Record Revenues, Digital Subscribers and Improved Operating Cash Flow;
Nextel International Strengthens Holdings
MCLEAN, Va., March 4 /PRNewswire/ -- Nextel Communications, Inc.
(Nasdaq: NXTL), today reported its financial results for 1997, including a
202 percent increase in fourth quarter radio service revenue as compared with
the fourth quarter of last year, increased international ownership interests
in Argentina and Mexico, and a new international investment in Peru.
During 1997, total revenue grew by approximately 122 percent to
$738,897,000 as compared with $332,938,000 for 1996. During the fourth
quarter of 1997, total revenue increased 187 percent to $275,059,000 as
compared with $95,961,000 for the fourth quarter of 1996. Radio service
revenue increased 139 percent for the year to $712,237,000 as compared with
$297,512,000 in 1996 and 202 percent for the fourth quarter to $267,647,000 as
compared with the fourth quarter of 1996 radio service revenue of $88,775,000.
"We had a record year in 1997," said Dan Akerson, Nextel's chairman and
CEO. "Our focus on serving the wireless communications needs of business and
other high usage customers with our unique and differentiated all digital
wireless services has proven to be a successful one. Nextel now has one of
the largest and fastest growing wireless businesses in the U.S. and we are
poised for continued aggressive network development in the U.S. and in
selected markets in North and South America. Nextel now holds interests in
wireless licenses in areas of the world where more than half a billion people
live or work. Our challenge for 1998 is to continue to provide high quality
service and an excellent value to our customers."
As previously announced, Nextel added approximately 970,400 digital
subscriber units in service in its U.S. markets during 1997, ending the year
with approximately 1,270,700 total digital units in service, including 324,100
new units added during the fourth quarter. This represents an increase of
323 percent over 1996 ending digital units of 300,300 and 34 percent over the
third quarter total of 946,600 digital units in service. Analog units in
service in Nextel's U.S. markets at the end of 1997 were approximately
583,000.
Customer usage also remained strong during the fourth quarter with monthly
average revenue per digital unit in service of $68, an increase of 21 percent
over last year's fourth quarter monthly average revenue of $56 per digital
unit. Nextel's average monthly subscriber churn rate for the fourth quarter
of 1997 was approximately 1.4% and for the entirety of 1997 was below 1.3%.
The operating cash flow loss (earnings before interest, taxes,
depreciation and amortization) for the fourth quarter of 1997 decreased to
$112,092,000 as compared with $118,956,000 for the third quarter of 1997.
Fourth quarter's consolidated operating cash flow loss of $112,092,000
includes approximately $10,250,000 of operating cash flow loss from
international operating activities as compared with $5,023,000 of operating
cash flow loss from international activities in the third quarter.
"Nextel's financial results for the fourth quarter include significant
improvement in operating cash flow losses over the third quarter, despite the
more than doubling in international operating losses generated from the
buildout of international operations," said Steve Shindler, Nextel's Chief
Financial Officer. "We have also maintained strong access to the capital
markets to fund our explosive domestic growth, focusing on high revenue
generating customers while maintaining one of the most aggressive digital
network construction programs in the wireless industry."
The consolidated net loss attributable to common shareholders for the
fourth quarter of 1997 was $841,544,000 ($3.18 per share) and $1,642,973,000
($6.59 per share) for the year and is based upon a weighted average number of
shares outstanding of approximately 264,616,000 for the fourth quarter and
approximately 249,320,000 for the year of 1997.
The consolidated net loss for 1997 includes the effect from certain
matters which have previously been disclosed including an extraordinary loss
related to the early extinguishment of debt and the non-cash effect on income
tax expense and amortization expense relating to the change in the
amortization period from 20 years to 40 years for certain intangible assets
including FCC licenses. The effect of these items adversely impacted net loss
attributable to common stockholders by $1.81 per share and $1.70 per share for
the year ended and quarter ended December 31, 1997, respectively.
Additionally, the 1997 consolidated net loss includes $29,119,000 for
cumulative preferred dividends associates with the Company's Series D
Preferred Stock.
International Expansion
Nextel International, Inc., a wholly-owned subsidiary of Nextel, has made
an investment in a new joint venture in Peru. On January 29, 1998, Nextel
International purchased a 70 percent interest in the common equity of Valorcom
S.A., a Peruvian company ("Nextel Peru"), for $27.9 million. Nextel Peru
currently offers analog specialized mobile radio ("SMR") services in the
greater Lima area and holds licenses covering approximately 138 SMR channels.
Nextel Peru plans to upgrade to digital enhanced specialized mobile radio
("ESMR") services in 1999.
