EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

LOGO

 

Contact:

  

Ed Moise, Investor Relations

   

(337) 310-3500

 

US UNWIRED REPORTS PRELIMINARY FOURTH QUARTER AND FULL YEAR 2004 RESULTS

 

LAKE CHARLES, LA (February 10, 2005)—US Unwired Inc. (OTCBB:UNWR), a Sprint (NYSE:FON) Network Partner, today reported consolidated revenues of $152.6 million for the three-month period ended December 31, 2004. US Unwired posted a consolidated Net Loss of $29.3 million and consolidated Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $16.8 million for fourth quarter of 2004. For the year, US Unwired posted a consolidated Net Loss of $130.2 million on $594.8 million of consolidated revenue and generated $99.2 million of consolidated Adjusted EBITDA.

 

On January 4, 2005, IWO Holdings, Inc. (“IWO”) and each of its subsidiaries filed a “pre-packaged” plan of reorganization with the United States Bankruptcy Court for the District of Delaware which would eliminate US Unwired’s ownership of IWO and IWO’s $355 million of debt on US Unwired’s consolidated financial statements. The Court confirmed the plan yesterday. The following financial presentation excludes the results, assets and liabilities of IWO; the tables at the end of this release, however, present US Unwired’s results both including and excluding the operations of IWO.

 

US UNWIRED OPERATIONS EXCLUDING IWO HOLDINGS

 

HIGHLIGHTS:

($000)

 

     3 months ended 12/31
     12 months ended 12/31
          3 months ended 12/31
     12 months ended 12/31
  
     2004
     2003
     2004
     2003
          2004
     2003
     2004
     2003
  

Total Revenues

    $ 107,936     $ 96,130     $ 417,554     $ 372,868    

Ending Subscribers

      469,531       401,541       469,531       401,541  

Net Loss*

      (29,301 )     (33,186 )     (130,226 )     (156,985 )  

Net Sub. Additions

      20,076       16,714       70,982       44,070  

Adjusted EBITDA**

      16,327       16,684       78,393       47,802    

Churn

      3.3 %     3.5 %     3.2 %     3.6 %

Capital Expenditures

      7,021       2,133       23,646       17,268    

ARPU (with roaming)

    $ 73.34     $ 75.67     $ 74.40     $ 76.06  
* Net Loss includes IWO Holdings on an equity basis.
** See attached table.

 

For the fourth quarter of 2004, US Unwired excluding the operations of IWO Holdings, (“the Company”) reported a Net Loss of $29.3 million and Adjusted EBITDA of $16.3 million on revenues of $107.9 million. For the full year of 2004, the Company’s Net Loss was $130.2 million, while Adjusted EBITDA and revenues were $78.4 million and $417.6 million, respectively.

 

“Our Company finished the year with an exceptionally strong quarter, particularly in sales, where we tripled last quarter’s net subscriber additions. The 20,076 net new customers added during the quarter capped a strong year during which we increased our subscriber base by 17%. This feat is even more impressive given that our cost per gross subscriber addition was only $333 for the fourth quarter and even less for the full year. Additionally, our CDMA network continues to show its superiority in design as our dropped and blocked calls fell to an all-time low of 1.3% and 1.4%, respectively, during the final period of the year” said Robert Piper, US Unwired’s President and Chief Executive Officer.

 

For the fourth quarter of 2004, monthly average minutes of use per subscriber were 1,011 with roaming and 780 without roaming, while total system minutes of use were approximately 1.5 billion, including 464 million roaming minutes. For the full year, monthly average minutes of use per subscriber were 982 with roaming and 742 without roaming, and total system minutes of use were approximately 5.7 billion, including 1.8 billion roaming minutes.

 

In the fourth quarter, US Unwired redeemed $41.1 million aggregate face amount of its 13 3/8% Senior Subordinated Discount Notes due 2009. The redemption finalized a series of transactions competed throughout 2004 that collectively eliminated approximately $22 million of interest expense annually. At December 31, 2004, the Company had cash of approximately $80.4 million.

