59% Increase in Operating Cash Flow
52% Increase in Service Revenue
32% Increase in Subscribers
FT. MYERS, Fla., Jan. 30 /PRNewswire/ -- Palmer Wireless, Inc.
(Nasdaq: PWIR) today reported that despite increased competitive pricing of
cellular services within the Company's markets, fourth quarter growth in
service revenue, coupled with 18,191 net subscriber additions, propelled the
Company to an all-time high of $66.2 million in operating cash flow and
279,816 subscribers for the year ended December 31, 1996. Company highlights
are as follows:
Palmer Wireless Company Highlights
(Unaudited)
Three Months Ended Full Year Ended
December 31, December 31,
1996 1995 %Change 1996 1995 %Change
Service Revenue (Mil) $39.3 $28.3 39.1% $151.1 $96.7 56.3%
Operating Cash Flow (Mil) 16.3 11.5 42.0% 66.2 41.6 59.2%
Margin % 41.5% 40.5% -- 43.8% 43.0% --
Average Monthly
Revenue Per Sub. $49.42 $55.37 -10.7% $52.20 $56.68 -7.9%
Net Subscriber
additions** 18,191 23,890 -23.9% 61,332 59,623 2.9%
Total Subscribers 279,816 211,985 32.0% 279,816 211,985 32.0%
Per Share Information:
Average Shares
Outstanding 28,138,180 23,559,508 -- 26,132,455 22,326,613 --
Operating Cash Flow
Per Share $.58 $.49 $2.53 $1.86
Net Income (Loss)
Per Share $.00 $.02 $.18 $.04
**Does not include subscribers acquired through acquisitions
"We are pleased to have closed 1996 with record numbers for subscribers
and operating cash flow," said Palmer Wireless President and Chief Executive
Officer William J. Ryan. "Despite increasing competitive pressures
experienced within our markets in the fourth quarter, the Company's strong
performance during the final weeks of the Christmas selling season resulted in
subscriber gains ahead of our reduced estimates. Amid forecasts of slowing
growth in the cellular industry, we continue to see strong underlying demand
in our service areas, and we expect to continue to aggressively add new
subscribers in our markets."
"During 1997, we will continue to focus on superior network coverage,
customer service and cost control, which are essential elements for a
successful cellular franchise. During the coming year, Palmer will add
nearly 70 cell sites to its existing coverage network, extending portable
coverage across nearly 100% of our service areas. At the same time, we will
continue to aggressively roll-out our digital service platform in order to
provide our customers with expanded PCS services and benefits such as caller-
ID, short message paging, and extended battery life. These services,
coupled with our new PCS roaming agreement with AT&T will allow Palmer
customers to eventually utilize these features over a large national
footprint, while at the same time expanding Palmer's future revenue stream as
AT&T customers travel into Palmer markets."
"The Company will also continue to benefit from our focused approach to
operations. By concentrating our efforts in regional clustered service areas,
Palmer continues to achieve significant economies of scale, resulting in a
very efficient operating cost structure. In fact, Palmer's $29 cash operating
cost per subscriber per month continues to be one of the lowest in the
industry."
"Through expanded coverage, new service offerings and efficient
operations, we remain in an excellent position to meet the industry's
challenges by providing our customers with the greatest value at competitive
prices while still achieving excellent cash flow margins."
Palmer added 18,191 net new subscribers during the fourth quarter. For
the year the Company added 61,332 net internal subscribers, increasing the
Company's cellular subscriber base by 32% to 279,816.
The Company's monthly churn rate increased during 1996 to 1.84% from the
1.63% rate experienced in 1995. 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. Despite this increase, management believes that this
churn rate is still well below the industry average.
Service revenue increased to a record $39.3 million for the fourth quarter
of 1996, a 39.1% increase over the $28.3 million generated during the fourth
quarter of 1995. Annual service revenue rose 56.3% to a record $151.1 million
in 1996, as compared to $96.7 million for 1995.
Average monthly service revenue per subscriber declined 10.7% from $55.37
in the fourth quarter of 1995 to $49.42 in the fourth quarter of 1996. For
the year, average monthly service revenue per subscriber declined 7.9% from
$56.68 in 1995 to $52.20 for 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 year'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 3.7% from the year ended December 31, 1995.
General and operating expenses, excluding depreciation and amortization,
increased 29.7% to $14.8 million in the fourth quarter of 1996 from
$11.4 million in the fourth quarter of 1995. For the full year ended December
31, 1996, Palmer's operating costs, excluding depreciation and amortization,
rose 55.4% to $60.0 million during 1996, versus the $38.6 million incurred in
1995.
