SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2001 Commission File No. 0-16751
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NTELOS Inc.
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(Exact name of registrant as specified in its charter)
VIRGINIA 54-1443350
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(State or other jurisdiction of (I R S employer
incorporation or organization) identification no.)
P. O. Box 1990, Waynesboro, Virginia 22980
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 540-946-3500
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None
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class COMMON STOCK, NO PAR VALUE Outstanding 5/15/01 16,858,274
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NTELOS Inc.
I N D E X
Page
Number
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PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets, March 31, 2001 and
December 31, 2000 3-4
Condensed Consolidated Statements of Operations, Three Months
Ended March 31, 2001 and 2000 5
Condensed Consolidated Statements of Cash Flows, Three Months
Ended March 31, 2001 and 2000 6
Condensed Consolidated Statements of Shareholders' Equity, Three
Months Ended March 31, 2001 and 2000 7
Notes to Condensed Consolidated Financial Statements 8-11
Management's Discussion and Analysis of Financial Condition
and Results of Operations 12-19
PART II. OTHER INFORMATION 20-21
SIGNATURES 22-23
2
NTELOS Inc.
Condensed Consolidated Balance Sheets
March 31,
2001 December 31,
(In thousands) (Unaudited) 2000
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ASSETS
Current Assets
Cash and cash equivalents $ 4,546 $ 1,637
Restricted cash 5,763 20,121
Accounts receivable, net of allowance of $8,714 ($5,100 in 2000) 37,757 24,268
Inventories and supplies 4,041 7,896
Other receivables and deposits - 11,500
Prepaid expenses and other 3,773 3,178
Income tax receivable - 2,930
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55,880 71,530
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Investments and Advances
Advance to affiliates 172 66,210
Securities and investments 33,443 17,405
Restricted cash 47,001 50,903
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80,616 134,518
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Property and Equipment
Land and building 42,090 26,988
Network plant and equipment 362,281 285,489
Furniture, fixtures, and other equipment 44,041 39,539
Radio spectrum licenses 446,401 428,317
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Total in service 894,813 780,333
Under construction 63,673 47,072
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958,486 827,405
Less accumulated depreciation 95,360 81,612
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863,126 745,793
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Other Assets
Cost in excess of net assets of business acquired, less accumulated
amortization of $5,441 ($4,253 in 2000) 99,004 45,861
Other intangibles, less accumulated amortization of $5,388 ($3,554 in 2000) 43,950 44,043
Deferred charges 22,025 26,586
Radio spectrum licenses not in service 9,895 7,874
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174,874 124,364
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$ 1,174,496 $ 1,076,205
==============================================================================================================================
See Notes to Condensed Consolidated Financial Statements
3
NTELOS Inc.
Condensed Consolidated Balance Sheets
March 31, 2001 December 31,
(In thousands) (Unaudited) 2000
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 45,521 $ 33,119
Advance billings and customer deposits 9,192 6,697
Accrued payroll 1,739 2,420
Accrued interest 5,992 20,894
Deferred revenue 5,539 4,843
Other accrued liabilities 6,897 7,362
Accrued income taxes payable 229 -
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75,109 75,335
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Long-term Debt 582,894 556,287
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Long-term Liabilities
Deferred income taxes 19,997 36,380
Retirement benefits 15,006 12,017
Other 40,108 13,750
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75,111 62,147
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Minority Interests 300 1,258
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Redeemable, Convertible Preferred Stock 251,593 246,906
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Commitments
Shareholders' Equity
Preferred stock - -
Common stock 129,268 45,272
Stock warrants 22,874 22,874
Retained earnings 36,722 57,668
Unrealized gain on securities available for sale, net 625 8,458
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189,489 134,272
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$ 1,174,496 $ 1,076,205
======================================================================================================================
See Notes to Condensed Consolidated Financial Statements.
4
NTELOS Inc.
