OKLAHOMA CITY, May 9, 2005 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) today reported a net loss applicable to common shareholders of $25.4 million, or $0.19 per share, for the first quarter ended March 31, 2005. The net loss included a $9.4 million income tax benefit for the quarter. (See Table 1.) This compares with the first quarter of 2004, when Dobson reported a net loss applicable to common shareholders of $16.5 million, or $0.12 per share. The net loss included a $5.7 million gain from extinguishment of debt and a $4.0 million income tax benefit.
Dobson reported EBITDA of $90.2 million for the first quarter of 2005, an increase of 8.5 percent over EBITDA of $83.1 million for the first quarter of 2004. Please see Table 3 for EBITDA reconciliation to GAAP measures.
Total revenue was $271.8 million for the first quarter of 2005, of which $53.4 million, or 20 percent, was roaming revenue. For the first quarter of 2004, Dobson reported total revenue of $233.8 million, of which $42.1 million, or 18 percent, was roaming revenue.
Dobson's first quarter 2005 results reflect operations acquired during 2004, including Michigan 5 Rural Service Area (RSA) and the Michigan markets acquired from NPI-Omnipoint Wireless, LLC and RFB Cellular, Inc.
Operating Trends
For the fourth consecutive quarter, Dobson increased its average service revenue per unit (ARPU), reflecting the continued shift of its subscriber base to higher-value GSM calling plans. First quarter ARPU was $42.94 per month, an increase of approximately 11 percent over ARPU of $38.83 for the first quarter of 2004. ARPU was $42.17 for the fourth quarter of 2004. ARPU includes revenue from postpaid, prepaid and reseller customers.
Average customer usage per month was 529 minutes of use (MOUs) for the first quarter of 2005, compared with 442 for the first quarter of 2004 and 509 for the fourth quarter of 2004, again reflecting the shift of Dobson's subscriber base to GSM calling plans, which typically offer larger "buckets" of MOUs than TDMA plans.
Dobson Communications reported approximately 395 million roaming MOUs for the first quarter of 2005, an increase of 23 percent over roaming MOUs of 322 million in the first quarter last year, on a same-store basis, including acquisitions. For the fourth quarter of 2004, Dobson reported 399 million MOUs.
The Company reported blended roaming yield of $0.135 per MOU for the first quarter of 2005, compared with $0.139 for the first quarter of 2004 and $0.136 for the fourth quarter of 2004.
GSM roaming accounted for approximately 275 million roaming MOUs, or 70 percent of Dobson's total roaming MOUs for the first quarter of 2005. GSM represented 56 percent of roaming MOUs in the fourth quarter of 2004 and 43 percent in the third quarter of 2004.
Dobson reported approximately 122,000 total gross subscriber additions for the first quarter of 2005, compared with approximately 99,600 gross subscriber additions in the first quarter of 2004 and 112,300 gross subscriber additions in the fourth quarter of 2004.
Among postpaid gross additions in the first quarter of 2005, approximately 73,700, or 95 percent, selected GSM calling plans.
Postpaid customer churn was 2.43 percent for the first quarter of 2005, compared with 1.90 percent for the first quarter of 2004 and 2.35 percent for the fourth quarter of 2004.
The Company's subscriber base declined by 18,800 customers in the first quarter of 2005, compared with a net subscriber reduction of approximately 5,400 in the first quarter of 2004 and a net reduction of 25,600 in the fourth quarter of 2004. As of March 31, 2005, the Company's total subscriber base was approximately 1,590,500.
At the end of the first quarter of 2005, approximately 563,200 of Dobson's customers, or 35 percent of its subscriber base, were on GSM calling plans. In the first quarter of 2005, approximately 91,600 of the Company's TDMA subscribers migrated to GSM calling plans, compared with 75,100 migrations in the fourth quarter of 2004. At year-end 2004, approximately 415,300 customers, or 26 percent of Dobson's total subscriber base, were on GSM calling plans.
Capital expenditures were approximately $32.6 million in the first quarter of 2005. The Company ended the quarter with $190.2 million in cash and cash equivalents, compared with $139.9 million in cash and cash equivalents and $39.0 million in marketable securities at December 31, 2004. Totals of $2.5 billion in long-term debt and $359.6 million in preferred stock obligations were not materially different from the year-end 2004 totals. (See Table 2.)
First Quarter 2005 Conference Call
On Tuesday, May 10, 2005, Dobson plans to conduct its first quarter earnings conference call beginning at 9:30 a.m. CT (10:30 a.m. ET). Along with first quarter results, Dobson may comment on how recent trends might affect results for 2005 as a whole.
