SIRIUS Announces 2002 Financial and Operating Results
NEW YORK, NY - March 28, 2003 - SIRIUS (NASDAQ: SIRI), today announced its financial results for the year ended December 31, 2002, the end of the first year of commercial operations for the premier satellite radio broadcaster. SIRIUS launched its service nationwide on July 1, 2002, and had 29,947 subscribers on December 31, 2002. In addition, on March 7, 2003, SIRIUS closed a $1.2 billion recapitalization, which eliminated approximately 91% of the company's debt and 100% of its convertible preferred stock, and raised $200.0 million of new equity. SIRIUS currently has funds to cover estimated funding needs into the second quarter of 2004.
FOURTH QUARTER 2002 VERSUS FOURTH QUARTER 2001
For the quarter ended December 31, 2002, SIRIUS reported total revenue of $685 thousand and a net loss applicable to common stockholders of $134.1 million, or $1.74 per share. This compares with a net loss applicable to common stockholders of $83.6 million, or $1.52 per share, for the 2001 quarter.
Subscriber revenue of $727 thousand was partially offset by $107 thousand of costs associated with a mail-in rebate program. Mail-in rebates that are paid directly to subscribers are recorded as a reduction to subscription revenue. Average monthly revenue per subscriber, or ARPU, was approximately $10.82. ARPU, excluding costs associated with a mail-in rebate program, was approximately $12.69.
FULL YEAR 2002 VERSUS FULL YEAR 2001
For the year ended December 31, 2002, SIRIUS reported total revenue of $805 thousand and a net loss applicable to common stockholders of $468.5 million, or $6.13 per share. This compares with a net loss applicable to common stockholders of $277.9 million, or $5.30 per share, for 2001.
Subscriber revenue of $1.0 million was offset by $426 thousand of costs associated with a mail-in rebate program. ARPU was approximately $7.47. ARPU, excluding costs associated with a mail-in rebate program, was approximately $12.58.
(Selected Balance Sheet Data and Statement of Operations follow).
On March 7, 2003, the company completed a series of transactions to restructure its debt and equity capitalization. As part of these transactions:
- SIRIUS exchanged 545,012,162 shares of the company's common stock for approximately 91% of its outstanding debt, resulting in the cancellation of all of the company's Lehman term loans, all of the company's Loral term loans, $251.2 million in aggregate principal amount at maturity of the company's 15% Senior Secured Discount Notes due 2007, $169.7 million in aggregate principal amount of the company's 14½% Senior Secured Notes due 2009, and $14.7 million in aggregate principal amount of the company's 8¾% Convertible Subordinated Notes due 2009;
- SIRIUS exchanged 76,992,865 shares of its common stock and warrants to purchase 87,577,114 shares of common stock for all of the company's outstanding convertible preferred stock;
- SIRIUS sold 24,060,271 shares of its common stock to affiliates of Apollo Management, L.P. for an aggregate of $25.0 million in cash;
- SIRIUS sold 24,060,271 shares of its common stock to affiliates of The Blackstone Group L.P. for an aggregate of $25.0 million in cash; and
- SIRIUS sold 163,609,837 shares of its common stock to affiliates of OppenheimerFunds, Inc. for an aggregate of $150.0 million in cash.
After giving effect to these transactions, at March 7, 2003, SIRIUS had $61.2 million in aggregate principal amount of outstanding debt, consisting of $29.2 million in aggregate principal amount at maturity of 15% Senior Secured Discount Notes due 2007, $30.3 million in aggregate principal amount of 14½% Senior Secured Notes due 2009 and $1.7 million in aggregate principal amount of 8¾% Convertible Subordinated Notes due 2009; and approximately 911,479,700 shares of common stock outstanding.
At March 7, 2003, SIRIUS had in excess of $300.0 million in cash, cash equivalents and marketable securities, an amount sufficient to cover its estimated funding needs into the second quarter of 2004. The company estimates that it will need additional funding of approximately $100.0 million before it achieves cash flow breakeven, the point at which revenues are sufficient to fund expected operating expenses, capital expenditures, principal and interest payments and taxes.
SIRIUS defines average monthly revenue per subscriber ("ARPU") as the total earned subscription revenue and activation revenue over the daily weighted average number of subscribers for the period. ARPU is not a measure of financial performance under accounting principles generally accepted in the United States and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States.