Condensed Consolidated Statements Of Operations
(Unaudited)
Three Months Ended
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March 31, March 31,
(In thousands except per share amounts) 2001 2000
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Operating Revenues
Wireless communications $ 25,265 $ 1,783
Wireline communications 19,915 13,476
Other communications services 2,384 5,351
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47,564 20,610
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Operating Expenses
Cost of sales 10,184 2,367
Maintenance and support 13,828 5,506
Depreciation and amortization 16,199 3,343
Customer operations 14,791 3,597
Corporate operations 4,877 2,101
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59,879 16,914
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Operating Income (Loss) (12,315) 3,696
Other Income (Expenses)
Equity loss from PCS investees
VA PCS Alliances - (1,523)
WV PCS Alliances (1,286) (2,144)
Interest expense (18,197) (460)
Other income, principally interest 3,028 41
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(28,770) (390)
Income Tax Benefits (10,764) (172)
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(18,006) (218)
Minority Interests 1,747 (73)
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Loss from continuing operations (16,259) (291)
Income from discontinued operations, net of tax - 339
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Net Income (Loss) (16,259) 48
Dividend requirements on preferred stock 4,687 -
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Income (Loss) applicable to common shares $ (20,946) $ 48
=======================================================================================================================
Loss from continuing operations per common share - basic and diluted $ (1.39) $ (0.02)
Income from discontinued operations per common share - basic and diluted - 0.02
Net income (loss) per common share - basic and diluted $ (1.39) $ -
Average shares outstanding - basic 15,075 13,066
Average shares outstanding - diluted 15,426 13,296
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Cash dividends per common share $ - $ 0.11475
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See Notes to Condensed Consolidated Financial Statements.
5
NTELOS Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three Months Ended
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(In thousands) March 31, 2001 March 31, 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (16,259) $ 48
Deduct income from discontinued operations - (339)
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Loss from continuing operations (16,259) (291)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 13,791 2,882
Amortization 2,408 461
Deferred taxes (10,571) (2,397)
Other 1,602 (935)
Accrued interest on long-term debt 5,220 43
Accrued interest income on restricted cash (1,861) -
Equity loss from PCS Alliances 1,271 3,668
Accretion of loan discount and origination fees 582 -
Changes in assets and liabilities from operations, net of effects of
acquisitions and dispositions:
(Increase) decrease in accounts receivable (4,039) 209
(Increase) decrease in materials and supplies 4,559 (4)
Increase in other current assets (163) (253)
Changes in income taxes 2,548 3,308
Decrease in accounts payable (676) (1,293)
Increase (decrease) in other accrued liabilities (1,460) 56
Increase in other current liabilities 791 203
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Net cash provided by (used in) continuing operations (2,257) 5,657
Net cash provided by discontinued operations - 796
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Net cash provided by (used in) operating activities (2,257) 6,453
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (25,505) (8,429)
Proceeds from sale of discontinued operation 3,500 -
Investments in PCS Alliances (634) (3,892)
Cash on hand in merged entity 4,096 -
Advances to PCS Alliances (2,960) (2,016)
Deposit refunds (deposit) on assets 8,000 (100)
Proceeds from sale of tower and investments 1,050 3,200
Other (814) (661)
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Net cash used in investing activities (13,267) (11,898)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 20,000 -
Cash dividends - (1,501)
Payments on senior notes - (12,727)
Additional borrowing (payments) under lines of credit and other debt (1,652) 19,404
instruments, net
Net proceeds from issuance of stock 145 382
Other (60) -
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Net cash provided by financing activities 18,433 5,558
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Increase in cash and cash equivalents 2,909 113
Cash and cash equivalents:
Beginning 1,637 198
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Ending $ 4,546 $ 311
=================================================================================================================================
See Notes to Condensed Consolidated Financial Statements.
6
NTELOS Inc.
Consolidated Statements of Shareholders' Equity
Accumulated
Other Total
Common Stock Retained Comprehensive Shareholders'
(In thousands) Shares Amount Warrants Earnings Income Equity
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Balance, December 31, 1999 13,060 $ 43,943 $ - $ 50,385 $ 21,856 $ 116,184
Comprehensive income:
Net Income 48
Unrealized loss on securities (2,409)
available for sale, net of
$1,533 of deferred tax benefit
Comprehensive income (2,361)
Dividends on common shares (1,501) (1,501)
Stock options exercised, net 34 382 382
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Balance, March 31, 2000 13,094 $ 44,325 $ - $ 48,932 $ 19,447 $ 112,704
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Balance, December 31, 2000 13,132 $ 45,272 $22,874 $ 57,668 $ 8,458 $ 134,272
Comprehensive income:
Net loss (16,259)
Cash flow hedge:
Cumulative effect of the (3,900)
adoption of SFAS No. 133, net
of $2,489 of deferred tax benefit
Derivative losses, net of $1,523 (2,402)
of deferred tax benefit
Unrealized loss on securities (1,531)
available for sale, net of $979
of deferred tax benefit
Comprehensive loss (24,092)
Common stock issuance pursuant to 3,716 83,851 83,851
R&B Merger
Dividends on preferred shares (4,687) (4,687)
Shares issued through Employee
Stock Purchase Plan 7 145 145
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Balance, March 31, 2001 16,855 $129,268 $22,874 $ 36,722 $ 625 $ 189,489
=============================================================================================================================
See Notes to Consolidated Financial Statements.
