TV Azteca First Quarter EBITDA Up 8% to a Record of Ps.601 Million
(US$54 Million) - Net Sales Increase 8%, to All-Time High Level for
a 1Q - MEXICO CITY, April 27 /PRNewswire-FirstCall/ -- TV Azteca,
S.A. de C.V. (NYSE: TZA; BMV: TVAZTCA), one of the two largest
producers of Spanish language television programming in the world,
announced today all-time high first quarter net sales of Ps.1,539
million (US$138 million), up 8% from the same period of 2003. First
quarter EBITDA was Ps.601 million (US$54 million), 8% above the
same period a year ago. EBITDA represents a six-year record high
for a first quarter. EBITDA margin for the quarter was 39%, the
same as the prior year period. "Our solid fundamentals translate
into robust profitability and ongoing tangible benefits for our
stakeholders," said Pedro Padilla, Chief Executive Officer of TV
Azteca. "In adherence to our plan for uses of cash, shareholders
approved cash distributions of US$55 million for this year. During
the quarter we also fully amortized our US$125 million note due
February 15, and we expect further capital structure improvements
in coming quarters." The company's plan for uses of cash entails
reducing TV Azteca's debt by approximately US$250 million, and
making cash distributions to shareholders above US$500 million by
2008. First Quarter Results Net sales grew 8% to an all-time high
level of Ps.1,539 million (US$138 million), up from Ps.1,422
million (US$127 million) for the same quarter of 2003. Total costs
and expenses rose 8% to Ps.938 million (US$84 million), from Ps.865
million (US$78 million) for the same period of last year. As a
result, the company reported EBITDA of Ps.601 million (US$54
million), 8% higher than Ps.557 million (US$50 million) in the
first quarter of 2003, and a six-year record. Net income for the
quarter was Ps.183 million (US$16 million), 136% higher than net
income of Ps.78 million (US$7 million) for the same period of 2003.
Millions of pesos(1) and dollars(2) except percentages and per
share amounts. 1Q 2003 1Q 2004 Change US$ % Net Sales Pesos Ps.
1,422 Ps. 1,539 US$ US$ 127 US$ 138 10 +8% EBITDA(3) Pesos Ps. 557
Ps. 601 US$ US$ 50 US$ 54 4 +8% Net Income Pesos Ps. 78 Ps. 183 US$
US$ 7 US$ 16 9 +136% Income per ADS(4) Pesos Ps. 0.41 Ps. 0.96 US$
US$ 0.04 US$ 0.09 0.05 +136% (1) Pesos of constant purchasing power
as of March 31, 2004. (2) Conversion based on the exchange rate of
Ps.11.15 per US dollar as of March 31, 2004. (3) EBITDA is Profit
Before Depreciation and Amortization under Mexican GAAP. (4)
Calculated based on 191 million ADSs outstanding as of March 31,
2004. Net Sales "Our compelling programming grid effectively
reached the target audiences of our domestic clients, which was
fundamental in achieving our 8% overall sales growth during the
quarter," said Mario San Roman, Chief Operating Officer of TV
Azteca. "Throughout the three month period our sales force
experienced consistent advertising demand, and was successful in
closing sizeable ad contracts for major brands in Mexico." First
quarter net revenue also includes sales from Azteca America -- the
company's wholly-owned broadcasting network focused on the U.S.
Hispanic market -- of Ps.65 million (US$6 million), compared with
Ps.3 million (US$0.3 million) of the same period a year ago. Azteca
America revenue is composed of Ps.38 million (US$3 million) in
sales from the Los Angeles station KAZA-TV, and Ps.27 million (US$2
million) from network sales. During the quarter, TV Azteca also
reported sales of programming abroad of Ps.36 million (US$3
million), compared with Ps.42 million (US$4 million) of the first
quarter of the prior year. The primary programs sold abroad during
the quarter were the company's novelas Mirada de Mujer el Regreso,
sold mostly in Central America, and La Hija del Jardinero, sold in
Europe and Latin America. During the first quarter, TV Azteca
reported content and advertising sales to Todito.com of Ps.70
million (US$6 million), and Ps.32 million (US$3 million) in
advertising sales to Unefon. In the first quarter of 2003, sales to
Todito and Unefon were Ps.38 million (US$3 million) and Ps.29
million (US$3 million), respectively. In accordance with the terms
of the advertising contract between Unefon and TV Azteca, during
the first quarter Unefon paid to TV Azteca in cash the Ps.35
million (US$3 million) of advertising purchases placed within the
prior three month period. During the quarter, barter sales were
Ps.52 million (US$5 million), compared with Ps.24 million (US$2
million) in the same period of the prior year. Inflation adjustment
of advertising advances was Ps.51 million (US$5 million), compared
with Ps.34 million (US$3 million) for the first quarter of 2003.
