EX-99.1 2 v00858exv99w1.htm EXHIBIT 99.1 exv99w1
 

EXHIBIT 99.1

For Release 1:00 PM PDT
AUGUST 4, 2004

     
(WESTERN WIRELESS)
   
  Western Wireless Corporation
  3650 131st Ave. SE
  Bellevue, WA 98006
  (425) 586-8700

Western Wireless Announces Second Quarter 2004 Financial Results

     BELLEVUE, Wash. (August 4, 2004) – Western Wireless Corporation (NASDAQ: WWCA), a leading provider of wireless communications services to rural America, announced today its operating results for the quarter ended June 30, 2004.

     Western Wireless reported consolidated total revenues of $465.5 million, an increase of 30% over the second quarter of 2003. Consolidated net income for the quarter was $41.0 million, or $0.42 per diluted share. This compares to net income of $40.1 million, or $0.49 per diluted share, for the same quarter last year. Net income for the second quarter of 2003 included a non-operating gain on the sale of Western Wireless International’s Croatian joint venture of $40.5 million. Consolidated Adjusted EBITDA grew to $162.5 million for the quarter, a 56% increase from the same quarter last year.

     “Last week marked the 10th anniversary of Western Wireless, and after celebrating that important milestone with our employees, I am thrilled to report outstanding financial results for the second quarter of 2004,” said John W. Stanton, Chairman and Chief Executive Officer of Western Wireless Corporation. “From our humble beginnings a decade ago, Western Wireless has grown into a multi-national wireless services provider that today serves over 2.7 million customers around the world. Second quarter witnessed continued robust growth in revenues and Adjusted EBITDA, and is highlighted by net income of 42 cents per diluted share.”

 


 

     Second Quarter Highlights

  Ø   Consolidated net income was $41.0 million, or $0.42 per diluted share. This is an increase from net income of $40.1 million in the second quarter of 2003, or $0.49 per diluted share. The gain on the sale of the Croatian joint venture contributed $40.5 million to net income in the second quarter of 2003.
 
  Ø   Domestic Adjusted EBITDA increased to $114.6 million, an increase of 9% over the second quarter of 2003 (see attached schedule of Adjustments to Reconcile Net Income (Loss) to Adjusted EBITDA).
 
  Ø   Domestic net subscriber additions for the quarter were 10,900. Churn of 2.4% for the quarter remained flat compared to second quarter 2003 but increased from the first quarter of 2004.
 
  Ø   Western Wireless International’s Adjusted EBITDA reached a record $47.9 million for the quarter, up from an Adjusted EBITDA loss of $0.8 million in the second quarter of 2003.
 
  Ø   Net customer additions for Western Wireless International for the quarter were 107,400.

     Domestic Results

     Domestic results are highlighted by continued growth in revenues, Adjusted EBITDA and net income. Subscriber revenues increased to $198.7 million, an increase of 14% over the second quarter of 2003. Beginning with the third quarter of 2003, Western Wireless includes in subscriber revenue amounts collected from its customers for federal and state universal service fund (“USF”) assessments. The subsequent remittances to the USF are recorded in general and administrative costs. Monthly subscriber revenue per average subscriber for the quarter was $50.22, an increase of 6% over the second quarter of 2003. This amount includes $1.69 for USF collections.

     Roamer revenues for the second quarter were $53.8 million, a slight reduction from $54.7 million for the second quarter of 2003. Western Wireless continues to benefit from its ability to serve the national carriers, regardless of technology. As a result, minutes of use on Western Wireless’ network continue to grow, providing stability in revenue. Roamer minutes of use were up 16% over the second quarter of 2003.

 


 

     Adjusted EBITDA for the second quarter was $114.6 million, an increase of 9% over the same quarter last year. Net income and Adjusted EBITDA are not affected by the USF collections and remittances.

     Net subscriber additions were 10,900 for the second quarter. Subscriber growth was effected by an expected increase in average monthly churn to 2.4%. Total subscribers at the end of the quarter were 1,324,200.