 

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US Unwired Reports Fourth Quarter Results

Page 2

February 10, 2005

 

Certain Lease Issues

 

Like many other publicly traded companies, US Unwired is reviewing its accounting practices with respect to lease accounting. Historically, when accounting for operating leases with escalation provisions, the Company has recorded lease expense at the current rate specified in the lease. The Company has re-evaluated its position and has determined that its operating leases should be recognized on a straight line-basis over the term of the lease. The Company is currently determining the financial effect of straight-lining its operating leases, and, if material, will adjust prior period financial statements. For the year ended December 31, 2004, the Company estimates the impact to US Unwired on a consolidated basis to be a decrease of $0.7 million in cost of service and net loss and to US Unwired excluding the operations of IWO Holdings, to be a decrease of $1.2 million in cost of service and net loss.

 

The review is being undertaken in consultation with the company’s audit committee of the board of directors and its independent public accounting firm, Ernst & Young LLP. As the adjustment relates solely to accounting treatment, it does not affect US Unwired’s historical or future cash flows or the timing of payments under the related leases. The review is not attributable to any material non-compliance by the company with any financial reporting requirement under the federal securities laws.

 

US Unwired will hold a conference call to discuss this press release at 10:00 a.m. Eastern Time on February 11, 2005. An online replay will be available approximately one hour following the conclusion of the live broadcast and will continue through February 25, 2005. Links to these events can be found at the Company’s web site at http://www.usunwired.com. If Internet access is unavailable, investors and other interested parties may listen to the teleconference by calling 888-694-4641. The teleconference will be available for replay until February 18, 2005, by calling 973-341-3080, and entering 5610577 when prompted for the pin number.

 

About US Unwired

 

US Unwired Inc., headquartered in Lake Charles, La., holds direct or indirect ownership interests in four PCS affiliates of Sprint: Louisiana Unwired, Texas Unwired, Georgia PCS and Gulf Coast Wireless. Through Louisiana Unwired, Texas Unwired and Georgia PCS, US Unwired is authorized to build, operate and manage wireless mobility communications network products and services under the Sprint brand name in 48 markets, currently serving approximately 470,000 PCS customers. US Unwired’s PCS territory includes portions of Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas. For more information on US Unwired, visit the company’s web site at http://www.usunwired.com. US Unwired is traded on the OTC Bulletin Board under the symbol “UNWR”.

 

About Sprint

 

Sprint offers an extensive range of innovative communication products and solutions, including global IP, wireless, local and multiproduct bundles. A Fortune 100 company with more than $27 billion in annual revenues in 2004, Sprint is widely recognized for developing, engineering and deploying state-of-the-art network technologies, including the United States’ first nationwide all-digital, fiber-optic network; an award-winning Tier 1 Internet backbone; and one of the largest 100-percent digital, nationwide wireless networks in the United States. For more information, visit www.sprint.com/mr.

 

This press release may contain forward-looking statements. Forward-looking statements are statements about current and future business strategy, operations, capabilities, construction plan, construction schedule, financial projections, plans and objectives of management, expected actions of third parties and other matters. Forward-looking statements often include words like believes, belief, expects, plans, anticipates, intends, projects, estimates, may, might, would, or similar words. Forward-looking statements are made pursuant to the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Since these forward looking statements are based on factors that involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward looking statements. Such factors include: the competitiveness of and the financial impact of Sprint wireless pricing plans, products and services; the ability of Sprint to provide back office, customer care and other 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; the potential need for additional capital; future losses; the significant level of indebtedness of US Unwired; and volatility of US Unwired’s stock price. For a detailed discussion of these and other cautionary statements and factors that could cause actual results to differ from

 

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US Unwired Reports Fourth Quarter Results

Page 3

February 10, 2005

 

those contained in this press release, please refer to Items 1, 7 and 7A of US Unwired’s Form 10-K for the year ended December 31, 2003, and Items 2 and 5 (“Risk Factors”) of US Unwired’s Form 10-Q for the period ended June 30, 2004, as filed with the Securities and Exchange Commission.

 

US Unwired does not undertake to update or revise any forward-looking statement contained herein.

