Claxson Reports 2006 Third Quarter Financial Results.Company Reports Increased Revenue and Net Income for the Most Recent Nine Months BUENOS AIRES Buenos Aires (bwā`nəs ī`rēz, âr`ēz, Span. bwā`nōs ī`rās), city and federal district (1991 pop. , Argentina -- Claxson Interactive Group Inc. (Pink Sheets:XSONF) ("Claxson" or the "Company") today announced financial results for the three and nine-month periods ended September 30, 2006. As previously announced, on December 14, 2006 the Company reached an agreement with Turner Broadcasting System Turner Broadcasting System, Inc. (often abbreviated TBS Networks or TBS, inc.) is the company managing the collection of cable networks and properties started by Robert Edward "Ted" Turner from the mid-1970s to the late-1990s. , Inc. for the sale of seven pay television networks for $235 million. The Company will continue to operate the 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. Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. joint venture, and Turner will assume sales representation and related support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services for the PTVLA networks. The agreement is subject to anti-trust approvals and is expected to close before the end of the third quarter of 2007. In addition to the PTVLA joint venture, the Company's pay TV division will continue to operate its Miami technical service operations and will continue to hold its interests in Digital Latin America and DMX See DMX512. Music Latin America. On December 22, 2006 the Company signed an agreement with affiliates of the Spanish media group "Grupo Prisa" for the sale of the Company's radio operations in Chile, consisting of eight radio networks, for $75 million minus the financial debt of Radio Chile at the time of the closing. The closing of the transaction is subject to regulatory anti-trust approvals in Chile, which is estimated to occur in a period not to exceed fifteen months. Financial Highlights Third Quarter 2006 Net revenue for the third quarter of 2006 was $20.7 million, a 1% decrease from net revenue of $20.8 million for the third quarter of 2005. 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 September 30, 2006 was $16.7 million, a 6% increase from the $15.8 million for the third quarter of 2005. 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. was $4.0 million for the three-month period ended September 30, 2006 compared to $5.0 million for the three-month period ended September 30, 2005. Foreign currency exchange loss for the three-month periods ended September 30, 2005 and 2006 was $0.8 million. Net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the three months ended September 30, 2006 was $2.8 million ($0.13 per common and diluted share), compared to $3.1 million ($0.15 per common and $0.14 per diluted share) for the same period in 2005. Net income for the three months ended September 30, 2006 was $2.4 million ($0.11 per common and diluted share), compared to $3.2 million ($0.15 per common and $0.14 per diluted share) for the same period in 2005. During the third quarter of 2006, the average exchange rate of the Argentine and Chilean currencies compared to the U.S. dollar depreciated Depreciated may refer to:
First Nine Months of 2006 Net revenue for the nine-month period ended September 30, 2006 was $59.2 million, a 4% increase compared to $56.8 million for the same period in 2005. Operating expense for the nine-month period ended September 30, 2006 was $46.6 million, a 4% increase compared to $44.9 million in the same period of 2005. Operating income was $12.6 million for the nine-month period ended September 30, 2006 compared to $11.9 million for the same period in 2005. Foreign currency exchange loss for the nine-month period ended September 30, 2006 was $1.2 million, a $1.6 million difference compared with the $0.4 million foreign currency exchange gain for the same period of 2005. Net income from continuing operations for the nine-month period ended September 30, 2006 was $9.2 million ($0.44 per common and $0.42 per diluted share), versus $8.7 million ($0.43 per common and $0.40 per diluted share) for the same period in 2005. Net income for the nine-month period ended September 30, 2006 was $8.3 million ($0.40 per common and $0.38 per diluted share), versus $6.1 million ($0.30 per common and $0.28 per diluted share) for the same period in 2005. During the nine-month period ended September 30, 2006, the average exchange rate of the Chilean currency compared to the U.S. dollar appreciated 8%, while the Argentine currency depreciated 6% versus the same period in 2005. [TABLE OMITTED] "We are very pleased with the overall results of the first nine months of 2006. In our Pay TV division we have been able to increase subscribers to offset the price reduction with one of our most important clients, and to increase advertising revenues to continue growing the business," said Roberto Vivo, 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. and Chairman. "In addition, as we announced recently, we reached an agreement with Turner to sell the majority of our Pay TV division, and we will focus on growing our remaining assets together with them." Pay TV Net revenue for the third quarter of 2006 was $15.2 million, a 2% increase from net revenue of $14.9 million for the third quarter of 2005. The increase in net revenue is principally attributable to an increase in advertising sales, partially offset by lower subscriber-based fees as a result of the new agreement with DirecTV. Net revenue for the nine-month period ended September 30, 2006 was $43.1 million compared to $41.1 million for the same period of 2005. The increase in net revenue is principally attributable to an increase in advertising sales and to a lesser extent to advertising and content and production services sold to third parties. Operating expense (before depreciation and amortization) for the third quarter of 2006 was $11.2 million compared to $10.0 million for the same period in 2005. The increase is principally attributable to higher selling expenses as a result of higher costs of new sales and increased provision for uncollectible accounts Uncollectible account An account