AirGate PCS, Inc. Announces First Quarter 2003 Results.Business Editors/High-Tech Writers ATLANTA--(BUSINESS WIRE)--Feb. 18, 2003 AirGate PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. , Inc. (NASDAQ/NM:PCSA PCSA Primary Care Service Area PCSA Personal Computing Systems Architecture PCSA Power Crane and Shovel Association PCSA Peel Committee on Sexual Assault (Canada) PCSA Presbyterian Church of Southern Africa ), a PCS Affiliate of Sprint (NYSE NYSE See: New York Stock Exchange : FON Fon People of southern Benin and adjacent parts of Togo. They speak a dialect of Gbe, a Kwa language of the Niger-Congo language family. Numbering about 3 million, the Fon are mainly farmers. , PCS), today announced financial and operating results for its first quarter of fiscal 2003. Total consolidated revenues for the first fiscal quarter ended December December: see month. 31, 2002 were $133.1 million compared with $81.7 million for the prior-year period. The first fiscal quarter 2001 results include only one month of operations of iPCS, Inc., which was acquired by the Company on November November: see month. 30, 2001. The Company reported a net loss of $47.7 million, or $1.85 per share, for the three months ended December 31, 2002, compared with a net loss of $29.6 million, or $1.68 per share, in the first quarter of fiscal 2002. Consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , defined as earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." basis, AirGate PCS achieved positive EBITDA of $2.5 million. "We are pleased with the progress we made during the first fiscal quarter of 2003," said Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs M. Dougherty Dougherty may refer to:
 līn),v to move the teeth into their proper positions to conform to the line of occlusion. our marketing efforts with the current demands of the marketplace. "A strategic focus for fiscal 2003 continues to be on improving the quality of our subscriber base," Dougherty continued. "We believe our 'smart-growth' strategy has allowed us to reach our key objectives of having a greater number of higher value prime credit quality customers while increasing our operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. . Approximately two-thirds of our subscriber base is in the prime category, with a similar percentage of our gross additions falling into the prime classification during the quarter. We will continue to focus on improving the overall credit quality of our customer base. While it is difficult to provide guidance in this environment of slower subscriber growth, we are paying close attention to our customer acquisition costs and identifying ways to achieve higher productivity from our subscriber base and improve our cash flow." "With respect to the second fiscal quarter, we expect to meet all covenant tests for stand-alone AirGate PCS. Based on the current amount drawn under our bank credit facility, AirGate PCS will need to generate approximately $10.4 million in EBITDA, as defined by the AirGate PCS credit facility, for the six months ending March 31, 2003 in order to be in compliance with the senior debt to EBITDA covenant. While we believe it will be a challenge to meet these obligations, we have a proven track record of meeting these covenants in our stand-alone AirGate PCS operations. Our management team is focused on improving our operations in order to achieve this important objective," Dougherty added. Additional financial and operating highlights for the first quarter of fiscal 2003 include the following:
Quarter Ended December 31, 2002
---------------------------------------------
AirGate iPCS Combined
-------------- -------------- ---------------
Ending Subscribers 352,809 236,628 589,437
Gross Additions 55,621 45,299 100,920
Net Additions 13,670 20,934 34,604
Churn* 3.8% 3.2% 3.5%
ARPU $58 $53 $56
CCPU $54 $59 $56
CPGA $369 $346 $359
EBITDA $2,536,000 ($6,055,000) ($3,519,000)
Capital Expenditures $5,626,000 $8,424,000 $14,050,000
Quarter Ended December 31, 2001
---------------------------------------------
AirGate iPCS Combined
-------------- -------------- ---------------
Ending Subscribers 289,844 163,514 453,358
Gross Additions 83,012 17,681 100,693
Net Additions 54,820 13,892 68,712
Churn* 3.2% 2.0% 2.2%
ARPU $60 $55 $59
CCPU $64 $77 $66
CPGA $345 $365 $349
EBITDA ($14,868,000) ($6,051,000) ($20,919,000)
Capital Expenditures $3,246,000 $3,880,000 $7,126,000
* Churn is net of 30-day returns and a subscriber reserve adjustment.
