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XM Cuts Staff In Quest For Profitability
XM Satellite Radio Holdings Inc. has reported its financial and operating results for the third quarter ended September 30, 2002. XM ended the quarter reporting 201,544 subscribers and continued to show significant quarter-to-quarter subscriber momentum, adding 64,836 subscribers, representing a 47% increase in subscribers during the third quarter. XM also introduced its first next- generation retail aftermarket radio and GM expanded its launch of XM Radio into 25 different 2003 vehicle lines including such segment leaders as the Chevy Avalanche, GMC Yukon, Pontiac Grand Am and Cadillac CTS.
Third Quarter Financial and Operating Results In comparison, for the three months ended September 30, 2001, XM reported consolidated revenue of $1,000, consolidated EBITDA loss of ($49.8) million, and a consolidated net loss available to common shareholders of ($70.8) million, or ($1.14) per share.
XM Liquidity and Funding Status To facilitate the overall financing package, we have been in discussions with General Motors regarding non-binding term sheets for the deferral of up to $200 million in payment obligations (with approximately half relating to 2003-2004) and exchanging these payments for certain debt and convertible securities, as well as the introduction of an arrangement that would permit certain payments to be made in either stock or cash. XM's ability to execute any arrangement regarding deferral of payments to GM is contingent upon certain modifications to XM's capital structure and the Company securing at least $200 million in additional financing. XM has not finalized any terms or reached final agreement with GM but management believes that agreement could be reached broadly on the terms currently under discussion or similar terms, should XM be successful in raising the required additional funding. To obtain at least $200 million in other financing, XM and its investment bankers are in discussions with potential outside investors as well as current major shareholders; any resulting transactions will be evaluated by an Independent Committee of the XM Board of Directors. XM is also taking steps to reduce expenditures and extend its current cash through the first quarter 2003, by minimizing discretionary spending, negotiating deferrals or reductions of existing obligations, reducing our workforce and capital expenditures, and other efforts.
XM Accelerates Cash Flow Breakeven XM has learned a tremendous amount during its first year of commercial service, a year highlighted by exceptional subscription ramp-up in a challenging consumer electronics market and the development of next- generation radios. Based on that learning, XM has refined its Business Plan -- focusing more on the OEM vehicle market to take full advantage of XM's relationship with automobile manufacturers, introducing new lower-priced and more user friendly radio technology in the retail aftermarket and concentrating on the most productive distribution channels -- thus improving revenue/expense ratios and accelerating cash flow. As a result of this positive progress and repositioning -- as well as the potential impact of refinancing proposals currently being discussed, XM expects to reach cash flow breakeven by mid-to-late 2004 and to do so with a much lower number of subscribers than previously forecast.
XM Adds Next Generation Satellite Radio Product to Lineup SKYFi includes a larger screen, enhanced real-time artist/program information, 20 channel presets and more flexible channel navigating. Later this year, Delphi and XM will make available to retailers a portable audio unit (boombox) that integrates with the SKYFi radio, the Delphi XM SKYFi Audio System(TM).
The "Second Launch of XM" in New GM Cars and Trucks Supporting its product rollout, GM has initiated a number of marketing programs designed to build XM Radio brand recognition among new car buyers and assure its sales force in all dealerships is well informed on the product and its features. GM is sponsoring national and local print and TV advertising either featuring or including the XM logo and message. Vehicles featured in these advertisements include such category leaders as GMC Sierra, Chevy Cavalier and Pontiac Grand Am.
XM Continues to Make Inroads with Other Automakers Also during the quarter, XM-equipped Nissan Pathfinder SUVs began arriving at dealerships, to be followed in early 2003 by the XM-equipped Nissan Murano, Infiniti I35 luxury sedans, M45 sedans, Q45 performance luxury sedans, G35 sedans and coupes.
XM's Service Continues to Evolve Related Links XM Satellite Radio SpaceDaily Search SpaceDaily Subscribe To SpaceDaily Express XM Radio Hits 136,500 Subs As GM Preinstalls On 25 Cars Detroit - July 17, 2002 XM Satellite Radio ended the second quarter with more than 136,500 total subscribers -- most from retail sales -- exceeding most Wall Street projections. With XM's retail distribution rolling, General Motors is expanding factory installation of XM from the Cadillac DeVille and Seville to 23 additional GM models in the 2003 model year.
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