Claxson Reports 2005 First Quarter Financial Results; The Company Increases Its Focus on the Pay TV Business and Shows Improved Results in All Divisions.BUENOS AIRES Buenos Aires (bwā`nəs ī`rēz, âr`ēz, Span. bwā`nōs ī`rās), city and federal district (1991 pop. , Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. -- Claxson Interactive Group Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :XSONF) ("Claxson" or the "Company"), today announced results for the three-month period ended March 31, 2005. As previously announced, the Company finalized See finalization. the sale of its TV Broadcast operation Chilevision on April 18. In addition, on May 6, Claxson completed the sale of the language localization Customizing software and documentation for a particular country. It includes the translation of menus and messages into the native spoken language as well as changes in the user interface to accommodate different alphabets and culture. See internationalization and l10n. operations of The Kitchen. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with applicable accounting principles, the assets, liabilities and operations of Chilevision and the language localization operations of The Kitchen are reflected as assets and liabilities held for sale in the balance sheet and as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. in the statement of operations See Income statement. of the Company. Financial Highlights Net revenue for the first quarter of 2005 was $17.8 million, an 18% increase from net revenue of $15.1 million for the first quarter of 2004, reflecting the improved performance of Pay TV and Broadcast Radio. Operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. for the three months ended March 31, 2005 was $14.9 million, compared to $14.7 million in the first quarter of 2004. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the three-month period ended March 31, 2005 was $2.9 million, compared to $0.4 million for the three month period ended March 31, 2004. Foreign exchange gain for the three-month period ended March 31, 2005 was $0.6 million compared to a $1.0 million in the same period of 2004. Net income for the three months ended March 31, 2005 was $1.4 million ($0.11 per basic and $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share), compared to $0.2 million ($0.06 per basic and diluted shares) for the same period in 2004. During the first quarter of 2005, the average exchange rate of the Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. and Chilean currencies compared to the U.S. dollar remained virtually unchanged and appreciated 2% respectively, versus the same period in 2004.
CLAXSON
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - INFORMATION BY
SEGMENT
(In Thousands of U.S. dollars)
Operating
expenses
(before Consolidated
depr. Operating
Net and Depreciation Total Income
Revenues amort.) & amortization expenses (loss)
-------- -------- -------------- -------- ------------
For the Three
Months Ended
March 31,
2005
Pay TV $12,299 $ 9,170 $ 551 $ 9,721 $ 2,578
Broadcast
Radio 5,379 3,418 469 3,887 1,492
Broadband &
Internet 29 227 - 227 (198)
Corporate 72 1,029 - 1,029 (957)
-------- -------- -------------- -------- ------------
Total $17,779 $13,844 $ 1,020 $14,864 $ 2,915
2004
Pay TV $10,839 $ 9,175 $ 841 $10,016 $ 823
Broadcast
Radio 4,232 2,694 430 3,124 1,108
Broadband &
Internet 26 261 - 261 (235)
Corporate - 1,326 - 1,326 (1,326)
-------- -------- -------------- -------- ------------
Total $15,097 $13,456 $ 1,271 $14,727 $ 370
"During these first months of 2005 we took some key actions to increase our focus on Pay TV, our core business. We successfully completed the sale of Chilevision, as well as the sale of the language localization operations of The Kitchen," said Roberto Roberto Rome, Berlin, Tokyo (WW2 Axis) Vivo, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We are pleased with the performance of all our business units and will be evaluating new business opportunities to invest the funds obtained from the divested assets." Pay TV Net revenue for the first quarter of 2005 was $12.3 million, a 13% increase from net revenue of $10.8 million for the first quarter of 2004. The increase in net revenue is principally attributable to increased distribution. Operating expense (excluding depreciation and amortization) for the first quarter of 2005 was $9.2 million, virtually unchanged from the comparable period of 2004. Operating income for the first quarter of 2005 was $2.6 million compared to $0.8 million for the same period in 2004. As of March 31, 2005, the Company's owned basic and premium channels reached approximately 43.3 million aggregate subscribers, a 12% growth compared to its subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base as of March 31, 2004. Playboy TV Playboy TV is a pay-per-view adult television channel on cable and satellite services, and available in Brazil, United States, Canada, New Zealand, the United Kingdom, Spain, Ireland and Norway. The channel is owned by Playboy Enterprises. and Fashion TV were the Company's channels that reported the strongest growth. Broadcast Radio Net revenue for the first quarter of 2005 was $5.4 million, a 27% increase from net revenue of $4.2 million for the first quarter of 2004. The increase is attributable to the increase in audience share in Chile, and revenues generated from new businesses (such as sale of CD's and concerts), as well as the 2% appreciation in the Chilean peso as compared to 2004. Operating expense (excluding depreciation and amortization) for the first quarter of 2005 was $3.4 million compared to $2.7 million for the same period in 2004. The increase is principally due to the development of the new businesses and increased sales and marketing expenses. Operating income for the first quarter of 2005 was $1.5 million compared to $1.1 million for the same period in 2004. IberoAmerican Radio Chile's average audience share in the first quarter of 2005 was 39.3% compared to 34.7% for the same period of 2004. Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). & Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the Net revenue for the first quarter of 2005 was $29,000 compared to $26,000 for the same period in 2004. Operating expense (excluding depreciation and amortization) for the first quarter of 2005 was $0.2 million compared to $0.3 million for the same period in 2004. Operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. for the first quarter of 2005 was $0.2 million, unchanged when compared to the same period in 2004. To capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the success of digital platform in Argentina and Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , the Broadband & Internet Division signed an agreement with Constancio Larguia, a well known Internet entrepreneur An Internet Entrepreneur is a person that engages in business on the internet and helps to shape the future of business on the internet by being an innovator. One who is able to recognize opportunity and administer resources to take advantage of the opportunities. , to launch a web page (Humanity.tv) on wellness subjects in the US market. ESDC ESDC Empire State Development Corporation ESDC Extra Segment Descriptor Cache ESDC Extremal Self-Dual Code Digital Platform provides the technology solution for Humanity.tv, and Infinito In`fi`ni´to a. 1. (Mus.) Infinite; perpetual, as a canon whose end leads back to the beginning. See Infinite, a. os>, 5. provides English 1. English - (Obsolete) The source code for a program, which may be in any language, as opposed to the linkable or executable binary produced from it by a compiler. The idea behind the term is that to a real hacker, a program written in his favourite programming language is content to be offered as Video On Demand. Humanity.tv is ESDC Digital Platform's first client in the US market. Statement of Cash Flows At March 31, 2005, Claxson had cash and cash equivalents of $7.7 million and $83.1 million in debt, which includes $14.8 million in future interest payments on the 8.75% Senior Notes due in 2010. During the first quarter of 2005 Claxson operating activities generated cash flow of $2.4 million compared to $2.6 million for the same period of 2004. Although the year to year variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality is $0.2 million, in 2005 the cash generation was primarily attributable to operations while in 2004 it was primarily attributable to working capital management. Cash generated from operating activities was primarily used for the payment of debt obligations and for capital expenditures. In addition, Claxson obtained $0.6 million from the sale of assets, resulting in a net cash generation of $0.4 million for the first quarter of 2005. About Claxson Claxson (OTCBB:XSONF) is a multimedia company providing branded entertainment Branded Entertainment, also known as Branded content or Advertainment, is the combination of an audio-visual program (TV, radio, podcast, etc.) and a brand. It can be initiated either by the brand or by the broadcaster. content targeted to Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms Refers to two or more operating environments, which typically include the CPU family and operating system. For example, if versions of a program run on Windows and the Macintosh, the software is said to support multiple platforms. through its assets in pay television, radio and the Internet. Headquartered in Buenos Aires, Argentina, and Miami, Florida “Miami” redirects here. For the Native American tribe, see Miami tribe. Miami is a major city in southeastern Florida, in the United States. It is the county seat of Miami-Dade County. Miami is a gamma world city with an estimated population of 404,048. , Claxson has a presence in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and all key Ibero-American countries, including without limitation, Argentina, Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , Chile, Brazil, Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. and Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the . Claxson's principal shareholders are the Cisneros Group The Cisneros Group of Companies is one of the largest, privately held media, entertainment, telecommunications and consumer products organizations in the world. The Group owns or holds interests in companies ranging from broadcast television, networks and pay television businesses of Companies and funds affiliated with Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. , Muse, Tate & Furst Inc. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 July: see month. 15, 2004.