     The average monthly cost of serving a subscriber (cost of service plus general and administrative expenses) was $24.31 per subscriber for the second quarter, an increase of 6.3% from the second quarter of 2003. However, this amount includes $1.68 attributable to the USF remittances. Cost per gross subscriber addition (or CPGA, determined by dividing 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 quarter) was $400 for the quarter. Western Wireless includes digital handset subsidies incurred in retaining existing subscribers in its subscriber acquisition costs. Retention costs for the quarter included in CPGA were $58.

     Capital expenditures for the quarter were $48.1 million. Western Wireless continued to add additional CDMA and GSM/GPRS coverage during the quarter. At the end of the quarter, more than 75% of the population in Western Wireless’ service area had access to CDMA services. In addition, Western Wireless has completed its GSM/GPRS overlay on over 490 sites and, due to traffic demand, will provide additional GSM/GPRS coverage by the end of the year. Over 90% of Western Wireless’ network minutes are digital.

     Domestic results for the quarter include a loss on extinguishment of debt of $16.3 million. Western Wireless completed the re-financing of its senior credit facility during the second quarter. The loss on extinguishment of debt reflects the write-off of deferred financing costs associated with the old credit facility and costs to retire certain interest rate derivatives. Domestic results also include other income of $10.6 million, which primarily reflects the change in market value during the quarter of Western Wireless’ various interest rate derivatives.

 


 

     International Results

     Total revenues for Western Wireless International’s (“WWI”) six consolidated businesses were $197.7 million for the quarter, an increase of 65% over the second quarter of 2003. This amount includes total revenues of $139.4 million from tele.ring, WWI’s Austrian subsidiary, which is up from $82.1 million for the second quarter of 2003, an increase of 70%.

     Adjusted EBITDA for the consolidated international operations for the quarter was $47.9 million, compared to an Adjusted EBITDA loss of $0.8 million for the second quarter of 2003. Adjusted EBITDA for tele.ring was $39.0 million for the second quarter. This compares to Adjusted EBITDA for tele.ring in the second quarter of 2003 of $1.8 million.

     Net post-paid and pre-paid customer additions for the consolidated international businesses totaled 107,400 for the quarter. Total customers at June 30, 2004 for the six consolidated businesses were 1,446,800. During the second quarter tele.ring added 49,900 mobile customers. At the end of the quarter, tele.ring had 776,700 mobile customers, of which 79% were post-paid subscribers. WWI’s Irish business, Meteor Mobile, added 22,900 customers during the quarter and ended the quarter with 222,100 customers. Virtually all of Meteor’s customers are pre-paid. WWI also had 140,900 fixed line customers, primarily in its tele.ring operations in Austria.

     Conference Call

     On August 4, 2004 at 2:00 p.m. PDT, Western Wireless will host a conference call to discuss second quarter results. The dial-up number for the call is 888/396-9185. The access code is the phrase “Western Wireless”. A separate dial-up replay number will be available beginning at 4:00 p.m. PDT on August 4, 2004 until midnight PDT on Saturday, August 14, 2004. The replay number is 866/400-9639 and the access code is

 


 

     5703. Investors can also access the live conference call and the conference call replay, as well as view this press release, through the investor relations link on the Western Wireless website at www.wwireless.com.

     About Western Wireless Corporation

     Western Wireless Corporation, located in Bellevue, Washington, serves over 1.3 million subscribers in 19 western states under the Cellular One® and Western Wireless® brand names. Through its subsidiaries and operating joint ventures, Western Wireless is licensed to offer service in eight 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, uncertainties and other factors that could cause actual results to differ materially from those expected or implied by the forward-looking statements. These factors include general economic and business conditions nationally, internationally and in the regions and countries in which we operate; demographic changes; technology changes; increased competition; changes in business strategy or development plans; our high leverage and our ability to access capital markets; our ability to attract and retain qualified personnel; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; our ability and the cost of acquiring additional spectrum licenses; and product liability and other claims asserted against us. 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 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:
  Media:
Steve Winslow
  John Snyder
Western Wireless Corporation
  Snyder Investor Relations
(800) 261-5960
  (206) 262-0291
steve.winslow@wwireless.com
  jsnyder@snyderir.com