Investors may listen by phone or via web-cast on Dobson's web site at www.dobson.net. Those interested may access the call by dialing:
Conference call (888) 203-7667 Pass code 3648050
A call replay will be available later for two weeks via Dobson's web site or by phone.
Replay number (888) 203-1112 Pass code 3648050
For further analysis of first quarter results, please see the Company's quarterly report on Form 10-Q, which Dobson plans to file May 10, 2005. Dobson Communications is a leading provider of wireless phone services to rural and suburban markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 16 states. For additional information on Dobson and its operations, please visit its web site at www.dobson.net.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding the Company's plans, intentions and expectations. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, but are not limited to, increased levels of competition or other factors that inhibit the growth of its subscriber base; shortages of key network equipment and/or handsets; restrictions on the Company's ability to finance its growth; accelerated migrations to GSM by the Company's customers, which would increase equipment costs; changes in the Company's roaming agreements that could affect revenue and/or earnings expectations; technology changes; and other factors. A more extensive discussion of the risk factors that could impact these areas and the Company's overall business and financial performance can be found in the Company's reports and other filings filed with the Securities and Exchange Commission. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements.
Table 1
Dobson Communications Corporation
Statements of Operations
Three Months Ended
March 31,
----------------------------
2005 2004
------------ ------------
($ in thousands except
per share data)
(unaudited)
Operating Revenue
Service revenue $ 206,082 $ 181,699
Roaming revenue 53,430 42,075
Equipment & other revenue 12,246 10,017
------------ ------------
Total 271,758 233,791
------------ ------------
Operating Expenses (excluding
depreciation & amortization)
Cost of service (exclusive of
depreciation & amortization shown
separately below) 72,299 54,186
Cost of equipment 30,366 23,534
Marketing & selling 34,094 29,162
General & administrative 44,811 43,776
------------ ------------
Total 181,570 150,658
------------ ------------
EBITDA (a) 90,188 83,133
Depreciation & amortization (51,570) (45,448)
------------ ------------
Operating income 38,618 37,685
Interest expense (60,742) (54,238)
Dividends on mandatorily redeemable
preferred stock (7,931) (8,618)
Other (expense) income, net (766) 1,277
Gain from extinguishment of debt -- 5,739
Minority interests in income of
subsidiaries (1,830) (944)
------------ ------------
Loss before income taxes (32,651) (19,099)
Income tax benefit 9,394 3,974
------------ ------------
Loss from continuing operations (23,257) (15,125)
Discontinued operations:
Income from discontinued operations,
net of taxes (b) -- 443
------------ ------------
Net loss (23,257) (14,682)
Dividends on preferred stock (2,145) (1,859)
------------ ------------
Net loss applicable to common
stockholders $ (25,402) $ (16,541)
============ ============
Basic and diluted net loss applicable
to common stockholders per
common share $ (0.19) $ (0.12)
============ ============
Basic and diluted weighted average
common shares outstanding 133,884,962 133,727,123
============ ============
(a) EBITDA is defined as loss from continuing operations before
depreciation and amortization, interest expense, dividends on
mandatorily redeemable preferred stock, other income (expense),
net, gain from extinguishment of debt, minority interests in
income of subsidiaries and income tax benefit. We believe that
EBITDA provides meaningful additional information concerning a
company's operating results and its ability to service its
long-term debt and other fixed obligations and to fund its
continued growth. Many financial analysts consider EBITDA to be a
meaningful indicator of an entity's ability to meet its future
financial obligations, and they consider growth in EBITDA to be
an indicator of future profitability, especially in a
capital-intensive industry such as wireless telecommunications.
You should not construe EBITDA as an alternative to net loss as
determined in accordance with GAAP, as an alternative to cash
flows from operating activities as determined in accordance with
GAAP or a measure of liquidity. Because EBITDA is not calculated
in the same manner by all companies, it may not be comparable to
other similarly titled measures of other companies.
