Claxson Reports 2003 Fourth Quarter and Annual Financial Results
Net Revenues, Operating Income and Net Income Increase for the Year
BUENOS AIRES, March 18 /PRNewswire-FirstCall/ -- Claxson
Interactive Group Inc. (BULLETIN BOARD: XSON) ("Claxson" or the
"Company"), today announced financial results for the three and
twelve-month periods ended December 31, 2003. Financial Results
Operating income for the three-month period ended December 31, 2003
was $3.5 million, representing a $3.0 million improvement from an
operating income of $0.5 million for the three-month period ended
December 31, 2002. Operating income for the twelve-month period
ended December 31, 2003 was $5.3 million representing a $7.6
million improvement from an operating loss of $2.3 million for the
same period of 2002. The improvement in operating results for 2003
is due to a 9% increase in revenues and a 1% decrease in operating
expenses. As a result of the Company's agreement with Playboy
Enterprises, Inc., the 2003 results include the consolidation of
the operations of Playboy TV Latin America & Iberia (PTVLA)
into the operations of Claxson's Pay TV division. Net revenues for
the fourth quarter of 2003 were $22.5 million, a 15% increase from
net revenues of $19.6 million for the fourth quarter of 2002. Net
revenues were affected by the consolidation of the PTVLA
operations, the appreciation of the Argentine and Chilean
currencies, and the improved performance of Claxson's Broadcast
Division assets, partially offset by a decrease in subscriber rates
received from DIRECTV(TM) Latin America when compared to 2002. Net
revenues for the twelve months ended December 31, 2003 totaled
$81.8 million compared to net revenues of $75.0 million for the
twelve months ended December 31, 2002. During the fourth quarter of
2003, the average exchange rate of the Argentine and Chilean
currencies compared to the U.S. dollar appreciated 18% and 9%,
respectively, versus the same period in 2002. For the twelve-month
period ended December 31, 2003 the average appreciation of the
currency in Argentina was 6%, while the Chilean currency
depreciated 2%, compared to the same period in 2002. "We have
completed a significant year in Claxson's financial and operational
consolidation. During 2003, the growth of our revenues, together
with a strict cost management philosophy, put Claxson on the path
to profitability," said Roberto Vivo, Chairman and CEO, Claxson.
"This quarter closes a year where Claxson strengthened its
turnaround and faces 2004 strategically situated to maintain and
solidify its competitive position in the market. I am very proud of
the accomplishments of my management team and every employee at
Claxson who accepted the challenge and worked very hard to bring us
up to where we are today." Subscriber-based fees for the
three-month period ended December 31, 2003 totaled $9.7 million,
representing approximately 43% of total net revenues and a 35%
increase from subscriber-based fees of $7.2 million for the fourth
quarter of 2002. The increase is primarily attributed to the
consolidation of PTVLA, and to a lesser extent to the appreciation
of the Argentine currency, partially offset by reduced fees from
DIRECTV Latin America. In November 2002, the Company agreed toa
reduction in DIRECTV Latin America's subscriber rates and converted
prices to local currencies, in exchange for a two year extension in
the contract's maturity. Subscriber-based fees for the twelve
months ended December 31, 2003 totaled $38.9 million compared to
$31.6 million for the same period of 2002. Advertising revenues for
the three-month period ended December 31, 2003 were $11.7 million,
representing approximately 52% of Claxson's total net revenues and
a 23% increase from advertising revenues of $9.5 million for the
fourth quarter of 2002. Advertising revenues for the twelve months
ended December 31, 2003 totaled $37.3 million compared to $30.5
million for the same period of 2002. The improvement in advertising
revenues is due primarily to increased revenues from the Company's
Broadcast assets in Chile, especially from Chilevision, Claxson's
broadcast TV station, as a result of improved ratings; and to a
better pay TV advertising market in Argentina as compared to 2002.
