Claxson Reports 2004 Second Quarter Financial Results Company
reports solid operating and net income growth in second quarter
BUENOS AIRES, Argentina, Aug. 17 /PRNewswire-FirstCall/ -- Claxson
Interactive Group Inc. (XSON.OB; "Claxson" or the "Company"), today
announced financial results for the three and six-month periods
ended June 30, 2004. Financial Highlights Second Quarter 2004 Net
revenue for the second quarter of 2004 was $23.0 million, a 17%
increase from net revenue of $19.7 million for the second quarter
of 2003. Operating expense for the three months ended June 30, 2004
was $18.6 million, an 11% decrease from the $20.8 million for the
second quarter of 2003. Operating income was $4.3 million for the
three-month period ended June 30, 2004 compared to an operating
loss of $1.0 million for the three-month period ended June 30,
2003. Foreign currency exchange loss for the three-month period
ended June 30, 2004 was $1.5 million, a total $4.1 million negative
effect compared to the $2.6 million gain in the same period of
2003. Net income for the three months ended June 30, 2004 was $2.3
million ($0.12 per common share), compared to $2.0 million ($0.11
per common share) for the same period in 2003. During the second
quarter of 2004, the average exchange rate of the Argentine and
Chilean currencies compared to the U.S. dollar depreciated 3% and
appreciated 14%, respectively, versus the same period in 2003.
First Six Months of 2004 Net revenue for the six-month period ended
June 30, 2004 was $43.3 million, a 13% increase compared to $38.2
million for same period in 2003. Operating expense for the
six-month period ended June 30, 2004 was $39.2 million compared to
$39.4 million in the same period of 2003. Operating income was $4.1
million for the six-month period ended June 30, 2004 compared to an
operating loss of $1.2 million for the same period in 2003. Foreign
currency exchange loss for the six-month period ended June 30, 2004
was $0.8 million, a total $10.7 million negative effect compared to
the $9.9 million gain in the same period of 2003. Net income for
the six-month period ended June 30, 2004 was $2.5 million ($0.13
per common share), compared to $7.7 million ($0.41 per common
share) for the same period in 2003. During the six-month period
ended June 30, 2004, the average exchange rate of the Argentine and
Chilean currencies compared to the U.S. dollar appreciated 2% and
17%, respectively, versus the same period in 2003. CLAXSON
CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION - BY SEGMENT (In
Thousands of U.S. dollars) Operating Depre- Consolidated expenses
ciation Operating Net (before depr. & amorti- Total Income
Revenues and amort.) zation expenses (loss) For the Three Months
Ended June 30, 2004 Pay TV $12,344 $9,036 $795 $9,831 $2,513
Broadcast 10,593 7,283 658 7,941 2,652 Internet & Broadband 31
279 7 286 (255) Corporate -- 578 -- 578 (578) Total $22,968 $17,176
$1,460 $18,636 $4,332 2003 Pay TV $11,803 $11,109 $984 $12,093
$(290) Broadcast 7,887 6,149 500 6,649 1,238 Internet &
Broadband 56 935 7 942 (886) Corporate -- 1,072 -- 1,072 (1,072)
Total $19,746 $19,265 $1,491 $20,756 $(1,010) Operating Depre-
Consolidated expenses ciation Operating Net (before depr. &
amorti- Total Income Revenues and amort.) zation expenses (loss)
For the Six Months Ended June 30, 2004 Pay TV $23,689 $18,939
$1,636 $20,575 $3,114 Broadcast 19,538 14,833 1,374 16,207 3,331
Internet & Broadband 57 540 7 547 (490) Corporate -- 1,904 --
1,904 (1,904) Total $43,284 $36,216 $3,017 $39,233 $4,051 2003 Pay
TV $23,859 $20,609 $1,738 $22,347 $1,512 Broadcast 14,276 11,771
1,336 13,107 1,169 Internet & Broadband 84 1,423 7 1,430
(1,346) Corporate -- 2,507 -- 2,507 (2,507) Total $38,219 $36,310
$3,081 $39,391 $(1,172) "We are very pleased with the overall
