OKLAHOMA CITY, Aug. 8, 2007 (PRIME NEWSWIRE) -- Dobson Communications Corporation (Nasdaq:DCEL) today announced its operating results for the second quarter ended June 30, 2007.
Dobson reported net income applicable to common shareholders of $16.1 million, or $0.09 per share, for the second quarter of 2007. (See Table 1.) For the second quarter of 2006, Dobson reported a net loss applicable to common shareholders of $8.4 million, or $0.05 per share.
EBITDA for the second quarter of 2007 was $132.4 million, compared with EBITDA of $107.3 million for the second quarter of 2006. Please see Table 3 for the reconciliation of EBITDA to GAAP measures.
Service revenue increased 18.6 percent to $264.8 million in the second quarter of 2007, compared with $223.3 million in the second quarter of 2006. ARPU was $52.15 for the second quarter of 2007, compared with ARPU of $47.89 for the second quarter in 2006. Data revenue contributed $6.09 to ARPU in the second quarter of 2007, compared with $3.72 in the second quarter of 2006.
Roaming revenue was $76.5 million in the second quarter of 2007, an increase of 7.7 percent over the same period of 2006. Roaming traffic totaled 827 million minutes of use (MOUs) for the second quarter of 2007, a 22.3 percent increase over the second quarter of 2006. Blended roaming yield was 9.3 cents for the second quarter of 2007.
While second quarter total revenue was 15.4 percent higher than that for the second quarter of 2006, the Company noted that total operating expenses grew by 11.2 percent.
Cost of service expense was $96.9 million in the second quarter of 2007, compared with $81.5 million for the second quarter of 2006. Incollect (off-network) expense was $26.7 million for the second quarter of 2007, compared with incollect expense of $20.5 million for the second quarter of 2006. The increase in cost of service from the second quarter of 2006 was also driven by higher network and cell site operating costs, reflecting the operating costs of markets acquired in the past 12 months and the addition of cell sites to strengthen GSM network performance.
Marketing and selling expense was $45.5 million for the second quarter of 2007, compared with $40.0 million for the second quarter last year. Higher marketing and selling expense was driven primarily by a 10.8 percent increase in postpaid gross additions in the quarter.
General and administrative expense was $51.1 million in the second quarter of 2007, compared with $46.7 million for the second quarter of 2006. Included in the second quarter 2007 expense is approximately $1.6 million in merger-related costs. On June 29, 2007, Dobson Communications announced that it has agreed to be acquired by AT&T Inc. (NYSE:T).
Subscriber growth
Dobson reported total gross subscriber additions of 158,600 for the second quarter of 2007, compared with 127,900 gross additions in the second quarter of 2006. (See Table 3.)
Postpaid gross additions were 99,300 for the second quarter of 2007, compared with 89,600 postpaid gross additions for the second quarter of 2006.
Postpaid customer churn was 1.72 percent in the second quarter of 2007, compared with 1.84 percent for the second quarter last year.
Consequently, Dobson reported 41,700 net subscriber additions in the second quarter of 2007, comprised of 22,900 postpaid customers, 5,900 prepaid customers, and 12,900 reseller customers. In the second quarter of 2006, Dobson reported 17,300 net additional subscribers, which included the addition of 13,800 postpaid customers and 7,700 prepaid customers, and a reduction of 4,200 reseller customers.
At the end of the second quarter of 2007, 93.5 percent of total customers and 96.8 percent of postpaid customers were on GSM calling plans. A year earlier, 81.8 percent of total subscribers and 86.6 percent of postpaid subscribers were GSM.
Capital expenditures for the second quarter of 2007 were $43.4 million, reflecting the addition of 119 cell sites to the Company's network and other capital improvements. Between its two subsidiaries, Dobson Cellular capital expenditures were $25.7 million, compared with $17.8 million at American Cellular. As of June 30, 2007, Dobson's total network included 3,216 cell sites.
Dobson's balance sheet at June 30, 2007 included $131.7 million in cash, $4.4 million in restricted investments and $2.8 million in short-term investments; $2.7 billion in total debt; and $135.7 million in preferred stock.