Sales and marketing costs, including loss on phone sales and installation
costs, rose 52.7% to $8.2 million in the fourth quarter of 1996 versus $5.4
million in the fourth quarter of 1995. For the year as a whole, sales and
marketing costs, including loss on phone sales and installation costs,
increased 51.3% to $24.9 million from $16.5 million in 1995.
Palmer's cost to add a gross subscriber increased to $232 for the fourth
quarter of 1996, as compared to $160 for the fourth quarter of 1995. For the
full year, The Company's cost to add a gross subscriber was $216 versus $183
for 1995. Increased phone subsidies, coupled with lower gross activations
being spread over Palmer's fixed marketing infrastructure are the primary
reasons for the increase in the cost to add a gross subscriber. Management
believes, however, that Palmer's cost to add a subscriber is still
significantly below the industry average.
Operating cash flow was $16.3 million for the fourth quarter
of 1996, 42.0% higher than the $11.5 million generated in the fourth quarter
of 1995. Annual operating cash flow rose 59.2% to a record $66.2 million
during 1996, as compared to $41.6 million for 1995. Operating cash flow
margins also increased in 1996 to 43.8% of service revenues versus 43.0%
of service revenues during 1995. This increase reflects improved roaming
agreements with neighboring cellular service providers, as well as the
spreading of fixed operating costs over a larger subscriber base.
The Company incurred a net loss of $0.1 million during the fourth quarter
of 1996 versus net income of $0.5 million or $.02 per share in the same period
last year. This decrease reflects a $0.7 million tax adjustment related to a
true up of the Company's effective income tax rate for prior periods. For the
year ended December 31, 1996, the Company earned $4.7 million or $.18 per
share as compared to $1.0 million or $.04 per share during 1995.
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
280,000 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 Twelve Months Ended
December 31, December 31,
% %
1995 1996 Growth 1995 1996 Growth
Subscriber Statistics
Net Subscriber
Additions 23,890 18,191 -23.9% 59,623 61,332 2.9%
Ending Subscriber
Base 211,985 279,816 32.0% 211,985 279,816 32.0%
Estimated Gross
Population (A) 3,306,784 3,755,042 -- 3,306,784 3,755,042 --
Penetration % 6.4% 7.5% -- 6.4% 7.5% --
Monthly Churn Rate 1.6% 2.1% -- 1.6% 1.8% --
Cost to Add a Gross
Subscriber (Including
Phone Loss) $160 $232 -- $183 $216 --
Cost to Add a Net
Subscriber (Including
Phone Loss) $226 $452 -- $276 $407 --
Revenue Statistics
($ in 000's, except per
subscriber information)
Local Service
Revenue (B) $23,673 $34,367 45.2% .$80,135 $131,001 63.5%
Roaming Revenue 4,597 4,949 7.7% 16,551 20,118 21.6%
Total Service
Revenue $28,270 $39,316 39.1% $96,686 $151,119 56.3%
Local Revenue Per
Subscriber (C) $46.37 $43.20 -6.8% $46.98 $45.25 -3.7%
Total Service Revenue Per
Subscriber (C) $55.37 $49.42 -10.7% $56.68 $52.20 -7.9%
Profitability Statistics
($ in 000's, except per subscriber information)
Monthly Cash Operating
Costs Per
Subscriber (E) $32.96 $28.99 -12.0% $32.30 $29.34 -9.2%
Operating Cash Flow Before
Sales, Marketing
Installation,
Phone Loss $16,839 $24,481 45.4% $58,070 $91,126 56.9%
% Margin -
Service Revenues 59.6% 62.3% -- 60.1% 60.3% --
Operating Cash Flow
(EBITDA) $11,449 $16,251 41.9% $41,586 $66,190 59.2%
% Margin - Service
Revenues 40.5% 41.3% -- 43.0% 43.8% --
Operating Income $6,665 $9,406 41.1 $26,582 $41,177 54.9%
Net Income
(Loss) (D) $490 $(54) -111.0% $954 $4,682 90.8%
Per Share Information
Weighted Shares Outstanding
(in 000's) 23,560 28,138 -- 22,327 26,132 --
Operating Cash Flow
Per Share $0.49 $0.58 -- $1.86 $2.53 --
Operating Income
Per Share $0.28 $0.33 -- $1.19 $1.58 --
Net Income (Loss)
Per Share (D) $0.02 $(0.00) -- $0.04 $0.18 --
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 each period and dividing
by number of periods reported
(D) 1995 includes a non-recurring charge of $2.7 million related to the
establishment of deferred taxes.
