Exhibit 99.1
| | | | | | | | |
| | | Contact: | | Wesley B. Wampler | | |
| | | | | Director, Investor Relations | | |
| | | | Phone: 540-949-3447 | | |
| | | | wamplerwes@ntelos.com | | |
| | | | | | |
| | | | | | |
| | | | | | |
NTELOS Holdings Corp. Reports Fourth Quarter and the
Year 2006 Operating Results
Revenues Exceed $440 million for 2006, Up 12% from 2005
Adjusted EBITDA Exceeds $172 million for 2006, Up 18% from 2005
Adjusted EBITDA less Capital Expenditures, Up 49% from 2005
WAYNESBORO, VA – March 1, 2007 – NTELOS Holdings Corp. (NASDAQ: NTLS), a leading provider of wireless and wireline communications services (branded as NTELOS) in Virginia and West Virginia, today announced operating results for its fourth quarter and year of 2006.
Operating revenues for fourth quarter 2006 were $113.8 million. Net income for the same period was $6.2 million. For purposes of this discussion and to provide comparable period financial results, 2006 for the Company is compared to the combined 2005 results of the Company and NTELOS Inc.
Highlights for the fourth quarter and the year 2006 include:
| | • | | Adjusted EBITDA (a non-GAAP measure) was $44.3 million for the quarter, $172.5 million for the year 2006 |
| | • | | Adjusted EBITDA less capital expenditures of $85.9 million for the year 2006, an increase of 49% over 2005 |
| | • | | Wireless net subscriber additions up 35% over previous quarter |
| | • | | 38 new wireless cell sites placed in service in the fourth quarter (27 in strategic network alliance footprint) |
| | • | | Wireless adjusted EBITDA of $29.0 million for the quarter, a 31% increase from fourth quarter 2005 |
| | • | | Wireless wholesale revenues of $20.9 million for the quarter, up 24% from fourth quarter 2005 |
“Our operating performance in the fourth quarter continued the positive trends of previous quarters resulting in 2006 being an outstanding year for NTELOS,” said James S. Quarforth, the Company’s Chief Executive Officer. “Our adjusted EBITDA exceeded $172 million for the year, up 18% over 2005, and cash generation was strong with adjusted EBITDA less capital expenditures topping $85 million for 2006—a 49% increase over 2005.”
Recent Developments
The Company plans to launch a proposed amendment to the credit facility of NTELOS Inc., a wholly-owned subsidiary, primarily to modify the restricted payments covenant of the credit agreement which affects the Company’s ability to pay dividends and repurchase common stock. This proposed amendment would provide flexibility to make certain restricted payments, including a regular quarterly dividend if the Board of Directors were to so determine in the future. No assurances can be given that this amendment will be obtained.
Operating Highlights
Operating revenues for fourth quarter 2006 were $113.8 million, a 12% increase over fourth quarter 2005 operating revenues of $102.1 million. Operating revenues for the year 2006 were $440.1 million, 12% over operating revenues for 2005 of $392.2 million.
Wireless operating revenues for fourth quarter of 2006 were $83.9 million compared to $73.1 million for the same period in 2005, an increase of 15%. Wireless subscribers were 367,197 at year-end 2006, a 9% increase from 336,306 at the end of 2005 and a 3% increase from 357,424 at the end of third quarter 2006. This subscriber growth, combined with increased Average monthly Revenue Per Handset/Unit (ARPU), resulted in an increase of 11% in subscriber revenues year-over-year. Wholesale revenues were $20.9 million for fourth quarter 2006 compared to $16.9 million for the same quarter last year, an increase of 24%. Wholesale revenues were primarily derived from the strategic network alliance agreement with Sprint Nextel, which totaled $20.7 million and $16.6 million for these respective periods.
Wireless operating revenues for the year 2006 were $322.3 million, a $42.0 million, or 15%, increase over 2005. For 2006, wholesale revenues derived from the strategic network alliance agreement with Sprint Nextel totaled $76.7 million compared to $61.7 million for 2005, an increase of 24%.
Wireline operating revenues were $29.7 million for the fourth quarter of 2006, a 4% increase over fourth quarter 2005 of $28.7 million. Rural Local Exchange Carrier (RLEC) operating revenues were $15.5 million in the fourth quarter of 2006 compared to $15.0 million in fourth quarter 2005, an increase of 4%. Growth in access revenues, primarily driven by increased minutes of use, was partially offset by revenue reductions from local access line losses. In the competitive wireline segment, operating revenues were $14.2 million for the fourth quarter 2006, up 3% from $13.7 million in the fourth quarter 2005. Revenues from Competitive Wireline strategic products, including broadband, integrated access, transport and Metro Ethernet, grew $1.0 million, or 10%, for fourth quarter 2006 compared to fourth quarter 2005, offsetting the loss of dial-up internet revenues and a reduction in carrier access revenues. For the year 2006, wireline operating revenues were $116.9 million, a $5.9 million, or 5% increase over 2005.
Adjusted EBITDA (a non-GAAP measure) for fourth quarter 2006 was $44.3 million, with a margin of 39%. This amount represents an increase of 21% over fourth quarter 2005 adjusted EBITDA of $36.5 million. Adjusted EBITDA for the years 2006 and 2005 was $172.5 million and $146.8 million, respectively, an increase of 18%. Adjusted EBITDA less capital expenditures was $85.9 million for the year 2006, a 49% increase from $57.6 million for 2005.
Wireless adjusted EBITDA was $29.0 million for the fourth quarter of 2006, compared to $22.2 million for fourth quarter 2005, an increase of 31%. The adjusted EBITDA margin was 35% for fourth quarter 2006 compared to 30% for fourth quarter 2005. Wireless adjusted EBITDA for the year 2006 was $112.0 million, a $22.3 million or 25%, increase over the $89.7 million for 2005.
Wireline adjusted EBITDA was $16.5 million for the fourth quarter of 2006, a 3% increase over the $16.0 million for the fourth quarter 2005. Wireline adjusted EBITDA margin was 56% for the quarter. For the year 2006, wireline adjusted EBITDA was $65.0 million, a 5% increase over the $61.8 million for 2005. Wireline adjusted EBITDA margin for the year 2006 was 56%, unchanged from 2005.
Business Segment Highlights
Wireless
| | • | | Gross customer additions for the fourth quarters of 2006 and 2005 were 44,591 and 43,187, respectively. Gross customer additions of higher-value, under-contract, postpay subscribers were 22,475 in the fourth quarter of 2006, totaling 82,143 for the year. Net subscriber additions for 2006 were 30,891, with 9,773 added in the fourth quarter. These fourth quarter net additions represent a 35% increase over the 7,256 net additions in third quarter 2006 and an 18% increase over the 8,271 net additions in fourth quarter 2005. At year-end 2006, postpay subscribers represented 73% of total subscribers and approximately 83% of these subscribers were under contract with an average contract term of 15 months remaining, reflecting the increased number of national rate plans, with longer average contract terms, in the product mix. |
ARPU (a non-GAAP measure) for fourth quarter 2006 was $53.64, up from $52.75 in the fourth quarter of 2005 and $53.30 in the third quarter of 2006. ARPU for the year 2006 was $53.59, up 2% from $52.51 for the year 2005. The increase was attributable to continued growth in data services and data packages and higher monthly access revenues due to growth in higher-priced unlimited and National plans. Total data ARPU for the year 2006 was $2.71 compared to $1.84 for 2005. Postpay data ARPU for 2006 was $3.12 compared to $2.22 for the year 2005.
Cost per Gross Addition (CPGA—a non-GAAP measure) in the fourth quarter, a historically high quarter for the wireless industry, was $354, up from $340 in the previous quarter but well below the $385 for fourth quarter 2005. For the year 2006, CPGA improved to $357, down from $368 for the year 2005. Cash Cost per Handset/Unit (CCPU—a non-GAAP measure), was $31.40 for fourth quarter 2006, down from $32.25 in the previous quarter. For the year 2006, CCPU was $31.25, compared to $30.07 for 2005. The increase is due to roaming costs related to increased roaming usage under the newer national rate plans, retention costs and operating costs associated with new cell sites. Total network cell sites were 984 at year-end 2006 compared to 946 at September 30, 2006 and 897 at year-end 2005. Of the 87 cell sites added in 2006, 61 were within the strategic network alliance footprint.
