55% Increase in Service Revenue
55% Increase in Operating Cash Flow
71% Increase in Subscribers
FT. MYERS, Fla., Oct. 10 /PRNewswire/ -- Palmer Wireless, Inc.
(Nasdaq: PWIR) today reported that strong growth in its subscribers, coupled
with continued improvements in operating efficiencies, resulted in record
revenue, operating cash flow and cash flow margins for the quarter ended
September 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 Nine Months Ended
September 30, September 30,
1996 1995 % 1996 1995 %
Service Revenue $37.5 $24.2 54.8% $107.7 $68.4 57.4%
Operating
Cash flow** 18.3 11.8 55.0% 49.9 30.1 65.7%
Margin % 48.8% 48.7% 46.4% 44.0%
Average Monthly
Revenue Per $49.70 $55.39 -10.3% $51.28 $57.24 -10.4%
Total
Subscribers 261,625 152,957 71.0% 261,625 152,957 71.0%
Per Share Information:
Average Shares
Outstanding 28,580,278 23,536,531 25,492,054 21,896,502
Operating Cash
Flow Per Share $.64 $.50 $1.96 $1.38
Net Income (Loss)
Per Share $.10 $.12 $.19 $.02
** Defined as operating income before depreciation and amortization "We
are very pleased to report record results for the third quarter which place
us squarely on target to meet our financial and operating objectives for the
full year," said Palmer Wireless President and Chief Executive Officer
William J. Ryan. "Our subscriber growth was 71% higher versus a 62% growth
rate between the same periods in 1994 and 1995. Our results are consistent
with the growth we have enjoyed in previous
quarters."
"Meanwhile, we remain focused on upgrading the markets we have acquired
during the past year," Mr. Ryan continued. "While we have made significant
progress in integrating these properties, the rate of improvement in these
underdeveloped markets has been slower than expected. However, with
approximately 1.2 million potential subscribers, these properties have great
potential for future growth. We are continuing to improve the coverage in
these markets, as well as to increase our customer service and marketing
activities. We remain committed to bringing these markets up to Palmer
standards as soon as possible."
Palmer Wireless added 12,853 internal net subscribers during the third
quarter, a 16.7% increase from the same period last year. During the quarter
Palmer added another net 5,099 subscribers from its acquisition of the Georgia
6 RSA. Total cellular subscribers increased to 261,625 at September 30, 1996,
71.0% higher than a year earlier.
The Company's churn rate increased slightly to 1.9% in the third quarter,
from 1.8% during the same period last year. Year to date, Palmer's churn rate
is 1.7% which is consistent with the prior year.
Palmer completed the third quarter at an average market penetration rate
of 6.9%, up from 5.9% in the third 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 and Georgia 6 RSA
acquisitions. 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 8.3% at September 30, 1996.
Service revenue rose 54.8% in the third quarter of 1996 to a record $37.5
million, up from $24.2 million generated during the third quarter of last
year. Average monthly service revenue per subscriber declined 10.3% from
$55.39 in the third quarter of 1995 to $49.70 in the third 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 7.7% from the third quarter of 1995.
Total operating and administrative expenses, excluding depreciation and
amortization, increased 53.6% to $13.8 million in the third quarter of 1996
from $9.0 million in the third quarter of 1995. Sales and marketing costs
(including installation costs and net phone subsidies) increased 56.8% to $5.3
million in the third quarter from $3.4 million in the third quarter of 1995.
Palmer's cost to add a gross subscriber (including net phone subsidies)
increased to $194 during the third quarter of 1996, as compared to $178 during
the same quarter last year. Increased fixed marketing costs associated with
the recently acquired Augusta, Savannah, Georgia 1 RSA and Georgia 6 RSA
markets is the primary reason for the increase in the cost to add a
subscriber. Management believes that Palmer's cost to add a subscriber is
still well below the industry average.