NTELOS Inc.
Notes to Condensed Consolidated Financial Statements
1. SIGNIFICANT ACCOUNTING POLICIES
In the opinion of NTELOS, Inc. ("NTELOS" or the "Company"), the
accompanying condensed consolidated financial statements which are
unaudited, except for the condensed consolidated balance sheet dated
December 31, 2000, which is derived from audited financial statements,
contain all adjustments (consisting of only normal recurring accruals)
necessary to present fairly the financial position as of March 31, 2001
and December 31, 2000, the results of operations for the three months
ended March 31, 2001 and 2000 and cash flows for the three months ended
March 31, 2001 and 2000. The results of operations for the three months
ended March 31, 2001 and 2000 are not necessarily indicative of the
results to be expected for the full year.
The Company adopted Statement of Financial Accounting Standard ("SFAS")
No. 133, as amended by SFAS No. 138, "Accounting for Derivative
Instruments and Hedging Activities". On January 1, 2001, the Company
reported the cumulative effect of adoption of $3.9 million reduction in
other comprehensive income, net of $2.5 million deferred tax benefit.
For the three month period ended March 31, 2001, the Company reported
derivative losses of $2.4 million, net of $1.5 million deferred tax
benefit. The related $10.3 million liability is classified in other
long-term liabilities.
Certain amounts on the prior year financial statements have been
reclassified, with no effect on net income, to conform with
classifications adopted in 2001. In periods prior to the second quarter
of 2000, the Company reported wireless revenues net of cost of sales,
primarily handsets. On June 1, 2000, the Company retroactively revised
its reporting to no longer net the cost of sales for handsets and to
present these amounts as a separate component of operating expenses.
Operating revenues for wireless communications were increased by an
identical amount. This revision was made because, in the opinion of
management, it more appropriately reflects the revenues and costs of its
wireless operations in accordance with industry practice.
2. DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
The Company manages its business segments with separable management
focus and infrastructures. As a result of the transactions described in
the notes 3, 4, and 5 and a change in the focus of the businesses that
comprised the wireless and wireline segments, voicemail and paging
operations, previously included in the wireless segment, and all cable
operations are now included in the "Other" column. Additionally, the
analog cellular operations, disposed of in July 2000 (Note 4), is
separated from all digital operations. The wireless personal
communications services ("PCS") segment now includes PCS operations,
consisting of the Virginia RSA6 Cellular Limited Partnership ("RSA6")
digital operation, the Richmond-Norfolk PCS market ("VA East"), the
Virginia PCS Alliance, L.C. ("VA Alliance"), and the West Virginia PCS
Alliance, L.C. ("WV Alliance"). Additionally, the Company previously had
a directory assistance segment, also disposed of in July 2000 (Note 5),
which is accounted for as a discontinued operation in 2000. The prior
year income statement information noted in the table below excludes the
directory assistance segment and assets of this segment are reflected in
the "Other" category in the prior year.
Summarized financial information concerning the Company's reportable
segments is shown in the following table. These segments are described
in more detail in Note 2 of the Company's 2000 Annual Report to
Shareholders.
8
NTELOS Inc.
Notes to Condensed Consolidated Financial Statements
Continued
Telephone Network CLEC Internet Wireless PCS Analog Other Total
(in thousands) Cellular
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As of and for the three months ended March 31, 2001
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Revenues $ 9,712 $ 1,776 $ 4,293 $ 4,134 $ 25,265 $ - $ 2,384 $ 47,564
EBITDA* 6,449 1,367 812 85 (5,743) - 914 3,884
Depreciation
&Amortization 1,367 300 502 987 12,068 - 975 16,199
Total Segment Assets 74,320 25,292 31,175 19,316 787,646 - 35,658 973,407
Corporate assets 201,089
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Total Assets $ 1,174,496
As of and for the three months ended March 31, 2000
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Revenues $ 7,969 $ 869 $ 1,614 $ 3,023 $ 1,783 $ 2,677 $ 2,675 $ 20,610
EBITDA* 5,493 574 (212) (329) (657) 1,336 834 7,039
Depreciation
&Amortization 1,026 217 229 728 - 204 939 3,343
Total Segment Assets 46,276 21,224 6,730 17,822 - 5,571 49,198 146,821
Corporate assets 73,788
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Total Assets $ 220,609
* Operating Income before depreciation and amortization.