 


 

WESTERN WIRELESS CORPORATION
Condensed Consolidating Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)

                                                 
    Three months ended June 30, 2004
  Three months ended June 30, 2003
    Domestic
  International
  Consolidated
  Domestic
  International
  Consolidated
Revenues:
                                               
Subscriber revenues
  $ 198,663     $ 169,323     $ 367,986     $ 173,886     $ 90,017     $ 263,903  
Roamer revenues
    53,758       9,058       62,816       54,704       9,486       64,190  
Fixed line revenues
            11,197       11,197               14,640       14,640  
Equipment sales
    14,873       5,006       19,879       10,648       2,585       13,233  
Other revenues
    471       3,143       3,614       539       2,727       3,266  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total revenues
    267,765       197,727       465,492       239,777       119,455       359,232  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating expenses:
                                               
Cost of service (exclusive of depreciation and accretion included below)
    45,659       79,824       125,483       43,344       61,502       104,846  
Cost of equipment sales
    25,668       17,676       43,344       22,231       14,893       37,124  
General and administrative
    50,506       23,665       74,171       40,575       21,636       62,211  
Sales and marketing
    31,284       28,685       59,969       28,583       22,268       50,851  
Depreciation, amortization and accretion
    41,526       20,779       62,305       54,587       17,023       71,610  
Stock-based compensation, net
            4,773       4,773                          
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total operating expenses
    194,643       175,402       370,045       189,320       137,322       326,642  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Other income (expense):
                                               
Interest and financing expense, net
    (18,502 )     (17,038 )     (35,540 )     (22,252 )     (15,187 )     (37,439 )
Loss on extinguishment of debt
    (16,260 )             (16,260 )                        
Equity in net income (loss) of unconsolidated affiliates, net of tax
    (30 )     1,726       1,696       (170 )     1,872       1,702  
Gain (loss) on sale of Croatian joint venture
                            (1,574 )     42,093       40,519  
Other, net
    10,611       (1,156 )     9,455       2,509       5,293       7,802  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total other income (expense)
    (24,181 )     (16,468 )     (40,649 )     (21,487 )     34,071       12,584  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Minority interests in net (income) loss of consolidated subsidiaries
            (2,116 )     (2,116 )             1,651       1,651  
 
           
 
     
 
             
 
     
 
 
Income before provision for income taxes
    48,941       3,741       52,682       28,970       17,855       46,825  
Provision for income taxes
    (7,673 )     (4,027 )     (11,700 )     (6,036 )     (709 )     (6,745 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net income (loss)
  $ 41,268     $ (286 )   $ 40,982     $ 22,934     $ 17,146     $ 40,080  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Basic income per share
                  $ 0.45                     $ 0.51  
 
                   
 
                     
 
 
Diluted income per share
                  $ 0.42                     $ 0.49  
 
                   
 
                     
 
 
Adjusted EBITDA (1)
  $ 114,648     $ 47,877     $ 162,525     $ 105,044     $ (844 )   $ 104,200  
 
   
 
     
 
     
 
     
 
     
 
     
 
 


(1)   See “Adjustments To Reconcile Net Income (Loss) To Adjusted EBITDA”

 


 

WESTERN WIRELESS CORPORATION
Condensed Consolidating Statements of Operations
(Dollars in thousands, except per share data

(Unaudited)

                                                 
    Six months ended June 30, 2004
  Six months ended June 30, 2003
    Domestic
  International
  Consolidated
  Domestic
  International
  Consolidated
Revenues:
                                               
Subscriber revenues
  $ 385,339     $ 331,136     $ 716,475     $ 336,253     $ 160,974     $ 497,227  
Roamer revenues
    101,795       24,702       126,497       102,883       23,385       126,268  
Fixed line revenues
            24,080       24,080               29,691       29,691  
Equipment sales
    29,085       11,325       40,410       20,464       5,812       26,276  
Other revenues
    972       6,002       6,974       1,654       5,290       6,944  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total revenues
    517,191       397,245       914,436       461,254       225,152       686,406  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Operating expenses:
                                               
