OKLAHOMA CITY, May 10, 2006 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) today reported strong growth in sales of postpaid calling plans and further reductions in postpaid churn for the first quarter ended March 31, 2006.
The Company reported approximately 125,300 total gross subscriber additions for the first quarter of 2006, an increase of 2.7 percent over the 122,000 total gross additions in the first quarter of last year. Postpaid sales were even stronger, with postpaid gross additions growing 9.6 percent to 84,800 in the first quarter of 2006, versus 77,400 in the first quarter of 2005.
Postpaid customer churn continued its recent positive trend, declining to 2.08 percent in the first quarter of 2006, compared with 2.82 percent in the third quarter of 2005 and 2.62 percent in the fourth quarter of 2005. In the first quarter of 2005, postpaid churn was 2.43 percent.
Consequently, Dobson reported that the postpaid segment of its subscriber base remained level in the first quarter of 2006, compared with net reductions of 28,500 postpaid subscribers in the first quarter of 2005 and 28,000 in the fourth quarter of 2005. On a total subscriber basis, the Company reported 2,500 net subscriber additions for the first quarter of 2006, compared with net reductions of 18,800 subscribers in the first quarter of 2005 and 22,500 subscribers in the fourth quarter of 2005.
"Our first quarter results were generated in large part by continued improvements in network performance, increased productivity by our reorganized customer care organization, the implementation of a well-focused marketing plan, and strong sales performance," said Steve Dussek, president and chief executive officer. "We are pleased with the effort and focus of the entire organization. With strong execution of our growth plan in the first quarter, we made a good start in what we expect to be a very productive year."
Dobson reported a net loss applicable to common shareholders of $13.3 million, or $0.08 per share, for the first quarter ended March 31, 2006. (See Table 1.) The net loss applicable to common shareholders included an income tax benefit of $5.3 million.
For the first quarter of 2005, Dobson reported a net loss applicable to common shareholders of $25.4 million, or $0.19 per share, which included $7.9 million dividends on mandatorily redeemable preferred stock and an income tax benefit of $9.4 million. Dobson completed the redemption of all of the remaining outstanding shares of its 12-1/4% Senior Exchangeable Preferred Stock and 13% Senior Exchangeable Preferred Stock on March 1, 2006.
Total revenue was $287.6 million for the first quarter of 2006, an increase of 5.8 percent over total revenue of $271.8 million for the same period last year.
Service revenue for the first quarter of 2006 was $216.1 million, compared with $206.1 million for the first quarter of 2005.
Dobson reported $46.76 average revenue per unit (ARPU) for the first quarter of 2006, which included $3.34 in data ARPU and $2.58 of ARPU from ETC (Eligible Telecommunications Carrier) funding. For the first quarter of 2005, the Company reported ARPU of $42.94, including $1.82 of data ARPU and $0.60 in ARPU from ETC funding.
Average MOUs per subscriber per month were 596 in the first quarter of 2006, compared with 494 in the first quarter and 589 in the fourth quarter of 2005.
Dobson reported first quarter 2006 roaming revenue of $54.8 million, compared with $53.4 million for the first quarter of 2005. Roaming results reflected the long-term roaming agreements that Dobson signed with its primary roaming partners in August and October 2005. The agreements reduced the total roaming revenue per minute that Dobson receives when the customers of its roaming partners roam on the Dobson network, in exchange for lower roaming costs per minute when Dobson customers roam off-network.
First quarter 2006 roaming revenue reflected 566 million roaming minutes of use (MOUs) and a roaming yield of 9.7 cents per MOU. This was an increase of 43 percent over the total of 395 million MOUs for the first quarter of 2005, when Dobson's roaming yield was 13.5 cents.
