Claxson Interactive (NASDAQ:XSON)
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Claxson Reports 2003 Third Quarter Financial Results
Claxson Reports Higher Operating Income For The Third Quarter And The Nine
Months Ended September 30, 2003
BUENOS AIRES, Nov. 19 /PRNewswire-FirstCall/ -- Claxson Interactive Group Inc.
(BULLETIN BOARD: XSON) ; ("Claxson" or the "Company"), today announced financial
results for the three and nine-month periods ended September 30, 2003.
Financial Results
Operating income for the three-month period ended September 30, 2003 was $3.0
million, reflecting an increase from operating income of $0.3 million for the
three-month period ended September 30, 2002. Operating income for the
nine-month period ending September 30, 2003 was $1.8 million, compared to an
operating loss of $2.8 million for the nine-month period ended September 30,
2002. The improvement in the operating results for the third quarter of 2003 is
due to a 17% increase in net revenues partially offset by a 3% increase in
operating expenses as compared to the same period in 2002.
The 2003 results include, as a result of the agreement with Playboy Enterprises,
Inc., the consolidation of the operations of Playboy TV Latin America & Iberia
(PTVLA) into the operations of our Pay TV division for financial reporting
purposes.
Net revenues for the third quarter of 2003 were $21.1 million, a 17% increase
from net revenues of $18.0 million for the third quarter of 2002. Net revenues
for the nine months ended September 30, 2003 totaled $59.3 million compared to
net revenues of $55.4 million for the nine months ended September 30, 2002. Net
revenues are affected by variations in the exchange rate of Argentine and
Chilean currencies and a decrease in rates from DIRECTV(TM) Latin America. Net
revenues earned in Argentina, where Claxson has significant operations, were 19%
of total net revenues for the three months ended September 30, 2003 compared to
21% for the same period in 2002. For the nine months ended September 30, 2003,
net revenues in Argentina were 19% of total net revenues compared to 22% for the
same period in 2002.
During the third quarter of 2003, the average exchange rate of the Argentine
peso as compared to the U.S. dollar appreciated 21%, versus the same period in
2002. For the nine-month period ended September 30, 2003 the average
appreciation of the currency in Argentina was 1% compared to the same period in
2002.
"This quarter ratifies Claxson's focus on operational performance, cost
management and increasing sales. As a result, we saw significant improvements
from an operating income point of view, compared to the same quarter last year,"
said Roberto Vivo, Chairman and CEO. "We will continue to solidify the achieved
operating efficiencies, and start reinvesting in our properties in order to
improve their competitive position for 2004."
Subscriber-based fees for the three-month period ended September 30, 2003
totaled $10.1 million, representing approximately 48% of total net revenues and
a 42% increase from subscriber-based fees of $7.2 million for the third quarter
of 2002. The increase is primarily attributable to the consolidation of PTVLA,
and the appreciation of the Argentine currency, partially offset by the effect
of the renegotiation of our agreement with DIRECTV(TM) Latin America, which
reduced per subscriber rates and translated prices to local currencies, in
exchange for a two year extension in the contract's maturity. Subscriber-based
fees for the nine months ended September 30, 2003 totaled $29.3 million compared
to subscriber-based fees of $24.4 million for the nine months ended September
30, 2002.
Advertising revenues for the three-month period ended September 30, 2003 were
$9.7 million, representing approximately 46% of Claxson's total net revenues and
a 40% increase from advertising revenues of $6.9 million for the third quarter
of 2002. Advertising revenues for the nine months ended September 30, 2003
totaled $25.7 million compared to advertising revenues of $21.1 million for the
nine months ended September 30, 2002. The improvement in advertising revenues
is due primarily to increased revenues from Chilevision, our broadcast TV
station in Chile, as a result of the efforts taken to improve its performance
during 2002; and to a better pay TV advertising market in Argentina as compared
to 2002.
Production services revenues for the three-month period ended September 30, 2003
were $0.7 million, which represented a 63% decrease from $2.0 million for the
third 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 nine months ended September
30, 2003 totaled $2.3 million compared to production services revenues of $5.4
million for the nine months ended September 30, 2002.
Other revenues for the three-month period ended September 30, 2003 were $0.5
million, which represented a 72% decrease from $1.9 million for the third
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 nine months ended September 30, 2003 totaled $2.2 million compared to
other revenues of $4.6 million for the nine months ended September 30, 2002.