Cost of service (exclusive of depreciation and accretion included below)
    88,646       158,211       246,857       82,729       116,752       199,481  
Cost of equipment sales
    48,457       42,551       91,008       41,129       28,656       69,785  
General and administrative
    97,506       50,445       147,951       79,552       40,764       120,316  
Sales and marketing
    63,176       60,428       123,604       54,952       43,363       98,315  
Depreciation, amortization and accretion
    81,122       39,902       121,024       104,749       32,674       137,423  
Asset dispositions
                            7,640               7,640  
Stock-based compensation, net
            6,520       6,520                          
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total operating expenses
    378,907       358,057       736,964       370,751       262,209       632,960  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Other income (expense):
                                               
Interest and financing expense, net
    (38,402 )     (31,394 )     (69,796 )     (46,032 )     (29,886 )     (75,918 )
Loss on extinguishment of debt
    (16,260 )             (16,260 )                        
Equity in net income (loss) of unconsolidated affiliates, net of tax
    (61 )     2,993       2,932       (339 )     984       645  
Gain (loss) on sale of Croatian joint venture
                            (1,574 )     42,093       40,519  
Other, net
    4,428       (1,775 )     2,653       4,691       2,087       6,778  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Total other income (expense)
    (50,295 )     (30,176 )     (80,471 )     (43,254 )     15,278       (27,976 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Minority interests in net (income) loss of consolidated subsidiaries
            (4,577 )     (4,577 )             4,043       4,043  
 
           
 
     
 
             
 
     
 
 
Income (loss) before provision for income taxes and cumulative change in accounting principle
    87,989       4,435       92,424       47,249       (17,736 )     29,513  
Provision for income taxes
    (13,724 )     (6,275 )     (19,999 )     (9,845 )     (1,390 )     (11,235 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Income (loss) before cumulative change in accounting principle
    74,265       (1,840 )     72,425       37,404       (19,126 )     18,278  
Cumulative change in accounting principle
                            (1,189 )     (1,042 )     (2,231 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net income (loss)
  $ 74,265     $ (1,840 )   $ 72,425     $ 36,215     $ (20,168 )   $ 16,047  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Basic income per share:
                                               
Before cumulative change in accounting principle
                  $ 0.79                     $ 0.23  
Cumulative change in accounting principle
                                            (0.03 )
 
                   
 
                     
 
 
Basic income per share
                  $ 0.79                     $ 0.20  
 
                   
 
                     
 
 
Diluted income per share:
                                               
Before cumulative change in accounting principle
                  $ 0.74                     $ 0.23  
Cumulative change in accounting principle
                                            (0.03 )
 
                   
 
                     
 
 
Diluted income per share
                  $ 0.74                     $ 0.20  
 
                   
 
                     
 
 
Adjusted EBITDA (1)
  $ 219,406     $ 85,610     $ 305,016     $ 202,892     $ (4,383 )   $ 198,509  
 
   
 
     
 
     
 
     
 
     
 
     
 
 


(1)   See “Adjustments To Reconcile Net Income (Loss) To Adjusted EBITDA”

 


 

WESTERN WIRELESS CORPORATION
Adjustments to Reconcile Net Income (Loss) to Adjusted EBITDA

(dollars in thousands)

                                 
    Three months ended June 30, 2004
    Domestic   Austrian   All Other    
    Operations
  Operations
  International
  Consolidated
Net income (loss)
  $ 41,268     $ 30,912     $ (31,198 )   $ 40,982  
Depreciation, amortization and accretion
    41,526       4,502       16,277       62,305  
Asset dispositions
                               
Stock-based compensation, net
            81       4,692       4,773  
Interest and financing expense, net
    18,502       2,477       14,561       35,540  
Equity in net (income) loss of unconsolidated affiliates, net of tax and other, net
    (10,581 )     1,065       (1,635 )     (11,151 )
(Gain) loss on sale of joint venture
                               
