8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: May 19, 2003
Date of Earliest Event Reported: May 19, 2003

ON COMMAND CORPORATION
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

00-21315	77-0435194
(Commission File Number)	(I.R.S. Employer Identification No.)

4610 South Ulster Street, 6^th Floor
Denver, CO 80237
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (720) 873-3200

(Former name or former address, if changed from last report)

ON COMMAND CORPORATION

FORM 8-K

May 19, 2003

Item 7. Financial Statements and Exhibits

99.1

Press release dated May 19, 2003 of On Command Corporation, (the "Company") announcing its operating and financial results for the first quarter ended March 31, 2003.

Item 9. Regulation FD Disclosure

        On May 19, 2003, the Company issued a press release announcing its operating and financial results for the first quarter ended March 31, 2003. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

        The information furnished in this Item 9 (which is being furnished under Item 12) shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific release in such a filing.

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 19, 2003

ON COMMAND CORPORATION
By:	/s/  BERNARD G. DVORAK Bernard G. Dvorak Senior Vice President, Chief Financial Officer and Treasurer (Principal Accounting and Financial Officer)

EXHIBT INDEX

Exhibit	Description
99.1	Press release dated May 19, 2003 of On Command Corporation, (the "Company") announcing its operating and financial results for the first quarter ended March 31, 2003.

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Item 7. Financial Statements and Exhibits
Item 9. Regulation FD Disclosure

SIGNATURE
EXHIBT INDEX

EX-99.1

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Exhibit 99.1

Contact:	Tad Walden Corporate Communications On Command Corporation (720) 873-3321 twalden@ocv.com
	Chuck Ence Investor Relations On Command Corporation (720) 873-3356 cence@ocv.com

FOR IMMEDIATE RELEASE

On Command reports results for the first quarter of 2003

•

On Command's first quarter conference call will take place at 4:00 pm EST on May 20, 2003. To participate, please dial (800) 309-9490 in the U.S. or (706) 634-6055 internationally at least ten minutes prior to the call. The conference ID is 716094.

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The first conference call will be Web cast live at www.oncommand.com.

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Replays are available via the Web site beginning May 20, 2003 after 5:00 pm EST and ending May 28, 2003 at 11:59 pm EST. Telephone replays will be available for the same period by dialing (800) 642-1687 in the U.S. or (706) 645-9291 internationally.

Denver, Colorado, May 20, 2003—On Command Corporation (OTCBB: ONCO), a leading provider of in-room interactive services, business information and guest services for the lodging industry, today announced its financial results for the three months ended March 31, 2003.

        Total revenue for the first quarter of 2003 was $56.7 million compared to $57.4 million in the first quarter of 2002, a decrease of 1.2%. The decrease in total revenue of 1.2% is primarily due to a decline in sales of video systems to third party providers. Offsetting the decrease, room revenue increased to $54.8 million in the first quarter of 2003 from $54.3 million in 2002.

        Adjusted EBITDA (defined by On Command as revenue less direct costs of revenue and other cash operating expenses, excluding depreciation and amortization and asset impairments and other charges) for the first quarter of 2003 was $15.8 million, an increase of 4.2% over the first quarter of 2002. Please see schedule 1 attached for a reconciliation of 2003 and 2002 adjusted EBITDA to operating loss.

        Loss from operations for the first quarter ended March 31, 2003 was $3.5 million compared to $6.8 million for the corresponding period of 2002.

        The Company reported a net loss attributed to common stockholders of $9.1 million ($0.29 per share) for the quarter, compared to a $12.1 million ($0.39 per share) net loss for the corresponding period in 2002.

        Revenue per room for the first quarter increased 3.8% to $21.89 from $21.08 for the same period in 2002. The Company achieved this revenue increase despite a 1.0% decline in the top 25 market occupancy rates, by continuing its strategy of installing digital upgrades and adding proven products to its existing room base. During the first quarter of 2003, the Company installed its Roommate digital platform in 20,500 rooms, bringing the total number of digital rooms to 312,000 or 35.3% of the total owned room base of 884,000.

        Additional highlights for the first quarter include:

•

Increased quarter over quarter adjusted EBITDA margin (defined as adjusted EBITDA divided by total revenue) to 27.8% from 26.3%.



•

Installed the digital music product to more than 24,000 rooms and the TV Internet service to more than 28,000 rooms.



•

Installed a digital upgrade in more than 32,000 rooms, delivering an average uplift in room revenue of 17% compared to tape-based systems without the upgrade.



•

Reduced capital spending and other investment costs for the quarter to $12 million, down 15.8% versus the first quarter of 2002.