which cannot be collected by a company because the customer is not able to pay or is unwilling to pay. receivable. Operating expense (before depreciation and amortization) for the nine-month period ended September 30, 2006 was $30.3 million compared to $29.2 million for the same period of 2005 primarily as a result of higher selling expenses. Operating income for the third quarter of 2006 was $3.6 million compared to operating income of $4.2 million for the same period in 2005. Operating income for the nine-month period ended September 30, 2006 was $11.6 million compared to $10.3 million for the same period of 2005. As of September 30, 2006, the Company's owned basic and premium channels reached 60 million aggregate subscribers, a 20% growth compared to its subscriber base as of September 30, 2005. Infinito, FTV FTV Fashion TV FTV First Time Video FTV Free to View (satellite television) FTV Flight Test Vehicle FTV Finish the Verse FTV Functional Test Vehicle FTV Franchise Tax voucher (California ) and HTV HTV H-II Transfer Vehicle HTV Harlech Television (Wales, UK) HTV Hrvatska Televizija (Croatian television) HTV Heidenheimer Tarifverbund (German) HTV Habitual Traffic Violator were the Company's channels that reported the strongest growth compared to the same period in 2005. Broadcast Radio Net revenue for the third quarter of 2006 was $5.2 million, an 11% decrease from net revenue of $5.9 million for the third quarter of 2005. The decrease is primarily attributable to lower overall advertising spending in 2006 as 2005 was an election year. Net revenue for the nine-month period ended September 30, 2006 was $15.5 million compared to $15.4 million for the same period of 2005. The increase is primarily attributable to an 8% appreciation of the Chilean peso partially offset by lower revenue in local currency. Operating expense (before depreciation and amortization) for the third quarter of 2006 was $3.3 million compared to $3.3 million for the same period in 2005. The decrease in local currency costs in the third quarter was offset by the appreciation of the Chilean Peso. Operating expense (before depreciation and amortization) for the nine-month period ended September 30, 2006 was $9.5 million compared to $9.0 million for the same period of 2005. The increase is primarily attributable to the appreciation of the Chilean peso, partially offset by lower costs in local currency. Operating income for the third quarter of 2006 was $1.5 million, compared to $2.1 million for the same period in 2005. Operating income for the nine-month period ended September 30, 2006 was $4.7 million compared to $5.0 million for the same period of 2005. IberoAmerican Radio Chile's average audience share in the three and nine-month period ended September 30, 2006 was 36.7% and 38.1%, compared to 38.0% and 38.3%, respectively, for the same periods of 2005. As a result of the expiration of the Company's option to acquire the license to operate the Sarandi radios in Uruguay in September 2006 (the Company had been leasing concessions to operate the radios), the Company evaluated its prospects in this market and eventually decided to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: the operation as the advertising market had not rebounded after the 2002 crisis. On November 17, 2006 the Company sold its Sarandi operation to local management in exchange of the assumption of liabilities. Given that the decision to sell this operation was made before September 30, 2006, in accordance with applicable accounting principles, the operations of Sarandi were reflected 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 until the time of their sale. Broadband & Internet Net revenue for the third quarter of 2006 was $168,000 compared to $11,000 for the third quarter of 2005. Net revenue for the nine-month period ended September 30, 2006 was $394,000 compared to $71,000. Net revenue increase is a result of the launch of services for new clients. Operating expense (before depreciation and amortization) for the third quarter of 2006 was $0.5 million compared to $0.3 million for the same period in 2005. Operating expense (before depreciation and amortization) for the nine-month period ended September 30, 2006 was $1.1 million, compared to $0.6 million for the same period of 2005. 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 third quarter of 2006 was $0.4 million compared to a $0.3 million loss for the same period in 2005. Operating loss for the nine-month period ended September 30, 2006 was $0.7 million compared to $0.5 million for the same period of 2005. Liquidity As of September 30, 2006, Claxson had cash and cash equivalents of $22.8 million and $60.1 million in principal and accrued but unpaid interest of financial debt. Future interest payments on the Company's 8.75% Senior Notes due in 2010, totaling $9.4 million as of September 30, 2006, are recorded as debt. For the nine-month period ended September 30, 2006, Claxson's operating activities generated cash flows of $8.6 million compared to $11.5 million for the same period of 2005. The difference is primarily due to increased investment in working capital during 2006 as a result of the increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and the decrease in accounts payable when compared to the same period of 2005. Cash generated from operating activities was used for the payment of debt obligations and for capital expenditures. Upon the anticipated closing of the pay television and/or the radio transactions in 2007, the Company expects to use the proceeds of the sales, net of transaction expenses and related escrowed amounts, to repay debt, including the Company's Senior Notes due 2010. Claxson intends to commence a process to analyze strategic alternatives with respect to its remaining assets, and may consider taking the Company private. About Claxson Claxson (XSONF.PK) 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 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, Chile, Brazil, Spain and Portugal. 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 September 27, 2006. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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