3. INVESTMENTS IN WIRELESS AFFILIATES
As of March 31, 2001, the Company had a 91% common ownership interest in
the VA Alliance, a PCS provider serving a 1.7 million populated area in
central and western Virginia. On July 25, 2000, the Company converted
its preferred interest to common interest and exercised its right to
fund the redemption of the VA Alliance's Series A preferred membership
interest. Pursuant to these events, the Company increased its common
interest from 21% to 65% and commenced consolidating the VA Alliance as
of July 26, 2000. The Company's ownership interest increased again on
February 13, 2001 from 65% to 91% as a result of the merger with R&B
Communications, Inc. ("R&B") (Note 4).
As of March 31, 2001, the Company had a 79% common ownership interest in
the WV Alliance, a PCS provider serving a 2.0 million populated area in
West Virginia and parts of eastern Kentucky, southwestern Virginia and
eastern Ohio. Prior to the R&B merger, the Company held a 45% ownership
interest and accounted for this investment under the equity method of
accounting. The Company's ownership interest increased from 45% to 79%
as a result of the R&B merger and the Company commenced consolidating
the WV Alliance as of the February 13, 2001 merger date (Note 4).
At December 31, 2000, $66.2 million had been advanced to the WV Alliance
which has been reflected as advances to affiliates in the Company's
consolidated balance sheet. At March 31, 2001, this is reflected as an
inter-company obligation which is eliminated from the Company's balance
sheet pursuant to the consolidation.
4. MERGER AND ACQUISITIONS
R&B Communications Merger
-------------------------
Effective February 13, 2001, the Company closed on its merger with R&B.
Under the terms of the merger, the Company issued approximately 3.7
million shares of its common stock in exchange for 100% of R&B's
outstanding common stock. The merger is being accounted for using the
purchase method of accounting and was valued at $83.9 million. The
purchase price in excess of the net assets acquired is approximately
$52.0 million and has been classified as goodwill and is included in
corporate assets in the segment table in Note 2, pending the completion
of asset valuations and other purchase accounting issues and
adjustments,.
9
NTELOS Inc.
Notes to Condensed Consolidated Financial Statements
Continued
As of February 13, 2001, the Company assumed debt of $7.3 million from
R&B payable in the year 2001 through 2026.
R&B is an Integrated Communications Provider ("ICP") providing local and
long distance telephone service, and dial-up and high-speed Internet
service to business and residential customers in Roanoke, Virginia and
the surrounding area, as well as in the New River Valley of Virginia.
PrimeCo VA Acquisition
----------------------
On July 26, 2000, the Company closed on the acquisition of the PCS
licenses, assets and operations of PrimeCo Personal Communications,
L.P., which is located in the Richmond and Hampton Roads areas of
Virginia ("PrimeCo VA"). The Company acquired PrimeCo VA for cash of
$408.6 million, the assumption of approximately $20.0 million of lease
obligations and the transfer of a limited partnership interest and the
assets, licenses and operations of our analog wireless operation, with a
combined value of approximately $78.5 million. This acquisition was
accounted for under the purchase method of accounting. The Company's
results of operations include PrimeCo VA operating results commencing on
July 26, 2000.
5. DISPOSITIONS
Effective July 11, 2000, pursuant to a stock purchase agreement dated
May 17, 2000 with telegate AG, a Federal Republic of Germany
corporation, the Company sold the capital stock of CFW Information
Services, Inc., through which directory assistance operations are
conducted. In exchange, the Company received $32.0 million at closing
and $3.5 million in January 2001 and recognized a $26.2 million pre-tax
gain ($16.0 million after tax). As such, the directory assistance
operation is treated as a discontinued operation in the 2000 financial
statements.
Revenue, operating income and income taxes from the discontinued
operation were $3.3 million, $.6 million and $.2 million, respectively,
for the three months ended March 31, 2000.
6. SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
The Company made its first scheduled semi-annual payment of interest for
$20 million on the $280 million senior notes out of restricted cash in
accordance with the terms and conditions set forth in the senior note
agreement. Additionally, see Note 4 above for the non-cash merger
transaction with R&B.
7. INCOME TAXES
The effective tax rate in the first quarter of 2001 was 39.8% as
compared to an effective income tax rate at December 31, 2000 of 25.6%.
Non deductible amortization totaled $.3 million in 2000 and the Company
estimates the non-deductible amortization in 2001 will be $3.3 million.