First quarter 2006 operating expenses were generally in line with the Company's expectations. General and administrative expense for the first quarter of 2006 was $47.3 million, compared with $44.8 million for the first quarter of 2005 and $52.1 million for the fourth quarter of 2005. Dobson began to implement SFAS 123R in the first quarter of 2006, recognizing $1.8 million in non-cash stock options expense, most of which was classified as G&A expense line.
In contrast, bad debt expense -- another component of G&A expense -- was $6.3 million in the first quarter of 2006, down from $9.4 million in the third quarter of 2005 and $10.2 million in the fourth quarter of 2005. In the first quarter last year, bad debt expense was $4.4 million. The Company stated on its February 2006 conference call that it expected bad debt expense to decline as the Company continued to reduce customer churn.
Dobson reported EBITDA of $92.5 million for the first quarter of 2006, compared with EBITDA of $90.2 million for the first quarter of 2005. Please see Table 3 for the reconciliation of EBITDA to GAAP measures.
Operating income for the first quarter of 2006 was $43.9 million, an increase of 13.7 percent over operating income of $38.6 million for the first quarter of 2005.
The Company had 1,545,900 subscribers as of March 31, 2006, with approximately 75 percent on GSM calling plans.
During the first quarter of 2006, 64,800 of the Company's TDMA customers migrated to GSM calling plans, compared with 84,200 in the fourth quarter and 101,400 in the third quarter of 2005. However, as the quarterly number of TDMA migrations has declined, Dobson noted that an increasing number of its GSM customers have been upgrading to new GSM handsets as they approach the end of their original two-year service agreements.
Capital expenditures were $31.3 million in the first quarter of 2006, of which $20.3 million was spent by Dobson Cellular Systems and $11.0 million by American Cellular Corporation. In total, the Company built 54 cell sites during the first quarter of 2006, bringing its total cell sites to 2,606 at March 31, 2006.
At March 31, 2006, Dobson's balance sheet included $179.5 million in unrestricted cash and cash equivalents; $4.4 million in restricted investments; $2.5 billion in long-term debt; and $135.7 million in preferred stock. (See Table 2.)
Outlook for 2006
On April 4, 2006, Dobson noted in a press release that postpaid customer churn for the first quarter of 2006 improved more rapidly than projected. Consequently, the Company now expects to exceed the high end of its guidance of 20,000 net subscriber additions for all of 2006. Dobson today again confirmed without further update its other 2006 guidance, as reported in its fourth quarter earnings release dated February 22, 2006.
First Quarter 2006 Conference Call
On Thursday, May 11, 2006, Dobson plans to conduct its first quarter earnings conference call beginning at 9:00 a.m. CT (10:00 a.m. ET). Along with first quarter results, Dobson may comment on recent operating trends and its outlook for 2006 as a whole. Investors will be able to listen by phone or via web-cast on Dobson's web site at www.dobson.net. Those interested may access the call by dialing:
Conference call (877) 704-5378
International (913) 312-1292
Pass code 1486897
A replay of the call will be available later in the day via Dobson's web site or by phone.
Replay (888) 203-1112
Pass code 1486897
The replay will be available by phone for two weeks. For further analysis of quarterly results, please see the Company's quarterly report on Form 10-Q, which Dobson filed today.
Dobson Communications is a leading provider of wireless phone services to rural and suburban markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 16 states. For additional information, please visit its web site at www.dobson.net.
This press release contains "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. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, but are not limited to, increased levels of competition or other factors that might inhibit the growth of its subscriber base; shortages of key network equipment and/or handsets; restrictions on the Company's ability to finance its growth; increased operating costs; changes in the Company's roaming agreements that could affect revenue and/or earnings expectations; technology changes; 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 reports and other filings filed with the Securities and Exchange Commission. Given these concerns, investors and analysts should not place undue reliance on forward-looking statements.