Production services revenues for the three-month period ended
December 31, 2003 were $0.7 million, compared to $1.7 million for
the fourth quarter of 2002. This decrease was primarily due to the
consolidation of PTVLA, as services provided to PTVLA are now
eliminated upon consolidation, and a decrease in volumes handled by
The Kitchen, Inc., Claxson's Miami-based broadcast and dubbing
facility, as a result of the adverse economic situation in Latin
America. Production services revenues for the twelve months
endedDecember 31, 2003 totaled $2.9 million compared to $7.1
million for the same period of 2002. Other revenues for the
three-month period ended December 31, 2003 were $0.4 million
compared to $1.2 million for the fourth quarter of 2002. This
decrease is due to the consolidation of PTVLA, as services provided
to PTVLA are now eliminated upon consolidation, as well as the
discontinuation of services provided to Playboy TV International.
Other revenues for the twelve months ended December 31, 2003
totaled$2.6 million compared to $5.8 million for the same period of
2002. Operating expenses for the three months ended December 31,
2003 were $19.0 million, virtually unchanged from the $19.1 million
in the fourth quarter of 2002, due primarily to the decrease in
amortization of our broadcast licenses in Chile as well as
continuous efforts to reduce costs, partially offset by the
consolidation and rationalization of PTVLA. Operating expenses for
the twelve months ended December 31, 2003 totaled $76.5 million
compared to $77.3 million for the same twelve months in 2002.
Interest expense for the three-month period ended December 31, 2003
was $0.5 million compared to $2.5 million for the fourth quarter of
2002. This decrease is attributable to the Exchange Offer and
consent solicitation as all future interest on the Claxson Notes is
reflected as part of the balance of the debt. As interest on these
Notes is paid, the debt will be reduced proportionately. Interest
expense for the twelve months ended December 31, 2003 totaled $2.2
million compared to interest expense of $12.4 million for the
twelve months ended December 31, 2002. Net income for the three
months ended December 31, 2003 was $1.1 million ($0.06 per common
share), including a $0.6 million foreign exchange gain due to the
fluctuations of local currencies. As dictated by the Company's
amended and restated memorandum of association, on September 21,
2003, all of our outstanding Series A preferred shares were
mandatorily converted to Class A common shares increasing the total
outstanding Class A common shares from 18.7 million to 19.4
million. The number of shares used for the per-share earnings
computation reflects this conversion. The fourth quarter net income
decreased from $24.0 million for the same period in 2002, which was
attributed to a gain on fluctuations on exchange rates and a gain
on debt restructuring. For the twelve month period ended December
31, 2003 net income was $8.3 million, which represents a turnaround
of $146.8 million over the $138.4 million net loss for the same
twelve months of 2002. As of December 31, 2003, Claxson had a
balance of cash and cash equivalents of $7.7 million and $88.3
million in debt, which includes $20.3 million in future interest
payments of the 8.75% Senior Notes due in 2010. During the year
2003 Claxson operating activities generated cash flows of $13.7
million compared to $2.0 million for the same period of 2002. Cash
generated from operating activities was primarily used for capital
expenditures, to maintain and/or update the Company's equipment and
buildings, and for the payment of debt obligations, as well as for
the payment of commitments related to the purchase of minority
interest in our Broadcast assets and the payment of fees related to
the Claxson formation transaction. Fourth Quarter Highlights
Following the launch of a new online chat service developed by
Claxson's Broadband and Internet Division for America Online Latin
America, Inc. (NASDAQ:AOLA), Claxson and America Online Latin
America announced the launch of Cupido.net (http://cupido.net/), a
matchmaking and meeting Internet service available to all web users
in Mexico, Brazil and Argentina. These arrangements underscore
Claxson's commitment to the new phase of its broadband and Internet
business model by offering technology development and support
services to external clients through its ESDC Digital Platform. In
December 2003, due to Chilevision's use of hidden camera recordings
made and/or broadcasted by Chilevision as part of its investigative
reporting on high-profile news of local interest, certain officers
and journalists of Chilevision were named the subject of several
pending criminal proceedings in Chile. No formal criminal charges
have been brought against any of Chilevision's employees that are
the subject of the pending criminal proceedings. No civil actions
have been filed against Chilevision or its employees. These
proceedings have been of high profile in the Chilean media and
although we cannot predict their outcome, we believe that the
allegations in these proceedings are without merit and have
retained counsel to vigorously defend Chilevision and its employees
in these cases. Accordingly, Claxson has not reserved for any
contingent liabilities as of December 31, 2003 related to these
proceedings. About Claxson Claxson (OTC:XSON) (BULLETIN BOARD:
XSON) is a multimedia company providing branded entertainment
content targeted to Spanish and Portuguese speakers around the
world. Claxson has a portfolio of popular entertainment brands that
are distributed over multiple platforms through its assets in pay
television, broadcast television, radio and the Internet. Claxson
was formed on September 21, 2001 in a merger transaction, which
combined El Sitio, Inc. and other media assets contributed by funds
affiliated with Hicks, Muse, Tate & Furst Inc. and members of
the Cisneros Group of Companies. Headquartered in Buenos Aires,
Argentina, and Miami, Florida, Claxson has a presence in all key
Ibero- American countries, including without limitation, Argentina,
Mexico, Chile, Brazil, Spain, Portugal and the United States. This
press release contains forward-looking statements within the
meaning of the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are
based on the current expectations or beliefs of Claxson's
management and are subject to a number of factors and uncertainties
that could cause actual results to differ materially from those
described in the forward-looking statements. For a detailed
discussion of these factors and other cautionary statements, please
refer to Claxson's annual report on Form 20F filed with the U.S.
