NEW YORK, May 14 - SIRIUS (Nasdaq: SIRI), the premier satellite radio broadcaster and only service delivering uncompromised coast-to-coast music and entertainment for your car and home, today announced that it more than doubled its subscribers in the first quarter of this year to approximately 68,000, meeting an important target for the second company to offer nationwide satellite radio service. The substantial growth in subscribers represents a 127 percent increase over its end-of-year 2002 figure.
"These excellent subscriber results indicate that we are beginning to see some traction in the marketplace," said Joseph P. Clayton, President and CEO of SIRIUS Satellite Radio. "With the introduction of our transportable 'Plug & Play' products from Kenwood and Audiovox hitting retail shelves this summer, we fully expect to exceed 100,000 subscribers this quarter, and reach our goal of over 300,000 subscribers by the end of the year."
SIRIUS also indicated that its brand awareness more than doubled since the beginning of the company's first brand advertising campaign in February of this year. These results were based on a category brand monitoring study conducted by Diagnostic Research and commissioned by SIRIUS.
With more subscribers signing up every day, SIRIUS is introducing a "Preferred Plan" for multiple subscriptions and a "Lifetime of Music & More Plan." On the "Preferred Plan," once a subscriber pays the initial subscription rate of $12.95, an additional subscription for that subscriber will cost only $6.99. On the "Lifetime of Music & More Plan," SIRIUS will charge a one-time fee of $399.99 that will cover the life of the satellite radio unit purchased.
SIRIUS also announced its financial results for the quarter ended March 31, 2003. SIRIUS launched its service nationwide on July 1, 2002, and had 68,059 subscribers on March 31, 2003. 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 million of new equity. SIRIUS currently has funds to cover estimated funding needs into the second quarter of 2004.
FIRST QUARTER 2003 VERSUS FIRST QUARTER 2002
For the first quarter of 2003 SIRIUS recognized total revenue of $1.6 million, compared to $33 thousand for the first quarter of 2002. SIRIUS reported a loss from operations of $(99.1) million for the first quarter of 2003, compared to a loss from operations of $(50.8) million for the first quarter of 2002. Adjusted EBITDA loss for the first quarter of 2003 was $(75.0) million, compared with $(36.2) million in the first quarter of 2002. Adjusted EBITDA loss for the first quarter of 2003 excludes a $256.5 million gain in connection with the elimination of approximately 91% of the company's debt.
SIRIUS reported net income applicable to common stockholders of $51.9 million, or $0.16 per share, for the first quarter of 2003, compared with a net loss applicable to common stockholders of $(90.1) million, or $(1.22) per share, for the first quarter of 2002. Included in net income applicable to common stockholders for the first quarter of 2003 was a $256.5 million gain in connection with the elimination of approximately 91% of the company's debt and a deemed dividend of $79.5 million associated with the elimination of 100% of its convertible preferred stock.
For the quarter ended March 31, 2003, average monthly revenue per subscriber, or ARPU, was approximately $10.94, including the effect of mail-in rebates.
SIRIUS defines Adjusted EBITDA loss as net loss before interest and investment income, interest expense, depreciation expense and debt restructuring. Our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in our industry. Adjusted EBITDA is not a measure of financial performance under accounting principles generally accepted in the United States. We have raised and invested large amounts of capital to fund the completion of our system; as a result, our results of operations include significant charges for depreciation and interest expense. In addition, we have recognized a gain associated with the restructuring of our debt. Adjusted EBITDA, which excludes these items, provides a basis to measure our operating performance, apart from the expenses associated with our physical plant or capital structure. Adjusted EBITDA should not be considered in isolation or as a substitute for operating loss, cash flow from operating activities or other measures of performance defined by accounting principles generally accepted in the United States. A reconciliation of Adjusted EBITDA loss is presented on the attachment.
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) For the Quarter Ended March 31, 2003 2002 Statement of Operations: Subscriber revenue, net of rebates $ 1,554 $ 4 Advertising revenue, net of agency fees 17 29 Other revenue 20 -- Total revenue 1,591 33 Operating expenses: Cost of services: Satellite and transmission 7,867 8,757 Programming and content 6,574 3,783 Customer service and billing 2,202 1,842 Sales and marketing 45,340 15,659 General and administrative 9,094 7,540 Research and development 4,983 7,713 Depreciation expense 24,100 14,481 Non-cash stock compensation 559 (9,024) Total operating expenses 100,719 50,751 Loss from operations (99,128) (50,718) Other income (expense): Debt restructuring 256,538 -- Interest and investment income 1,343 2,000 Interest expense (18,665) (30,193) Total other expense 239,216 (28,193) Net income (loss) 140,088 (78,911) Preferred stock dividends (8,574) (11,042) Preferred stock deemed dividends (79,634) (171) Net income (loss) applicable to common stockholders $ 51,880 $ (90,124) Net income (loss) per share applicable to common stockholders: Basic $ 0.16 $ (1.22) Diluted $ 0.16 $ (1.22) Weighted average common shares outstanding: Basic 327,785 73,861 Diluted 327,872 73,861 Reconciliation of net income (loss) to Adjusted EBITDA: Net income (loss) as reported 140,088 (78,911) Add back non-EBITDA items included in net loss: Depreciation expense 24,100 14,481 Interest and investment income (1,343) (2,000) Interest expense 18,665 30,193 Debt restructuring (256,538) -- Adjusted EBITDA $ (75,028) $ (36,237) March 31, December 31, 2003 2002 Select Balance Sheet Data: Cash, cash equivalents and marketable securities $ 289,742 $ 173,702 Restricted investments 7,200 7,200 Working capital 263,268 151,289 Total assets 1,420,985 1,340,940 Long-term debt, net of current portion 58,205 670,357 Accrued interest, net of current portion -- 46,914 Total liabilities 117,744 772,941 Convertible preferred stock -- 531,153 Accumulated deficit (787,391) (927,479) Stockholders' equity 1,303,241 36,846 Other Data: Subscribers (end of period) 68,059 412
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 only $12.95, with greater savings for upfront payments of multiple months or a year or more. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Automotive brands currently offering SIRIUS radios in select new car models include BMW, MINI, Chrysler, Dodge, Jeep®, Nissan, Infiniti and Mazda. Automotive brands that have announced plans to offer SIRIUS in select models include Ford, Lincoln, Mercury, Mercedes-Benz, Jaguar, Volvo, Audi, Volkswagen, Land Rover and Aston Martin.
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.