        "On Command experienced solid performance despite the prevailing economy during the first quarter of 2003," said Chris Sophinos, president and chief executive officer of On Command. "Our results of improved room revenue in total and on a per room basis, at a time of lower occupancy rates, validated our modular upgrade program under which we have installed and upgraded 42% more rooms this quarter than we did in the first quarter of 2002 while spending 16% less capital dollars."

Business Outlook

        Given the economic uncertainties and the unknown recovery period after the war on Iraq, the Company will not be giving guidance for 2003 at this time.

About On Command

        On Command Corporation (www.oncommand.com) is a leading provider of in-room entertainment technology to the lodging and cruise ship industries. On Command is a majority-owned subsidiary of Liberty Satellite & Technology, Inc. (OTCBB: LSTTA, LSTTB).

        On Command entertainment services include: on-demand movies; television Internet services using high-speed broadband connectivity; television email; short form television features covering drama, comedy, news and sports; PlayStation video games; and music-on-demand services through Instant Media Network, a majority-owned subsidiary of On Command Corporation and the leading provider of digital on-demand music services to the hotel industry. All On Command products are connected to guest rooms and managed by leading edge video-on-demand navigational controls and a state-of-the art guest user interface system. The guest menu system can be customized by hotel properties to create a robust platform that services the needs of On Command hotel partners and the traveling public. On Command and its distribution network services more than 1,000,000 guest rooms, which touch more than 300 million guests annually.

        On Command's direct served hotel properties are located in the United States, Canada, Mexico, Spain, and Argentina. On Command distributors serve cruise ships operating under the Royal Caribbean, Costa and Carnival flags. On Command hotel properties include more than 100 of the most prestigious hotel chains and operators in the lodging industry: Accor, Adam's Mark Hotels & Resorts, Fairmont, Four Seasons, Hilton Hotels Corporation, Hyatt, Loews, Marriott (Courtyard, Renaissance, Fairfield Inn and Residence Inn), Radisson, Ramada, Six Continents Hotels (Inter-Continental, Crowne Plaza and Holiday Inn), Starwood Hotels & Resorts (Westin, Sheraton, W Hotels and Four Points), and Wyndham Hotels & Resorts.

###

ON COMMAND CORPORATION
(An Indirect Consolidated Subsidiary of Liberty Media Corporation)

Condensed Consolidated Balance Sheets

(unaudited)

				March 31, 2003			December 31, 2002
				(amounts in thousands)
Assets
Current assets:
	Cash and cash equivalents			$	3,036		$	4,501
	Accounts receivable, net				30,531			33,525
	Other current assets				3,245			3,461
			Total current assets		36,812			41,487
Property and equipment:
	Video systems
		In service			675,156			668,697
		Construction in progress			35,290			37,511
					710,446			706,208
	Support equipment, vehicles and leasehold improvements				26,231			26,245
					736,677			732,453
	Accumulated depreciation				(467,901	)		(457,482	)
					268,776			274,971
Goodwill					65,580			65,580
Other assets, net					14,691			14,444
			Total assets	$	385,859		$	396,482

(continued)

ON COMMAND CORPORATION
(An Indirect Consolidated Subsidiary of Liberty Media Corporation)

Condensed Consolidated Balance Sheets

(unaudited)

				March 31, 2003			December 31, 2002
				(amounts in thousands)
Liabilities and Stockholders' Deficit
Current liabilities:
	Accounts payable			$	21,596		$	28,689
	Accounts payable to parent				1,191			1,906
	Accrued compensation				5,545			6,433
	Sales, use and property tax liabilities				4,693			4,585
	Other accrued liabilities				7,243			7,987
	Current portion of debt				833			833
		Total current liabilities			41,101			50,433
Long-term debt					265,695			261,946
Other long-term liabilities					223			496
			Total liabilities		307,019			312,875
Minority interest in consolidated subsidiary					245			259
Redeemable securities:
	Mandatorily redeemable preferred stock				100,110			97,848
	Common stock subject to repurchase obligation				2,333			2,333
		Total redeemable securities			102,443			100,181
Stockholders' deficit:
Preferred stock, $.01 par value; shares authorized—10,000,000; shares issued and outstanding—98,500 in 2003 and 2002					—			—
Common stock, $.01 par value; shares authorized—150,000,000; shares issued—30,977,840 in 2003 and 30,973,989 in 2002					310			310
Additional paid-in-capital					297,566			299,398
Accumulated other comprehensive loss					(2,478	)		(4,533	)
Accumulated deficit					(292,585	)		(285,777	)
					2,813			9,398
Common stock held in treasury, at cost (119,500 in 2003 and 2002)					(1,344	)		(1,344	)
Note receivable from stockholder					(25,317	)		(24,887	)
			Total stockholders' deficit		(23,848	)		(16,833	)
Commitments and contingencies
			Total liabilities and stockholders' deficit	$	385,859		$	396,482