Conference Call and 2007 Guidance
The Company also announced today that it is suspending its 2007 guidance. While its acquisition by AT&T is pending, Dobson will not provide guidance on expected operating and financial results and will not conduct conference calls related to its earnings announcements. The Company noted, however, that first half 2007 results exceeded the expectations underlying its previously announced operating and financial guidance for the year.
For further analysis of quarterly results, please see the Company's quarterly report on Form 10-Q, which Dobson plans to file Thursday, August 9, 2007.
Dobson Communications is a leading provider of wireless phone services to rural and suburban markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 17 states. For additional information, please visit its web site at www.dobson.net.
Table 1
Dobson Communications Corporation
Statements of Operations
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------------------
2007 2006 2007 2006
----------------------------------------------------
($ in thousands except per share data)
(unaudited)
Operating
Revenue
Service revenue $ 264,781 $ 223,260 $ 518,726 $ 439,355
Roaming revenue 76,525 71,043 138,475 125,823
Equipment and
other revenue 18,863 17,756 37,388 34,480
----------- ------------- -------------- -----------
Total 360,169 312,059 694,589 599,658
----------- ------------- -------------- -----------
Operating Expenses
(excluding
depreciation and
amortization)
Cost of service
(exclusive of
depreciation
and amortization
shown separately
below) 96,933 81,503 190,170 157,576
Cost of equipment 34,253 36,545 68,045 69,115
Marketing and
selling 45,497 39,996 88,342 79,119
General and
administrative 51,096 46,744 99,651 94,069
----------- ------------- ------------- ------------
Total 227,779 204,788 446,208 399,879
----------- ------------- ------------- ------------
EBITDA(a) 132,390 107,271 248,381 199,779
Gain on
disposition of
operating
assets 1,567 1,593 3,133 3,257
Depreciation and
amortization (48,453) (48,155) (98,632) (98,430)
----------- ------------- ------------- ------------
Operating income 85,504 60,709 152,882 104,606
Interest expense (55,402) (57,414) (114,087) (114,821)
Loss on
redemption
of mandatorily
redeemable
preferred stock -- (37) -- (1,482)
Dividends on
mandatorily
redeemable
preferred stock -- -- -- (709)
Loss from
extinguishment
of debt (55) (12,660) (57,578) (12,717)
Other income,
net 2,470 1,636 4,045 3,535
Minority
interests
in income of
subsidiaries (2,436) (2,169) (4,735) (4,533)
----------- ------------- ------------- ------------
Income (loss)
before
income taxes 30,081 (9,935) (19,473) (26,121)
Income tax
(expense)
benefit (11,979) 3,892 6,977 9,181
----------- ------------- ------------- ------------
Net income (loss) 18,102 (6,043) (12,496) (16,940)
Dividends on
preferred stock (2,035) (2,374) (4,071) (4,749)
----------- ------------- ------------- ------------
Net income (loss)
applicable to
common stock-
holders $ 16,067 $ (8,417) $ (16,567) $ (21,689)
=========== ============= ============= ============
Basic net income
(loss) applicable
to common stock-
holders per
common share $ 0.09 $ (0.05) $ (0.10) $ (0.13)
=========== ============= ============= ============
Basic weighted
average common
shares
outstanding 171,563,025 170,100,621 171,336,469 169,749,306
=========== ============= ============= ============
Diluted net
income (loss)
applicable to
common stock-
holders per
common share $ 0.09 $ (0.05) $ (0.10) $ (0.13)
=========== ============== ============ ============
Diluted
weighted
average common
shares
outstanding(b) 189,285,064 170,100,621 171,336,469 169,749,306
=========== ============= ============= ============
(a) EBITDA is defined as net income (loss) before gain on
disposition of operating assets, depreciation and amortization,
interest expense, loss on redemption of mandatorily redeemable
preferred stock, dividends on mandatorily redeemable preferred stock,
loss from extinguishment of debt, other income, net, minority
interest in income of subsidiaries and income tax (expense) 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 communications. You should not construe
EBITDA as an alternative to net income (loss) as determined in
accordance with generally accepted accounting principles, or GAAP, as an
alternative to cash flows from operating activities 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.