Loss on extinguishment of debt
    16,260                       16,260  
Minority interests in net (income) loss of consolidated subsidiaries
                    2,116       2,116  
Provision for income taxes
    7,673       1       4,026       11,700  
Discontinued operations
                               
Cumulative change in accounting principle
                               
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Adjusted EBITDA (1)
  $ 114,648     $ 39,038     $ 8,839     $ 162,525  
 
   
 
     
 
     
 
     
 
 
                                 
    Three months ended June 30, 2003
    Domestic   Austrian   All Other    
    Operations
  Operations
  International
  Consolidated
Net income (loss)
  $ 22,934     $ (4,373 )   $ 21,519     $ 40,080  
Depreciation, amortization and accretion
    54,587       2,586       14,437       71,610  
Asset dispositions
                                 
Stock-based compensation, net
                               
Interest and financing expense, net
    22,252       2,797       12,390       37,439  
Equity in net (income) loss of unconsolidated affiliates, net of tax and other, net
    (2,339 )     805       (7,970 )     (9,504 )
(Gain) loss on sale of joint venture
    1,574               (42,093 )     (40,519 )
Loss on extinguishment of debt
                               
Minority interests in net (income) loss of consolidated subsidiaries
                    (1,651 )     (1,651 )
Provision for income taxes
    6,036       (5 )     714       6,745  
Discontinued operations
                               
Cumulative change in accounting principle
                               
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Adjusted EBITDA (1)
  $ 105,044     $ 1,810     $ (2,654 )   $ 104,200  
 
   
 
     
 
     
 
     
 
 

 


 

WESTERN WIRELESS CORPORATION
Adjustments to Reconcile Net Income (Loss) to Adjusted EBITDA
(dollars in thousands)

                                 
    Six months ended June 30, 2004
    Domestic   Austrian   All Other    
    Operations
  Operations
  International
  Consolidated
Net income (loss)
  $ 74,265     $ 58,937     $ (60,777 )   $ 72,425  
Depreciation, amortization and accretion
    81,122       8,471       31,431       121,024  
Asset dispositions
                               
Stock-based compensation, net
            228       6,292       6,520  
Interest and financing expense, net
    38,402       5,127       26,267       69,796  
Equity in net (income) loss of unconsolidated affiliates, net of tax and other, net
    (4,367 )     2,104       (3,322 )     (5,585 )
(Gain) loss on sale of joint venture
                               
Loss on extinguishment of debt
    16,260                       16,260  
Minority interests in net (income) loss of consolidated subsidiaries
                    4,577       4,577  
Provision for income taxes
    13,724       2       6,273       19,999  
Discontinued operations
                               
Cumulative change in accounting principle
                               
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Adjusted EBITDA (1)
  $ 219,406     $ 74,869     $ 10,741     $ 305,016  
 
   
 
     
 
     
 
     
 
 
                                 
    Six months ended June 30, 2003
    Domestic   Austrian   All Other    
    Operations
  Operations
  International
  Consolidated
Net income (loss)
  $ 36,215     $ (8,095 )   $ (12,073 )   $ 16,047  
Depreciation, amortization and accretion
    104,749       4,962       27,712       137,423  
Asset dispositions
    7,640                       7,640  
Stock-based compensation, net
                               
Interest and financing expense, net
    46,032       5,306       24,580       75,918  
Equity in net (income) loss of unconsolidated affiliates, net of tax and other, net
    (4,352 )     1,981       (5,052 )     (7,423 )
(Gain) loss on sale of joint venture
    1,574               (42,093 )     (40,519 )
Loss on extinguishment of debt
                    (4,043 )     (4,043 )
Minority interests in net (income) loss of consolidated subsidiaries
                               
Provision for income taxes
    9,845       (4 )     1,394       11,235  
Discontinued operations
                               
Cumulative change in accounting principle
    1,189       770       272       2,231  
 
   
 
     
 
     
 
     
 
 
Adjusted EBITDA (1)
  $ 202,892     $ 4,920     $ (9,303 )   $ 198,509  
 
   
 
     
 
     
 
