21% Increase in Service Revenue
24% Increase in Operating Cash Flow
34% Increase In Subscribers
FT. MYERS, Fla., July 28 /PRNewswire/ -- Palmer Wireless, Inc.
(Nasdaq: PWIR) today reported that continued strong second quarter growth in
subscribers, coupled with improved operating efficiencies and lowered
interconnection charges, resulted in significantly increased service revenue,
operating cash flow, and a record $2.5 million in net income for the quarter
ended June 30, 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 Six Months Ended
June 30, June 30,
1997 1996 % 1997 1996 %
Service Revenue $45.9 $37.8 21.4% $88.1 $72.7 56.3%
(Millions)
Operating Cash 21.3 17.3 23.6% 39.4 31.7 59.2%
Flow (Millions)
Margin % 46.4% 45.6% -- 44.7% 43.5% --
Average Monthly
Revenue Per Sub. $48.41 $54.35 -10.9% $48.06 $54.05 -11.1%
Net Subscriber
Additions** 14,830 14,873 -0.3% 30,914 30,288 2.1%
Total Subscribers 325,653 243,887 33.5% 325,653 243,887 33.5%
Per Share
Information:
Average Shares 27,813,259 24,299,453 27,813,259 23,940,039
Outstanding
Operating Cash
Flow Per Share $.77 $.71 $1.42 $1.32
Net Income (Loss)
Per Share (Loss) $.09 $.07 $.13 $.07
**Does not include subscribers acquired through acquisitions
"The Company continues to post strong quarterly results," said Palmer
Wireless President and Chief Executive Officer William J. Ryan. "Despite the
increasing competitive environment, Palmer continues to enjoy solid
subscriber growth, improving cash flow margins and declining customer churn."
Palmer Wireless added 14,830 internal net subscribers during the second
quarter. Total cellular subscribers increased to 310,823 at March 31, 1997,
37% higher than a year earlier. Palmer completed the second quarter at an
average market penetration rate of 8.3%, up from 6.9% in the second quarter of
1996.
The Company's monthly churn rate declined to 1.7% in the second quarter,
from 1.8% during the same period last year, as the Company continued to
improve coverage and customer service efforts, particularly in the more
recently acquired markets. Management believes that this rate is well below
the industry average.
Service revenue rose 21.4% in the second quarter of 1997 to a record
$45.9 million, up from $37.8 million generated during the second quarter of
last year. Average monthly service revenue per subscriber declined 10.9% from
$54.35 in the second quarter of 1996 to $48.41 in the second 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 17.7% to $17.3 million in the second quarter of 1997
from $14.7 million in the second quarter of 1996. Sales and marketing costs
(including installation costs and net phone subsidies) increased 23.7% to
$7.3 million in the second quarter from $5.9 million in the second quarter of
1996.
Palmer's cost to add a gross subscriber (including net phone subsidies)
increased to $233 during the second quarter, versus $216 during the same
quarter last year. Larger phone subsidies and marketing promotions are the
primary reasons for this rise. Despite the increase, management believes that
Palmer's cost to add a subscriber is still significantly below the industry
average.
Total cash operating costs (including phone subsidy) per subscriber per
month declined 12.3% from $29.56 in the second quarter of 1996 to $25.93 in
the second quarter of 1997, and more than offset the decline in revenue per
subscriber. Management believes that this monthly cost per subscriber
continues to be among the lowest in the industry.
Operating cash flow rose to a record $21.3 million for the quarter. This
result was 23.6% higher than the $17.3 million earned in the second quarter of
last year. Operating cash flow also improved to 46.4% of service revenues in
the second quarter from 45.6% for the same quarter last year, reflecting
increased operating efficiency as well as lower interconnection charges.
Net income for the quarter was a record $2.5 million or $.09 per share, as
compared to $1.7 million or $.07 per share for the same period last year.
On May 23, 1997, Palmer announced that it had reached a definitive
agreement to be acquired by Price Communications Corporation (AMEX: PR). The
agreement is subject to both FCC and regulatory approval.
