Q3 earnings...
press release below.
Highlights:
1. Worse than expected losses (2.78/sh) are due to several factors:
Doing away with the 1-yr prepaid subscription requirement for
new subscribers, while continuing to expense all subscriber
acquisition costs up front... With more subscribers than expected,
this hurts in the short-term.
2. Experiencing an equipment shortage.. as a result expect about
the same number of new subscribers in Q4 as Q3 instead of more.
3. Increased operating expenses due to marketing promotion.
What do people on this thread think? Good or bad? Comments?
DOM
ENGLEWOOD, Colo.--(BUSINESS WIRE)--Nov. 14, 1997--EchoStar
Communications Corporation ("EchoStar") (NASDAQ: DISH; DISHP) today reported that
its revenues increased more than 300 percent during the third quarter of 1997 as a result of
record DISH Network subscriber growth and increased revenues generated by the
Company's Technology and Satellite Services businesses.
EchoStar's revenues during the three months ended September 30, 1997 totaled $124.8
million, compared to total revenue of $30.4 million during the same 1996 period. For the nine
months ended September 30, 1997, EchoStar reported total revenue of $281.9 million, a
150% increase compared to $112.6 million for the nine months ended September 30, 1996.
During the three months ended September 30, 1997, EchoStar's DISH Network DBS
service experienced record subscriber growth, adding approximately 230,000 net
subscribers. Since December 31, 1996, EchoStar has added 470,000 DISH Network
subscribers and had approximately 820,000 subscribers as of September 30, 1997 (895,000
subscribers as of October 31, 1997). EchoStar's earnings before interest, taxes,
depreciation and amortization ("EBITDA") was negative $41.6 million for the three months
ended September 30, 1997, compared to negative $15.6 million for the same period in 1996.
For the nine months ended September 30, 1997, EchoStar's EBITDA was negative $42.5
million, compared to negative $28.6 million for the same period in 1996.
Revenues from EchoStar's DISH Network business totaled $95.8 million during the three
months ended September 30, 1997, an increase of $79.7 million compared to the same
period in 1996. The Company's Technology business, which principally sells DTH products
and provides integration services to international digital direct-to-home satellite
operators, also experienced increased revenues (from $9.9 million in Q3 1996 to $22.6
million in the 1997 third quarter).
EchoStar's Satellite Services business also realized revenues of $3.7 million during the
period. The Company's Satellite Services business unit provides business television,
satellite uplink and satellite capacity usage services.
As expected, EchoStar's net loss increased to $115.2 million for the three-month period
ended September 30, 1997, as compared to $26.5 million reported for the comparable period
in 1996. EchoStar also reported net losses of approximately $241.8 million and $56.3 million
for the nine-month periods ended September 30, 1997 and 1996, respectively. The
increases in EchoStar's net losses resulted principally from increases in marketing
expenses (including expensed subscriber acquisition costs) as well as from increases in
non-cash depreciation, amortization and net interest expenses. These increased expenses
were partially offset by the increased revenues resulting from EchoStar's DISH Network,
Technology and Satellite Services businesses.
Compared to the second quarter of 1997, EchoStar's total revenues increased $31.3 million,
or 33%, while EBITDA decreased from $3.0 million to negative $41.6 million during the
quarter ended September 30, 1997. This decrease in EBITDA resulted from EchoStar's
record subscriber growth resulting from its popular marketing promotion introduced in June
which eliminated the requirement for a prepaid annual subscription. This marketing
promotion negatively impacts EBITDA at the time of subscriber activation as EchoStar's
net subscriber acquisition costs are immediately expensed.
Charles W. Ergen, Chairman and Chief Executive Officer of EchoStar, noted: "Our third
quarter subscriber growth demonstrates that if you provide a superior product, particularly
when compared to our cable competitors, and provide that product at a better price,
consumers will listen. We look forward to our fourth quarter as it appears we are well on
our way toward achieving our goal of one million DISH Network subscribers by December
31, 1997. Because of our stronger than expected subscriber growth during the quarter just
ended, we have experienced some product shortages during the fourth quarter, and expect
these shortages to persist throughout the remainder of the year. Consequently, we expect
that our fourth quarter subscriber growth, while still strong, will approximate our third
quarter results."
DISH Network is a service mark of EchoStar Communications
Corporation. DISH Network's Internet address is:
http//www.dishnetwork.com .