Wireline
| | • | | RLEC: Access lines at the end of fourth quarter 2006 were 45,281, compared to 46,810 at year-end 2005, a 3% decrease. This line loss is reflective of wireless substitution, a reduction in Centrex and second lines and network grooming to reduce internal Internet service provider lines. Despite these line losses, RLEC operating revenues for fourth quarter 2006 were 4%, or approximately $0.5 million, higher than fourth quarter 2005 primarily due to an increase in access revenues related to the increase in minutes of use. RLEC adjusted EBITDA for fourth quarter 2006 was $12.0 million compared to $11.3 million for fourth quarter 2005, an increase of $0.7 million or 6%. RLEC adjusted EBITDA for the year 2006 was $46.6 million, $3.8 million, or 9%, over the $42.8 million for 2005. |
| | • | | Competitive Wireline: Competitive Local Exchange Carrier (CLEC) business local access lines at the end of 2006 were 46,781, a 4% increase over the 44,948 lines at year-end 2005. Operating revenues for CLEC business local access lines increased 2% year-over-year reflecting the customer growth partially offset by downward pricing driven by discounts associated with bundled multiple-product packages. Dial-up internet subscribers declined from 33,078 to 27,628 from year-end 2005 and 2006, respectively. Revenue decline resulting from these subscriber losses was approximately $1.8 million year-over-year. Revenues from wireline strategic products, however, increased approximately $1.0 million, or 10%, to $10.7 million in fourth quarter 2006 from $9.7 million in fourth quarter 2005, due to customer growth. Strategic product revenue growth for the year 2006 was 11%, increasing from $37.2 million in 2005 to $41.2 million in 2006. Broadband growth in the RLEC footprint continues to be especially strong, with customer penetration increasing to 28% at year-end 2006 from 21% at year-end 2005. |
Quarforth concluded, “Our performance for 2006 was marked by significant growth in operating revenues, adjusted EBITDA and cash generation. For the past several years, we have seen a nice lift in adjusted EBITDA in the first quarter, driven by wireless subscribers added late in the fourth quarter. Our net additions and overall performance in the fourth quarter 2006 position us well for 2007.”
Business Outlook
The following statements are based on management’s current expectations. These statements are forward-looking and actual results may differ materially. Please see “Special Note from the Company Regarding Forward-Looking Statements”.
The Company reaffirms its guidance for 2007 which was issued in a press release on January 30, 2007. In this press release, 2007 consolidated revenues were projected to be between $472.0 million and $481.0 million and 2007 adjusted EBITDA to be between $186.0 million and $191.0 million. Please see the release for additional financial and operating metric guidance.
###
Note
Wireline revenues were previously reported net of certain long distance network expenses in the Competitive segment. These expenses totaled $0.5 million for each quarter of 2005 and $0.6 million for each quarter of 2006 and have been reclassified to the maintenance and support caption in operating expenses for all periods presented.
Non-GAAP Measures
Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization, accretion of asset retirement obligations, capital restructuring fees, gain on sale of assets, advisory termination fees, other income and expenses, minority interests, reorganization items and non-cash compensation charges.
ARPU, or average monthly revenues per handset/unit in service, is computed by dividing service revenues per period by the weighted average number of handsets in service during that period. Please see footnotes in exhibits for a complete definition of this measure.
CPGA, or cost per gross addition, is computed by adding the income statement component of merchandise cost of sales, which is included in cost of wireless sales expense, and sales and marketing, which is included in customer operations expense and reducing that amount by the equipment revenues from sales to new customers, which is included in wireless communications revenues. The net result of these components is then divided by the gross subscriber additions during the period. Please see footnotes in exhibits for a complete definition of this measure.
CCPU, or cash cost per handset/unit, is computed by adding the income statement components of cost of sales, maintenance and support, corporate operations and customer operations, less equipment revenue and costs incurred to acquire new subscribers. The net result of these components is then divided by average subscribers for the period. In addition to the Company’s subscriber costs, CCPU includes the costs of other carriers’ subscribers roaming on the NTELOS network. Non-cash expenses such as depreciation, amortization and non-cash compensation are excluded from the calculation. Please see footnotes in exhibits for a complete definition of this measure.
Adjusted EBITDA, ARPU, CPGA and CCPU are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with GAAP. Please refer to the exhibits and materials posted on the Company’s website for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with GAAP and for a discussion of the presentation, comparability and use of such financial performance measures.
About NTELOS
NTELOS Holdings Corp. is an integrated communications provider with headquarters in Waynesboro, VA. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Ohio, Tennessee, Maryland and North Carolina, including wireless phone service, local and long distance telephone services, and data services for internet access and wide area networking. Detailed information about NTELOS is available at www.ntelos.com.
SPECIAL NOTE FROM THE COMPANY REGARDING FORWARD-LOOKING STATEMENTS
Any statements contained in this press release that are not statements of historical fact, including statements about our beliefs and expectations, are forward-looking statements and should be evaluated as such. The words “anticipates,” “believes,” “expects,” “intends,” “plans,” “estimates,” “targets,” “projects,” “should,” “may,” “will” and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, our current expectations, plans and strategies, and anticipated financial results, all of which are subject to known and unknown risks, uncertainties and factors that may cause our actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. We do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise. Important factors with respect to any such forward-looking statements, including certain risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, include, but are not limited to: leverage; operating and financial restrictions imposed by our senior credit facilities; our cash requirements; rapid development and intense competition in the telecommunications industry; increased competition in our markets; declining prices for our services; changes or advances in technology; the potential to experience a high rate of customer turnover; our dependence on our affiliation with Sprint Nextel (“Sprint”); a potential increase in the roaming rates we pay; wireless handset subsidy costs; the potential for our largest competitors and Sprint to build networks in our markets; the potential loss of our licenses; federal and state regulatory developments; loss of our cell sites; the rates of penetration in the wireless telecommunications industry; our capital requirements; governmental fees and surcharges; our reliance on certain suppliers and vendors; the potential for system failures or unauthorized use of our network; the potential for security breaches of our physical facilities; the potential loss of our senior management and inability to hire additional personnel; the trading market for our common stock; the control over us by our two largest stockholders, CVC and Quadrangle; provisions in our charter documents and Delaware law; expenses of becoming a public company; the requirement to comply with Section 404 of the Sarbanes-Oxley Act; and other unforeseen difficulties that may occur. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our SEC filings, including our Annual Reports on Forms 10-K.
Exhibits:
| | • | | Condensed Consolidated Balance Sheets |
| | • | | Condensed Consolidated Statements of Operations |
| | • | | Summary of Operating Results |
| | • | | Reconciliation of Net Income (Loss) to Operating Income |
| | • | | Reconciliation of Operating Income (Loss) to Adjusted EBITDA |
| | • | | Wireless Customer Detail |
| | • | | Wireless Key Performance Indicators (KPI) |
| | • | | Wireless KPI Reconciliations (ARPU, CPGA and CCPU) |
| | • | | Business Outlook for 2007 |
NTELOS Holdings Corp.
