OKLAHOMA CITY, May 8, 2002 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) reported total revenue of $143.1 million for the first quarter ended March 31, 2002, an increase of nine percent over last year's first quarter. EBITDA was $53.7 million, or 22 percent higher than the same quarter of 2001.
Sixteen percent growth in local service revenue, lower equipment expense, and lower marketing and selling expense, compared to the same quarter last year, were the primary factors in the Company's strengthened EBITDA margin.
EBITDA represents earnings before interest, taxes, depreciation, amortization, loss from investment in joint venture, income (loss) from discontinued operations and cumulative effect of change in accounting principle. As a result, EBITDA does not include Dobson's 50 percent interest in American Cellular, which it accounts for on an equity basis (Table 1), thereby reporting American Cellular's results of operations as "loss from investment in joint venture." EBITDA also excludes the results of operations of the five properties that were sold to Verizon Wireless (NYSE:VZ) by Dobson and American Cellular in February 2002. The results of operations from these properties are shown in Table 1 (attached) as income (loss) from discontinued operations, net of taxes, in accordance with Generally Accepted Accounting Principles (GAAP).
Dobson's first quarter net loss applicable to common shareholders was $110.5 million, or $1.21 per share, based on 91.6 million average shares outstanding. The net loss included:
* One-time charges totaling $174.2 million, net of taxes, from the adoption of SFAS No. 142, the new accounting rule regarding the write-down of impaired investments attributable to intangible assets. Of this total, $33.3 million reflected the impact of SFAS No. 142 on Dobson directly, and $140.9 million reflected its share of American Cellular's impairment loss. With the adoption of SFAS No. 142, Dobson has ceased amortizing cellular licenses for both companies and goodwill for American Cellular.
* Income from discontinued operations and the disposal of those operations, net of taxes, totaling $92.8 million, representing the gains on the sale and the results of operations prior to the sale of five properties to Verizon Wireless by Dobson and American Cellular.
* A loss from investment in joint venture before discontinued operations and cumulative effect of change in accounting principle of $7.2 million.
* Non-cash preferred stock dividends of $23.0 million.
In the first quarter last year, Dobson's net loss applicable to common shareholders was $63.6 million, or $0.68 per share, based on an average 94.1 million shares outstanding. This included a loss from Dobson's investment in the American Cellular joint venture of $19.1 million and non-cash preferred stock dividends of $19.5 million.
On the basis of continuing operations only and after dividends on preferred stock, Dobson's net loss, which excluded amortization of wireless licenses, was $29.1 million, or $0.32 per share, for the quarter ended March 31, 2002, compared with a net loss from continuing operations only and after dividends on preferred stock of $62.7 million, or $0.67 per share, for the first quarter last year.
Proportionate 1Q Results
Dobson's proportionate results for the first quarter reflected similar increases in revenue and EBITDA. Proportionate results reflect Dobson's 50 percent ownership in American Cellular (Table 3) and exclude the results of operations of the five properties that were sold to Verizon Wireless.
Proportionate total revenue for the first quarter was $193.1 million, a 10 percent increase over last year's first quarter. First quarter EBITDA increased to $71.1 million, or 23 percent higher than EBITDA of $57.9 million for the same period last year (proportionate).
"We were particularly pleased in the first quarter with the increase in local service revenue and strengthened profitability of our on-network business," said Everett Dobson, Chairman and Chief Executive Officer. "Improving the profitability of our local business is a key operating goal for 2002."
Several factors contributed to the increase in local revenue. The Company's proportionate subscriber base increased almost 15 percent to just over 1.0 million customers in the 12 months ended March 31, 2002. In addition, by March 31, 2002, Dobson's proportionate subscriber base was 79 percent digital, compared with 53 percent a year ago, and digital subscribers typically pay higher average revenue per unit (ARPU) than analog subscribers.
As a result, total proportionate ARPU in the first quarter increased to $41, compared with $40 for the first quarter last year. The first quarter of 2002 was the fifth consecutive quarter in which year-over-year quarterly ARPU has increased.