Additionally, the Company's net operating loss carryforward was
approximately $22 million at December 31, 2000 and, at March 31, 2001,
is estimated to be approximately $50 million by the 2001 year end. The
Company has not recognized a valuation allowance based on available tax
planning strategies which would result in the Company recognizing the
tax benefit over the remaining statutory carryforward period.
8. EARNINGS PER SHARE
The weighted average number of common shares outstanding, which was used
to compute diluted net income per share in accordance with FASB
Statement No. 128, Earnings Per Share, was increased by 229,000 shares
for the three months ended March 31, 2000, to reflect the assumed
conversion of dilutive stock options. For the three months ended March
31, 2001, the Company had common stock equivalents from options totaling
51,000 shares and 300,000 stock warrants which would be dilutive.
However, due to the fact that the Company has a loss from continuing
operations and a loss applicable to common shares, these common stock
equivalents are antidilutive as additional shares would decrease the
computed loss per share information and therefore, basic and diluted
earnings per share are the same. The Company currently has a total of
1.1 million options outstanding and 1.3 million warrants outstanding to
acquire shares of common stock. Of these, 373,600 options and no
warrants are currently exercisable.
10
NTELOS Inc.
Notes to Condensed Consolidated Financial Statements
Continued
9. PRO FORMA RESULTS
The pro forma unaudited results of operations for the three months ended
March 31, 2001 and 2000, assuming consummation of the transactions more
fully described in the Notes above and in the Notes to the Consolidated
Financial Statements in the Company's 2000 Annual Report as of January
1, 2000 are as follows:
Three Months Ended March 31,
(In thousands, except per share data) 2001 2000
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Operating revenues $ 52,731 $ 41,682
Operating expenses, before depreciation and amortization 48,950 42,414
EBITDA 3,781 (732)
Operating income 13,333 17,015
Net loss (16,639) (24,320)
Dividend requirements on preferred stock 4,849 4,563
Loss applicable to common shares (21,488) (28,883)
Net loss per common share:
Basic and diluted $ (1.29) $ (1.72)
11
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Overview
We are a leading regional integrated communications provider offering a
broad range of wireless and wireline products and services to business and
residential customers in Virginia, West Virginia, Kentucky, Tennessee and North
Carolina. We own our own digital PCS licenses, fiber optic network, switches and
routers, which enables us to offer our customers end-to-end connectivity in the
regions that we serve. This facilities-based approach allows us to control
product quality and generate operating efficiencies. As of March 31, 2001, we
had approximately 186,100 digital PCS subscribers and approximately 75,600
combined incumbent local exchange carrier ("ILEC") and competitive local
exchange carrier ("CLEC") access lines installed. R&B Communications, Inc.
("R&B"), who we merged with on February 13, 2001, accounted for 18,600 of the
combined ILEC and CLEC lines.
Historically, we have derived much of our revenues from our ILEC services. As a
result of our increasing focus on and growth in digital PCS, Internet access and
CLEC services, a significant portion of our operating revenues and EBITDA
(earnings before interest, taxes, depreciation and amortization) will be
generated by businesses other than our ILEC. These newer businesses have
generated lower operating margins due to start-up costs associated with
expansion into new markets and introduction of new service offerings throughout
the regions we serve. As we expand our markets through start-up activities,
acquisitions of new businesses, and the introduction of new products, we expect
these lower operating margins to continue.
We have recently significantly expanded the scope of the geographic markets that
we serve and have focused our growth efforts on our core communications
services, primarily digital PCS services, Internet access, including dedicated,
high-speed DSL and dial-up services, high-speed data transmission and local
telephone services. Over the last twelve months, we completed the following:
o acquisition of the wireless licenses, assets and operations of PrimeCo
Personal Communications, L.P. ("PrimeCo") in the Richmond and Hampton
Roads, Virginia markets ("PrimeCo VA" and also referred to within our
operations as "VA East");
o issuance and sale of $375 million of senior and subordinated notes;
o closing of $325 million senior credit facility, with $150 million borrowed
on the date of the PrimeCo VA closing, $175 million outstanding at year-end
and $195 million outstanding at March 31, 2001;;
o payment of existing senior indebtedness and refinancing of the VA Alliance
and the WV Alliance debt obligations;
o issuance and sale of $250 million of redeemable, convertible preferred
stock;
o acquisition of certain PCS licenses currently owned by AT&T that added a
population of 2.5 million in certain markets in Pennsylvania, in exchange
for WCS licenses that we own but which were not in service (final closing
was in April 2001);
o redemption of the series A preferred membership interest in the VA Alliance
and conversion of the series B preferred membership interest into common
interest;
o dispositions of RSA5 and the analog assets and operations of RSA6 in
connection with the PrimeCo VA acquisition;
o disposition of our directory assistance operations; and,
o closing of the merger agreement with R&B, an integrated communications
provider in a geographic market contiguous to ours and commensurate
therewith, consolidated the WV Alliance (Note 4).