ON COMMAND CORPORATION
(An Indirect Consolidated Subsidiary of Liberty Media Corporation)

Condensed Consolidated Statements of Operations

(unaudited)

			Three Months Ended March 31,
			2003			2002
			(amounts in thousands)
Revenue:
	Room revenue		$	54,754		$	54,254
	System and equipment sales and other			1,966			3,129
		Total revenue		56,720			57,383
Direct costs of revenue:
	Content fees, commissions and other in-room services			27,386			27,884
	System, equipment and other costs			862			1,380
		Total costs of revenue		28,248			29,264
		Direct margin (exclusive of other operating expenses shown separately below)		28,472			28,119
Other operating expenses:
	Operations support			6,062			6,506
	Research and development			1,083			957
	Selling, general and administrative			5,576			5,542
	Depreciation and amortization			18,963			20,131
	Asset impairments and other charges			325			1,829
		Total other operating expenses		32,009			34,965
		Loss from operations		(3,537	)		(6,846	)
Interest expense				(3,353	)		(3,606	)
Other income, net				170			482
		Loss before income taxes		(6,720	)		(9,970	)
Income tax expense				(88	)		(43	)
		Net loss		(6,808	)		(10,013	)
Dividends on mandatorily redeemable preferred stock				(2,262	)		(2,054	)
		Net loss attributable to common stockholders	$	(9,070	)	$	(12,067	)
Basic and diluted net loss per common share			$	(0.29	)	$	(0.39	)
Basic and diluted weighted average number of common shares outstanding				30,858			30,892

ON COMMAND CORPORATION
(An Indirect Consolidated Subsidiary of Liberty Media Corporation)

Condensed Consolidated Statements of Cash Flows

(unaudited)

				Three Months Ended March 31,
				2003			2002
				(amounts in thousands)
Cash flows from operating activities:
	Net loss			$	(6,808	)	$	(10,013	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization			18,963			20,131
		Payments of restructuring costs			(273	)		(480	)
		Asset impairments and other changes			325			1,829
		Other non-cash items			287			196
	Changes in assets and liabilities:
		Accounts receivable			3,137			(2,062	)
		Other assets			521			630
		Accounts payable			(6,431	)		(527	)
		Accounts payable to parent			(833	)		(37	)
		Accrued compensation			(869	)		246
		Sales, use and property tax liabilities			81			(362	)
		Other accrued liabilities			(762	)		818
			Net cash provided by operating activities		7,338			10,369
Cash flows from investing activities:
	Capital expenditures				(11,998	)		(12,440	)
	Cost investments				—			(1,716	)
			Net cash used in investing activities		(11,998	)		(14,156	)
Cash flows from financing activities:
	Borrowings of debt				4,000			7,000
	Repayments of debt				(251	)		(270	)
	Payment of deferred financing costs				(550	)		—
	Proceeds from issuance of common and preferred stock				—			31
			Net cash provided by financing activities		3,199			6,761
Effect of exchange rate changes on cash					(4	)		(29	)
Net increase (decrease) in cash and cash equivalents					(1,465	)		2,945
Cash and cash equivalents, beginning of period					4,501			2,869
Cash and cash equivalents, end of period				$	3,036		$	5,814

Schedule 1
Reconciliation of Adjusted EBITDA to Loss From Operations:

	Quarter Ended March 31, 2003			Quarter Ended March 31, 2002
	(in thousands)			(in thousands)
Adjusted EBITDA(1)		15,751			15,114
Depreciation and amortization		(18,963	)		(20,131	)
Asset impairments and other charges		(325	)		(1,829	)
Loss from Operations	$	(3,537	)	$	(6,846	)

(1)

Adjusted EBITDA is defined by the Company as revenue less direct costs of revenue and other operating expenses, excluding depreciation and amortization and asset impairments and other charges.

A Note on adjusted EBITDA

        The most significant difference between "adjusted EBITDA", as defined by the Company, and loss from operations, as determined in accordance with generally accepted accounting principles, is that depreciation and amortization expense are not included in the calculation of adjusted EBITDA. GAAP requires depreciation and amortization to be shown as an expense in calculating net income and loss because capital spending is not fully expensed in the period incurred. Rather, the cost of a capital expenditure is spread out over the assumed useful life of the property acquired, under the heading depreciation and amortization, so that the expense can be matched to the revenue anticipated to be generated by that expense. Thus, excluding depreciation and amortization from a measurement of operating performance will fail to reflect the true cost of operations over time. Similarly, asset impairment charges reflect non-temporary declines in the value of investments, the original cost of which was not expensed in the period incurred.