The increase in proportionate EBITDA resulted from lower equipment expense, lower marketing and selling expense, and increased sales of "on-network" calling plans, starting in late 2001, that boosted both service revenue and margins on that revenue. Increased operating efficiency was further reflected by the drop in cost per gross subscriber addition (CPGA) to $410 in the first quarter of 2002, compared with $449 in the first quarter last year.
As previously announced, first quarter gross subscriber additions (proportionate, postpaid) were approximately 81,800, and customer churn was 2.2 percent, yielding net subscriber additions of 17,200 for the first quarter. During the period, the Company also migrated 27,500 analog customers to digital calling plans, compared with 37,700 migrations in the first quarter last year.
The Company continued to add network capacity during the quarter, increasing the total number of cell sites in the Dobson and American Cellular networks by 30 to a total of approximately 1,600. The two networks now include approximately 48,650 voice paths, of which 71 percent are digital. At the end of the quarter, 87 percent of the traffic on the combined networks was digital, compared with 73 percent a year ago.
Capital expenditures were approximately $17.9 million at Dobson and $13.2 million at American Cellular in the first quarter. The Company has projected capital expenditures of $85 million at Dobson and $55 million at American Cellular for 2002 as a whole.
AT&T Wireless Roaming Agreement Extended
Along with its first quarter results, Dobson also announced today a three-year extension of its nationwide preferred roaming agreement with AT&T Wireless (NYSE:AWE), its largest roaming partner. The two companies' previous preferred roaming agreement was scheduled to expire in June 2004. The new agreement covers TDMA roaming and extends through June 30, 2007.
AT&T Wireless is overlaying its TDMA network with GSM/GPRS technology, and Dobson plans to overlay the new technologies on its network as well. The companies continue to discuss extending their roaming relationship to cover GSM/GPRS roaming.
Dobson announced a new, 10-year roaming agreement with Cingular Wireless, its second largest roaming partner, earlier this year. With the extension of the AT&T Wireless preferred roaming agreement and the completion of the new Cingular Wireless agreement , Dobson now has more than 85 percent of its roaming traffic under long-term contract, based on first quarter roaming minutes of use.
Conference Call
Dobson plans to conduct a conference call to discuss its first quarter results on Thursday, May 9, beginning at 9 a.m. ET (8 a.m. CT). On the conference call, the Company expects to discuss current market conditions and its operating outlook. The call will also be broadcast on the Internet.
Those interested may access the call by dialing:
Conference call #s (800) 810-0924 Pass code 330642
The call may also be accessed via the internet through the Investor Relations page of Dobson's web site at www.dobson.net. A replay of the call will be available later in the day via Dobson's web site or by phone.
Replay #s (888) 203-1112 Pass code 330642
Dobson Communications is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, the rapidly growing Company owns or manages wireless operations in 17 states. For additional information on the Company 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, shortages of key equipment, restrictions on the Company's ability to finance its growth 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 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
(Includes American Cellular ownership on an
equity basis)
Three Months Ended
March 31,
--------------------------
2002 2001
----------- -----------
Operating Revenue