| | | | | | |
| Condensed Consolidated Balance Sheets1 | | | | |
(dollars in thousands) | | | | |
| | | December 31,
2006 | | December 31,
2005 |
ASSETS | | | | | | |
Current Assets | | | | | | |
Cash and cash equivalents | | $ | 44,180 | | $ | 28,134 |
Accounts receivable, net | | | 38,396 | | | 37,691 |
Inventories and supplies | | | 5,471 | | | 3,419 |
Other receivables and deposits | | | 3,777 | | | 3,817 |
Prepaid expenses and other | | | 6,562 | | | 5,593 |
| | | | | | |
| | | 98,386 | | | 78,654 |
| | | | | | |
Interest rate swap | | | 3,874 | | | 4,120 |
Securities and investments | | | 294 | | | 3,042 |
| | |
Property, plant and equipment | | | 489,811 | | | 408,117 |
Less accumulated depreciation | | | 113,039 | | | 47,975 |
| | | | | | |
| | | 376,772 | | | 360,142 |
| | | | | | |
Other Assets | | | | | | |
Goodwill | | | 151,976 | | | 162,395 |
Franchise rights | | | 32,000 | | | 32,000 |
Other intangibles, net | | | 99,379 | | | 113,580 |
Radio spectrum licenses in service | | | 114,102 | | | 114,051 |
Radio spectrum licenses not in service | | | 18,250 | | | 15,581 |
Other radio spectrum licenses | | | 1,344 | | | 1,344 |
Deferred charges | | | 4,470 | | | 10,934 |
| | | | | | |
| | | 421,521 | | | 449,885 |
| | | | | | |
Total Assets | | $ | 900,847 | | $ | 895,843 |
| | | | | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
Current Liabilities | | | | | | |
Current portion of long-term debt | | $ | 13,152 | | $ | 4,513 |
Current portion of retirement benefits | | | 945 | | | — |
Accounts payable | | | 25,209 | | | 30,628 |
Advance billings and customer deposits | | | 16,709 | | | 16,112 |
Accrued payroll | | | 10,021 | | | 11,164 |
Accrued interest | | | 305 | | | 161 |
Deferred revenue | | | 683 | | | 933 |
Accrued taxes | | | 3,584 | | | 3,138 |
Other accrued liabilities | | | 2,804 | | | 4,613 |
| | | | | | |
| | | 73,412 | | | 71,262 |
| | | | | | |
Long-Term Liabilities | | | | | | |
Long-term debt | | | 613,371 | | | 754,871 |
Other long-term liabilities | | | 61,842 | | | 68,183 |
| | | | | | |
| | | 675,213 | | | 823,054 |
| | | | | | |
Minority Interests | | | 457 | | | 429 |
| | |
Stockholders’ Equity | | | 151,765 | | | 1,098 |
| | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 900,847 | | $ | 895,843 |
| | | | | | |
1 | Please see NTELOS Holdings Corp. Form 10-K for the year ended December 31, 2005 for details related to the formation of NTELOS Holdings Corp. and a new accounting basis that was established for the Company’s assets and liabilities as of the May 2, 2005 merger. |
NTELOS Holdings Corp.1
| | | | | | | | | | | | | | | | |
Condensed Consolidated Statements of Operations2 | | Three months ended: | | | Year ended:
Dec. 31, 2006 | | | January 14, 2005
(inception) to
Dec. 31, 2005 | |
| | | Dec. 31, 2006 | | | Dec. 31, 2005 | | | |
(in thousands, except for per share data) | | | | |
Operating Revenues | | | | | | | | | | | | | | | | |
| | | | |
Wireless communications | | $ | 83,933 | | | $ | 73,149 | | | $ | 322,329 | | | $ | 190,477 | |
Wireline communications | | | 29,709 | | | | 28,701 | | | | 116,925 | | | | 74,813 | |
Other communications services | | | 204 | | | | 223 | | | | 822 | | | | 569 | |
| | | | | | | | | | | | | | | | |
| | | 113,846 | | | | 102,073 | | | | 440,076 | | | | 265,859 | |
| | | | | | | | | | | | | | | | |
Operating Expenses3 | | | | | | | | | | | | | | | | |
| | | | |
Cost of wireless sales (exclusive of items shown separately below) | | | 17,902 | | | | 14,357 | | | | 68,413 | | | | 38,582 | |
| | | | |
Maintenance and support (inclusive of non-cash compensation expense of $91 and $1,087 for the three and twelve months ended December 31, 2006, respectively; and $305 for the three months ended December 31, 2005 and for the period January 14, 2005 to December 31, 2005) | | | 20,252 | | | | 18,450 | | | | 78,016 | | | | 46,821 | |
| | | | |
Customer operations (inclusive of non-cash compensation expense of $138 and $1,448 for the three and twelve months ended December 31, 2006, respectively; and $389 for the three months ended December 31, 2005 and the period January 14, 2005 to December 31, 2005) | | | 26,061 | | | | 26,166 | | | | 99,998 | | | | 63,330 | |
| | | | |
Corporate operations (inclusive of non-cash compensation expense of $703 and $10,702 for the three and twelve months ended December 31, 2006, respectively; and $1,517 and $3,036 for the three months ended December 31, 2005 and for the period January 14, 2005 to December 31, 2005, respectively) | | | 6,225 | | | | 8,766 | | | | 34,398 | | | | 22,434 | |
| | | | |
Depreciation and amortization | | | 21,160 | | | | 21,954 | | | | 84,921 | | | | 59,103 | |
| | | | |
Accretion of asset retirement obligations | | | 152 | | | | 173 | | | | 816 | | | | 489 | |
| | | | |
Capital restructuring charges | | | — | | | | 4 | | | | — | | | | 183 | |
| | | | |
Termination of advisory agreements | | | — | | | | — | | | | 12,941 | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 91,752 | | | | 89,870 | | | | 379,503 | | | | 230,942 | |
| | | | | | | | | | | | | | | | |
Operating Income | | | 22,094 | | | | 12,203 | | | | 60,573 | | | | 34,917 | |
| | | | |
Other Income (Expenses) | | | | | | | | | | | | | | | | |
Equity share of net loss from NTELOS Inc. | | | — | | | | — | | | | — | | | | (1,213 | ) |
Interest expense4,5 | | | (10,961 | ) | | | (15,728 | ) | | | (59,850 | ) | | | (34,338 | ) |
(Loss) gain on interest rate swap agreement | | | (389 | ) | | | 1,297 | | | | (246 | ) | | | 4,780 | |
Gain on sale of assets | | | — | | | | — | | | | 1,723 | | | | — | |
Other income | | | 296 | | | | 1,239 | | | | 2,833 | | | | 1,595 | |
| | | | | | | | | | | | | | | | |
| | | 11,040 | | | | (989 | ) | | | 5,033 | | | | 5,741 | |
| | | | |
Income tax expense | | | 4,882 | | | | 472 | | | | 12,190 | | | | 4,591 | |
| | | | | | | | | | | | | | | | |
| | | 6,158 | | | | (1,461 | ) | | | (7,157 | ) | | | 1,150 | |
| | | | |
Minority interests in earnings of subsidiaries | | | (3 | ) | | | (9 | ) | | | (28 | ) | | | (52 | ) |
| | | | | | | | | | | | | | | | |
Net Income (Loss) | | | 6,155 | | | | (1,470 | ) | | | (7,185 | ) | | | 1,098 | |
| | | | |
Distribution preference on Class B shares | | | — | | | | — | | | | 30,000 | | | | — | |
| | | | | | | | | | | | | | | | |
Income (Loss) applicable to common shares | | $ | 6,155 | | | $ | (1,470 | ) | | $ | (37,185 | ) | | $ | 1,098 | |
| | | | | | | | | | | | | | | | |
Basic and Diluted Earnings (Loss) per Common Share: | | | | | | | | | | | | | | | | |
| | | | |
Earnings (Loss) per share—Basic | | $ | 0.15 | | | $ | (0.06 | ) | | $ | (0.95 | ) | | $ | 0.05 | |
Earnings (Loss) per share—Diluted | | $ | 0.15 | | | $ | (0.06 | ) | | $ | (0.95 | ) | | $ | 0.05 | |
| | | | |
Average Shares Outstanding—Basic6 | | | 41,160 | | | | 24,416 | | | | 39,231 | | | | 20,646 | |
Average Shares Outstanding—Diluted6 | | | 42,170 | | | | 24,416 | | | | 39,231 | | | | 22,434 | |
Note: Wireline revenues were previously reported net of certain long distance network expenses in the Competitive segment. These expenses totaled $0.5 million for each quarter of 2005 and $0.6 million for each quarter of 2006 and have been reclassified to the maintenance and support caption in operating expenses for all periods presented.