     
 
 


(1)   EBITDA is a non-GAAP financial measure generally defined as net income (loss) before interest, taxes, depreciation and amortization. We use the non-GAAP financial measure “Adjusted EBITDA” which further excludes the following items: (i) accretion; (ii) asset dispositions; (iii) stock-based compensation, net; (iv) equity in net (income) loss of unconsolidated affiliates, net of tax and other, net; (v) (gain) loss on sale of joint venture; (vi) loss on extinguishment of debt; (vii) minority interests in net (income) loss of consolidated subsidiaries; (viii) discontinued operations; and (ix) cumulative change in accounting principle. Each of these items is presented in our Condensed Consolidating Statements of Operations.
 
    Other companies in the wireless industry may define Adjusted EBITDA in a different manner or present other varying financial measures and accordingly, the Company’s presentation may not be comparable to other similarly titled measures of other companies. The Company’s calculation of Adjusted EBITDA is also not directly comparable to EBIT (earnings before interest and taxes) or EBITDA.
 
    The Company views Adjusted EBITDA as an operating performance measure and as such, believes that the GAAP financial measure most directly comparable to Adjusted EBITDA is net income (loss). The Company has presented Adjusted EBITDA because this financial measure, in combination with other financial measures, is an integral part of the Company’s internal reporting system utilized by management to assess and evaluate the performance of its business. Adjusted EBITDA is also considered a significant performance measure. It is used by management as a measurement of the Company’s success in obtaining, retaining and servicing customers by reflecting the Company’s ability to generate subscriber revenue while providing a high level of customer service in a cost effective manner. The components of Adjusted EBITDA include the key revenue and expense items for which the Company’s operating managers are responsible and upon which the Company evaluates their performance.
 
    Adjusted EBITDA is consistent with certain financial measures used in the Company’s domestic credit facility and the indenture for its senior notes. Such financial measures are key components of several negative covenants including, among others, the limitation on incurrence of indebtedness, the limitations on investments and acquisitions and the limitation on distributions and dividends.
 
    Adjusted EBITDA should not be construed as an alternative to net income (loss), as determined in accordance with GAAP, as an alternative to cash flows from operating activities, as determined in accordance with GAAP, or as a measure of liquidity. The Company believes Adjusted EBITDA is useful to investors as a means to evaluate the Company’s operating performance prior to financing costs, deferred tax charges, non-cash depreciation and amortization expense, and certain other non-cash charges. Although Adjusted EBITDA may be defined differently by other companies in the wireless industry, the Company believes that Adjusted EBITDA provides some commonality of measurement in analyzing operating performance of companies in the wireless industry.

 


 

WESTERN WIRELESS CORPORATION
Adjustments to Reconcile Net Cash Provided By Operating Activities to Free Cash Flow

(dollars in thousands)

                                                 
    Three months ended June 30, 2004
  Three months ended June 30, 2003
    Domestic
  International
  Consolidated
  Domestic
  International
  Consolidated
Net cash provided by operating activities
  $ 76,643     $ 45,811     $ 122,454     $ 55,599     $ 12,285     $ 67,884  
Purchase of property and equipment
    (48,126 )     (26,870 )     (74,996 )     (33,700 )     (14,391 )     (48,091 )
Interest and financing expense, net
    18,502       17,038       35,540       22,252       15,187       37,439  
Non-cash interest
            (3,322 )     (3,322 )             (2,886 )     (2,886 )
Interest allocation
    12,373       (12,373 )             10,490       (10,490 )        
Changes in operating assets and liabilities
    6,664       (2,191 )     4,473       17,438       (15,264 )     2,174  
Cash paid and payable for taxes
    1,302       4,027       5,329               709       709  
Other, net
    (836 )     (1,113 )     (1,949 )     (735 )     (385 )     (1,120 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Free cash flow (1)
  $ 66,522     $ 21,007     $ 87,529     $ 71,344     $ (15,235 )   $ 56,109  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net cash provided by (used in) investing activities
                  $ (120,945 )                   $ 18,073  
 
                   
 
                     
 