 

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US Unwired Reports Fourth Quarter Results

Page 4

February 10, 2005

 

US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(unaudited)

 

    

Three-Month Periods Ended

December 31,

    

Years Ended

December 31,

  
     2004
     2003
     2004
     2003
  

Revenue:

                                 

Subscriber

    $ 110,676     $ 95,251     $ 429,648     $ 381,558  

Roaming

      35,324       35,745       135,300       128,553  

Merchandise sales

      6,156       6,516       28,081       23,224  

Other revenue

      408       524       1,809       2,416  
    
 
 
 

Total revenue

      152,564       138,036       594,838       535,751  

Operating expense:

                                 

Cost of service

      82,087       73,744       310,725       306,223  

Merchandise cost of sales

      14,818       16,777       56,696       46,367  

General and administrative

      11,602       4,649       35,667       31,378  

Sales and marketing

      27,158       24,252       92,142       90,211  

Non-cash stock compensation

      104       221       375       2,404  

Depreciation and amortization

      22,835       30,122       95,192       119,188  

IWO asset abandonment charge

      —         (324 )     —         12,079  
    
 
 
 

Total operating expense

      158,604       149,441       590,797       607,850  
    
 
 
 

Operating income (loss)

      (6,040 )     (11,405 )     4,041       (72,099 )

Other income (expense):

                                 

Interest expense

      (18,957 )     (25,161 )     (86,901 )     (90,815 )

Gain (loss) on sale of assets

      (1,117 )     34       (1,841 )     12  

Loss on extinguishment of debt

      (3,365 )     —         (62,342 )     —    
    
 
 
 

Total other expense

      (23,439 )     (25,127 )     (151,084 )     (90,803 )
    
 
 
 

Loss from continuing operations before income taxes and equity in losses of unconsolidated affiliates

      (29,479 )     (36,532 )     (147,043 )     (162,902 )

Income tax benefit

      —         (531 )     —         (531 )
    
 
 
 

Loss from continuing operations before equity in losses of unconsolidated affiliates

      (29,479 )     (36,001 )     (147,043 )     (162,371 )

Equity in income (losses) of unconsolidated affiliates

      (9 )     2,720       215       2,911  
    
 
 
 

Loss from continuing operations

      (29,488 )     (33,281 )     (146,828 )     (159,460 )

Discontinued operations:

                                 

Gain on disposal of discontinued operations

      187       —         16,318       —    

Income from discontinued operations

      —         126       284       2,506  
    
 
 
 
       187       126       16,602       2,506  
    
 
 
 

Net loss

    $ (29,301 )   $ (33,155 )   $ (130,226 )   $ (156,954 )
    
 
 
 

Basic and diluted loss per share

                                 

Continuing operations

    $ (0.18 )   $ (0.26 )   $ (0.98 )   $ (1.24 )

Discontinued operations

      —         —         0.11       0.02  
    
 
 
 
     $ (0.18 )   $ (0.26 )   $ (0.87 )   $ (1.22 )
    
 
 
 

Weighted average outstanding common shares

      163,555       128,832       149,398       128,832  
    
 
 
 

 

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US Unwired Reports Fourth Quarter Results

Page 5

February 10, 2005

 

US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

 

     December 31,
  
     2004
     2003
  
Assets:                 

Current assets:

                 

Cash and cash equivalents

    $ 114,253     $ 97,193  

Restricted cash

      80       19,358  

Subscriber receivables, net

      36,730       28,687  

Other receivables

      1,582       2,625  

Inventory

      5,069       5,615  

Prepaid expenses and other assets

      14,963       14,833  

Receivables from related parties

      —         647  

Receivables from officers

      156       85  

Current assets related to discontinued operations

      —         1,049  
    
 

Total current assets

      172,833       170,092  

Property and equipment, net

      357,491       411,518  

Goodwill

      46,705       46,705  

Intangibles, net

      30,424       40,785  

Notes receivable from unconsolidated affiliates

      —         1,887  

Other assets

      32,992       42,571  

Non-current assets related to discontinued operations

      —         4,770  
    
 

Total assets

    $ 640,445     $ 718,328  
    
 
Liabilities and stockholders’ deficit:                 

Current liabilities:

                 

Accounts payable

    $ 67,263     $ 41,377  

Accrued expenses

      85,276       77,137  

Current maturities of long term debt, including IWO debt in default

      355,765       362,842  

Current liabilities related to discontinued operations

      —         49  
    
 