Collectively these events are referred to as the "Transactions" elsewhere in
this document.
We have accounted for the directory assistance operation disposed of in July
2000 as a discontinued operation. Therefore, the directory assistance operating
results for 2000 are separated in the financial statements from the results of
continuing operations.
As a result of the Transactions, results from the period after July 2000 differ
significantly from those prior to July 2000. Additionally, the first quarter of
2001 differed significantly from any prior quarter due to the inclusion of R&B
and the WV Alliance in the consolidated results from February 14, 2001 to the
end of the quarter. We reported significant losses from operations beginning in
the third quarter of 2000 due to the addition of the VA East operations,
consolidation of the VA Alliance results, significant goodwill, licenses and
other intangible amortization and the significant increases in interest related
costs.
12
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
The discussion and analysis herein should be read in conjunction with the
financial statements and the notes thereto included herein. Much of the
discussion in this section involves forward-looking statements. Our actual
results may differ significantly from the results suggested by these
forward-looking statements. We wish to caution readers that these
forward-looking statements and any other forward-looking statements that we make
are based on a number of assumptions, estimates and projections including but
not limited to, changes in industry conditions created by federal and state
legislation and regulations; successful integration of acquisitions; the
achievement of build-out, operational, capital, financing and marketing plans
relating to deployment of PCS services; retention of our existing customer base
and service levels and our ability to attract new customers; continuation of
economic growth and demand for wireless and wireline communications services;
rapid changes in technology; the competitive nature of the wireless telephone
and other communications services industries; the effects of inflation and price
changes not being greater than anticipated; adverse changes in the roaming rates
we charge and pay; the capital intensity of the wireless telephone business and
our debt structure; our substantial debt obligations and our ability to service
those obligations; the cash flow and financial performance of our subsidiaries;
restrictive covenants and consequences of default contained in our financing
arrangements; our opportunities for growth through acquisitions and investments
and our ability to manage this growth and successfully integrate the businesses;
the level of demand for competitive local exchange services in smaller markets;
our ability to manage and monitor billing; and possible health effects of radio
frequency transmission. Investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve risks and
uncertainties, and that any significant deviations from these assumptions could
cause actual results to differ materially from those in the above and other
forward-looking statements. Forward-looking statements included herein are as of
the date hereof and we undertake no obligation to revise or update such
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Revenues
Our revenues are generated from the following categories:
o wireless communications, consisting of retail, service and
wholesale digital PCS revenues;
o wireline communications, including telephone revenues, fiber
optic network usage (or carrier's carrier services), Internet,
CLEC, long distance revenues; and,
o other communications services revenues, including revenues from
paging, voicemail, wireless and wireline cable television, our
sale and lease of communications equipment and security alarm
monitoring and rental of property and equipment, primarily to
tenants of certain company owned facilities. Through the
disposition date of July 26, 2000, analog cellular revenues are
included in this category.
Operating Expenses
Our operating expenses are generally incurred from the following
categories:
o cost of sales, including digital PCS handset equipment costs,
usage-based access charges, including long distance, roaming
charges, and other direct costs. We sell handsets to our
customers at a price below our cost. Previously, we have netted
these discounts and costs against our revenues. We have
reclassified prior periods to conform to our new policy of
separately reporting cost of sales;
o maintenance and support expenses, including costs related to
specific property and equipment, as well as indirect costs such
as engineering and general administration of property and
equipment;
o depreciation and amortization, including amortization of goodwill
and other intangibles from acquisitions, merger and capital
outlays to support continued business expansion;
o customer operations expenses, including marketing, product
management, product advertising, sales, publication of a regional
telephone directory, customer services and directory services;
and,
o corporate operations expenses, including taxes other than income,
executive, accounting, legal, purchasing, information technology,
human resources and other general and administrative expenses.
13
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
Other Income (Expenses)
Our other income (expenses) are generated (incurred) from interest
income and expense, equity income or loss from RSA5 (through July 25, 2000),
equity income or loss from the VA Alliance (through July 25, 2000) and WV
Alliance (through February 13, 2001), gain on sale of investments and assets and
loss on write-down of investments.