 
Net cash provided by financing activities
                  $ 17,319                     $ 87,143  
 
                   
 
                     
 
 
                                                 
    Six months ended June 30, 2004
  Six months ended June 30, 2003
    Domestic
  International
  Consolidated
  Domestic
  International
  Consolidated
Net cash provided by operating activities
  $ 151,839     $ 64,688     $ 216,527     $ 126,508     $ 11,819     $ 138,327  
Purchase of property and equipment
    (94,716 )     (42,311 )     (137,027 )     (64,305 )     (35,534 )     (99,839 )
Interest and financing expense, net
    38,402       31,394       69,796       46,032       29,886       75,918  
Non-cash interest
            (6,187 )     (6,187 )             (5,384 )     (5,384 )
Interest allocation
    23,672       (23,672 )             20,937       (20,937 )        
Changes in operating assets and liabilities
    6,531       14,753       21,284       11,110       (17,585 )     (6,475 )
Cash paid and payable for taxes
    1,302       6,275       7,577               1,390       1,390  
Other, net
    (2,340 )     (1,641 )     (3,981 )     (1,695 )     (3,572 )     (5,267 )
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Free cash flow (1)
  $ 124,690     $ 43,299     $ 167,989     $ 138,587     $ (39,917 )   $ 98,670  
 
   
 
     
 
     
 
     
 
     
 
     
 
 
Net cash used in investing activities
                  $ (217,646 )                   $ (35,006 )
 
                   
 
                     
 
 
Net cash provided by financing activities
                  $ 14,736                     $ 83,981  
 
                   
 
                     
 
 


(1)   Free cash flow is a non-GAAP financial measure which the Company defines as net cash provided by operating activities; (i) less purchase of property and equipment and non-cash interest; (ii) adding back interest and financing expense, net; and (iii) adjusting for changes in operating assets and liabilities, cash paid and payable for taxes, interest allocation and other, net.
 
    The Company views free cash flow as a liquidity measure and, as such, believes that the GAAP financial measure most directly comparable to free cash flow is net cash provided by (used in) operating activities. The Company has presented free cash flow because this financial measure, in combination with other financial measures, is an integral part of the Company’s internal reporting system. The Company believes the ability of a company in the wireless industry to generate positive free cash flow has a positive impact on shareholder value. Free cash flow provides an important measurement of the cash generated by the Company after capital reinvestment in its business and is an indicator of the Company’s ability to service its long-term debt and other corporate cash requirements.
 
    Free cash flow should not be construed as an alternative to net income (loss), as determined in accordance with GAAP or as an alternative to net cash provided by (used in) operating activities, as determined in accordance with GAAP. The Company believes free cash flow is useful to investors as a means to evaluate the cash-generating capabilities of the Company, as recurring capital expenditures are required in the wireless industry to sustain its subscriber base and revenue growth. Further, the Company considers trends in free cash flow when making decisions regarding the allocation of financial resources.

 


 

WESTERN WIRELESS CORPORATION
Selected Domestic Operating Statistics

                 
    As of and for the
    Three months ended June 30,
    2004
  2003
Licensed Population(1)
    11,149,000       10,582,000  
Subscribers
    1,324,200       1,231,200  
Average monthly subscriber revenue(2)
  $ 50.22     $ 47.37  
Average monthly service revenue(3)
  $ 63.92     $ 62.41  
Average monthly cost of serving a subscriber:(4)
               
- per subscriber
  $ 24.31     $ 22.86  
- per minute of use
  $ 0.039     $ 0.043  
Cost per gross subscriber addition(5)
  $ 400     $ 395  
Churn
    2.4 %     2.4 %
Subscriber minutes of use
    543       454  
Capital expenditures (000’s)
  $ 48,126     $ 33,700  


(1)   Population is estimated based upon 2003 Claritas, Inc. estimates and is adjusted by Western Wireless by applying Claritas’s positive and negative growth factors.
 
(2)   Average 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)   Average monthly service revenue is determined by dividing service revenues 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 revenues.
 
(4)   Average monthly 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 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.