Costs and Expenses The 8% increase in first quarter costs and
expenses resulted from the combined effect of a 12% increase in
programming, production and transmission costs to Ps.665 million
(US$60 million), from Ps.593 million (US$53 million) in the prior
year period, and constant administration and selling expense at
Ps.273 million (US$24 million). "Strategic production efforts at
the Los Angeles station and Azteca America Network to optimally
capture growing ad opportunities contributed to cost increases
during the quarter," commented Carlos Hesles, Chief Financial
Officer of TV Azteca. "The specific content production
significantly boosts loyalty from target audiences within entire
key day parts, resulting in superior revenue and solid prospects
for sustained sales and profitability expansion." "Adding to the
initiatives to capture U.S. Hispanic opportunities, not present in
the prior year, we experienced difficult comparables domestically,"
added Mr. Hesles. "A year ago we substituted a prime-time novela
with La Academia, our musical reality show, with the costs of its
facilities fully amortized in prior periods, whereas this quarter
we built a standard programming grid, which included an additional
prime-time novela, and its associated costs." Congruent with the
growing production efforts, TV Azteca increased its overall number
of hours of internally produced programming during the quarter, to
2,093 from 1,960 in the same period of the previous year. The
constant administration and selling expense at TV Azteca reflects
controlled personnel, travel, services and operating expenses,
despite increased domestic and international operations. EBITDA and
Net Income The 8% increase in first quarter net sales, combined
with the 8% growth in costs and expenses, resulted in EBITDA of
Ps.601 million (US$54 million), up 8% from Ps.557 million (US$50
million) a year ago. First quarter net income increased 136% to
Ps.183 million (US$16 million) from Ps.78 million (US$7 million).
The increase was primarily influenced by a Ps.23 million (US$2
million) exchange gain following a 1% peso appreciation against the
dollar during the quarter, compared with a Ps.96 million (US$9
million) exchange loss resulting from a 3% depreciation of the peso
in the same quarter of 2003. During the quarter, the company
recorded other expenses of Ps.102 million (US$9 million), compared
with Ps.85 million (US$8 million) a year ago. Other expenses for
the quarter were primarily composed of Ps.35 million (US$3 million)
of charitable donations, Ps.36 million (US$3 million) of advisory
fees, Ps.26 million (US$2 million) from the recognition of 50% of
the net loss of Todito.com in TV Azteca's financial statements, and
Ps.5 million (US$0 million) of the net effect of the recognition of
gains from Monarcas, TV Azteca's soccer team, and other expenses.
Loss on monetary position was Ps.44 million (US$4 million) compared
with a loss of Ps.14 million (US$1 million) for the same period of
2003. The rise in monetary loss is explained by an increase in the
company's net asset monetary position. Generation and Uses of Cash
"Our sound financial results translated into robust free cash
generation during the quarter, which is a solid step towards our
goal of US$150 million in free cash creation for the full year
2004," Mr. Hesles added. As was previously detailed, on March 10 TV
Azteca collected US$17 million in cash from the 2001 credit support
agreement in favor of Unefon. The remaining debt from Unefon to TV
Azteca under the credit agreement, after the cash payment, is US$10
million. The company noted it has been released from any
outstanding contingent liability related to the credit support
agreement. Adhering to the timetable of the company's plan for uses
of cash, during the quarter, TV Azteca fully amortized its US$125
million 101/8% note due February 15, 2004. The payment was composed
of US$60 million from TV Azteca's cash position and US$65 million
of unsecured financing obtained from financial institutions, on
market terms. The company noted the solid fundamentals together
with its strict adherence to the plan for uses of cash results in