CLAXSON
UNAUDITED BALANCE SHEETS
(In Thousands of U.S. dollars)
As of As of
March 31, December 31,
2005 2004
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,716 $ 7,270
Accounts receivable, net 21,670 23,018
Assets held for sale 25,578 25,599
Other current assets 9,497 8,698
--------- ---------
Total current assets 64,461 64,585
PROPERTY AND EQUIPMENT, net 10,455 11,048
PROGRAMMING RIGHTS, net 4,390 4,028
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 3,063 3,407
INVESTMENTS IN EQUITY SECURITIES 250 54
GOODWILL 49,831 51,021
BROADCAST LICENSES, net 15,621 16,722
OTHER ASSETS 5,962 5,650
--------- ---------
TOTAL ASSETS $154,033 $156,515
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, accrued and other
liabilities $ 25,088 $ 24,500
Liabilities related to assets held for sale 15,053 14,924
Current portion of programming rights
obligations 5,603 5,332
Current portion of long-term debt 8,170 8,119
--------- ---------
Total current liabilities 53,914 52,875
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 74,908 77,680
Other long-term liabilities 2,789 2,795
--------- ---------
Total long-term liabilities 77,697 80,475
MINORITY INTEREST 415 562
SHAREHOLDERS' EQUITY 22,007 22,603
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $154,033 $156,515
========= =========
CLAXSON
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of U.S. dollars, except per share data)
Three Months
Ended
March 31,
----------------
2005 2004
----------------
NET REVENUES:
Subscriber-based fees $10,556 $9,511
Advertising 6,166 5,212
Production services 277 105
Other 780 269
-------- -------
Total net revenues 17,779 15,097
-------- -------
OPERATING EXPENSES:
Product, content and technology 6,942 6,064
Marketing and sales 3,138 3,360
Corporate and administration 3,764 4,032
Depreciation and amortization 1,020 1,271
-------- -------
Total operating expenses 14,864 14,727
-------- -------
OPERATING INCOME 2,915 370
INTEREST EXPENSE (381) (399)
OTHER INCOME, NET 476 191
FOREIGN CURRENCY EXCHANGE GAIN 609 989
NET (LOSS) INCOME FROM UNCONSOLIDATED AFFILIATES (556) 197
-------- -------
INCOME BEFORE INCOME TAXES , MINORITY INTEREST AND
DISCONTINUED OPERATIONS 3,063 1,348
INCOME TAXES (941) (278)
MINORITY INTEREST 153 27
-------- -------
NET INCOME FROM CONTINUING OPERATIONS 2,275 1,097
DISCONTINUED OPERATIONS
Loss from operations of discontinued divisions - net (834) (916)
-------- -------
LOSS ON DISCONTINUED OPERATIONS (834) (916)
-------- -------
NET INCOME $ 1,441 $ 181
======== =======
NET INCOME PER COMMON SHARE:
Income from continuing operations
Basic and diluted $ 0.11 $ 0.06
======== =======
Loss on discontinued operations
Basic and diluted $ (0.04) $(0.05)
======== =======
NET INCOME PER SHARE:
Basic and diluted $ 0.07 $ 0.01
======== =======
NUMBER OF SHARES USED IN PER SHARE CALCULATIONS:
Basic 20,318 19,426
======== =======
Diluted 21,941 19,917
======== =======
CLAXSON
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of U.S. dollars)
Twelve Months
Ended
December 31,
----------------
2005 2004
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,441 $ 181
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Amortization of programming rights 776 334
Share-based compensation 14 14
Depreciation and amortization 1,020 1,271
Accrued and unpaid interest 181 115
Exchange rate (gain) (609) (989)
Net (gain) on disposal of assets (506) (168)
(Income) loss from unconsolidated affiliates 556 (197)
Minority interest (153) (27)
Changes in operating assets and liabilties (360) 2,027
-------- -------
Net cash provided by operating activities 2,360 2,561
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (289) (510)
Acquisitions, net of cash acquired, and including
transaction costs paid - (723)
Dividends distributions to minority owners of
subsidiaries - (285)
Investment in unconsolidated affiliates (170) -
Proceeds on sale of investment in subsidiaries 639 -
-------- -------
Net cash provided by (used in) investing
activities 180 (1,518)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of short/long-term debt (2,120) (3,606)
Proceeds from excersized stock options 26 48
-------- -------
Net cash (used in) financing activities (2,094) (3,558)
-------- -------
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH AND
CASH EQUIVALENTS - 1
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 446 (2,514)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 7,270 7,677
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,716 $5,163
======== =======
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