Crown Media Holdings Inc. (CRWN, Financial) filed Quarterly Report for the period ended 2009-03-31.
Crown Media Holdings Inc. owns and operates pay television channels dedicated to high quality family programming. Currently they operate and distribute the Hallmark Entertainment Network internationally and the Odyssey Network domestically primarily through cable and direct-to-home satellite systems. In addition they along with The Jim Henson Company each own 50% of the Kermit Channel which is distributed primarily in India. We have more than 50 million subscribers worldwide. Crown Media Holdings Inc. has a market cap of $313.3 million; its shares were traded at around $2.99 with and P/S ratio of 1.1.
Selling, general and administrative expense. Our selling, general and administrative expense decreased $1.3 million or 10%. The Company recorded $1.4 million of compensation expense associated with RSUs during the three months ended March 31, 2008, as compared to $171,000 of compensation benefit associated with RSUs for the three months ended March 31, 2009. On March 13, 2008, the Compensation Committee determined that 100% of the first vesting of the 2006 Performance RSUs of 571,578 units vested. On February 10, 2009, the Compensation Committee determined that the 100% of the second vesting of the 2006 Performance RSUs of 307,772 units vested. The Company recorded $570,000 and $116,000 of compensation benefit associated with SARs for the three months ended March 31, 2008 and 2009, respectively. The SAR liability has declined due to a lower stock price. See Note 8 to the Unaudited Condensed Consolidated Financial Statements in this Report.
During the three months ended March 31, 2008, our operating activities provided $306,000 of cash compared to cash used of $385,000 in the first quarter of 2009. The Company s net loss for the three months ended March 31, 2009, decreased $7.2 million to $7.5 million from $14.7 million for the three months ended March 31, 2008. Our depreciation and amortization expense for the three months ended March 31, 2009, decreased $3.0 million to $33.6 million from $36.6 million in 2008. During the first quarter of 2009, we entered into amendments to some of our original programming agreements which extended the current license period to those titles and thus resulted in lower amortization in the first quarter of 2009 compared to the first quarter of 2008. On January 5, 2009, pursuant to the Waiver Agreement, the Company paid $3.9 million for interest on the 2001, 2005 and 2006 Notes that accrued from November 16, 2008, through December 31, 2008. Additions to non-affiliate program license fee assets and corresponding license fees payable increased from $17.5 million during March 31, 2008, as compared to additions of $53.0 million during March 31, 2009.
Cash used in investing activities was $1.3 million and $304,000 for the three months ended March 31, 2008 and 2009, respectively. During the three months ended March 31, 2008 and 2009, the Company paid $1.1 million and $223,000, respectively, to the buyer of the international business (which occurred in April 2005) for amounts due under the terms of the sale agreement, primarily for reimbursement of transponder lease payments.
Cash provided by financing activities was $2.1 million and $3.3 million for the three months ended March 31, 2008 and 2009, respectively. We borrowed $18.8 million and $12.4 million under our credit facility to supplement the cash requirements of our operating and investing activities during the three months ended March 31, 2008 and 2009, respectively. We repaid principal of $16.5 million and $8.9 million under our bank credit facility during the three months ended March 31, 2008 and 2009, respectively.
As of March 31, 2009, the Company had $5.3 million in cash and cash equivalents on hand and $12.9 million of current borrowing capacity under the bank credit facility. Day-to-day cash disbursement requirements have typically been satisfied with cash on hand and operating cash receipts supplemented with the borrowing capacity available under the bank credit facility and forbearance by Hallmark Cards and its affiliates. The Company s management anticipates that the principal uses of cash up to May 1, 2010, will include the payment of operating expenses, accounts payable and accrued expenses, programming costs, interest and repayment of principal under the bank credit facility and interest of approximately $20.0 million to $25.0 million due under certain notes to the Hallmark Cards affiliates.
