On Command Reports Results for the Third Quarter of 2003 - On
Command's third quarter conference call will take place at 4:00 pm
ET on November 19, 2003. To participate, please dial (800) 309-9490
in the U.S. or (706) 634-6055 internationally at least ten minutes
prior to the call. The conference ID is 4046585. DENVER, Colo.,
Nov. 19 /PRNewswire-FirstCall/ -- On Command Corporation (BULLETIN
BOARD: ONCO) , a leading provider of in-room interactive services,
business information and guest services for the lodging industry,
today announced its financial results for the quarter and nine
months ended September 30, 2003. Total net revenue for the third
quarter of 2003 was $61.0 million compared to $60.8 million in the
third quarter of 2002. Room revenue increased by 2.5% to $59.5
million in the third quarter of 2003 compared to $58.0 million in
the third quarter of 2002. Adjusted EBITDA (defined by On Command
as revenue less direct costs of revenue and other cash operating
expenses, excluding depreciation and amortization and asset
impairments and other charges) for the third quarter of 2003 was
$15.5 million, a decrease of $2 million compared to Adjusted EBITDA
in the third quarter of 2002 of $17.5 million. For the nine months
ended September 30, 2003, Adjusted EBITDA was $45.3 million
compared to $49.6 million in the comparable period in 2002. (Please
see schedule 1 attached for a reconciliation of 2003 and 2002
Adjusted EBITDA to loss from operations.) Loss from operations for
the third quarter ended September 30, 2003 was $4.3 million
compared to $2.5 million for the corresponding period of 2002. The
Company reported a net loss attributed to common stockholders of
$11.1 million ($0.36 per share) for the quarter, compared to a $8.3
million ($0.27 per share) net loss for the corresponding period in
2002. Revenue per room for the third quarter was $23.49 compared to
$22.86 for the same period in 2002, the increase due primarily to
an increase in revenue generated from short subjects, digital music
and television-based Internet products. Highlights for the third
quarter include: -- installed the digital platform in 10,000 rooms,
bringing the total number of digital rooms to 343,000 or 39.0% of
the total owned room base of 879,000; -- installed the digital
music product in more than 43,600 rooms and the TV Internet service
to more than 6,600 rooms, bringing total digital music rooms to
293,000 and TV Internet capability to 285,000 rooms; -- reduced
capital spending for the nine months ended September 30, 2003 to
$35.4 million, compared to $41.4 million in the first nine months
of 2002. About On Command On Command Corporation (
http://www.oncommand.com/ ) is a leading provider of in-room
entertainment technology to the lodging and cruise ship industries.
On Command is a majority-owned subsidiary of Liberty Satellite
& Technology, Inc. On Command entertainment services include:
on-demand movies; television Internet services using high-speed
broadband connectivity; television email; short form television
features covering drama, comedy, news and sports; PlayStation video
games; and music-on-demand services through Instant Media Network,
a majority-owned subsidiary of On Command Corporation and the
leading provider of digital on-demand music services to the hotel
industry. All On Command products are connected to guest rooms and
managed by leading edge video-on-demand navigational controls and a
state-of-the art guest user interface system. The guest menu system
can be customized by hotel properties to create a robust platform
that services the needs of On Command hotel partners and the
traveling public. On Command and its distribution network services
more than 1,000,000 guest rooms, which touch more than 300 million
guests annually. On Command's direct served hotel properties are
located in the United States, Canada, Mexico, and Spain. On Command
