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ARCH COMMUNICATIONS GROUP ANNOUNCES STRONG THIRD FISCAL QUARTER RESULTS; REPORTS RECORD CASH FLOW AND NET NEW SUBSCRIBER UNITS

 WESTBOROUGH, Mass., June 30 /PRNewswire/ -- Arch Communications Group, Inc. (NASDAQ: APGR) reported today that revenues for the third fiscal quarter ending May 31, 1993 were $11,547,000 or 28.8 percent ahead of last year's corresponding quarter revenues of $8,965,000. Third quarter operating cash flow, or Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), was $2,803,000, a new record, vs. $2,428,000 for the third quarter in fiscal year 1992. Although EBITDA increased 15.4 percent over the prior year, the company said that negative cash flow of approximately $450,000 associated with opening five new Market Expansions reduced some of the effect of core
market growth. Excluding the effect of the Market Expansions and acquisitions, Core Market cash flow grew approximately 28.3 percent in the same period a year earlier.
 Arch also reported that during the third quarter the company added through internal growth a record 18,155 net new subscriber units in service, representing a 38.5 percent annualized growth rate, almost double the 9,570 units put into service a year earlier. As of May 31, 1993, Arch had a new high of 212,653 subscriber units in service which includes approximately 5,700 subscriber units acquired with the purchase of two small businesses in New York and New Hampshire during the third quarter.
 Revenues for the nine months ending May 31, 1993 were $31,826,000, up from $25,573,000 for the corresponding period in fiscal 1992. Operating cash flow grew to a record $8,159,000 vs. $7,230,000 for the corresponding fiscal 1992 period. The company attributed the increases primarily to growth in its subscriber base. Although EBITDA grew over the prior year, the company said negative cash flow of approximately $1,000,000 associated with opening five new Market Expansions reduced some of the effect of Core Market growth. In the first nine months, 45,519 net new units were added for a 37.9 percent annualized growth rate.
 Commenting on the results, Chief Executive Officer C.E. Baker said, "We are delighted with the continued strong operating performance by Arch. We are particularly pleased with the financial performance of our Core Markets. Third quarter EBITDA in Core Markets increased 28.3 percent over the same period a year ago and for the nine months ended May 31, 1993, EBITDA was 26.8 percent ahead of the corresponding period in fiscal 1992. Market Expansions have accounted for approximately 9,000 new subscriber units during the first nine months of this year."
 Baker also noted that the company's acquisition program is proceeding on course with one transaction closed in the first fiscal quarter, and two transactions closed during the third fiscal quarter. These transactions have brought approximately 7,000 subscribers to Arch. A fourth transaction to acquire a paging property with approximately 15,000 subscribers is scheduled to close in the fourth fiscal quarter, Baker said. These acquisitions are in New York and New England markets.
 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 5 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.
 FINANCIAL HIGHLIGHTS
 (In thousands, except for share and per share data)
 Three Months Ended Nine Months Ended
 May 31, May 31, May 31, May 31,
 1993 1992 1993 1992
 Revenues $11,547 $8,965 $31,826 $25,573
 Operating cash flow(a) 2,803 2,428 8,159 7,230
 Extraordinary charge
 from early
 extinguishment of debt (415) --- (415) ---
 Net income (loss) (1,571) (1,337) (3,869) (5,331)
 Income (loss) per
 common share before
 extraordinary item (16 cents) (19 cents) (48 cents)(93 cents)
 Extraordinary charge
 from early
 extinguishment of debt(6 cents) --- (6 cents) ---
 Net income (loss) per
 common share (22 cents) (19 cents) (54 cents)(93 cents)
 Weighted average
 common shares 7,125,408 7,123,284 7,124,968 5,754,670
 ----
 NOTE: (a) Operating cash flow is Earnings Before Interest, Taxes, Depreciation and Amortization, "EBITDA".
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED BALANCE SHEETS
 (in thousands)
 May 31, 1993 Aug. 31 1992
 (unaudited)
 Current assets:
 Cash and equivalents $1,643 $12,501
 Accounts receivable, net 1,945 1,649
 Prepaid advertising 297 177
 Prepaid expenses and other 849 539
 Total current assets 4,734 14,866
 Property and equipment, at cost 51,129 42,209
 Less accumulated depreciation
 and amortization 16,648 16,631
 Property and equipment, net 34,481 25,578
 Intangible and other assets, net 15,511 14,707
 Total $54,726 $55,151
 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 Current Liabilities:
 Current maturities of
 long-term debt $2,440 $172
 Accounts payable 3,656 3,210
 Accrued expenses and other
 liabilities 3,404 3,430
 Total current liabilities 9,500 6,812
 Long-term debt, less current
 maturities 41,806 41,057
 Stockholders' equity (deficit):
 Common stock-$.01 par 71 71
 Additional paid-in capital 44,701 44,694
 Accumulated deficit (41,352) (37,483)
 Total stockholders' equity 3,420 7,282
 Total $54,726 $55,151
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 (unaudited and in thousands, except share and per share amounts)
 Three months ended Nine months ended
 5/31/93 5/31/92 5/31/93 5/31/92
 Service, rental and
 maintenance
 revenues $10,060 $7,921 $28,055 $23,011
 Product sales 1,487 1,044 3,771 2,562
 Total revenues 11,547 8,965 31,826 25,573
 Expenses:
 Services, rental
 and maintenance 2,415 2,002 6,815 5,975
 Cost of products
 sold 989 694 2,283 1,522
 Selling 1,926 1,300 5,164 3,512
 General and
 administrative 3,414 2,541 9,405 7,334
 Depreciation and
 amortization 3,311 3,095 9,498 9,392
 Total 12,055 9,632 33,165 27,735
 Operating income
 (loss) (508) (667) (1,339) (2,162)
 Interest expense, net 648 670 2,115 3,169
 Income (loss)
 before extraordinary
 item (1,156) (1,337) (3,454) (5,331)
 Extraordinary charge
 from early
 extinguishment of debt 415 --- 415 ---
 Net income (loss) ($1,571) ($1,337) ($3,869) ($5,331)
 Income (loss) per
 common share before
 extraordinary item (16 cents) (19 cents) (48 cents) (93 cents)
 Extraordinary charge
 from early
 extinguishment of
 debt (6 cents) --- (6 cents) ---
 Net income (loss)
 per common share (22 cents) (19 cents) (54 cents) (93 cents)
 Weighted average
 number of common
 shares outstanding 7,125,408 7,123,284 7,124,968 5,754,670
 ARCH COMMUNICATIONS GROUP, INC.
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
 Nine Months Ended
 (unaudited and in thousands)
 5/31/93 5/31/92
 Cash provided by operating
 activities $5,806 $4,290
 Cash flows from investing activities:
 Purchases of operating assets
 of paging systems (2,034) ---
 Additions to property and
 equipment, net (14,019) (5,566)
 Additions to intangibles
 and other (3,152) (627)
 Net cash used for investing
 activities (19,205) (6,193)
 Cash flows from financing
 activities:
 Net proceeds from issuance
 of common stock 7 25,448
 Issuance of long-term debt 4,550 900
 Repayment of long-term debt (2,016) (12,472)
 Net cash provided by financing
 activities 2,541 13,876
 Net increase (decrease) in cash
 and equivalents (10,858) 11,973
 Cash and equivalents at
 beginning of period 12,501 1,274
 Cash and equivalents at end
 of period $1,643 $13,247
 -0- 6/30/93
 /CONTACT: William A. Wilson, vice president of finance and CFO, Arch Communications, 508-898-0962/
 (APGR)


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

CH -- NE003 -- 7019 06/30/93 09:27 EDT
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