OKLAHOMA CITY, Nov. 9, 2000 (PRIMEZONE) -- Dobson Communications Corporation (Nasdaq:DCEL) today announced record results for its third quarter ended September 30, 2000, including gains of 42 percent in total revenues and 52 percent in EBITDA, compared with the third quarter last year. Revenues for the period reached $143.7 million, versus $101.0 million last year, and EBITDA was $61.5 million, compared with $40.4 million in the third quarter of 1999.
EBITDA represents earnings before interest, taxes, depreciation, amortization, equity in earnings of unconsolidated subsidiaries, loss from discontinued operations, and extraordinary items. The revenue and EBITDA totals above do not reflect Dobson's 50 percent joint venture ownership in American Cellular Corporation, which Dobson accounts for on an equity basis as a "loss from investment in joint venture" (Table 1).
The Company's third quarter net loss applicable to common shareholders was $44.1 million, or $0.47 per share, based on average shares of 93.8 million. The net loss includes payment in kind of $17.1 million in preferred stock dividends and a $12.5 million loss from investment in the American Cellular joint venture. In the third quarter last year, Dobson recorded a net loss applicable to common shareholders of $44.4 million, or $0.81 per share (based on an average 54.8 million shares), after a $16.0 million loss from discontinued operations and payment in kind of $18.6 million in preferred stock dividends. Last year's third quarter included no joint venture-related loss, because the Dobson/AT&T Wireless (NYSE:AWE) joint venture acquired American Cellular in the first quarter of 2000.
"The Company has made significant progress in achieving its goals for the year," said Everett Dobson, chairman and chief executive officer. "We continue to enjoy strong growth in revenues and EBITDA, to acquire strategic properties that should support future growth, and to build out the most powerful wireless network in the rural sector.
"Our rapid transition to digital continues to drive higher average revenue per unit," he said. "The integration of American Cellular has been smooth, and our partnership with AT&T Wireless obviously remains a cornerstone of our strategic growth plan. Today, nine months after our IPO, we are more encouraged than ever by the opportunities immediately ahead. Dobson is well positioned to capitalize on them."
On November 8, 2000, Dobson filed Form 8-K documents with the Securities and Exchange Commission. The filing disclosed a contingent sale of $200 million in Series A Convertible Preferred Stock that, if approved, would further strengthen Dobson's financial resources as it prepares to participate in the Federal Communications Commission C and F Block Broadband Spectrum Auction (FCC Auction No. 35). Dobson has been "grand-fathered" as a Designated Entity to participate in the auction, which is scheduled to commence on December 12, 2000.
Proportionate, Pro Forma Results
Dobson's proportionate, pro forma results for the third quarter, including its 50 percent ownership in the American Cellular joint venture and other acquisitions, reflected even greater progress toward key objectives (Table 3). On this basis, Dobson reported total revenues of $202.1 million, an increase of 21 percent over the same quarter last year.
The Company added approximately 80,000 gross subscribers during the quarter, of which 74 percent were digital. In the immediately previous quarter, 60 percent of gross adds were digital, and, through early November, 85-to-90 percent of Dobson's fourth quarter gross adds have been digital.
Net additions for the third quarter were 28,500, bringing Dobson's total base to 854,100 at September 30, 2000. Based on October results and normal holiday season trends, the Company expects fourth quarter net subscriber additions of at least 43,000 (see Fourth Quarter Outlook below).
From June 30 to September 30, 2000, the digital component of Dobson's subscriber base increased from approximately 176,500 to 270,000 subscribers -- or from 22.0 percent of its total base to 31.6 percent. This reflects in part the Company's success in transitioning analog customers to digital calling plans.
The remainder of Dobson's subscriber base at September 30, 2000 consisted of 67.2 percent analog subscribers and 1.2 percent prepaid.
The strong growth in Dobson's digital segment strengthened average revenue per unit (ARPU) to $42 for the third quarter, on par with ARPU for the same period last year and four percent higher than ARPU for the second quarter ended June 30, 2000. Digital ARPU for the third quarter was $49, higher by 39 percent than analog ARPU of $36.