(b) For the three months ended June 30, 2007, dilutive shares
include potentially dilutive shares from option grants and our
convertible debt. Our Series F convertible preferred stock
is anti-dilutive for the three months ended June 30, 2007.
Table 2
Dobson Communications Corporation
Selected Balance Sheet and Statistical Data
Balance Sheet Data: June 30, December 31,
2007 2006
------------------------
($ in millions)($ in millions)
(unaudited)
Cash and cash equivalents
(unrestricted) (a) $ 131.7 $ 117.1
Restricted investments $ 4.4 $ 4.4
Short-term investments $ 2.8 $ 5.0
Debt:
DCC Senior Floating Rate Notes $ 150.0 $ 150.0
DCC Senior Convertible
Debentures 160.0 160.0
DCS 8.375% Senior Notes 510.0 511.2
DCS 9.875% Senior Notes 325.0 325.0
DCC 8.875% Senior Notes 419.7 419.7
ACC Credit Facility 897.8 124.7
ACC 9.5% Senior Notes, net 16.3 15.8
ACC 10.0% Senior Notes 185.7 900.0
-------- --------
Total debt $2,664.5 $2,606.4
======== ========
Preferred Stock: -------- --------
Series F Preferred Stock $ 135.7 $ 135.7
======== ========
Six Months Ended June 30,
------------------------
2007 2006
-------- --------
($ in millions)($ in millions)
Capital Expenditures: $ 79.3 $ 81.4
======== ========
(a) Includes $23.3 million and $36.5 million of cash and cash
equivalents from American Cellular Corporation at June 30, 2007
and December 31, 2006, respectively.
Table 3
Dobson Communications Corporation
For the Quarter Ended
6/30 3/31 12/31 9/30 6/30
2007 2007 2006 2006 2006
($ in thousands except per subscriber data)
(unaudited)
Operating
Revenue
Service
revenue $ 264,781 $ 253,945 $ 247,106 $ 232,324 $ 223,260
Roaming
revenue 76,525 61,950 70,089 87,365 71,043
Equipment
and
other
revenue 18,863 18,525 17,873 16,681 17,756
---------- --------- --------- --------- ---------
Total 360,169 334,420 335,068 336,370 312,059
---------- --------- --------- --------- ---------
Operating Expenses
(excluding
depreciation
and
amortization)
Cost of
service 96,933 93,237 94,558 88,809 81,503
Cost of
equipment 34,253 33,792 33,911 33,152 36,545
Marketing
and
selling 45,497 42,845 43,854 42,155 39,996
General
and
administra-
tive 51,096 48,555 49,365 47,527 46,744
---------- --------- --------- --------- ---------
Total 227,779 218,429 221,688 211,643 204,788
---------- --------- --------- --------- ---------
EBITDA
(a)(b) $ 132,390 $ 115,991 $ 113,380 $ 124,727 $ 107,271
========== ========= ========= ========= =========
Pops 12,672,900 12,672,900 12,672,900 12,052,700 12,039,200
Post-paid
Gross Adds 99,300 94,300 95,000 92,100 89,600
Net Adds 22,900 12,900 15,100 11,300 13,800
Subscri-
bers 1,489,000 1,466,100 1,453,200 1,390,800 1,378,900
Churn 1.72% 1.86% 1.84% 1.95% 1.84%
Pre-paid
Gross Adds 32,200 28,600 39,700 33,300 23,900
Net Adds 5,900 1,200 16,100 14,500 7,700
Subscribers 114,600 108,700 107,500 88,500 73,200
Reseller
Gross Adds 27,100 9,800 11,100 14,100 14,400
Net Adds 12,900 (4,200) (3,100) (2,300) (4,200)
Subscribers 114,900 102,000 106,200 109,300 111,600
Total
Gross Adds 158,600 132,700 145,800 139,500 127,900
Net Adds 41,700 9,900 28,100 23,500 17,300
Subscri-
bers 1,718,500 1,676,800 1,666,900 1,588,600 1,563,700
ARPU $ 52.15 $ 50.73 $ 49.92 $ 49.16 $ 47.89
Penetration 13.6% 13.2% 13.2% 13.2% 13.0%
(a) Includes $2.8 million, $2.6 million, $2.5 million, $2.7 million
and $2.5 million of EBITDA for the quarters ended June 30,
2007, March 31, 2007, December 31, 2006, September 30, 2006 and
June 30, 2006, respectively, related to minority interests.
