Claxson Interactive (NASDAQ:XSON)
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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/