distributors serve cruise ships operating under the Royal
Caribbean, Costa and Carnival flags. On Command hotel properties
include more than 100 of the most prestigious hotel chains and
operators in the lodging industry: Accor, Adam's Mark Hotels &
Resorts, Fairmont, Four Seasons, Hilton Hotels Corporation, Hyatt,
Loews, Marriott (Courtyard, Renaissance, Fairfield Inn and
Residence Inn), Radisson, Ramada, Six Continents Hotels
(Inter-Continental, Crowne Plaza and Holiday Inn), Starwood Hotels
& Resorts (Westin, Sheraton, W Hotels and Four Points), and
Wyndham Hotels & Resorts. ON COMMAND CORPORATION (An Indirect
Consolidated Subsidiary of Liberty Media Corporation) Condensed
Consolidated Balance Sheets (unaudited) September 30, December 31,
2003 2002 (amounts in thousands) Assets Current assets: Cash and
cash equivalents $1,642 $4,501 Accounts receivable, net 29,675
33,525 Other current assets 3,305 3,461 Total current assets 34,622
41,487 Property and equipment: Video systems In service 680,719
668,697 Construction in progress 28,924 37,511 709,643 706,208
Support equipment, vehicles and leasehold improvements 26,774
26,245 736,417 732,453 Accumulated depreciation (483,159) (457,482)
253,258 274,971 Goodwill 65,642 65,580 Other assets, net 14,798
14,444 Total assets $368,320 $396,482 ON COMMAND CORPORATION (An
Indirect Consolidated Subsidiary of Liberty Media Corporation)
Condensed Consolidated Balance Sheets (unaudited) September 30,
December 31, 2003 2002 (amounts in thousands) Liabilities and
Stockholders' Deficit Current liabilities: Accounts payable $18,807
$28,689 Accounts payable to parent 1,724 1,906 Accrued compensation
5,523 6,433 Sales, use and property tax liabilities 5,125 4,585
Other accrued liabilities 8,142 7,987 Common stock subject to
repurchase obligation 1,876 2,333 Current portion of debt 9,704 833
Total current liabilities 50,901 52,766 Long-term debt: Third party
218,890 261,946 Due to parent 40,000 -- 258,890 261,946 Other
long-term liabilities -- 496 Total liabilities 309,791 315,208
Minority interest in consolidated subsidiary -- 259 Mandatorily
redeemable preferred stock 104,612 97,848 Stockholders' deficit:
Preferred stock, $.01 par value; shares authorized - 10,000,000;
shares issued and outstanding - 98,500 at September 30, 2003 and
December 31, 2002 -- -- Common stock, $.01 par value; shares
authorized - 150,000,000; shares issued - 30,977,840 at September
30, 2003 and 30,973,989 at December 31, 2002 310 310 Additional
paid-in-capital 294,500 299,398 Accumulated other comprehensive
loss (1,704) (4,533) Accumulated deficit (311,092) (285,777)
(17,986) 9,398 Common stock held in treasury, at cost (155,500 at
September 30, 2003 and 119,500 at December 31, 2002) (1,884)
(1,344) Note receivable from stockholder (26,213) (24,887) Total
stockholders' deficit (46,083) (16,833) Commitments and
contingencies Total liabilities and stockholders' deficit $368,320
$396,482 ON COMMAND CORPORATION (An Indirect Consolidated
Subsidiary of Liberty Media Corporation) Condensed Consolidated
Statements of Operations (unaudited) Three Months Ended Nine Months
Ended September 30, September 30, 2003 2002 2003 2002 (amounts in
thousands, except per share amounts) Net Revenue: Net room revenue
$59,462 $58,009 $171,687 $171,393 System and equipment sales and
other 1,504 2,781 5,551 7,779 60,966 60,790 177,238 179,172 Direct
costs of net revenue: Content fees, commissions and other in-room
services 31,358 28,901 90,310 85,874 System, equipment and other
costs 812 1,333 2,797 3,964 Total costs of net revenue 32,170
30,234 93,107 89,838 Direct margin (exclusive of other operating
expenses shown separately below) 28,796 30,556 84,131 89,334 Other
operating expenses: Operations support 5,729 6,073 17,473 19,714
Research and development 1,071 1,143 3,071 3,178 Selling, general
and administrative 6,487 5,847 18,319 16,816 Depreciation and
amortization 18,297 19,276 56,724 59,277 Asset impairments and
