WiderThan Reports 2005 Fourth Quarter and Full Year Results

Share Name	Share Symbol	Market	Type
Widerthan	NASDAQ:WTHN	NASDAQ	Common Stock

Widerthan (NASDAQ:WTHN)
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Full Year 2005 Revenues Grow to $101 Million, an Increase of 61% Year-Over- Year; Fourth Quarter Revenues Grow to $31 Million, an Increase of 35% Year-Over-Year SEOUL, South Korea, March 16 /PRNewswire-FirstCall/ -- WiderThan Co., Ltd. (NASDAQ:WTHN), a leading global provider of integrated mobile entertainment solutions for wireless carriers, today reported financial results for the fourth quarter and fiscal year ended December 31, 2005 and issued financial guidance for the first quarter of 2006. Fourth quarter 2005 revenues were $31.2 million, an increase of 35.3% over the $23.1 million recorded in the fourth quarter of 2004. US GAAP net income for the fourth quarter was $2.7 million, or $0.14 per diluted American Depositary Share (ADS), compared to $2.2 million in the prior year period, or $0.13 per diluted ADS. Included in the fourth quarter 2005 results was a non- cash, stock-based compensation charge of $0.6 million, compared to a charge of $0.2 million in the prior year period. Adjusted net income, which excludes non-cash stock compensation expense, was $3.3 million, or $0.26 per diluted ADS, in the fourth quarter 2005, compared to an adjusted net income of $2.4 million, or $0.23 per diluted ADS, in the prior year period. For the fiscal year ended December 31, 2005, revenues increased 61.4% to $101.4 million from $62.8 million during fiscal year 2004. Fiscal year 2005 US GAAP net income was $8.6 million, or $0.49 per diluted ADS, compared to $3.9 million for fiscal year 2004, or $0.26 per diluted ADS. These results include a non-cash, stock-based compensation charge of $3.2 million compared to a charge of $3.0 million in the prior year. Adjusted net income, which excludes non-cash stock compensation expense, for the year was $11.8 million, or $1.06 per diluted ADS, compared to an adjusted net income of $7.0 million, or $0.68 per diluted ADS, for fiscal year 2004. Commenting on the year, Sang Jun Park, WiderThan's Chief Executive Officer, said, "WiderThan extended its wireless entertainment leadership by delivering innovative services to support ringback tones (RBT), Music on Demand (MoD), text messaging and mobile games. We also completed our initial public offering (IPO), providing flexibility to execute our strategic objectives, and, thanks to our strong momentum, our revenues exceeded $100 million for the first time." F. Terry Kremian, WiderThan's Global President, said, "WiderThan made substantial operational progress during 2005. We created WiderThan Americas, which significantly increases our ability to deliver industry-leading mobile entertainment solutions and services. We also won several new customers across the globe for ringback tones, including Hutchison 3 in the UK, TMN in Portugal, and Excelcom in Indonesia. These new customers build on our industry-leading ringback tone franchise, which provides services to carriers including SK Telecom, T-Mobile USA and Verizon Wireless." Mr. Kremian continued, "In Korea, we launched a leading-edge MoD service with SK Telecom, which has been rapidly embraced by consumers. Lastly, our mobile games business has quietly but steadily taken off internationally, securing distribution through major carriers in both the U.S. and the Asia-Pacific region." Cash, cash equivalents and short-term financial instruments on December 31, 2005, totaled $86.0 million. During 2005, WiderThan generated approximately $10.9 million in cash from operations. Hoseok Kim, WiderThan's Chief Financial Officer, commented on the company's finances, saying, "Carrier application services are providing us with stable, recurring revenues and have become, as planned, the largest portion of our business. With the completion of our IPO in the fourth quarter, WiderThan is adequately capitalized and ready to execute our strategic objectives." First Quarter 2006 Outlook For the first time, WiderThan is issuing financial guidance for the first quarter of 2006 based on information as of March 15, 2006. This guidance assumes that our major currency exchange rates remain constant. First Quarter 2006 Net Revenues $26.0-$29.0 million US GAAP Net Income $1.6-$2.0 million Adjusted Net Income $2.4-$2.8 million Presentation, Conference Call and Web Cast On Thursday, March 16, 2006 at 4:15 p.m. Eastern Standard Time WiderThan will post a prerecorded presentation and transcript to its web site at http://ir.widerthan.com/ that will review 2005 fourth quarter and full year results. 