WorldSpace� Satellite Radio (NASDAQ:WRSP), one of the world leaders
in satellite-based digital radio services, today announced results
for the first quarter ended March 31, 2008. The Company ended the
quarter with 171,470 subscribers worldwide, a loss of 2,696 from
the close of the prior quarter, reflecting the planned cessation of
marketing efforts in India and other parts of the world ahead of
the company�s efforts to commence mobile service in Europe in 2009.
In India, the Company lost 1,049 net subscribers during the first
quarter of 2008, reflecting continued reduction in marketing in
that region. WorldSpace ended the period with 162,026 subscribers
in India, compared to 163,075 at the end of the fourth quarter of
2007. Highlights of the first quarter include: An agreement with
Delphi to design the WorldSpace mobile receiver for the European
aftermarket based upon a WorldSpace-developed reference design.
Delphi was also selected as a lead designer for the Company�s
European OEM receiver and reception system applications that will
also be based on WorldSpace�s reference designs. The receipt of
approval from Switzerland's Office Federal de la Communication to
operate terrestrial repeaters that will work in conjunction with
its existing satellite network to provide Swiss consumers with a
subscription-based satellite radio service in three languages,
starting sometime in 2009. Following the end of the quarter,
WorldSpace Europe, a wholly-owned subsidiary, received approval
from Germany�s Federal Network Agency, the Bundesnetzagentur, for
the operation of a terrestrial repeater network in Germany. The
repeaters will work in conjunction with WorldSpace�s existing
satellite network to provide German consumers with a
subscription-based satellite radio service in automobiles, again
starting sometime in 2009. Germany, with the largest automobile
market in Europe, is the third European country to approve
WorldSpace service; additional countries are expected to do the
same before the end of the year. In December, WorldSpace secured a
financing facility for up to $40 million of subordinated financing
from Yenura Pte. Ltd., a company controlled by Noah Samara,
chairman and CEO of WorldSpace. While the facility was intended to
support the Company's focused activities as it continued urgently
to seek additional financing (including financing to address near
term debt obligations), the realization of these business
objectives has been limited by the continued slow availability of
funds from the facility. WorldSpace Chairman and CEO Noah Samara
stated, "I am pleased with the accelerated progress we are making
in Europe and believe these achievements are adding substantial
value for our shareholders. But, I am concerned about the Company�s
cash position and its pending and near term payment obligations,
including those to our debt holders. We are working very hard to
solve this liquidity issue and will announce something as soon as
we have a commitment. �Our goals for 2008 are unchanged: in
addition to resolving our financial situation, we continue to focus
on plans to launch an Italian business and secure licenses and
approvals in additional countries in Europe and India,� Samara
added. �Our operational focus is on Europe in general and Italy in
particular. We continue to reduce our spending in India, pending
the attainment of the license for repeaters and a local equity
partner relationship.� Subscriber Growth Gross subscriber adds of
15,637 in India were down from 18,226 in the fourth quarter of
2007. Net subscriber losses in India were slightly lower than net
losses of 1,827 in the fourth quarter of 2007, as the Company
continues to work towards stabilizing its subscriber base, while
awaiting approval of its terrestrial offering in the country along
with finalization of potential partnership agreements. Revenue For
the first quarter of 2008, WorldSpace reported revenues of
approximately $3.0 million, essentially flat with revenues of
approximately $3.0 million for the first quarter of 2007.
Subscription revenue was approximately $1.7 million for the first
quarter of 2008, compared with approximately $1.8 million in the
first quarter of 2007. On a sequential basis, subscription revenues
in the fourth quarter of 2007 were approximately $1.9 million.
