its capital stock, nominal value GRD
100 per share. On May 6, 1999, the Company utilized a portion of the net
proceeds it received from the IPO to acquire the following interests: a 51%
interest in Audiotex (for a purchase price of $7.25 million); a 99.97% interest
in Antenna Radio, which owns Antenna FM (97.1 FM), a combination news/talk and
music radio station serving the greater Athens area (for a purchase price of
$16.25 million plus the assumption of approximately $5.2 million of
indebtedness); a 100% interest in Antenna Spoudastiki Ltd., which operates a
training center for journalists and other media personnel (for a purchase price
of $6.0 million); and a 100% interest in Pacific Broadcast, which rebroadcasts
the Company's programming in Australia through a joint venture (for a purchase
price of $3.5 million). Each of the companies whose interests were acquired was
previously affiliated with or controlled by members of the family of Mr. Minos
Kyriakou, the Company's Chairman and Chief Executive Officer.
21
<PAGE>
These business combinations were among companies under common control
and have been accounted for "as if" a pooling of interest had occurred for
periods subsequent to September 1, 1998, the date that the companies came under
common control for accounting purposes. Accordingly, the balance sheet as at
December 31, 1998 and the consolidated statements of operations, cash flows and
shareholders' equity for the year ended December 31, 1998 have been restated.
Because the business combinations were among companies under common control they
have been consolidated based upon their book value and historical results of
operations, respectively. The cash amounts paid for the companies acquired, in
excess of their book values, have been treated as a dividend to the selling
shareholders.
On February 7, 2000, the Company acquired the 49% interest in Audiotex
that it did not already own from Legion International S.A., a Lagardere Group
company, for total consideration of GRD 55 million and an increase in the
royalty fee to Legion International S.A. from 7.5% to 12.0% of Audiotex's annual
revenue for 10 years. The term of the amended royalty agreement is from January
1, 2000 to January 1, 2010. This acquisition was accounted for using the
purchase method and, accordingly, the net assets acquired have been recorded at
their fair value and the results of their operations are included from the date
of acquisition. Based on estimates of fair value, GRD 53 million has been
allocated to goodwill. The incremental increase in the royalty payment of 4.5%
for the next five years and the payment of a 12% royalty fee for an additional
five years represents the additional consideration payable for the acquired
interest and will be recorded as an additional element of the cost of the
acquired entity (i.e., goodwill) and will be amortized over 10 years.
Audiotext's revenues for the year ended December 31, 1999 were GRD 855 million.
Assuming revenues of the same amount over the next 10 years, the additional
consideration paid would be approximately GRD 706. However, the ultimate amount
will only be determined at the end of each period. The additional elements of
cost will be recorded when the contingency is resolved and the consideration is
issuable.
On February 24, 2000 the Company advanced GRD 3 billion in exchange for
the right to acquire a controlling interest in Macedonia TV, one of the six
Greek commercial TV broadcasters with a nationwide license. This right gives
Antenna the ability to acquire a 51% interest in Macedonia TV from its three
shareholders for a total consideration equal to the advance payment. The Company
may acquire this interest within the next three years, but may only do so if and
when Greek law permits a broadcaster and/or its shareholders to own or control
two licensed free to air television broadcast companies. If the interest is not
acquired, Antenna will be refunded all amounts paid and will be granted a right
of first refusal over any future transfers of the 51% interest. The advance is
reflected as a long-term asset on the consolidated balance sheet.
On March 2, 2000, the Company entered into an agreement with MEAGA S.A.
a Greek company which is listed on the Athens Stock Exchange, to acquire
approximately 70% of MEAGA, subject to the completion of due diligence by
Antenna and receipt of regulatory approvals and consents. In connection with
this transaction, MEAGA will sell its existing businesses to third party
purchasers and the proceeds will be applied to repay all outstanding
indebtedness of MEAGA. As a result, just prior to the acquisition, MEAGA will
have no assets or liabilities. In exchange for its interest in MEAGA, Antenna
will transfer stakes in four of its subsidiaries, Antenna Radio, Antenna
Spoudastiki, Audiotex and Daphne, to MEAGA. Following the completion of the
acquisition, the assets and liabilities of MEAGA will be comprised of the
historical book values of the businesses contributed by Antenna. The
consolidated financial statements of Antenna TV will reflect a charge to
recognize the cost of the disposition of the interest transferred to the
minority shareholders and a corresponding recognition of a minority
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<PAGE>
interest in the consolidated balance sheet. Regulatory approvals and consents
for this transaction have not yet been obtained.