Service revenue $ 86,674 $ 74,485
Roaming revenue 51,880 50,837
Equipment & other revenue 4,571 5,839
----------- -----------
Total 143,125 131,161
----------- -----------
Operating Expenses
(excluding depreciation
& amortization)
Cost of service 40,628 36,304
Cost of equipment 11,333 13,294
Marketing & selling 17,800 18,487
General & administrative 19,697 19,056
----------- -----------
Total 89,458 87,141
----------- -----------
EBITDA 53,667 44,020
Depreciation & amortization (21,012) (44,453)
----------- -----------
Operating income (loss) 32,655 (433)
Minority interest (1,510) (1,195)
Loss from investment in
joint venture(1) (7,193) (19,093)
Other (expense) income, net 1,244 1,174
----------- -----------
Loss before interest & income taxes 25,196 (19,547)
Interest expense (30,666) (38,398)
Income tax (expense) benefit (649) 14,745
----------- -----------
Loss from continuing operations (6,119) (43,200)
Discontinued operations:
Income (loss) from discontinued
operations, net of taxes 5,121 (616)
Loss from discontinued operations from
investment in joint venture (327) (253)
Gain from disposal of discontinued
operations, net of taxes 81,246 --
Gain from disposal of discontinued
operations from investment
in joint venture 6,736 --
----------- -----------
Income (loss) before change in
accounting principle 86,657 (44,069)
Cumulative effect of change in
accounting principle, net of taxes (33,300) --
Cumulative effect of change in
accounting principle from
investment in joint venture (140,850) --
----------- -----------
Net Loss (87,493) (44,069)
Dividends on preferred stock (23,000) (19,490)
----------- -----------
Net loss applicable to common
shareholders $ (110,493) $ (63,559)
=========== ===========
Basic net loss applicable to common
shareholders per common share:
Continuing operations $ (0.07) $ (0.46)
Discontinued operations 1.01 (0.01)
Change in accounting principle (1.90) --
Dividends on preferred stock (0.25) (0.21)
----------- -----------
Basic net loss applicable to common
shareholders per common share $ (1.21) $ (0.68)
=========== ===========
Basic weighted average common
shares outstanding 91,642,105 94,067,290
=========== ===========
(1) Represents the Company's 50% ownership
in the Net Loss from American Cellular.
Detailed as follows:
For the
three months ended
March 31,
---------------------
2002 2001
------- -------
EBITDA 34,806 27,795
Depreciation and Amortization (15,982) (43,105)
Interest Expense (40,541) (38,956)
Other Income, net (502) 321
Income tax benefit 8,947 15,760
Dividends on preferred stock (1,114) --
------- -------
Net Loss of American Cellular
from continuing operations (100%) (14,386) (38,185)
======= =======
Table 2
Dobson Communications Corporation
Selected Financial Data
March 31, 2002
---------------
($ in millions)
Cash and cash equivalents (1) $ 157.2
==========
Total Debt: (2)
Dobson Operating Co., L.L.C. credit facility $ 520.7
Dobson/Sygnet credit facility 292.1
DCC 10.875% Senior Notes, net 298.1
Dobson/Sygnet Senior Notes 200.0
Other 0.4
----------
Total debt $ 1,311.3
==========
Preferred Stock:
Series AA Preferred Stock, 5.96% $ 200.0
Senior Exchangeable Preferred Stock, 12.25%, net 368.7
Senior Exchangeable Preferred Stock, 13.00% 242.8
----------
Total preferred stock $ 811.5
==========
Three months ended
March 31, 2002
------------------
($ in millions)
Capital Expenditures: (3) $ 17.9
==========
(1) Does not include $91.2 million of cash received in April 2002
from our partial refund of our deposit with the FCC for the PCS
auction.
(2) Does not include our proportionate interest in American
Cellular's total debt of $1.6 billion.
(3) Does not include our proportionate share of American Cellular's
capital expenditures for the three months ended March 31, 2002
totaling $13.2 million.
