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WORLDSPACE(R) Reports Fourth Quarter and 2006 Results
Subscriber Base Increased 73% Annually to 199,000; Subscription Revenues Nearly Doubled to $7.3 Million for Year Company Postpones Previously-Scheduled Conference Call
SILVER SPRING, Md., March 26, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- WORLDSPACE(R)
Satellite Radio (Nasdaq: WRSP), one of the world leaders in satellite-based
digital radio services, today announced results for the fourth quarter of 2006
and year ended December 31, 2006. The Company added 22,274 net subscribers
during the fourth quarter of 2006, ending the quarter with 199,105 subscribers
worldwide, 73% higher than at year-end 2005. In India, the Company added
23,945 net subscribers during the fourth quarter of 2006, ending the year with
162,010 subscribers in India, 117% higher than at the end of 2005.
The Company also announced that it is postponing its usual earnings
teleconference, currently scheduled for March 27, 2007 at 4:30 PM. The Company
is currently engaged in negotiations for a potential financing transaction.
The purpose of these negotiations is to address the Company's cash flow issues
arising from the Company's projected year-end cash position and the possible
exercise of the convertible noteholders' put right at that time. While it
cannot be certain that these negotiations will be successful, the Company
believes it will be able to respond better to investor questions once such
negotiations have concluded.
WorldSpace's fourth quarter business highlights included the launch of two
24-hour channels broadcasting in the Indian languages of Marathi and
Gujarathi. This completed WorldSpace's coverage of the major Indian languages.
WorldSpace now produces 33 channels of content that provide a high-quality
listening experience, content that can potentially be licensed for delivery
through alternative media. In addition, the previously-announced live audio
coverage of cricket began in mid-November 2006 and will run through February
2008 (except for the Cricket World Cup and games played in India), under which
ball-by-ball, real-time coverage, highlights, commentary and related
programming is airing on "PLAY," the WorldSpace-branded all-sports channel for
India.
In Europe, WorldSpace's Italian subsidiary signed an agreement with
Telecom Italia for the installation and servicing of the company's repeaters,
and is making continued progress with other partners targeting a market launch
in 2008. In South Africa, the company also secured authorization to commence
its terrestrial repeater business, while awaiting final formal license
approval. Based upon this progress, WorldSpace decided to close its Kenyan
operations and serve this market from South Africa.
Subscriber Growth
Gross subscriber adds of 38,908 in India were up 3% over the third quarter
of 2006, and net additions in India of 23,945 were up 29% over the third
quarter of 2006, due to lower churn than in the third quarter. However, the
Company continued to experience high churn rates in the fourth quarter in
India as the remaining introductory three-month packages came up for renewal
during the quarter, although in reduced numbers compared with the third
quarter. As of the end of the fourth quarter, about 59% of subscribers that
came up for renewal during the year had renewed their subscriptions to a six-
month or higher package on a pre-paid basis. The phasing out of three-month
package sales is now been completed, and that is expected to reduce churn
numbers as new and renewing subscribers enter into longer term prepaid plans.
Revenue Growth
For the fourth quarter of 2006, WorldSpace reported revenues of
approximately $5.0 million, compared with approximately $4.4 million for the
fourth quarter of 2005. Subscription revenue was approximately $2.0 million
for the fourth quarter of 2006 compared with approximately $1.1 million for
the fourth quarter of 2005. On a sequential basis, subscription revenues in
the fourth quarter of 2006 were 8% higher than the $1.8 million recorded in
the third quarter of 2006, and overall revenues in the fourth quarter of 2006
were 50% higher than the $3.3 million produced in the previous quarter.
On an annual basis, WorldSpace reported revenues of approximately $15.6
million in 2006, a 34 percent increase from revenues of approximately $11.7
million in 2005. Subscription revenues were approximately $7.3 million in
2006, nearly double the approximately $3.7 million recorded in 2005.
Net Loss and EBITDA Loss
WorldSpace recorded a net loss for the fourth quarter of 2006 of $33.8
million, or $0.89 per share, compared with a net loss of $33.2 million, or
$0.90 per share for the fourth quarter of 2005. WorldSpace had an EBITDA
(earnings before interest income, interest expense, income taxes, depreciation
and amortization) loss of $39.0 million for the fourth quarter of 2006,
compared with an EBITDA loss of $44.9 million for the third quarter of 2005,
and an EBITDA loss of $27.1 million in the third quarter of 2006. For the
year, WorldSpace recorded a net loss of $128.6 million, or $3.44 per share in
2006, compared with a net loss of $79.9 million or $2.77 per share in 2005.