Third quarter churn increased to 2.15 percent, compared with 1.86 percent last year (proportionate, pro forma). In the Dobson/Sygnet markets in Ohio, Pennsylvania and western New York, average monthly churn increased to 2.4 percent.
Roaming revenues increased 20 percent to $88.4 million, driven by a 41 percent gain in roaming minutes-of-use (MOUs). Offsetting the strong growth in MOUs were scheduled reductions in the roaming rates paid to Dobson by its major roaming partners. Roaming MOU growth was stronger and roaming yield declined less in the Dobson standalone properties than in the American Cellular properties.
EBITDA was $91.4 million, 20 percent higher than EBITDA in last year's third quarter on a proportionate, pro forma basis. EBITDA margin was particularly strong in the Dobson standalone properties, reflecting operating efficiencies in two key areas -- general and administrative expenses and cost of service in operating the Company's network. These gains were offset partially by higher digital equipment subsidies. On the American Cellular side, EBITDA margin declined due to higher equipment costs, more aggressive marketing and higher cost of network service, in line with the Company's strategy for these markets.
Dobson also continued to enhance the capacity and coverage of its network in the third quarter, with capital expenditures of $37.8 million in the Dobson standalone properties and $23.1 million in the American Cellular properties. The Company installed 67 new cell sites, bringing its total of owned and managed cell sites to 740 in the Dobson markets and 480 in the American markets at September 30, 2000. During the quarter the Company also added nearly 3,500 voice paths to its total managed network. Forty-four percent of its approximately 29,000 voice paths are now digital, constituting the rural wireless sector's most powerful backbone for new voice and data services. Digital voice technology is now deployed in 100 percent of Dobson's owned and managed markets.
Dobson also significantly increased the number of cellular digital packet data radios during the quarter, extending CDPD coverage to more than 75 percent of its voice coverage area. This was important to initiating the roll-out of its "WebMagic" wireless data product during the third quarter.
Capital expenditures year-to-date total $99.7 million in Dobson standalone and $46.3 million in American Cellular.
Fourth Quarter Outlook
Dobson expects continued strong growth in the quarter ending December 31, 2000, and in fiscal 2001. The Company expects fourth quarter operating metrics (proportionate, pro forma) to include:
-- Total revenues in a range of $180 million to $190 million, compared with $155.3 million in the fourth quarter of 1999. The Company's revenue expectation is based on continued growth in service revenues and normal seasonal declines in roaming MOUs, which normally reduces roaming revenues from the third quarter to the fourth. -- Higher operating costs due to normal seasonal increases in growth subscriber additions, and increases in selling expenses and cost of service. -- EBITDA in a range of approximately $70 million to $75 million, in line with historical trends and seasonal factors. This compares with EDITDA for last year's fourth quarter of $62.5 million. -- Further increases in depreciation and amortization costs and interest costs, primarily due to the acquisition of the Georgia 1 RSA; and -- Net adds of 45,000 to 50,000. Dobson experienced strong gross subscriber additions and improvement in churn in October, the first month of the fourth quarter. These two trends and the expectation of strong holiday sales support Dobson's anticipation of stronger gross adds and net adds in the fourth quarter.
Dobson plans to discuss its guidance for the fourth quarter and fiscal 2001 on its third quarter conference call, as well as commenting on its general outlook for FCC Auction No. 35.
Conference Call and Guidance to Be Web-Cast
Dobson Communications will host its third quarter conference call on Friday, November 10, at 8:00 a.m. (ET). To participate, please call (800) 946-0712; the confirmation code is 797921. The third quarter conference call will also be web-cast live through Dobson's web site at www.dobson.net.
A replay of the call will be available at approximately noon on Friday, the 10th, by dialing (888) 203-1112, using the same confirmation code. The Company plans to archive the conference call on its web site shortly after the actual event.
