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ARCH COMMUNICATIONS GROUP ANNOUNCES STRONG FOURTH QUARTER RESULTS; REPORTS RECORD REVENUES, CASH FLOW AND NET NEW SUBSCRIBER UNITS

 WESTBOROUGH, Mass., Oct. 20 /PRNewswire/ -- Arch Communications Group, Inc. (NASDAQ: APGR) reported today that revenues for the fourth quarter of Fiscal 1993 ended August 31 were $11,734,000, up 31.5 percent over the same period a year earlier. Net revenues are the sum of service and equipment sales revenues, less cost of equipment sales and is the most commonly used method for presentation of revenues in the paging industry. Net revenues for the year were $41,277,000, an increase of 25.2 percent over Fiscal 1992.
 Fourth quarter operating cash flow, or Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") was $3,156,000, up 20.7 percent from the year earlier period. Total EBITDA for the year was $11,315,000, up from the prior year. The fourth quarter and year EBITDA results reflected approximately $300,000 and $1,450,000 of negative cash flow associated with market expansions undertaken in the current year; there were no market expansion losses in Fiscal 1992. Excluding the effects of the market expansion losses, Core Market EBITDA grew 32.2 percent and 29.7 percent for the quarter and year, respectively.
 Arch also reported that during the fourth quarter the company added 41,584 net new subscriber paging units, bringing the total added during the year to 94,103, a 58.8 percent increase over the prior year end. Internal growth in the quarter was a record 24,084 net new units, which represented an annualized growth rate of 45.3 percent. Internal growth for the year was 69,603 net new units, a 43.5 percent growth rate. During the quarter, Arch acquired a paging company in Maine which had approximately 17,500 subscriber units in service, bringing total units acquired during Fiscal 1993 to 24,500.
 Commenting on the results, Chief Executive Officer C.E. Baker said, "We are very pleased with Arch's continued strong operating performance. The 24,084 net new subscribers added by our operating units in the fourth quarter surpassed our previous record, achieved the prior quarter, by over 32 percent. Since our Initial Public Offering completed late the second quarter of fiscal 1992, we have produced six successive record quarters of net new subscribers.
 "Fiscal 1993 was an outstanding year for Arch. In addition to setting new records for all operating measures, we opened five new market expansions, closed four fold-in acquisitions totalling 24,500 subscribers and planned our entry into the rapidly expanding nationwide paging market."
 Baker reported: "On Sept. 9, 1993 we announced Arch Nationwide Paging (ANP) as a new division to provide nationwide paging service in every major metropolitan city in the U.S. and selected international locations. ANP's Nationwide Network(TM) is comprised of affiliated paging service providers that allow ANP to transmit nationwide messages over existing paging systems. This eliminates system capital investment normally required to offer nationwide paging. The ANP network will benefit from significant cost advantages over the existing providers of nationwide paging service, and use Motorola's new Bravo Plus Scanner(TM), which Arch Communications helped to develop and test. This move into the rapidly expanding nationwide market offers significant growth and increased cash flow potential for Arch with minimum investment and risk. As a nationwide provider, we expect to rapidly increase our market share among frequent business travelers. We estimate that the ANP nationwide services will be available by the middle of Arch's fiscal 1994."
 Arch seeks to build shareholder equity by growing earnings before interest, taxes, depreciation and amortization, EBITDA, and by increasing paging units in service. EBITDA, or operating cash flow, is the key performance measure for paging companies and is the basis for valuation as well as for borrowings from institutional lenders. The Company believes that it can best grow EBITDA and paging units in service by establishing the lowest cost operating structure within its service areas, installing efficient high-quality transmission systems, and quickly and effectively responding to its customers through its decentralized organizational structure.
