Leap Wireless International Reports Results For First Quarter of Fiscal 2000
- Operating Companies Show Strong Subscriber Growth -
SAN DIEGO, Jan. 5 /PRNewswire/ -- Wireless communications carrier Leap Wireless International, Inc. (Nasdaq: LWIN) today announced its subscriber growth through the end of calendar 1999 and its subscriber and financial results for the first quarter of fiscal year 2000 ended November 30, 1999.
By the end of the calendar year, international and domestic subscribers at Leap's subsidiaries and joint ventures grew to more than 210,000 - over 22,000 in the United States, 78,000 in Chile, and 110,000 in Mexico. This represents a 250 percent increase since August 31, 1999, Leap's 1999 fiscal year end. Leap's proportionate share of the total subscriber base grew to 111,000 at calendar year-end based on Leap's 100 percent ownership of SMARTCOM PCS, 28.6 percent ownership of PEGASO, and its current 7.2 percent stake in Chase Telecommunications Holdings, Inc. (ChaseTel). In late September 1999, Leap filed an application with the FCC to approve the transfer of ChaseTel's licenses to Leap in conjunction with Leap's planned acquisition of ChaseTel. At the end of Leap's first fiscal quarter ended November 30, 1999, international and domestic subscribers were 104,200 with Leap's proportionate share of these subscribers being approximately 70,200.
"We saw subscriber growth of nearly 74 percent during the first fiscal quarter even though our Chilean operation did not re-launch as SMARTCOM PCS until late in November and PEGASO's launch of Mexico City did not occur until December," said Harvey P. White, chairman and chief executive officer of Leap. "We are especially pleased with the performance of our operations in December. The last month of 1999 proved to be ChaseTel's greatest thus far in terms of subscriber growth. PEGASO and SMARTCOM PCS saw large increases as well. These results reaffirm Leap's commitment to make wireless service easy to buy, easy to use and easy to pay for."
Domestically, Leap's operating company, ChaseTel, added 3,500 subscribers to its Chattanooga network during Leap's first fiscal quarter, closing the quarter with approximately 15,900 total subscribers and bringing ChaseTel's total penetration of the covered population in the Chattanooga market to 5.0 percent. Growth over the Christmas holiday period continued to be strong, with ChaseTel adding more than 6,100 subscribers in the month of December, bringing its total subscribers to over 22,000 and increasing its penetration to 7.0 percent in less than ten months of operation. Leap's domestic service concept, Cricket(SM), was launched in Chattanooga, Tenn., in March 1999, using ChaseTel's infrastructure under an agreement that provides that ChaseTel controls the business until Leap's proposed acquisition of ChaseTel is complete. Construction of a wireless network in Nashville is underway and is expected to launch by early 2000.
Internationally, subscriber growth was strong in Leap's Mexican joint venture, with PEGASO adding 21,500 customers during Leap's first fiscal quarter and bringing the total number of subscribers on its network to 27,000 at the end of November. By calendar year end, PEGASO's subscribers rose to 110,000 after the launch of Mexico City in early December. Leap's Chilean operation also made significant progress, as total subscribers grew by 19,300 subscribers to 61,300 in the first fiscal quarter. Holiday sales added another 16,700 subscribers, bringing SMARTCOM PCS' total subscriber base to 78,000 by calendar year end.
Significant Events
In September, Leap announced that it had agreed to purchase over $660 million in infrastructure equipment and services from Lucent Technologies and Ericsson in two separate vendor agreements. Both Lucent and Ericsson have agreed to finance the sale of equipment and related services that Leap intends to use to develop its wireless networks in various markets across the United States. These agreements are part of Leap's strategy to work with multiple world-class vendors. The commitment of funds by Ericsson is subject to the development of the next generation equipment, the negotiation of definitive documentation and the approval of Ericsson's board of directors.
In December, Leap announced that it had signed non-binding memoranda of understanding to purchase PCS operating licenses in Denver, Colo., Pittsburgh, Pa., and Macon, Columbus and Albany, Ga. If executed and approved, the agreements contemplated by these memoranda will give Leap licenses serving approximately 6.3 million potential subscribers (1998 POPs) and bring the total number of licensed POPs which the Company has acquired or agreed to acquire for use by its domestic subsidiary, Cricket Communications, Inc., to approximately 30.5 million. Leap currently has licenses or rights to acquire licenses to offer Cricket service to approximately 24 million POPs.
