SAN JOSE, Calif., Aug. 1 (PRIMEZONE) -- On Command Corporation (Nasdaq:ONCO) announced today that 2000 second quarter revenues climbed to a record $65.8 million, a 5.1% increase over the $62.6 million reported in the second quarter of 1999. Second quarter earnings before interest, taxes, depreciation, amortization, and stock based compensation (EBITDA) totaled $18.8 million, compared to $18.3 million recorded in the corresponding 1999 period.
The record revenue was primarily attributable to new hotel installations, continued conversions of hotels served by SpectraVision systems to superior performing On Command Systems, and higher net revenues per equipped room (RER). RER per month totaled $21.84 in Q2 2000 compared to $21.04 in the second quarter of 1999, a 3.8% improvement. The Q2 2000 RER increases even more significantly -- to $23.35 when SpectraVision rooms, which are being converted over time, are excluded.
The improvement in revenue per room was primarily due to reduced movie denial rates as well as significant increases in Internet and game revenues driven by OCX installations, On Command's fully interactive, integrated entertainment and Internet delivery system. Improvement in net loss was due to the increase in EBITDA as well as a significant reduction in depreciation primarily due to the expiration of depreciation on the acquired SpectraVision assets. Depreciation decreased from 37.6% of revenue in Q2 1999 to 32.6% in Q2 2000.
On June 30, 2000, On Command Corporation's installed room base was approximately 969,000 rooms, as compared to approximately 942,000 at the end of the second quarter of 1999. In the second quarter of 2000, On Command installed its on-demand system in approximately 27,700 rooms, of which 13,500 were new hotel installations, 5,500 were conversions of SpectraVision properties, and 8,700 were conversions of OCV systems to the advanced OCX(r) system, the Company's interactive multimedia platform. At June 30, 2000, rooms installed with the OCX platform totaled approximately 83,000, an increase of 23,000 rooms from March 31, 2000. Of these 83,000 rooms, 69,000 rooms were active with Internet. In addition the Company's @Hotel(TM) PC product has been installed in approximately 6,000 rooms, bringing the total Internet installations to over 75,000.
``We remain on schedule with the deployment of OCX,'' said Jerome H. Kern, Chairman and CEO of On Command. ``Our goal of 150,000 OCX installations by year end is well within our reach, and our immediate focus is expansion of our platform technologically, as well as aggressive development of a creative and broad array of programming for hotel guests.''
On July 18, 2000, the Company closed on a $350 million refinancing of its unsecured revolving credit facility on very favorable terms in today's credit environment. ``The significance of this financing cannot be overemphasized,'' stated Paul Milley, Senior Vice President and CFO. ``This facility provides sufficient funding for us to complete the re-equipping of our hotel base with the OCX platform as well as facilitating continued room growth domestically and internationally. At the same time, the Company's leverage continues to be very conservative, with a leverage ratio of 2.7.''
On Command Corporation (www.oncommand.com) is the leading provider of in-room interactive entertainment, Internet services, business information and guest services for the lodging industry and its guests. The company is based in San Jose, California with offices across the United States and around the world. On Command Corporation annually serves more than 250 million guests through nearly 1 million rooms in approximately 3,450 hotel properties in over 22 countries. These hotel partners represent over 100 of the most prestigious hotel chains and operators in the lodging industry including Adam's Mark Hotels and Resorts; Bass Hotels & Resorts (InterContinental, Crowne Plaza, and Holiday Inn), Fairmont, Four Seasons, Hilton (Doubletree, Embassy Suites), Hyatt, Loews, Marriott (Courtyard, Renaissance, Fairfield Inn & Residence Inn), Radisson, Ramada, Starwood Hotels & Resorts (Westin, Sheraton, W Hotels, Four Points), and Wyndham Hotels & Resorts. OCX is a registered trademark of On Command Corporation. On Command is listed on the Nasdaq Stock Market under the symbol ONCO and its warrants are traded under the symbols ONCOW and ONCOZ.