other charges 1,502 751 2,758 8,401 Total other operating expenses
33,086 33,090 98,345 107,386 Loss from operations (4,290) (2,534)
(14,214) (18,052) Interest expense (4,518) (3,535) (11,182)
(10,569) Other income (expense), net (68) (69) 251 653 Loss before
income taxes (8,876) (6,138) (25,145) (27,968) Income tax benefit
(expense) (39) 14 (170) (366) Net loss (8,915) (6,124) (25,315)
(28,334) Dividends on mandatorily redeemable preferred stock
(2,158) (2,200) (6,764) (6,384) Net loss attributable to common
stockholders $(11,073) $(8,324) $(32,079) $(34,718) Basic and
diluted net loss per common share $(0.36) $(0.27) $(1.04) $(1.12)
Basic and diluted weighted average number of common shares
outstanding 30,853 30,925 30,856 30,908 ON COMMAND CORPORATION (An
Indirect Consolidated Subsidiary of Liberty Media Corporation)
Condensed Consolidated Statements of Cash Flows (unaudited) Nine
Months Ended September 30, 2003 2002 (amounts in thousands) Cash
flows from operating activities: Net loss $(25,315) $(28,334)
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 56,724 59,277 Payments of
restructuring costs (1,060) (829) Asset impairments and other
changes 2,758 8,401 Other non-cash items 1,790 1,080 Changes in
assets and liabilities: Accounts receivable 4,276 1,739 Other
assets 695 (701) Accounts payable (10,295) 3,062 Accrued
liabilities (558) 3,755 Net cash provided by operating activities
29,015 47,450 Cash flows from investing activities: Capital
expenditures (35,396) (41,444) Acquisition of minority interest
(300) -- Cash proceeds from dispositions, net of cash transferred
-- 1,135 Cost investments -- (2,599) Net cash used in investing
activities (35,696) (42,908) Cash flows from financing activities:
Borrowings of debt 49,000 7,000 Repayments of debt (43,185)
(12,666) Payment of deferred financing costs (2,160) -- Proceeds
from issuance of common and preferred stock -- 85 Net cash provided
(used) by financing activities 3,655 (5,581) Effect of exchange
rate changes on cash 167 (17) Net increase (decrease) in cash and
cash equivalents (2,859) (1,056) Cash and cash equivalents,
beginning of period 4,501 2,869 Cash and cash equivalents, end of
period $1,642 $1,813 Schedule 1 Reconciliation of Adjusted EBITDA
to Loss From Operations: Three Months Ended Nine Months Ended
September 30, September 30, 2003 2002 2003 2002 (in thousands) (in
thousands) (in thousands) (in thousands) Adjusted EBITDA (1) 15,509
17,493 45,268 49,626 Depreciation and amortization (18,297)
(19,276) (56,724) (59,277) Asset impairments and other charges
(1,502) (751) (2,758) (8,401) Loss from Operations $(4,290)
$(2,534) $(14,214) $(18,052) (1) Adjusted EBITDA is defined by the
Company as revenue less direct costs of revenue and other cash
operating expenses, excluding depreciation and amortization and
asset impairments and other charges. A Note on Adjusted EBITDA The
most significant difference between "Adjusted EBITDA," as defined
by the Company, and loss from operations, as determined in
accordance with generally accepted accounting principles, is that
depreciation and amortization expense are not included in the
calculation of Adjusted EBITDA. "GAAP" requires depreciation and
amortization to be shown as an expense in calculating loss from
operations because capital spending is not fully expensed in the
period incurred. Rather, the cost of a capital expenditure is
spread out over the assumed useful life of the property acquired,
under the heading depreciation and amortization, so that the
expense can be matched to the revenue anticipated to be generated
by that expense. Thus, excluding depreciation and amortization from
a measurement of operating performance will fail to reflect the
true cost of operations over time. Similarly, asset impairment
charges reflect non-temporary declines in the value of investments,
the original cost of which was not expensed in the period incurred.
