/C O R R E C T I O N -- Claxson Interactive Group Inc. / In the
news release, "Claxson (OTC Bulletin Board: XSON) Reports 2003
Third Quarter Financial Results" issued yesterday by Claxson
Interactive Group over PR Newswire, we are advised by the company
that there have been changes to the original release. The revised
version follows: BUENOS AIRES, Nov. 20 /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. Claxson is continuing to provide services to DIRECTV
and is being paid for such services on a current basis. 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/
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