1 | Please see NTELOS Holdings Corp. Form 10-K for the year ended December 31, 2005 for details related to the formation of NTELOS Holdings Corp. and a new accounting basis that was established for the Company’s assets and liabilities as of the May 2, 2005 merger. |
2 | On February 24, 2005, NTELOS Holdings Corp. purchased 24.9% of NTELOS Inc.’s common stock and warrants to buy common stock. From February 24, 2005 to May 1, 2005, the Company accounted for the results of NTELOS Inc. under the equity method of accounting. NTELOS Holdings Corp. had no operating activities prior to its acquisition of NTELOS Inc. on May 2, 2005. |
3 | Includes a $0.9 million and $13.2 million non-cash compensation expense related to capital stock and options to purchase capital stock for the three and twelve months ended December 31, 2006, respectively. Also includes $0.3 million, $0.5 million and $0.5 million of fees in the second, third and fourth quarters of 2005, respectively and $0.5 million of fees in the first quarter of 2006 paid under advisory agreements with CVC Management LLC and Quadrangle Advisors LLC whereby they provided advisory and other services to the Company. These advisory agreements were terminated in February 2006 in connection with the initial public offering for a termination fee of $12.9 million that was paid out of the offering proceeds. See NTELOS Holdings Corp. Form 10-K for the year ended December 31, 2006 for further details. |
4 | Includes approximately $5.3 million of interest expense for the year ended December 31, 2006 for interest on the $135 million floating rate senior notes issued October 17, 2005. These notes were paid off on April 15, 2006 from the proceeds of the initial public offering. Unamortized portions of the debt issuance costs and the original issue discounts of approximately $5.1 million and $1.3 million were written off in second quarter 2006 in connection with the repayment of these notes. |
5 | Includes a prepayment penalty of $2.25 million on the second lien credit facility that was retired on June 1, 2006 from borrowings under the new Amended and Restated Credit Agreement. See NTELOS Holdings Corp. Form 8-K dated June 1, 2006 for further details. |
6 | Earnings (Loss) per share and average weighted shares outstanding have been adjusted for all periods to reflect the conversion of Class A and Class L common shares to Class B common shares as of the initial public offering based on a 2.15 conversion ratio. All Class B common shares had been converted to common shares by December 31, 2006. |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Summary of Operating Results | |
| (dollars in thousands) | | Three Months Ended: | | | Year Ended: | |
| | | Mar 31, 20051 | | | June 30, 20051 | | | Sep 30, 2005 | | | Dec 31, 2005 | | | Mar 31, 2006 | | | June 30, 2006 | | | Sep. 30, 2006 | | | Dec 31, 2006 | | | Dec 31, 20051 | | | Dec 31, 2006 | |
Operating Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireless PCS Operations | | $ | 65,643 | | | $ | 69,425 | | | $ | 72,086 | | | $ | 73,149 | | | $ | 77,575 | | | $ | 79,588 | | | $ | 81,233 | | | $ | 83,933 | | | $ | 280,303 | | | $ | 322,329 | |
Subscriber Revenues | | | 46,601 | | | | 50,199 | | | | 52,194 | | | | 51,785 | | | | 54,252 | | | | 55,199 | | | | 56,500 | | | | 57,612 | | | | 200,779 | | | | 223,563 | |
Wholesale/Roaming Revenues, net | | | 14,610 | | | | 15,308 | | | | 15,850 | | | | 16,883 | | | | 18,287 | | | | 19,175 | | | | 19,346 | | | | 20,939 | | | | 62,651 | | | | 77,747 | |
Equipment Revenues | | | 4,244 | | | | 3,716 | | | | 3,886 | | | | 4,287 | | | | 4,829 | | | | 5,002 | | | | 5,162 | | | | 5,150 | | | | 16,133 | | | | 20,143 | |
Other Revenues | | | 188 | | | | 202 | | | | 156 | | | | 194 | | | | 207 | | | | 212 | | | | 225 | | | | 232 | | | | 740 | | | | 876 | |
| | | | | | | | | | |
Wireline Operations3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RLEC | | | 14,361 | | | | 13,668 | | | | 13,995 | | | | 14,962 | | | | 14,720 | | | | 14,843 | | | | 15,711 | | | | 15,493 | | | | 56,986 | | | | 60,767 | |
Competitive Wireline | | | 12,772 | | | | 13,544 | | | | 13,962 | | | | 13,739 | | | | 13,784 | | | | 14,081 | | | | 14,077 | | | | 14,216 | | | | 54,017 | | | | 56,158 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireline Total | | | 27,133 | | | | 27,212 | | | | 27,957 | | | | 28,701 | | | | 28,504 | | | | 28,924 | | | | 29,788 | | | | 29,709 | | | | 111,003 | | | | 116,925 | |
| | | | | | | | | | |
Other Operations | | | 277 | | | | 190 | | | | 222 | | | | 223 | | | | 188 | | | | 227 | | | | 203 | | | | 204 | | | | 912 | | | | 822 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 93,053 | | | $ | 96,827 | | | $ | 100,265 | | | $ | 102,073 | | | $ | 106,267 | | | $ | 108,739 | | | $ | 111,224 | | | $ | 113,846 | | | $ | 392,218 | | | $ | 440,076 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (before depreciation & amortization, accretion of asset retirement obligations, asset write-down and impairment charges, gain on sale of assets, termination of advisory agreements, operational and capital restructuring charges and non-cash compensation, a non-GAAP Measure) | |
| | | | | | | | | | |
Wireless PCS Operations | | $ | 45,251 | | | $ | 45,993 | | | $ | 48,379 | | | $ | 50,972 | | | $ | 49,622 | | | $ | 51,876 | | | $ | 53,831 | | | $ | 54,958 | | | $ | 190,595 | | | $ | 210,287 | |
Cost of Sales—Equipment | | | 6,558 | | | | 6,357 | | | | 6,316 | | | | 6,367 | | | | 7,002 | | | | 6,984 | | | | 7,013 | | | | 7,081 | | | | 25,598 | | | | 28,080 | |
Cost of Sales—Access & Other | | | 7,124 | | | | 8,330 | | | | 8,242 | | | | 7,990 | | | | 8,797 | | | | 9,980 | | | | 10,735 | | | | 10,821 | | | | 31,686 | | | | 40,333 | |
Maintenance and Support | | | 8,623 | | | | 8,424 | | | | 9,452 | | | | 9,663 | | | | 9,842 | | | | 10,092 | | | | 10,629 | | | | 11,021 | | | | 36,162 | | | | 41,584 | |
Customer Operations | | | 18,544 | | | | 18,103 | | | | 19,317 | | | | 22,056 | | | | 19,566 | | | | 20,627 | | | | 21,078 | | | | 22,109 | | | | 78,020 | | | | 83,380 | |
Corporate Operations | | | 4,402 | | | | 4,779 | | | | 5,052 | | | | 4,896 | | | | 4,415 | | | | 4,193 | | | | 4,376 | | | | 3,926 | | | | 19,129 | | | | 16,910 | |
| | | | | | | | | | |
Wireline Operations3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RLEC | | | 3,426 | | | | 3,426 | | | | 3,622 | | | | 3,673 | | | | 3,377 | | | | 3,581 | | | | 3,663 | | | | 3,534 | | | | 14,147 | | | | 14,155 | |
Competitive Wireline | | | 8,556 | | | | 8,697 | | | | 8,762 | | | | 9,038 | | | | 9,398 | | | | 9,186 | | | | 9,461 | | | | 9,678 | | | | 35,053 | | | | 37,723 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireline Total | | | 11,982 | | | | 12,123 | | | | 12,384 | | | | 12,711 | | | | 12,775 | | | | 12,767 | | | | 13,124 | | | | 13,212 | | | | 49,200 | | | | 51,878 | |
| | | | | | | | | | |
Other Operations2 | | | 1,019 | | | | 1,244 | | | | 1,532 | | | | 1,843 | | | | 1,474 | | | | 1,347 | | | | 1,264 | | | | 1,338 | | | | 5,638 | | | | 5,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 58,252 | | | $ | 59,360 | | | $ | 62,295 | | | $ | 65,526 | | | $ | 63,871 | | | $ | 65,990 | | | $ | 68,219 | | | $ | 69,508 | | | $ | 245,433 | | | $ | 267,588 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA (a non-GAAP Measure)4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireless PCS Operations | | $ | 20,392 | | | $ | 23,432 | | | $ | 23,707 | | | $ | 22,177 | | | $ | 27,953 | | | $ | 27,712 | | | $ | 27,402 | | | $ | 28,975 | | | $ | 89,708 | | | $ | 112,042 | |
| | | | | | | | | | |
Wireline Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RLEC | | | 10,935 | | | | 10,242 | | | | 10,373 | | | | 11,289 | | | | 11,343 | | | | 11,262 | | | | 12,048 | | | | 11,959 | | | | 42,839 | | | | 46,612 | |
Competitive Wireline | | | 4,216 | | | | 4,847 | | | | 5,200 | | | | 4,701 | | | | 4,386 | | | | 4,895 | | | | 4,616 | | | | 4,538 | | | | 18,964 | | | | 18,435 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireline Total | | | 15,151 | | | | 15,089 | | | | 15,573 | | | | 15,990 | | | | 15,729 | | | | 16,157 | | | | 16,664 | | | | 16,497 | | | | 61,803 | | | | 65,047 | |
| | | | | | | | | | |
Other Operations2 | | | (742 | ) | | | (1,054 | ) | | | (1,310 | ) | | | (1,620 | ) | | | (1,286 | ) | | | (1,120 | ) | | | (1,061 | ) | | | (1,134 | ) | | | (4,726 | ) | | | (4,601 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 34,801 | | | $ | 37,467 | | | $ | 37,970 | | | $ | 36,547 | | | $ | 42,396 | | | $ | 42,749 | | | $ | 43,005 | | | $ | 44,338 | | | $ | 146,785 | | | $ | 172,488 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital Expenditures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireless PCS Operations | | $ | 8,740 | | | $ | 9,907 | | | $ | 20,902 | | | $ | 16,542 | | | $ | 14,235 | | | $ | 14,583 | | | $ | 16,762 | | | $ | 13,829 | | | $ | 56,091 | | | $ | 59,409 | |
| | | | | | | | | | |
Wireline Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RLEC | | | 749 | | | | 2,347 | | | | 1,288 | | | | 3,780 | | | | 2,901 | | | | 2,547 | | | | 1,847 | | | | 1,567 | | | | 8,164 | | | | 8,862 | |
Competitive Wireline | | | 2,841 | | | | 4,001 | | | | 3,874 | | | | 5,972 | | | | 2,043 | | | | 3,474 | | | | 3,878 | | | | 2,708 | | | | 16,688 | | | | 12,103 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireline Total | | | 3,590 | | | | 6,348 | | | | 5,162 | | | | 9,752 | | | | 4,944 | | | | 6,021 | | | | 5,725 | | | | 4,275 | | | | 24,852 | | | | 20,965 | |