"By making wireless service simple, affordable and worry-free, Cricket's goal is to bring wireless service to people who have never used a mobile phone before as well as those who value the freedom of mobility in their local service area," said Susan G. Swenson president and chief operating officer of Leap and president and chief executive officer of Cricket Communications, Inc. "With financing from world-class infrastructure vendors and the pending addition of new markets, Cricket intends to roll out its flat-rate service to consumers in selected cities across the country."
Internationally, PEGASO continued its march toward building a national system with the launch of Monterrey in September and Mexico City in December. With the addition of these two cities, PEGASO's 100 percent digital CDMA network now covers approximately 27.7 million potential Mexican subscribers.
In December, Leap announced that Sprint and PEGASO had signed a non-binding memorandum of understanding that, if consummated, will give Sprint PCS a 30.5 percent stake in the Mexican wireless carrier through an investment of up to $250 million. The contemplated transaction includes the purchase of shares newly issued by PEGASO as well as shares from certain investors other than Leap or PEGASO's Mexican shareholders. Leap, a founding shareholder of PEGASO, currently owns 28.6 percent of PEGASO and will retain its shares and remain active on the company's board. If the pending transaction with Sprint PCS is consummated, Leap's percentage ownership in PEGASO will decrease to 20.5 percent.
Leap's Chilean operations also made significant progress. Since acquiring full control of the operation when Leap bought out its former 50 percent partner in April 1999, Leap has invested significant resources in the venture. Leap has recruited a new management team and upgraded the reliability and capacity of the carrier's nationwide network. In November, Leap relaunched service under a new brand name, SMARTCOM PCS (formerly called Chilesat PCS). Branding itself as the "Intelligent Choice" in Chile's fast growing wireless market, SMARTCOM PCS is dedicated to delivering high-quality wireless service that offers simplicity, value and innovation to Chilean consumers.
Financial Results
Operating revenues for Leap's consolidated and unconsolidated operating companies for the three months ending November 30, 1999 rose to $8.3 million, a 41 percent increase from the prior quarter. Consolidated operating revenues of $5.5 million were recognized by SMARTCOM PCS, which Leap began fully consolidating in the fourth quarter of fiscal 1999. No revenues were consolidated prior to the fourth quarter of fiscal 1999. Cost of operating revenues of $7.4 million and depreciation and amortization of $5.2 million in the first quarter of fiscal 2000 primarily reflect the consolidation of SMARTCOM PCS.
Consolidated selling, general and administrative expense was $13.5 million for the first fiscal quarter of 2000 compared to $4.2 million for the same period in fiscal 1999. The increase includes $7.4 million related to the consolidation of SMARTCOM PCS and is also attributable to increased staffing and business development activities related to Leap's domestic subsidiary, Cricket Communications, Inc.
Leap's equity share in the net loss of its unconsolidated wireless operating companies was $16.2 million for the first quarter of 2000 compared to $16.0 million in the first quarter of fiscal 1999. Net losses for Leap's unconsolidated wireless operating companies relate primarily to the expenditures incurred in launching network services, including marketing and other expenses, and the amortization of capitalized network costs. During the first quarter of fiscal 2000, Leap's equity share in the net loss of its unconsolidated wireless operating companies related to PEGASO, which launched service in Tijuana, Guadalajara and Monterrey in February, August and September 1999 separately, and ChaseTel, which re-launched service utilizing Leap's Cricket(SM) wireless concept in March 1999. During the first quarter of fiscal 1999, Leap's equity share in the net loss of its unconsolidated wireless operating companies related primarily to SMARTCOM PCS (prior to Leap's acquisition of the remaining 50 percent interest), Chase Telecommunications (for which Leap adopted the equity method of accounting in the third quarter of fiscal 1999 and retroactively adjusted prior periods) and Leap's Russian investments which have been subsequently written-off or liquidated.
Leap's consolidated net loss for the three months ended November 30, 1999 was $46.3 million or $2.45 per share, compared to $21.0 million or $1.19 per share for the same period in fiscal 1999. The results of Leap's foreign operating companies are as of and for the three months ended September 30, a two-month reporting lag.