Information and statements presented in this press release may contain forward looking disclosures, expressed or implied, that are based on the beliefs of management as well as assumptions made based on information currently available to management. These forward looking statements and information involve risks and uncertainties including, but not limited to, the ability of the Company to raise capital, future demand for the Company's services, general economic conditions, government regulations, competition and customer strategies, capital deployment, the impact of pricing and other risks and uncertainties. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this press release as anticipated, believed, estimated or expected. These risks are detailed from time to time in various reports filed by On Command Corporation with the Securities and Exchange Commission, including Forms 10-K (filed for the year-ended December 31, 1999) and Forms 10-Q filed quarterly (and most recently filed for the quarter ended March 31, 2000).
ON COMMAND CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------ -----------------
06/30/2000 06/30/1999 06/30/2000 06/30/1999
--------- --------- --------- ---------
REVENUES:
Room revenues $ 63,088 $ 59,252 $ 125,474 $ 117,774
Video systems
sales/other 2,681 3,312 5,259 6,023
------ ------ ------ ------
TOTAL REVENUES 65,769 62,564 130,733 123,797
DIRECT COSTS 30,061 28,483 60,812 55,943
------ ------ ------ ------
DIRECT PROFIT 35,708 34,081 69,921 67,854
OPERATING EXPENSES:
Operations 8,255 7,041 15,926 14,459
Research and
development 1,971 2,046 4,078 4,108
Selling, general
& administration 6,665 6,688 12,518 12,763
------ ------ ------ ------
TOTAL OPERATING
EXPENSES 16,891 15,775 32,522 31,330
------ ------ ------ ------
EBITDA 18,817 18,306 37,399 36,524
Depreciation,
amortization,
and stock based
compensation 22,258 24,314 42,007 47,089
------ ------ ------ ------
LOSS FROM
OPERATIONS (3,441) (6,008) (4,608) (10,565)
Interest/Other
expense, net (3,262) (2,404) (6,556) (4,686)
------ ------ ------ ------
LOSS BEFORE
INCOME TAXES (6,703) (8,412) (11,164) (15,251)
Provision for
(benefit from)
income taxes 257 48 363 71
------ ------ ------ ------
NET LOSS $ (6,960) $ (8,460) $ (11,527) $ (15,322)
====== ====== ====== ======
Basic and
diluted
loss per
share $ (0.23) $ (0.28) $ (0.38) $ (0.51)
====== ====== ====== ======
Shares used
in per share
computations 30,477 30,187 30,424 30,180
====== ====== ====== ======
ON COMMAND CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2000 1999
(unaudited)
------- -------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,334 $ 8,972
Accounts receivable, net 35,739 32,037
Other current assets 1,552 1,211
------- -------
Total current assets 43,625 42,220
VIDEO SYSTEMS, Net 278,230 266,947
PROPERTY AND EQUIPMENT, Net 19,374 17,644
GOODWILL, Net 71,109 73,297
OTHER ASSETS, Net 4,556 2,809
------- -------
TOTAL ASSETS $ 416,894 $ 402,917
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 32,214 $ 31,435
Accrued compensation 5,735 6,431
Other current liabilities 19,624 19,146
------- -------
Total current liabilities 57,573 57,012
