21% Increase in Service Revenue;
26% Increase in Operating Cash Flow;
37% Increase In Subscribers
FT. MYERS, Fla., April 23 /PRNewswire/ -- Palmer Wireless, Inc.
(Nasdaq: PWIR) today reported that record first quarter growth in subscribers,
coupled with improved operating efficiencies and lowered interconnection
charges, resulted in significantly increased service revenue, operating cash
flow and net income for the quarter ended March 31, 1997. Company highlights,
which are in millions of dollars, except for per share data, are as follows:
Palmer Wireless Company Highlights
(Unaudited)
Three Months Ended
March 31,
1997 1996 %
Service Revenue $42.2 $34.9 20.9%
Operating Cash Flow** 18.1 14.4 25.5%
Margin % 42.8% 41.3%
Average Monthly Revenue Per Sub. $47.70 $53.73 -11.2%
Total Subscribers 310,823 227,400 36.7%
Per Share Information:
Average Shares Outstanding 27,813,259 23,561,923 --
Operating Cash Flow Per Share $.65 $.61 --
Net Income (Loss) Per Share $.04 $.00 --
** Defined as operating income before depreciation and amortization
"We are very pleased with our first quarter results," said Palmer Wireless
President and Chief Executive Officer William J. Ryan. "The company rebounded
strongly from the fourth quarter, posting solid results in subscriber
additions, operating cash flow and net income. Despite increasing
competition, our systems continue to show strong growth and improved margins,
as we continue to successfully focus our attention on lowering operating costs
per subscriber."
"We are particularly pleased with the results of our Savannah and Augusta
properties," Ryan continued.
"As two of Palmer's largest population markets, we expect these MSA's to
make key contributions to Palmer's future operating results. Both markets are
now integrated into Palmer's method of operation and both experienced strong
penetration growth during the quarter."
Palmer Wireless added 16,084 internal net subscribers during the first
quarter, a 4.3% increase from the same period last year. During the quarter
Palmer also added another 14,923 subscribers from its acquisition of the
Georgia 13 RSA. Total cellular subscribers increased to 310,823 at March 31,
1997, 37% higher than a year earlier.
The Company's monthly churn rate increased to 1.9% in the first quarter,
from 1.5% during the same period last year. This increase is primarily due to
increased rate discounting and promotions targeted at existing cellular
customers, as competitors have moved to add subscribers and gain market share
in advance of the introduction of PCS. While this 1.9% rate is higher than
last year, it is down from the 2.1% churn rate experienced during the fourth
quarter, and management believes that this rate is still well below the
industry average.
Palmer completed the first quarter at an average market penetration rate
of 7.9%, up from 6.8% in the first quarter of 1996. This improvement in
penetration would have been even larger except for Palmer's acquisition of the
Savannah and Augusta, Georgia cellular markets ("the GTE Acquisition") on
December 1, 1995 and the Georgia 1 RSA acquisition in June of 1996. These
properties are significantly under penetrated relative to Palmer's core
systems. Excluding these properties, Palmer's penetration would have been
8.9% as of March 31, 1997.
Service revenue rose 20.9% in the first quarter of 1997 to a record
$42.2 million, up from $34.9 million generated during the first quarter of
last year. Average monthly service revenue per subscriber declined 11.2% from
$53.73 in the first quarter of 1996 to $47.70 in the first quarter of 1997.
Generally, declines in revenue per subscriber are normal in this industry.
This is primarily because new customers tend to use less airtime than
established subscribers. Consequently, growth in service revenue generally
does not increase proportionately with the increase in subscribers. This
quarter's large decline also reflects more competitive rate plans introduced
into Palmer's markets.
Total operating and administrative expenses, excluding depreciation and
amortization, increased 9.8% to $16.5 million in the first quarter of 1997
from $15.0 million in the first quarter of 1996. Sales and marketing costs
(including installation costs and net phone subsidies) increased 39.3% to
$7.7 million in the first quarter from $5.5 million in the first quarter of
1996.
Palmer's cost to add a gross subscriber (including net phone subsidies)
increased to $234 during the first quarter of 1997, as compared to $217 during
the same quarter last year. Larger phone subsidies and marketing promotions
are the primary reasons for this increase. Despite this increase, management
believes that Palmer's cost to add a subscriber is still well below the
industry average.
