EX-99.1 3 v87685exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
 

For Release 1:00 PM PDT
February 13, 2003

Western Wireless Announces Fourth Quarter and Full Year 2002
Financial Results

     BELLEVUE, Wash. (February 13, 2003) – Western Wireless Corporation (NASDAQ: WWCA), a leading provider of wireless communications services to rural America, announced today its operating results for the quarter and year ended December 31, 2002.

     Highlights

    Operating income before depreciation and amortization, asset disposition and stock based compensation (“EBITDA”) for Western Wireless’ domestic operations rose to a record $97.1 million for the quarter, an increase of 32% from the fourth quarter of 2001.
 
    Free cash flow (EBITDA less capital expenditures) from domestic operations for the year ended December 31, 2002 exceeded $206 million, more than doubling free cash flow from the $83 million reported for 2001. Western Wireless achieved its sixth consecutive year of positive free cash flow in 2002 in its domestic cellular operations.
 
    Domestic net subscriber additions doubled from the third quarter of 2002 to 21,700. Churn improved to 2.2% for the quarter.
 
    Net customer additions for the consolidated international operations increased to 115,500 for the quarter, the highest level of customer additions in the history of Western Wireless International.
 
    Western Wireless closed on the sale of its interest in Tal hf (“Tal”), an Icelandic wireless operator during the fourth quarter, netting $28.9 million in cash proceeds. Fourth quarter and full year results include a gain on the sale of Tal of $23.9 million.

 


 

     “2002 was a year of dramatically improved financial results for Western Wireless. Despite a challenging economic environment, the company increased domestic cash flow by 6.6% and substantially more than doubled free cash flow,” said John W. Stanton, chairman and chief executive officer of Western Wireless. “Below the surface, the company strengthened its economic model substantially during the year by reducing the costs of serving customers, signing long term roaming agreements with the three largest operators in the industry and strengthening the management team.”

     Stanton added, “Internationally we ramped up our marketing efforts during the fourth quarter in several markets with terrific results, and closed on the sale of our Icelandic business. Our international businesses are well positioned and I look forward to further improvement in these operations during 2003.”

     Consolidated Financial Results

     For the fourth quarter, consolidated total revenue was $305 million, an 8.8% increase over 2001. Consolidated net loss for the quarter was $22.9 million or $0.29 per basic and diluted share. For the year, consolidated total revenue was $1.2 billion, a 14.3% increase over 2001. Consolidated net loss for the year was $185.7 million or $2.35 per basic and diluted share.

     As previously reported, Western Wireless adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” on January 1, 2002 and prospectively ceased amortizing its domestic licensing costs. In connection with the adoption of SFAS 142, full year results include a deferred income tax provision of $121 million. Western Wireless recently completed a comprehensive analysis of the differences between the book and tax basis of domestic licensing costs. As a result of that analysis, Western Wireless determined that the deferred income tax provision previously reported during the first quarter of 2002 associated with the adoption of SFAS 142 should be increased because of newly identified basis differences. The previously reported deferred income tax provisions in the second and third quarters of 2002 should be decreased as a result of these same differences. The impact of these adjustments on Western Wireless’ quarterly financial results is set forth in the attached schedule (titled Selected Quarterly Consolidated Financial Information). The aggregate impact to

 


 

Western Wireless’ interim financial statements for the first three quarters of 2002 was an increase in the deficit, deferred taxes, and net loss of approximately $21 million (or $0.27 per basic and diluted share). Because these adjustments relate to deferred income tax provisions, there is no impact on interim cash flows from operations, investing or financing activities. Deferred taxes represent a non-cash charge and are not currently paid or payable.

     Fourth Quarter 2002 Domestic Highlights

     Total service revenue for the quarter was $210.6 million. Average monthly subscriber revenue for the quarter was $43.67 driven by continued strength in access revenue. Roaming revenue for the quarter was $55.5 million. Total service revenue per subscriber was $59.15 per month during the quarter.

     Net subscriber additions for the fourth quarter increased to 21,700. Churn improved during the quarter to 2.2%. Total subscribers at the end of the year were 1,197,800.

     Western Wireless’ focus on operating efficiencies continues to support operating margins that are among the highest in the industry. The total monthly cost of serving a subscriber (general and administrative costs plus cost of service expenses) was $20.67 per subscriber for the quarter, a 17% decline from the fourth quarter of 2001. On a per minute of use basis, the total cost of serving a subscriber was 4.4 cents, a 38% decline from the fourth quarter of 2001. Cost per gross subscriber addition (“CPGA”), which includes handset subsidies, was $405 for the quarter. Western Wireless includes costs related to transitioning its current analog subscribers to new digital handsets in subscriber acquisition costs. Adjusting for these transition costs, CPGA for the quarter was $360.

