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WorldSpace(R) Satellite Radio Reports Fourth Quarter & 2007 Results
SILVER SPRING, Md.--(BUSINESS WIRE)--March 20, 2008--WORLDSPACE(R)
Satellite Radio (NASDAQ:WRSP), one of the world leaders in
satellite-based digital radio services, today announced results for
the fourth quarter and year ended December 31, 2007. The Company ended
the quarter with 174,166 subscribers worldwide, a loss of 3,478 from
the close of the prior quarter, reflecting the cessation of current
marketing efforts in Europe ahead of the company's efforts to commence
mobile service there beginning with Italy in 2009. In India, the
Company lost 1,827 net subscribers during the fourth quarter of 2007,
reflecting continued reduced marketing in that region while the
Company awaits regulatory approval for its mobile system, ending the
period with 163,075 subscribers in India, compared to 162,010 at the
end of the fourth quarter of 2006.
Other highlights include:
- Following the close of the quarter, WorldSpace secured a
financing facility for up to $40 million of subordinated
financing, from Yenura Pte. Ltd., a company controlled by Mr.
Noah Samara, chairman and CEO of WORLDSPACE. About half this
amount has been available to the Company and drawn by the
Company to date. Yenura assures the Company that the balance
will be available to draw in the next few weeks. The Company
also secured a waiver of certain pre-payment obligations owed
to the holders of its existing debt. The facility supports the
Company's preparations for the launch of its European mobile
service in the Italian market and business development
activities in selected markets, while the Company continues to
seek additional financing from a variety of sources, including
existing and new investors.
- Roberto Zaino was appointed content director for WORLDSPACE(R)
Italia, a majority-owned subsidiary of the Company. WORLDSPACE
Italia is expected to bring mobile satellite radio services to
the Italian marketplace with some 40-50 channels of music,
sports, news and entertainment programming in after market
equipment available early in 2009 and in certain Fiat Group
Automobiles' models as original equipment beginning in late
2009. Mr. Zaino is known in Italy as a pioneer of the radio
broadcasting industry, having begun his career with the launch
of Radio Milano International more than 30 years ago.
- In a separate announcement today, the Company disclosed it has
received a terrestrial repeater license from Switzerland.
Noah Samara stated, "We continue to make progress in Italy towards
the first European launch of mobile satellite radio service
contemplated for the end of this year or early next year. We
appreciate the support of our partners who are working closely with us
to make this launch successful. We believe the Italian market, and
indeed the broader European market, represents a remarkable business
opportunity for a robust mobile service. We remain confident that
WorldSpace, along with our partners -- Class Editori, Fiat, Telecom
Italia, Delphi, Fraunhofer ISS and others -- can effectively implement
our strategy, once we secure the financial resources required to
support it."
Samara added, "Our goals for 2008 include securing licenses and
approvals in at least four additional major European countries as well
as India. We are working on the development of a satellite/terrestrial
hybrid service for India and the Middle East, with the Indian service
still remaining subject to securing the necessary government approvals
for the terrestrial component. Through this hybrid DARS service
offering, we expect to broaden services to automobiles while improving
the reliability of our service in urban areas. And we continue to
evolve our plans for a hybrid DARS service in the Middle East. We also
expect to introduce new receivers targeted at stratified market
segments, all subject to securing additional long-term capital to fund
these plans."
Subscriber Growth
Gross subscriber adds of 18,226 in India were down from 20,132 in
the third quarter of 2007. Net subscriber losses in India of 1,827
continued the downward trend from net losses of 8,713 in the third
quarter of 2007, as the Company continued to minimize its marketing
efforts this year. Subscriber declines outside of India primarily
reflected the cessation of marketing outreach in Europe, as WorldSpace
prepares for its planned mobile offering in that region starting with
Italy in early 2009.
Revenue
For the fourth quarter of 2007, WorldSpace reported revenues of
approximately $3.8 million, compared to revenues of approximately $5.0
million for the fourth quarter of 2006. Subscription revenue was
approximately $2.0 million for the fourth quarter of 2007, flat with
the approximately $2.0 million in the fourth quarter of 2006. On a
sequential basis, subscription revenues in the fourth quarter of 2007
were slightly higher than the approximately $1.9 million recorded in
the third quarter of 2007 as well.