SIRIUS Satellite Radio Inc. Financial Highlights (In thousands, except per share and subscriber data) (Unaudited)
December 31, 2002 December 31, 2001 Select Balance Sheet Data: Cash, cash equivalents and marketable securities $173,702 $308,944 Restricted investments, short-term and long-term 7,200 21,998 Working capital 151,289 275,732 Total assets 1,340,940 1,527,605 Long-term debt, net of current portion 670,357 639,990 Accrued interest, net of current portion 46,914 17,201 Total liabilities 772,941 719,788 Convertible preferred stock 531,153 485,168 Accumulated deficit (927,479) (504,998) Stockholders' equity 36,846 322,649
For the Quarter Ended For the Year Ended December 31, December 31, 2002 2001 2002 2001 Statement of Operations: Subscriber revenue, net of rebates $620 $-- $623 $-- Advertising revenue, net of agency fees 35 -- 146 -- Other revenue 30 -- 36 -- Total revenue 685 -- 805 --
Operating expenses: Cost of services: Satellite and transmission 13,961 8,339 39,308 31,056 Programming and content 10,621 3,539 22,728 9,836 Customer service and billing 2,283 1,826 7,862 6,572 Sales and marketing 28,511 6,394 108,385 21,566 General and administrative 6,433 9,078 30,682 28,536 Research and development 6,388 9,571 30,087 47,794 Depreciation expense 23,156 2,421 82,747 9,052 Non-cash stock compensation 128 10,670 (7,867) 14,044 Total operating expenses 91,481 51,838 313,932 168,456
Loss from operations (90,796) (51,838) (313,127) (168,456)
Other income (expense): Expense associated with restructuring (6,543) -- (8,448) -- Gain on extinguishment of debt -- 5,313 -- 5,313 Interest and investment income 727 2,680 5,257 17,066 Interest expense (25,474) (28,861) (106,163) (89,686) Total other expense (31,290) (20,868) (109,354) (67,307)
Net loss (122,086) (72,706) (422,481) (235,763)
Preferred stock dividends (11,806) (10,752) (45,300) (41,476) Preferred stock deemed dividends (172) (171) (685) (680)
Net loss applicable to common stockholders $(134,064) $(83,629) $(468,466) $(277,919) Net loss per share applicable to common stockholders (basic and diluted) $(1.74) $(1.52) $(6.13) $(5.30)
Weighted average common shares outstanding (basic and diluted) 77,268 54,981 76,394 52,427
Other data: Subscribers (end of period) 29,947 -- 29,947 --
SIRIUS is the only satellite radio service bringing listeners more than 100 streams of the best music and entertainment coast-to-coast. SIRIUS offers 60 music streams with no commercials, along with over 40 world-class sports, news and entertainment streams for a monthly subscription fee of $12.95. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Satellite radio products bringing SIRIUS to listeners in the car, truck, home, RV and boat are manufactured by Kenwood, Panasonic, Clarion, Audiovox and Jensen, and are available at major retailers including Circuit City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is the premier OEM satellite radio provider, with exclusive partnerships with DaimlerChrysler, Ford and BMW. Automotive brands currently offering SIRIUS radios in select new car models include BMW, Chrysler, Dodge, Jeep®, Nissan and Infiniti. Automotive brands that have announced plans to start offering SIRIUS in select models include Ford, Lincoln, Mercury, Mercedes-Benz, Jaguar, Volvo, Mazda, MINI, Audi, Volkswagen, Land Rover and Aston Martin.
Click on www.SIRIUS.com to listen to SIRIUS live, or to find a SIRIUS retailer or car dealer in your area.
Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance with respect to SIRIUS Satellite Radio Inc. are not historical facts and may be forward-looking and, accordingly, such statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in any forward-looking statements. Accordingly, any such statements are qualified in their entirety by reference to the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission. Among the key factors that have a direct bearing on our results of operations are: our need for substantial additional funds before the second quarter of 2004; our dependence upon third parties to manufacture, distribute, market and sell SIRIUS radios and components for those radios; the unproven market for our service; our competitive position and any events which affect the useful life of our satellites.