Statement under the Private Securities Litigation Reform Act of 1995: The statements
contained in this release regarding the Company's plans for future development and
operation of its business are forward-looking statements that involve risks and
uncertainties. While management believes that the assumptions underlying these
statements are reasonable, actual results could differ materially. Among the factors that
could cause actual results to differ materially are the following: the unavailability of
sufficient capital on satisfactory terms to finance the Company's business plan; increased
competition from cable, other DBS and satellite system operators, and other providers of
subscription television services; the introduction of new technologies and competitors into
the subscription television business; increased subscriber acquisition costs and subscriber
promotion subsidies; the inability of the Company to obtain necessary shareholder and
bondholder approval of any strategic transactions; the inability of the Company to obtain
and hold necessary authorizations from the FCC; the outcome of any litigation in which the
Company may be involved; general business and economic conditions; and other risk factors
described from time to time in the Company's reports filed with the Securities and
Exchange Commission. The Company wishes to caution readers not to place undue reliance
on any such forward-looking statements, which statements are made pursuant to the
Private Securities Litigation Reform Act of 1995, and as such, speak only as of the date
made.
SELECTED FINANCIAL DATA
EchoStar Communications Corporation
(Nasdaq National Market: DISH; DISHP)
(In thousands, except per share data)
Three Months Ended September 30,
1996 1997
Revenue:
DISH Network:
Subscription television services $ 13,235 $ 82,078
Other 2,794 13,698
Total DISH Network 16,029 95,776
DTH equipment sales and integration
services 9,933 22,584
Satellite services 1,994 3,669
Other 2,406 2,797
Total revenue 30,362 124,826
Costs and Expenses:
DISH Network Operating Expenses:
Subscriber-related expenses 7,009 42,732
Call center and other 4,418 10,754
Satellite and transmission 1,384 3,442
Total DISH Network operating
expenses 12,811 56,928
Cost of sales - DTH equipment and
integration services 9,466 11,943
DISH Network Marketing:
Subscriber promotion subsidies 6,000 63,603
Advertising and other 3,946 16,786
Total DISH Network marketing
expenses 9,946 80,389
General and administrative 13,772 17,209
Amortization of subscriber
acquisition costs 3,368 34,124
Depreciation and amortization 7,897 12,958
Total costs and expenses 57,260 213,551
Operating loss (26,898) (88,725)
Other Income (Expense):
Interest income 5,335 5,559
Interest expense, net of amounts
capitalized (19,996) (31,898)
Other 91 (73)
Total other income (expense) (14,570) (26,412)
Loss before income taxes (41,468) (115,137)
Income tax benefit (provision), net 14,950 (20)
Net loss $(26,518) $(115,157)
Loss attributable to common shares $(26,819) $(115,458)
Weighted-average common shares
outstanding 40,456 41,558
Loss per common and common
equivalent share $ (0.66) $ (2.78)
Other Data:
EBITDA $(15,633) $ (41,643)
DISH Network subscribers, end
of period 190,000 820,000
SELECTED FINANCIAL DATA
EchoStar Communications Corporation
(Nasdaq National Market: DISH; DISHP)
(In thousands, except per share data)
Nine Months Ended September 30,
1996 1997
Revenue:
DISH Network:
Subscription television services $ 17,482 $ 192,986
Other 9,497 35,090
Total DISH Network 26,979 228,076
DTH equipment sales and integration
services 72,653 38,651
Satellite services 3,819 7,879
Other 9,158 7,300
Total revenue 112,609 281,906
Costs and Expenses:
DISH Network Operating Expenses:
Subscriber-related expenses 9,270 97,307
Call center and other 6,859 23,189
Satellite and transmission 2,882 9,676
Total DISH Network operating expenses 19,011 130,172
Cost of sales - DTH equipment and
integration services 72,955 26,642
DISH Network Marketing:
Subscriber promotion subsidies 6,000 94,616
Advertising and other 11,459 24,104
Total DISH Network marketing expenses 17,459 118,720
General and administrative 31,747 48,857
Amortization of subscriber acquisition
costs 3,460 95,542
Depreciation and amortization 17,561 38,315
Total costs and expenses 162,193 458,248
Operating loss (49,584) (176,342)
Other Income (Expense):
Interest income 14,718 8,902
Interest expense, net of amounts
capitalized (53,180) (73,941)
Other (43) (367)
Total other income (expense) (38,505) (65,406)
Loss before income taxes (88,089) (241,748)
Income tax benefit (provision), net 31,796 (64)
Net loss $(56,293) $(241,812)
Loss attributable to common shares $(57,196) $(242,715)
Weighted-average common shares
outstanding 40,455 41,364
Loss per common and common equivalent
share $ (1.41) $ (5.87)
Other Data:
EBITDA $(28,563) $ (42,485)
DISH Network subscribers, end of
period 190,000 820,000
CONTACT: EchoStar Communications Corporation
Judianne Atencio, 303/799-8222, ext. 5112
e-mail: judianne.atencio@echostar.com
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