Operating expenses for the three months ended September 30, 2003 were $18.1
million, an increase of 3% from the $17.6 million in the third quarter of 2002,
due primarily to the consolidation of PTVLA, partially offset by the decrease in
amortization of our broadcast licenses in Chile. Operating expenses for the
nine months ended September 30, 2003 decreased to $57.5 million compared to
operating expenses of $58.2 million for the nine months ended September 30,
2002.
Interest expense for the three-month period ended September 30, 2003 was $0.5
million compared to $3.1 million for the third quarter of 2002. This decrease
is attributable to the Exchange Offer and consent solicitation as all future
interest on the new 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 nine months ended September 30, 2003
totaled $1.7 million compared to interest expense of $9.9 million for the nine
months ended September 30, 2002.
Net loss for the three months ended September 30, 2003 was $0.5 million ($0.03
per common share), including a $1.5 million foreign exchange loss due to the
fluctuations of local currencies. As dictated by our 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 third quarter net loss represented a decrease of
$5.0 million from the $5.5 million net loss for the same period in 2002. For
the nine-month period ended September 30, 2003 net income was $7.2 million,
which represents a turnaround of $169.6 million over the $162.4 million net loss
for the same nine months of 2002.
As of September 30, 2003, Claxson had a balance of cash and cash equivalents of
$8.5 million and $87.7 million in debt, which includes $20.3 million in future
interest payments.
Third Quarter Highlights
During the first quarter of 2003, Claxson's largest client, DIRECTV(TM) Latin
America, filed for protection under Chapter 11. At the filing date, Claxson's
accounts receivable from DIRECTV totaled approximately $4.5 million. On July 11,
2003, Claxson signed an agreement with an affiliate of Hughes Electronic
Corporation, pursuant to which Claxson assigned its pre-bankruptcy petition
claims for the amounts owed to Claxson by DIRECTV(TM) Latin America. On July 22,
2003, Claxson received the payment for such assignment of claims.
On May 17, 2002, based on its long term programming strategy, the Company sold
its 50% participation in the animation channel Locomotion, a joint venture with
The Hearst Corporation, to Corus Entertainment Inc. (NYSE:CJR), a Canadian media
and entertainment company. As part of this transaction, Claxson continued
providing affiliate sales services, program origination and post-production
services to Locomotion. As of August 1, 2003 Claxson no longer provides sales
services to Locomotion. The remaining contract for program origination and
post-production services will not be renewed by Locomotion upon expiration on
December 31, 2003. All of these services will be transferred to an affiliate of
one of the Locomotion partners.
During the third quarter, Claxson executed a sales representation agreement with
Utilisima Satelital, a pay TV channel directed to female audiences in Latin
America, Spain and the US. Launched in 1996 and reaching 5 million households
in Argentina, Bolivia, Chile, Peru, Paraguay, Uruguay, Venezuela, Spain and the
US, Utilisima has become one of the leading channels targeting Spanish-speaking
women. Its programming includes more than 40 original shows, totaling more than
4,000 episodes a year and covering a wide range of topics. Utilisima's addition
to Claxson's portfolio strengthens the company's pan regional offering by adding
a new genre geared specifically to women.