 Arch Communications Group, Inc. provides paging services in 13 states, serving primarily middle and small market areas with populations ranging from 250,000 to 1,000,000. The company's operations are organized into five business units operating as Page New England; Page New York; Page Michigan; Page South in North Carolina, South Carolina and Georgia; and Interlink Paging in Louisiana and Florida.
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts)
 Three months ended Year ended
 Aug. 31, Aug. 31,
 1993 1992 1993 1992
 Service, rental and
 maintenance revenues $11,555 $8,453 $39,610 $31,464
 Product sales 1,927 1,179 5,698 3,741
 Cost of products sold (1,748) (711) (4,031) (2,233)
 Net revenues 11,734 8,921 41,277 32,972
 Operating expenses:
 Service, rental and
 maintenance 2,717 2,215 9,532 8,190
 Selling 2,143 1,337 7,307 4,849
 General and
 administrative 3,718 2,755 13,123 10,089
 Depreciation and
 amortization 4,266 3,150 13,764 12,542
 Total operating
 expenses 12,844 9,457 43,726 35,670
 Operating income (loss) (1,110) (536) (2,449) (2,698)
 Interest expense, net (746) (794) (2,861) (3,963)
 Income (loss) before
 extraordinary item (1,856) (1,330) (5,310) (6,661)
 Extraordinary charge
 from early extinguish-
 ment of debt --- --- 415 ---
 Net income (loss) $(1,856) $(1,330) $(5,725) $(6,661)
 Income (loss) per
 common share before
 extraordinary item (26 cents) (19 cents) (74 cents) $(1.09)
 Extraordinary charge
 from early extinguish-
 ment of debt --- --- (6 cents) ---
 Net income (loss) per
 common share (26 cents) (19 cents) (80 cents) $(1.09)
 Weighted average
 number of common
 shares outstanding 7,125,745 7,124,745 7,125,164 6,099,060
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 (in thousands)
 Three Months Ended Year Ended
 Aug. 31, Aug. 31,
 1993 1992 1993 1992
 Cash provided by
 operating activities $2,915 $3,613 $8,721 $7,903
 Cash flows from investing
 activities:
 Purchases of operating
 assets of paging systems (7,611) --- (10,145) ---
 Additions to property and
 equipment, net (3,088) (4,000) (16,607) (9,566)
 Additions to intangibles
 and other (1,094) (317) (4,246) (944)
 Net cash used for investing
 activities (11,793) (4,317) (30,998) (10,510)
 Cash flows from financing
 activities:
 Net proceeds from issuance
 of common stock --- --- 6 25,448
 Issuance of long-term debt 8,773 --- 13,323 900
 Repayment of long-term debt (45) (42) (2,061) (12,514)
 Net cash provided by (used
 for) financing activities 8,728 (42) 11,268 13,834
 Net increase (decrease) in
 cash and equivalents (150) (746) (11,009) 11,227
 Cash and equivalents at
 beginning of period 1,643 13,247 12,501 1,274
 Cash and equivalents at
 end of period $1,493 $12,501 $1,492 $12,501
 Supplemental disclosure -
 interest paid $910 $1,094 $2,939 $4,175
 Arch Communications Group, Inc.
 Consolidated Condensed Balance Sheets
 August 31,
 (in thousands)
 1993 1992
 ASSETS
 Current Assets:
 Cash and equivalents $1,492 $12,501
 Accounts receivable, net 2,071 1,649
 Prepaid advertising 281 177
 Prepaid expenses and other 846 539
 Total current assets 4,690 14,866
 Property and equipment, at cost 56,297 42,209
 Less accumulated depreciation and
 amortization 17,707 16,631
 Property and equipment, net 38,590 25,578
 Intangible and other assets, net 18,929 14,707
 Total $62,209 $55,151
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 Current liabilities:
 Current maturities of long-term
 debt $3,227 $172
 Accounts payable 3,233 3,210
 Accrued expenses and other
 liabilities 4,438 3,430
 Total current liabilities 10,898 6,812
 Long-term debt, less current
 maturities 49,748 41,057
 Stockholders' equity (deficit):
 Common stock - 1 cent par 71 71
 Additional paid-in capital 44,700 44,694
 Accumulated deficit (43,208) (37,483)
 Total stockholders' equity (deficit) 1,563 7,282
 Total $62,209 $55,151
 -0- 10/20/93
 /CONTACT: William A. Wilson, VP/Finance and CFO of Arch Communications, 508-898-0962/
 (APGR)


CO: Arch Communications Group, Inc. ST: Massachusetts IN: TLS SU: ERN

DJ-JL -- NE001 -- 4314 10/20/93 07:01 EDT
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