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Nextel Reports Record Second Quarter 2003 Results
Wednesday July 16, 9:14 pm ET
RESTON, Va.--(BUSINESS WIRE)--July 16, 2003--Nextel Communications, Inc. (NASDAQ:NXTL - News)
* Income of $281 Million; Earnings per Share of $0.27 -
* Operating Income before Depreciation and Amortization of $1.0 Billion -
* Record Quarterly Subscriber Additions of 591,000; 11.7 Million Total Subscribers -
* Debt and Preferred Retirements of $131 Million; $3.9 Billion through Second Quarter -
* 2003 Guidance Raised -
Nextel Communications, Inc. (NASDAQ:NXTL - News), today announced record financial results for second quarter 2003 including income available to common stockholders of $281 million, or $0.27 per diluted share. Revenue was $2.6 billion, a 19% increase over last year's second quarter. Operating income before depreciation and amortization was $1.0 billion for the second quarter, increasing by 23% over the second quarter of the prior year. Bolstered by improved customer satisfaction, Nextel added approximately 591,000 subscribers during the second quarter, bringing total subscribers to 11.7 million at June 30.
"This quarter represents Nextel's strongest performance to date," said Tim Donahue, Nextel's president and CEO. "We are delivering on every front and producing record earnings, record subscriber additions and garnering the most valuable customers in the industry. Nextel continues to attract and retain the most valuable customers in the industry due to our differentiated wireless products and services, our targeted sales approach and our enhanced back office systems. Additionally, our Nationwide Direct Connect rollout is almost complete, and the 6:1 vocoder, which will nearly double the cellular capacity of our network, is coming soon. The positive trends we're experiencing bode well for Nextel for the balance of the year and we've raised our guidance accordingly."
"Nextel is gaining an increasing share of the best subscribers in the wireless marketplace," said Tom Kelly, Nextel's executive vice president and COO. "I'm especially pleased with our improved customer retention rate which is a testimony to the satisfaction our customers have with Nextel. Our new products and services, network quality, and our customer touchpoint strategy are driving impressive results on all fronts. Nextel's recently announced exclusive 10-year partnership with NASCAR is unique in professional sports and representative of our innovative approach to our current and prospective customers. I am quite optimistic about the future."
Nextel's average monthly service revenue per subscriber (ARPU) was approximately $69 for the second quarter, up from $67 in the first quarter and significantly higher than estimates for other national wireless carriers. Customer churn was approximately 1.6% for the second quarter of 2003, the best since 1998.
"Our operating trends once again translated into superior results," said Paul Saleh, Nextel's executive vice president and CFO. "We've turned in record results this quarter including operating income before depreciation and amortization of $1.0 billion with a 42% margin, and free cash flow grew to $314 million. We are ahead of our expectations, and have thus revised upward our financial guidance for the full year. Additionally, our consistently strong operating performance and substantial liquidity position continue to allow us to de-lever the balance sheet. Including the series D preferred stock which was called on July 15, we have retired approximately $4.3 billion in
debt and preferred stock since the first quarter of 2002, enabling the company to avoid approximately $7.1 billion in principal, interest and dividend obligations."
For the quarter ended June 30, 2003, Nextel retired $131 million in principal amount of its outstanding debt and mandatorily redeemable preferred stock in exchange for approximately $137 million in cash. Additionally, on July 15, 2003 Nextel redeemed $375 million in principal amount of the series D mandatorily redeemable preferred stock which was outstanding at the end of the second quarter. Nextel may from time to time as it deems appropriate enter into other transactions, which in the aggregate may be material.
Capital expenditures for the second quarter 2003 were $402 million - down 10% from second quarter 2002 capital expenditures of $448 million. Total minutes of use on the Nextel National Network grew by 34% in the second quarter to 24.5 billion compared with the prior year's second quarter.
2003 Guidance (Revised to reflect positive business trends through mid-year)
Nextel is revising its guidance upward. This guidance is forward-looking and is based upon management's current beliefs as well as a number of assumptions concerning future events and as such, should be taken in the context of the risks and uncertainties outlined in the Securities and Exchange Commission filings of Nextel Communications Inc. The new guidance is:
* Free cash flow of $600 million or more - up from $500 million
* Earnings per share of $1.00 or more - up from at least $0.75
* Operating income before depreciation and amortization of $3.9 billion or more - up from $3.8 billion
* Capital expenditures of $1.8 billion or less - unchanged
* Net subscriber additions (excluding Boost Mobile) of 1.9 million or more - up from 1.7 million
In addition to the results prepared in accordance with Generally Accepted Accounting Principles (GAAP) provided throughout this press release, Nextel has presented non-GAAP financial measures, such as operating income before depreciation and amortization, free cash flow and ARPU. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Reconciliations from GAAP results to these non-GAAP financial measures are provided in the notes to the attached financial tables. To view these and other reconciliations and information about how to access the conference call discussing Nextel's second quarter results visit the 'Investor Relations' link under the 'About Nextel' tab at www.nextel.com. |
