53% Increase in Service Revenue
71% Increase in Operating Cash Flow
72% Increase In Subscribers
FT. MYERS, Fla., July 30 /PRNewswire/ -- Palmer Wireless, Inc.
(Nasdaq: PWIR) today reported that strong growth in its customer base,
coupled with continued improvements in operating efficiencies, resulted
in record revenue and operating cash flow for the quarter ended June 30,
1996. Company highlights, which are in millions of dollars, except for
per share data, are as follows:
PALMER WIRELESS COMPANY
Highlights
(Unaudited)
Three Months Ended
June 30,
1996 1995 % Change
Service Revenue $36.4 $23.8 52.9%
Operating Cash flow** 17.3 10.1 71.3%
Margin % 47.5% 42.5% --
Average Monthly Revenue Per Sub. $52.23 $59.82 -12.7%
Total Subscribers 243,887 141,944 71.8%
Per Share Information:
Average Shares Outstanding 24,299,453 23,300,351 --
Operating Cash Flow Per Share $.71 $.43 --
Net Income (Loss) Per Share $.07 $.07 --
Six Months Ended
June 30,
1996 1995 % Change
Service Revenue $70.2 $44.2 58.8%
Operating Cash flow** 31.7 18.4 72.6%
Margin % 45.1% 41.5% --
Average Monthly Revenue Per Sub. $52.16 $58.31 -10.5%
Total Subscribers 243,887 141,944 71.8%
Per Share Information:
Average Shares Outstanding 23,940,039 20,968,685 --
Operating Cash Flow Per Share $1.32 $.88 --
Net Income (Loss) Per Share $.07 $(.11) --
** Defined as operating income before depreciation and amortization
"Our second quarter results reflect the Company's continued strong
operating performance across all key operating measurements," said
Palmer Wireless President and Chief Executive Officer William J. Ryan.
"Demand for wireless services in our region remains strong and we
continue to aggressively add new subscribers. In addition to internal
growth, we have continued to gain critical mass in the Southeast
through strategic acquisitions, including our recently closed purchases
of the Georgia 1 and Georgia 6 RSA's which added over 400,000 pops to
our coverage area."
Mr. Ryan continued, "I am pleased to report that we are on track to
meet our financial and operating objectives. Supported by the proceeds
of our secondary offering completed in June and strong operating
cash flow growth, we remained focused on integrating our acquisitions,
improving our overall operating results, and searching for additional
acquisitions that will expand our Southeast cluster."
Palmer Wireless added 14,873 internal net subscribers during the
second quarter, a 12.0% increase from the same period last year. Palmer
added another 1,614 subscribers from its acquisition during the quarter
of the Georgia 1 RSA. Total cellular subscribers increased to 243,887
at June 30, 1996, 71.8% higher than a year earlier.
The Company's churn rate increased slightly to 1.8% in the second
quarter, from 1.7% during the same period last year. Management
believes that its churn rate is well below the industry average, and
that the year-to-date churn rate of 1.6% is in line with Company
expectations.
Palmer ended the second quarter at an average market penetration of
6.8%, up from 5.5% in the second quarter of 1995. 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 recently completed Georgia
1 RSA acquisition. These properties were underdeveloped and have not
yet been fully integrated into Palmer's method of operation. Excluding
these properties, Palmer's penetration would have been 7.9% at June 30,
1996.
Service revenue rose 52.9% in the second quarter of 1996 to a record
$36.4 million, up from $23.8 million generated during the second quarter
of 1995. Average monthly service revenue per subscriber declined
12.7% from $59.82 in the second quarter of 1995 to $52.23 in the second
quarter of 1996. 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.
However, this quarter's large decline also reflects several revised
roaming agreements the Company entered into with some of its neighboring
carriers during the first and second quarters of 1996. These agreements
provide for reciprocal lower roaming rates per minute of use between
Palmer and these neighboring carriers. This results in lower roaming
revenue for the Company, but also results in offsetting lower cost of
service expenses when Palmer's subscribers are roaming on these
neighboring systems. Excluding the effects of roaming revenue, average
monthly revenue per subscriber declined approximately 6.7% from the
second quarter of 1995.