About Leap Wireless International, Inc.
Leap Wireless International, Inc., headquartered in San Diego, Calif., is a wireless communications carrier that deploys, owns and operates wireless networks in domestic and international markets with strong growth potential. Through its operating companies, Leap has launched all-digital wireless service in the United States, Mexico and Chile. Leap is dedicated to bringing the benefits of reliable, cost-effective and high-quality voice and data services to domestic and emerging markets. For more information, please call investor relations at (858) 882-6111 or visit www.leapwireless.com.
This news release contains "forward-looking statements," including statements regarding the roll-out plans of Leap's operating companies. Forward-looking statements, which are based upon certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "believe," "expect," "intend," "plan," "anticipate," "estimate," "project" or similar expressions. The ability of the Company to predict actual results and other future events is inherently uncertain. Important factors which may cause actual results to differ materially from the forward-looking statements contained herein or in other public statements by the Company are described in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1999 and other documents filed with the Securities and Exchange Commission. Those factors most likely to cause actual results to differ include but are not limited to: uncertainties regarding the ability of Leap and its operating companies to raise sufficient capital for continued expansion and operation, performance uncertainties and potential delays relating to the deployment of large scale construction projects and uncertainties relating to negotiating and executing definitive agreements and the closing of transactions described herein.
LEAP WIRELESS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
November 30, August 31,
1999 1999
(Unaudited)
ASSETS
Cash and cash equivalents $40,249 $26,215
Accounts receivable, net 3,980 2,726
Inventories 4,329 5,410
Recoverable taxes 6,592 3,907
Other current assets 5,500 1,926
Total current assets 60,650 40,184
Property and equipment, net 112,841 116,947
Investments in and loans
receivable from unconsolidated
wireless operating companies 77,398 94,429
Intangible assets, net 71,475 73,944
Deposits and other assets 10,977 9,827
Total assets $333,341 $335,331
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and
accrued liabilities $19,838 $16,372
Loans payable to banks 17,566 17,225
Other current liabilities 301 --
Total current liabilities 37,705 33,597
Long-term debt 260,818 221,812
Other long-term liabilities 9,272 8,504
Total liabilities 307,795 263,913
Minority interest in
consolidated subsidiary 373 518
Stockholders' equity:
Preferred stock - authorized
10,000,000 shares $.0001
par value, no shares issued
and outstanding -- --
Common stock - authorized
75,000,000 shares; $.0001
par value, 18,954,636 shares
issued and outstanding 2 2
Additional paid-in capital 292,651 291,189
Accumulated deficit (263,157) (216,896)
Accumulated other
comprehensive loss (4,323) (3,395)
Total stockholders' equity 25,173 70,900
Total liabilities
and stockholders' equity $333,341 $335,331
LEAP WIRELESS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(In thousands, except per share data)
Three Months Ended
November 30,
1999 1998
(Restated)
Operating revenues $5,484 $--
Operating expenses:
Cost of operating revenues (7,384) --
Selling, general and
administrative expenses (13,538) (4,240)
Depreciation and amortization (5,175) (124)
Total operating expenses (26,097) (4,364)
Operating loss (20,613) (4,364)
Equity in net loss of
unconsolidated wireless
operating companies (16,193) (16,029)
Interest income 397 462
Interest expense and
amortization of discount
and facility fee (7,174) (1,051)
Foreign currency transaction
losses (2,794) --
Other income (expense), net 116 --
Net loss (46,261) (20,982)
Other comprehensive income (loss):
Foreign currency
translation losses (928) (587)
Comprehensive loss $(47,189) $(21,569)
Basic and diluted net
loss per common share $(2.45) $(1.19)
Shares used to calculate
basic and diluted net loss
per common share 18,857 17,663
SOURCE Leap Wireless International, Inc.
/CONTACT: Jim Seines, Investor Relations, 858-882-6084, fax 858-882-6030,
jseines@leapwireless.com, or Sarah Thailing, Media Relations,
858-882-6018, fax 858-882-6030, sthailing@leapwireless.com, both of Leap
Wireless International, Inc./
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 132891/
/Web site: leapwireless.com
(LWIN) |