Total current liabilities

      508,304       481,405  

Long term debt, net of current maturities

      364,351       434,745  

Deferred gain

      28,111       30,729  

Investments in and advances to unconsolidated affiliates

      2,467       1,216  

Stockholders’ deficit:

                 

Common stock

      1,637       1,288  

Additional paid in capital

      751,576       654,899  

Retained deficit

      (1,015,991 )     (885,765 )

Treasury stock

      (10 )     (10 )

Promissory note

      —         (179 )
    
 

Total stockholders’ deficit

      (262,788 )     (229,767 )
    
 

Total liabilities and stockholders’ deficit

    $ 640,445     $ 718,328  
    
 

 

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US Unwired Reports Fourth Quarter Results

Page 6

February 10, 2005

 

US UNWIRED INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Years Ended December 31,
  
     2004
     2003
  

Cash flows from operating activities:

                 

Net cash provided by operating activities

    $ 63,345     $ 60,641  

Cash flows from investing activities:

                 

Proceeds from sale of assets

      43,344       350  

Investments in unconsolidated affiliates

      (1,298 )     —    

Distribution from unconsolidated affiliates

      2,451       250  

Payments for the purchase of equipment

      (35,529 )     (30,486 )

Release of restricted cash

      19,279       21,859  
    
 

Net cash provided by (used in) investing activities

      28,247       (8,027 )

Cash flows from financing activities:

                 

Proceeds from long-term debt

      360,232       —    

Proceeds from exercised options

      438       —    

Principal payments of long-term debt

      (422,634 )     (14,718 )

Debt issuance costs

      (12,568 )     (2,688 )
    
 

Net cash used in financing activities

      (74,532 )     (17,406 )
    
 

Net increase in cash and cash equivalents

      17,060       35,208  

Cash and cash equivalents at beginning of period

      97,193       61,985  
    
 

Cash and cash equivalents at end of period

    $ 114,253     $ 97,193  
    
 

 

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US Unwired Reports Fourth Quarter Results

Page 7

February 10, 2005

 

US UNWIRED AND SUBSIDIARIES

SELECTED OPERATING METRICS

 

     3 Month Periods Ended 12/31
     Years Ended 12/31
  
     2004
     2003
     2004
     2003
  

Subscribers

                                 

Gross Additions

      99,867       88,107       364,116       316,100  

Net Additions

      26,729       22,089       93,382       59,246  

Total Subscribers

      706,942       617,813       706,942       617,813  

Resale Subscribers

      189,930       88,219       189,930       88,219  

Churn

      3.2 %     3.4 %     3.1 %     3.4 %

Average Revenue Per User, Monthly

                                 

Including Roaming

    $ 70.17     $ 71.96     $ 71.30     $ 72.27  

Without Roaming

      53.19       52.33       54.23       54.06  

Cost Per Gross Addition

      359       391       332       358  

Average Monthly Minutes of Use Per Subscriber

                                 

Home

      717       590       680       568  

Roaming

      210       192       218       179  

System Minutes of Use (Millions)

                                 

Subscriber

      1,492       1,074       5,385       4,012  

Roaming

      641       512       2,492       1,771  

Licensed POPs (Millions)

      17.6       17.6       17.6       17.6  

Covered POPs (Millions)

      12.9       12.8       12.9       12.8  

Cell Sites

      1,945       1,878       1,945       1,878  

 

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US Unwired Reports Fourth Quarter Results

Page 8

February 10, 2005

 

CONDENSED STATEMENTS OF OPERATIONS OF US UNWIRED,

EXCLUDING THE OPERATIONS OF IWO

(In thousands, except per share data)

(Unaudited)

 

    

Three-Month Periods Ended

December 31,

    

Years Ended

December 31,

  
   2004
     2003
     2004
     2003
  

Revenue:

                                 

Subscriber

    $ 75,202     $ 63,308     $ 289,778     $ 252,830  

Roaming

      25,896       25,947       97,738       93,541  

Merchandise sales

      4,057       4,448       19,208       16,177  

Other revenue

      2,781       2,427       10,830       10,320  
    
 
 
 

Total revenue

      107,936       96,130       417,554       372,868  

Operating expense:

                                 