Total operating and administrative expenses, excluding depreciation
and amortization, increased 37.8% to $13.2 million in the second quarter
of 1996 from $9.6 million in the second quarter of 1995. Sales and
marketing costs (including installation costs and net phone subsidies)
increased 43.4% to $5.9 million in the second quarter from $4.1 million
in the second quarter of 1995.
Palmer's cost to add a net subscriber increased to $395 for the
second quarter of 1996, as compared to $308 for the second quarter of
1995. Increased fixed marketing costs associated with the establishment
of retail marketing in the recently acquired Augusta and Savannah,
Georgia markets is the primary reason for the increase in the cost to
add a net subscriber. Excluding these properties, Palmer's cost to add
a net subscriber would have increased to only $319 during the second
quarter. Management believes, however, that Palmer's cost to add a net
subscriber is still well below the industry average.
Operating cash flow rose to a record $17.3 million for the second
quarter. This result was 71.3% higher than the $10.1 million earned in
the second quarter of 1995 and 19.7% higher than the first quarter of
this year. Operating cash flow margins increased in the second quarter
to 47.5% of service revenues versus 42.5% for the same quarter last
year, reflecting increased operating efficiency, as well as improved
roaming agreements with neighboring cellular service providers.
Net income for the six month period ending June 30, 1996 was
$1.8 million or $.07 per share, as compared to a loss of $2.3 million or
$.11 per share for the same period last year.
Palmer Wireless, headquartered in Ft. Myers, Florida, owns and
operates 17 non-wireline cellular telephone systems in Florida, Alabama,
Georgia, and South Carolina covering a total estimated population
of 3.8 million with over 250,000 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.
PALMER WIRELESS, INC. AND SUBSIDIARIES
SUMMARY OF OPERATING STATISTICS
Three Months Ended
June 30, %
1995 1996 GROWTH
Subscriber Statistics
Net Subscriber Additions 13,283 14,873 12.0%
Subscriber Base 141,944 243,887 71.8%
(A) Estimated Gross
Population 2,577,630 3,561,286 --
Penetration % 5.5% 6.8% --
Average Monthly Churn Rate 1.7% 1.8% --
Cost To Add a Gross Subscriber
(including Phone Loss) $201 $216 --
Cost To Add a Net Subscriber
(including Phone Loss) $308 $395 --
Operating Statistics
($ in 000's except for
per subscriber information)
(B) Total Service Revenue $23,802 $36,349 52.7%
(C) Service Revenue
Per Subscriber $59.82 $52.23 -12.7%
Cash Operating Costs
(including phone subsidy) $13,690 $19,094 39.5%
(C) Cash Operating Costs
(including phone subsidy)
Per Subscriber $34.41 $27.44 -20.3%
Profitability Statistics
($ In 000's)
Operating Cash Flow
Before Sales, Marketing,
Install., Phone Loss $14,206 $23,127 62.8%
% Margin - Total Revenues 64.8% 60.0% --
% Margin - Service Revenues 59.7% 63.6% --
Operating Cash Flow (EBITDA) $10,112 $17,255 70.6%
% Margin - Total Revenues 39.0% 44.8% --
% Margin - Service Revenues 42.5% 47.5% --
Operating Income $6,892 $11,281 63.7%
Net Income (Loss) $1,620 $1,684 (D)
Per Share Information
Weighted Average
Shares Outstanding
(shares in 000's) 23,300 24,299 --
Operating Cash flow (EBITDA)
Per Share $0.43 $0.71 --
Operating Income Per Share $0.30 $0.46 --
Net Income (Loss) Per Share $0.07 $0.07 --
Six Months Ended
June 30, %
1995 1996 GROWTH
Subscriber Statistics
Net Subscriber Additions 24,720 30,288 22.5%
Subscriber Base 141,944 243,887 71.8%
(A) Estimated Gross
Population 2,577,630 3,561,286 --
Penetration % 5.5% 6.8% --