Table 1
Dobson Communications Corporation
Statements of Operations
Three Months Ended
March 31,
--------------------------
2006 2005
----------- -----------
($ in thousands except
per share data)
(unaudited)
Operating Revenue
Service revenue $ 216,095 $ 206,082
Roaming revenue 54,780 53,430
Equipment and other revenue 16,724 12,246
----------- -----------
Total 287,599 271,758
----------- -----------
Operating Expenses (excluding
depreciation & amortization)
Cost of service (exclusive of
depreciation & amortization shown
separately below) 76,073 72,299
Cost of equipment 32,570 30,366
Marketing and selling 39,123 34,094
General and administrative 47,325 44,811
----------- -----------
Total 195,091 181,570
----------- -----------
EBITDA (a) 92,508 90,188
Depreciation and amortization (50,275) (51,570)
Gain on disposition of operating assets 1,664 --
----------- -----------
Operating income 43,897 38,618
Interest expense (57,407) (60,742)
Loss on redemption of mandatorily
redeemable preferred stock (1,445) --
Dividends on mandatorily redeemable
preferred stock (709) (7,931)
Other income (expense), net 1,842 (766)
Minority interests in income
of subsidiaries (2,364) (1,830)
----------- -----------
Loss before income taxes (16,186) (32,651)
Income tax benefit 5,289 9,394
----------- -----------
Net loss (10,897) (23,257)
Dividends on preferred stock (2,375) (2,145)
----------- -----------
Net loss applicable to
common stockholders $ (13,272) $ (25,402)
=========== ===========
Basic and diluted net loss applicable to
common stockholders per common share $ (0.08) $ (0.19)
=========== ===========
Basic and diluted weighted
average common shares outstanding 169,394,088 133,884,962
=========== ===========
(a) EBITDA is defined as loss from continuing operations before
depreciation and amortization, gain on disposition of operating
assets, interest expense, loss on redemption of mandatorily
redeemable preferred stock, dividends on mandatorily redeemable
preferred stock, other income (expense), net, minority interests
in income of subsidiaries and income tax benefit. We believe that
EBITDA provides meaningful additional information concerning a
company's operating results and its ability to service its
long-term debt and other fixed obligations and to fund its
continued growth. Many financial analysts consider EBITDA to be a
meaningful indicator of an entity's ability to meet its future
financial obligations, and they consider growth in EBITDA to be
an indicator of future profitability, especially in a capital
intensive industry such as wireless communications. You should
not construe EBITDA as an alternative to net loss as determined
in accordance with GAAP, as an alternative to cash flows from
operating activities as determined in accordance with GAAP or a
measure of liquidity. Because EBITDA is not calculated in the
same manner by all companies, it may not be comparable to other
similarly titled measures of other companies.
Table 2
Dobson Communications Corporation
Selected Balance Sheet and Statistical Data
Balance Sheet Data: March 31, 2006 December 31, 2005
--------- ---------
($ in millions) ($ in millions)
(unaudited)
Cash and cash equivalents
(unrestricted) (a) $ 179.5 $ 196.5
Restricted investments $ 4.4 $ 4.5
Debt:
DCC Senior Floating Rate Notes $ 150.0 $ 150.0
DCC Senior Convertible Debentures 160.0 160.0
DCS 8.375% Senior Notes 250.0 250.0
DCS 9.875% Senior Notes 325.0 325.0
DCS Floating Rate Senior Notes 250.0 250.0
DCC 8.875% Senior Notes 419.7 419.7
ACC 9.5% Senior Notes, net 15.0 14.8
ACC 10.0% Senior Notes 900.0 900.0
--------- ---------
Total debt $ 2,469.7 $ 2,469.5
========= =========
Preferred Stock:
Senior Exchangeable Preferred
Stock, 12.25%, net (b) -- 5.1
Senior Exchangeable Preferred
Stock, 13.00%, net (c) -- 27.7
Series F Preferred Stock 135.7 135.7
--------- ---------
Total preferred stock $ 135.7 $ 168.5
========= =========
Three Months Ended March 31,
----------------------------
2006 2005
--------- ---------
($ in millions) ($ in millions)
Capital Expenditures: $ 31.3 $ 32.6
========= =========
(a) Includes $58.3 million and $76.6 million of cash and cash
equivalents from American Cellular at March 31, 2006 and December
31, 2005, respectively.