Cost of service

      57,499       49,500       214,327       205,427  

Merchandise cost of sales

      9,894       11,575       38,665       33,006  

General and administrative

      6,556       3,209       25,356       25,628  

Sales and marketing

      17,556       14,941       60,438       58,601  

Non-cash stock compensation

      104       221       375       2,404  

Depreciation and amortization

      15,477       16,238       59,976       64,553  
    
 
 
 

Total operating expense

      107,086       95,684       399,137       389,619  
    
 
 
 

Operating income (loss)

      850       446       18,417       (16,751 )

Other income (expense):

                                 

Interest expense

      (8,408 )     (13,640 )     (47,674 )     (50,634 )

Gain (loss) on sale of assets

      (1,117 )     3       (1,757 )     12  

Loss on extinguishment of debt

      (3,365 )     —         (62,342 )     —    
    
 
 
 

Total other expense

      (12,890 )     (13,637 )     (111,773 )     (50,622 )
    
 
 
 

Loss from continuing operations before income taxes and equity in losses of unconsolidated affiliates

      (12,040 )     (13,191 )     (93,356 )     (67,373 )

Income tax benefit

      —         (531 )     —         (531 )
    
 
 
 

Loss from continuing operations before equity in losses of unconsolidated affiliates

      (12,040 )     (12,660 )     (93,356 )     (66,842 )

Equity in losses of unconsolidated affiliates, including IWO

      (17,448 )     (20,652 )     (53,472 )     (92,649 )
    
 
 
 

Loss from continuing operations

      (29,488 )     (33,312 )     (146,828 )     (159,491 )

Discontinued operations:

                                 

Gain on disposal of discontinued operations

      187       —         16,318       —    

Income from discontinued operations

      —         126       284       2,506  
    
 
 
 
       187       126       16,602       2,506  
    
 
 
 

Net loss

    $ (29,301 )   $ (33,186 )   $ (130,226 )   $ (156,985 )
    
 
 
 

Basic and diluted loss per share

                                 

Continuing operations

    $ (0.18 )   $ (0.26 )   $ (0.98 )   $ (1.24 )

Discontinued operations

      —         —         0.11       0.02  
    
 
 
 
     $ (0.18 )   $ (0.26 )   $ (0.87 )   $ (1.22 )
    
 
 
 

Weighted average outstanding common shares

      163,555       128,832       149,398       128,832  
    
 
 
 

 

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US Unwired Reports Fourth Quarter Results

Page 9

February 10, 2005

 

CONDENSED BALANCE SHEETS OF US UNWIRED,

EXCLUDING THE OPERATIONS OF IWO

(Unaudited)

 

    

As of

December 31,

  
     2004
     2003
  
Assets:                 

Current assets:

                 

Cash and cash equivalents

    $ 80,413     $ 64,856  

Subscriber receivables, net

      25,349       18,749  

Other receivables

      1,437       2,477  

Inventory

      3,683       3,996  

Prepaid expenses and other assets

      8,049       9,114  

Receivables from related parties

      471       686  

Receivables from officers

      156       85  

Current assets related to discontinued operations

      —         1,049  
    
 

Total current assets

      119,558       101,012  

Property and equipment, net

      206,170       245,615  

Goodwill

      46,705       46,705  

Intangible assets, net

      13,093       15,143  

Notes receivable from unconsolidated affiliates

      —         1,887  

Other assets

      19,349       26,031  

Non-current assets related to discontinued operations

      —         4,770  
    
 

Total assets

    $ 404,875     $ 441,163  
    
 
Liabilities and stockholders’ deficit                 

Current liabilities:

                 

Accounts payable

    $ 43,648     $ 24,298  

Accrued expenses

      44,942       38,886  

Current maturities of long term debt

      490       11,145  

Current liabilities related to discontinued operations

      —         49  
    
 

Total current liabilities

      89,080       74,378  

Long term debt, net of current maturities

      364,351       434,745  

Deferred gain

      27,502       29,836  

Investments in and advances to unconsolidated affiliates, including IWO

      186,955       132,016  

Stockholders’ deficit:

                 

Common stock

      1,637       1,288  

Additional paid in capital

      751,382       654,705  

Retained deficit

      (1,016,022 )     (885,795 )

Treasury stock

      (10 )     (10 )
    
 