However, because depreciation, amortization and impairments and
other charges reflect primarily the effects of past capital
expenditures, On Command's management believes that Adjusted EBITDA
when considered together with measures prepared in accordance with
generally accepted accounting principles can be very useful to
investors and analysts as a measurement of the Company's current
operating performance, particularly when assessed in conjunction
with information regarding current capital spending and other
investing activities and trends, as reported above. On Command's
management regularly uses Adjusted EBITDA as a measurement to
assess the performance of operating units and individuals and to
assist in strategic planning and the allocation of resources.
Because Adjusted EBITDA does not reflect changes in working capital
or other cash requirements of the Company, it is not intended to
represent cash flows for the period, or to reflect funds available
for interest, dividends, reinvestment or other discretionary uses.
Adjusted EBITDA has not been presented as an alternative to loss
from operations, and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles in the United States of
America. The Company's definition of Adjusted EBITDA may differ
from similar measurements provided by other public companies. Q3
2003 Q2 2003 Q1 2003 Q4 2002 Q3 2002 Room Base Statistics Total
Hotels 3,352 3,364 3,356 3,380 3,383 Total Guest Pay Rooms 879,000
885,000 884,000 891,000 900,000 On-demand Rooms 867,000 873,000
869,000 874,000 880,000 % of total rooms 98.6% 98.6% 98.3% 98.1%
97.8% Scheduled Rooms (all SpectraVision) 12,000 12,000 15,000
17,000 20,000 % of total rooms 1.4% 1.4% 1.7% 1.9% 2.2% Domestic
Rooms 779,000 786,000 785,000 792,000 801,000 % of total rooms
88.6% 88.8% 88.8% 88.9% 89.0% International Rooms 100,000 99,000
99,000 99,000 99,000 % of total rooms 11.4% 11.2% 11.2% 11.1% 11.0%
Total Digital Rooms 343,000 333,000 312,000 291,000 275,000 Total
Guest Programming Rooms 508,000 515,000 519,000 517,000 519,000
Operating Results & Statistics (in thousands) Net Room Revenue
$59,462 $57,471 $54,754 $55,228 $58,009 Other Revenue $1,504 $2,081
$1,966 $3,997 $2,781 Total Revenue $60,966 $59,552 $56,720 $59,225
$60,790 Direct Costs of Revenue $32,170 $32,689 $28,248 $31,222
$30,234 Direct Margin $28,796 $26,863 $28,472 $28,003 $30,556
Operations Support Expense $5,729 $5,682 $6,062 $6,370 $6,073
Research & Development Expense $1,071 $917 $1,083 $886 $1,143
SG&A Expense $6,487 $6,256 $5,576 $4,736 $5,847 Total Operating
Expenses $13,287 $12,855 $12,721 $11,992 $13,063 Adjusted EBITDA
$15,509 $14,008 $15,751 $16,011 $17,493 Loss from Operations
$(4,290) $(6,387) $(3,537) $(4,612) $(2,534) As a % of Total
Revenue: Direct Margin 47.2% 45.1% 50.2% 47.3% 50.3% Operations
9.4% 9.5% 10.7% 10.8% 10.0% Research & Development 1.8% 1.5%
1.9% 1.5% 1.9% SG&A 10.6% 10.5% 9.8% 8.0% 9.2% Adjusted EBITDA
25.4% 23.5% 27.8% 27.0% 29.2% Loss from Operations -7.0% -10.7%
-6.2% -7.8% -3.8% Per Room per Month: Total Room Revenue $23.49
$22.77 $21.89 $21.97 $22.86 Total Movie Revenue $19.19 $18.75
$18.18 $18.38 $19.21 Direct Profit $10.87 $10.12 $10.70 $10.44
$11.26 Operations Expense $2.16 $2.14 $ 2.28 $ 2.38 $ 2.24 Adjusted
EBITDA $5.86 $5.28 $ 5.92 $ 5.97 $ 6.54 Loss from Operations
$(1.62) $(2.41) $(1.33) $(1.72) $(0.85) DATASOURCE: On Command
Corporation CONTACT: Tad Walden, Corporate Communications,
+1-720-873-3321, , or Bernard G. Dvorak, SVP and CFO,
+1-720-873-3640, , both of On Command Corporation Web site:
http://www.oncommand.com/
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