Dobson Communications Reports Second Quarter 2007 Results

Oklahoma City, Oklahoma, UNITED STATES


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
               =========   =========    ========   ========   ========

        

Coordonnées