     Capital expenditures for the quarter were $54.5 million, and for the year were $160.7 million. Over 50% of the population in Western Wireless’ service area now has access to CDMA services. Nearly 60% of all subscribers now use digital handsets.

 


 

     Western Wireless International

     Operating revenues and expenses for WWI’s consolidated businesses for the fourth quarter do not include the operations of WWI’s Icelandic business, Tal. The sale of Tal was completed in November 2002. Its results up to the closing of the sale are reported in discontinued operations for all periods presented.

     WWI’s six consolidated businesses added 115,500 customers during the quarter, bringing total consolidated customers to 741,300. For the year, WWI’s consolidated businesses added 250,200 customers. WWI also had 175,900 fixed line customers, primarily in its tele.ring operations in Austria.

     Total revenue for the quarter was $83.7 million, an increase of 44% over the same period last year. Consolidated EBITDA loss for the quarter was $23.4 million, reduced from a loss of $40 million for the fourth quarter of 2001. For the year, total revenue was $302.9 million, up 143% from 2001. Consolidated EBITDA loss for the year declined to $58.7 million, reduced from $114.8 million in 2001.

     The three companies in which WWI holds a minority interest added 17,900 proportionate customers during the fourth quarter. For the year, these companies added 56,000 proportionate customers. WWI’s proportionate interest in the total customer base for these companies at the end of the year was 249,400.

     Conference Call

     On February 13, 2003 at 1:30 p.m. PST, Western Wireless will host a conference call to discuss fourth quarter operating results. The dial-up number for the call is 888/566-5774 and the access code is the phrase “Western Wireless”. A separate dial-up replay number will be available beginning at 3:30 p.m. PST on February 13, 2003 until midnight on Friday, February 21, 2003. The replay number is 800/934-9421 and the access code is 4702. Investors can also access the conference call and replay through the company’s website at www.wwireless.com.

 


 

     About Western Wireless Corporation

     Western Wireless Corporation, located in Bellevue, Washington, was formed in 1994 through the merger of previously unrelated rural wireless companies. Following the merger, Western Wireless continued to invest in rural cellular licenses, acquired six PCS licenses in the original auction of PCS spectrum in 1995 through its VoiceStream subsidiary, and made its first international investment in 1996. Western Wireless went public later in 1996 and completed the spin-off of VoiceStream in 1999. Western Wireless now serves over 1.1 million subscribers in 19 western states under the Cellular One® and Western Wireless® brand names. Through its subsidiaries, Western Wireless is licensed to offer service in nine foreign countries.

     This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These include, but are not limited to, statements regarding the Company’s plans, intentions and expectations. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expected or implied by the forward-looking statements. These risks include increased levels of competition, restrictions on the Company’s ability to finance its growth, any market changes that would significantly decrease consumer demand for wireless products, changes in technology, changes in, or failure to comply with, governmental regulations, general economic and business conditions, both nationally and in the regions in which Western Wireless operates, and other factors. A more extensive discussion of the risk factors that could impact these areas and the Company’s overall business and financial performance can be found in the Company’s public offering prospectuses and its periodic reports filed with the Securities and Exchange Commission. Given these factors, investors and analysts should not place undue reliance on forward-looking statements.

     
For further information contact:
Investment Community: 
Steve Winslow 
Western Wireless Corporation 
(800) 261-5960 
steve.winslow@wwireless.com
   
Media: 
John Snyder 
Snyder Investor Relations 
(206) 262-0291 
jsnyder@snyderir.com

 


 

WESTERN WIRELESS CORPORATION

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share data)

                                                 
    Three months ended December 31, 2002   Three months ended December 31, 2001
   
 
    Domestic   International   Consolidated   Domestic   International   Consolidated
   
 
 
 
 
 
Revenues:
                                               
  Subscriber revenues
  $ 155,496     $ 56,643     $ 212,139     $ 152,032     $ 35,420     $ 187,452  
  Roamer revenues
    55,527       7,554       63,081       54,597       3,799       58,396  
  Fixed line revenues
            14,495       14,495               14,713       14,713  
  Equipment sales
    10,727       3,401       14,128       12,733       3,124       15,857  
  Other revenue
    (390 )     1,575       1,185       2,875       985       3,860  
 
   
     
     
     
     
     
 
    Total revenues
    221,360       83,668       305,028       222,237       58,041       280,278  
 