AirGate PCS will hold a conference call to discuss this press release tomorrow, Wednesday Wednesday: see week. , February February: see month. 19, 2003, at 10:00 a.m. ET. A live broadcast of the conference call will be available on-line at www.airgatepcsa.com or www.companyboardroom.com. To listen to the live call, please go to the Web site at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. , and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call through the close of business on March 1, 2003. About AirGate PCS and iPCS AirGate PCS, Inc., excluding its unrestricted subsidiary iPCS, is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications network The transmission channels interconnecting all client and server stations as well as all supporting hardware and software. products and services under the Sprint brand in territories within three states located in the Southeastern United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The territories include over 7.1 million residents in key markets such as Charleston Charleston, cities, United States Charleston. 1 City (1990 pop. 20,398), seat of Coles co., E Ill.; inc. 1835. Charleston is an industrial, rail, and trade center located in an agricultural area; shoes are also made. Eastern Illinois Univ. , Columbia Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. , and Greenville-Spartanburg, South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. ; and Augusta Augusta, city, Italy Augusta (oug  `stä), city (1991 pop. 34,189), E Sicily, Italy, on an island (formerly a peninsula) in the Ionian Sea, connected by bridge with the Sicilian and Savannah, Georgia Savannah is a city located in (and the county seat of) Chatham County, Georgia (USA). The city's population was 128,500 in 2005, according to the most recent U.S. Census estimate. Savannah was the first colonial and state capital of Georgia. .
iPCS, Inc., a wholly owned unrestricted subsidiary of AirGate PCS, Inc., is the PCS Affiliate of Sprint with the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in 37 markets in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , Iowa and eastern Nebraska. The territories include over 7.4 million residents in key markets such as Grand Rapids, Michigan “Grand Rapids” redirects here. For other uses, see Grand Rapids (disambiguation). Grand Rapids is a city in the U.S. state of Michigan. As of the 2000 census, the city population was 197,800. ; Champaign-Urbana and Springfield, Illinois Springfield is the capital of the U.S. state of Illinois and the county seat of Sangamon County. As reported in the 2000 U.S. Census, the city was home to 111,454 people. The land on which Springfield is today was first settled in the late 1810s, around the time Illinois became a ; and the Quad Cities
The Quad Cities are a group of cities which flank the Mississippi River in Iowa and Illinois in the midwestern United States. areas of Illinois and Iowa. AirGate and iPCS are separate corporate entities that have discrete and independent financing sources, debt obligations and sources of revenue. As an unrestricted subsidiary, iPCS's lenders, noteholders and creditors do not have a lien lien, claim or charge held by one party, on property owned by a second party, as security for payment of some debt, obligation, or duty owed by that second party. or encumbrance A burden, obstruction, or impediment on property that lessens its value or makes it less marketable. An encumbrance (also spelled incumbrance) is any right or interest that exists in someone other than the owner of an estate and that restricts or impairs the transfer of the estate or on assets of AirGate. Further, AirGate generally cannot provide capital or other financial support to iPCS. About Sprint Sprint operates the largest, 100-percent digital, nationwide PCS wireless network in the United States, already serving more than 4,000 cities and communities across the country. Sprint has licensed PCS coverage of more than 280 million people in all 50 states, Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and the U.S. Virgin Islands. In August 2002, Sprint became the first wireless carrier in the country to launch next generation services nationwide delivering faster speeds and advanced applications on Vision-enabled Phones and devices. For more information on products and services, visit www.sprint.com/mr. PCS is a wholly-owned tracking stock of Sprint Corporation trading on the NYSE under the symbol "PCS." Sprint is a global communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. with approximately 72,000 employees worldwide and nearly $27 billion in annual revenues and is widely recognized for developing, engineering and deploying state-of-the-art network technologies. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based on current expectations, estimates, forecasts and projections about AirGate, iPCS, the wireless industry, our beliefs and our management's assumptions. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results to differ include: the liquidity and potential restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of iPCS, including the potential loss of all value in the iPCS common stock held by AirGate; the unsettled nature of the wireless market; the potential need for additional sources of liquidity; the current economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. ; the potential to continue to experience a high rate of customer turnover; our ability to predict future customer growth, as well as other key operating metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. ; the competitiveness and impact of Sprint wireless pricing plans, products and services; the ability to successfully launch and leverage 3G products and services; customer credit quality; our ability to retain customers; the ability of Sprint to provide back office, customer care and other services; the prices charged by Sprint for its services; consumer purchasing patterns; potential fluctuations in quarterly results; an adequate supply of subscriber equipment; risks related to our ability to compete with larger, more established businesses; rapid technological and market change; risks related to future growth and expansion; rates of penetration in the wireless industry; impacts of spending cuts Noun 1. spending cut - the act of reducing spending cut - the act of reducing the amount or number; "the mayor proposed extensive cuts in the city budget" on network quality, customer retention and customer growth; anticipated future losses; the significant level of indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of each of AirGate and iPCS; adequacy of bad debt and other reserves; and the volatility of AirGate PCS' stock price. For a detailed discussion of these and other cautionary statements and factors that could cause actual results to differ from those contained in this news release, please refer to AirGate PCS' filings with the Securities and Exchange Commission ("SEC"), especially in the "risk factors" section of AirGate PCS' Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended September 30, 2002 and Form 10-Q Form 10-Q See 10-Q. for the quarter ended December 31, 2002, and in subsequent filings with the SEC. Except as otherwise required under federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. Definitions of Terms Used: The following are terms used in the press release. None are measures of financial performance under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in the United States. These terms as used by the Company may not be comparable to the use of these terms by other companies. EBITDA: EBITDA (earnings before interest, taxes, depreciation and amortization) is a financial measure used in the financial community. ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. (average revenue per user): Summarizes the average monthly service revenue per customer, excluding roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. revenue. ARPU is computed by dividing service revenue by the average subscribers for the period, net of an adjustment for those customers not reasonably expected to pay. Churn churn: see butter. : Churn is the monthly rate of customer turnover expressed as a percentage of the customer base that discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: service during the month. Churn is computed by dividing the number of customers that discontinued the service during the month by the average subscribers for the period, net of an adjustment for 30 day returns and those customers not reasonably expected to pay. Net Additions: Net additions refer to the increase in total subscribers between periods, net of an adjustment for those customers not reasonably expected to pay. Ending Subscribers: Ending subscribers exclude an estimate of new subscribers added during the period who are not reasonably expected to pay.
AirGate PCS, Inc. and Subsidiaries
Condensed Consolidating Balance Sheets at December 31, 2002
Unaudited
(dollars in thousands, except share and per share amounts)
Consolidated
AirGate iPCS, Elimina- AirGate
PCS, Inc. Inc. tions PCS, Inc.
--------- --------- --------- ----------
ASSETS
Current Assets:
Cash and cash
equivalents $ 944 $ 2,066 $ -- $ 3,010
Accounts
receivable,
net 23,199 14,231 -- 37,430
Receivable from
Sprint PCS 29,827 12,507 -- 42,334
Inventories 3,378 3,177 -- 6,555
Prepaid expenses 6,704 3,943 -- 10,647
Other current
assets 542 66 (315) 293
--------- --------- --------- ---------
Total current
assets 64,594 35,990 (315) 100,269
Property and
equipment, net 203,644 180,076 -- 383,720
Intangible
assets, net (1,457) 25,520 -- 24,063
Investment in
subsidiary (124,975) -- 124,975 --
Financing costs (918) 8,785 -- 7,867
Other assets 6,623 3,087 -- 9,710
--------- --------- --------- ---------
Total assets $ 147,511 $ 253,458 $ 124,660 $ 525,629
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable
and accrued
expenses $ 13,897 $ 10,674 $ (315) $ 24,256
Payable to
Sprint PCS 53,150 28,861 -- 82,011
Deferred revenue 7,280 4,643 -- 11,923
Current maturities
of long term
debt and capital
lease obligations 44,795 317,033 -- 361,828
--------- --------- --------- ---------
Total current
liabilities 119,122 361,211 (315) 480,018
Long-term debt and
capital lease
obligations, 366,728 563 -- 367,291
excluding current
maturities
Other long term
liabilities 2,106 16,659 -- 18,765
--------- --------- --------- ---------
Total liabilities 487,956 378,433 (315) 866,074
Stockholders' equity
(deficit):
Common stock 258 -- -- 258
Additional
paid-in-capital 731,180 192,850 -- 924,030
Unearned stock
compensation (875) -- -- (875)
Accumulated
deficit (1,071,008) (317,825) 124,975 (1,263,858)
--------- --------- --------- ---------
Total stockholders'
equity (deficit) (340,445) (124,975) 124,975 (340,445)
--------- --------- --------- ---------
Total liabilities
and stockholders'
equity (deficit) $ 147,511 $ 253,458 $ 124,660 $ 525,629
========= ========= ========= =========
Note 1: Amounts in the column for AirGate PCS, Inc. include the
effects of purchase accounting related to the iPCS
acquisition.