Operating cash flow rose to a record $18.3 million for the quarter. This
result was 55.0% higher than the $11.8 million earned in the third quarter of
last year. Operating cash flow margins increased in the third quarter to a
record 48.8% of service revenues versus 48.7% 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 nine month period ending September 30, 1996 was $4.7
million or $.19 per share, as compared to $.5 million or $.02 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 and Subsidiaries
Summary of Operating Statistics
Three Months Ended
September 30,
%
1995 1996 Growth
Subscriber Statistics
Net Subscriber Additions 11,013 12,853 16.7%
Ending Subscriber Base 152,957 261,625 71.0%
Estimated Gross Population (A) 2,585,818 3,778,248
Penetration % 5.9% 6.9%
Monthly Churn Rate 1.8% 1.9%
Cost to Add a Gross Subscriber
(Including Phone Loss) $178 $194
Cost to Add a Net Subscriber
(Including Phone Loss) $309 $416
Revenue Statistics
Local Service Revenue (B) 20,204 32,185 59.3%
Roaming Revenue 4,001 5,274 31.8%
Total Service Revenue 24,206 37,459 54.8%
Local Revenue Per Subscriber (C) $46.24 $42.70 -7.7%
Total Service Revenue Per
Subscriber (C) $55.39 $49.70 -10.3%
Profitability Statistics ($ in 000's)
Operating Cash Flow Before Sales,
Marketing
Installation, Phone Loss $15,190 $23,610 55.4%
% Margin - Total Revenues 58.3% 59.7%
% Margin - Service Revenues 62.8% 63.0%
Operating Cash Flow (EBITDA) $11,786 $18,272 55.0%
% Margin - Total Revenues 45.2% 46.2%
% Margin - Service Revenues 48.7% 48.8%
Operating Income $8,152 11,977 46.9%
Net Income $2,801 $2,976 6.2%
Per Share Information
Weighted Shares Outstanding
(in 000's) 23,537 28,580
Operating Cash Flow Per Share $0.50 $0.64
Operating Income Per Share $0.35 $0.42
Net Income (Loss) Per Share $0.12 $0.10
Nine Months Ended
September 30,
%
1995 1996 Growth
Subscriber Statistics
Net Subscriber Additions 35,733 43,141 20.7%
Ending Subscriber Base 152,957 261,625 71.0%
Estimated Gross Population (A) 2,585,818 3,778,248
Penetration % 5.9% 6.9%
Monthly Churn Rate 1.7% 1.7%
Cost to Add a Gross Subscriber
(Including Phone Loss) $196 $209
Cost to Add a Net Subscriber
(Including Phone Loss) $310 $387
Revenue Statistics
Local Service Revenue (B) 56,462 92,496 63.8%
Roaming Revenue 11,954 15,168 26.9%
Total Service Revenue 68,416 107,664 57.4%
Local Revenue Per Subscriber (C) $47.24 $44.06 -6.7%
Total Service Revenue Per
Subscriber (C) $57.24 $51.28 -10.4%
Profitability Statistics ($ in 000's)
Operating Cash Flow Before Sales,
Marketing
Installation, Phone Loss $41,231 $66,645 61.6%
% Margin - Total Revenues 55.4% 58.5%
% Margin - Service Revenues 60.3% 61.9%
Operating Cash Flow (EBITDA) $30,137 $49,939 55.7%
% Margin - Total Revenues 40.5% 43.8%
% Margin - Service Revenues 44.0% 46.4%
Operating Income $19,917 $31,772 59.5%
Net Income $ 464(D) $4,736 920.7%
Per Share Information
Weighted Shares Outstanding
(in 000's) 21,897 25,492
Operating Cash Flow Per Share $1.38 $1.96
Operating Income Per Share $0.91 $1.25
Net Income (Loss) Per Share $0.02(D) $0.19
Notes To Operating Summary
(A) Based upon year end estimates from the CACI Eight edition Sourcebook
(B) Local Service Revenue equals Access, Airtime, Toll, feature,
Connection, Disconnection and other Revenues.
(C) Denominator based upon adding BOM subs for each period and dividing by
number of periods reported
(D) 1995 includes a Non-recurring charge of $2.7 million related to the
establishment of deferred taxes.
