Claxson Reports 2004 First Quarter Financial Results BUENOS AIRES,
Argentina, May 19 /PRNewswire-FirstCall/ -- Claxson Interactive
Group Inc. (BULLETIN BOARD: XSON) ("Claxson" or the "Company")
today announced financial results for the three-month period ended
March 31, 2004. Financial Highlights Net revenues for the first
quarter of 2004 were $20.3 million, a 10% increase from net
revenues of $18.5 million for the first quarter of 2003, reflecting
the improved performance of the Broadcasting Division and of the
Argentine pay TV advertising market. Operating expenses for the
three months ended March 31, 2004 were $20.6 million, an 11%
increase from the $18.6 million in the first quarter of 2003.
Operating results for the three- month period ended March 31, 2004
represented a loss of $0.3 million, compared to a loss of $0.2
million for the three-month period ended March 31, 2003. Foreign
exchange gain for the three-month period ended March 31, 2004 was
$0.8 million compared to a $7.3 million gain in the same period of
2003. Net income for the three months ended March 31, 2004 was $0.2
million ($0.01 per common share), compared to $5.7 million ($0.31
per common share) for the same period in 2003. During the first
quarter of 2004, the average exchange rate of the Argentine and
Chilean currencies compared to the U.S. dollar appreciated 7% and
20%, respectively, versus the same period in 2003. CLAXSON
CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION - BY SEGMENT (In
Thousands of U.S. dollars) Operating expenses Operating Net (before
depr. Depr. & Total Income Revenues and amort.) Amort. expenses
(loss) For the Three Months Ended March 31, 2004: Pay TV $11,345
$9,903 $841 $10,744 $601 Broadcast 8,945 7,550 716 8,266 679
Broadband & Internet 26 261 -- 261 (235) Corporate -- 1,326 --
1,326 (1,326) Total $20,316 $19,040 $1,557 $20,597 $(281) For the
Three Months Ended March 31, 2003: Pay TV $12,056 $9,515 $754
$10,269 $1,787 Broadcast 6,389 5,623 836 6,459 (70) Broadband &
Internet 28 488 -- 488 (460) Corporate -- 1,419 -- 1,419 (1,419)
Total $18,473 $17,045 $1,590 $18,635 $(162) "As planned, during the
first quarter, we focused on reinvesting in the development and
marketing of our properties to grow revenue and improve our
competitive position for 2004 across the region," said Roberto
Vivo, Chairman and CEO. "We are pleased with the performance of all
our business units, in particular Broadcast, where we experienced
significant ad revenue growth as a result of higher ratings. In
addition, our Pay TV division developed new programming that,
together with a larger marketing investment, helped solidify our
position in key strategic markets, especially in the adult genre."
PAY TV Net revenues for the first quarter of 2004 were $11.3
million, a 6% decrease from net revenues of $12.1 million for the
first quarter of 2003. The decrease in net revenues is principally
attributable to a $0.7 million decrease in production and other
services as a result of the cancellation of the playout and other
services provided to Locomotion, as well as an overall slowdown in
the language conversion business of The Kitchen, Inc. Operating
expenses (excluding depreciation and amortization) for the first
quarter of 2004 were $9.9 million compared to $9.5 million for the
same period in 2003. The increase is principally attributed to
marketing expenses related to the adult and entertainment brands.
Operating income for the first quarter of 2004 was $0.6 million
compared to $1.8 million for the same period in 2003. On April 28,
2004 Claxson announced the launch of Playboy TV on Digital Plus,
the new digital DTH platform resulting from the merger of Canal
Satelite Digital and Via Digital, which is controlled by Sogecable,
a leading pay TV group in Spain. Playboy TV became part of Digital
Plus' premium offering available to 1.8 million subscribers, who
can enjoy a 24/7 customized version of the channel tailored to the
needs and tastes of the Spanish audiences. BROADCAST Net revenues
for the first quarter of 2004 were $8.9 million, a 39% increase
from net revenues of $6.4 million for the first quarter of 2003.
The increase is partially attributable to improved ratings of
Chilevision that enabled the channel to increase its prices, as
well as a 20% appreciation in the Chilean peso as compared to 2003.
Operating expenses (excluding depreciation and amortization) for
the first quarter of 2004 were $7.6 million compared to $5.6
million for the same period in 2003. The increase is due to the
appreciation of the Chilean peso, as well as the increase in
production costs as a result of the higher number of original
production hours incurred by Chilevision to achieve its ratings
growth. Operating income for the first quarter of 2004 was $0.7
million compared to an operating loss of $0.1 million for the same
period in 2003. BROADBAND & INTERNET Net revenues for the first
quarter of 2004 were $0.03 million, unchanged from the first
quarter of 2003. Operating expenses (excluding depreciation and
amortization) for the first quarter of 2004 were $0.3 million
compared to $0.5 million for the same period in 2003. The decrease
is due to the various cost reductions achieved during 2003.