| | | | | | | | | | |
Other Operations | | | 1,725 | | | | 2,021 | | | | 2,113 | | | | 2,370 | | | | 1,247 | | | | 2,084 | | | | 1,033 | | | | 1,869 | | | | 8,229 | | | | 6,233 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 14,055 | | | $ | 18,276 | | | $ | 28,177 | | | $ | 28,664 | | | $ | 20,426 | | | $ | 22,688 | | | $ | 23,520 | | | $ | 19,973 | | | $ | 89,172 | | | $ | 86,607 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA less Capital Expenditures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireless PCS Operations | | $ | 11,652 | | | $ | 13,525 | | | $ | 2,805 | | | $ | 5,635 | | | $ | 13,718 | | | $ | 13,129 | | | $ | 10,640 | | | $ | 15,146 | | | $ | 33,617 | | | $ | 52,633 | |
| | | | | | | | | | |
Wireline Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RLEC | | | 10,186 | | | | 7,895 | | | | 9,085 | | | | 7,509 | | | | 8,442 | | | | 8,715 | | | | 10,201 | | | | 10,392 | | | | 34,675 | | | | 37,750 | |
Competitive Wireline | | | 1,375 | | | | 846 | | | | 1,326 | | | | (1,271 | ) | | | 2,343 | | | | 1,421 | | | | 738 | | | | 1,830 | | | | 2,276 | | | | 6,332 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Wireline Total | | | 11,561 | | | | 8,741 | | | | 10,411 | | | | 6,238 | | | | 10,785 | | | | 10,136 | | | | 10,939 | | | | 12,222 | | | | 36,951 | | | | 44,082 | |
| | | | | | | | | | |
Other Operations | | | (2,467 | ) | | | (3,075 | ) | | | (3,423 | ) | | | (3,990 | ) | | | (2,533 | ) | | | (3,204 | ) | | | (2,094 | ) | | | (3,003 | ) | | | (12,955 | ) | | | (10,834 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 20,746 | | | $ | 19,191 | | | $ | 9,793 | | | $ | 7,883 | | | $ | 21,970 | | | $ | 20,061 | | | $ | 19,485 | | | $ | 24,365 | | | $ | 57,613 | | | $ | 85,881 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 | For purposes of this discussion and to provide comparable period financial results, results of NTELOS Inc. from January 1, 2005 to May 1, 2005 have been combined with NTELOS Holdings Corp. results from May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no operating activities prior to its acquisition of NTELOS Inc. on May 2, 2005. |
2 | Other Operations expense includes fees paid under advisory agreements with CVC Management LLC and Quadrangle Advisors LLC whereby they provide advisory and other services to the Company for an annual advisory fee of $2.0 million. The Company recognized $0.3 million, $0.5 million and $0.5 million of advisory fees in the second, third and fourth quarters of 2005, respectively and $0.5 million for first quarter 2006. These advisory agreements were terminated in February 2006 for a termination fee of $12.9 million. See NTELOS Holdings Corp. Form 10-K for the year ended December 31, 2006 for further details. |
3 | Wireline revenues were previously reported net of certain long distance network expenses in the Competitive segment. These expenses totaled $0.5 million for each quarter of 2005 and $0.6 million for each quarter of 2006 and have been reclassified to the maintenance and support caption in operating expenses for all periods presented. |
4 | Please see earnings release schedules available on the Company’s website or NTELOS Holdings Corp. SEC Filings for reconciliations of adjusted EBITDA to operating income and to net income. |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Operating Income | |
(dollars in thousands) | | | | | | | | | | | | | | | | |
| | | Three Months Ended: | | | Year Ended: | |
| | | Dec. 31 2005 | | | Dec. 31, 2006 | | | Dec. 31, 20051,2 | | | Dec. 31, 2006 | |
Net income (loss) | | $ | (1,470 | ) | | $ | 6,155 | | | $ | 593 | | | $ | (7,185 | ) |
Interest expense | | | 15,728 | | | | 10,961 | | | | 45,177 | | | | 59,850 | |
Gain (loss) on interest rate swap agreement | | | (1,297 | ) | | | 389 | | | | (4,120 | ) | | | 246 | |
Income taxes | | | 472 | | | | 4,882 | | | | 12,741 | | | | 12,190 | |
Minority Interest | | | 9 | | | | 3 | | | | 39 | | | | 28 | |
Other Income | | | (1,239 | ) | | | (296 | ) | | | (1,864 | ) | | | (4,556 | ) |
Reorganization items, net | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Operating Income | | $ | 12,203 | | | $ | 22,094 | | | $ | 52,566 | | | $ | 60,573 | |
| | | | | | | | | | | | | | | | |
| | | | |
Wireless | | $ | 7,712 | | | $ | 14,336 | | | $ | 32,288 | | | $ | 52,799 | |
RLEC | | | 7,228 | | | | 8,397 | | | | 27,845 | | | | 32,243 | |
Competitive Wireline | | | 1,662 | | | | 1,441 | | | | 8,630 | | | | 6,598 | |
Other | | | (4,399 | ) | | | (2,080 | ) | | | (16,197 | ) | | | (31,067 | ) |
| | | | | | | | | | | | | | | | |
Operating Income | | $ | 12,203 | | | $ | 22,094 | | | $ | 52,566 | | | $ | 60,573 | |
| | | | | | | | | | | | | | | | |
1 | For purposes of this discussion and to provide comparable period financial results, results of NTELOS Inc. from January 1, 2005 to May 1, 2005 have been combined with NTELOS Holdings Corp. results from May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no operating activities prior to its acquisition of NTELOS Inc. on May 2, 2005. |
2 | Net income (loss) excludes the Company’s equity share of net loss from NTELOS Inc. for the period from January 14, 2005 (inception) to May 1, 2005 of ($1.2) million. |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Operating Income (Loss) to Adjusted EBITDA1 | |
(dollars in thousands) | | 2005 | | | 2006 | |
| | | Wireless
PCS | | | RLEC | | | Competitive
Wireline | | | Other | | | Total | | | Wireless
PCS | | | RLEC | | | Competitive
Wireline | | | Other | | | Total | |
For The Three Months Ended December 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | $ | 7,712 | | | $ | 7,228 | | | $ | 1,662 | | | $ | (4,399 | ) | | $ | 12,203 | | | $ | 14,336 | | | $ | 8,397 | | | $ | 1,441 | | | $ | (2,080 | ) | | $ | 22,094 | |
Depreciation and amortization | | | 14,309 | | | | 4,058 | | | | 3,028 | | | | 559 | | | | 21,954 | | | | 14,464 | | | | 3,559 | | | | 3,090 | | | | 47 | | | | 21,160 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sub-total: EBITDA | | | 22,021 | | | | 11,286 | | | | 4,690 | | | | (3,840 | ) | | | 34,157 | | | | 28,800 | | | | 11,956 | | | | 4,531 | | | | (2,033 | ) | | | 43,254 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of asset retirement obligations | | | 156 | | | | 3 | | | | 11 | | | | 3 | | | | 173 | | | | 175 | | | | 3 | | | | 7 | | | | (33 | ) | | | 152 | |
Capital restructuring charges | | | — | | | | — | | | | — | | | | 4 | | | | 4 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Non-cash compensation—A shares | | | — | | | | — | | | | — | | | | 2,213 | | | | 2,213 | | | | — | | | | — | | | | — | | | | 932 | | | | 932 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 22,177 | | | $ | 11,289 | | | $ | 4,701 | | | $ | (1,620 | ) | | $ | 36,547 | | | $ | 28,975 | | | $ | 11,959 | | | $ | 4,538 | | | $ | (1,134 | ) | | $ | 44,338 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA Margin | | | 30.3 | % | | | 75.5 | % | | | 34.2 | % | | | | | | | 35.8 | % | | | 34.5 | % | | | 77.2 | % | | | 31.9 | % | | | | | | | 38.9 | % |
| | | | | | | | | | |
For The Twelve Months Ended December 31 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating Income | | $ | 32,288 | | | $ | 27,845 | | | $ | 8,630 | | | $ | (16,197 | ) | | $ | 52,566 | | | $ | 52,799 | | | $ | 32,243 | | | $ | 6,598 | | | $ | (31,067 | ) | | $ | 60,573 | |
Depreciation and amortization | | | 56,723 | | | | 14,981 | | | | 10,291 | | | | 907 | | | | 82,902 | | | | 58,453 | | | | 14,356 | | | | 11,800 | | | | 312 | | | | 84,921 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sub-total: EBITDA | | | 89,011 | | | | 42,826 | | | | 18,921 | | | | (15,290 | ) | | | 135,468 | | | | 111,252 | | | | 46,599 | | | | 18,398 | | | | (30,755 | ) | | | 145,494 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accretion of asset retirement obligations | | | 697 | | | | 13 | | | | 43 | | | | (12 | ) | | | 741 | | | | 790 | | | | 13 | | | | 37 | | | | (24 | ) | | | 816 | |
Termination of advisory agreements | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,941 | | | | 12,941 | |
Capital restructuring charges | | | — | | | | — | | | | — | | | | 15,587 | | | | 15,587 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Gain on sale of asset | | | — | | | | — | | | | — | | | | (8,742 | ) | | | (8,742 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Non-cash compensation—A shares | | | — | | | | — | | | | — | | | | 3,731 | | | | 3,731 | | | | — | | | | — | | | | — | | | | 13,237 | | | | 13,237 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 89,708 | | | $ | 42,839 | | | $ | 18,964 | | | $ | (4,726 | ) | | $ | 146,785 | | | $ | 112,042 | | | $ | 46,612 | | | $ | 18,435 | | | $ | (4,601 | ) | | $ | 172,488 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA Margin | | | 27.8 | % | | | 70.5 | % | | | 33.8 | % | | | | | | | 33.4 | % | | | 34.8 | % | | | 76.7 | % | | | 32.8 | % | | | | | | | 39.2 | % |
1 | For purposes of this discussion and to provide comparable period financial results, results of NTELOS Inc. from January 1, 2005 to May 1, 2005 have been combined with NTELOS Holdings Corp. results from May 2, 2005 to December 31, 2005. NTELOS Holdings Corp. had no operating activities prior to its acquisition of NTELOS Inc. on May 2, 2005. |
NTELOS Holdings Corp.