Three Months Ended March 31,
(b) Operating results from income ----------------------------
from discontinued operations: 2005 2004
---- ----
Service revenue $ -- $ 2,383
Roaming revenue -- 1,067
Equipment & other revenue -- 106
------------ ------------
Total operating revenue -- 3,556
------------ ------------
Cost of service (exclusive of
depreciation & amortization
shown separately below) -- 824
Cost of equipment -- 235
Marketing & selling -- 605
General & administrative -- 529
------------ ------------
Total operating expenses
(excluding depreciation
and amortization) -- 2,193
------------ ------------
EBITDA -- 1,363
------------ ------------
Depreciation & amortization -- (647)
Interest expense & other -- (2)
Income tax expense -- (271)
------------ ------------
Income from discontinued
operations $ -- $ 443
============ ============
Table 2
Dobson Communications Corporation
Selected Balance Sheet and Statistical Data
Balance Sheet Data: March 31, December 31,
2005 2004
------------- -------------
($ in millions) ($ in millions)
(unaudited)
Cash and cash equivalents
(unrestricted) (a) $ 190.2 $ 139.9
======== ========
Marketable securities $ -- $ 39.0
======== ========
Total Debt:
DCS 8.375% Senior Notes $ 250.0 $ 250.0
DCS 9.875% Senior Notes 325.0 325.0
DCS Floating Rate Senior Notes 250.0 250.0
DCC 10.875% Senior Notes, net 297.7 297.7
DCC 8.875% Senior Notes 419.7 419.7
ACC 9.5% Senior Notes, net 14.0 13.7
ACC 10.0% Senior Notes 900.0 900.0
-------- --------
Total debt $2,456.4 $2,456.1
======== ========
Preferred Stock:
Senior Exchangeable Preferred Stock,
12.25%, net (b) 45.5 44.6
Senior Exchangeable Preferred Stock,
13.00%, net (c) 191.6 191.5
Series F Preferred Stock 122.5 122.5
-------- --------
Total preferred stock $ 359.6 $ 358.6
======== ========
Three Months Ended
March 31,
-------------------------------
2005 2004
------------- -------------
($ in millions) ($ in millions)
Capital Expenditures: $ 32.6 $ 40.6
============= =============
(a) Includes $34.9 million and $41.5 million of cash from American
Cellular at March 31, 2005 and December 31, 2004, respectively.
(b) Net of deferred financing costs of $(0.9) million for December
31, 2004 and discount of $(0.7) million and $(0.7) million at
March 31, 2005 and December 31, 2004, respectively.
(c) Net of deferred financing costs of $(1.3) million and $(1.4)
million at March 31, 2005 and December 31, 2004, respectively.
Table 3
Dobson Communications Corporation
For the Quarter Ended
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
($ in thousands except per subscriber data)
(unaudited)
Operating
Revenue
Service
revenue $ 206,082 $ 201,882 $ 198,740 $ 189,288 $ 181,699
Roaming
revenue 53,430 53,252 62,221 50,606 42,075
Equipment
& other
revenue 12,246 9,794 11,438 12,469 10,017
---------- ---------- ---------- ---------- ----------
Total 271,758 264,928 272,399 252,363 233,791
---------- ---------- ---------- ---------- ----------
Operating
Expenses
(excluding
depreciation
& amortization)
Cost of
service 72,299 69,851 69,299 61,972 54,186
Cost of
equipment 30,366 27,321 30,242 27,870 23,534
Marketing &
Selling 34,094 32,927 32,816 33,786 29,162
General &
adminis-
trative 44,811 47,800 44,893 43,056 43,776
---------- ---------- ---------- ---------- ----------
Total 181,570 177,899 177,250 166,684 150,658
---------- ---------- ---------- ---------- ----------
EBIT-
DA(a)(b) $ 90,188 $ 87,029 $ 95,149 $ 85,679 $ 83,133
========== ========== ========== ========== ==========
Pops 11,757,400 11,757,400 11,436,800 11,436,800 10,790,300
Post-paid
Gross Adds 77,400 69,500 83,200 73,500 68,700
Net Adds (28,500) (33,100) (7,500) (400) (14,300)
Sub-
scribers 1,435,600 1,464,100 1,472,600 1,480,100 1,457,600
Churn 2.4% 2.3% 2.0% 1.7% 1.9%
Average
Service
Revenue
per
Subscriber
(ARPU) $ 46.36 $ 45.26 $ 43.92 $ 42.33 $ 40.86
Pre-paid
Gross Adds 19,200 16,300 14,500 13,300 16,000
Net Adds 3,900 (400) (200) (1,300) 7,400
Subscribers 50,200 46,300 45,100 45,300 36,400
Reseller
Gross Adds 25,400 26,500 23,900 20,200 14,900
Net Adds 5,800 7,900 8,900 8,900 1,500
Subscribers 104,700 98,900 91,000 82,100 73,200
Total
Gross Adds 122,000 112,300 121,600 107,000 99,600
Net Adds (18,800) (25,600) 1,200 7,200 (5,400)
Sub-
scribers 1,590,500 1,609,300 1,608,700 1,607,500 1,567,200
ARPU $ 42.94 $ 42.17 $ 41.20 $ 40.03 $ 38.83
Penetra-
tion 13.5% 13.7% 14.1% 14.1% 14.5%
(a) Includes $2.3 million, $1.8 million, $1.9 million, $1.6 million
and $1.3 million of EBITDA for the quarters ended March 31,
2005, December 31, 2004, September 30, 2004, June 30, 2004, and
March 31, 2004, respectively, related to minority interests.