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Crown Media Holdings Inc. owns and operates pay television channels dedicated to high quality family programming. Currently they operate and distribute the Hallmark Entertainment Network internationally and the Odyssey Network domestically primarily through cable and direct-to-home satellite systems. In addition they along with The Jim Henson Company each own 50% of the Kermit Channel which is distributed primarily in India. We have more than 50 million subscribers worldwide. Crown Media Holdings Inc. has a market cap of $313.3 million; its shares were traded at around $2.99 with and P/S ratio of 1.1.
Highlight of Business Operations:
Operating costs for the three months ended March 31, 2009, increased $543,000 over 2008 primarily due the $657,000 increase in bad debt expense. The Company s bad debt expense was $622,000 for the three months ended March 31, 2009, as compared to the Company s negative bad debt expense of $34,000 for the three months ended March 31, 2008. The increase in bad debt expense is due to certain advertising customers experiencing cash flow problems under current economic conditions. The Company will continue to monitor cash collections as part of determining this expense and expects that this expense may continue at higher levels in 2009 than in 2008.Selling, general and administrative expense. Our selling, general and administrative expense decreased $1.3 million or 10%. The Company recorded $1.4 million of compensation expense associated with RSUs during the three months ended March 31, 2008, as compared to $171,000 of compensation benefit associated with RSUs for the three months ended March 31, 2009. On March 13, 2008, the Compensation Committee determined that 100% of the first vesting of the 2006 Performance RSUs of 571,578 units vested. On February 10, 2009, the Compensation Committee determined that the 100% of the second vesting of the 2006 Performance RSUs of 307,772 units vested. The Company recorded $570,000 and $116,000 of compensation benefit associated with SARs for the three months ended March 31, 2008 and 2009, respectively. The SAR liability has declined due to a lower stock price. See Note 8 to the Unaudited Condensed Consolidated Financial Statements in this Report.
During the three months ended March 31, 2008, our operating activities provided $306,000 of cash compared to cash used of $385,000 in the first quarter of 2009. The Company s net loss for the three months ended March 31, 2009, decreased $7.2 million to $7.5 million from $14.7 million for the three months ended March 31, 2008. Our depreciation and amortization expense for the three months ended March 31, 2009, decreased $3.0 million to $33.6 million from $36.6 million in 2008. During the first quarter of 2009, we entered into amendments to some of our original programming agreements which extended the current license period to those titles and thus resulted in lower amortization in the first quarter of 2009 compared to the first quarter of 2008. On January 5, 2009, pursuant to the Waiver Agreement, the Company paid $3.9 million for interest on the 2001, 2005 and 2006 Notes that accrued from November 16, 2008, through December 31, 2008. Additions to non-affiliate program license fee assets and corresponding license fees payable increased from $17.5 million during March 31, 2008, as compared to additions of $53.0 million during March 31, 2009.
Cash used in investing activities was $1.3 million and $304,000 for the three months ended March 31, 2008 and 2009, respectively. During the three months ended March 31, 2008 and 2009, the Company paid $1.1 million and $223,000, respectively, to the buyer of the international business (which occurred in April 2005) for amounts due under the terms of the sale agreement, primarily for reimbursement of transponder lease payments.
Cash provided by financing activities was $2.1 million and $3.3 million for the three months ended March 31, 2008 and 2009, respectively. We borrowed $18.8 million and $12.4 million under our credit facility to supplement the cash requirements of our operating and investing activities during the three months ended March 31, 2008 and 2009, respectively. We repaid principal of $16.5 million and $8.9 million under our bank credit facility during the three months ended March 31, 2008 and 2009, respectively.
As of March 31, 2009, the Company had $5.3 million in cash and cash equivalents on hand and $12.9 million of current borrowing capacity under the bank credit facility. Day-to-day cash disbursement requirements have typically been satisfied with cash on hand and operating cash receipts supplemented with the borrowing capacity available under the bank credit facility and forbearance by Hallmark Cards and its affiliates. The Company s management anticipates that the principal uses of cash up to May 1, 2010, will include the payment of operating expenses, accounts payable and accrued expenses, programming costs, interest and repayment of principal under the bank credit facility and interest of approximately $20.0 million to $25.0 million due under certain notes to the Hallmark Cards affiliates.
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