overall debt reduction, which translates into stronger capital
structure, benefiting both shareholders and noteholders. On April
15, the company's shareholders approved US$55 million in cash
distributions to be paid during 2004. A payment of US$33 million is
scheduled to be made on May 13, and another of approximately US$22
million on November 11. Debt Outstanding As of March 31, 2004, the
company's total outstanding debt was Ps.6,056 million (US$543
million). TV Azteca's cash balance was Ps.1,975 million (US$177
million), resulting in net debt of Ps.4,081 million (US$366
million). The total debt to last twelve months (LTM) EBITDA ratio
was 1.7 times, and net debt to EBITDA was 1.2 times. LTM EBITDA to
net interest expense ratio was 6.1 times. The company noted that
excluding -- for analytical purposes -- US$120 million debt due
2069, total debt was Ps.4,720 million (US$423 million), and total
debt to EBITDA ratio was 1.4 times. Company Profile TV Azteca is
one of the two largest producers of Spanish language television
programming in the world, operating two national television
networks in Mexico, Azteca 13 and Azteca 7, through more than 300
owned and operated stations across the country. TV Azteca
affiliates include Azteca America Network, a new broadcast
television network focused on the rapidly growing US Hispanic
market, and Todito.com, an Internet portal for North American
Spanish speakers. Except for historical information, the matters
discussed in this press release are forward-looking statements and
are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Risks
that may affect TV Azteca are identified in its Form 20-F and other
filings with the US Securities and Exchange Commission. TV AZTECA,
S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED RESULTS OF OPERATIONS*
(Millions of Mexican pesos of March 31, 2004 purchasing power)
First Quarter of : 2003 2004 Net revenue Ps 1,422 Ps 1,539
Programming, production and transmission costs 593 665 Sales and
administrative expenses 273 273 EBITDA 557 601 Depreciation and
amortization 88 97 Operating profit 469 504 Other expense -Net (85)
(102) Comprehensive financing cost: Interest expense (187) (184)
Other financing expense (10) (16) Interest income 47 49 Exchange
(loss) gain -Net (96) 23 Loss on monetary position (14) (44) Net
comprehensive financing cost (260) (172) Income before provision
for income tax 123 230 Provision for income tax (45) (47) Net
income Ps 78 Ps 183 Net income of minority stockholders Ps 0 Ps -
Net income of majority stockholders Ps 78 Ps 183 End of period
exchange rate Ps 10.76 Ps 11.15 First Quarter of : 2003 2004 Change
Millions of US Dollars ** % Net revenue US$ 127 100% US$ 138 100%
US$ 10 8% Programming, production and transmission costs 53 42% 60
43% 6 12% Sales and administrative expenses 24 19% 24 18% - 0%
EBITDA 50 39% 54 39% 4 8% Depreciation and amortization 8 9 1
Operating profit 42 33% 45 33% 3 7% Other expense -Net (8) (9) (2)
Comprehensive financing cost: Interest expense (17) (16) 0 Other
financing expense (1) (1) (1) Interest income 4 4 0 Exchange (loss)
gain -Net (9) 2 11 Loss on monetary position (1) (4) (3) Net
comprehensive financing cost (23) (15) 8 Income before provision
for income tax 11 9% 21 15% 10 87% Provision for income tax (4) (4)
(0) Net income US$ 7 5% US$ 16 12% US$ 9 135% Net income of
minority stockholders US$ 0 US$ - US$ (0) Net income of majority
stockholders US$ 7 5% US$ 16 12% US$ 9 136% End of period exchange
rate * Mexican GAAP. ** The U.S. dollar figures represent the
Mexican peso amounts as of March 31, 2004 expressed as of March 31,
2004 purchasing power, translated at the exchange rate of Ps. 11.15
per U.S. dollar. TV AZTECA, S.A. DE C.V. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS* (Millions of Mexican pesos of March
31, 2004 purchasing power) At March 31, 2003 2004 Current assets:
Cash and cash equivalents Ps 1,857 Ps 1,975 Accounts receivable
4,375 4,275 Other current assets 1,078 1,084 Total current assets
7,310 7,334 Accounts receivable from Unefon 2,175 1,753 Investment
in Azteca America 1,215 1,440 Exhibition rights 1,392 1,025
