CLAXSON BALANCE SHEETS (In Thousands of U.S. dollars) As of As of December 31, December 31, 2003 2002 ASSETS CURRENT ASSETS: Cash and cash equivalents $7,682 $8,072 Restricted investments 213 750 Accounts receivable, net 25,249 29,874 Other current assets 7,409 8,617 Total current assets 40,553 47,313 RESTRICTED INVESTMENTS 750 750 PROPERTY AND EQUIPMENT, net 19,107 18,573 PROGRAMMING RIGHTS, net 4,679 5,554 INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES 1,061 1,025 INVESTMENTS IN EQUITY SECURITIES 54 448 GOODWILL 53,627 51,837 BROADCAST LICENSES 21,160 18,065 OTHER ASSETS 4,348 4,057 TOTAL ASSETS $145,339 $147,622 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable, accrued and other liabilities $30,928 $36,635 Current portion of programming rights obligations 10,082 9,899 8.75 % Senior Notes Due 2010, including accrued interest 3,616 1,396 11 % Senior Notes Due 2005, including accrued interest 2,928 6,247 6.25 % Senior Notes Due 2013, including accrued interest 80 -- Current portion of long-term debt 8,033 7,156 Total current liabilities 55,667 61,333 LONG-TERM LIABILITIES: Long-term debt, net of current portion 12,707 16,029 8.75 % Senior Notes Due 2010, including accrued interest 57,999 61,576 6.25 % Senior Notes Due 2013, including accrued interest 2,666 -- 5 % Senior Notes Due 2008, including accrued interest 244 -- Other long-term liabilities 4,935 4,325 Total long-term liabilities 78,551 81,930 MINORITY INTEREST 1,128 1,164 SHAREHOLDERS' EQUITY 9,993 3,195 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $145,339 $147,622 CLAXSON CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands of U.S. dollars, except per share data) Three Months Twelve Months Ended Ended December 31, December 31, 2003 2002 2003 2002 NET REVENUES: Subscriber-based fees $9,665 $7,191 $38,932 $31,566 Advertising 11,700 9,496 37,324 30,547 Production services 668 1,676 2,930 7,081 Other 432 1,187 2,601 5,766 Total net revenues 22,465 19,550 81,787 74,960 OPERATING EXPENSES: Product, content and technology 9,881 8,774 36,581 34,710 Marketing and sales 2,503 3,784 12,576 13,090 Corporate and administration 5,136 4,153 18,615 17,164 Depreciation and amortization 1,472 2,368 5,993 12,304 Impairment of goodwill -- -- 2,758 -- Total operating expenses 18,992 19,079 76,523 77,268 OPERATING INCOME (LOSS) 3,473 471 5,264 (2,308) INTEREST EXPENSE (536) (2,485) (2,246) (12,422) OTHER INCOME (EXPENSE), NET (1,317) 3,067 (1,364) 3,709 FOREIGN CURRENCY EXCHANGE GAIN (LOSS) 637 6,825 9,095 (61,349) GAIN ON DEBT RESTRUCTURING -- 15,274 -- 15,274 NET GAIN (LOSS) FROM UNCONSOLIDATED AFFILIATES 161 550 346 (6,746) BENEFIT (PROVISION) FOR INCOME TAXES (1,290) 249 (2,804) 134 MINORITY INTEREST (1) 4 46 68 CHANGE IN ACCOUNTING PRINCIPLES -- -- -- (74,789) NET INCOME (LOSS) $1,127 $23,955 $8,337 $(138,429) NET INCOME (LOSS) PER COMMON SHARE (Basic and diluted) $0.06 $1.28 $0.44 $(7.41) NET INCOME (LOSS) PER COMMON SHARE BEFORE CHANGE IN ACCOUNTING PRINCIPLE (Basic and diluted) $0.06 $1.28 $0.44 $(3.41) NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Basic) 19,428 18,678 18,886 18,678 NUMBER OF SHARES USED IN PER SHARE CALCULATIONS (Diluted) 19,734 18,678 18,980 18,678 CLAXSON CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION - BY SEGMENT (In Thousands of U.S. dollars) Internet Pay & Tele- Broad- Broad- Claxson vision cast band Corporate Total For the Three Months Ended December 31, 2003: NET REVENUES $11,963 $10,493 $9 $-- $22,465 OPERATING INCOME (LOSS) $2,611 $2,194 $(63) $(1,269) $3,473 For the Three Months Ended December 31, 2002: NET REVENUES $10,807 $8,723 $20 $-- $19,550 OPERATING INCOME (LOSS) $1,385 $920 $(882) $(952) $471 For the Twelve Months Ended December 31, 2003: NET REVENUES $48,215 $33,394 $178 $-- $81,787 OPERATING INCOME (LOSS) $7,266 $4,928 $(1,898) $(5,032) $5,264 For the Twelve Months Ended December 31, 2002: NET REVENUES $46,192 $28,578 $190 $-- $74,960 OPERATING INCOME (LOSS) $9,303 $(1,152) $(7,684) $(2,775) $(2,308) CLAXSON CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of U.S. dollars) Twelve Months Ended December 31, 2003 2002 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $8,337 $(138,429) Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Amortization of programming rights 4,623 4,903 Share-based compensation 49 73 Depreciation and amortization 5,993 12,304 Interest accrued on notes receivable from shareholders 126 838 Preferred dividend receivable -- (342) Net (gain) loss on disposal of assets (97) 567 Exchange rate (gain) loss (9,095) 61,349 Impairment of goodwill 2,758 74,789 Gain on debt restructuring -- (15,274) (Gain) loss from unconsolidated subsidiaries (346) 6,746 Minority interest (46) (68) Changes in operating assets and liabilties 1,352 (5,485) Net cash provided by operating activities 13,654 1,971 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (2,583) (1,605) Net cash balance of newly consolidated affiliate -- 909 Payments for acquisition of minority interest (2,416) (2,238) Transaction costs paid (1,869) (1,050) (Investments in) distributions from unconsolidated subsidiaries 371 (130) Sale of investments in subsidiaries 837 8,400 Net cash (used in) provided by investing activities (5,660) 4,286 CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of short/long-term debt (8,591) (7,689) Payment of debt restructuring costs -- (3,868) Restricted cash released (deposited) in guaranty of Chilean syndicated loan 706 (1,500) Capital contribution by minority shareholder -- 32 Net cash used in financing activities (7,885) (13,025) EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH AND CASH EQUIVALENTS (499) (371) NET DECREASE IN CASH AND CASH EQUIVALENTS (390) (7,139) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 8,072 15,211 CASH AND CASH EQUIVALENTS, END OF YEAR $7,682 $8,072