(b) Net of discount of $(0.1) million at December 31, 2005.
(c) Net of deferred financing costs of $(0.1) million at December
31, 2005.
Table 3
Dobson Communications Corporation
For the Quarter Ended
----------------------------------------------------------
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
---------- ---------- ---------- ---------- ----------
($ in thousands except per subscriber data)
(unaudited)
Operating
Revenue
Service
revenue $ 216,095 $ 215,008 $ 221,311 $ 215,984 $ 206,082
Roaming
revenue 54,780 63,398 80,430 61,149 53,430
Equipment
and other
revenue 16,724 15,813 14,078 20,533 12,246
---------- ---------- ---------- ---------- ----------
Total 287,599 294,219 315,819 297,666 271,758
---------- ---------- ---------- ---------- ----------
Operating
Expenses
(excluding
depreciation
and amorti-
zation)
Cost of
service 76,073 77,380 77,950 68,965 72,299
Cost of
equipment 32,570 33,334 32,156 34,255 30,366
Marketing
and
selling 39,123 35,769 35,535 35,855 34,094
General
and adminis-
trative 47,325 52,052 50,725 49,308 44,811
---------- ---------- ---------- ---------- ----------
Total 195,091 198,535 196,366 188,383 181,570
---------- ---------- ---------- ---------- ----------
EBITDA
(a)(b) $ 92,508 $ 95,684 $ 119,453 $ 109,283 $ 90,188
========== ========== ========== ========== ==========
Pops 11,854,000 11,854,000 11,854,000 11,757,400 11,757,400
Post-paid
Gross Adds 84,800 80,400 84,800 87,600 77,400
Net Adds -- (28,000) (34,500) (9,000) (28,500)
Sub-
scribers 1,364,700 1,364,700 1,392,700 1,426,600 1,435,600
Churn 2.1% 2.6% 2.8% 2.3% 2.4%
Pre-paid
Gross Adds 22,000 19,000 21,600 20,700 19,200
Net Adds 6,300 300 3,300 5,300 3,900
Subscribers 65,400 59,100 58,800 55,500 50,200
Reseller
Gross Adds 18,500 23,200 25,000 23,200 25,400
Net Adds (3,800) 5,200 7,100 2,600 5,800
Subscribers 115,800 119,600 114,400 107,300 104,700
Total
Gross Adds 125,300 122,600 131,400 131,500 122,000
Net Adds 2,500 (22,500) (24,100) (1,100) (18,800)
Sub-
scribers 1,545,900 1,543,400 1,565,900 1,589,400 1,590,500
ARPU $ 46.76 $ 46.10 $ 46.77 $ 45.28 $ 42.94
Penetration 13.0% 13.0% 13.2% 13.5% 13.5%
(a) Includes $2.6 million, $3.3 million, $2.7 million, $3.1
million, and $2.3 million of EBITDA for the quarters ended March
31, 2006, December 31, 2005, September 30, 2005, June 30, 2005,
and March 31, 2005, respectively, related to minority interests.