Average Monthly Churn Rate 1.6% 1.6% --
Cost To Add a Gross Subscriber
(including Phone Loss) $206 $216 --
Cost To Add a Net Subscriber
(including Phone Loss) $311 $375 --
Operating Statistics
($ in 000's except for
per subscriber information)
(B) Total Service Revenue $44,211 $70,205 58.8%
(C) Service Revenue
Per Subscriber $58.31 $52.16 -10.5%
Cash Operating Costs
(including phone subsidy) $25,859 $38,538 49.0%
(C) Cash Operating Costs
(including phone subsidy)
Per Subscriber $34.10 $28.64 -16.0%
Profitability Statistics
($ In 000's)
Operating Cash Flow
Before Sales, Marketing,
Install., Phone Loss $26,043 $43,035 65.2%
% Margin - Total Revenues 53.9% 57.8% --
% Margin - Service Revenues 58.9% 61.3% --
Operating Cash Flow (EBITDA) $18,352 $31,667 72.6%
% Margin - Total Revenues 38.0% 42.5% --
% Margin - Service Revenues 41.5% 45.1% --
Operating Income $11,765 $19,795 68.3%
Net Income (Loss) ($2,337) $1,760 --
Per Share Information
Weighted Average
Shares Outstanding
(shares in 000's) 20,969 23,940 --
Operating Cash flow (EBITDA)
Per Share $0.88 $1.32 --
Operating Income Per Share $0.56 $0.83 --
Net Income (Loss) Per Share ($0.11) $0.07 --
Notes To Operating Summary
(A) Based upon year-end population estimates from the CACI Eighth
Edition Sourcebook
(B) Service Revenue equals Access, Airtime, Long Distance, Feature,
Connection, Disconnection, Gross Outcollect Roaming, and other Revenues.
Installation and Warranty Revenue is included in Equipment Sales.
(C) Denominator Computed Based upon adding BOM Subs for each period
and dividing by number of periods reported.
(D) Includes a Non-Recurring Charge of $2,650 related to the
establishment of Deferred Taxes upon the Exchange of certain Assets and
Liabilities of Palmer Cellular Partnership for the Stock of Palmer
Wireless, Inc.
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited)
December 31, June 30,
1995 1996
Assets
Current assets:
Cash and cash equivalents $ 3,436 $ 1,372
Trade accounts receivable,
net of allowance for
doubtful accounts 17,347 18,156
Receivable from other cellular carriers 3,936 223
Deferred income taxes 821 768
Prepaid expenses and deposits 1,111 2,039
Inventory 2,434 2,076
Total current assets 29,085 24,634
Net property, plant and equipment 100,936 118,746
Licenses, net of amortization 321,053 345,095
Other intangible assets,
net of amortization 11,797 12,715
Total $462,871 $501,190
Liabilities and Equity
Current liabilities:
Short-Term Debt $ -- $ 2,535
Current installments of long-term debt 7,441 7,717
Accounts payable 10,795 9,334
Accrued expenses 8,833 9,355
Other liabilities 3,451 3,710
Total current liabilities 30,520 32,651
Long-term debt, excluding
current installments 343,000 282,000
Deferred income taxes 9,636 10,081
Minority interests 5,162 5,850
Total liabilities 388,318 330,582
Stockholders' equity 74,553 170,608
Total $462,871 $501,190
Note: The balance sheet at December 31, 1995 has been derived from
the audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands, except per share amounts)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1995 1996 1995 1996
Revenue:
Service $23,802 $36,349 $44,211 $70,205
Equipment sales
and installation 2,129 2,204 4,095 4,239
Total revenue 25,931 38,553 48,306 74,444
Operating expenses:
Engineering, technical
and other direct 4,669 5,779 8,529 12,403
Cost of equipment 3,525 4,466 6,669 8,397
Selling, general
and administrative 7,625 11,053 14,756 21,977
Depreciation and
amortization 3,220 5,974 6,587 11,872
Total operating
expenses 19,039 27,272 36,541 54,649
Operating income 6,892 11,281 11,765 19,795
Other income
(expense):
Interest
expense, net (4,983) (8,060) (10,712) (16,005)