Customer Summary Table
| | | | | | | | | | |
Quarter Ended: | | 12/31/2005 | | 3/31/2006 | | 6/30/2006 | | 9/30/2006 | | 12/31/2006 |
Wireless Subscribers | | 336,306 | | 343,879 | | 350,168 | | 357,424 | | 367,197 |
| | | | | |
RLEC Access Lines | | 46,810 | | 46,492 | | 46,013 | | 45,677 | | 45,281 |
| | | | | |
CLEC Access Lines1 | | 44,948 | | 45,296 | | 45,885 | | 46,224 | | 46,781 |
| | | | | |
Broadband Connections2 | | 14,047 | | 15,018 | | 15,616 | | 16,373 | | 17,177 |
| | | | | |
Dial-Up Internet Subscribers | | 33,078 | | 31,707 | | 30,242 | | 28,913 | | 27,628 |
| | | | | |
Long Distance Subscribers | | 40,263 | | 41,971 | | 43,168 | | 44,263 | | 45,237 |
1 | Includes customer Primary Rate Interface (PRI) line equivalents at 23 lines per PRI. Excludes intercompany PRI lines. |
2 | Includes DSL, dedicated Internet access, wireless broadband, broadband over fiber, metro Ethernet, ATM and frame relay. |
NTELOS Holdings Corp.
Wireless Customer Detail
| | | | | | | | | | |
Quarter Ended: | | 12/31/2005 | | 3/31/2006 | | 6/30/2006 | | 9/30/2006 | | 12/31/2006 |
Total Wireless Subscribers | | | | | | | | | | |
Beginning Subscribers | | 328,035 | | 336,306 | | 343,879 | | 350,168 | | 357,424 |
Prepay | | 79,728 | | 80,023 | | 86,179 | | 89,368 | | 94,771 |
Postpay | | 248,307 | | 256,283 | | 257,700 | | 260,800 | | 262,653 |
| | | | | |
Gross Additions | | 43,187 | | 40,285 | | 37,343 | | 42,156 | | 44,591 |
Prepay | | 16,396 | | 20,536 | | 17,690 | | 21,890 | | 22,116 |
Postpay | | 26,791 | | 19,749 | | 19,653 | | 20,266 | | 22,475 |
| | | | | |
Disconnections | | 34,916 | | 32,712 | | 31,054 | | 34,900 | | 34,818 |
Prepay | | 16,012 | | 14,244 | | 14,295 | | 16,246 | | 17,797 |
Postpay | | 18,904 | | 18,468 | | 16,759 | | 18,654 | | 17,021 |
| | | | | |
Net Additions | | 8,271 | | 7,573 | | 6,289 | | 7,256 | | 9,773 |
Prepay | | 384 | | 6,292 | | 3,395 | | 5,644 | | 4,319 |
Postpay | | 7,887 | | 1,281 | | 2,894 | | 1,612 | | 5,454 |
| | | | | |
Ending Subscribers | | 336,306 | | 343,879 | | 350,168 | | 357,424 | | 367,197 |
Prepay | | 80,023 | | 86,179 | | 89,368 | | 94,771 | | 98,846 |
Postpay | | 256,283 | | 257,700 | | 260,800 | | 262,653 | | 268,351 |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | |
Wireless Key Performance Indicators | | Three Months Ended: | | | Year Ended: | |
| | | Dec. 31, 2005 | | | Dec. 31, 2006 | | | Dec. 31, 2005 | | | Dec. 31, 2006 | |
Average Subscribers(weighted monthly) | | | 330,106 | | | | 360,526 | | | | 321,719 | | | | 350,235 | |
| | | | |
Gross Subscriber Revenues ($000) | | $ | 52,238 | | | $ | 58,012 | | | $ | 202,712 | | | $ | 225,218 | |
Revenue Accruals & Deferrals | | | (428 | ) | | | (348 | ) | | | (1,818 | ) | | | (1,575 | ) |
Eliminations & Other Adjustments | | | (25 | ) | | | (52 | ) | | | (115 | ) | | | (80 | ) |
| | | | | | | | | | | | | | | | |
Net Subscriber Revenues ($000) | | $ | 51,785 | | | $ | 57,612 | | | $ | 200,779 | | | $ | 223,563 | |
| | | | |
Average Monthly Revenue per Handset/Unit (ARPU) 1 | | $ | 52.75 | | | $ | 53.64 | | | $ | 52.51 | | | $ | 53.59 | |
| | | | |
Average Monthly Revenue per Postpay Handset/Unit (ARPU) 1 | | $ | 54.47 | | | $ | 54.76 | | | $ | 54.42 | | | $ | 54.84 | |
| | | | |
Average Monthly Data Revenue per Handset/Unit (ARPU) 1 | | $ | 2.22 | | | $ | 2.89 | | | $ | 1.84 | | | $ | 2.71 | |
| | | | |
Average Monthly Data Revenue per Postpay Handset/Unit (ARPU) 1 | | $ | 2.62 | | | $ | 3.36 | | | $ | 2.22 | | | $ | 3.12 | |
| | | | |
Cost of Acquisition per Gross Addition (CPGA) 2 | | $ | 385 | | | $ | 354 | | | $ | 368 | | | $ | 357 | |
| | | | |
Monthly Cash Cost per Handset/Unit (CCPU) 3 | | $ | 30.36 | | | $ | 31.40 | | | $ | 30.07 | | | $ | 31.25 | |
| | | | |
Strategic Network Alliance Revenues ($000) | | $ | 16,646 | | | $ | 20,657 | | | $ | 61,653 | | | $ | 76,730 | |
Home Voice Revenue | | | 9,285 | | | | 10,980 | | | | 34,242 | | | | 41,672 | |
Travel Voice | | | 5,849 | | | | 5,704 | | | | 22,199 | | | | 23,041 | |
Data Revenue | | | 1,512 | | | | 3,973 | | | | 5,212 | | | | 12,017 | |
| | | | |
Monthly Postpay Subscriber Churn | | | 2.5 | % | | | 2.2 | % | | | 2.3 | % | | | 2.3 | % |
| | | | |
Monthly Blended Subscriber Churn | | | 3.5 | % | | | 3.2 | % | | | 3.2 | % | | | 3.2 | % |
| | | | |
Total Cell Sites (Period Ending) | | | 897 | | | | 984 | | | | 897 | | | | 984 | |
| | | | |
Cell Sites under the Strategic Network Alliance Agreement (Period Ending; Sub-set of Total Cell Sites above) | | | 534 | | | | 595 | | | | 534 | | | | 595 | |
1 | Average monthly revenues per handset/unit in service, or ARPU, is an industry metric that measures service revenues per period divided by the weighted average number of handsets in service during that period. ARPU as defined may not be similar to ARPU measures of other companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the Company’s statement of operations. The Company closely monitors the effects of new rate plans and service offerings on ARPU in order to determine their effectiveness. ARPU provides management useful information concerning the appeal of NTELOS rate plans and service offerings and the Company’s performance in attracting and retaining high value customers. |
2 | CPGA is cost per gross addition and summarizes the average cost to acquire new customers during the period. CPGA is a non-GAAP financial measure that is computed by adding the income statement component of merchandise cost of sales, which is included in cost of wireless sales expense, and sales and marketing, which is included in customer operations expense and reduces that amount by the equipment revenues from sales to new customers, which is included in wireless communications revenues. The net result of these components is then divided by the gross subscriber additions during the period. NTELOS believes CPGA is a useful measure used to compare the Company’s average cost to acquire a new subscriber to that of other wireless communications providers, although other wireless communications providers may include or exclude certain items from their calculations which may make the comparison less meaningful. The inclusion of merchandise cost of sales net of the equipment revenues from sales to new customers is critical to the understanding of how much it costs the Company to acquire a new subscriber. |