Income Taxes
Our income tax liability and effective tax rate increases or decreases
based upon changes in a number of factors, including our pre-tax income or loss,
losses sustained by the Alliances, net operating losses and related
carryforwards, alternative minimum tax credit carryforwards, state minimum tax
assessments, gain or loss on the sale of assets and investments, write-down of
assets and investments, non-deductible amortization, and charitable
contributions and other tax deductible amounts.
Results of Operations
Three Months Ended March 31, 2001
Compared to Three Months Ended March 31, 2000
OVERVIEW
EBITDA decreased $3.2 million, or 45%, from $7.0 million for the three months
ended March 31, 2000 to $3.8 million for the three months ended March 31, 2001.
Operating income (loss) decreased $16.0 million from income of $3.7 million to a
$12.3 million loss for the three months ended March 31, 2000 and 2001,
respectively. Pro forma EBITDA (Note 7) improved $4.5 million, from a loss of
$.7 million to earnings of $3.8 million for the three months ended March 31,
2000 and 2001, respectively. Pro forma operating loss improved $3.7 million,
from a loss of $17.0 million to a loss of $13.3 million for the three months
ended March 31, 2000 and 2001, respectively.
The combination of digital PCS customers from acquisitions and internal growth
as well as growth in ILEC, CLEC and Internet customers contributed to a year
over year increase in revenue of $27.0 million ($11.0 million on a pro forma
basis). Negative operating margins from early to mid-stage PCS operations and
the associated costs of adding new PCS customers (referred to as subscriber
acquisition costs), primarily handset subsidies and commissions, drove the
decline in overall operating margins. In addition, costs relating to internal
growth and increased depreciation and amortization from acquisition and merger
activity and the consolidation of VA Alliance and WV Alliance further lowered
operating income in 2001 over the prior year comparable period.
Net loss applicable to common shares for the three months ended March 31, 2001
was $20.9 million, which included $18.2 million in interest expense, as well as
equity losses from the WV Alliance for the period prior to the consolidation of
$1.3 million.
Net income for the three months ended March 31, 2000 was $.1 million, which
included equity losses from the Alliances of $3.7 million.
OPERATING REVENUES
Operating revenues increased $27.0 million, or 131%, from $20.6 million for the
three months ended March 31, 2000 to $47.6 million for the three months ended
March 31, 2001.
WIRELESS COMMUNICATIONS REVENUES--Wireless communications revenues increased
$23.5 million from $1.8 million to $25.3 million for the three months ended
March 31, 2000 and 2001, respectively. This increase is primarily due to the
acquisition of PrimeCo VA and the consolidation of the VA Alliance (Note 4),
which occurred on July 26, 2000, and the consolidation of the WV Alliance (Note
4) on February 13, 2001. The acquisition of PrimeCo VA (now referred to as the
VA East market) and the consolidation of the VA Alliance accounted for $21.3
million, or 91% of the total increase. The consolidation of the WV PCS Alliance
in February 2001 also added $2.6 million to the year over year revenues. Revenue
from our core market, which is included in both the 2000 and 2001 results,
decreased $.4 million. Pro forma revenues increased $6.5 million from $21.2
million to $27.7 million for the three months ended March 31, 2000 and 2001,
respectively. The western Virginia and West Virginia markets increased $6.9
million, offset by a $.4 million (3%) decline in the Virginia East market.
14
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
Including PrimeCo VA, VA Alliance and WV Alliance, we increased PCS subscribers
by 130,900, from 55,200 as of March 31, 2000 to 186,100 as of March 31, 2001.
The revenue increase from additional subscribers and wholesale revenue of $1.8
million and $2.6 million, respectively, on a pro forma basis was partially
offset by a decrease in average revenue per unit ("ARPU") as ARPU declined by
11% to $40.49 by the end of the three months ended March 31, 2001. This
primarily resulted from competition and changes in the mix of prepay and postpay
customers and promotional introductory rates offered in the initial months of
certain postpay rate plans.