        However, because depreciation, amortization and impairments reflect primarily the effects of past capital expenditures, On Command's management believes that adjusted EBITDA when considered together with measures prepared in accordance with generally accepted accounting principles can be very useful to investors and analysts as a measurement of the Company's current operating performance, particularly when assessed in conjunction with information regarding current capital spending and other investing activities and trends, as reported above. On Command's management regularly uses adjusted EBITDA as a measurement to assess the performance of operating units and individuals and to assist in strategic planning and the allocation of resources.

        Because adjusted EBITDA does not reflect changes in working capital or other cash requirements of the Company, it is not intended to represent cash flows for the period, or to reflect funds available for interest, dividends, reinvestment or other discretionary uses. Adjusted EBITDA has not been presented as an alternative to loss from operations, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles in the United States of America. The Company's definition of adjusted EBITDA may differ from similar measurements provided by other public companies.

ON COMMAND CORPORATION QUARTERLY STATISTICS

		Q1 2003			Q4 2002			Q3 2002			Q2 2002			Q1 2002
Room Base Statistics
Total Hotels			3,356			3,380			3,383			3,421			3,443
Total Guest Pay Rooms			884,000			891,000			900,000			916,000			923,000
On-demand Rooms			869,000			874,000			880,000			890,000			895,000
	% of total rooms		98.3	%		98.1	%		97.8	%		97.2	%		97.0	%
Scheduled Rooms (all SpectraVision)			15,000			17,000			20,000			26,000			28,000
	% of total rooms		1.7	%		1.9	%		2.2	%		2.8	%		3.0	%
Domestic Rooms			785,000			792,000			801,000			808,000			816,000
	% of total rooms		88.8	%		88.9	%		89.0	%		88.2	%		88.4	%
International Rooms			99,000			99,000			99,000			108,000			107,000
	% of total rooms		11.2	%		11.1	%		11.0	%		11.8	%		11.6	%
Total Digital Rooms			312,000			291,000			275,000			264,000			240,000
Total Guest Programming Rooms			519,000			517,000			519,000			516,000			518,000
Operating Results & Statistics (in thousands)
Room Revenue		$	54,754		$	55,227		$	58,009		$	59,131		$	54,254
Other Revenue		$	1,966		$	3,997		$	2,781		$	1,869		$	3,129
Total Revenue		$	56,720		$	59,224		$	60,790		$	61,000		$	57,383
Direct Expense		$	28,248		$	31,222		$	30,234		$	30,340		$	29,264
Direct Margin		$	28,472		$	28,002		$	30,556		$	30,660		$	28,119
Operations Expense		$	6,062		$	6,370		$	6,073		$	7,134		$	6,506
Research & Development Expense		$	1,083		$	886		$	1,143		$	1,078		$	957
SG&A Expense		$	5,576		$	4,736		$	5,590		$	5,428		$	5,542
Total Operating Expenses		$	12,721		$	11,992		$	12,806		$	13,640		$	13,005
Adjusted EBITDA		$	15,751		$	16,010		$	17,750		$	17,020		$	15,114
Loss from Operations		$	(3,537	)	$	(4,612	)	$	(2,306	)	$	(8,249	)	$	(6,846	)
As a % of Total Revenue:
	Direct Margin		50.2	%		47.3	%		50.3	%		50.3	%		49.0	%
	Operations		10.7	%		10.8	%		10.0	%		11.7	%		11.3	%
	Research & Development		1.9	%		1.5	%		1.9	%		1.8	%		1.7	%
	SG&A		9.8	%		8.0	%		9.2	%		8.9	%		9.7	%
	Adjusted EBITDA		27.8	%		27.0	%		29.2	%		27.9	%		26.3	%
	Loss from Operations		-6.2	%		-7.8	%		-3.8	%		-13.5	%		-11.9	%
Per Room per Month:
	Total Room Revenue	$	21.89		$	21.97		$	22.86		$	22.88		$	21.08
	Total Movie Revenue	$	18.18		$	18.38		$	19.21		$	19.61		$	18.02
	Direct Profit	$	10.70		$	10.44		$	11.26		$	11.11		$	10.12
	Operations Expense	$	2.28		$	2.38		$	2.24		$	2.58		$	2.34
	Adjusted EBITDA	$	5.92		$	5.97		$	6.54		$	6.17		$	5.44
	Loss from Operations	$	(1.33	)	$	(1.72	)	$	(0.85	)	$	(2.99	)	$	(2.46	)

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On Command reports results for the first quarter of 2003