On July 21, an informal comment questioning the transaction was filed with
the FCC. The Company's counsel strongly believes that the arguments raised in
the filing are without merit and management still anticipates closing the
transaction during the fourth quarter of this 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
325,000 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 Six Months Ended
June 30, June 30,
% %
1996 1997 Growth 1996 1997 Growth
Subscriber Statistics
Net Subscriber
Additions 14,873 14,830 -0.3% 30,288 30,914 2.1%
Ending Subscriber
Base 243,887 325,653 33.5% 243,887 325,653 33.5%
Estimated Gross
Population (A)3,324,430 3,914,840 3,324,430 3,914,840
Penetration % 6.9% 8.3% 7.3% 8.3%
Monthly Churn
Rate 1.8% 1.7% 1.6% 1.8%
Cost to Add a
Gross Subscriber
(Including Phone
Loss) $216 $233 $216 $234
Cost to Add a Net
Subscriber
(including Phone
Loss) $395 $485 $375 $480
Revenue Statistics
($ in 000's, except
per subscriber
information)
Local Service
Revenue (B) $32,967 $38,371 16.4% $62,846 $74,644 18.8%
Roaming Revenue 4,858 7,549 55.4% 9,894 13,496 36.4%
Total Service
Revenue $37,825 $45,920 21.4% $72,740 $88,140 21.2%
Local Revenue Per
Subscriber (C) $47.37 $40.71 -14.1% $48.70 $40.84 -16.1%
Total Service
Revenue Per
Subscriber (C) $54.35 $48.41 -10.9% $54.05 $48.06 -11.1%
Profitability
Statistics ($ in
000s, except per
subscriber
information)
Monthly Cash
Operating
Costs Per
Subscriber (D)$29.56 $25.93 -12.3% $30.52 $26.57 -12.9%
Operating Cash Flow
Before Sales,
Marketing
Installation, Phone
Loss $23,127 $28,605 23.7% $43,035 $54,348 26.3%
% Margin - Service
Revenues 61.1% 62.3% 59.2% 61.7%
Operating Cash
Flow (EBITDA) $17,255 $21,327 23.6% $31,667 $39,415 24.5%
% Margin - Service
Revenues 45.6% 46.4% 43.5% 44.7%
Operating Income $11,281 $13,652 21.0% $19,795 $24,187 22.2%
Net Income (Loss) $1,684 $2,524 49.9% $1,760 $3,701 110.3%
Per Share Information
Weighted Shares
Outstanding
(in 000's) 24,299 27,813 23,940 27,813
Operating Cash Flow
Per Share $0.71 $0.77 $1.32 $1.42
Operating Income
Per Share $0.46 $0.49 $0.83 $0.87
Net Income (Loss)
Per Share $0.07 $0.09 $0.07 $0.13
Notes To Operating Summary
(A) Based upon year end estimates from the CACI Ninth edition
Sourcebook
(B) Local Service Revenue equals Access, Airtime, Toll, Feature,
Connection, Disconnection and Other Revenues.
(C) Denominator based upon adding BOM subs for each period and dividing
by number of periods reported
(D) Defined as Total Operating Expenses before depreciation and
amortization (including Phone Subsidy) divided by BOM subs for each
period divided by the number of periods
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
($ in thousands)
(Unaudited)
December 3l, June 30,
1996 1997
Assets
Current assets:
Cash and cash equivalents $1,698 $1,740
Trade accounts receivable,
net of allowance for
doubtful accounts 18,784 19,049
Receivable from other cellular
carriers 1,706 3,669
Deferred income taxes 830 980
Prepaid expenses and deposits 2,313 1,794
Inventory 5,106 3,181
Total current assets $30,437 $30,413
Net property, plant and
equipment 132,438 157,596
Licenses, net of amortization 375,808 398,845
Other intangible assets and
other assets,
at cost less accumulated
amortization 11,259 10,348
Total $549,942 $597,202
Liabilities and Equity
Current liabilities:
Notes payable $1,366 $2,321
Current installments
of long-term debt 5,296 --
Accounts payable 10,394 9,032
Accrued expenses 8,399 11,896
Other liabilities 4,686 4,874
Total current
liabilities $30,141 $28,123
Long-term debt, excluding
current installments 337,000 378,000
Deferred income taxes 11,500 15,326
Minority interests 6,371 7,123
Total liabilities $385,012 $428,572
Stockholders' equity 164,930 168,630
Total $549,942 $597,202
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
($ in thousands, except per share amounts)
(Unaudited)
For the three months For the six months
ended June 30, ended June 30,
1996 1997 1996 1997
Revenue:
Service $37,826 $45,920 $72,741 $88,140
Equipment sales and
installation 2,204 2,625 4,239 5,088
Total revenue $40,030 $48,545 $76,980 $93,228
Operating expenses:
