WiderThan Reports 2005 Fourth Quarter and Full Year Results

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, [phone],





Web site:  http://www.widerthan.com/ 

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