Total stockholders’ deficit

      (263,013 )     (229,812 )
    
 

Total liabilities and stockholders’ deficit

    $ 404,875     $ 441,163  
    
 

 

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US Unwired Reports Fourth Quarter Results

Page 10

February 10, 2005

 

CONDENSED STATEMENTS OF CASH FLOW OF US UNWIRED,

EXCLUDING THE OPERATIONS OF IWO

(Unaudited)

 

     Years Ended December 31,
  
     2004
     2003
  

Cash flows from operating activities:

                 

Net cash provided by operating activities

    $ 71,213     $ 71,953  

Cash flows from investing activities:

                 

Proceeds from sale of assets

      43,185       350  

Investments in unconsolidated affiliates

      (1,298 )     —    

Distribution from unconsolidated affiliates

      2,451       250  

Payments for the purchase of equipment

      (23,646 )     (17,268 )
    
 

Net cash provided by (used in) investing activities

      20,692       (16,668 )

Cash flows from financing activities:

                 

Proceeds from long-term debt

      358,416       —    

Proceeds from exercised options

      438       —    

Principal payments of long-term debt

      (422,634 )     (14,718 )

Debt issuance costs

      (12,568 )     (2,688 )
    
 

Net cash used in financing activities

      (76,348 )     (17,406 )

Net increase in cash and cash equivalents

      15,557       37,879  

Cash and cash equivalents at beginning of period

      64,856       26,977  
    
 

Cash and cash equivalents at end of period

    $ 80,413     $ 64,856  
    
 

 

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US Unwired Reports Fourth Quarter Results

Page 11

February 10, 2005

 

US UNWIRED, EXCLUDING THE OPERATIONS OF IWO

SELECTED OPERATING METRICS

 

     3 Month Period Ended 12/31
     Year Ended 12/31
  
     2004
     2003
     2004
     2003
  

Subscribers

                                 

Gross Additions

      70,013       60,740       255,576       219,317  

Net Additions

      20,076       16,714       70,982       44,070  

Total Subscribers

      469,531       401,541       469,531       401,541  

Resale Subscribers

      98,795       42,968       98,795       42,968  

Churn

      3.3 %     3.5 %     3.2 %     3.6 %

Average Revenue Per User, Monthly

                                 

Including Roaming

    $ 73.34     $ 75.67     $ 74.40     $ 76.06  

Without Roaming

      54.55       53.67       55.64       55.52  

Cost Per Gross Addition

      333       357       311       338  

Average Monthly Minutes of Use Per Subscriber

                                 

Home

      780       644       742       620  

Roaming

      230       210       241       196  

System Minutes of Use (Millions)

                                 

Subscriber

      1,076       760       3,863       2,822  

Roaming

      464       366       1,789       1,276  

Licensed POPs (Millions)

      11.3       11.3       11.3       11.3  

Covered POPs (Millions)

      8.1       8.1       8.1       8.1  

Cell Sites

      1,224       1,197       1,224       1,197  

 

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US Unwired Reports Fourth Quarter Results

Page 12

February 10, 2005

 

Definition of Performance Measurements and Metrics (Non-GAAP Terms)

 

The wireless telecommunications industry uses terms such as subscriber additions, average revenue per user, churn and cost per gross addition as performance measurements or metrics. None of these terms are measures of financial performance under accounting principles generally accepted in the United States (“GAAP”). When we use these terms, they may not be comparable to similar terms used by other wireless telecommunications companies.

 

Subscribers. We refer to our customers as “subscribers”. Gross additions refer to the total number of new subscribers added during the period. Net additions refer to the total number of new subscriber additions during the period reduced by any subscribers that have cancelled or terminated their service with us during this same period.

 

Reseller Subscribers. We participate in a reseller program in our service area through Sprint PCS as part of the partnership between Sprint PCS and Virgin Mobile USA, LLC (“Virgin”). The agreement allows Virgin to sell prepaid wireless services and pay us for use of our network on a per minute basis.

 

Churn. Churn is the monthly rate of customer turnover expressed as a percentage of our overall average customers for the reporting period. Customer turnover includes both customers that elected voluntarily to not continue using our service and customers that were involuntarily terminated from using our service because of non-payment. Churn is calculated by dividing the sum of (i) the number of customers that discontinue service; (ii) less those customers discontinuing their service within 30 days of their original activation date; and, (iii) adding back those customers that reactivate their service, by our overall average customers for the reporting period; and dividing the result by the number of months in the period.