SAC and CPGA
Subscriber Acquisition Costs (SAC) fell to $23 in the fourth quarter of
2006 on a blended basis and $32 in India. Cost Per Gross Addition (CPGA)
increased in the quarter to $154 on a blended basis, from the $137 CPGA in the
third quarter of 2006 due to increased marketing spend in India. The CPGA in
India increased to $164 for the fourth quarter from $126 in the third quarter
of 2006. 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.
Conference Call
WorldSpace plans to hold a conference call to discuss these results and
other corporate developments and will announce the timing of the call at a
future date.
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, Virgin Radio UK, NDTV 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,
2006 2005 2006 2005
(unaudited, in
thousands)
STATEMENT OF OPERATIONS
DATA:
REVENUE:
Subscription revenue $1,954 $1,136 $7,294 $3,690
Equipment revenue 623 1,176 3,056 2,822
Other revenue 2,451 2,113 5,261 5,148
Total revenue 5,028 4,425 15,611 11,660
OPERATING EXPENSES:
Satellite and transmission,
programming and other 5,599 6,163 26,661 18,061
Cost of equipment 8,471 4,703 16,615 6,725
Research and development 1,807 1,040 2,563 1,040
Selling and marketing 6,705 11,986 23,385 18,463
General and administrative 17,777 11,072 58,365 43,539
Stock-based compensation 2,030 14,915 11,416 25,161
Depreciation and amortization 14,840 17,500 58,896 61,636
Total operating expenses 57,229 67,151 197,901 174,625
Loss from Operations (52,201) (62,726) (182,290) (162,965)
OTHER INCOME (EXPENSE):
Gain on extinguishment of debt - -- - 14,130
Interest income 2,577 2,949 11,331 6,596
Interest expense (2,336) (2,386) (9,332) (9,884)
Other (1,618) 288 (4,759) 2,600
Loss before income taxes (53,578) (61,875) (185,050) (149,523)
Income tax benefit (provision) 19,761 28,699 56,447 69,660
Net loss (33,817) (33,176) (128,603) (79,863)
Three months ended Twelve Months ended
December 31, December 31,
2006 2005 2006 2005
PER SHARE DATA - Basic
and Diluted:
Net Loss per share ($0.89) ($0.90) ($3.44) ($2.77)
Weighted Average Number of
Shares Outstanding 37,817,729 36,721,947 37,395,558 28,828,958
Three months ended Twelve months ended
December 31, December 31,
(unaudited)
2006 2005 2006 2005
Net Subscriber Additions 22,274 40,235 83,799 81,036
India 23,945 38,904 87,436 66,239
Rest of World ("ROW") (1,671) 1,331 (3,637) 14,797
Total EOP Subs 199,105 115,306 199,105 115,306
India 138,065 74,574 162,010 74,574
ROW 38,766 40,732 37,095 40,732
ARPU (1) $3.75 $4.15 $3.83 $4.66
ARPU (India) 3.15 3.35 3.01 2.76
ARPU (ROW) 6.05 5.11 6.22 6.14
SAC (2) $23 $43 $35 $30
SAC(India) 32 43 38 36
SAC(ROW) 0 39 0 5
CPGA (3) $154 $172 $140 $173
CPGA(India) 164 154 136 188
CPGA(ROW) 124 432 208 121
SELECTED BALANCE SHEET DATA:
December 31,
2006 2005
(In thousands)
Cash and cash equivalents $ 27,565 $ 36,925
Restricted cash and
marketable securities 143,763 243,636
Satellites and related
systems, net 345,046 397,463
Total assets 568,645 729,517
Total debt (including current
portion) 155,368 155,000
Contingent royalty obligation 1,814,175 1,814,175
Total liabilities 2,172,000 2,221,970
Minority Interest 304
Total shareholders' deficit (1,603,659) (1,492,453)
EBITDA reconciliation (4):
Three months ended Twelve months ended
December December
31, 31,
2006 2005 2006 2005
(Unaudited, in thousands)
Reconciliation of Net Loss to
EBITDA Net Loss as reported
$ (33,817) $ (33,176) $(128,603) $ (79,863)
Addback non-EBITDA items
included in net loss:
Interest income
(2,577) (2,949) (11,331) (6,596)
Interest expense
2,336 2,386 9,332 9,884
Depreciation & amortization
14,840 17,500 58,896 61,636
Deferred income taxes benefit
(19,761) (28,699) (56,447) (69,660)
EBITDA
$ (38,979) $ (44,938) $ (128,153) $ (84,599)
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.
SOURCE WORLDSPACE Satellite Radio
Judith Pryor of WorldSpace, Inc., +1-301-960-1242, jpryor@worldspace.com
http://www.WORLDSPACE.com
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