Dobson Communications is a leading provider of cellular phone services to rural markets in the United States. Headquartered in Oklahoma City, the rapidly growing Company owns or manages wireless operations in 19 states. For additional information on the Company and its operations, 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 increased levels of competition, shortages of cellular handsets and other key equipment, restrictions on the Company's ability to finance its growth 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 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 (Includes American Cellular ownership on an equity basis and other acquisitions on the basis of actual impact only, not pro forma) Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 ---- ---- ---- ---- ($ in thousands, except per share data) (unaudited) Operating Revenue Service revenue $ 72,839 $ 53,066 $ 196,012 $ 150,032 Roaming revenue 64,474 43,991 163,798 107,296 Equipment & other revenue 6,425 3,934 17,950 9,952 ----------- ----------- ----------- ----------- Total 143,738 100,991 377,760 267,280 Operating Expenses (excluding deprecia- tion & amortization) Cost of service 35,928 25,876 88,157 67,903 Cost of equipment 11,284 6,703 33,839 18,562 Marketing & selling 17,102 13,247 50,724 34,957 General & administrative 17,916 14,728 51,828 40,795 ----------- ----------- ----------- ----------- Total 82,230 60,554 224,548 162,217 EBITDA 61,508 40,437 153,212 105,063 Depreciation & amortization (44,779) (30,120) (122,875) (100,020) ----------- ----------- ----------- ----------- Operating income 16,729 10,317 30,337 5,043 Minority interest (1,407) (645) (3,704) (2,125) Loss from investment in joint venture(1) (12,477) -- (30,436) -- Other income 2,515 1,508 7,497 3,411 ----------- ----------- ----------- ----------- Income before interest & income taxes 5,360 11,180 3,694 6,329 Interest expense (41,238) (26,836) (107,378) (82,364) Income tax benefit 8,892 5,952 27,834 28,892 ----------- ----------- ----------- ----------- Loss from continuing operations (26,986) (9,704) (75,850) (47,143) Loss from discontinued operations, net of income tax -- (16,032) -- (41,811) Extraordinary expense, net of income tax -- -- (20,387) -- ----------- ----------- ----------- ----------- Net Loss (26,986) (25,736) (96,237) (88,954) Dividends on preferred stock (17,100) (18,641) (109,071) (50,513) ----------- ----------- ----------- ----------- Net loss applicable to common share- holders $ (44,086) $ (44,377) $ (205,308) $ (139,467) =========== ========== =========== =========== Basic net loss applicable to common share- holders per common share: Continuing operations $ (0.29) $ (0.18) $ (0.86) $ (0.86) Discontinued operations -- (0.29) -- (0.76) Extraordinary expense -- -- (0.23) -- Dividends on preferred stock (0.18) (0.34) (1.24) (0.92) ----------- ----------- ----------- ----------- Basic net loss applicable to common share- holders per common share: $ (0.47) $ (0.81) $ (2.33) $ (2.54) ----------- ----------- ----------- ----------- Basic weighted average common shares outstanding 93,788,684 54,823,354 87,941,001 54,823,354 =========== ========== =========== =========== ---------------------------------------------------------- (1) Represents the Company's 50% ownership in the Net Loss from American Cellular. Detailed as follows: For the three months ended September 30, 2000 ------------------------ EBITDA 57,589 Depreciation and Amortization (45,039) Interest Expense (43,829) Other Income, net 88 Income tax benefit 6,237 ------- Net Loss