(b) A reconciliation of EBITDA to loss from continuing operations as
determined in accordance with generally accepted accounting
principles is as follows:
Loss from
continuing
operations $(23,257) $(11,883) $(11,008) $(14,047) $(15,125)
Add back non-
EBITDA items
included in
loss from
continuing
operations:
Deprecia-
tion &
amortiza-
tion (51,570) (51,279) (49,456) (46,635) (45,448)
Interest
expense (60,742) (58,182) (54,456) (52,784) (54,238)
Dividends
on manda-
torily
redeemable
preferred
stock (7,931) (6,877) (8,290) (8,289) (8,618)
Other
(expense)
income,
net (766) 891 511 442 1,277
Gain from
extinguish-
ment of
debt -- 34,662 -- -- 5,739
Gain from
redemption
of pre-
ferred
stock -- -- 1,410 5,069 --
Minority
interests
in income
of sub-
sidiaries (1,830) (1,352) (1,512) (1,058) (944)
Income tax
benefit
(expense) 9,394 (16,775) 5,636 3,529 3,974
---------- ---------- ---------- ---------- ----------
EBITDA $ 90,188 $ 87,029 $ 95,149 $ 85,679 $ 83,133
========== ========== ========== ========== ==========
Table 4
Dobson Cellular Systems
For the Quarter Ended
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
($ in thousands except per subscriber data)
(unaudited)
Operating
Revenue
Service
revenue $ 119,524 $ 115,768 $ 114,732 $ 109,460 $ 104,327
Roaming
revenue 30,911 31,421 35,695 29,206 23,962
Equipment
& other
revenue 10,250 7,411 9,203 8,541 7,330
---------- ---------- ---------- ---------- ----------
Total 160,685 154,600 159,630 147,207 135,619
---------- ---------- ---------- ---------- ----------
Operating
Expenses
(excluding
depreciation
& amortiza-
tion)
Cost of
service 43,978 43,193 42,847 38,542 32,218
Cost of
equipment 18,708 16,754 18,660 15,042 13,410
Marketing
& selling 19,721 18,967 18,472 18,538 15,947
General &
administra-
tive 25,279 25,980 24,513 22,920 23,284
---------- ---------- ---------- ---------- ----------
Total 107,686 104,894 104,492 95,042 84,859
---------- ---------- ---------- ---------- ----------
EBIT-
DA(a)(b) $ 52,999 $ 49,706 $ 55,138 $ 52,165 $ 50,760
========== ========== ========== ========== ==========
Pops 6,687,500 6,687,500 6,439,800 6,439,800 5,793,300
Post-paid
Gross Adds 45,700 39,900 46,300 40,200 37,800
Net Adds (12,900) (17,200) (7,200) (1,100) (10,000)
Subscribers 800,100 813,000 805,600 812,800 791,000
Churn 2.4% 2.4% 2.2% 1.7% 2.0%
Average
Service
Revenue
per Sub-
scriber
(ARPU) $ 48.23 $ 47.26 $ 46.11 $ 44.95 $ 43.32
Pre-paid
Gross Adds 13,300 11,100 10,100 8,300 9,000
Net Adds 2,000 (1,200) 100 (500) 4,200
Subscribers 34,900 32,900 32,500 32,400 22,700
Reseller
Gross Adds 11,500 11,700 11,000 10,100 9,200
Net Adds 2,000 1,800 3,000 3,500 1,200
Subscribers 55,400 53,400 51,600 48,600 45,100
Total
Gross Adds 70,500 62,700 67,400 58,600 56,000
Net Adds (8,900) (16,600) (4,100) 1,900 (4,600)
Subscribers 890,400 899,300 889,700 893,800 858,800
ARPU $ 44.52 $ 43.78 $ 42.89 $ 42.17 $ 40.87
Penetration 13.3% 13.4% 13.8% 13.9% 14.8%
(a) Includes $2.3 million, $1.8 million, $1.9 million, $1.6 million
and $1.3 million of EBITDA for the quarters ended March 31,
2005, December 31, 2004, September 30, 2004, June 30, 2004, and
March 31, 2004, respectively, related to minority interests.