Net Loss and EBITDA Loss
WorldSpace recorded a net loss for the fourth quarter of 2007 of
$46.0 million, or $1.10 per share, compared with a net loss of $33.8
million, or $0.89 per share for the fourth quarter of 2006. WorldSpace
had an EBITDA (earnings before interest income, interest expense,
income taxes, depreciation and amortization) loss of $22.5 million for
the fourth quarter of 2007, compared with an EBITDA loss of $39.0
million for the fourth quarter of 2006.
SAC and CPGA
Subscriber Acquisition Costs (SAC) were $16 in the fourth quarter
of 2007 on a blended basis (India and the rest of the world) and $18
in India, compared with $10 on a blended basis and $12 in India for
the third quarter of 2007. Cost Per Gross Addition (CPGA) decreased in
the quarter to $79 on a blended basis, down from the $80 CPGA in the
prior quarter, reflecting the lower marketing activity in India, where
the CPGA decreased to $68 for the fourth quarter of 2007 from $75 in
the third quarter of 2007. WorldSpace's CPGA is the fully-loaded cost
to acquire each new subscriber, including SAC, as well as advertising
and marketing expenses. SAC also represents a subsidy on equipment
sales.
Full Year Results
For 2007, WorldSpace recorded net revenues of approximately $13.8
million, compared with net revenues of approximately $15.6 million in
2006. The net loss for 2007 was $169.5 million, or $4.22 per share,
compared with a net loss of $128.6 million, or $3.44 per share, in
2006. EBITDA in 2007 was a loss of $92.5 million; in 2006, EBITDA was
a loss of $128.2 million.
WorldSpace expects to file its financial statements for the year
ended December 31, 2007, with the Securities and Exchange Commission
on or before March 31, 2008. The Company anticipates that its
independent registered public accounting firm, Grant Thornton LLP,
will include an explanatory paragraph in their audit opinion that
expresses doubt about the Company's ability to continue as a going
concern based on its current financial resources. WorldSpace confirms
its need to secure additional capital to fund its operations.
Conference Call
WorldSpace plans to hold a conference call to discuss these
results and other developments on Thursday, March 20, 2008 at 4:30 pm.
The call will also be available as a webcast, which can be accessed
via the Company's website, www.worldspace.com, by following the links
to investor relations and webcasts. To participate in the call, please
dial 1-866-713-8307, using passcode 72883105; internationally, the
call may be accessed by dialing 1-617-597-5307, using the same
passcode. The call will be available as an archived webcast beginning
approximately one hour after completion in the investor relations
section of the Company's website.
Non GAAP Reconciliation
Earnings before interest income, interest expense, income taxes,
depreciation and amortization is commonly referred to in our business
as "EBITDA." EBITDA is not a measure of financial performance under
generally accepted accounting principles. The Company believes EBITDA
is often a useful measure of a Company's operating performance and is
a significant basis used by the Company's management to measure the
operating performance of the Company's business because EBITDA
excludes charges for depreciation, amortization and interest expense
that have resulted from our debt financings, as well as our provision
for income tax expense. Accordingly, the Company believes that EBITDA
provides helpful information about the operating performance of its
business, apart from the expenses associated with its physical assets
or capital structure. EBITDA is frequently used as one of the bases
for comparing businesses in the Company's industry, although the
Company's measure of EBITDA may not be identical to similarly titled
measures of other companies. EBITDA does not purport to represent
operating income or cash flow from operating activities, as those
terms are defined under generally accepted accounting principles, and
should not be considered as alternatives to those measurements as an
indicator of our performance. A reconciliation of net loss to EBITDA
has been provided in this release.
About WORLDSPACE(R) Satellite Radio
Based in the Washington, DC metropolitan area, WorldSpace, Inc.