(b) A reconciliation of EBITDA to net income (loss) as determined in
accordance with GAAP is as follows:
Net income
(loss) $ 18,102 $(30,598) $ 1,742 $ 27,979 $ (6,043)
Add back
non-EBITDA
items
included
in net
income
(loss):
Depreciation
and
amortization (48,453) (50,179) (50,097) (47,776) (48,155)
Gain on
disposition
of
operating
assets 1,567 1,566 1,567 1,566 1,593
Interest
expense (55,402) (58,685) (59,423) (57,840) (57,414)
Loss on
redemption
of
mandatorily
redeemable
preferred
stock -- -- -- -- (37)
Loss
from
extinguishment
of debt (55) (57,523) (522) -- (12,660)
Other
income,
net 2,470 1,575 2,245 1,810 1,636
Minority
interests
in
income
of
subsid-
iaries (2,436) (2,299) (2,248) (2,447) (2,169)
Income
tax
(expense)
benefit (11,979) 18,956 (3,160) 7,939 3,892
---------- --------- --------- --------- ---------
EBITDA $ 132,390 $ 115,991 $ 113,380 $ 124,727 $ 107,271
========== ========= ========= ========= =========
Table 4
Dobson Cellular Systems
For the Quarter Ended
6/30 3/31 12/31 9/30 6/30
2007 2007 2006 2006 2006
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 158,486 $ 150,476 $ 146,198 $ 140,711 $133,739
Roaming
revenue 42,096 33,386 36,724 47,869 41,548
Equipment
and
other
revenue 15,309 15,305 15,351 14,701 15,277
--------- --------- --------- --------- --------
Total 215,891 199,167 198,273 203,281 190,564
--------- --------- --------- --------- --------
Operating Expenses
(excluding
depreciation
and
amortization)
Cost of
service 57,805 56,601 55,703 55,018 52,478
Cost of
equipment 20,210 20,339 20,300 20,676 22,613
Marketing
and
selling 26,310 24,865 25,752 25,007 24,311
General
and
admini-
strative 29,881 27,926 28,922 27,919 27,319
--------- --------- --------- --------- --------
Total 134,206 129,731 130,677 128,620 126,721
--------- --------- --------- --------- --------
EBITDA(a)(b) $ 81,685 $ 69,436 $ 67,596 $ 74,661 $ 63,843
======== ======== ========= ======== ========
Pops 6,913,700 6,913,700 6,913,700 6,724,700 6,711,200
Post-paid
Gross Adds 58,800 55,900 58,900 58,200 56,100
Net Adds 16,000 11,000 13,900 11,700 11,500
Subscribers 838,500 822,500 811,500 797,600 785,300
Churn 1.72% 1.83% 1.87% 1.96% 1.91%
Pre-paid
Gross Adds 20,500 17,100 24,600 21,100 16,100
Net Adds 3,700 (200) 8,900 9,200 5,100
Subscribers 70,400 66,700 66,900 58,000 48,000
Reseller
Gross Adds 15,300 7,300 7,800 9,400 9,300
Net Adds 7,800 (200) 400 1,300 600
Subscribers 73,900 66,100 66,300 65,900 64,600
Total
Gross Adds 94,600 80,300 91,300 88,700 81,500
Net Adds 27,500 10,600 23,200 22,200 17,200
Subscribers 982,800 955,300 944,700 921,500 897,900
ARPU $ 54.70 $ 52.91 $ 52.34 $ 51.59 $ 50.15
Penetration 14.2% 13.8% 13.7% 13.7% 13.4%
(a) Includes $2.8 million, $2.6 million, $2.5 million, $2.7 million
and $2.5 million of EBITDA for the quarters ended June 30, 2007,
March 31, 2007, December 31, 2006, September 30, 2006 and June 30,
2006, respectively, related to minority interests.