results of the second quarter and first six months of 2004. We
continue to see growth in our consolidated net revenues which
resulted in significant improvements both in operating and net
income, in spite of the foreign currency losses we experienced in
2004," said Roberto Vivo, Chairman and CEO. "We're especially
pleased with the performance of the broadcasting and pay TV units,
which translated into solid growth in their operating income." PAY
TV Net revenue for the second quarter of 2004 was $12.3 million, a
5% increase from net revenue of $11.8 million for the second
quarter of 2003. The increase in net revenue is principally
attributable to an increase in subscriber-based fees and
advertising, partially offset by a $0.6 million decrease in
production and other services as a result of the cancellation of
the payout and other services provided to the Locomotion channel,
previously an equity investment of Claxson. Net revenue for the
six-month period ended June 30, 2004 was $23.7 million compared to
$23.9 million for the same period of 2003. The decrease is
explained by a decrease of $1.3 million in production and other
services as a result of the cancellation of services provided to
the Locomotion Channel and other third parties, partially offset by
increased advertising and subscriber-based fee revenues. Operating
expense (excluding depreciation and amortization) for the second
quarter of 2004 was $9.0 million compared to $11.1 million for the
same period in 2003. The decrease is principally attributable to
the goodwill impairment charge taken in 2003 of $2.5 million, and
reduced marketing expenses, partially offset by higher programming
expenditures. Operating expense for the six-month period ended June
30, 2004 was $18.9 million compared to $20.6 million for the same
period of 2003. Excluding the goodwill impairment charge taken in
2003, operating expense increased $0.8 million as a result of
higher programming expenditures. Operating income for the second
quarter of 2004 was $2.5 million compared to an operating loss of
$0.3 million for the same period in 2003. Operating income for the
six-month period ended June 30, 2004 was $3.1 million compared to
$1.5 million for the same period of 2003. As of June 30, 2004, the
Company's owned basic and premium channels reached 40.5 million
aggregate subscribers, a 15% growth compared to its subscriber base
as of June 30, 2003. FTV and Retro were the Company's owned
channels that reported the strongest growth. BROADCAST Net revenue
for the second quarter of 2004 was $10.6 million, a 34% increase
from net revenue of $7.9 million for the second quarter of 2003.
The increase is primarily attributable to improved ratings of
Chilevision that enabled the channel to increase its advertising
revenue, as well as a 13% appreciation in the Chilean peso as
compared to 2003. Net revenue for the six- month period ended June
30, 2004 was $19.5 million compared to $14.3 million for the same
period of 2003. This increase is a result of the increased audience
share of Chilevision as well as a 17% appreciation of the Chilean
Peso as compared to same period in 2003. Operating expense
(excluding depreciation and amortization) for the second quarter of
2004 was $7.3 million compared to $6.1 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 expense for
the six-month period ended June 30, 2004 was $14.8 million compared
to $11.8 million for the same period of 2003. As was the case in
the second quarter, this increase is explained by the appreciation
of the Chilean Peso and the increase in production expenditures at
Chilevision. Operating income for the second quarter of 2004 was
$2.7 million compared to $1.2 million for the same period in 2003.
Operating income for the six- month period ended June 30, 2004 was
$3.3 million compared to $1.2 million for the same period of 2003.
