WiderThan Reports 2006 Second Quarter Results

Second Quarter Revenues Grow to $33.1 Million, an Increase of 49% Year-Over- Year; New Customer Win in Ringback Tone Service Announced 


SEOUL, South Korea, Aug. 9  /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 second quarter ended June 30, 2006 and issued financial guidance for the third quarter and fourth quarter of 2006.

Second quarter 2006 revenues were $33.1 million, an increase of 49% over the $22.2 million in the second quarter of 2005.  Net income, calculated in accordance with generally accepted accounting principles in the United States (US GAAP), for the second quarter of 2006 was $4.6 million, or $0.23 per diluted American Depositary Share (ADS), compared to $1.6 million or $0.08 per diluted ADS in the prior year period.  Included in net income for the second quarter of 2006 was a non-cash, stock-based compensation charge of $0.7 million, compared to a charge of $0.6 million in the prior year period. Adjusted net income, which excludes non-cash stock compensation expense, was $5.2 million, or $0.26 per diluted ADS, in the second quarter of 2006, compared to an adjusted net income of $2.2 million, or $0.21 per diluted ADS, in the prior year period.

Commenting on the results, Sang Jun Park, WiderThan's Chief Executive Officer, said, "WiderThan had a strong second quarter in 2006.  I am also very pleased to announce that we have signed a new carrier customer for our Ringback Tone (RBT) Service.  Service integration for this carrier is underway and we expect to launch service by the end of the third quarter of this year."

F. Terry Kremian, WiderThan's Global President, said, "Ringback tone subscribers outside Korea grew 20% sequentially in the second quarter of 2006 from the first quarter of 2006.  Overall, we added a total of 1.5 million new RBT users bringing our total active RBT subscribers to 16.9 million."  Mr. Kremian added, "We continue to see solid consumer uptake for our carriers' services in both ringback tone penetration and music-on-demand services."

Cash, cash equivalents and short-term financial instruments on June 30, 2006, totaled $93.1 million.  During the second quarter of 2006, WiderThan generated approximately $3.0 million in cash from operations.  Hoseok Kim, WiderThan's Chief Financial Officer, commented on the company's finances saying, "Positive cash flow in the second quarter further enhances our strong balance sheet.  In addition, we continue to improve our internal processes related to financial reporting which enables us to report our results in a more timely manner."

Third and Fourth Quarter 2006 Outlook

WiderThan is issuing financial guidance for the third quarter and fourth quarter of 2006 based on information as of August 8, 2006.  This guidance assumes that our major currency exchange rates remain constant.

                          Third Quarter 2006       Fourth Quarter 2006
  Net Revenues            $31.0-$33.0 million      $34.8-$37.3 million
  US GAAP Net Income      $3.9-$4.3 million        $5.0-$5.6 million
  Adjusted Net Income     $4.5-$4.9 million        $5.6-$6.2 million


  Presentation, Conference Call and Web Cast


On Wednesday, August 9, 2006 at 4:15 p.m. Eastern Daylight Time, WiderThan will post to its web site at http://ir.widerthan.com/ a prerecorded presentation and transcript of the WiderThan management team's review of the company's second quarter financial performance.  There will be a live question and answer (Q&A) conference call to allow analysts and investors to ask questions of the WiderThan management team at 5:00 p.m. Eastern Daylight Time that same day.  A listen-only web cast of the Q&A session will be available at http://ir.widerthan.com/.  Those wishing to participate in the live Q&A session should use the following numbers to dial into the session:

  Calling from the United States or Canada: 800-260-8140
  Calling from other countries: 617-614-3672
  Pass code: 11764871



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 US GAAP, WiderThan uses non-US 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 our US GAAP results. These non-GAAP results provide useful information to both management and investors by excluding expenses which we believe may not be indicative of the Company's 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.

Adjusted EBITDA excludes non-cash stock-based compensation expense, depreciation and amortization expense from the Company's statement of operations.  Adjusted net income excludes non-cash based stock compensation expense from the Company's statement of operations.

About WiderThan

WiderThan is a leading provider of integrated mobile entertainment solutions for wireless carriers. Our applications, content and services enable wireless carriers to provide 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 50 wireless carriers in over 25 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 annual report on Form 20-F for the year ended December 31, 2005.  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     Six Months Ended
                                      June 30,               June 30,
                                  2005        2006        2005        2006
  Revenues
     Service revenues
       Carrier application
        services                $13,860     $22,878     $26,004     $43,485
       Content services           3,979       3,576       9,727       7,044
       Professional and other
        services                  2,082       3,081       4,263       5,466
     Total service revenues      19,921      29,535      39,994      55,995
     System sales                 2,283       3,531       4,479       5,874
  Total revenues                 22,204      33,066      44,473      61,869