45 minutes later, at 5:00 p.m. Eastern Standard Time, WiderThan management will host a live Q&A conference call to enable analysts and investors to ask management any questions they may have. The Q&A session will also be available via web cast at http://ir.widerthan.com/ in listen-only mode. Those wishing to participate should use the following numbers to dial into the Q&A session: Calling from the United States or Canada: 800-706-7741 Calling from other countries: 617-614-3471 Pass code: 18908453 An online replay of the presentation and Q&A web cast will be available at http://ir.widerthan.com/ following the completion of the live call and will remain available for at least 90 days. Non-GAAP Measures To supplement WiderThan's consolidated financial statements presented in accordance with generally accepted accounting principles in the Unites States, or US GAAP, WiderThan uses non-GAAP measures of certain components of financial performance, including adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted net income, which are adjusted from results based on US GAAP to exclude certain expenses. These non- GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of core operating results. These measures should be considered in addition to results prepared in accordance with US GAAP, but should not be considered a substitute for, or superior to, US GAAP results. The non-GAAP measures included in this press release have been reconciled to the nearest US GAAP measure. These non-GAAP measures exclude the following items from the Company's statement of operations: * Non-cash stock-based compensation expense, depreciation and amortization expense About WiderThan WiderThan is a leading provider of integrated mobile entertainment solutions for wireless carriers. Our applications, content and services enable wireless carriers to a broad range of mobile entertainment, such as ringback tones, music-on-demand, mobile games, ringtones, messaging and information services, to their subscribers. WiderThan currently provides mobile entertainment solutions to more than 45 wireless carriers in over 20 countries, including SK Telecom in Korea, Cingular Wireless, Sprint Nextel, T- Mobile USA and Verizon Wireless in the United States, Bharti Airtel in India and Globe Telecom in the Philippines. Forward-Looking and Cautionary Statements Any statements in this announcement about the future expectations, plans or prospects of WiderThan, including statements containing the words "believe," "plan," "anticipate," "expect," "estimate," "will" and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including factors described in WiderThan's registration statement on Form F-1. These factors include the fluctuations of revenues and earnings, our reliance on SK Telecom to generate a majority of revenues and as a partner to develop and test services, the fact that the markets in which we operate are highly competitive, the challenges of global expansion, the lack of any contractual obligation for our carrier customers to use our services, the fact that a substantial portion of our revenues are subject to pricing decisions of carrier customers, the consolidation among our potential customer base, the dynamics of the wireless carrier markets in which our largest potential customers compete with one another, the fact that our carrier customers could begin developing and/or providing some or all of our carrier application services on their own, our dependence on ringback tone service for a significant portion of our revenue, potential increases in royalty rates payable to music label companies, currency exchange rate fluctuations, maintaining an effective system of internal controls and complying with regulations required by the telecom industry and in Korea. The forward- looking statements included in this announcement represent WiderThan's view as of the date of this release. WiderThan anticipates that subsequent events and developments may cause WiderThan's views to change. However, WiderThan disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date of this document. These forward-looking statements should not be relied upon as representing WiderThan's views as of any date subsequent to the date of this announcement. WiderThan Co., Ltd. Condensed Consolidated Statements of Operations (unaudited) (In thousands of US dollars, except share and per share information) Three Months Ended Twelve Months Ended 12/31/04 12/31/05 12/31/04 12/31/05 Revenues Service revenues Carrier application services $9,251 $17,627 $24,670 $61,211 Content services 6,866 4,358 18,176 18,228 Professional and other services 2,177 2,726 9,423 9,149 Total service revenues 18,294 24,711 52,269 88,588 System sales 4,785 6,526 10,563 12,829 Total revenues $23,079 $31,237 $62,832 $101,417 Costs and expenses Cost of service revenues (exclusive of depreciation and amortization, as shown below) 7,080 10,217 22,585 33,541 Cost of system sales (exclusive of depreciation and amortization, as shown below) 2,953 3,835 7,813 7,914 Depreciation and amortization 883 1,163 2,490 4,269 Selling and marketing 1,411 1,172 2,601 4,711 General and administrative 4,580 7,559 14,355 24,250 Research and development 2,092 3,207 3,760 12,016 Stock compensation (Note A) 216 805 3,029 3,363 Total costs and expenses $19,215 $27,958 $56,633 $90,064 Operating income $3,864 $3,279 $6,199 $11,353 Other income Interest income 81 151 367 445 Foreign exchange gain, net (609) (139) (574) (19) Investment income, net - 361 - 361 Total other income $(528) $373 $(207) $787 Income before taxes, minority interest and earnings from equity method investment 3,336 3,652 5,992 12,140 Income taxes 1,261 1,234 2,156 3,791 Income before minority interest and earnings from equity method investment 2,075 2,418 3,836 8,349 Minority Interest - 206 - 153 Gain (loss) from equity method investment 83 53 113 75 Net income $2,158 $2,677 $3,949 $8,577 Accretion of preferred shares (288) (371) (505) (1,355) Amounts allocated to participating preferred shareholders (507) (529) (770) (1,807) Net income attributable to common shares $1,363 $1,777 $2,674 $5,415 Earning per share - basic $0.13 $0.14 $0.26 $0.49 Earning per share - diluted $0.13 $0.14 $0.26 $0.49 Weighted average number of shares - basic 10,500,000 12,320,977 10,293,151 10,958,986 Weighted average number of shares - diluted 10,500,000 12,509,359 10,326,993 11,081,085 Note A: The following stock compensation expenses resulting from our stock options, ESOA and VSO are not included in the following expense categories: Three Months Ended Twelve Months Ended 12/31/04 12/31/05 12/31/04 12/31/05 Cost of service revenues $15 $85 $1,024 $286 Cost of system sales 12 4 326 22 General and administrative 59 641 1,041 2,546 Research and development 130 75 638 509 Total $216 $805 $3,029 $3,363 WiderThan Co., Ltd. Condensed Consolidated Balance Sheet (unaudited) (In thousands of US dollars) 12/31/2005 Assets Current assets Cash and cash equivalents $71,171 Restricted cash - Short-term financial instrument 14,851 Accounts receivable, net 34,924 Deferred costs 5,589 Other current assets 2,745 Total current assets 129,280 Property, plant and equipment, net 10,346 Goodwill 18,673 Other non-current assets 10,034 Total assets $168,333 Liabilities and Stockholders' Equity Current liabilities Accounts payable 22,636 Short-term debt - Deferred income 6,614 Accrued expenses 6,099 Taxes payable 2,620 Other current liabilities 3,753 Cash Appreciation Right liability 1,210 Total current liabilities 42,932 Other non-current liabilities Long-term deferred Revenues 3,158 Other non-current liabilities 1,247 Total liabilities $47,337 Commitments and contingencies Minority interest $(133) Stockholders' equity Common stock : $500 par value; authorized 30 million shares, issued and outstanding 19.8 million shares in 2005. $8,871 Additional paid-in capital 88,454 Retained earnings 17,805 Accumulated other comprehensive income 5,999 Total stockholders' equity 121,129 Total liabilities and stockholders' equity $168,333 WiderThan Co., Ltd. Condensed Consolidated Statement of Cash Flows (unaudited) (In thousands of US dollars) Three Months Twelve Months Ended Ended December 31, December 31, 2005 2005 Cash flows from operating activities: Net income $2,677 $8,577 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,163 4,269 Stock compensation expenses 805 3,363 