The consolidated financial statements of the Company include all of its
significant majority-owned subsidiaries. Affiliated companies in which the
Company does not own a controlling interest or for which the minority
shareholders have significant veto rights over operating decisions are accounted
for using the equity method.
Results of Operations
Three Months Ended March 31, 2000 (unaudited)
Compared to Three Months Ended March 31, 1999 (unaudited)
Total net revenue increased GRD 3,302 million ($9.4 million), or 40.2%,
from GRD 8,213 million ($23.5 million) in the three months ended March 31, 1999
to GRD 11,515 million ($32.9 million) in the three months ended March 31, 2000.
This increase was attributable primarily to the addition of GRD 2,317 million
($6.6 million) of revenue from Daphne (primarily representing publication
revenue) and, to a lesser extent, to an underlying increase in advertising
revenue and the addition of GRD 111 million ($0.3 million) of revenue from
Audiotex (primarily representing telephone services revenue), which was
accounted for using the equity method prior to February 7, 2000.
Advertising revenue, which comprised 77.5% of total net revenues for
the three months ended March 31, 2000, increased GRD 1,301 million ($3.7
million), or 17.1%, from GRD 7,624 million ($21.8 million) in the three months
ended March 31, 1999 to GRD 8,925 million ($25.5 million) in the three months
ended March 31, 2000, primarily reflecting a 13.7% underlying increase in
advertising revenue due principally to increases in volume. The total increase
in advertising revenue also reflected the addition of GRD 311 million ($0.9
million) of advertising revenue from Daphne.
Related party revenue decreased GRD 106 million ($0.3 million), or
25.3%, from GRD 418 million ($1.2 million) in the three months ended March 31,
1999 to GRD 312 million ($0.9 million) in the three months ended March 31, 2000,
which decrease was attributable principally to the decrease in programming fees
paid by Antenna Satellite from $9,020 per day to $70,000 per month.
Antenna earned publication revenue of GRD 1,946 million ($5.6 million)
in the three months ended March 31, 2000, as a result of the addition of
publication income from Daphne.
Other revenue, representing revenue from program sales, Visa(R) card
fees and commissions, and revenue from the provision of technical services and
from infomercials, increased GRD 161 million ($0.4 million), or 94.0%, from GRD
171 million ($0.5 million) in the three months ended March 31, 1999 to GRD 332
million ($0.9 million) in the three months ended March 31, 2000. This increase
was principally the result of the addition of GRD 111 million ($0.3 million) of
other revenue from Audiotex, which was accounted for using the equity method
prior to February 7, 2000, and the addition of GRD 60 million ($0.2 million)
from Daphne.
Cost of sales increased GRD 2,090 million ($6.0 million), or 146%, from
GRD 1,427 million ($4.1 million) in the three months ended March 31, 1999 to GRD
3,517 million ($10.1 million) in the three months ended March 31, 2000. This
increase was attributable
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<PAGE>
primarily to the addition of GRD 1,784 million ($5.1 million) of cost of sales
from Daphne and, to a lesser extent, increases in cost of sales from Antenna
Spoudastiki and Audiotex, which was accounted for using the equity method prior
to February 7, 2000. The underlying cost of sales increased GRD 233 million
($0.6 million) in the three months ended March 31, 2000.
Selling, general and administrative expenses ("SG&A") increased GRD 163
million ($0.5 million), or 12.0%, from GRD 1,360 million ($3.9 million) in the
three months ended March 31, 1999 to GRD 1,523 million ($4.4 million) in the
three months ended March 31, 2000. This increase was attributable principally to
the addition of SG&A of GRD 268 ($0.8 million) from Daphne. The underlying SG&A
expense decreased 10.9% to GRD 1,065 million ($3.1 million).