Engineering, technical
and other direct 7,256 8,124 14,939 15,554
Cost of equipment 4,466 5,250 8,397 11,057
Selling, general and
administrative 11,053 13,844 21,977 27,204
Total expenses $22,775 $27,218 $45,313 $53,815
Operating income
before depreciation
and amortization$17,255 $21,327 $31,667 $39,413
Margin as a % of
service revenue 45.6% 46.4% 43.5% 44.7%
Depreciation and
amortization 5,974 7,576 11,872 15,129
Operating income $11,281 $13,751 $19,795 $24,284
Other income (expense):
Interest expense, net(8,061) (8,241) (16,006) (16,113)
Other income, net (58) 91 (58) 162
Total other
expense $(8,119) $(8,150) $(16,064) $(15,951)
Income before
minority interest
share of income
and income taxes3,162 $5,601 $3,731 $8,333
Minority interest share
of income (571) (451) (1,023) (782)
Income before income
taxes $2,591 $5,150 $2,708 $7,551
Income taxes (907) (2,627) (948) (3,851)
Net income $1,684 $2,523 $1,760 $3,700
Net income per share of
common stock $0.07 $0.09 $0.07 $0.13
Average shares
outstanding 24,299,453 27,813,259 23,940,039 27,813,259
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
($ In thousands)
(Unaudited)
Common Stock Common Stock Additional
Class A Class B paid-in
Shares Amount Shares Amount capital
Balances at
December 31, 1995 6,095,772 $61 17,293,578 $173 $72,466
Public offering,
net of issuance
costs of $5,826
(Note 3) 5,000,000 50 -- -- 94,124
Exercise of stock
options 6,666 -- -- -- 95
Employee and non-employee
director stock purchase
plans 17,243 -- -- -- 290
Treasury shares
purchased -- -- -- -- --
Net income -- -- -- -- --
Balances at
December 31, 1996 11,119,681 $111 17,293,578 $173 $166,975
Net income -- -- -- -- --
Balances at
June 30, 1997 11,119,681 $111 17,293,578 $173 $166,975
(Accumulated
deficit) Total
retained Treasury stock stockholders'
earnings Shares Amount equity
Balances at December 31, 1995 $1,853 -- $ -- $ 74,553
Public offering, net of issuance
costs of $5,826 (Note 3) -- -- -- 94,174
Exercise of stock options -- -- -- 95
Employee and non-employee director
stock purchase plans -- -- -- 290
Treasury shares purchased -- 600,000 (8,864) (8,864)
Net income 4,682 -- -- 4,682
Balances at December 31, 1996 $6,535 600,000 $(8,864) $ 164,930
Net income 3,700 -- -- 3,700
Balances at June 30, 1997 $10,235 600,000 $(8,864) $168,630
PALMER WIRELESS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited)
For the six months
ended June 30,
1996 1997
Cash flows from operating
activities:
Net (loss) income $1,760 3,700
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 11,872 15,129
Minority interest share
of income 1,023 782
Deferred income taxes 498 3,676
Loss on disposal of property 59 (9)
Interest deferred and added
to long-term debt 326 0
Payment of deferred interest 0 (1,514)
Decrease in trade accounts
receivable (809) 500
Decrease in Inventory 358 2,085
Increase in accounts payable
and accrued expenses (1,629) 1,799
Change in other accounts 2,345 (576)
Total adjustments $14,043 $21,872
Net cash provided by
operating activities $15,803 $25,572
Cash flows from investing activities:
Capital expenditures (21,639) (31,700)
Proceeds from sales of
property and equipment 4 201
Purchase of cellular
systems (31,500) (31,260)
Collection of purchase
price adjustment 2,452 0
Purchases of minority
interests (1,254) (794)
Increase in other intangible
assets and other assets (1,710) (150)
Net cash used in
investing
activities $(53,647) $(63,703)
Cash flows from financing activities:
Increase in short term
notes payable 2,535 955
Repayment of long-term
debt (100,050) (3,782)
Proceeds from long-term
debt 39,000 41,000
Public offering proceeds,
net 94,295 0
Net cash provided by
financing activities $35,780 $38,173
Net increase in cash
and cash equivalents$(2,064) $42
Cash and cash equivalents at
the beginning of period 3,436 1,698
Cash and cash equivalents at
the end of period $1,372 1,740
Supplemental disclosure of cash
flow information:
Income taxes paid (received),
net 1,172 $(617)
Interest paid $14,460 $16,328
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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