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Nextel Reports First Quarter Results
PR Newswire - April 19, 1999 07:14
- Record Domestic Digital Net Subscriber Additions -
- Industry Leading Average Monthly Revenue per Digital Subscriber -
- Positive Consolidated Operating Cash Flow -
McLEAN, Va., April 19 /PRNewswire/ -- Nextel Communications, Inc., (Nasdaq: NXTL) today
reported its financial results for the first quarter of 1999, including record quarterly domestic digital
subscriber additions of 415,000, increased average monthly revenue per digital subscriber to
approximately $71, and the achievement of positive operating cash flow on a consolidated basis.
"The first quarter of 1999 was the best in our history," said Dan Akerson, Nextel's chairman and CEO.
"Nextel achieved our first ever quarter of positive consolidated operating cash flow and a record $81.8
million in positive domestic operating cash flow. Strong customer demand for Nextel's national all-digital
wireless services produced in excess of 3.4 billion total digital wireless system minutes of use and
enhanced the productivity of more than 3 million customers. Nextel has secured a solid position at the
forefront of the wireless industry which continues to significantly outpace the growth in other sectors of
the telecommunications industry."
Nextel added approximately 415,000 domestic digital net subscribers during the first quarter of 1999, for a
total of 3,152,900 domestic digital subscriber units in service at March 31, 1999. This represents a 92%
increase over the 1,641,500 domestic digital subscriber units at the end of the first quarter of 1998. First
quarter's domestic customer retention rate remained among the best in the wireless industry, as
evidenced by first quarter's flat churn rate of approximately 2% as compared with the fourth quarter of
1998.
Consolidated revenue increased 103% to $663.8 million for the first quarter of 1999 as compared with
$327.1 million in the first quarter of 1998. Nextel's industry leading domestic average monthly revenue
per digital subscriber of approximately $71 is up approximately $5 over the first quarter of 1998.
Customer usage per subscriber remained strong, at a domestic monthly average of approximately 400
minutes, driving total system minutes of use to exceed 3.4 billion quarterly digital minutes of use on the
Nextel National Network, more than double last year's first quarter system minutes of 1.5 billion. "Nextel
achieved its financial targets in both the quantity and quality of subscriber growth," said Steve Shindler,
Nextel's CFO. "Nextel clearly has the highest economic value per subscriber in the wireless industry.
Strong first quarter demand, as reflected both in customer usage and additions, led to an 11.8% first
quarter sequential increase in domestic revenue while total domestic SG&A costs rose 3.1% versus the
fourth quarter of 1998. Our domestic operations converted approximately 59 cents of every new dollar of
revenue into new operating cash flow during the quarter. Last year, Nextel was added to the S&P 500
during the first quarter; this year we achieved positive consolidated operating cash flow and a one-notch
upgrade in our bond rating. We expect to continue to cost effectively pursue high quality subscribers
while prudently managing our growth." The consolidated operating cash flow (earnings before interest,
taxes, depreciation and amortization) for the first quarter of 1999 was positive $35,820,000, as compared
to last year's loss of $105,033,000. Domestic operations produced positive operating cash flow of
$81,810,000 during the first quarter of 1999, as compared to last year's first quarter domestic loss of
$94,843,000. Nextel International, Inc., which launched service in major Latin American markets
throughout 1998, ended the first quarter with $19.9 million in revenues and an operating cash flow loss of
$45,990,000.
The consolidated operating loss for the first quarter decreased to $192.6 million down from fourth quarter
of 1998's consolidated loss of $252.2 million. The reported consolidated net loss attributable to common
shareholders for the first quarter of 1999 was $485.5 million, or $1.66 per share, and is comprised of
$1.09 per share from domestic operations and $0.57 from international operations. The consolidated
effective tax rate for the first quarter decreased to 2.2%, down from the 1998 effective tax rate of
11.2%. This change in the effective tax rate from 1998 increased the net loss for the first quarter of 1999
by $0.14 per share. In addition, first quarter results include the impact of the currency devaluation in
Brazil of $0.15 cents per share. The reported consolidated EPS figure of $1.66 normalized for these two
items is $1.37, approximately $0.06 better than consensus expectations.