Amortization of programming costs increased GRD 11 million ($0.03
million), or 0.4%, from GRD 3,138 million ($8.97 million) in the three months
ended March 31, 1999 to GRD 3,149 million ($9.0 million) in the three months
ended March 31, 2000.
Depreciation increased GRD 213 million ($0.6 million), or 127.5%, from
GRD 167 million ($0.5 million) in the three months ended March 31, 1999 to GRD
381 million ($1.1 million) in the three months ended March 31, 2000. Of the
increase in depreciation, GRD 183 million ($0.5 million) was attributable to the
addition of depreciation from Daphne.
Operating income increased GRD 824 million ($2.3 million), or 38.8%,
from GRD 2,122 million ($6.1 million) in the three months ended March 31, 1999
to 2,946 million ($8.4 million) in the three months ended March 31, 2000,
principally reflecting an increase in total net revenue during the period and,
to a lesser extent, an increase in operating income from Antenna Radio. The
increase in operating income also reflected the addition of operating income
from Audiotex, which was accounted for using the equity method prior to February
7, 2000, and the addition of operating income from Daphne.
Interest expense, net decreased GRD 321 million ($0.9 million), or 46.8
%, from GRD 685 million ($1.9 million) in the three months ended March 31, 1999
to GRD 364 million ($1.0 million) in the three months ended March 31, 2000,
resulting from an increase in interest income of GRD 546 million ($1.6 million)
due to higher cash balances which more than offset the increase in underlying
interest expense and the addition of interest expense from Daphne.
Foreign exchange losses, increased by GRD 1,499 million ($4.3 million)
from a gain of GRD 90 million ($0.3 million) to a loss of GRD 1,409 million
($4.0 million), primarily reflecting an underlying loss resulting from the
translation of the Senior Notes denominated in U.S. dollars, partially offset by
unrealized gains from the Company's U.S. dollar cash holdings and
receivables/payables denominated in foreign currencies.
Other expense, net decreased GRD 286 million ($0.8 million), or 97.5%
from GRD 293 million ($0.8 million) in the three months ended March 31, 1999 to
GRD 7 million ($0.02 million) in the three months ended March 31, 2000. The
decrease was attributable principally to lower start-up costs associated with
the Company's investment in the direct-to-home television broadcast business.
Equity in net income of unconsolidated affiliates decreased from GRD 15
million ($0.04 million) in the three months ended March 31, 1999 to GRD 3
million ($0.01 million) in the three months ended March 31, 2000, as a result of
the acquisition of the remaining interest in Audiotex, which was accounted for
using the equity method prior to February 7, 2000.
24
<PAGE>
Related party commission income decreased from GRD 145 million ($0.4
million) in the three months ended March 31, 1999 to GRD 48 million ($0.1
million) in the three months ended March 31, 2000, as a result of the
reclassification of revenue earned from Audiotex.
Provision for income taxes decreased GRD 123 million ($0.4 million)
from GRD 627 million ($1.8 million) in the three months ended March 31, 1999 to
GRD 504 million ($1.4 million) in the three months ended March 31, 2000,
principally as a result of a decrease in pre-tax profits. Of the decrease in
provision for income taxes, GRD 46 million ($0.1 million) was attributable to
underlying provision for income taxes and GRD 65 million ($0.2 million) was
attributable to the addition of provision for income taxes for Daphne.
Net income decreased GRD 18 million ($0.05 million) from net income of
GRD 767 million ($2.2 million) in the three months ended March 31, 1999 to net
income of GRD 750 million ($2.15 million) in the three months ended March 31,
2000. The decrease was principally attributable to unrealized foreign exchange
losses and higher interest expenses, partially offset by higher operating income
and interest income.
Liquidity and Capital Resources
The Company funds its operations, expenditures for programming, working
capital requirements and capital expenditures principally through a combination
of cash flow from operations and equity contributions. As of March 31, 2000, the
Company had approximately GRD 39,580 million ($113.2 million) of total debt
(long-term indebtedness and long-term obligations under capital leases). In
March 1999, the Company completed the initial public offering (the "IPO") of
7,700,000 American Depositary Shares ("ADSs"), representing 3,850,000 shares of
its capital stock, nominal value GRD 100 per share. Of the 7,700,000 ADSs sold,
6,160,000 were sold by the Company for net proceeds of $86.5 million and
1,540,000 were sold by a selling shareholder for net proceeds of $14.4 million.