Total cash operating costs (including phone subsidy) per subscriber per
month declined 13.6% from $31.55 in the first quarter of 1996 to $27.27 in the
first quarter of 1997, and more than offset the decline in revenue per
subscriber. Management believes that this monthly cost per subscriber is
among the lowest in the industry.
Operating cash flow rose to $18.1 million for the quarter. This result
was 25.5% higher than the $14.4 million earned in the first quarter of last
year. Operating cash flow margins increased in the first quarter to 42.8% of
service revenues versus 41.3% for the same quarter last year, reflecting
increased operating efficiency, improved roaming relationships with
neighboring carriers, as well as lower interconnection charges.
Net income for the quarter was $1.2 million or $.04 per share, as compared
to $0.1 million or $.00 per share for the same period last year.
Palmer Wireless, headquartered in Ft. Myers, Florida, owns and operates
18 non-wireline cellular telephone systems in Florida, Alabama, Georgia, and
South Carolina covering a total estimated population of 3.9 million with over
310,000 subscribers. All of the Company's systems are North American Cellular
Network (NACN) and Cellular One Affiliates. The Company trades on the NASDAQ
Stock Market under the symbol: PWIR.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995:
The statements made in this press release, other than historical financial
results are forward-looking in nature. Palmer's actual results may differ
materially from those projected in this release. Primary factors that may
effect these projections include, but are not limited to: changes in the
overall economy; the number and makeup of the competitors in each of our
markets; the introduction or lack of introduction of new technology; the
ability of Palmer to secure sufficient locations to provide adequate coverage
within each of our markets; changes in law and/or regulatory policy;
agreements or lack of agreements with neighboring cellular, PCS, long distance
and/or local exchange carriers; and the mix of products and services offered
in our markets. You should evaluate any statements in light of these
important factors.
Palmer Wireless and Subsidiaries
Summary of Operating Statistics
Three Months Ended
March 31,
1996 1997 % Growth
Subscriber Statistics
Net Subscriber Additions 15,415 16,084 4.3%
Ending Subscriber Base 227,400 310,823 36.7%
Estimated Gross Population (A)3,324,430 3,914,840
Penetration % 6.8% 7.9%
Monthly Churn Rate 1.5% 1.9%
Cost to Add a Gross Subscriber
(Including Phone Loss) $217 $234
Cost to Add a Net Subscriber
(Including Phone Loss) $357 $476
Revenue Statistics
($ in 000's, except per subscriber information)
Local Service Revenue (B) $29,879 $36,273 21.4%
Roaming Revenue (B) 5,036 5,947 18.1%
Total Service Revenue $34,915 $42,220 20.9%
Local Revenue Per Subscriber (C) $45.98 $40.98 -10.9%
Total Service Revenue Per
Subscriber (C) $53.73 $47.70 -11.2%
Profitability Statistics
($ in 000's, except per
subscriber information)
Monthly Cash Operating Costs
Per Subscriber (D) $31.55 $27.27 -13.6%
Operating Cash Flow Before Sales,
Marketing Installation, Phone
Loss $19,808 $25,741 29.3%
% Margin - Service Revenues 57.0% 61.0%
Operating Cash Flow (EBITDA) $14,412 $18,086 25.5%
% Margin - Service Revenues 41.3% 42.8%
Operating Income $8,514 $10,533 23.7%
Net Income (Loss) $76 $1,177 1446.7%
Per Share Information
Weighted Shares Outstanding
(in 000's) 23,562 27,813
Operating Cash Flow Per Share $0.61 $0.65
Operating Income Per Share $0.36 $0.38
Net Income (Loss) Per Share (D) $0.00 $0.04
Notes To Operating Summary
(A) Based upon year end estimates from the CACI Ninth edition Sourcebook
(B) Local Service Revenue equals Access, Airtime, Toll, Feature,
Connection, Disconnection and Other Revenues.
