Nextel Reports Strong Third-Quarter 2004 Results
RESTON, Va.--(BUSINESS WIRE)--Oct. 22, 2004--Nextel (NASDAQ:NXTL)
-- Revenue of $3.4 Billion, up 18%
-- Operating Income before Depreciation and Amortization of $1.32 Billion, up 17%
-- Income of $586 million, includes Tax Benefit and Debt Retirement Costs
-- Earnings per share of $0.53, includes Tax Benefit and Debt Retirement Costs
-- 745,000 Total Subscriber Additions; 550,000 from Nextel; 195,000 from Boost Mobile(TM)
-- Revises 2004 Guidance
Nextel Communications, Inc. (NASDAQ:NXTL) today announced strong financial and operating results for the third-quarter 2004, including record revenue and operating income before depreciation and amortization (OIBDA). Highlights include revenue of $3.40 billion, up 18% from last year's third-quarter revenue of $2.89 billion and OIBDA of $1.32 billion, up 17% from last year's third-quarter OIBDA of $1.13 billion. Third-quarter 2004 income was $586 million, or $0.53 per share, up from last year's third-quarter income of $346 million, or $0.33 per share.
"Nextel is experiencing strong demand for its wireless services across all sectors and especially higher growth in government, high-end individuals and our Boost Mobile business," said Tim Donahue, Nextel's president and CEO. "Nextel continues to take more than its proportionate share of high quality subscribers, revenue and most importantly cash flow. Nextel will continue to focus on profitable growth and is well-positioned for the future."
Nextel ended the third quarter with approximately 15.3 million total subscribers including 14.5 million Nextel subscribers and 800,000 Boost Mobile subscribers. During the quarter, Nextel added 550,000 new subscribers, average revenue per user (ARPU) was $69 and customer satisfaction improved as evidenced by a reduction in churn to 1.5%. In addition, Boost Mobile added 195,000 subscribers during the third quarter.
"Nextel continues to attract high-quality wireless customers and deliver solid financial results," said Tom Kelly, Nextel's executive vice president and COO. "So far this year, lifetime revenue per Nextel subscriber has improved to approximately $4,600 in the third quarter, up from $4,100 in the first quarter. Boost Mobile is beginning to show robust growth in new markets around the country and we are pleased with the early results of this unique life-style branded service. Nextel continues to make investments to accommodate future growth and expand the reach of the Nextel National Network(SM)."
Income available to common stockholders was $586 million, or $0.53 per share for the third quarter of 2004. Income available to common stockholders includes a $175 million, or $0.16 per share, tax benefit from the release of a portion of the valuation allowance attributable to our capital loss carryforwards, and a $21 million loss, or $0.02 per share, on the early retirement of debt. Adjusted for these two items, third-quarter income available to common stockholders was $432 million, or $0.39 per share.
"Nextel continues to post strong results and build on its track record of industry-leading and consistent performance," said Paul Saleh, Nextel's executive vice president and CFO. "We reported record OIBDA of $1.32 billion and increased our OIBDA margin sequentially - even as we continue to make investments in Boost Mobile and our Nextel Wireless Broadbandsm service trial. During the quarter, Nextel generated $301 million in free cash flow and further strengthened its financial profile by reducing debt by $481 million during the quarter. We are increasing our full-year guidance on subscribers, OIBDA and earnings per share. We are also revising our capital expenditures and free cash flow guidance for 2004 to reflect stronger business activities and additional investments in our network."
During the third quarter, Nextel undertook a number of balance sheet activities. On July 15, 2004, Nextel closed on a new $4 billion revolving credit facility, increasing liquidity by $1.4 billion while lowering interest rates and lowering debt. Nextel also participated in debt-for-debt exchanges in the third quarter, replacing $450 million in principal amount of its 9.375% notes due 2009 and $67 million in principal amount of its 9.5% notes due 2011 with $550 million in principal amount of its 6.875% notes due 2013. Additionally, on September 27, 2004, we announced that we had purchased from Motorola 6 million of our Class B shares for $141 million and 5.6 million shares of Nextel Partners' Class A stock for $77 million.
Nextel ended the third quarter of 2004 with approximately $1.7 billion in cash, cash equivalents and short-term investments. Total liquidity was $4.7 billion and Nextel had $9.1 billion of debt outstanding as of the end of the third-quarter 2004, down from $12.2 billion as of the end of the third-quarter 2003.
Capital expenditures were $659 million in the third quarter of 2004. Total system minutes of use on the Nextel National Network increased 25% during the third quarter when compared with the same period in 2003 to approximately 33.6 billion, excluding Boost Mobile usage.
Revised 2004 Guidance
Nextel's 2004 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. Nextel's current outlook for full-year 2004 results is as follows:
-- OIBDA of approximately $5.1 billion - up from $4.9 billion
-- Earnings per share of approximately $2.60, on a GAAP basis - up from $2.00
-- Capital expenditures of $2.4 billion, or less - up from $2.2 billion
-- Free cash flow of approximately $1.5 billion, down from $1.7 billion
-- Total year-end 2004 subscribers of 16 million or more:
-- 2 million or more Nextel subscriber additions, up from 1.9 million and
-- 650,000 or more Boost Mobile subscribers, up from 500,000
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 adjusted net income, adjusted earnings per share, OIBDA, OIBDA margin, free cash flow, lifetime revenue per subscriber, and total debt-to-annualized OIBDA ratio 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 third-quarter results visit the 'Investor Relations' link under the 'About Nextel' tab at www.nextel.com.
About Nextel
Nextel Communications, a FORTUNE 200 company based in Reston, Va., is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all-digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500(R) companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 297 of the top 300 U.S. markets where approximately 259 million people live or work.
Nextel, the Nextel logo, and Nextel Direct Connect are trademarks and/or service marks of Nextel Communications, Inc.
About Boost Mobile
Boost Mobile(TM), an Irvine, Ca.-based division of Nextel Communications, is a provider of quality wireless telecommunications products and services, including Boost-branded wireless phones, the Boost(TM) Walkie-Talkie (digital Push To Talk(TM) technology), and Re-Boost(TM) Pay-As-You-Go cards. Experience Boost on the Web at www.boostmobile.com. |