 

Average Revenue per User. Average revenue per user (“ARPU”) is the average monthly service revenue per subscriber and is calculated by dividing total subscriber revenue for the period by the average number of subscribers during the period. We present ARPU excluding and including roaming revenue.

 

Cost per Gross Addition. Cost per gross addition (“CPGA”) summarizes the average cost to acquire new customers during the reporting period. CPGA is computed by adding sales and marketing expenses and merchandise cost of sales and reducing the amount by the revenue from merchandise sales. The net amount is divided by the number of total new subscriber gross additions for the period.

 

Average Monthly Minutes of Use per Subscriber. We calculate average monthly minutes of use (“MOUs) per subscriber to provide us with an indication of the effectiveness of our basic service plans. We calculate average monthly MOUs per subscriber by dividing total subscriber minutes with and without roaming by the average number of our subscribers. System Minutes of Use

 

System Minutes of Use. System Minutes of Use (“MOUs”) provide an indication of total network (“system”) usage. We track and evaluate system usage for our subscribers as well as other Sprint PCS, Sprint PCS affiliates and non-Sprint PCS subscribers using our system in order to assess network capacity.

 

Licensed/Covered POPs. Licensed POPs means the number of residents in our service area. “Covered POPs” is the number of residents in our service area that have service available as a result of our network build out. The number of people in our service area does not represent the number of Sprint PCS subscribers that we expect to have in our service area.

 

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US Unwired Reports Fourth Quarter Results

Page 13

February 10, 2005

 

EBITDA is an acronym for Earnings before Interest, Taxes, Depreciation and Amortization, although other items in addition to these are sometimes excluded to calculate Adjusted EBITDA. Although EBITDA is not a calculation in accordance with accounting principles generally accepted in the United States (GAAP), we believe that EBITDA is widely used as a measure of operating performance in our industry. Nevertheless, the measure should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with GAAP. In addition, since all companies do not calculate EBITDA in the same manner, this measure may not be comparable to similarly titled measures reported by other companies. We believe the nearest comparable GAAP measure to EBITDA is our Net Loss, and we have presented below a reconciliation of the two measures.

 

US UNWIRED INC. AND SUBSIDIARIES

(In thousands)

 

     Three-Month Periods Ended
December 31,
    

Years Ended

December 31,

  
     2004
     2003
     2004
     2003
  
     (Unaudited)     (Unaudited)  

Adjusted EBITDA

    $ 16,795     $ 18,717     $ 99,233     $ 47,089  

Depreciation and amortization

      (22,835 )     (30,122 )     (95,192 )     (119,188 )

Other income (expense)

      (23,439 )     (25,127 )     (151,084 )     (90,803 )

Income tax benefit

      —         531       —         531  

Equity in income (losses) of unconsolidated affiliates

      (9 )     2,720       215       2,911  

Income from discontinued operations, net

      187       126       16,602       2,506  
    
 
 
 

Net loss

    $ (29,301 )   $ (33,155 )   $ (130,226 )   $ (156,954 )
    
 
 
 

 

US UNWIRED, EXCLUDING THE OPERATIONS OF IWO

(In thousands)

 

     Three-Month Periods Ended
December 31,
    

Years Ended

December 31,

  
     2004
     2003
     2004
     2003
  
     (Unaudited)     (Unaudited)  

Adjusted EBITDA

    $ 16,327     $ 16,684     $ 78,393     $ 47,802  

Depreciation and amortization

      (15,477 )     (16,238 )     (59,976 )     (64,553 )

Other income (expense), net

      (12,890 )     (13,637 )     (111,773 )     (50,622 )

Income tax benefit

      —         531       —         531  

Equity in income (losses) of unconsolidated affiliates, including IWO

      (17,448 )     (20,652 )     (53,472 )     (92,649 )

Income from discontinued operations, net

      187       126       16,602       2,506  

Net loss

    $ (29,301 )   $ (33,186 )   $ (130,226 )   $ (156,985 )
    
 
 
 

 

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