(Nasdaq:WRSP) is the world's only global media and entertainment
company positioned to offer a satellite radio experience to consumers
in more than 130 countries with five billion people, driving 300
million cars. WorldSpace delivers the latest tunes, trends and
information from around the world and around the corner. WorldSpace
subscribers benefit from a unique combination of local programming,
original WorldSpace content and content from leading brands around the
globe including the BBC, CNN International, Virgin Radio UK, and RFI.
WorldSpace's satellites cover two-thirds of the earth's population
with six beams. Each beam is capable of delivering up to 80 channels
of high quality digital audio and multimedia programming directly to
WorldSpace Satellite Radios anytime and virtually anywhere in its
coverage areas. WorldSpace is a pioneer of satellite-based digital
radio services (DARS) and was instrumental in the development of the
technology infrastructure used today by XM Satellite Radio. For more
information, visit http://www.WorldSpace.com.
Forward-looking Statements
This press release may contain certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations
or beliefs about future events and financial, political and social
trends and assumptions it has made based on information currently
available to it. The Company cannot assure that any expectations,
forecasts or assumptions made by management in preparing these
forward-looking statements will prove accurate, or that any
projections will be realized. Such forward-looking statements may be
affected by inaccurate assumptions or by known or unknown risks or
uncertainties. Actual results may vary materially from those expressed
or implied by the statements herein. For factors that could cause
actual results to vary, perhaps materially, from these forward-looking
statements, please refer to the Company's Form 10-K, filed with the
Securities and Exchange Commission, and other subsequent filings.
Forward-looking statements contained herein speak only as of the date
of this release. The Company does not undertake any obligation to
update or revise publicly any forward-looking statements, whether to
reflect new information, future events or otherwise.
FINANCIAL TABLES FOLLOW
RESULTS OF
OPERATIONS
------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
(unaudited)
-------------------------
(in thousands, except share information)
---------------------------------------------------
STATEMENT OF
OPERATIONS DATA:
REVENUE:
Subscription
revenue $ 1,953 $ 1,954 $ 7,528 $ 7,294
Equipment
revenue 454 623 2,049 3,056
Other revenue 1,393 2,451 4,207 5,261
------------ ------------ ------------ ------------
Total revenue 3,800 5,028 13,784 15,611
------------ ------------ ------------ ------------
OPERATING
EXPENSES:
Satellite and
transmission,
programming and
other 6,581 5,899 30,078 27,556
Cost of equipment 3,998 8,471 7,569 16,615
Research and
development 5,034 1,807 7,100 2,563
Selling and
marketing 2,270 6,829 10,866 24,028
General and
administrative 6,747 19,383 48,632 68,243
Depreciation and
amortization 14,969 14,840 59,258 58,896
------------ ------------ ------------ ------------
Total Operating
Expenses 39,599 57,229 163,503 197,901
------------ ------------ ------------ ------------
Loss from
Operations (35,799) (52,201) (149,719) (182,290)
OTHER INCOME
(EXPENSE):
Loss on
extinguishment of
debt (1,435) - (1,435) -
Interest income (169) 2,577 4,689 11,331
Interest expense (3,892) (2,336) (13,460) (9,332)
Write-off of
deferred debt
issuance costs - - (11,516) -
Other expense (210) (1,618) (559) (4,759)
------------ ------------ ------------ ------------
Loss Before Income
Taxes (41,505) (53,578) (172,000) (185,050)
Income Tax Benefit
(Provision) (4,530) 19,761 2,493 56,447
------------ ------------ ------------ ------------
Net Loss $ (46,035) $ (33,817) $ (169,507) $ (128,603)
============ ============ ============ ============
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
------------ ------------ ------------ ------------
(unaudited)
-------------------------
PER SHARE DATA-
Basic & Diluted:
Net Loss per share $ 1.10 $ 0.89 $ 4.22 $ 3.44
Weighted Average
Number of Shares
Outstanding 41,851,632 37,817,729 40,187,346 37,395,558
