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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/