During the second quarter of 2004, Chilevision reported an average
audience share of 15.0%, compared to 12.1% for the same period in
2003. Chilevision's average audience share for the six-month period
ended June 30, 2004 was 15.4%, compared to 14.6% for the same
period in 2003. Ibero American Radio Chile's average audience share
for the six-month period ended June 30, 2004 was 34.7%, compared to
35.7% for the same period in 2003. BROADBAND & INTERNET Net
revenue for the second quarter of 2004 was $31.0 thousand compared
to $56.0 thousand for the second quarter of 2003. Net revenue for
the six-month period ended June 30, 2004 was $57 thousand compared
to $84 thousand for the same period of 2003. Operating expense
(excluding depreciation and amortization) for the second quarter of
2004 was $0.3 million compared to $0.9 million for the same period
in 2003. Operating expense for the six-month period ended June 30,
2004 was $0.5 million compared to $1.4 million for the same period
of 2003. Operating loss for the second quarter of 2004 was $0.3
million compared to a $0.9 million loss for the same period in
2003. Operating income for the six-month period ended June 30, 2004
was $0.5 million compared to $1.3 million for the same period of
2003. Director Fees In June of 2004, certain directors waived their
unpaid director fees, and as a result, corporate expenses decreased
by $0.6 million in the second quarter of 2004. Statement of Cash
Flows and Liquidity As of June 30, 2004, Claxson had a balance of
cash and cash equivalents of $7.2 million and $85.0 million in
debt, which includes $18.5 million in future interest payments on
the Company's 8.75% Senior Notes due in 2010. For the six-month
period ended June 30, 2004, Claxson operating activities generated
cash flows of $3.5 million compared to $4.7 million for the same
period of 2003. The difference is primarily due to the collection
during the first quarter of 2003 of certain 2002 receivables. Cash
generated from operating activities was primarily used for the
repayment of debt, the payment of fees related to the Claxson
formation transaction and for capital expenditures. Net cash used
for debt repayment was $2.4 million as a result of the
renegotiation of the Chilean syndicated financing and the use of
the escrowed amounts. During the six-month period ended June 30,
2004, Claxson received $0.6 million as the last installment from
the sale of its investment in the Locomotion Channel in 2002. For
the six-month period ended June 30, 2004, Claxson had a net use of
cash of $0.4 million. On June 21, 2004, Claxson's audit committee
and its disinterested directors approved the issuance of
convertible debentures in an amount up to $5 million. On July 8,
2004, the Company executed agreements with its Chairman and Chief
Executive Officer, its Pay Television Chief Operating Officer and
its Chief Financial Officer, for the purchase of $2.0 million of
the debentures. These debentures may be converted to Class A common
shares at a conversion price of $3.24 per share, mature on July
2006 and bear annual interest at 8.25%. Additionally, in the event
the Company prepays the debentures, the investors have the right to
receive warrants to purchase shares of the Company's Class A common
shares in an amount equal to the principal amount of the debenture.
Although there is no formal commitment, the Company is in
negotiations with the Cisneros Group for the sale of the remaining
amount of the convertible debentures. On June 25, 2004, Claxson's
Chilean subsidiary, Radio Chile, completed the restructuring of its
syndicated credit facility. Under the new syndicated credit
facility, Radio Chile received approximately $2.6 million in
additional funds, after the deduction of expenses and underwriting
fees. As part of the restructuring Radio Chile was able to extend
the maturity of the facility an additional three years, improve the
amortization schedule to bi-annual payments as compared to
quarterly payments, release the Chilevision and escrow account
guarantees, relax the covenant ratios and reduce the interest rate
to the local prime lending rate plus 2.50%. The total principal
amount of the new facility is approximately $14.7 million and
matures in 2009. 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, 2004. CLAXSON
BALANCE SHEETS (In Thousands of U.S. dollars) As of As of June 30,
December 31, 2004 2003 ASSETS CURRENT ASSETS: Cash and cash