(b) A reconciliation of EBITDA to loss from continuing operations
as determined in accordance with generally accepted accounting
principles is as follows:
Loss from
continuing
operations $ (10,897) $ (24,893) $ (63,431) $ (10,029) $ (23,257)
Add back
non-EBITDA
items in-
cluded in
loss from
continuing
operations:
Depreciation
and amorti-
zation (50,275) (51,383) (49,102) (50,340) (51,570)
Gain on dis-
position of
operating
assets 1,664 1,483 1,432 939 --
Interest
expense (57,407) (58,545) (62,457) (61,258) (60,742)
Loss on re-
demption and
repurchases
of mandatorily
redeemable
preferred
stock (1,445) (4,457) (66,383) -- --
Dividends on
mandatorily
redeemable
preferred
stock (709) (1,161) (5,464) (7,996) (7,931)
Other income
(expense),
net 1,842 1,966 2,633 744 (766)
Loss from ex-
tinguishment
of debt -- (21,698) -- -- --
Minority
interests
in income
of sub-
sidiaries (2,364) (2,932) (2,347) (2,646) (1,830)
Income tax
benefit
(expense) 5,289 16,150 (1,196) 1,245 9,394
---------- ---------- ---------- ---------- ----------
EBITDA $ 92,508 $ 95,684 $ 119,453 $ 109,283 $ 90,188
========== ========== ========== ========== ==========
Table 4
Dobson Cellular Systems
For the Quarter Ended
-----------------------------------------------------
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
--------- --------- --------- --------- ---------
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 128,622 $ 125,069 $ 128,599 $ 125,134 $ 119,524
Roaming
revenue 31,797 38,532 45,771 34,985 30,911
Equipment
and other
revenue 14,478 13,271 12,295 17,606 10,250
--------- --------- --------- --------- ---------
Total 174,897 176,872 186,665 177,725 160,685
--------- --------- --------- --------- ---------
Operating Expenses
(excluding
depreciation
and amortization)
Cost of
service 48,206 48,312 48,376 43,374 43,978
Cost of
equipment 20,356 20,102 18,708 21,486 18,708
Marketing
and selling 23,083 20,770 20,531 20,961 19,721
General and
administrative 27,739 30,684 30,137 27,838 25,279
--------- --------- --------- --------- ---------
Total 119,384 119,868 117,752 113,659 107,686
--------- --------- --------- --------- ---------
EBITDA
(a)(b) $ 55,513 $ 57,004 $ 68,913 $ 64,066 $ 52,999
========= ========= ========= ========= =========
Pops 6,687,500 6,687,500 6,687,500 6,687,500 6,687,500
Post-paid
Gross Adds 51,900 48,400 50,800 52,500 45,700
Net Adds 3,300 (13,000) (15,700) (900) (12,900)
Subscribers 773,800 770,500 783,500 799,200 800,100
Churn 2.1% 2.6% 2.8% 2.2% 2.4%
Pre-paid
Gross Adds 13,900 13,000 14,600 14,200 13,300
Net Adds 3,000 -- 1,700 3,300 2,000
Subscribers 42,900 39,900 39,900 38,200 34,900
Reseller
Gross Adds 11,200 11,100 11,400 11,100 11,500
Net Adds 700 3,000 3,800 1,100 2,000
Subscribers 64,000 63,300 60,300 56,500 55,400
Total
Gross Adds 77,000 72,500 76,800 77,800 70,500
Net Adds 7,000 (10,000) (10,200) 3,500 (8,900)
Subscribers 880,700 873,700 883,700 893,900 890,400
ARPU $ 49.01 $ 47.44 $ 48.23 $ 46.75 $ 44.52
Penetration 13.2% 13.1% 13.2% 13.4% 13.3%
(a) Includes $2.6 million, $3.3 million, $2.7 million, $3.1
million and $2.3 million of EBITDA for the quarters ended March
31, 2006 December 31, 2005, September 30,2005, June 30, 2005 and
March 31, 2005, respectively, related to minority interests.