of American Cellular (100%) (24,954) ======= Table 2 Dobson Communications Corporation Selected Financial Data September 30, 2000 ------------------ ($ in millions) Cash Equivalents and Restricted Cash Unrestricted cash and cash equivalents $ 148.8 Escrow for towers sold to American Tower Company 2.0 Escrow for Interest on Dobson/Sygnet Senior Notes 35.9 --------- Total Cash $ 186.7 ========= Long-term debt: (1) Dobson Operating Co., L.L.C. credit facility $ 705.3 Dobson/Sygnet credit facility 341.3 DCC 10.875% Senior Notes, net 297.9 Dobson/Sygnet Senior Notes 200.0 Other 3.9 --------- Total debt $ 1,548.4 ========= Senior Exchangeable Preferred Stock 12.25% $ 303.2 13.00% 199.8 --------- Total Senior Exchangeable Preferred Stock $ 503.0 ========= Nine Months Ended September 30, 2000 ------------------ ($ in millions) Capital Expenditures $ 99.7 ========= (1) Does not include our proportionate interest in American Cellular's long-term debt of $1.67 billion. Table 3 Dobson Communications Corporation Proportionately Consolidated Pro Forma Selected Financial Information (Includes 50% of American Cellular's operations to represent proportionate ownership and pro forma effect of all acquisitions, including Oklahoma 6 RSA, as if they had occurred at the beginning of the periods presented) For the Quarter Ended 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 ($ in thousands except per subscriber data) (unaudited) Operating Revenue Service revenue $ 86,476 $ 86,485 $ 88,217 $ 97,287 $104,760 Roaming revenue 73,575 61,221 62,361 76,325 88,371 Equipment & other revenue 6,850 7,554 7,518 8,948 8,937 -------- -------- -------- -------- -------- Total 166,901 155,260 158,096 182,560 202,068 Operating Expenses (excluding depreciation & amortization) Cost of service 39,737 34,304 33,816 38,962 47,823 Cost of equipment 10,216 14,407 14,557 14,696 15,768 Marketing & selling 18,605 21,755 21,707 22,197 23,398 General & administrative 22,372 22,311 23,895 24,273 23,658 -------- -------- -------- -------- -------- Total 90,930 92,777 93,975 100,128 110,647 -------- -------- -------- -------- -------- EBITDA (1) $ 75,971 $ 62,483 $ 64,121 $ 82,432 $ 91,421 ======== ======== ======== ======== ======== EBITDA Margin 45.52% 40.24% 40.56% 45.15% 45.24% Pops (000s) 9,134 9,265 9,265 9,265 9,265 Post-paid Gross Adds 72,300 88,000 82,200 75,300 80,000 Net Adds 34,100 45,100 42,900 33,400 26,300 Subscribers 702,500 741,200 784,200 817,700 844,000 Churn 1.86% 1.99% 1.72% 1.74% 2.15% Average Service Revenue per Subscriber $ 42 $ 40 $ 38 $ 40 $ 42 Average Service and Roaming Revenue per Subscriber $ 78 $ 68 $ 66 $ 72 $ 77 Pre-paid Net Adds -- 500 1,600 1,200 2,200 Subscribers 4,600 5,100 6,700 7,900 10,100 Total Net Adds 34,100 45,600 44,500 34,600 28,500 Subscribers 707,100 746,300 790,900 825,600 854,100 Penetration 7.74% 8.05% 8.54% 8.91% 9.22% (1) Includes $1.3 million, $1.5 million, $1.7 million, $1.9 million and $2.1 million of EBITDA for the quarters ended September 30, 1999, December 31, 1999, March 31, 2000, June 30, 2000 and September 30, 2000, respectively, related to minority interests. Table 4 Dobson Communications Corporation Consolidated Pro Forma Financial Information for cellular operations applicable to Dobson Communications 13% Senior Exhangeable Preferred Stock and 10.875% Senior Notes (100% of Dobson Communications - includes both DOC LLC and Dobson/Sygnet on a pro forma basis as if all acquisitions had occurred at the beginning of the periods and no American Cellular operations) For the Quarter Ended 