On March 19, 1999 and March 25, 1999, the Company used a portion of the net
proceeds received by it from the IPO to repurchase GRD 447 million ($1.5
million) and GRD 739 million ($2.4 million), respectively, of its outstanding
Senior Notes. On May 6, 1999, the Company used a portion of the net proceeds
received by it from the IPO to complete the acquisition of interests in Antenna
Radio, Antenna Spoudastiki, Pacific Broadcast and Audiotex.
The Company's principal use of funds are expenditures for programming,
which expenditures totaled GRD 3,426 million ($9.8 million) in the three months
ended March 31, 1999 and GRD 3,593 million ($10.3 million) in the three months
ended March 31, 2000.
Operating Activities. Net cash used in operating activities was GRD
4,625 million ($13.2 million) in the three months ended March 31, 1999 compared
to GRD 4,729 million ($13.5 million) in the three months ended March 31, 2000.
Investing Activities. Net cash used in investing activities was GRD 70
million ($0.2 million) in the three months ended March 31, 1999 and GRD 3,839
million ($11.0 million) in the three months ended March 31, 2000, reflecting
increased purchases of fixed assets and the advance paid for the right to
acquire an interest in Macedonia TV.
Financing Activities. Net cash provided by financing activities was GRD
23,863 million ($68.2 million) in the three months ended March 31, 1999 compared
to net cash provided by financing activities of GRD 544 million ($1.6 million)
in the three months ended March 31,
25
<PAGE>
2000. The decrease in funds from financing activities principally reflects the
fact that in 1999 the Company raised the proceeds of the IPO and repurchased a
portion of the Senior Notes.
Distributable Reserves. The Company had distributable reserves in its
Greek statutory accounts of approximately GRD 472 million ($1.3 million). The
declaration of future dividends, if any, will be subject to the requirements of
Greek corporate law and the terms of the indenture with respect to the Senior
Notes.
Other Long-term Liability. The Company has an outstanding liability to
the Pension Fund for Athens and Thessaloniki Newspaper Employees for advertiser
contributions. The amount is payable in monthly installments until April 30,
2002. An installment of approximately GRD 311 million ($0.9 million) was paid
during the three month period ended March 31, 2000.
Year 2000 and Euro Conversion
The Company was aware of the issues associated with programming codes
in existing computer systems relating to the Year 2000 and similar dates. The
Year 2000 problem was pervasive and complex as virtually every computer
operation could be affected in some way by the rollover of the two digit year
value to 00 and similar problems may arise on other dates, such as December 31,
2000. The main issue was whether computer systems would properly recognize date
sensitive information when the date changes. Systems that did not property
recognize such information could generate erroneous data or cause a system to
fail. The Company has upgraded its management information system under the
direction of the Information Technology Department. The principal areas that
could be affected by such a problem was its computer network, customer billing
system and business systems (accounting, finance, advertising, marketing, human
resources, journalist support and transmission systems). The hardware and
operating systems related to its computer network and software applications
related to its business systems were Year 2000-compliant. The Company spent GRD
92 million ($0.3 million) upgrading its computer network. The Company did not
experience any Year 2000 problems.
The Company's revenues and expenses are denominated in drachmae and
dollars. Greece is not among the eleven members of the European Union whose
currencies became subject to conversion to the euro commencing January 1, 1999.
The Company is not party to any material contracts in which payment is expected
to be made in a currency which is scheduled to be converted to the euro. The
Company's upgraded management information system is expected to be capable of
handling conversion to the euro.
Inflation
Although the Greek economy has long been subject to both high levels of
inflation and the effects of the Greek government's measures to curb inflation
such as high real interest rates, the Company does not believe inflation has had
a material effect on its results of operations or financial condition for the
periods presented. Greece experienced average annual rates of inflation of
10.9%, 8.9%, 8.2%, 5.6%, 4.8% and 2.6% in the years 1994 through 1999,
respectively.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange Risk Management
The Company's functional currency is the drachma but certain of its
revenue, operating costs and expenses are denominated in foreign currencies.