Minority interest (206) (153) Foreign exchange translation loss, net 141 19 Equity in gain of related equity investment (53) (75) Provision for severance benefits 299 1,141 Change in operating assets and liabilities: Increase in accounts receivable (9,323) (15,494) Decrease (increase) in deferred costs 7,376 (4,385) Increase in other assets (5,827) (5,670) Increase in trade accounts payable 6,067 10,853 Increase in deferred income 1,851 5,165 Decrease in accrued expenses (804) (1,180) Increase (decrease) in taxes payable 742 (511) Payment of severance benefits (905) (1,107) Increase in other liabilities 5,733 6,068 Net cash provided by operating activities $9,736 $10,880 Cash flows from investing activities: Increase in short-term financial instruments, net (14,851) (12,920) Purchase of property, plant and equipment (1,815) (6,214) Proceeds from sales of property, plant and equipment 198 252 Sale of Preferred C 8,207 8,207 Refund of purchase consideration - 190 Increase in restricted cash 8,069 - Net cash used in investing activities $(192) $(10,485) Cash flows from financing activities: Issuance of common stock, net 52,361 52,361 Repayment of short-term debt (9,209) - Issuance of preferred stock - 469 Increase (decrease) in minority interest (847) 153 Net cash provided by financing activities $42,305 $52,983 Effect of exchange rate changes on cash and cash equivalents 469 (24) Net increase in cash and cash equivalents 52,318 53,354 Cash and cash equivalents: Beginning of year 18,853 17,817 End of period $71,171 $71,171 WiderThan Co., Ltd. Reconciliation of Non GAAP Measures to GAAP (unaudited) (In thousands of US dollars, except share and per share information) Three Months Ended Twelve Months Ended 12/31/04 12/31/05 12/31/04 12/31/05 Reconciliation to adjusted EBITDA: Net income $2,158 $2,677 $3,949 $8,577 (Gain) loss from equity method investment (83) (53) (113) (75) Minority Interest - (206) - (153) Income taxes 1,261 1,234 2,156 3,791 Total other (income) loss 528 (373) 207 (787) Depreciation and amortization 883 1,163 2,490 4,269 Stock compensation (Note A) 216 626 3,029 3,184 Adjusted EBITDA $4,963 $5,068 $11,718 $18,806 Three Months Ended Twelve Months Ended 12/31/04 12/31/05 12/31/04 12/31/05 Reconciliation to adjusted net income: Net income $2,158 $2,677 $3,949 $8,577 Stock compensation (Note A) 216 626 3,029 3,184 Adjusted net income $2,374 $3,303 $6,978 $11,761 Adjusted net income per share - diluted $0.23 $0.26 $0.68 $1.06 Weighted average number of shares - diluted 10,500,000 12,509,359 10,326,993 11,081,085 Note A: Cash stock compensation expense of $179,000 is excluded from this line item in 2005. WiderThan Co., Ltd. Selected Operational Data for Carrier Application Services As of and for the As of and for the year ended year ended December 31, December 31, 2004 2005 Ringback tones: Number of carriers (1) 5 6 Number of accessible subscribers (2) (in millions) 102.3 118.5 Number of ringback tone subscribers (3) (in millions) 9.6 14.3 Inter-carrier messaging: Number of carriers (1) 18 27 Number of messages delivered (4) (in billions) 5.9 17.3 Music-on-demand: Number of carriers (1) 1 1 Number of accessible subscribers (2) (in millions) 18.8 19.4 Notes: (1) Represents the aggregate number of carriers with which the relevant service was in operation during the relevant period. (2) Represents the approximate aggregate number of our carriers customers' wireless subscribers at the end of the relevant period as reported publicly by our carrier customers. (3) Represents the aggregate number of subscribers to the ringback tone service provided by our carrier customers during the relevant period. (4) Represents the aggregate number of messages delivered by means of our inter-carrier messaging service on behalf of our carrier customers during the relevant period. WiderThan Co., Ltd. Geographic Revenue Distribution Three Months Twelve Months Ended Ended December 31, December 31, 2004 2004 Korea 77% 82% America 18% 14% Asia (ex-Korea) 5% 3% EMEA 0% 1% Three Months Twelve Months Ended Ended December 31, December 31, 2005 2005 Korea 58% 65% America 24% 23% Asia (ex-Korea) 15% 10% EMEA 3% 2% DATASOURCE: WiderThan Co., Ltd. CONTACT: Investors: Tania Almond of WiderThan, +1-571-521-1080, Web site: http://www.widerthan.com/

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WTHN Widerthan