3 | CCPU is cash cost per handset/unit and represents the average cost to provide wireless service and support per subscriber. CCPU is a non-GAAP financial measure that is computed by adding the income statement components of cost of sales, maintenance and support, corporate operations and customer operations for wireless operations, less wireless equipment revenue and costs incurred to acquire new subscribers. The net result is then divided by average subscribers for the period. In addition to the Company’s subscriber costs, CCPU includes the costs of other carriers’ subscribers roaming on the NTELOS network. Non-cash expenses such as depreciation, amortization and non-cash compensation are excluded. NTELOS believes CCPU is a useful measure to compare the Company’s average costs to that of other wireless providers, although other providers may include or exclude certain items from their calculations which may make the comparison less meaningful. The Company believes CCPU is useful to evaluate NTELOS’ effectiveness in managing cash costs associated with providing services to customers. CCPU should be considered in addition to, but not as a substitute for, information contained in the Company’s statement of operations. |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | |
Wireless KPI Reconciliations | | Three Months Ended: | | | Year Ended: | |
| | | Dec. 31, 2005 | | | Dec. 31, 2006 | | | Dec. 31, 2005 | | | Dec. 31, 2006 | |
Average Revenue per Handset/Unit (ARPU)1 | | | | | | | | | | | | | | | | |
(dollars in thousands except for subscribers and ARPU) | | | | | | | | | | | | | | | | |
| | | | |
| Wireless communications revenue | | $ | 73,149 | | | $ | 83,933 | | | $ | 280,303 | | | $ | 322,329 | |
Less: Equipment revenue from sales to new customers | | | (2,819 | ) | | | (3,677 | ) | | | (11,997 | ) | | | (15,063 | ) |
Less: Equipment revenue from sales to existing customers | | | (1,468 | ) | | | (1,472 | ) | | | (4,135 | ) | | | (5,079 | ) |
Less: Wholesale revenue | | | (16,883 | ) | | | (20,939 | ) | | | (62,651 | ) | | | (77,747 | ) |
Plus (Less): Other revenues, eliminations and adjustments | | | 259 | | | | 167 | | | | 1,192 | | | | 778 | |
| | | | | | | | | | | | | | | | |
Wireless gross subscriber revenue | | $ | 52,238 | | | $ | 58,012 | | | $ | 202,712 | | | $ | 225,218 | |
| | | | | | | | | | | | | | | | |
| | | | |
Less: Paid in advance subscriber revenue | | | (10,921 | ) | | | (14,263 | ) | | | (42,104 | ) | | | (52,648 | ) |
Plus (Less): adjustments | | | (350 | ) | | | (303 | ) | | | (1,422 | ) | | | (1,124 | ) |
| | | | | | | | | | | | | | | | |
Wireless gross postpay subscriber revenue | | $ | 40,967 | | | $ | 43,446 | | | $ | 159,186 | | | $ | 171,446 | |
| | | | | | | | | | | | | | | | |
| | | | |
Average subscribers | | | 330,106 | | | | 360,526 | | | | 321,719 | | | | 350,235 | |
| | | | | | | | | | | | | | | | |
Total ARPU | | $ | 52.75 | | | $ | 53.64 | | | $ | 52.51 | | | $ | 53.59 | |
| | | | | | | | | | | | | | | | |
| | | | |
Average postpay subscribers | | | 250,684 | | | | 264,460 | | | | 243,772 | | | | 260,530 | |
| | | | | | | | | | | | | | | | |
Postpay ARPU | | $ | 54.47 | | | $ | 54.76 | | | $ | 54.42 | | | $ | 54.84 | |
| | | | | | | | | | | | | | | | |
| | | | |
Wireless gross subscriber revenue | | $ | 52,238 | | | $ | 58,012 | | | $ | 202,712 | | | $ | 225,218 | |
Less: Wireless voice and other feature revenue | | | (50,041 | ) | | | (54,890 | ) | | | (195,591 | ) | | | (213,824 | ) |
| | | | | | | | | | | | | | | | |
Wireless data revenue | | $ | 2,197 | | | $ | 3,122 | | | $ | 7,121 | | | $ | 11,394 | |
| | | | | | | | | | | | | | | | |
| | | | |
Average subscribers | | | 330,106 | | | | 360,526 | | | | 321,719 | | | | 350,235 | |
| | | | | | | | | | | | | | | | |
Total Data ARPU | | $ | 2.22 | | | $ | 2.89 | | | $ | 1.84 | | | $ | 2.71 | |
| | | | | | | | | | | | | | | | |
| | | | |
Wireless gross postpay subscriber revenue | | $ | 40,967 | | | $ | 43,446 | | | $ | 159,186 | | | $ | 171,446 | |
Less: Wireless postpay voice and other feature revenue | | | (38,999 | ) | | | (40,777 | ) | | | (152,704 | ) | | | (161,687 | ) |
| | | | | | | | | | | | | | | | |
Wireless postpay data revenue | | $ | 1,968 | | | $ | 2,669 | | | $ | 6,482 | | | $ | 9,759 | |
| | | | | | | | | | | | | | | | |
| | | | |
Average postpay subscribers | | | 250,684 | | | | 264,460 | | | | 243,772 | | | | 260,530 | |
| | | | | | | | | | | | | | | | |
Postpay data ARPU | | $ | 2.62 | | | $ | 3.36 | | | $ | 2.22 | | | $ | 3.12 | |
| | | | | | | | | | | | | | | | |
1 | Average monthly revenues per handset/unit in service, or ARPU, is an industry metric that measures service revenues per period divided by the weighted average number of handsets in service during that period. ARPU as defined may not be similar to ARPU measures of other companies, is not a measurement under GAAP and should be considered in addition to, but not as a substitute for, the information contained in the Company’s statement of operations. The Company closely monitors the effects of new rate plans and service offerings on ARPU in order to determine their effectiveness. ARPU provides management useful information concerning the appeal of NTELOS rate plans and service offerings and the Company’s performance in attracting and retaining high value customers. |
NTELOS Holdings Corp.