(E) Defined as Total Operating Expenses before depreciation and
amortization (Including Phone Subsidy) divided by BOM subs for each
period divided by the number of periods
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands, except per share amounts)
(Unaudited)
For the quarter ended For the year ended
December 31 December 31
1995 1996 1995 1996
Revenue:
Service $28,270 $39,316 $96,686 $151,119
Equipment sales and
Installation 2,276 2,275 8,220 8,624
Total Revenue 30,546 41,591 104,906 159,743
Operating expense:
Engineering, technical
and other direct 5,362 6,617 18,184 28,717
Cost of Equipment 4,529 5,673 14,146 17,944
Selling, general and
administrative 9,206 13,050 30,990 46,892
Total operating expenses
before depreciation and
amortization 19,097 25,340 63,320 93,553
Operating income before
depreciation and
amortization 11,449 16,251 41,586 66,190
Depreciation and
amortization 4,784 6,846 15,004 25,013
Operating income 6,665 9,405 26,582 41,177
Other income(expense):
Interest expense, net (5,681) (7,808) (21,213) (31,462)
Other expense,net (117) (187) (687) (429)
Total other expense (5,798) (7,995) (21,900) (31,891)
Income before minority
interest share of income
and income taxes 867 1,410 4,682 9,286
Minority interest share
of income (377) (318) (1,078) (1,880)
Income before income taxes 490 1,092 3,604 7,406
Income taxes -- (1,146) (2,650) (2,724)
Net income(loss) $490 $(54) $954 $4,682
Net income (loss) per share
of common stock $0.02 $(0.00) $0.04 $0.18
Average shares
outstanding 23,559,508 28,138,180 22,326,613 26,132,455
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the year ended December 31,
1995 1996
Cash flows from operating
activities:
Net income $954 $4,682
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 15,004 25,013
Minority and interest share
of income 1,078 1,880
Deferred income taxes 2,650 1,855
Loss on disposal of property 681 129
Interest deferred and
added to long-term debt 607 355
Payment of deferred interest -- (1,080)
Increase in trade accounts
receivable (2,741) (828)
Decrease (increase) in
inventory 4,076 (2,595)
Increase (decrease) in accounts
payable and accrued expenses 3,433 (1,350)
Change in other accounts 1,918 2,802
Total adjustments $26,706 $26,181
Net Cash provided by
operating activities $27,660 $30,863
Cash flow from investing activities:
Capital expenditures (36,564) (41,445)
Proceeds from sales of property
and equipment 38 5
Purchase of cellular systems (158,397) (68,639)
Collection of purchase
price adjustment -- 2,452
Purchases of minority interests (1,543) (1,854)
Increase in other intangible
assets and other assets (310) (1,862)
Net cash used in
investing activities $(196,776) $(111,343)
Cash flows from financing activities:
Advances to Palmer Communications
Incorporated, net (1,650) --
Increase in short term notes payable -- 1,366
Repayment of long-term debt (65,125) (108,319)
Proceeds from long-term debt 171,000 100,000
Public offering proceeds, net 71,144 95,000
Payment of debt issuance cost (4,803) --
Payment of deferred offering cost (1,297) (826)
Employee and non-employee director
stock purchase plans -- 290
Repurchase of stock -- (8,864)
Exercise of stock options 285 95
Net cash provided by financing
activities $169,554 $78,742
Net increase (decrease) in cash
and cash equivalents $438 $(1,738)
Cash and cash equivalents at the
beginning of period $2,998 $3,436
Cash and cash equivalents at the
end of period $3,436 $1,698
Supplemental disclosure of cash
flow information:
Cash paid for taxes -- $1,591
Cash paid for interest $18,435 $29,733
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(unaudited)
December 31, December 31,
1995 1996
Assets
Current assets:
Cash and cash equivalents $3,436 $1,698
Trade accounts receivable, net of
allowance for doubtful accounts 17,347 18,784
Receivable from other cellular carriers 3,936 1,706
Deferred income taxes 821 830
Prepaid expenses and deposits 1,111 2,313
Inventory 2,434 5,106
Total current assets 29,085 30,437
Net property, plant and equipment 100,936 132,438
Licenses, net of amortization 321,053 375,808
Other intangible assets and other assets,
net of amortization 11,797 11,259
$462,871 $54,942
Liabilities and Equity
Current liabilities:
Notes payable $ -- $1,366
Current installments of long-term debt 7,441 5,296
Accounts payable 10,795 10,394
Accrued expenses 8,833 8,399
Other liabilities 3,451 4,686
Total current liabilities 30,520 30,141
Long-term debt, excluding
current installments 343,000 337,000
Deferred income taxes 9,636 11,500
Minority interests 5,162 6,371
Total liabilities 388,318 385,012
Stockholders' equity 74,553 164,930
$462,871 $549,942
SOURCE Palmer Wireless, Inc.
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CONTACT:
Wayne Wisehart or Jeff Green of Palmer
Wireless, Inc., 941-433-8226; or Diana Brainerd or Aaron Grazado
of Brainerd Communicators, Inc., 212-986-6667
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