(b) A reconciliation of EBITDA to net income (loss) as determined in
accordance with GAAP is as follows:
Net income
(loss) $ 10,597 $ 2,730 $ (293) $ 10,851 $ (9,303)
Add back
non-EBITDA
items
included
in net
income
(loss):
Depreciation
and amor-
tization (28,239) (28,851) (28,938) (28,389) (28,164)
Gain on
dispo-
sition
of operating
assets 851 850 851 850 857
Interest
expense (37,603) (37,367) (37,943) (38,232) (38,562)
Loss from
extinguishment
of debt -- -- (522) -- (12,549)
Other
income,
net 3,253 2,651 3,052 2,030 1,761
Minority
interests
in
income of
subsidiaries (2,436) (2,299) (2,248) (2,447) (2,169)
Income
tax
(expense)
benefit (6,914) (1,690) (2,141) 2,378 5,680
--------- --------- --------- --------- --------
EBITDA $ 81,685 $ 69,436 $ 67,596 $ 74,661 $ 63,843
========= ========= ========= ========= ========
Table 5
American Cellular Corporation
For the Quarter Ended
6/30 3/31 12/31 9/30 6/30
2007 2007 2006 2006 2006
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 106,295 $ 103,469 $ 100,908 $ 91,613 $ 89,521
Roaming
revenue 34,429 28,564 33,365 39,496 29,495
Equipment
and
other
revenue 6,875 6,541 6,123 5,583 6,080
--------- --------- -------- -------- --------
Total 147,599 138,574 140,396 136,692 125,096
--------- --------- -------- -------- --------
Operating
Expenses
(excluding
depre-
ciation
and
amorti-
zation)
Cost of
service 41,057 38,565 40,711 35,648 30,881
Cost of
equipment 14,043 13,453 13,611 12,476 13,932
Marketing
and
selling 19,330 18,004 18,066 17,198 15,786
General
and
admini-
strative 22,597 22,011 22,178 21,344 21,165
--------- --------- -------- -------- --------
Total 97,027 92,033 94,566 86,666 81,764
--------- --------- -------- -------- --------
EBITDA(a) $ 50,572 $ 46,541 $ 45,830 $ 50,026 $ 43,332
========= ========= ======== ======== ========
Pops 5,759,200 5,759,200 5,759,200 5,328,000 5,328,000
Post-paid
Gross Adds 40,500 38,400 36,100 33,900 33,500
Net Adds 6,900 1,900 1,200 (400) 2,300
Subscribers 650,500 643,600 641,700 593,200 593,600
Churn 1.73% 1.90% 1.82% 1.93% 1.76%
Pre-paid
Gross Adds 11,700 11,500 15,100 12,200 7,800
Net Adds 2,200 1,400 7,200 5,300 2,600
Subscribers 44,200 42,000 40,600 30,500 25,200
Reseller
Gross Adds 11,800 2,500 3,300 4,700 5,100
Net Adds 5,100 (4,000) (3,500) (3,600) (4,800)
Subscribers 41,000 35,900 39,900 43,400 47,000
Total
Gross Adds 64,000 52,400 54,500 50,800 46,400
Net Adds 14,200 (700) 4,900 1,300 100
Subscribers 735,700 721,500 722,200 667,100 665,800
ARPU $ 48.76 $ 47.88 $ 46.78 $ 45.85 $ 44.88
Penetration 12.8% 12.5% 12.5% 12.5% 12.5%
(a) A reconciliation of EBITDA to net income (loss) as determined in
accordance with GAAP is as follows:
Net income
(loss) $ 4,089 $ (36,593) $ (1,359) $ 4,483 $ (100)
Add back
non-EBITDA
items
included
in net
income
(loss):
Depreciation
and amorti-
zation (20,171) (21,284) (21,115) (19,343) (19,948)
Gain on dis-
position of
operating
assets 716 716 716 716 736
Interest
expense (22,591) (25,942) (26,420) (24,540) (23,779)
Loss from
extinguish-
ment of
debt (55) (57,523) -- -- --
Other
expense,
net (1,157) (1,505) (1,177) (592) (483)
Income tax
(expense)
benefit (3,225) 22,404 807 (1,784) 42
--------- --------- -------- -------- --------
EBITDA $ 50,572 $ 46,541 $ 45,830 $ 50,026 $ 43,332
========= ========= ======== ======== ========