Operating Expenses Total operating expenses for the first quarter
of 2008 were $36.4 million, a 10.3% decline from operating expenses
of $40.6 million in the first quarter of 2007, primarily reflecting
reduced marketing activity in India, as well as decreased
compensation and lower professional and legal fees in the 2008
period. Net Loss and EBITDA Loss WorldSpace recorded a net loss for
the first quarter of 2008 of $36.8 million, or $0.87 per share,
compared with a net loss of $35.5 million, or $0.91 per share for
the first quarter of 2007. WorldSpace had an EBITDA (earnings
before interest income, interest expense, income taxes,
depreciation and amortization) loss of $18.5 million for the first
quarter of 2008, compared with an EBITDA loss of $23.4 million for
the first quarter of 2007. As of March 31, 2008, the Company had
cash and cash equivalents of $2.0 million, along with restricted
cash and investments of approximately $5.6 million, compared with
$3.6 million and $6.3 million, respectively, as of December 31,
2007. SAC and CPGA Subscriber Acquisition Costs (SAC) were $28 in
the first quarter of 2008 on a blended basis (India and the rest of
the world) and $30 in India, compared with $16 on a blended basis
and $18 in India for the fourth quarter of 2007. Cost Per Gross
Addition (CPGA) decreased in the quarter to $70 on a blended basis,
down from the $80 CPGA in the prior quarter, reflecting the lower
marketing activity in India, where the CPGA increased to $72 for
the first quarter of 2008 from $68 in the fourth 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. 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� 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 March 31, 2008 � 2007
(unaudited, in thousands) STATEMENT OF OPERATIONS DATA: REVENUE:
Subscription revenue $ 1,735 $ 1,820 Equipment revenue 338 479
Other revenue � 971 � � 747 � Total revenue � 3,044 � � 3,046 � �
OPERATING EXPENSES: Satellite and transmission, programming and
other 6,652 7,369 Cost of equipment 566 1,754 Research and
development 2446 95 Selling and marketing 1,651 2,495 General and
administrative 10,296 14,279 Depreciation and amortization � 14,786
� � 14,597 � Total operating expenses � 36,397 � � 40,589 � � Loss
from Operations (33,353 ) (37,543 ) � OTHER INCOME (EXPENSE):
Interest income 190 2,293 Interest expense (3,487 ) (2,667 ) Other
� 90 � � (77 ) Total other income (expense) (3,207 ) (451 ) � Loss
before income taxes (36,560 ) (37,994 ) Income tax benefit
(expense) � (262 ) � 2,460 � Net loss $ (36,822 ) $ (35,534 ) �
Three months ended March 31, 2008 2007 PER SHARE DATA � Basic and
Diluted: Net Loss per share $ (0.87 ) $ (0.91 ) Weighted Average
Number of Shares Outstanding � 42,327,652 � � 39,012,096 � �
SUMMARY OPERATING METRICS � � Three months ended March 31, 2008 �
2007 Net Subscriber Additions (Deletions) (2,696 ) (7,459 ) India
(1,049 ) 8,344 Rest of World ("ROW") (1,647 ) (15,803 ) � Total EOP
Subs 171,470 191,646 India 162,026 170,354 ROW 9,444 21,292 � ARPU
(1) $ 3.36 $ 3.19 ARPU (India) 3.06 2.94 ARPU (ROW) 8.13 5.07 � SAC
(2) $ 28 $ 33 SAC (India) 30 33 SAC (ROW) 0 0 � CPGA (3) $ 70 $ 71
CPGA (India) 72 68 CPGA (ROW) 54 104 � EBITDA (4) $ (18,477 ) $
(23,403 ) � SELECTED BALANCE SHEET DATA: As of March 31, 2008 � �
December 31, 2007 Unaudited (in thousands) Cash and cash
equivalents $ 2,044 $ 3,597 Restricted Cash and Marketable
Securities 5,557 6,312 Satellites and Related Systems, net 286,307
298,503 Total Assets 323,717 340,014 Total Debt ( including current
portion) 104,162 94,013 Contingent Royalty Obligation 1,814,175
1,814,175 Total Liabilities 2,110,571 2,091,745 Minority Interest
608 689 Total Shareholders� Deficit (1,787,462) (1,752,420) �
EBITDA Reconciliation: Three months ended March 31, 2008 � 2007
(unaudited, in thousands) Reconciliation of Net Loss to EBITDA Net
Loss as reported (36,822 ) (35,534 ) Addback non-EBITDA items
included in net loss: Interest income (190 ) (2,293 ) Interest
expense 3,487 2,287 Depreciation & amortization 14,786 14,597
Deferred income tax expense (benefit) � 262 � � (2,460 ) EBITDA $
(18,477 ) $ (23,403 ) 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 � 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 provide � 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.
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