   
     
     
     
     
     
 
Operating expenses:
                                               
  Cost of service
    39,312       50,178       89,490       47,531       42,968       90,499  
  Cost of equipment sales
    21,659       14,461       36,120       27,464       8,975       36,439  
  General and administrative
    34,298       18,321       52,619       39,933       20,118       60,051  
  Sales and marketing
    29,005       24,073       53,078       33,751       25,993       59,744  
  Depreciation and amortization
    48,030       14,008       62,038       55,388       6,423       61,811  
  Asset disposition
    15,000               15,000                          
  Stock based compensation, net
    1,328               1,328       482       (14,516 )     (14,034 )
 
   
     
     
     
     
     
 
    Total operating expenses
    188,632       121,041       309,673       204,549       89,961       294,510  
 
   
     
     
     
     
     
 
Other income (expense):
                                               
  Interest and financing expense, net
    (26,319 )     (13,519 )     (39,838 )     (31,082 )     (7,271 )     (38,353 )
  Equity in net income (loss) of unconsolidated affiliates
    (170 )     (16 )     (186 )     980       (7,395 )     (6,415 )
  Other, net
    2,396       1,270       3,666       4,168       (1,511 )     2,657  
 
   
     
     
     
     
     
 
    Total other expense
    (24,093 )     (12,265 )     (36,358 )     (25,934 )     (16,177 )     (42,111 )
 
   
     
     
     
     
     
 
Minority interest in net loss of consolidated subsidiaries
            1,111       1,111               4,810       4,810  
 
           
     
             
     
 
Income (loss) from continuing operations before provision for income taxes
    8,635       (48,527 )     (39,892 )     (8,246 )     (43,287 )     (51,533 )
Provision for income taxes
    (6,586 )     (686 )     (7,272 )                        
 
   
     
     
     
     
     
 
  Income (loss) from continuing operations
    2,049       (49,213 )     (47,164 )     (8,246 )     (43,287 )     (51,533 )
Discontinued operations:
                                               
  Income from discontinued operations
            328       328               125       125  
  Gain (loss) on sale of discontinued operations
    (721 )     24,624       23,903                          
 
   
     
     
     
     
     
 
    Total discontinued operations
    (721 )     24,952       24,231               125       125  
 
   
     
     
     
     
     
 
    Net income (loss)
  $ 1,328     $ (24,261 )   $ (22,933 )   $ (8,246 )   $ (43,162 )   $ (51,408 )
 
   
     
     
     
     
     
 
Basic and diluted loss per share:
                                               
  Continuing operations
                  $ (0.60 )                   $ (0.65 )
  Total discontinued operations
                    0.31                          
 
                   
                     
 
Basic and diluted loss per share
                  $ (0.29 )                   $ (0.65 )
 
                   
                     
 
Weighted average shares outstanding:
                                               
  Basic and diluted
                    78,969,000                       78,809,000  
 
                   
                     
 
EBITDA (1)
  $ 97,086     $ (23,365 )   $ 73,721     $ 73,558     $ (40,013 )   $ 33,545  
 
   
     
     
     
     
     
 


(1)   EBITDA represents total revenues less total operating expenses, exclusive of depreciation, amortization, asset disposition and stock based compensation.

 


 

WESTERN WIRELESS CORPORATION

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share data)

                                                 
    Twelve months ended December 31, 2002   Twelve months ended December 31, 2001
   
 
    Domestic   International   Consolidated   Domestic   International   Consolidated
   
 
 
 
 
 
Revenues:
                                               
  Subscriber revenues
  $ 609,406     $ 201,280     $ 810,686     $ 619,214     $ 74,562     $ 693,776  
  Roamer revenues
    228,878       29,057       257,935       244,538       7,976       252,514  
  Fixed line revenues
            55,751       55,751               29,198       29,198  
  Equipment sales
    41,937       11,695       53,632       38,738       8,200       46,938  
  Other revenues
    3,483       5,123       8,606       10,981       4,552       15,533  
 
   
     
     
     
     
     
 
    Total revenues
    883,704       302,906       1,186,610       913,471       124,488       1,037,959  
 
   
     
     
     
     
     
 
Operating expenses:
                                               
  Cost of service
    176,584       184,107       360,691       193,363       94,448       287,811  
  Cost of equipment sales
    79,162       39,487       118,649       80,008       23,344       103,352  
  General and administrative
    144,666       72,182       216,848       166,712       55,798       222,510  
  Sales and marketing
    115,678       65,874       181,552       128,378       65,733       194,111  
  Depreciation and amortization
    194,003       46,484       240,487       190,601       19,325       209,926  
  Asset disposition
    21,304               21,304                          
  Stock based compensation, net
    1,328       (5,450 )     (4,122 )     4,183       (1,876 )     2,307  
 