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 ($ in thousands except per subscriber data) (unaudited) Operating Revenue Service revenue $ 63,829 $ 62,477 $ 64,240 $ 70,408 $ 75,283 Roaming revenue 52,171 42,998 46,423 56,317 64,958 Equipment & other revenue 5,038 5,538 5,662 6,462 6,574 -------- -------- -------- -------- -------- Total 121,038 111,013 116,325 133,187 146,815 Operating Expenses (excluding depreciation & amortization) Cost of service 31,975 26,905 26,233 30,611 36,928 Cost of equipment 7,660 11,293 11,959 11,496 11,552 Marketing & selling 14,789 17,202 17,796 17,635 17,602 General & administrative 16,679 16,918 17,802 18,299 18,106 -------- -------- -------- -------- -------- Total 71,103 72,318 73,790 78,041 84,188 -------- -------- -------- -------- -------- EBITDA (1) $ 49,935 $ 38,695 $ 42,535 $ 55,146 $ 62,627 ======== ======== ======== ======== ======== EBITDA Margin 41.26% 34.86% 36.57% 41.40% 42.66% Pops (000s) 6,679 6,810 6,810 6,810 6,810 Post-paid Gross Adds 51,400 61,000 59,800 51,500 55,100 Net Adds 22,500 28,500 30,800 20,300 13,500 Subscribers 503,500 525,600 556,600 576,900 590,400 Churn 1.96% 2.12% 1.78% 1.83% 2.37% Average Service Revenue per Subscriber $ 43 $ 41 $ 39 $ 41 $ 43 Average Service and Roaming Revenue per Subscriber $ 78 $ 69 $ 68 $ 74 $ 80 Pre-paid Net Adds (600) -- 300 900 2,000 Subscribers 3,300 3,300 3,600 4,500 6,500 Total Net Adds 21,900 28,500 31,100 21,200 15,500 Subscribers 506,800 528,900 560,200 581,400 596,900 Penetration 7.59% 7.77% 8.23% 8.54% 8.77% (1) Includes $1.3 million, $1.5 million, $1.7 million, $1.9 million and $2.1 million of EBITDA for the quarters ended September 30, 1999, December 31, 1999, March 31, 2000, June 30, 2000 and September 30, 2000, respectively, related to minority interests. Table 5 American Cellular Corporation Consolidated Financial Information (100% American Cellular, exclusive of Dobson operations) For the Quarter Ended 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 ($ in thousands except per subscriber data) (unaudited) Operating Revenue Service revenue $ 45,295 $ 48,014 $ 47,953 $ 53,759 $ 58,954 Roaming revenue 42,807 36,447 31,877 40,015 46,827 Equipment & other revenue 3,623 4,033 3,712 4,972 4,727 -------- -------- -------- -------- -------- Total 91,725 88,494 83,542 98,746 110,508 Operating Expenses (excluding depreciation & amortization) Cost of service 15,524 14,799 15,166 16,701 21,791 Cost of equipment 5,111 6,227 5,196 6,399 8,431 Marketing & selling 7,632 9,106 7,822 9,124 11,593 General & administrative 11,387 10,785 12,186 11,948 11,104 -------- -------- -------- -------- -------- Total 39,654 40,917 40,370 44,172 52,919 -------- -------- -------- -------- -------- EBITDA $ 52,071 $ 47,577 $ 43,172 $ 54,574 $ 57,589 ======== ======== ======== ======== ======== EBITDA Margin 56.77% 53.76% 51.68% 55.27% 52.11% Pops (000s) 4,911 4,911 4,911 4,911 4,911 Post-paid Gross Adds 41,800 54,000 44,700 47,500 49,800 Net Adds 23,200 33,300 24,100 26,300 25,600 Subscribers 397,900 431,200 455,300 481,600 507,200 Churn 1.63% 1.70% 1.60% 1.55% 1.63% Average Service Revenue per Subscriber $ 39 $ 39 $ 36 $ 38 $ 40 Average Service and Roaming Revenue per Subscriber $ 76 $ 68 $ 60 $ 67 $ 71 Pre-paid Net Adds 1,000 1,000 2,800 600 400 Subscribers 2,500 3,500 6,300 6,900 7,300 Total Net Adds 24,200 34,300 26,900 26,900 26,000 Subscribers 400,400 434,700 461,600 488,500 514,500 Penetration 8.15% 8.85% 9.40% 9.95% 10.48% Table 6 Dobson Operating Company LLC Pro Forma Financial Information for cellular operations applicable