The international digital subscribers for Nextel International, Inc., and its affiliates totaled approximately
727,500 at the end of the first quarter of 1999, up from approximately 618,800 at the end of the fourth
quarter of 1998. Nextel International's proportionate share of international digital subscribers, based upon
its ownership interests, is estimated to be approximately 206,600, up from fourth quarter's level of
approximately 166,500. On a global basis, Nextel ended the first quarter of 1999 with approximately
3,359,500 digital units in service.
Consolidated capital expenditures during the first quarter of 1999 were $423.6 million including $375.0
million for domestic operations and $48.6 million for capital expenditures by Nextel International. This
compares with $554.7 million consolidated capital expenditures for the fourth quarter of 1998 which
consisted of $473.3 million for domestic operations and $81.4 million for capital expenditures by Nextel
International.
During the first quarter of 1999, the U.S. General Services Administration's Federal Technology Service
announced the award of a national contract with Nextel for the use by all Federal agencies. The GSA
joins a growing list of Nextel's corporate customers including Federal Express Corporation, America
Online, Xerox, General Electric Company, Airborne Express, Yellow Corporation, Siemens, ABF Freight
System, Inc., DHL Worldwide Express, Coca-Cola Enterprises Inc., The Home Depot, and Morgan
Stanley Dean Witter.
"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 they currently believe may cause actual future experience and results
to differ from Nextel's and/or Nextel International's current expectations regarding the relevant matter or
subject area. Such risks and uncertainties include those that are described from time to time in Nextel's
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, 1998 and Nextel International's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
Nextel Communications, Inc., based in McLean, VA, is the leading provider of fully integrated wireless
communications and has built the largest guaranteed all-digital wireless network in the United States
covering thousands of communities across the United States. Nextel and Nextel Partners, Inc., currently
serve 92 of the top 100 U.S. markets. The Nextel National Network offers a fully integrated wireless
communications tool with digital cellular, text/numeric paging and Nextel Direct Connect(SM) -- a digital
two-way radio feature. In addition, through Nextel International, Inc., Nextel has wireless operations and
investments in Canada, Mexico, Argentina, Brazil, the Philippines, Peru, Japan and Shanghai, China.
Please visit our website at nextel.com.
NEXTEL COMMUNICATIONS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except share data)
(Unaudited)
Three Months Ended March 31,
1999 1998
Operating revenues $ 663,805 $ 327,134
Operating expenses:
Cost of revenues 162,320 102,428
Selling, general and
administrative 465,665 329,739
Depreciation and amortization 228,440 184,495
Operating loss (192,620) (289,528)
Interest expense (198,059) (145,380)
Other income (expense), net (58,600) 14,406
Loss before income tax benefit (449,279) (420,502)
Income tax benefit 9,839 33,640
Mandatorily redeemable preferred
stock dividends (46,034) (28,088)
Loss attributable to common
stockholders $ (485,474) $ (414,950)
Loss per share attributable
to common stockholders,
basic and diluted $ (1.66) $ (1.53)
Weighted average number of
common shares outstanding 291,625,000 270,385,000
Selected Balance Sheet and Other Data
(in thousands, except unit data)
March 31, December 31,
1999 1998
(Unaudited)
Cash and cash equivalents,
including restricted portion
of $109,029 and $122,116,
respectively $ 245,758 $ 321,379
Property, plant and
equipment, net 5,085,416 4,915,025
Intangible assets, net 4,671,545 4,937,124
Total assets 11,421,586 11,573,361
Long-term debt, excluding
current portion 8,005,738 7,710,373
Mandatorily redeemable
preferred stock 1,624,287 1,578,252
Total stockholders' equity
(deficit) (343,574) 229,502
Digital units in service:
Domestic 3,152,900 2,789,900
International -- total 727,500 618,800
International -- proportionate 206,600 166,500
Global - proportionate 3,359,500 2,956,400
Three Months Ended
March 31, December 31,
1999 1998
(Unaudited)
Capital Expenditures:
Domestic $ 374,948 $ 473,270
International 48,627 81,448
Total capital expenditures,
net of capitalized interest
of $9,169 and $13,390,
respectively $ 423,575 $ 554,718
SOURCE Nextel Communications, Inc.
/CONTACT: Paul Blalock, Investors, 703-394-3500, or Ben Banta, Media,
703-394-3573, both of Nextel Communications/
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