(b) A reconciliation of EBITDA to (loss) income from continuing
operations as determined in accordance with generally accepted
accounting principles is as follows:
(Loss) income
from continuing
operations $ (7,035) $ (7,625) $ 3,900 $ (2,478) $ (8,956)
Add back non-
EBITDA items
included in
(loss) income
from continuing
operations:
Depreciation and
amortization (28,778) (28,874) (28,744) (29,179) (30,315)
Gain on disposi-
tion of operating
assets 915 802 783 -- --
Interest expense (38,434) (38,559) (38,198) (37,433) (37,025)
Other income, net 1,840 1,408 2,132 1,195 1,726
Minority interests
in income of
subsidiaries (2,364) (2,932) (2,347) (2,646) (1,830)
Income tax
benefit 4,273 3,526 1,361 1,519 5,489
--------- --------- --------- --------- ---------
EBITDA $ 55,513 $ 57,004 $ 68,913 $ 64,066 $ 52,999
========= ========= ========= ========= =========
Table 5
American Cellular Corporation
For the Quarter Ended
-----------------------------------------------------
3/31/2006 12/31/2005 9/30/2005 6/30/2005 3/31/2005
--------- --------- --------- --------- ---------
($ in thousands except per subscriber data)
(unaudited)
Operating Revenue
Service
revenue $ 87,473 $ 89,939 $ 92,712 $ 90,850 $ 86,558
Roaming revenue 22,983 24,866 34,659 26,164 22,519
Equipment and
other revenue 5,848 5,554 4,794 5,939 5,008
--------- --------- --------- --------- ---------
Total 116,304 120,359 132,165 122,953 114,085
--------- --------- --------- --------- ---------
Operating Expenses
(excluding depre-
ciation and
amortization)
Cost of service 29,723 30,366 30,872 26,890 29,619
Cost of
equipment 12,214 13,232 13,448 12,769 11,658
Marketing and
selling 16,276 14,999 15,004 14,894 14,373
General and
administrative 21,327 23,077 22,296 23,178 21,241
--------- --------- --------- --------- ---------
Total 79,540 81,674 81,620 77,731 76,891
--------- --------- --------- --------- ---------
EBITDA (a) $ 36,764 $ 38,685 $ 50,545 $ 45,222 $ 37,194
========= ========= ========= ========= =========
Pops 5,166,500 5,166,500 5,166,500 5,069,900 5,069,900
Post-paid
Gross Adds 32,900 32,000 34,000 35,100 31,700
Net Adds (3,300) (15,000) (18,800) (8,100) (15,600)
Subscribers 590,900 594,200 609,200 627,400 635,500
Churn 2.0% 2.6% 2.8% 2.3% 2.5%
Pre-paid
Gross Adds 8,100 6,000 7,000 6,500 5,900
Net Adds 3,300 300 1,600 2,000 1,900
Subscribers 22,500 19,200 18,900 17,300 15,300
Reseller
Gross Adds 7,300 12,100 13,600 12,100 13,900
Net Adds (4,500) 2,200 3,300 1,500 3,800
Subscribers 51,800 56,300 54,100 50,800 49,300
Total
Gross Adds 48,300 50,100 54,600 53,700 51,500
Net Adds (4,500) (12,500) (13,900) (4,600) (9,900)
Subscribers 665,200 669,700 682,200 695,500 700,100
ARPU $ 43.80 $ 44.35 $ 44.88 $ 43.40 $ 40.92
Penetration 12.9% 13.0% 13.2% 13.7% 13.8%
(a) A reconciliation of EBITDA to net (loss) income as determined
in accordance with generally accepted accounting principles is as
follows:
Net (loss)
income $ (4,969) $ (4,434) $ 4,555 $ 481 $ (5,268)
Add back non-
EBITDA items
included in net
(loss) income:
Depreciation and
amortization (21,454) (22,509) (20,358) (21,161) (21,255)
Gain on dis-
position of
operating assets 749 681 649 939 --
Interest expense (23,785) (23,782) (23,782) (23,778) (23,784)
Other expense,
net (258) (227) (400) (446) (652)
Income tax
benefit (expense) 3,015 2,718 (2,099) (295) 3,229
--------- --------- --------- --------- ---------
EBITDA $ 36,764 $ 38,685 $ 50,545 $ 45,222 $ 37,194
========= ========= ========= ========= =========