Securities and Exchange Commission on July 15, 2003. CLAXSON
BALANCE SHEETS (In Thousands of U.S. dollars) As of As of December
31, December 31, 2003 2002 ASSETS CURRENT ASSETS: Cash and cash
equivalents $7,682 $8,072 Restricted investments 213 750 Accounts
receivable, net 25,249 29,874 Other current assets 7,409 8,617
Total current assets 40,553 47,313 RESTRICTED INVESTMENTS 750 750
PROPERTY AND EQUIPMENT, net 19,107 18,573 PROGRAMMING RIGHTS, net
4,679 5,554 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES 1,061 1,025
INVESTMENTS IN EQUITY SECURITIES 54 448 GOODWILL 53,627 51,837
BROADCAST LICENSES 21,160 18,065 OTHER ASSETS 4,348 4,057 TOTAL
ASSETS $145,339 $147,622 LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable, accrued and other
liabilities $30,928 $36,635 Current portion of programming rights
obligations 10,082 9,899 8.75 % Senior Notes Due 2010, including
accrued interest 3,616 1,396 11 % Senior Notes Due 2005, including
accrued interest 2,928 6,247 6.25 % Senior Notes Due 2013,
including accrued interest 80 -- Current portion of long-term debt
8,033 7,156 Total current liabilities 55,667 61,333 LONG-TERM
LIABILITIES: Long-term debt, net of current portion 12,707 16,029
8.75 % Senior Notes Due 2010, including accrued interest 57,999
61,576 6.25 % Senior Notes Due 2013, including accrued interest
2,666 -- 5 % Senior Notes Due 2008, including accrued interest 244
-- Other long-term liabilities 4,935 4,325 Total long-term
liabilities 78,551 81,930 MINORITY INTEREST 1,128 1,164
SHAREHOLDERS' EQUITY 9,993 3,195 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $145,339 $147,622 CLAXSON CONSOLIDATED
STATEMENTS OF OPERATIONS (In Thousands of U.S. dollars, except per
share data) Three Months Twelve Months Ended Ended December 31,
December 31, 2003 2002 2003 2002 NET REVENUES: Subscriber-based
fees $9,665 $7,191 $38,932 $31,566 Advertising 11,700 9,496 37,324
30,547 Production services 668 1,676 2,930 7,081 Other 432 1,187
2,601 5,766 Total net revenues 22,465 19,550 81,787 74,960
OPERATING EXPENSES: Product, content and technology 9,881 8,774
36,581 34,710 Marketing and sales 2,503 3,784 12,576 13,090
Corporate and administration 5,136 4,153 18,615 17,164 Depreciation
and amortization 1,472 2,368 5,993 12,304 Impairment of goodwill --
-- 2,758 -- Total operating expenses 18,992 19,079 76,523 77,268
OPERATING INCOME (LOSS) 3,473 471 5,264 (2,308) INTEREST EXPENSE
(536) (2,485) (2,246) (12,422) OTHER INCOME (EXPENSE), NET (1,317)
3,067 (1,364) 3,709 FOREIGN CURRENCY EXCHANGE GAIN (LOSS) 637 6,825
9,095 (61,349) GAIN ON DEBT RESTRUCTURING -- 15,274 -- 15,274 NET
GAIN (LOSS) FROM UNCONSOLIDATED AFFILIATES 161 550 346 (6,746)
BENEFIT (PROVISION) FOR INCOME TAXES (1,290) 249 (2,804) 134
MINORITY INTEREST (1) 4 46 68 CHANGE IN ACCOUNTING PRINCIPLES -- --
-- (74,789) NET INCOME (LOSS) $1,127 $23,955 $8,337 $(138,429) NET
INCOME (LOSS) PER COMMON SHARE (Basic and diluted) $0.06 $1.28
$0.44 $(7.41) NET INCOME (LOSS) PER COMMON SHARE BEFORE CHANGE IN
ACCOUNTING PRINCIPLE (Basic and diluted) $0.06 $1.28 $0.44 $(3.41)
NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Basic) 19,428
18,678 18,886 18,678 NUMBER OF SHARES USED IN PER SHARE
CALCULATIONS (Diluted) 19,734 18,678 18,980 18,678 CLAXSON
CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION - BY SEGMENT (In
Thousands of U.S. dollars) Internet Pay & Tele- Broad- Broad-
Claxson vision cast band Corporate Total For the Three Months Ended
December 31, 2003: NET REVENUES $11,963 $10,493 $9 $-- $22,465
OPERATING INCOME (LOSS) $2,611 $2,194 $(63) $(1,269) $3,473 For the
Three Months Ended December 31, 2002: NET REVENUES $10,807 $8,723
$20 $-- $19,550 OPERATING INCOME (LOSS) $1,385 $920 $(882) $(952)
$471 For the Twelve Months Ended December 31, 2003: NET REVENUES
$48,215 $33,394 $178 $-- $81,787 OPERATING INCOME (LOSS) $7,266
$4,928 $(1,898) $(5,032) $5,264 For the Twelve Months Ended
December 31, 2002: NET REVENUES $46,192 $28,578 $190 $-- $74,960
OPERATING INCOME (LOSS) $9,303 $(1,152) $(7,684) $(2,775) $(2,308)
CLAXSON CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of U.S.
dollars) Twelve Months Ended December 31, 2003 2002 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) $8,337 $(138,429)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Amortization of programming rights 4,623
4,903 Share-based compensation 49 73 Depreciation and amortization
5,993 12,304 Interest accrued on notes receivable from shareholders
126 838 Preferred dividend receivable -- (342) Net (gain) loss on
disposal of assets (97) 567 Exchange rate (gain) loss (9,095)
61,349 Impairment of goodwill 2,758 74,789 Gain on debt
restructuring -- (15,274) (Gain) loss from unconsolidated
subsidiaries (346) 6,746 Minority interest (46) (68) Changes in
operating assets and liabilties 1,352 (5,485) Net cash provided by
operating activities 13,654 1,971 CASH FLOWS FROM INVESTING
ACTIVITIES: Acquisition of property and equipment (2,583) (1,605)
Net cash balance of newly consolidated affiliate -- 909 Payments
for acquisition of minority interest (2,416) (2,238) Transaction
costs paid (1,869) (1,050) (Investments in) distributions from
unconsolidated subsidiaries 371 (130) Sale of investments in
subsidiaries 837 8,400 Net cash (used in) provided by investing
activities (5,660) 4,286 CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of short/long-term debt (8,591) (7,689) Payment of debt
restructuring costs -- (3,868) Restricted cash released (deposited)
in guaranty of Chilean syndicated loan 706 (1,500) Capital
contribution by minority shareholder -- 32 Net cash used in
financing activities (7,885) (13,025) EFFECT OF FOREIGN CURRENCY
TRANSLATION ON CASH AND CASH EQUIVALENTS (499) (371) NET DECREASE
IN CASH AND CASH EQUIVALENTS (390) (7,139) CASH AND CASH
EQUIVALENTS, BEGINNING OF YEAR 8,072 15,211 CASH AND CASH
EQUIVALENTS, END OF YEAR $7,682 $8,072 DATASOURCE: Claxson
Interactive Group, Inc. CONTACT: Press, Alfredo Richard, SVP,
Communications, +1-305-894-3588, or Investors, Jose Antonio
Ituarte, Chief Financial Officer, in Argentina,
+011-5411-4339-3700, both of Claxson Web site:
http://www.claxson.com/
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