Transactions involving other currencies are converted into drachmae using the
exchange rates in effect at the time of the transactions. Assets and liabilities
denominated in other currencies are stated at the drachma equivalent using
exchange rates in effect at period-end. Non-drachma denominated revenue,
principally from licensing and distribution of programming outside Greece,
accounted for GRD 163 million ($0.5 million), or 1.4%, of total net revenue in
the three month period ended March 31, 2000. The Company's non-drachma
denominated operating costs, principally foreign-produced programming invoiced
in U.S. dollars, accounted for 4.0% of total net revenue in the three month
period ended March 31, 2000. Non-drachma denominated indebtedness (primarily
U.S. dollars) totaled GRD 39,674 million ($113.4 million) at March 31, 2000.
Gains and losses resulting from exchange rate fluctuations are reflected in the
statements of operations.
Historically, advertising in most forms of media has been correlated to
general economic conditions. Since substantially all of the Company's operations
are conducted in Greece, the Company's operating results will depend to a
certain extent on the prevailing economic conditions in Greece. Furthermore, a
significant proportion of the Company's revenue is in drachmae. The Company
expects to increase modestly the level of non-drachma denominated revenue as
result of its strategy of increasing its sales of programming to Greek-speaking
audiences resident outside Greece and to other markets.
The Company hedges elements of its currency exposure through use of
such derivative instruments as forward exchange agreements and currency options,
though it might also consider interest rate swaps. The Company is evaluating
alternatives for future hedging opportunities. Derivatives involve, to varying
degrees, market exposure and credit risk. Market exposure means that changes in
interest rates or currency exchange rates cause the value of financial
instruments to decrease or increase or its obligations to be more or less costly
to settle. When used for risk management purposes, any gains or losses on the
derivatives will offset losses or gains on the asset, liability or transaction
being hedged. The Company has experienced net foreign exchange losses in the
past, and it could experience net foreign exchange losses in the future to the
extent that foreign exchange rates shift in excess of the risk covered by
hedging arrangements. Credit risk would arise in the event of non-performance by
a counterparty. The Company intends to minimize credit risk by entering into
contracts only with highly credit rated counterparties and through internal
limits and monitoring procedures.
The financial instruments to which the Company is a party are recorded
in the balance sheet at fair value unless, for accounting purposes, they meet
the criteria for a hedge of an identifiable foreign currency commitment. A
foreign exchange contract is considered a hedge of an identifiable foreign
currency commitment if: (i) the contract is designated, and effective, as a
hedge of a foreign currency commitment and (ii) the foreign currency commitment
is firm. Gains and losses on foreign exchange contracts meeting these criteria
are deferred and included in the measurement of the related foreign currency
transaction, unless it is estimated that the deferral would lead to recognition
of losses in a later period, in which case such losses are not deferred.
27
<PAGE>
The Company was party to an $87 million forward contract with the Royal
Bank of Scotland, to hedge its currency exposure on a portion of the principal
and interest payable of its U.S. dollar denominated debt. The term of the
contract covered the period from May 15, 1998 to May 15, 1999. The forward rate
was 334 drachmae to the dollar, and the spot rate on the contract's effective
date was 310 drachmae to the dollar. The premium (representing the difference
between the spot rate of 310 drachma to the dollar on the contract's effective
date and the forward rate), aggregating GRD 2,088 million ($6.9 million), was
amortized over the term of the contract. Of this amount, GRD 522 million was
recognized for the three months ended March 31, 1999. There was no amortization
for the three months ended March 31, 2000 as the forward contract expired on May
15, 1999. In addition, foreign exchange gains or losses on the Company's
non-drachma denominated indebtedness (currently, the Senior Notes) were offset
by corresponding losses or gains on the forward contract's notional amount.
The Company was party to an option agreement with the Royal Bank of
Scotland to sell $104 million at a rate of 280 drachmae to the dollar in May
1999. The option had a maturity date that coincided with the maturity of the
foreign exchange contract described above. The option was recorded on the
balance sheet at its market value and was marked to market each accounting
period with the resulting gain or loss being reflected in the statement of
operations. During the three months ended March 31, 1999, GRD 333 million was
recorded as part of the foreign exchange loss in the consolidated statement of
operations. There was no mark to market adjustment for the three months ended
March 31, 2000 because the option matured on May 15, 1999.