OTHER ACCRUED LIABILITIES 1,720 1,758
REVOLVING CREDIT FACILITY 205,000 180,000
------- -------
Total liabilities 264,293 238,770
------- -------
STOCKHOLDERS' EQUITY 152,601 164,147
------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 416,894 $ 402,917
======= =======
ON COMMAND CORPORATION QUARTERLY STATISTICS
Q2 2000 Q1 2000 Q4 1999 Q3* 1999 Q2 1999
------- ------- ------- ------- -------
-----------
Room Base
Statistics
-----------
Total Hotels 3,449 3,416 3,366 3,355 3,308
Total Guest
Pay Rooms 969,000 958,000 956,000 950,000 942,000
Average
rooms
per hotel 281 280 284 283 285
On-demand
Rooms -
On Command 815,000 797,000 779,000 762,000 744,000
On-demand
Rooms -
SpectraVision 91,000 96,000 105,000 111,000 114,000
------- ------- ------- ------- -------
Total
On-demand
Rooms 906,000 893,000 884,000 873,000 858,000
% of total
rooms 93.5% 93.2% 92.5% 91.9% 91.1%
Scheduled
Rooms
(all
SpectraVision) 63,000 65,000 72,000 77,000 84,000
% of total
rooms 6.5% 6.8% 7.5% 8.1% 8.9%
Domestic
Rooms 835,000 827,000 830,000 826,000 820,000
% of total
rooms 86.2% 86.3% 86.8% 86.9% 87.0%
International
Rooms 134,000 131,000 126,000 124,000 122,000
% of total
rooms 13.8% 13.7% 13.2% 13.1% 13.0%
Total
Free-to-Guest
Rooms 530,000 528,000 529,000 528,000 537,000
----------------------------------------------
Operating Results & Statistics (in thousands)*
----------------------------------------------
Total
Revenue $ 65,769 $ 64,964 $ 61,399 $ 63,850 $ 62,564
Direct
Expense 30,061 30,751 28,123 29,152 28,483
------ ------ ------ ------ ------
Direct
Profit 35,708 34,213 33,276 34,698 34,081
Operations
Expense 8,255 7,671 7,926 7,573 7,041
Research &
Development
Expense 1,971 2,107 2,188 2,182 2,046
SG&A Expense 6,665 5,853 6,199 6,418 6,688
------ ------ ------ ------ ------
Total
Operating
Expenses 16,891 15,631 16,313 16,173 15,775
------ ------ ------ ------ ------
EBITDA $ 18,817 $ 18,582 $ 16,963 $ 18,525 $ 18,306
====== ====== ====== ====== ======
EBITDA
(12 months
trailing) $ 72,887 $ 72,376 $ 72,012 $ 73,140 $ 72,651
As a % of
Total
Revenue:
Direct
Profit
Margin 54.3% 52.7% 54.2% 54.3% 54.5%
Operations 12.6% 11.8% 12.9% 11.9% 11.3%
Research &
Development 3.0% 3.2% 3.6% 3.4% 3.3%
SG&A 10.1% 9.0% 10.1% 10.1% 10.7%
Total
Operating
Expenses 25.7% 24.1% 26.6% 25.3% 25.2%
EBITDA 28.6% 28.6% 27.6% 29.0% 29.3%
Per Room
per Month:
Total
Room
Revenue $ 21.84 $ 21.72 $ 20.96 $ 21.77 $ 21.04
Total
Movie
Revenue $ 19.48 $ 19.70 $ 18.99 $ 19.73 $ 19.16
Direct
Profit $ 12.36 $ 11.91 $ 11.64 $ 12.22 $ 12.10
Operations
Expense $ 2.86 $ 2.67 $ 2.77 $ 2.67 $ 2.50
EBITDA $ 6.51 $ 6.47 $ 5.93 $ 6.53 $ 6.50
------------------------------------
Balance Sheet & Leverage Statistics*
------------------------------------
Interest
Expense/
Total
Revenue 5.2% 5.3% 5.2% 4.2% 4.1%
Average
Interest
Rate
During
Period 7.0% 7.5% 7.1% 6.2% 5.9%
Debt/Book
Capitalization 56.7% 54.0% 52.3% 50.6% 49.5%
Debt/Book
Equity 131.1% 117.4% 109.7% 102.3% 97.8%
Debt/12 months
EBITDA 2.7 2.6 2.5 2.4 2.4
12 months
EBITDA/
Annualized
Interest
Expense 5.4 5.2 5.6 6.8 7.1
* LodgeNet royalty payments are excluded from all calculations.