In Mexico and Argentina, Nextel International also announced that it now
holds 100 percent of the equity in its Mexican and Argentine operating
companies Through a series of transactions since January 1997, Nextel
International has increased its equity interest in Comunicaciones Nextel de
Mexico S.A. de C.V. (formerly known as Corporacion Mobilcom S.A. de C.V.) from
30 percent to 100 percent for consideration equal to $132.2 million. On
January 30, 1998, Nextel International raised its ownership percentage in
Nextel Argentina S.R.L. ("Nextel Argentina") to 100% by acquiring the
remaining 50% equity interest for $46 million.
Additionally, in December 1997, Nextel Argentina acquired an additional 60
SMR channels in Buenos Aires for $12 million in a government auction, thereby
increasing its SMR spectrum holdings in Buenos Aires to 12 MHz.
Separately, Nextel International's 77 percent owned Brazilian subsidiary
has executed an interconnect agreement with Telecommunicacoes de Sao Paulo and
Telecommunicacoes Brasileiras S.A. for the provision of interconnect services
on its ESMR network planned for launch during the first half of 1998. Other
Latin American ESMR networks currently under development include Rio de
Janeiro, Buenos Aires and Mexico City.
Nextel and Nextel International now own licenses to provide wireless
services in areas of the world where more than 500 million people live or
work. On a proportionate ownership interest basis, such licensed frequency
coverage represents more than 400 million people, including major metropolitan
population centers in Canada, Mexico, Argentina, Brazil, Shanghai, Philippines
and Peru.
Nextel's service advantages include: its own national all-digital
network, the elimination of roaming charges, per second billing after the
first minute on digital cellular calls, flat rate long distance charges and
Nextel Direct Connect(SM) service for instant contact with other
communications group members in the customer's home market, at the touch of a
button, and at a fraction of the cost of traditional cellular.
Nextel Communications, based in McLean, Va., is the only national provider
of all-digital wireless networks where the full benefits of digital are always
ensured and has built the largest guaranteed all-digital wireless network in
the United States. Nextel International, Inc., based in Seattle, Washington,
has wireless operations and investments in Canada, Mexico, Argentina, Brazil,
Shanghai, Philippines and Peru.
The planned launch dates for Nextel International's ESMR systems
referenced above are based on a number of significant assumptions and other
factors that are set forth in the Current Report on Form 8-K filed by Nextel
International with the Securities and Exchange Commission ("SEC") on
March 2, 1998.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: A number of the matters and subject areas discussed in this press
release that are not historical or current facts deal with potential future
circumstances and developments. The discussion of such matters and subject
areas is qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from Nextel and Nextel
International's actual future experience involving any one or more of such
matters and subject areas. Nextel and Nextel International have attempted to
identify, in context, certain of the factors that it currently believes may
cause actual future experience and results to differ from Nextel and Nextel
International's wireless communications business also may be subject to the
effect of other risks and uncertainties. Such risks and uncertainties are
described from time to time in Nextel and Nextel International's reports filed
with the SEC, including Nextel's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 and the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997 and Nextel
International's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 1997 and September 30, 1997.
To learn more about Nextel visit the Web site at nextel.com.
To order Nextel service, call 1-800-NEXTEL9.
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except share and unit data)
Years Ended December 31,
1997 1996
Revenues $738,897 $332,938
Operating expenses
Cost of radio service
and analog equipment
sales and maintenance 284,549 247,717
Selling, general and
administrative 865,791 330,256
Depreciation and
amortization 526,377 400,831
Operating loss (937,820) (645,866)
Other income (expense), net (371,521) (217,346)
Loss before income tax
provision (benefit) (1,309,341) (863,212)
Income tax (provision)
benefit (258,726) 307,192
Extraordinary loss from
extinguishment of debt (45,787) --
Preferred stock dividends (29,119) --
Net loss attributable to
common stockholders $(1,642,973) $(556,020)
Net loss per share
attributable to common
stockholders $(6.59) $(2.50)
Weighted average number
of common shares
outstanding 249,320,000 222,779,000
Selected Balance Sheet Data
As of December 31,
1997 1996
Cash, cash equivalents and
marketable securities
(including restricted portion
of $288,350 and $0,
respectively) $433,005 144,693
Total current assets 839,597 309,097
Property, plant and
equipment, net 3,225,603 1,803,739
Intangible assets, net 4,699,746 4,076,300
Total assets 9,227,801 6,472,439
Long-term debt
(excluding current portion)5,038,250 2,783,041
Mandatorily redeemable
preferred stock 529,119 --
Total stockholders' equity 1,912,420 2,808,138
Other Selected Data
As of December 31,
1997 1996
Year-to-date capital
expenditures, including
international of $101,892 and
$8,818, respectively, and net
of capitalized interest of
$43,036 and $32,900,
respectively $1,598,500 $537,100
Digital units in service 1,270,700 300,300
SOURCE Nextel Communications, Inc.
/CONTACT: Investors, Paul Blalock, 703-394-3500 or Media, Ben Banta,
703-394-3573, both of Nextel Communications/
/Web site: nextel.com |