Property, plant and equipment-Net 2,368 2,180 Television
concessions-Net 3,945 3,915 Invesment in Todito 315 195 Other
assets 948 830 Invesment in Unefon 1,830 - Invesment in
Cosmofrecuencias 374 - Goodwill -Net 667 591 Total long term assets
15,229 11,929 Total assets Ps 22,539 Ps 19,263 Current liabilities:
Short-term debt Ps 519 Ps 776 Guaranteed senior notes 1,402 - Other
current liabilities 1,549 1,174 Total current liabilities 3,470
1,950 Long-term debt: Guaranteed senior notes 3,365 3,346 Bank
loans 37 598 Total long-term debt 3,402 3,944 Other long term
liabilities: American Tower Corporation (due 2019) 1,343 1,336
Advertising advances 4,400 4,592 Unefon advertising advance 2,236
2,072 Todito advances 500 266 Other long term liabilities 201 126
Deferred income tax payable 27 206 Total other long-term
liabilities 8,707 8,598 Total liabilities 15,579 14,492 Total
stockholders' equity 6,960 4,771 Total liabilities and equity Ps
22,539 Ps 19,263 End of period exchange rate Ps 10.76 Ps 11.15 At
March 31, 2003 2004 Change Millions of US Dollars** % Current
assets: Cash and cash equivalents US$ 166 US$ 177 US$ 11 Accounts
receivable 392 383 (9) Other current assets 97 97 1 Total current
assets 655 658 2 0% Accounts receivable from Unefon 195 157 (38)
Investment in Azteca America 109 129 20 Exhibition rights 125 92
(33) Property, plant and equipment-Net 212 195 (17) Television
concessions-Net 354 351 (3) Invesment in Todito 28 17 (11) Other
assets 85 74 (11) Invesment in Unefon 164 - (164) Invesment in
Cosmofrecuencias 34 - (34) Goodwill-Net 60 53 (7) Total long term
assets 1,365 1,069 (296) -22% Total assets US$ 2,021 US$ 1,727 US$
(294) -15% Current liabilities: Short-term debt US$ 47 US$ 70 US$
23 Guaranteed senior notes 126 - (126) Other current liabilities
139 105 (34) Total current liabilities 311 175 (136) -44% Long-term
debt: Guaranteed senior notes 302 300 (2) Bank loans 3 54 50 Total
long-term debt 305 354 49 Other long term liabilities: American
Tower Corporation (due 2019) 120 120 (1) Advertising advances 394
412 17 4% Unefon advertising advance 200 186 (15) Todito advances
45 24 (21) Other long term liabilities 18 11 (7) Deferred income
tax payable 2 18 16 Total other long-term liabilities 781 771 (10)
-1% Total liabilities 1,397 1,299 (97) -7% Total stockholders'
equity 624 428 (196) -31% Total liabilities and equity US$ 2,021
US$ 1,727 US$ (294) -15% End of period exchange rate * Mexican
GAAP. ** The U.S. dollar figures represent Mexican peso amounts as
of March 31, 2004, expressed as of March 31, 2004 purchasing power,
translated at the exchange rate of Ps. 11.15 per U.S. dollar. TV
AZTECA, S.A. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
CHANGES IN FINANCIAL POSITION (Millions of Mexican pesos of March
31, 2004 purchasing power) First quarter ended March 31,
Operations: 2003 2004 Net income Ps 79 Ps 183 Charges (credits) to
results of operation not affecting resources: Amortization of
goodwill 11 10 Depreciation 77 87 Equity in affiliates (37) (19)
Deferred income tax - 22 Net change in accounts receivable,
inventories, exhibition rights, related parties, accounts payable
and accrued expenses 549 1,284 Unefon advertising advances (32)
(36) Todito advertising, programming, and services advances (53)
(59) Advertising advances (295) (388) Resources provided by
operations 299 1,084 Investment: Acquisition of property, machinery
and equipment -Net (76) (65) Resources used in investing activities
(76) (65) Financing: Guaranteed senior notes 101 (1,502) Bank loans
-Net 62 (76) Stock options exercised - 14 Resources provided by
(used in) financing activities 163 (1,564) Increase (decrease) in
cash and cash equivalents 386 (545) Cash and cash equivalents at
beginning of period 1,471 2,520 Cash and cash equivalents at end of
period Ps 1,857 Ps 1,975 DATASOURCE: TV Azteca, S.A. de C.V.
CONTACT: Investor Relations: Bruno Rangel, +5255-3099-9167, , or
Omar Avila, +5255-3099-0041, ; or Media Relations: Tristan Canales,
+5255-3099-5786, , or Daniel McCosh, +5255-3099-0059, , all of TV
Azteca Web site: http://www.tvazteca.com.mx/
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