Operating loss for the first quarter of 2004 was $0.2 million down
from a $0.5 million loss for the same period in 2003. As a result
of the efforts to replicate the success of the digital platform in
Argentina, the Broadband & Internet Division signed an
agreement with Marcos Galassi, a well known Internet entrepreneur
in Brazil, to direct the distribution of its digital platform in
that market. The Broadband & Internet Division also announced
the renewal of its agreement with Fibertel, the largest broadband
provider in Argentina, for another two years. Accordingly, Fibertel
started deploying version 4.0 of the ESDC Digital Platform. With
this agreement, Claxson is positioned in the pay per view business
to market its branded content in broadband networks, including
adult content, documentaries and entertainment. Statement of Cash
Flows As of March 31, 2004, Claxson had a balance of cash and cash
equivalents of $5.2 million and $83.9 million in debt, which
includes $18.5 million in future interest payments on the 8.75%
Senior Notes due in 2010. During the first quarter of 2004, Claxson
operating activities generated cash flows of $2.8 million compared
to $4.7 million for the same period of 2003. The difference is
primarily due to the collection in first quarter of 2003 of certain
2002 receivables. Cash generated from operating activities was
primarily used for the payment of debt obligations of $3.7 million,
the payment of fees related to the Claxson formation transaction,
and for capital expenditures. During the first quarter of 2004,
Claxson had a net use of cash of $2.5 million. About Claxson
Claxson (XSON.OB) 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. 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. Claxson's principal
shareholders are the Cisneros Group of Companies and funds
affiliated with Hicks, Muse, Tate & Furst Inc. 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. -- Financial Tables Follow --
CLAXSON BALANCE SHEETS (In Thousands of U.S. dollars) As of As of
March 31, December 31, 2004 2003 ASSETS CURRENT ASSETS: Cash and
cash equivalents $5,163 $7,682 Restricted investments 183 213
Accounts receivable, net 22,998 25,249 Other current assets 7,826
7,409 Total current assets 36,170 40,553 RESTRICTED INVESTMENTS 750
750 PROPERTY AND EQUIPMENT, net 18,295 19,107 PROGRAMMING RIGHTS,
net 5,109 4,804 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES 1,249
1,061 INVESTMENTS IN EQUITY SECURITIES 67 54 GOODWILL 52,664 53,627
BROADCAST LICENSES 20,124 21,160 OTHER ASSETS 4,063 4,223 TOTAL
ASSETS $138,491 $145,339 LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable, accrued and other
liabilities $31,111 $30,928 Current portion of programming rights
obligations 9,843 10,082 8.75 % Senior Notes Due 2010, including
accrued interest 3,618 3,616 11 % Senior Notes Due 2005, including
accrued interest 2,993 2,928 6.25 % Senior Notes Due 2013,
including accrued interest 34 80 Current portion of long-term debt
7,720 8,033 Total current liabilities 55,319 55,667 LONG-TERM
LIABILITIES: Long-term debt, net of current portion 10,429 12,707
8.75 % Senior Notes Due 2010, including accrued interest 56,188
57,999 6.25 % Senior Notes Due 2013, including accrued interest
2,667 2,666 5 % Senior Notes Due 2008, including accrued interest
246 244 Other long-term liabilities 4,509 4,935 Total long-term
liabilities 74,039 78,551 MINORITY INTEREST 814 1,128 SHAREHOLDERS'
EQUITY 8,319 9,993 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$138,491 $145,339 CLAXSON CONSOLIDATED STATEMENTS OF OPERATIONS (In
Thousands of U.S. dollars, except per share data) Three Months
Ended March 31, 2004 2003 NET REVENUES: Subscriber-based fees
$9,511 $9,793 Advertising 9,916 7,026 Production services 611 912
Other 278 742 Total net revenues 20,316 18,473 OPERATING EXPENSES:
Product, content and technology 10,154 8,811 Marketing and sales
4,377 3,380 Corporate and administration 4,509 4,854 Depreciation
and amortization 1,557 1,590 Total operating expenses 20,597 18,635
OPERATING LOSS (281) (162) INTEREST EXPENSE (458) (658) OTHER
INCOME (EXPENSE), NET 192 (59) FOREIGN CURRENCY EXCHANGE GAIN 764
7,308 NET GAIN FROM UNCONSOLIDATED AFFILIATES 197 22 PROVISION FOR
INCOME TAXES (260) (761) MINORITY INTEREST 27 41 NET INCOME $181
$5,731 NET INCOME PER COMMON SHARE (Basic and diluted) $0.01 $0.31
NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Basic) 19,446
18,678 NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Diluted)
19,940 18,678 CLAXSON CONSOLIDATED STATEMENTS OF CASH FLOWS (In
Thousands of U.S. dollars) Three Months Ended March 31, 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES: Net income $181 $5,731
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities: Amortization of programming rights 1,226
1,078 Share-based compensation 14 13 Depreciation and amortization
1,557 1,590 Interest accrued on notes receivable from shareholders
23 42 Exchange rate gain (764) (7,308) Gain on recovery of negative
goodwill (168) -- Gain from unconsolidated subsidiaries (197) (22)
Minority interest (27) (41) Changes in operating assets and
liabilities 921 3,659 Net cash provided by operating activities
2,766 4,742 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of
property and equipment (584) (608) Payments for acquisition of
minority interest -- (1,260) Transaction costs paid (723) (924)
Dividends distributions to minority owners of subsidiaries (285) --
Investment in unconsolidated subsidiaries -- (50) Sale of
investment in unconsolidated subsidiary -- 300 Net cash used in
investing activities (1,592) (2,542) CASH FLOWS FROM FINANCING
ACTIVITIES: Repayments of short/long-term debt (3,699) (2,272)
Proceeds from exercised stock options 48 -- Net cash used in
financing activities (3,651) (2,272) EFFECT OF FOREIGN CURRENCY
TRANSLATION ON CASH AND CASH EQUIVALENTS (42) 139 NET DECREASE IN
CASH AND CASH EQUIVALENTS (2,519) 67 CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,682 8,072 CASH AND CASH EQUIVALENTS, END OF
PERIOD $5,163 $8,139 DATASOURCE: Claxson Interactive Group, Inc.
CONTACT: Press, Alfredo Richard, SVP, Communications,
+1-305-894-3588, or Investors, Jose Antonio Ituarte, Chief
Financial Officer, +011-5411-4339-3700, both of Claxson Web site:
http://www.claxson.com/
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