  Costs and expenses (Note A)

     Cost of service
      revenues (exclusive of
      depreciation and
      amortization, as shown
      below)                      7,342      10,909      14,566      20,683

     Cost of system sales
      (exclusive of
      depreciation and
      amortization, as shown
      below)                      1,573       1,370       2,621       2,766
     Depreciation and
      amortization                1,051       1,369       2,031       2,640
     Selling and marketing        1,324       1,273       2,283       1,949
     General and
      administrative              5,722       9,747      11,784      18,837
     Research and
      development                 3,179       2,120       5,794       5,138
  Total costs and expenses       20,191      26,788      39,079      52,013
  Operating income                2,013       6,278       5,394       9,856

  Other income
     Interest income                121         935         249       1,768
     Foreign exchange gain
      (loss), net                    39         (92)         92        (367)
  Total other income                160         843         341       1,401

  Income before taxes,
   minority interest and
   earnings from equity
   method investment              2,173       7,121       5,735      11,257
  Income taxes                      643       2,659       1,555       4,221
  Income before minority
   interest and earnings
   from equity method
   investment                     1,530       4,462       4,180       7,036
  Minority Interest                   -           -           -           -
  Gain (loss) from equity
   method investment                 57          91         (60)        168
  Income before cumulative
   effect of a change in
   accounting principle           1,587       4,553       4,120       7,204

  Cumulative effect on prior
   years of retroactive
   application of FAS123(R)           -           -           -         152

  Net Income                     $1,587      $4,553      $4,120      $7,356

  Accretion of preferred
   shares                          (297)          -        (626)          -
  Amounts allocated to
   participating preferred
   shareholders                    (586)          -      (1,061)          -
  Net income attributable to
   common shares                   $704      $4,553      $2,433      $7,356

  Earning per share - basic       $0.08       $0.23       $0.23       $0.37
  Earning per share - diluted     $0.08       $0.23       $0.23       $0.36

  Weighted average number
   of shares - basic         10,500,000  19,807,216  10,500,000  19,807,216
  Weighted average number
   of shares - diluted       10,510,517  20,220,824  10,510,517  20,258,320


  Note A: The following stock compensation expenses resulting from our stock
  options, employee stock ownership association (ESOA) and virtual stock
  options (VSOs) are included in the following expense categories:

                                      Three Months Ended  Six Months Ended
                                             June 30,           June 30,
                                          2005    2006      2005      2006
      Cost of service revenues             $57    $130      $111      $222
      Cost of system sales                   7      10        10        16
      General and administrative           434     454       820     1,005
      Research and development             138      57       250       116
          Total                           $636    $651    $1,191    $1,359



                             WiderThan Co., Ltd.
                    Condensed Consolidated Balance Sheet
                        (In thousands of US dollars)

                                              December 31,        June 30,
                                                  2005              2006
  Assets                                       (Audited)         (Unaudited)
  Current assets
      Cash and cash equivalents                  $71,171           $50,931
      Short-term financial instruments            14,851            42,172
      Accounts receivable, net                    34,924            32,972
      Deferred costs                               5,589             6,998
      Other current assets                         2,745             3,629
                Total current assets             129,280           136,702

  Property, plant and equipment, net              10,346            11,870
  Goodwill                                        18,673            19,883
  Other non-current assets                        10,034            11,359
                Total assets                    $168,333          $179,814

  Liabilities and Stockholders' Equity
  Current liabilities
      Accounts payable                            22,636            22,537
      Current portion of deferred income           6,614             2,931
      Accrued expenses                             6,099             5,488
      Taxes payable                                2,620             3,284
      Other current liabilities                    3,753             3,937
      Cash Appreciation Right liability            1,210                 -
                Total current liabilities         42,932            38,177
  Non-current liabilities
      Long-term deferred income, net of
       current portion                             3,158             2,056
      Other non-current liabilities                1,247             2,343

                Total liabilities                 47,337            42,576

  Commitments and contingencies
  Minority interest                                 (133)                -

  Stockholders' equity
      Common stock: Won 500 par value;
       authorized 30 million shares,
       issued and outstanding 10.5 million,
       and 19.8 million shares in 2005
       and 2006, respectively                      8,871             8,871
      Additional paid-in capital                  87,540            89,080
      Retained earnings                           17,805            24,828
      Accumulated other comprehensive income       6,913            14,459
                Total stockholders' equity       121,129           137,238
                Total liabilities and
                 stockholders' equity           $168,333          $179,814



                             WiderThan Co., Ltd.
         Condensed Consolidated Statement of Cash Flows (Unaudited)
                        (In thousands of US dollars)

                                               Three Months      Six Months
                                                  Ended            Ended
                                              June 30, 2006    June 30, 2006