   
     
     
     
     
     
 
    Total operating expenses
    732,725       402,684       1,135,409       763,245       256,772       1,020,017  
 
   
     
     
     
     
     
 
Other income (expense):
                                               
  Interest and financing expense, net
    (110,080 )     (46,611 )     (156,691 )     (138,384 )     (23,469 )     (161,853 )
  Equity in net income (loss) of unconsolidated affiliates
    (678 )     4,897       4,219       1,550       (9,322 )     (7,772 )
  Other, net
    993       (180 )     813       (10,318 )     (530 )     (10,848 )
 
   
     
     
     
     
     
 
    Total other expense
    (109,765 )     (41,894 )     (151,659 )     (147,152 )     (33,321 )     (180,473 )
 
   
     
     
     
     
     
 
Minority interest in net loss of consolidated subsidiaries
            8,408       8,408               18,967       18,967  
 
           
     
             
     
 
Income (loss) from continuing operations before provision for income taxes and cumulative change in accounting principle
    41,214       (133,264 )     (92,050 )     3,074       (146,638 )     (143,564 )
Provision for income taxes
    (120,687 )     (2,583 )     (123,270 )                        
 
   
     
     
     
     
     
 
Income (loss) from continuing operations before cumulative change in accounting principle
    (79,473 )     (135,847 )     (215,320 )     3,074       (146,638 )     (143,564 )
Discontinued operations:
                                               
  Income (loss) from discontinued operations
            5,736       5,736               (5,933 )     (5,933 )
  Gain (loss) on sale of discontinued operations
    (721 )     24,624       23,903                          
 
   
     
     
             
     
 
    Total discontinued operations
    (721 )     30,360       29,639               (5,933 )     (5,933 )
 
   
     
     
     
     
     
 
Income (loss) before cumulative change in accounting principle
    (80,194 )     (105,487 )     (185,681 )     3,074       (152,571 )     (149,497 )
Cumulative change in accounting principle
                            (6,600 )     1,020       (5,580 )
 
   
     
     
     
     
     
 
    Net loss
  $ (80,194 )   $ (105,487 )   $ (185,681 )   $ (3,526 )   $ (151,551 )   $ (155,077 )
 
   
     
     
     
     
     
 
Basic and diluted loss per share:
                                               
  Continuing operations before cumulative change
  in accounting principle
                  $ (2.73 )                   $ (1.82 )
  Total discontinued operations
                    0.38                       (0.08 )
  Cumulative change in accounting principle
                                            (0.07 )
 
                                           
 
Basic and diluted loss per share
                  $ (2.35 )                   $ (1.97 )
 
                   
                     
 
Weighted average shares outstanding:
                                               
  Basic and diluted
                    78,955,000                       78,625,000  
 
                   
                     
 
EBITDA (1)
  $ 367,614     $ (58,744 )   $ 308,870     $ 345,010     $ (114,835 )   $ 230,175  
 
   
     
     
     
     
     
 


(1)   EBITDA represents total revenues less total operating expenses, exclusive of depreciation, amortization, asset disposition and stock based compensation.

 


 

Western Wireless Corporation
Selected Domestic Operating Statistics

                   
      As of and for the
      Three months ended December 31,
     
      2002   2001
     
 
Licensed population (1)
    10,582,000       10,240,000  
Subscribers
    1,197,800       1,176,500  
Monthly subscriber revenue (2)
  $ 43.67     $ 43.43  
Monthly service revenue (3)
  $ 59.15     $ 59.84  
Cost of serving a subscriber (4):
               
 
- per subscriber
  $ 20.67     $ 24.98  
 
- per minute of use
  $ 0.044     $ 0.071  
Cost per gross subscriber addition (5)
  $ 405     $ 486  
Churn
    2.2 %     2.3 %
Subscriber minutes of use
    398       308  
EBITDA (000’s) (6)
  $ 97,086     $ 73,558  
Capital expenditures (000’s)
  $ 54,524     $ 110,990  


(1)   Population is estimated based upon the 2000 Census and 2001 actual data provided by Claritas, Inc., and is adjusted by Western Wireless by applying Claritas’ growth factors.
(2)   Monthly subscriber revenue is determined by dividing subscriber revenue for the period by average subscribers for the period (the sum of beginning subscribers and ending subscribers, divided by two), and dividing that result by the number of months in the period.
 
