From: XM Satellite Radio
Posted: Tuesday, April 23, 2002
XM Announces $199 Pioneer Universal Radio and Retail Rollout in Wal-Mart Stores
XM Satellite Radio Holdings Inc. today reported financial and operating results for the first quarter ended March 31, 2002. The quarter was highlighted by robust subscriber growth of approximately 175%; XM added 48,509 subscribers in the quarter, more than doubling the number of subscribers and ending the quarter with 76,242 total subscribers. Revenue, EBITDA and EPS for the first quarter exceeded the consensus Wall Street expectations.
During the quarter, XM announced arrangements with several automakers to offer XM Radio in new cars. They include Nissan, Infiniti, Volkswagen, Audi and Isuzu. Also during the quarter, XM Radio and DIRECTV announced a joint marketing arrangement intended to drive XM subscriber growth and add value to current DIRECTV subscribers.
First Quarter Financial and Operating Results
XM Radio commenced commercial operations in the fourth quarter of 2001. For the three months ended March 31, 2002, XM reported consolidated revenue of $1.8 million, EBITDA loss of ($75.9) million, and a consolidated net loss available to common shareholders of ($117.7) million, or ($1.56) per share. In comparison, for the three months ended March 31, 2001, XM had no consolidated revenue, EBITDA loss of ($40.0) million, and a consolidated net loss available to common shareholders of ($42.7) million, or ($0.80) per share.
XM Exceeds Expectations and Doubles Subscribers
During the first full quarter of nationwide service, XM Radio, America's leading satellite radio service, exceeded most Wall Street analysts expectations in reporting 76,242 total subscribers as of March 31, 2002. This is an increase of 48,509 new subscribers, or 171%, over the fourth quarter 2001. ``XM remains on track to end the year with 350,000 subscribers and expects to see an increase in the subscribers from new car sales with the rollout of XM-factory installed radios in twenty-five GM 2003 automobile models. XM continues to be one of the most successful consumer electronics product launches of the last 20 years,'' said XM President and CEO Hugh Panero.
Although the majority of XM subscriber additions have been through consumer retail distribution, significant growth is expected from the automotive sector when XM becomes available later this year in GM 2003 models, including all models of the Cadillac and other popular brands such as Buick, Chevrolet, GMC, Olds, and Pontiac. In addition, XM will be available on select models from Nissan, Infiniti, Volkswagen, Audi and Isuzu.
During the quarter, XM continued to receive recognition from the press and trade publications. Entertainment Weekly, America's leading consumer magazine of entertainment and popular culture, gave XM Radio a coveted ``A'' in its Feb. 22 Oscar Edition, raving ``I think I'm in love'' with XM's revolutionary programming. Stephen Wildstrom, Business Week's technology critic, wrote, after experiencing XM in a GM Cadillac ``I found the service a delight.'' In addition, XM Radio drew awards from three top electronics and auto trade magazines.
XM Signs Agreements with Leading Automobile Manufacturers
XM recently announced agreements with several automakers to offer XM in new cars. Nissan announced it will offer XM as an option this coming fall on 2003 Infiniti and Nissan models. These models include the Infiniti Q45 performance luxury sedan, the Infiniti G35, the Infiniti I35 luxury sedan along with the Nissan Pathfinder sport-utility vehicle and the Nissan Murano crossover SUV. XM also announced it had signed a distribution agreement with Volkswagen of America, Inc., which also encompasses Audi of America, to offer satellite radio to Volkswagen and Audi customers in the United States in the coming years. Specific vehicle installation plans and timing will be announced separately by Volkswagen and Audi. Earlier in the quarter, XM announced that participating Isuzu dealers will offer to install XM radios in Axiom and Rodeo models beginning in May 2002.
GM announced in April that Cadillac will become the first automotive brand to offer XM Satellite Radio on all its models. Cadillac will offer XM on the 2003 model year DeVille, Seville, CTS, and Escalade family of vehicles. In addition, Cadillac will offer XM Radio as an option on the 2004 model year XLR luxury roadster and an all-new entry in the mid luxury utility segment, the Cadillac SRX.
In addition, by the end of Q1, XM had entered into arrangements with more than 150 independent auto dealerships representing a broad range of automakers. These dealers have committed to install XM radios in new and used cars and to package the radio as part of the overall sale.
XM Announces Joint Marketing Arrangement with DIRECTV
XM Radio announced a joint marketing arrangement with DIRECTV, the nation's leading provider of digital satellite television entertainment. The agreement is designed to help drive XM subscriber growth by giving DIRECTV satellite television customers a value-added offer for XM. ``DIRECTV customers already understand the advantages that come with satellite entertainment -- programming variety, superior reception and great value,'' said Hugh Panero, XM's president and CEO and Roxanne Austin, DIRECTV president and COO in a joint statement.