Note 2: The $44,795 reflected as AirGate's current maturities of
long-term debt includes $2,024 related to the current
maturities of AirGate's senior credit facility and $42,771
related to the adjustments to fair value of iPCS' debt
obligation under purchase accounting.
AirGate PCS, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(dollars in thousands, except share and per share amounts)
Three Months Ended
December 30,
----------------------
2002 2001
--------- ---------
Revenues:
Service revenue $ 96,328 $ 55,849
Roaming revenue 31,991 21,303
Equipment revenue 4,782 4,545
--------- ---------
133,101 81,697
--------- ---------
Operating Expenses:
Cost of services and roaming (exclusive
of depreciation, as shown
separately below) (88,006) (57,757)
Cost of equipment (12,127) (9,583)
Selling and marketing (28,903) (29,845)
General and administrative expenses (7,408) (5,200)
Non-cash stock compensation expense (176) (231)
Depreciation (20,626) (11,266)
Amortization of intangible assets (4,264) (4,539)
--------- ---------
Total operating expenses (161,510) (118,421)
--------- ---------
Operating loss (28,409) (36,724)
--------- ---------
Interest expense, net (19,265) (10,279)
--------- ---------
Loss before income tax benefit (47,674) (47,003)
Income tax benefit -- 17,359
--------- ---------
Net loss $ (47,674) $ (29,644)
========= =========
Basic and diluted net loss per share of
common stock $ (1.85) $ (1.68)
Basic and diluted weighted-average
outstanding common shares 25,824,149 17,675,349
AirGate PCS, Inc. and Subsidiaries
Condensed Consolidating Statements of Operations
for the Three Months Ended December 31, 2002
(Unaudited)
(dollars in thousands, except share and per share amounts)
Consolidated
AirGate iPCS, Elimina- AirGate
PCS, Inc. Inc. tions PCS, Inc.
--------- --------- --------- ----------
Revenues:
Service revenue $ 59,933 $ 36,395 $ -- $ 96,328
Roaming revenue 18,910 13,379 (298) 31,991
Equipment revenue 3,022 1,760 -- 4,782
--------- --------- --------- ---------
81,865 51,534 (298) 133,101
Operating Expenses:
Cost of services
and roaming
(exclusive
of depreciation,
as shown
separately below) (51,431) (36,873) 298 (88,006)
Cost of equipment (6,847) (5,280) -- (12,127)
Selling and
marketing (16,798) (12,105) -- (28,903)
General and
administrative
expenses (4,077) (3,331) -- (7,408)
Non-cash stock
compensation
expense (176) -- -- (176)
Depreciation (11,599) (9,027) -- (20,626)
Amortization of
intangible
assets (2,885) (1,379) -- (4,264)
Total operating
expenses (93,813) (67,995) 298 (161,510)
Operating loss (11,948) (16,461) -- (28,409)
Interest expense,
net (9,963) (9,302) -- (19,265)
Loss in subsidiary (25,763) -- 25,763 --
Loss before
income tax
benefit (47,674) (25,763) 25,763 (47,674)
Income tax
benefit -- -- -- --
Net loss $ (47,674) $ (25,763) $ 25,763 $ (47,674)
Note 1: Reconciliation of EBITDA to Operating Loss.
Calculation of EBITDA:
Operating loss $ (11,948) $ (16,461) $ -- $ (28,409)
Depreciation 11,599 9,027 -- 20,626
Amortization of
intangible
assets 2,885 1,379 -- 4,264
EBITDA, as defined $ 2,536 $ (6,055) $ -- $ (3,519)
Note 2: Amounts in the column for AirGate PCS, Inc. include the
effects of purchase accounting related to the iPCS
acquisition.
Note 3: Included in operating expenses of AirGate PCS, Inc. are
$2.5 million of expenses related to purchase accounting
adjustments not pushed down to iPCS.
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