(3)   Monthly service revenue is determined by dividing service revenue for the period by average subscribers for the period and dividing that result by the number of months in the period. Service revenues include subscriber, roamer and other revenue.
 
(4)   Cost of serving a subscriber is determined by dividing total service costs (cost of service plus general and administrative expense) by average subscribers for the period, and dividing that result by the number of months in the period.

 


 

(5)   Cost per gross subscriber addition is determined by dividing sales and marketing costs, net of equipment subsidy (the sum of sales and marketing costs and cost of equipment sales, reduced by equipment sales) by the number of gross subscriber additions for the period.
 
(6)   EBITDA represents total revenues less total operating expenses, exclusive of depreciation, amortization, asset disposition and stock based compensation. EBITDA may or may not be similar to the calculation of EBITDA of other companies and should not be viewed as an alternative to accounting principles generally accepted in the United States. Management believes, however, that EBITDA provides meaningful additional information about our performance.

 


 

Selected Quarterly Consolidated Financial Information
For the year ended December 31, 2002
(dollars in thousands, except per share data)

                                                         
                                            Loss From Continuing Operations
                    Loss                   Before Cumulative Change
            Operating   Before   Provision for Income Taxes   in Accounting Principal
    Total   Income   Provision for  
 
Quarter Ended   Revenues   (Loss)   Income Taxes   Quarter   Year-to-Date   Quarter   Year-to-Date

 
 
 
 
 
 
 
March 31, 2002, as reported (1)
  $ 284,426     $ 11,783     $ (18,177 )   $ (79,287 )   $ (79,287 )   $ (97,464 )   $ (97,464 )
March 31, 2002, as recalculated
    N/A       N/A       N/A     $ (103,933 )   $ (103,933 )   $ (122,110 )   $ (122,110 )
June 30, 2002, as reported (1)
  $ 290,849     $ 13,213     $ (24,887 )   $ (7,433 )   $ (86,720 )   $ (32,320 )   $ (129,784 )
June 30, 2002, as recalculated
    N/A       N/A       N/A     $ (5,055 )   $ (108,988 )   $ (29,942 )   $ (152,052 )
September 30, 2002, as
reported (1)
  $ 306,307     $ 30,850     $ (9,094 )   $ (8,203 )   $ (94,923 )   $ (17,297 )   $ (147,081 )
September 30, 2002, as recalculated
    N/A       N/A       N/A     $ (7,010 )   $ (115,998 )   $ (16,104 )   $ (168,156 )
December 31, 2002(1)
  $ 305,028     $ (4,645 )   $ (39,892 )   $ (7,272 )   $ (123,270 )   $ (47,164 )   $ (215,320 )

[Additional columns below]

[Continued from above table, first column(s) repeated]
                                                 
                    Basic and Diluted Loss Per Share                
                    From Continuing Operations                
                    Before Cumulative Change   Basic and Diluted
    Net Loss   in Accounting Principal   Net Loss Per Share
   
 
 
Quarter Ended   Quarter   Year-to-Date   Quarter   Year-to-Date   Quarter   Year-to-Date

 
 
 
 
 
 
March 31, 2002, as reported (1)
  $ (96,002 )   $ (96,002 )   $ (1.24 )   $ (1.24 )   $ (1.22 )   $ (1.22 )
March 31, 2002, as recalculated
  $ (120,648 )   $ (120,648 )   $ (1.55 )   $ (1.55 )   $ (1.53 )   $ (1.53 )
June 30, 2002, as reported (1)
  $ (29,755 )   $ (125,757 )   $ (0.41 )   $ (1.64 )   $ (0.38 )   $ (1.59 )
June 30, 2002, as recalculated
  $ (27,377 )   $ (148,025 )   $ (0.38 )   $ (1.93 )   $ (0.35 )   $ (1.86 )
September 30, 2002, as reported (1)
  $ (15,916 )   $ (141,673 )   $ (0.22 )   $ (1.86 )   $ (0.20 )   $ (1.79 )
September 30, 2002, as recalculated
  $ (14,723 )   $ (162,748 )   $ (0.20 )   $ (2.13 )   $ (0.19 )   $ (2.06 )
December 31, 2002(1)
  $ (22,933 )   $ (185,681 )   $ (0.60 )   $ (2.73 )   $ (0.29 )   $ (2.35 )

(1)   Amounts exclude the effects of TAL, our Icelandic subsidiary. TAL was sold by us in the fourth quarter of 2002 and has been reported as discontinued operations for all periods presented.