(b) A reconciliation of EBITDA to (loss) income from continuing
operations as determined in accordance with generally accepted
accounting principles is as follows:
(Loss) income
from con-
tinuing
operations $(8,956) $(91,976) $(2,562) $(1,302) $10,837
Add back
non-EBITDA
items in-
cluded in
(loss)
income from
continuing
operations:
Depreciation
& amorti-
zation (30,315) (30,000) (28,575) (25,716) (25,217)
Interest
expense (37,025) (35,222) (30,161) (28,754) (9,216)
Other
income,
net 1,726 1,143 977 1,264 2,445
Loss from
extinguish-
ment of
debt -- (14,200) -- -- (349)
Minority
interests
in income
of subsi-
diaries (1,830) (1,352) (1,512) (1,059) (944)
Income tax
benefit
(expense) 5,489 (62,051) 1,571 798 (6,642)
---------- ---------- ---------- ---------- ----------
EBITDA $ 52,999 $ 49,706 $ 55,138 $ 52,165 $ 50,760
========== ========== ========== ========== ==========
Table 5
American Cellular Corporation
For the Quarter Ended
3/31/2005 12/31/2004 9/30/2004 6/30/2004 3/31/2004
($ in thousands except per subscriber data)
(unaudited)
Operating
Revenue
Service
revenue $ 86,558 $ 86,113 $ 84,008 $ 79,828 $ 77,372
Roaming
revenue 22,519 21,831 26,526 21,401 18,113
Equipment
& other
revenue 5,008 4,121 3,973 5,665 4,424
---------- ---------- ---------- ---------- ----------
Total 114,085 112,065 114,507 106,894 99,909
---------- ---------- ---------- ---------- ----------
Operating
Expenses
(excluding
depreciation
& amorti-
zation)
Cost of
service 29,619 26,838 26,633 23,611 22,148
Cost of
equipment 11,658 10,567 11,582 12,828 10,124
Marketing
& selling 14,373 13,960 14,343 15,248 13,215
General &
adminis-
trative 21,241 23,373 21,933 21,688 22,044
---------- ---------- ---------- ---------- ----------
Total 76,891 74,738 74,491 73,375 67,531
---------- ---------- ---------- ---------- ----------
EBITDA(a) $ 37,194 $ 37,327 $ 40,016 $ 33,519 $ 32,378
========== ========== ========== ========== ==========
Pops 5,069,900 5,069,900 4,997,000 4,997,000 4,997,000
Post-paid
Gross Adds 31,700 29,600 36,900 33,300 30,900
Net Adds (15,600) (15,900) (300) 700 (4,300)
Sub-
scribers 635,500 651,100 667,000 667,300 666,600
Churn 2.5% 2.3% 1.9% 1.6% 1.8%
Average
Service
Revenue
per Sub-
scriber
(ARPU) $ 44.02 $ 42.85 $ 41.27 $ 39.22 $ 37.96
Pre-paid
Gross Adds 5,900 5,200 4,400 5,000 7,000
Net Adds 1,900 800 (300) (800) 3,200
Subscribers 15,300 13,400 12,600 12,900 13,700
Reseller
Gross Adds 13,900 14,800 12,900 10,100 5,700
Net Adds 3,800 6,100 5,900 5,400 300
Subscribers 49,300 45,500 39,400 33,500 28,100
Total
Gross Adds 51,500 49,600 54,200 48,400 43,600
Net Adds (9,900) (9,000) 5,300 5,300 (800)
Sub-
scribers 700,100 710,000 719,000 713,700 708,400
ARPU $ 40.92 $ 40.17 $ 39.09 $ 37.42 $ 36.39
Penetra-
tion 13.8% 14.0% 14.4% 14.3% 14.2%
(a) A reconciliation of EBITDA to net loss as determined in
accordance with generally accepted accounting principles is as
follows:
Net loss $(5,268) $(7,457) $(3,380) $(7,499) $(7,365)
Add back
non-EBITDA
items in-
cluded in
net loss:
Depreciation
& amorti-
zation (21,255) (21,279) (20,881) (20,919) (20,231)
Interest
expense (23,784) (23,457) (23,971) (23,692) (23,675)
Other
expense,
net (652) (471) (616) (1,003) (350)
Income tax
benefit 3,229 423 2,072 4,596 4,513
---------- ---------- ---------- ---------- ----------
EBITDA $ 37,194 $ 37,327 $ 40,016 $ 33,519 $ 32,378
========== ========== ========== ========== ==========