Other expense, net (20) (59) (348) (59)
Total other expense (5,003) (8,119) (11,060) (16,064)
Income before
minority interest
share of income
and income taxes 1,889 3,162 705 3,731
Minority interest
share of income (269) (571) (392) (1,023)
Net income before
income taxes 1,620 2,591 313 2,708
Income taxes -- (907) (2,650) (948)
Net income (loss) $1,620 $1,684 $(2,337) $1,760
Net income (loss)
per share of
common stock $0.07 $0.07 $(0.11) $0.07
Average shares
outstanding 23,300,351 24,299,453 20,968,685 23,940,039
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
($ in thousands)
(Unaudited)
Common Stock Common Stock Additional
Class A Class B paid-in
Shares Amount Shares Amounts capital
Balance at
Dec. 31, 1994 706,422 $7 17,293,578 $173 $4,902
Partnership loss
before business
combination -- -- -- -- (1,066)
Public offering, net
of issuance costs
of $8,114 5,369,350 54 -- -- 68,345
Exercise of stock
options 20,000 -- -- -- 285
Net income -- -- -- -- --
Balance at Dec. 31,
1995 6,095,772 $61 17,293,578 $173 $72,466
Public offering,
net of issuance
costs of
$5,705 5,000,000 $50 -- -- 94,150
Exercise of stock
options 6,666 -- -- -- 95
Net income -- -- -- -- --
Balances at
June 30,
1996 11,102,438 $111 17,293,578 $173 $166,711
(Accumulated Total
deficit) stockholders'
retained equity
earnings
Balance at
Dec. 31, 1994 $(167) $4,915
Partnership loss
before combination -- (1,066)
Public offering, net
of issuance costs
of $8,114 -- 68,399
Exercise of stock
options -- 285
Net income 2,020 2,020
Balance at Dec. 31,
1995 1,853 74,553
Public offering,
net of issuance
costs of
$5,705 -- 94,200
Exercise of stock
options -- 95
Net income 1,760 1,760
Balances at
June 30, 1996 $3,613 $170,608
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months ended
June 30,
1995 1996
Cash flow from
operating activities:
Net (loss) income $(2,337) $1,760
Adjustments to reconcile net
(loss) income to net cash provided
by operating activities:
Depreciation and
amortization 6,587 11,872
Minority interest share
of income 392 1,023
Deferred income taxes 2,650 498
Loss on disposal of property 342 59
Interest deferred and added
to long-term debt 301 326
Increase in trade accounts
receivable (1,383) (809)
Decrease in inventory 4,108 358
Decrease in accounts payable
and accrued expenses (5,701) (1,629)
Change in other accounts 1,423 2,345
Total adjustments $8,719 $14,043
Net cash provided by operating
activities $6,382 $15,803
Cash flows from
investing activities:
Capital expenditures (16,314) (21,639)
Proceeds from sales of
property and equipment 30 4
Purchase of cellular system -- (31,500)
Collection of purchase price
adjustment -- 2,452
Purchases of minority interests (735) (1,254)
Increase in other intangible
assets (1,466) (1,710)
Net cash used in investing
activities (18,485) (53,647)
Cash flows from financing activities:
Advances to Palmer Communications
Incorporated, net (1,601) --
Increase in short-term
notes payable -- 2,535
Repayment of long-term debt (65,050) (100,050)
Proceeds from long-term debt 8,000 39,000
Public offering proceeds, net 71,144 94,295
Net cash provided by
financing activities $12,493 $35,780
Net increase in cash and cash
equivalents $390 $(2,064)
Cash and cash equivalents at
the beginning of period 2,998 3,436
Cash and cash equivalents at
the end of period $3,388 $1,372
Supplemental disclosure of cash
flow information:
Cash paid for interest $9,935 $14,460
CONTACT:
Wayne Wisehart or Jeff Green of Palmer
Wireless, Inc., 941-433-8226; or Chris Plunkett or Diana Brainerd
of Brainerd Communicators, Inc., 212-986-6667
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