Three Months Ended Twelve Months Ended
December 31, December 31,
(unaudited)
2007 2006 2007 2006
--------- --------- --------- ---------
Net Subscriber Additions (3,478) 22,274 (24,939) 83,799
India (1,827) 23,945 1,065 87,436
Rest of World ("ROW") (1,651) (1,671) (26,004) (3,637)
Total End Of Period
Subscribers 174,166 199,105 174,166 199,105
India 163,075 162,010 163,075 162,010
ROW 11,091 37,095 11,091 37,095
ARPU (1) $ 3.70 $ 3.75 $ 3.39 $ 3.83
ARPU (India) 3.36 3.15 3.11 3.01
ARPU (ROW) 8.28 6.05 6.46 6.22
SAC (2) $ 16 $ 23 $ 23 $ 35
SAC (India) 18 32 24 38
SAC (ROW) 0 0 0 0
CPGA (3) $ 79 $ 154 $ 87 $ 140
CPGA (India) 68 164 82 136
CPGA (ROW) 217 124 153 208
SELECTED BALANCE SHEETS DATA:
December 31,
2007 2006
------------ ------------
(In thousands)
Cash and cash equivalents $ 3,597 $ 27,565
Restricted Cash and Marketable Securities 6,312 143,763
Satellites and Related Systems, net 298,503 345,046
Total Assets 340,014 568,645
Total Debt ( including current portion) 94,013 155,368
Contingent Royalty Obligation 1,814,175 1,814,175
Total Liabilities 2,091,745 2,172,000
Minority Interest 689 304
Total Shareholders' Deficit (1,752,420) (1,603,659)
EBITDA Reconciliation (4):
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
--------- --------- ---------- ----------
(in thousands)
-----------------------------------------
Reconciliation of Net Loss to
EBITDA
Net Loss as reported $(46,035) $(33,817) $(169,507) $(128,603)
Addback non-EBITDA items
included in net loss:
Interest income 169 (2,577) (4,689) (11,331)
Interest expense (inc. debt
cost write-off) 3,892 2,336 24,976 9,332
Depreciation & amortization 14,969 14,840 59,258 58,896
Deferred income tax provision
(benefit) 4,530 (19,761) (2,493) (56,447)
--------- --------- ---------- ----------
EBITDA $(22,475) $(38,979) $ (92,455) $(128,153)
--------- --------- ---------- ----------
Notes:
1. Average Revenue per User (ARPU) is derived from the total of
monthly earned subscription revenue (net of promotion and rebates)
divided by the monthly average number of subscribers for the period
reported. ARPU is a measure of operational performance and not a
measure of financial performance under generally accepted accounting
principles.
2. Subscriber Acquisition Cost (SAC) includes the negative margins
from equipment sales to end customers, but does not include ongoing
loyalty payments to retailers and distribution partners, and payments
under revenue sharing arrangements to content providers.
3. Cost per Gross Addition (CPGA) includes amounts in SAC described
above, as well as advertising, media and other discretionary
marketing expenses, but does not include headcount related to sales
and marketing staff.
4. "EBITDA" refers to net loss before interest income, interest
expense, income taxes, depreciation and amortization. EBITDA is not a
measure of financial performance under generally accepted accounting
principles. EBITDA is often a useful measure of a company's operating
performance and is a significant basis used by WorldSpace's
management to measure the operating performance of the business.
Because we have funded and completed the build-out of our system
through the raising and expenditure of large amounts of capital, our
results of operations reflect significant charges for depreciation,
amortization and interest expense. EBITDA, which excludes this
information, provides helpful information about the operating
performance of our business, apart from the expenses associated with
our physical plant or capital structure. EBITDA is frequently used as
one of the bases for comparing businesses in our industry, although
our measure of EBITDA may not be comparable to similarly titled
measures of other companies. EBITDA does not purport to represent
operating loss or cash flow from operating activities, as those terms
are defined under generally accepted accounting principles and should
not be considered as an alternative to those measurements as an
indicator of our performance.
CONTACT:
WorldSpace, Inc.
Media Contact:
Judith Pryor, +1 301-960-1242
jpryor@worldspace.com
or
Investor Contact:
Sridhar Ganesan, +1 301-960-2300
sganesan@worldspace.com
SOURCE: WorldSpace, Inc.
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