| | | | | | | | | | | | | | | | |
Wireless KPI Reconciliations | | Three Months Ended: | | | Year Ended: | |
| | | Dec. 31, 2005 | | | Dec. 31, 2006 | | | Dec. 31, 2005 | | | Dec. 31, 2006 | |
Cost per Gross Acquisition (CPGA)2 | | | | | | | | | | | | | | | | |
(dollars in thousands except for subscribers and CPGA) | | | | | | | | | | | | | | | | |
| | | | |
| Cost of wireless sales | | $ | 14,357 | | | $ | 17,902 | | | $ | 57,284 | | | $ | 68,413 | |
Less: access, roaming, and other cost of sales | | | (7,990 | ) | | | (10,820 | ) | | | (31,686 | ) | | | (40,332 | ) |
| | | | | | | | | | | | | | | | |
Merchandise cost of sales | | $ | 6,367 | | | $ | 7,082 | | | $ | 25,598 | | | $ | 28,081 | |
| | | | | | | | | | | | | | | | |
| | | | |
| Total customer operations | | $ | 26,166 | | | $ | 26,061 | | | $ | 92,600 | | | $ | 99,998 | |
Less Wireline and other segment expenses | | | (4,110 | ) | | | (3,954 | ) | | | (14,580 | ) | | | (16,619 | ) |
Less: Wireless customer care, billing, bad debt and other expenses | | | (8,987 | ) | | | (9,665 | ) | | | (33,229 | ) | | | (37,611 | ) |
| | | | | | | | | | | | | | | | |
Sales and marketing | | $ | 13,069 | | | $ | 12,442 | | | $ | 44,791 | | | $ | 45,768 | |
| | | | | | | | | | | | | | | | |
| | | | |
Merchandise cost of sales | | $ | 6,367 | | | $ | 7,082 | | | $ | 25,598 | | | $ | 28,081 | |
Sales and marketing | | | 13,069 | | | | 12,442 | | | | 44,791 | | | | 45,768 | |
Less: Merchandise sales | | | (2,819 | ) | | | (3,743 | ) | | | (11,997 | ) | | | (15,198 | ) |
| | | | | | | | | | | | | | | | |
Total CPGA costs | | $ | 16,617 | | | $ | 15,781 | | | $ | 58,392 | | | $ | 58,651 | |
| | | | | | | | | | | | | | | | |
Gross subscriber additions | | | 43,187 | | | | 44,591 | | | | 158,728 | | | | 164,375 | |
| CPGA | | $ | 385 | | | $ | 354 | | | $ | 368 | | | $ | 357 | |
| | | | |
Cash Cost per Handset/Unit (CCPU)3 | | | | | | | | | | | | | | | | |
(dollars in thousands except for subscribers and CCPU) | | | | | | | | | | | | | | | | |
| | | | |
| Maintenance and support | | $ | 18,450 | | | $ | 20,252 | | | $ | 68,746 | | | $ | 78,016 | |
Less Wireline, other segment expenses | | | (8,787 | ) | | | (9,231 | ) | | | (32,584 | ) | | | (36,432 | ) |
| | | | | | | | | | | | | | | | |
Wireless maintenance and support | | $ | 9,663 | | | $ | 11,021 | | | $ | 36,162 | | | $ | 41,584 | |
| | | | | | | | | | | | | | | | |
| | | | |
| Corporate operations | | $ | 8,766 | | | $ | 6,225 | | | $ | 30,619 | | | $ | 34,398 | |
Less Wireline, other segment, and corporate expenses | | | (3,870 | ) | | | (2,298 | ) | | | (11,491 | ) | | | (17,487 | ) |
| | | | | | | | | | | | | | | | |
Wireless corporate operations | | $ | 4,896 | | | $ | 3,927 | | | $ | 19,128 | | | $ | 16,911 | |
| | | | | | | | | | | | | | | | |
| | | | |
Wireless maintenance and support | | $ | 9,663 | | | $ | 11,021 | | | $ | 36,162 | | | $ | 41,584 | |
Wireless corporate operations | | | 4,896 | | | | 3,927 | | | | 19,128 | | | | 16,911 | |
Wireless customer care, billing, bad debt and other expenses | | | 8,987 | | | | 9,665 | | | | 33,229 | | | | 37,611 | |
Wireless access, roaming, and other cost of sales | | | 7,990 | | | | 10,820 | | | | 31,686 | | | | 40,332 | |
Equipment revenue from sales to existing customers | | | (1,468 | ) | | | (1,472 | ) | | | (4,135 | ) | | | (5,079 | ) |
| | | | | | | | | | | | | | | | |
Total CCPU costs | | $ | 30,068 | | | $ | 33,961 | | | $ | 116,070 | | | $ | 131,359 | |
| | | | | | | | | | | | | | | | |
| | | | |
Average subscribers | | | 330,105 | | | | 360,526 | | | | 321,719 | | | | 350,235 | |
| | | | |
| CCPU | | $ | 30.36 | | | $ | 31.40 | | | $ | 30.07 | | | $ | 31.25 | |
2 | CPGA is cost per gross addition and summarizes the average cost to acquire new customers during the period. CPGA is a non-GAAP financial measure that is computed by adding the income statement component of merchandise cost of sales, which is included in cost of wireless sales expense, and sales and marketing, which is included in customer operations expense and reduces that amount by the equipment revenues from sales to new customers, which is included in wireless communications revenues. The net result of these components is then divided by the gross subscriber additions during the period. NTELOS believes CPGA is a useful measure used to compare the Company’s average cost to acquire a new subscriber to that of other wireless communications providers, although other wireless communications providers may include or exclude certain items from their calculations which may make the comparison less meaningful. The inclusion of merchandise cost of sales net of the equipment revenues from sales to new customers is critical to the understanding of how much it costs the Company to acquire a new subscriber. |
3 | CCPU is cash cost per handset/unit and represents the average cost to provide wireless service and support per subscriber. CCPU is a non-GAAP financial measure that is computed by adding the income statement components of cost of sales, maintenance and support, corporate operations and customer operations for wireless operations, less wireless equipment revenue and costs incurred to acquire new subscribers. The net result is then divided by average subscribers for the period. In addition to the Company’s subscriber costs, CCPU includes the costs of other carriers’ subscribers roaming on the NTELOS network. Non-cash expenses such as depreciation, amortization and non-cash compensation are excluded. NTELOS believes CCPU is a useful measure to compare the Company’s average costs to that of other wireless providers, although other providers may include or exclude certain items from their calculations which may make the comparison less meaningful. The Company believes CCPU is useful to evaluate NTELOS’ effectiveness in managing cash costs associated with providing services to customers. CCPU should be considered in addition to, but not as a substitute for, information contained in the Company’s statement of operations. |
NTELOS Holdings Corp.
| | | | | | | | | | |
Business Outlook for the Year 20071 | | Twelve Months 2007 | |
(Dollars in millions) | | | | | | | | | | |
| | | |
Operating Revenues—Guidance | | | | | | | | | | |
| | | |
Wireless | | $ | 355.0 | | | to | | $ | 361.0 | |
| | | |
Wireline | | | 116.0 | | | to | | | 119.0 | |
| | | |
Other | | | 1.0 | | | | | | 1.0 | |
| | | | | | | | | | |
| | $ | 472.0 | | | to | | $ | 481.0 | |
| | | | | | | | | | |
| | | |
Reconciliation of Net Loss to Adjusted EBITDA—Guidance | | | | | | | | | | |
| | | |
Net Income | | $ | 27.0 | | | to | | $ | 32.0 | |
| | | |
Interest expense, inclusive of change in value of interest rate swap3 | | | 47.5 | | | to | | | 46.5 | |
| | | |
Interest expense | | | 44.4 | | | to | | | 42.7 | |
| | | |
Interest rate swap change in value | | | 3.1 | | | to | | | 3.8 | |
| | | |
Income tax expense (benefit)2 | | | 19.6 | | | to | | | 22.8 | |
| | | |
Other expense (income) | | | (1.9 | ) | | to | | | (2.1 | ) |
| | | | | | | | | | |
Operating Income | | | 92.2 | | | to | | | 99.2 | |
| | | | | | | | | | |
Depreciation and amortization | | | 88.5 | | | to | | | 86.5 | |
| | | |
Accretion of asset retirement obligation | | | 1.0 | | | | | | 1.0 | |
| | | |
Non-cash compensation charges | | | 4.3 | | | to | | | 4.3 | |
| | | | | | | | | | |
Adjusted EBITDA | | $ | 186.0 | | | to | | $ | 191.0 | |
| | | | | | | | | | |
| | | |
Wireless | | $ | 128.5 | | | to | | $ | 131.0 | |
| | | |
Wireline | | | 62.5 | | | to | | | 64.0 | |
| | | |
Other | | | (5.0 | ) | | to | | | (4.0 | ) |
| | | | | | | | | | |
Adjusted EBITDA | | $ | 186.0 | | | to | | $ | 191.0 | |
| | | | | | | | | | |
1 | These estimates are based on management’s current expectations. These estimates are forward-looking and actual results may differ materially. Please see “Special Note Regarding from the Company Forward-Looking Statements”. |
2 | Current cash income tax is expected to be between $4 million and $8 million, reflecting the benefit of available tax NOLs and excess tax depreciation and amortization from capital expenditures in recent years and planned levels for 2007. |
3 | At December 31, 2006, the deferred asset for interest rate swap amounted to $3.9 million. This interest rate swap is scheduled to mature in February 2008. |
