Press Release

SIRIUS Announces 2002 Financial and Operating Results

By SpaceRef Editor
March 28, 2003
Filed under , ,

SIRIUS , 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).

    RECAPITALIZATION

    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
    14-1/2% Senior Secured Notes due 2009, and $14.7 million in aggregate
    principal amount of the company’s 8-3/4% 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
    14-1/2% Senior Secured Notes due 2009 and $1.7 million in aggregate principal
    amount of 8-3/4% 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          --
    
    

    About SIRIUS

    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.

  • SpaceRef staff editor.