to Dobson Communications 12.25% Senior Exchangeable Preferred Stock (Includes DOC LLC on a pro forma basis as if all acquisitions had occurred at the beginning of the periods. Excludes Dobson/Sygnet and American Cellular) For the Quarter Ended 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 ($ in thousands except per subscriber data) (unaudited) Operating Revenue Service revenue $ 38,379 $ 37,771 $ 39,033 $ 41,824 $ 44,274 Roaming revenue 40,516 34,513 37,834 46,566 53,133 Equipment & other revenue 3,679 3,601 3,552 3,805 4,546 --------- -------- -------- -------- -------- Total 82,574 75,885 80,419 92,195 101,953 Operating Expenses (excluding depreciation & amortization) Cost of service 23,760 20,114 19,948 22,203 27,025 Cost of equipment 4,401 6,074 6,580 6,597 7,477 Marketing & selling 9,070 10,518 10,789 11,627 11,798 General & administrative 11,825 12,401 12,081 12,237 11,568 --------- -------- -------- -------- -------- Total 49,056 49,107 49,398 52,664 57,868 --------- -------- -------- -------- -------- EBITDA (1) $ 33,518 $ 26,778 $ 31,021 $ 39,531 $ 44,085 ========= ======== ======== ======== ======== EBITDA Margin 40.59% 35.29% 38.57% 42.88% 43.24% Pops (000s) 4,305 4,448 4,448 4,448 4,448 Post-paid Gross Adds 30,700 34,700 34,400 33,900 37,200 Net Adds 10,700 14,800 16,000 14,800 13,000 Subscribers 292,200 301,800 318,200 333,000 346,000 Churn 2.33% 2.26% 1.98% 1.95% 2.38% Average Service Revenue per Subscriber $ 44 $ 42 $ 42 $ 42 $ 43 Average Service and Roaming Revenue per Subscriber $ 91 $ 82 $ 82 $ 90 $ 95 Pre-paid Net Adds (600) -- 300 900 1,800 Subscribers 3,300 3,300 3,600 4,500 6,300 Total Net Adds 10,100 14,800 16,300 15,700 14,800 Subscribers 295,500 305,100 321,800 337,500 352,300 Penetration 6.86% 6.86% 7.23% 7.59% 7.92% (1) Includes $1.3 million, $1.5 million, $1.7 million, $1.9 million and $2.1 million of EBITDA for the quarters ended September 30, 1999, December 31, 1999, March 31, 2000, June 30, 2000 and September 30, 2000, respectively, related to minority interests. Table 7 Dobson/Sygnet Communications Company Financial Information for cellular operations applicable to Dobson/Sygnet 12.25% Senior Notes (Excludes DOC LLC and American Cellular) For the Quarter Ended 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00 ($ in thousands except per subscriber data) (unaudited) Operating Revenue Service revenue $ 25,450 $ 24,706 $ 25,191 $ 28,568 $ 30,995 Roaming revenue 11,655 8,484 8,589 9,751 11,824 Equipment & other revenue 1,360 1,937 2,110 2,657 2,028 -------- -------- -------- -------- -------- Total 38,465 35,127 35,890 40,976 44,847 Operating Expenses (excluding depreciation & amortization) Cost of service 8,115 6,975 6,285 8,408 9,903 Cost of equipment 3,242 5,171 5,379 4,899 4,075 Marketing & selling 5,737 6,568 7,007 6,008 5,804 General & administrative 4,986 4,484 5,743 6,053 6,501 -------- -------- -------- -------- -------- Total 22,080 23,198 24,414 25,368 26,283 -------- -------- -------- -------- -------- EBITDA $ 16,385 $ 11,929 $ 11,476 $ 15,608 $ 18,564 ======== ======== ======== ======== ======== EBITDA Margin 42.60% 33.96% 31.98% 38.09% 41.39% Pops (1) (000s) 2,374 2,362 2,362 2,362 2,362 Post-paid Gross Adds 20,700 26,300 25,400 17,700 17,900 Net Adds 11,800 13,700 14,800 5,500 500 Subscribers 211,300 223,800 238,400 243,900 244,400 Churn 1.43% 1.93% 1.52% 1.68% 2.37% Average Service Revenue per Subscriber $ 41 $ 38 $ 36 $ 39 $ 42 Average Service and Roaming Revenue per Subscriber $ 60 $ 51 $ 49 $ 53 $ 58 Penetration 8.90% 9.48% 10.09% 10.33% 10.35%