The following table sets forth as of March 31, 2000 the principal, cash
flows and related weighted average interest rates by expected maturity date of
indebtedness of the Company that may be sensitive to foreign currency exchange
rate fluctuations:
<TABLE>
<CAPTION>
Financial Instrument Maturity (2007) Fair Value
------------------------------------ -------------------- -------------------
(GRD) ($) (GRD) ($)
(in millions)
<S> <C> <C> <C> <C>
Senior Notes ($111 million)............................... 38,911 111.1 32,930 94.1
Average interest rate..................................... 9.8% --
</TABLE>
The average interest rate represents the stated interest rate of 9%
plus amortization of deferred issuance costs.
Interest Rate Risk Management
The Company manages interest rate risk by financing non-current assets
and a portion of current assets with equity, long-term liabilities and long-term
debt with fixed interest rates.
The following table sets forth as of March 31, 2000 the principal, cash
flows and related weighted average interest rates by expected maturity date of
indebtedness of the Company that may be sensitive to interest rate fluctuations:
<TABLE>
<CAPTION>
Financial Instrument Maturity (2007) Fair Value
------------------------------------ -------------------- -------------------
(GRD) ($) (GRD) ($)
(in millions)
<S> <C> <C> <C> <C>
Senior Notes ($111 million)............................... 38,911 111.1 32,930 94.1
Average interest rate..................................... 9.8% --
</TABLE>
28
<PAGE>
The average interest rate represents the stated interest rate of 9%
plus amortization of deferred issuance costs.
29
<PAGE>
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Use of Proceeds from Registered Securities
The Company's Registration Statement on Form F-1 (Registration No.
333-72247) with respect to the IPO became effective on March 3, 1999. The sale
of the ADSs in the IPO commenced on March 3, 1999 and closed on March 9, 1999.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
During the three months ended March 31, 2000, the Company used portions
of the proceeds from the IPO as follows: (i) the acquisition of the 49% interest
in Audiotex that it did not already own ($0.2 million); (ii) the acquisition of
the right to acquire a controlling interest in Macedonia TV ($8.6 million); and
(iii) the purchase of new office space ($1.5 million).
ITEM 5. OTHER INFORMATION
(a) Forward-Looking Statements
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made in
this Quarterly Report. Any statements that express, or involve discussions as
to, expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of the words or phrases such
as "will likely result," "are expected to," "will continue," "is anticipated,"
"estimated," "intends," "plans," "projection" and "outlook") are not historical
facts and may be forward-looking and, accordingly, such statements involve
estimates, assumptions and uncertainties which could cause actual results to
differ materially from those expressed in the forward-looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the factors discussed throughout this Quarterly
Report and in the Company's Annual Report on Form 20-F for the fiscal year ended
December 31, 1999. Among the key factors that have a direct bearing on the
Company's results of operations are the ability of the Company to successfully
implement its growth and operating strategies; changes in economic cycles;
competition from other broadcast companies and media; fluctuation of exchange
rates; and changes in the laws and government regulations applicable to the
Company or the interpretation or enforcement thereof. These and other factors
are discussed herein under "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and elsewhere in this Quarterly
Report.
(b) Subsequent Events
On April 12, 2000, the Company announced that it had entered into a
memorandum of understanding with Internet Gold International Ltd., a subsidiary
of Internet Gold, to jointly undertake various Internet-related activities.
Internet Gold agreed to use its best efforts to cause one or more of the
shareholders of CompuLink Networks SA, a Greek Internet service provider, to
transfer to the Company a 20% stake in CompuLink for consideration of $1
million, $200,000 of which will be paid in cash and $800,000 of which will be
paid in the form of advertising time on television and radio and in magazines.
The Company and Internet Gold will also form two new joint venturees that will
30
<PAGE>
provide content for the Internet and one new joint venture that will be an
Internet service provider in Cyprus.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANTENNA TV S.A.
(Registrant)
By: /s/ Nikolaos Angelopoulos
-------------------------
Name: Nikolaos Angelopoulos
Title: Chief Financial Officer
Dated: May 15, 2000
32