XM Raised Additional Funds and Unveils Sound Quality Technology
Outside of the quarter, in April 2002, XM priced a public offering of common stock and raised $154 million in gross funding, funding the company's current plan into the first quarter of 2003. The company has now raised approximately $1.8 billion in gross funding.
Also outside of the quarter, XM unveiled the details of its state-of-the- art digital sound technology. It features customized CT-aacPlus audio encoding with Neural Audio optimization -- the combination provides superior sound quality remarkably close to Compact Disc.
XM Announces $199 Pioneer XM Radio and Retail Rollout in Wal-Mart Stores
As part of our technological innovation, product enhancement and cost reduction efforts, on May 1st retailers will begin offering the Pioneer Universal Receiver which can adapt any car stereo system to receive XM with a suggested price of $199. This is a reduction of $50. In addition, purchasers of an XM ready head unit can now add the Pioneer XM Receiver unit with a suggested price of $149, also a $50 reduction. The XM antenna is priced separately from $49 to $79.
XM's first generation proven chipset technology went into production early last fall. Building on this success, XM's second generation, lower cost chipset, is on target for production in the fourth quarter of 2002.
In addition, XM Radio continues to build and improve on a robust retail distribution network, now featuring approximately 5200 retail outlets and expected to have over 6000 outlets by the end of the second quarter 2002. XM Radio has initiated a retail distribution relationship with Wal-Mart stores where they will be selling both Pioneer and Sony product lines. The program will launch as a pilot effort in 1000 of Wal-Mart's 3000 outlets nationwide.
About XM Satellite Radio
XM will transform radio, an industry that has seen little technological change since FM, almost 40 years ago. XM is offering its 100 channels of digital-quality, coast-to-coast sound for $9.99 a month. Leading manufacturers including Sony, Alpine and Pioneer are offering a broad array of XM radios including universal models that will easily enable any existing car stereo system to receive the XM service (Sony Plug-n-Play, Pioneer and Alpine Universal Controllers), and new AM/FM/XM systems offering many other great features.
XM's strategic investors include America's leading car, radio and
satellite TV companies -- General Motors, American Honda Motor Co. Inc., Clear
Channel Communications and DIRECTV.
XM has a distribution agreement with
General Motors to integrate XM radios into its vehicles commencing in 2001.
For more information, please visit XM's web site: http://www.xmradio.com .
EBITDA is not a defined term per GAAP, the definition is provided in the company's 10-K filed with the Securities and Exchange Commission on 3-19-02. Copies of the filing are available upon request from XM Radio's Investor Relations Department. Factors that could cause actual results to differ materially from those in the forward-looking statements in this press release include demand for the company's service, the company's dependence on third party vendors, its continuing need for additional financing, as well as other risks described in XM Satellite Radio Holdings Inc.'s Form 8-K filed with the Securities and Exchange Commission on 4-8-2002. Copies of the filing are available upon request from XM Radio's Investor Relations Department. XM SATELLITE RADIO HOLDINGS INC. FINANCIAL HIGHLIGHTS (in thousands, except subscriber and share amounts) (unaudited) Consolidated Statements of Operations Data Three Months ended March 31, 2002 2001 Subscriber revenue 1,389 - Ad sales revenue 455 - Less: National agency commissions (64) - Other revenue 5 - Total revenue $ 1,785 $ - Operating expenses: Broadcasting operations: Content/programming costs (8,957) (4,799) System operating costs (11,709) (7,005) Customer care and billing operations (2,565) (951) Sales and marketing (47,491) (18,028) General and administrative (4,335) (6,366) Research and development (2,810) (2,983) Depreciation and amortization (22,279) (1,992) Total operating expenses $ (100,146) $ (42,124) Operating loss (98,361) (42,124) Interest income 1,658 5,176 Interest expense (15,999) - Other income (expense), net 452 - Net loss $ (112,250) $ (36,948) Series B preferred stock dividend requirement (941) (941) Series C preferred stock dividend requirement (4,555) (4,847) Net loss applicable to common stockholders $ (117,746) $ (42,736) Net loss per share: - basic and diluted $ (1.56) $ (0.80) Weighted average shares used in computing net loss per share - basic and diluted 75,241,684 53,254,778 Other data EBITDA $ (75,875) $ (40,007) XM subscriptions (end of period) 76,242 0 March 31, December 31, Consolidated Balance Sheets Data 2002 2001 Cash and cash equivalents 52,296 182,497 Short-term investments 60,129 28,355 Restricted investments 51,041 72,759 System under construction 56,044 55,056 Property and equipment in service, net 1,064,602 1,066,191 Total assets 1,336,631 1,456,203 Total long-term debt, net of current portion 411,725 411,520 Total liabilities 521,574 529,552 Stockholders' equity 815,057 926,651
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