Table 3
Dobson Communications Corporation
Proportionately Consolidated Selected Financial Information
(Includes 50% of American Cellular's operations to
represent proportionate ownership)
For the Quarter
Ended 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 104,043 $ 115,831 $ 122,869 $ 119,553 $ 121,767
Roaming
revenue 64,200 81,801 92,286 75,468 65,177
Equipment &
other
revenue 8,062 8,699 7,963 7,249 6,123
---------- ---------- ---------- ---------- ----------
Total 176,305 206,331 223,118 202,270 193,067
---------- ---------- ---------- ---------- ----------
Operating Expenses
(excluding
depreciation
& amortization)
Cost of
service 47,976 54,450 59,034 56,092 54,315
Cost of
equipment 18,778 17,792 17,060 15,715 15,056
Marketing &
selling 25,538 25,585 25,968 25,937 24,587
General &
administra-
tive 26,096 25,849 27,000 26,010 28,038
---------- ---------- ---------- ---------- ----------
Total 118,388 123,676 129,062 123,754 121,996
---------- ---------- ---------- ---------- ----------
EBITDA (1) $ 57,917 $ 82,655 $ 94,056 $ 78,516 $ 71,071
========== ========== ========== ========== ==========
EBITDA Margin 32.9% 40.1% 42.2% 38.8% 36.8%
Pops 8,852,500 8,852,500 8,852,500 8,852,500 8,852,500
Post-paid
Gross Adds 80,800 75,200 85,950 92,500 81,800
Net Adds 31,600 27,450 34,650 34,300 16,150
Subscribers 878,500 905,950 940,600 971,450 987,600
Churn 2.0% 1.8% 1.9% 2.0% 2.2%
Average
Service
Revenue per
Subscriber $ 40 $ 43 $ 44 $ 41 $ 41
Average
Service
and Roaming
Revenue per
Subscriber $ 65 $ 73 $ 77 $ 68 $ 63
Pre-paid
Net Adds 2,300 2,150 400 2,450 1,600
Subscribers 14,850 17,000 17,400 16,950 18,550
Reseller
Net Adds 3,100 8,750 4,300 5,850 (600)
Subscribers 8,950 17,700 22,000 27,850 27,250
Total
Net Adds 37,000 38,350 39,350 42,600 17,150
Subscribers (2) 902,300 940,650 980,000 1,016,250 1,033,400
Penetration 10.2% 10.6% 11.1% 11.5% 11.7%
(1) Includes $1.6 million, $2.0 million, $2.1 million, $1.9 million
and $1.9 million of EBITDA for the quarters ended March 31, 2001,
June 30, 2001, September 30, 2001, December 31, 2001 and March
31, 2002 respectively, related to minority interests.
(2) Billing reconciliation included in fourth quarter 2001
subscribers.
Table 4
Dobson Communications Corporation
For the Quarter
Ended 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 74,485 $ 82,222 $ 86,963 $ 85,359 $ 86,674
Roaming
revenue 50,837 64,641 72,209 59,943 51,880
Equipment &
other
revenue 5,839 6,414 5,672 4,820 4,571
---------- ---------- ---------- ---------- ----------
Total 131,161 153,277 164,844 150,122 143,125
---------- ---------- ---------- ---------- ----------
Operating Expenses
(excluding
depreciation &
amortization)
Cost of
service 36,304 41,359 44,846 41,688 40,628
Cost of
equipment 13,294 12,842 12,679 11,939 11,333
Marketing
& selling 18,487 18,737 18,659 18,915 17,800
General &
administra-
tive 19,056 18,391 19,004 18,033 19,697
---------- ---------- ---------- ---------- ----------
Total 87,141 91,329 95,188 90,575 89,458
---------- ---------- ---------- ---------- ----------
EBITDA (1) $ 44,020 $ 61,948 $ 69,656 $ 59,547 $ 53,667
========== ========== ========== ========== ==========
EBITDA
Margin 33.6% 40.4% 42.3% 39.7% 37.5%
Pops 6,354,000 6,354,000 6,354,000 6,354,000 6,354,000
Post-paid
Gross Adds 53,600 56,100 58,800 65,000 58,400
Net Adds 17,600 20,900 22,800 22,800 11,100
Subscribers 604,400 625,300 648,100 668,800 679,900
Churn 2.1% 1.9% 1.9% 2.1% 2.3%
Average
Service
Revenue per
Subscriber $ 41 $ 44 $ 45 $ 43 $ 42
Average
Service and
Roaming
Revenue per
Subscriber $ 70 $ 79 $ 83 $ 73 $ 68
Pre-paid
Net Adds 2,300 2,700 600 2,700 1,700
Subscribers 11,500 14,200 14,800 14,600 16,300
Reseller
Net Adds 2,700 2,300 3,200 4,900 (700)
Subscribers 6,400 8,700 11,900 16,800 16,100
Total
Net Adds 22,600 25,900 26,600 30,400 12,100
Subscribers (2) 622,300 648,200 674,800 700,200 712,300
Penetration 9.8% 10.2% 10.6% 11.0% 11.2%
(1) Includes $1.6 million, $2.0 million, $2.1 million, $1.9 million
and $1.9 million of EBITDA for the quarters ended March 31, 2001,
June 30, 2001, September 30, 2001, December 31, 2001 and March
31, 2002 respectively, related to minority interests.