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. 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 Beach,
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
UNAUDITED
BALANCE SHEETS
(In Thousands of U.S. dollars)
As of As of
September 30, December 31,
2003 2002
ASSETS
CURRENT ASSETS:
Cash, cash equivalents and
investments $8,511 $8,072
Restricted investments 108 750
Accounts receivable, net 25,920 29,874
Other current assets 7,709 8,617
Total current assets 42,248 47,313
RESTRICTED INVESTMENTS 750 750
PROPERTY AND EQUIPMENT, net 18,300 18,573
PROGRAMMING RIGHTS, net 4,663 5,554
INVESTMENTS IN UNCONSOLIDATED
SUBSIDIARIES 868 1,025
INVESTMENTS IN DEBT AND EQUITY
SECURITIES 140 448
GOODWILL 50,961 51,837
BROADCAST LICENSES 18,806 18,065
OTHER ASSETS 4,238 4,057
TOTAL ASSETS $140,974 $147,622
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, accrued and other
liabilities $31,864 $36,635
Current portion of programming
rights obligations 10,451 9,899
8.75 % Senior Notes Due 2010,
including accrued interests 3,618 1,396
11 % Senior Notes Due 2005,
including accrued interests 3,558 6,247
6.25 % Senior Notes Due 2013,
including accrued interests 54 --
Current portion of long-term debt 7,055 7,156
Total current liabilities 56,600 61,333
LONG-TERM DEBT 12,544 16,029
8.75 % Senior Notes Due 2010,
including interests 57,999 61,576
6.25 % Senior Notes Due 2013,
including accrued interests 2,623 --
5 % Senior Notes Due 2008,
including accrued interests 246 --
OTHER LONG-TERM LIABILITIES 4,308 4,325
MINORITY INTEREST 1,126 1,164
SHAREHOLDERS' EQUITY 5,528 3,195
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $140,974 $147,622
CLAXSON
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of U.S. dollars, except per share data)
Consolidated Consolidated
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
NET REVENUES:
Subscriber-based fees $10,135 $7,159 $29,267 $24,375
Advertising 9,712 6,945 25,624 21,051
Production services 735 2,006 2,262 5,405
Other 521 1,865 2,169 4,579
Total net revenues 21,103 17,975 59,322 55,410
OPERATING EXPENSES:
Product, content and technology 9,231 8,114 26,700 25,936
Marketing and sales 3,409 2,681 10,073 9,306
Corporate and administration 4,060 4,253 13,479 13,011
Depreciation and amortization 1,440 2,581 4,521 9,936
Impairment of goodwill -- -- 2,758 --
Total operating expenses 18,140 17,629 57,531 58,189
OPERATING INCOME (LOSS) 2,963 346 1,791 (2,779)
INTEREST EXPENSE (456) (3,138) (1,710) (9,937)
OTHER INCOME (EXPENSE), NET (892) 1,038 (47) 642
FOREIGN CURRENCY EXCHANGE GAIN
(LOSS) (1,474) (1,431) 8,458 (68,174)
NET GAIN (LOSS) FROM UNCONSOLIDATED
AFFILIATES 80 (2,374) 185 (7,296)
BENEFIT (PROVISION) FOR INCOME TAXES (680) 91 (1,514) (115)
MINORITY INTEREST (37) 14 47 64
CHANGE IN ACCOUNTING PRINCIPLES -- -- -- (74,789)
NET INCOME (LOSS) $(496) $(5,454) $7,210 $(162,384)
NET INCOME (LOSS) PER COMMON SHARE
(Basic and diluted) $(0.03) $(0.29) $0.39 $(8.69)
NET INCOME (LOSS) PER COMMON SHARE
BEFORE CHANGE IN
ACCOUNTING PRINCIPLE (Basic and
diluted) $(0.03) $(0.29) $0.39 $(4.69)
NUMBER OF SHARES USED IN PER SHARE
CALCULATIONS (Basic and diluted) 18,751 18,678 18,703 18,678
CLAXSON
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION - BY
SEGMENT
(In Thousands of U.S. dollars)
Pay Internet & Claxson
Television Broadcast Broadband Corporate Total
For the Three Months
Ended September 30,
2003:
NET REVENUES $12,393 $8,625 $85 $-- $21,103
OPERATING INCOME (LOSS) $2,998 $1,565 $(489) $(1,111) $2,963
For the Three Months
Ended September 30,
2002:
NET REVENUES $11,187 $6,736 $52 $-- $17,975
OPERATING INCOME (LOSS) $2,565 $(409) $(1,412) $(398) $346
For the Nine Months
Ended September 30,
2003:
NET REVENUES $36,252 $22,901 $169 $-- $59,322
OPERATING INCOME (LOSS) $4,655 $2,734 $(1,835) $(3,763) $1,791
For the Nine Months
Ended September 30,
2002:
NET REVENUES $35,385 $19,855 $170 $-- $55,410
OPERATING INCOME (LOSS) $7,918 $(2,072) $(6,802) $(1,823) $(2,779)
DATASOURCE: Claxson Interactive Group, Inc.
CONTACT: Press, Alfredo Richard, SVP, Communications, +1-305-894-3588,
or Investors, Jose Antonio Ituarte, Chief Financial Officer,
+1-011-5411-4339-3700, both of Claxson
Web site: http://www.claxson.com/