equivalents $7,236 $7,682 Restricted investments -- 213 Accounts
receivable, net 26,255 25,249 Other current assets 6,625 7,409
Total current assets 40,116 40,553 RESTRICTED INVESTMENTS -- 750
PROPERTY AND EQUIPMENT, net 17,206 19,107 PROGRAMMING RIGHTS, net
5,117 4,804 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES 1,047 1,061
INVESTMENTS IN EQUITY SECURITIES 94 54 GOODWILL 51,874 53,627
BROADCAST LICENSES 19,196 21,160 OTHER ASSETS 4,786 4,223 TOTAL
ASSETS $139,436 $145,339 LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Accounts payable, accrued and other
liabilities $29,633 $30,928 Current portion of programming rights
obligations 8,919 10,082 Current portion of long-term debt 9,630
14,657 Total current liabilities 48,182 55,667 LONG-TERM
LIABILITIES: Long-term debt, net of current portion 75,378 73,616
Other long-term liabilities 4,576 4,935 Total long-term liabilities
79,954 78,551 MINORITY INTEREST 825 1,128 SHAREHOLDERS' EQUITY
10,475 9,993 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $139,436
$145,339 CLAXSON CONSOLIDATED STATEMENTS OF OPERATIONS (In
Thousands of U.S. dollars, except per share data) Three Months
Ended Six Months Ended June 30, June 30, 2004 2003 2004 2003 NET
REVENUES: Subscriber-based fees $9,928 $9,339 $19,439 $19,132
Advertising 12,074 8,886 21,990 15,912 Production services 717 615
1,328 1,527 Other 249 906 527 1,648 Total net revenues 22,968
19,746 43,284 38,219 OPERATING EXPENSES: Product, content and
technology 10,695 8,658 20,849 17,469 Marketing and sales 2,667
3,284 7,044 6,664 Corporate and administration 3,814 4,565 8,323
9,419 Depreciation and amortization 1,460 1,491 3,017 3,081
Impairment of goodwill -- 2,758 -- 2,758 Total operating expenses
18,636 20,756 39,233 39,391 OPERATING INCOME (LOSS) 4,332 (1,010)
4,051 (1,172) INTEREST EXPENSE (541) (596) (999) (1,254) OTHER
INCOME (EXPENSE), NET (247) 904 (55) 845 FOREIGN CURRENCY EXCHANGE
GAIN (LOSS) (1,523) 2,624 (759) 9,932 NET GAIN FROM UNCONSOLIDATED
AFFILIATES 678 83 875 105 PROVISION FOR INCOME TAXES (392) (73)
(652) (834) MINORITY INTEREST (24) 43 3 84 NET INCOME $2,283 $1,975
$2,464 $7,706 NET INCOME PER COMMON SHARE (Basic) $0.12 $0.11 $0.13
$0.41 NET INCOME PER COMMON SHARE (Diluted) $0.11 $0.10 $0.12 $0.40
NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Basic) 19,491
18,678 19,469 18,678 NUMBER OF SHARES USED IN PER SHARE
CALCULATIONS (Diluted) 19,926 19,428 19,927 19,428 CLAXSON
CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of U.S.
dollars) Six Months Ended June 30, 2004 2003 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $2,464 $7,706 Adjustments to
reconcile net loss to net cash (used in) provided by operating
activities: Amortization of programming rights 2,501 2,035
Share-based compensation 33 26 Depreciation and amortization 3,017
3,081 Accrued and unpaid interest 380 182 Exchange rate (gain) loss
759 (9,932) Impairment of goodwill -- 2,758 (Gain) from
unconsolidated subsidiaries (875) (105) Minority interest (3) (84)
Changes in operating assets and liabilities (4,815) (944) Net cash
provided by operating activities 3,461 4,723 CASH FLOWS FROM
INVESTING ACTIVITIES: Acquisition of property and equipment (942)
(1,380) Payments for acquisition of minority interest -- (2,416)
Transaction costs paid (1,152) (1,319) Dividends distributions to
minority owners of subsidiaries (380) -- Investment in
unconsolidated subsidiaries -- (110) Dividends from unconsolidated
subsidiaries 247 -- Proceeds on sale of investment in
unconsolidated subsidiaries 625 362 Net cash (used in) provided by
investing activities (1,602) (4,863) CASH FLOWS FROM FINANCING
ACTIVITIES: Net repayments of short/long-term debt (3,351) (3,782)
Restricted cash released in guaranty of Chilean syndicated loan 907
694 Proceeds from exercised stock options 52 -- Net cash used in
financing activities (2,392) (3,088) EFFECT OF FOREIGN CURRENCY
TRANSLATION ON CASH AND CASH EQUIVALENTS 87 (527) NET DECREASE IN
CASH AND CASH EQUIVALENTS (446) (3,755) CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 7,682 8,072 CASH AND CASH EQUIVALENTS, END OF
PERIOD $7,236 $4,317 DATASOURCE: Claxson Interactive Group, Inc.
CONTACT: Press: Alfredo Richard, SVP, Communications,
+1-305-894-3588, Investors: Jose Antonio Ituarte, Chief Financial
Officer, +011-5411-4339-3700, both of Claxson Web site:
http://www.claxson.com/
Copyright