  Cash flows from operating activities:
  Net income                                      $4,553            $7,356

  Adjustments to reconcile net income
   (loss) to net cash provided by
   operating activities:
            Depreciation and amortization          1,369             2,640
            Stock compensation expenses              651             1,359
            Cumulative effect on prior
             years of retroactive
             application of FAS123R                    -              (152)
            Foreign exchange
             translation loss, net                    92               367
            Equity in gain of related
             equity investment                       (91)             (168)
            Provision for severance
             benefits                                323               634

  Change in operating assets and liabilities:
            Decrease (increase) in
             accounts receivable                  (2,684)            3,790
            Increase in deferred costs              (696)           (1,032)
            Increase in other assets              (1,592)           (1,383)
            Increase (decrease) in
             trade accounts payable                1,528            (1,545)
            Decrease in deferred income           (2,450)           (4,054)
            Increase (decrease) in
             accrued expenses                        900              (992)
            Increase in taxes payable              1,012               487
            Increase (decrease) in
             long-term deferred income               362            (1,289)
            Payment of severance benefits            (42)              (50)
            Payment of cash appreciation
             right liability                      (1,210)           (1,210)
            Increase in other liabilities          1,021               358
                 Net cash provided by
                  operating activities             3,046             5,116

  Cash flows from investing activities:
      (Decrease) increase in short-term
       financial instruments, net                      -           (25,985)
      Purchase of property, plant and
       equipment                                  (2,365)           (3,290)
            Net cash used in investing
             activities                           (2,365)          (29,275)

  Cash flows from financing activities:
      Decrease in minority interest                  149               133
            Net cash provided by
             financing activities                    149               133

  Effect of exchange rate changes on
   cash and cash equivalents                         953             3,786
      Net decrease (increase) in cash
       and cash equivalents                        1,783           (20,240)
  Cash and cash equivalents:
      Beginning of year                           49,148            71,171
      End of period                              $50,931           $50,931



                             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   Six Months Ended
                                            June 30,            June 30,
                                         2005     2006      2005      2006

  Reconciliation to adjusted EBITDA:
     Net income                          $1,587   $4,553   $4,120    $7,356
     Cumulative effect on prior years
      of retroactive application
      of FAS123(R)                            -        -        -       152
     (Gain) loss from equity method
      investment                            (57)     (91)      60      (168)
     Minority interest                        -        -        -         -
     Income taxes                           643    2,659    1,555     4,221
     Total other income                    (160)    (843)    (341)   (1,401)
     Depreciation and amortization        1,051    1,369    2,031     2,640
     Stock compensation expenses            636      651    1,191     1,359
     Adjusted EBITDA                     $3,700   $8,298   $8,616   $14,159



                                Three Months Ended       Six Months Ended
                                     June 30,                June 30,
                                2005        2006        2005        2006

  Reconciliation to adjusted
   net income:
    Income before cumulative
     effect of a change in
     accounting principle        $1,587      $4,553      $4,120      $7,356
    Stock compensation
     expenses                       636         651       1,191       1,359
    Adjusted net income          $2,223      $5,204      $5,311      $8,715

    Adjusted net income per
     share - diluted              $0.21       $0.26       $0.51       $0.43
    Weighted average number
     of shares - diluted     10,510,517  20,220,824  10,510,517  20,258,320



                             WiderThan Co., Ltd.
         Selected Operational Data for Carrier Application Services

                                                  For the Three Months Ended
                                                            June 30,
                                                        2005        2006

  Ringback tones:
  Number of carriers (1)                                     6          7
  Number of accessible subscribers (2) (in millions)     116.5      148.0
  Number of ringback tone subscribers (3) (in millions)   11.9       16.9

  Inter-carrier messaging:
  Number of carriers (1)                                    26         37
  Number of messages delivered (4) (in billions)           4.0        9.2

  Music-on-demand:
  Number of carriers (1)                                     1          2
  Number of accessible subscribers (2) (in millions)      19.2       74.8


  Notes:
  (1) Represents the aggregate number of carriers for 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

                                                 For the Three Months Ended
                                                           June 30,
                                                    2005              2006

  Korea                                              69%               62%
  America                                            24%               31%
  Asia (ex-Korea)                                     5%                6%
  EMEA                                                2%                1%

                                                   For the Six Months Ended
                                                           June 30,
                                                    2005              2006

  Korea                                              68%               62%
  America                                            24%               31%
  Asia (ex-Korea)                                     7%                6%
  EMEA                                                2%                1%


DATASOURCE: WiderThan Co., Ltd.



CONTACT:  Investors:  Tania Almond of WiderThan, [phone],





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

http://ir.widerthan.com/ 

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