(2) Billing reconciliation included in fourth quarter 2001
subscribers.
Table 5
American Cellular Corporation
For the Quarter
Ended 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 59,117 $ 67,219 $ 71,812 $ 68,389 $ 70,187
Roaming
revenue 26,727 34,320 40,154 31,050 26,593
Equipment &
other revenue 4,446 4,568 4,583 4,858 3,103
---------- ---------- ---------- ---------- ----------
Total 90,290 106,107 116,549 104,297 99,883
---------- ---------- ---------- ---------- ----------
Operating Expenses
(excluding
depreciation &
amortization)
Cost of
service 23,343 26,181 28,375 28,807 27,374
Cost of
equipment 10,968 9,900 8,762 7,552 7,446
Marketing &
selling 14,103 13,696 14,619 14,045 13,574
General &
administra-
tive 14,081 14,917 15,993 15,954 16,682
---------- ---------- ---------- ---------- ----------
Total 62,495 64,694 67,749 66,358 65,076
---------- ---------- ---------- ---------- ----------
EBITDA $ 27,795 $ 41,413 $ 48,800 $ 37,939 $ 34,807
========== ========== ========== ========== ==========
EBITDA
Margin 30.8% 39.0% 41.9% 36.4% 34.8%
Pops 4,997,000 4,997,000 4,997,000 4,997,000 4,997,000
Post-paid
Gross Adds 54,400 38,200 54,300 55,000 46,800
Net Adds 28,000 13,100 23,700 23,000 10,100
Subscribers 548,200 561,300 585,000 605,300 615,400
Churn 1.9% 1.6% 1.8% 1.8% 2.0%
Average
Service
Revenue per
Subscriber $ 37 $ 40 $ 41 $ 38 $ 38
Average
Service and
Roaming
Revenue per
Subscriber $ 53 $ 61 $ 65 $ 55 $ 52
Pre-paid
Net Adds -- (1,100) (400) (500) (200)
Subscribers 6,700 5,600 5,200 4,700 4,500
Reseller
Net Adds 800 12,900 2,200 1,900 200
Subscribers 5,100 18,000 20,200 22,100 22,300
Total
Net Adds 28,800 24,900 25,500 24,400 10,100
Subscribers (1) 560,000 584,900 610,400 632,100 642,200
Penetration 11.2% 11.7% 12.2% 12.6% 12.9%
(1) Billing reconciliation included in fourth quarter 2001
subscribers.