(C) Denominator based upon adding BOM subs for reach period and dividing
by number of periods reported
(D) Defined as Total Operating Expenses before depreciation and
amortization (Including Phone Subsidy) divided by BOM subs for each period
divided by the number of periods
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands, except per share amounts)
For the three months
ended March 31,
1996 1997
Revenue:
Service $34,915 $42,220
Equipment sales and
installation 2,035 2,463
Total revenue $36,950 $44,683
Operating Expenses:
Engineering, technical and
other direct 7,683 7,430
Cost of equipment 3,931 5,807
Selling, general and
administrative 10,924 13,360
Total expenses $22,538 $26,597
Operating income before
depreciation and
amortization $14,412 $18,086
Margin as a % of service
revenue 41.3% 42.8%
Depreciation and
amortization 5,898 7,553
Operating income $8,514 $10,533
Other income (expense):
Interest expense, net (7,945) (7,872)
Other income, net -- 71
Total other expense $(7,945) $(7,801)
Income before minority
interest share of income
and income taxes $569 $2,732
Minority interest share of
income (452) (331)
Income before income taxes $117 $ 2,401
Income taxes (41) (1,224)
Net income $ 76 $ 1,177
Net income per share of
common stock $0.00 $0.04
Average shares
outstanding 23,561,923 27,813,259
Palmer Wireless, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
($ in thousands)
For the three months
ended March 31,
1996 1997
Cash flows from operating activities:
Net income $ 76 $ 1,177
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 5,898 7,553
Minority interest share of income 452 331
Deferred income taxes 41 1,224
Loss on disposal of property -- 5
Interest deferred and added
to long-term debt 187 --
Payment of deferred interest -- (1,514)
Decrease in trade accounts receivable 50 1,730
Decrease in inventory 378 1,223
Increase in accounts payable
and accrued expenses 40 1,252
Change in other accounts (343) (651)
Total adjustments $ 6,703 $ 11,153
Net cash provided
by operating activities $ 6,779 $ 12,330
Cash flows from investing activities:
Capital expenditures (6,618) (16,987)
Proceeds from sales of
property and equipment -- 12
Purchase of cellular systems -- (31,096)
Collection of purchase price adjustment 2,452 --
Purchases of minority interests (1,224) (368)
Increase in other intangible
assets and other assets (2,247) (48)
Net cash used in investing activities $ (7,637) $ (48,487)
Cash flows from financing activities:
Increase in short-term notes payable -- 1,332
Repayment of long-term debt (25) (3,782)
Proceeds from long-term debt 2,000 39,000
Net cash provided by
financing activities $ 1,975 $ 36,550
Net increase in cash
and cash equivalents $ 1,117 $ 393
Cash and cash equivalents
at the beginning of period 3,436 1,698
Cash and cash equivalents
at the end of period $ 4,553 $ 2,091
Supplemental disclosure
of cash flow information:
Income taxes paid (refunded), net $ 67 $ (648)
Interest paid $ 7,033 $ 8,615
Palmer Wireless, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
($ in thousands)
December 31, March 31,
1996 1997
Assets:
Current assets:
Cash and cash equivalents $ 1,698 $ 2,091
Trade accounts receivable, net
of allowance for doubtful accounts 18,784 17,819
Receivable from other cellular carriers 1,706 3,194
Deferred income taxes 830 1,044
Prepaid expenses and deposits 2,313 1,940
Inventory 5,106 4,043
Total current assets $ 30,437 $ 30,131
Net property, plant and equipment 132,438 148,121
Licenses, net of amortization 375,808 400,620
Other intangible assets and other
assets, at cost less accumulated
amortization 11,259 10,694
Total $ 549,942 $ 589,566
Liabilities and Equity:
Current liabilities:
Notes payable $ 1,366 $ 2,698
Current installments of long-term debt 5,296 --
Accounts payable 10,394 10,510
Accrued expenses 8,399 9,871
Other liabilities 4,686 4,770
Total current liabilities $ 30,141 $ 27,849
Long-term debt, excluding
current installments 337,000 376,000
Deferred income taxes 11,500 12,938
Minority interests 6,371 6,672
Total liabilities $ 385,012 $ 423,459
Stockholders' equity 164,930 166,107
Total $ 549,942 $ 589,566
SOURCE Palmer Wireless, Inc.
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CONTACT:
Wayne Wisehart or Jeff Green of Palmer
Wireless, 941-433-8226; or Chris Plunkett or Diana Brainerd of
Brainerd Communicators, Inc., 212-986-6667
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