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
Unaudited)
For The Nine Months Ended
September 30,
1995 1996
Cash flows from operating activities:
Net income $ 464 $ 4,736
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 10,220 18,167
Minority interest share of income 701 1,562
Deferred income taxes 2,650 809
Loss on disposal of property 564 59
Interest deferred and added to long-term debt 431 355
Payment of deferred interest -- -1,080
Increase in trade accounts receivable -1,852 -337
Decrease (increase) in inventory 4,436 -553
Decrease in accounts payable
and accrued expenses -3,835 -3,789
Change in other accounts 1,803 1,991
Total adjustments $ 15,118 $ 17,184
Net cash provided by operating activities $ 15,582 $ 21,920
Cash flows from investing activities:
Capital expenditures -22,093 -30,174
Proceeds from sales of property and equipment 31 4
Purchase of cellular systems -- -67,580
Collection of purchase price adjustment -- 2,452
Purchases of minority interests -783 -1,854
Deposits for PCS auction -- -5,132
Increase in other intangible assets -1,851 -522
Net cash used in investing activities $ -24,696 $ -102,806
Cash flows from financing activities:
Advances to Palmer Communications
Incorporated, net -1,643 --
Increase in notes payable -- 2,964
Repayment of long-term debt -65,075 -108,319
Proceeds from long-term debt 8,000 91,000
Public offering proceeds, net 71,144 94,200
Employee and non-employee
director stock purchase plans -- 290
Exercise of stock options -- 95
Net cash provided by financing activities $ 12,426 $ 80,230
Net increase (decrease) in cash
and cash equivalents $3,312 $ -656
Cash and cash equivalents
at the beginning of period 2,998 3,436
Cash and cash equivalents
at the end of period $ 6,310 $ 2,780
Supplemental disclosure of cash flow information:
Cash paid for interest $ 13,936 $ 21,312
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
($ in thousands)
(Unaudited)
Common Stock Common Stock
Class A Class B
Shares Amount Shares Amount
Balances at
December 31, 1994 706,422 $7 17,293,578 173
Partnership loss before
business combination -- -- -- --
Public offering, net of issuance
costs of $8,114 5,369,350 54 -- --
Exercise of stock options 20,000 -- -- --
Net income -- -- -- --
Balances at
December 31, 1995 6,095,772 $61 17,293,578 $173
Public offering, net of issuance
costs of $5,800 (Note 3) 5,000,000 50 -- --
Exercise of stock options 6,666 -- -- --
Employee and non-employee director
stock purchase plans 17,168 -- -- --
Net income -- -- -- --
Balances at
September 30, 1996 11,119,606 $111 17,293,578 $173
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
($ in thousands)
(Unaudited)
(Accumulated
Additional deficit) Total
paid-in retained stockholders'
capital earnings equity
Balances at
December 31, 1994 1,902 $ (167) $4,915
Partnership loss before
business combination (1,066) -- (1,066)
Public offering,
net of issuance
costs of $8,114 68,345 -- 68,399
Exercise of stock options 285 -- 285
Net income -- 2,020 2,020
Balances at
December 31, 1995 72,466 $1,853 $74,553
Public offering, net of issuance
costs of $5,800 (Note 3) 94,150 -- 94,200
Exercise of stock options 95 -- 95
Employee and non-employee director
stock purchase plans 290 -- 290
Net income -- 4,736 4,736
Balances at
September 30, 1996 $167,001 $6,589 $173,874
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited)
December 31, September 30,
1995 1996
Assets
Current assets:
Cash and cash equivalents $ 3,436 $ 2,780
Trade accounts receivable,
net of allowance for
doubtful accounts 17,347 18,258
Receivable from other
cellular carriers 3,936 648
Deferred income taxes 821 980
Prepaid expenses and deposits 1,111 7,259
Inventory 2,434 3,064
Total current assets 29,085 32,989
Net property, plant
and equipment 100,936 124,375
Licenses, net
of amortization 321,053 377,379
Other intangible assets,
net of amortization 11,797 10,603
Total $ 462,871 $ 545,346
Liabilities and Equity
Current liabilities:
Notes payable $ -- $ 2,964
Current installments of
long-term debt 7,441 4,397
Accounts payable 10,795 7,319
Accrued expenses 8,833 8,961
Other liabilities 3,451 3,175
Total current liabilities 30,520 26,816
Long-term debt, excluding
current installments 343,000 328,000
Deferred income taxes 9,636 10,603
Minority interests 5,162 6,053
Total liabilities 388,318 371,472
Stockholders' equity 74,553 173,874
Total $ 462,871 $ 545,346
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 Nine Months
Ended September 30, Ended September 30,
1995 1996 1995 1996
Revenue:
Service $ 24,206 $ 37,459 $ 68,416 $ 107,664
Equipment sales and
installation 1,849 2,110 5,944 6,349
Total revenue 26,055 39,569 74,360 114,013
Operating expenses:
Engineering, technical
and other direct 4,293 5,558 12,822 17,961
Cost of equipment 2,949 3,874 9,617 12,271
Selling, general
and admin. 7,027 11,865 21,784 33,842
Depreciation
and amortization 3,634 6,295 10,220 18,167
Total operating
expenses 17,903 27,592 54,443 82,241
Operating income 8,152 11,977 19,917 31,772
Other income (expense):
Interest expense, net -4,820 -7,649 -15,532 -23,654
Other expense, net -222 -183 -570 -242
Total other expense -5,042 -7,832 -16,102 -23,896
Income before minority interest
share of income
and income taxes 3,110 4,145 3,815 7,876
Minority interest
share of income -309 -539 -701 -1,562
Income before
income taxes 2,801 3,606 3,114 6,314
Income taxes -- -630 -2,650 -1,578
Net income $ 2,801 $ 2,976 $ 464 $ 4,736
Net income per share
of common stock $ 0.12 $ 0.10 $ 0.02 $ 0.19
Average shares
outstanding 23,536,531 28,580,278 21,896,502 25,492,054
SOURCE Palmer Wireless, Inc.
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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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