Table 6
Dobson Operating Company LLC
For the Quarter
Ended 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 43,525 $ 48,799 $ 51,476 $ 50,591 $ 52,501
Roaming
revenue 41,040 53,645 59,094 47,753 41,561
Equipment &
other revenue 3,881 4,766 4,033 3,169 3,202
---------- ---------- ---------- ---------- ----------
Total 88,446 107,210 114,603 101,513 97,264
---------- ---------- ---------- ---------- ----------
Operating Expenses
(excluding
depreciation &
amortization)
Cost of
service 26,732 30,226 33,096 30,289 29,675
Cost of
equipment 7,349 8,039 7,424 5,975 6,905
Marketing &
selling 12,173 12,545 12,391 12,045 11,765
General &
administra-
tive 11,967 11,404 12,025 11,704 12,883
---------- ---------- ---------- ---------- ----------
Total 58,221 62,214 64,936 60,013 61,228
---------- ---------- ---------- ---------- ----------
EBITDA (1) $ 30,225 $ 44,996 $ 49,667 $ 41,500 $ 36,036
========== ========== ========== ========== ==========
EBITDA
Margin 34.2% 42.0% 43.3% 40.9% 37.1%
Pops 3,996,300 3,996,300 3,996,300 3,996,300 3,996,300
Post-paid
Gross Adds 31,400 36,100 38,000 36,400 36,500
Net Adds 13,500 16,400 16,000 12,000 7,200
Subscribers 341,600 358,000 374,000 384,200 391,400
Churn 1.9% 1.8% 2.0% 2.2% 2.4%
Average
Service
Revenue per
Subscriber $ 42 $ 46 $ 46 $ 44 $ 44
Average
Service and
Roaming
Revenue per
Subscriber $ 83 $ 97 $ 100 $ 86 $ 80
Pre-paid
Net Adds 2,200 2,500 300 2,400 1,600
Subscribers 10,900 13,400 13,700 14,000 15,600
Reseller
Net Adds 2,700 2,300 1,400 1,600 (1,000)
Subscribers 6,400 8,700 10,100 11,700 10,700
Total
Net Adds 18,400 21,200 17,700 16,000 7,800
Subscribers (2) 358,900 380,100 397,800 409,900 417,700
Penetration 9.0% 9.5% 10.0% 10.3% 10.5%
(1) Includes $1.6 million, $2.0 million, $2.1 million, $1.9 million
and $1.9 million of EBITDA for the quarters ended March 31, 2001,
June 30, 2001, September 30, 2001, December 31, 2001 and March
31, 2002 respectively, related to minority interests.
(2) Billing reconciliation included in fourth quarter 2001
subscribers.
Table 7
Dobson/Sygnet Communications Company
For the Quarter
Ended 3/31/01 6/30/01 9/30/01 12/31/01 3/31/02
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 30,956 $ 33,404 $ 35,484 $ 34,769 $ 34,076
Roaming
revenue 9,797 10,996 13,115 12,189 10,319
Equipment &
other revenue 1,958 1,667 1,639 1,651 1,370
---------- ---------- ---------- ---------- ----------
Total 42,711 46,067 50,238 48,609 45,765
---------- ---------- ---------- ---------- ----------
Operating Expenses
(excluding
depreciation &
amortization)
Cost of
service 9,572 11,134 11,750 11,399 10,953
Cost of
equipment 5,946 4,802 5,255 5,964 4,428
Marketing &
selling 6,314 6,192 6,268 6,870 6,035
General &
administra-
tive 7,065 6,995 6,986 6,332 6,510
---------- ---------- ---------- ---------- ----------
Total 28,897 29,123 30,259 30,565 27,926
---------- ---------- ---------- ---------- ----------
EBITDA $ 13,814 $ 16,944 $ 19,979 $ 18,044 $ 17,839
========== ========== ========== ========== ==========
EBITDA
Margin 32.3% 36.8% 39.8% 37.1% 39.0%
Pops 2,357,700 2,357,700 2,357,700 2,357,700 2,357,700
Post-paid
Gross Adds 22,200 20,000 20,800 28,600 21,900
Net Adds 4,100 4,500 6,800 10,800 3,900
Subscribers 262,800 267,300 274,100 284,600 288,500
Churn 2.3% 1.9% 1.7% 2.1% 2.1%
Average
Service
Revenue per
Subscriber $ 40 $ 42 $ 44 $ 41 $ 39
Average
Service and
Roaming
Revenue per
Subscriber $ 52 $ 56 $ 60 $ 56 $ 51
Pre-paid
Net Adds 100 200 300 300 100
Subscribers 600 800 1,100 600 700
Reseller
Net Adds -- -- 1,800 3,300 300
Subscribers -- -- 1,800 5,100 5,400
Total
Net Adds 4,200 4,700 8,900 14,400 4,300
Subscribers (1) 263,400 268,100 277,000 290,300 294,600
Penetration 11.2% 11.4% 11.7% 12.3% 12.5%
(1) Billing reconciliation included in fourth quarter 2001
subscribers.