WIRELINE COMMUNICATIONS REVENUES--Wireline communications revenues increased
$6.4 million, or 48%, from $13.5 million to $19.9 million for the three months
ended March 31, 2000 and 2001, respectively. Wireline revenues increased $4.8
million, or 28%, from $17.6 million to $22.4 million on a pro forma basis, for
the three months ended March 31, 2000 and 2001, respectively.
o Telephone Revenues. Telephone revenues, which include local service, access
and toll service, directory advertising and calling feature revenues from our
ILEC business increased $1.7 million, or 22%, from $8.0 million for the three
months ended March 31, 2000 to $9.7 million for the three months ended March 31,
2001. The consolidation of R&B Telephone in the first quarter of 2001 accounted
for $1.4 million of the increase over the first quarter of 2000. The remainder
of the increase is attributable to access line growth of 5% and an increase in
carrier access minutes of 21% in the first quarter of 2001 over the first
quarter of 2000. These increases were partially offset by slight decreases in
toll and access rates, a shift in the composition of the classification of
access minutes and decreases in other telephone revenues.
o Fiber Optic Network Usage Revenues. Revenues from fiber optic network usage
operations increased $.9 million, or 104%, from $.9 million for the three months
ended March 31, 2000 to $1.8 million for the three months ended March 31, 2001.
Of this increase, $.7 million is attributable to the consolidation of R&B
Network in February 2001.
o CLEC Revenues. CLEC revenues increased $2.7 million, from $1.6 million for the
three months ended March 31, 2000 to $4.3 million for the three months ended
March 31, 2001. Of this increase, $.5 million is attributable to the
consolidation of R&B CLEC in February 2001 and $.5 million is due to increased
revenues from NA Communications, which was reclassified in both periods from the
Internet segment to provide uniform reporting within the organization. Excluding
the increase attributable to R&B, the increase is due to an increase of 7,900
CLEC access lines, or 88.5%, in the first quarter of 2001 over the first quarter
of 2000 and a $.7 million increase in reciprocal compensation which increased
from $.5 million to $1.2 million for the first quarter of 2000 and 2001,
respectively.
o Internet Revenues. Revenues from Internet services increased $1.1 million, or
36.7%, from $3.0 million to $4.1 million for the three months ended March 31,
2000 and 2001, respectively. The consolidation of R&B Internet in February 2001
accounted for $.1 million of the total increase. Internet subscribers increased
8,000 or 15%, in first quarter 2001 over first quarter 2000, with DSL customer
additions accounting for 1,100 of this total, from 800 customers at March 31,
2000 to 1,900 customers at March 31, 2001.
OTHER COMMUNICATIONS SERVICES REVENUES--Other communications services revenues,
including other R&B, decreased $3.0 million, or 55%, from $5.4 million to $2.4
million for the three month periods ended March 31, 2000 and 2001, respectively.
o Other Wireless Revenues. Other wireless revenues consist of revenues from
analog cellular, paging and voicemail. These revenues decreased $2.9 million, or
83%, from $3.5 million for the three months ended March 31, 2000 to $.6 million
for the three months ended March 31, 2001. This decrease reflects the absence of
analog cellular revenue in the first quarter of 2001, as the business was sold
in July 2000 in connection with the acquisition of VA East. In the first quarter
of 2000, analog cellular revenue was $2.7 million. Voicemail and paging revenue
decreased $.2 million, or 23%, from $.8 million for the three months ended March
31, 2000 to $.6 million for the three months ended March 31, 2001.
o Cable and other Revenues. Wireless cable revenues decreased $.1 million, or
16%, from $.6 million for the three months ended March 31, 2000 to $.5 million
for the three months ended March 31, 2001. Wireline cable revenues remained
relatively constant in the first quarter of 2001 as compared to the first
quarter of 2000. Revenues from all other sources remained constant at $.9
million for the comparative periods.
OPERATING EXPENSES
TOTAL OPERATING EXPENSES--Total operating expenses increased $43.0 million, from
$16.9 million to $59.9 million for the three months ended March 31, 2000 and
2001, respectively. The consolidation of the VA Alliance and the acquisition of
VA East in July 2000, and the consolidation of the WV Alliance and R&B merger in
February 2001 accounted for $41.7 million, or 97%, of the total increase. The
15
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
exclusion of analog cellular in 2001 due to its disposition in July 2000 offset
the overall increase by $1.5 million. Operating expenses, excluding depreciation
and amortization, increased $30.1 million, from $13.6 million for the three
months ended March 31, 2000 to $43.7 million for the three months ended March
31, 2001. Wireline operating expenses, excluding depreciation and amortization,
increased $3.2 million from $8.0 million to $11.2 million for the three months
ended March 31, 2000 and 2001, respectively. Wireless operating expenses,
excluding depreciation and amortization, increased $28.6 million from $2.4
million for the three months ended March 31, 2000 to $31.0 million for the three
months ended March 31, 2001. Within the wireline business, $1.4 million of the
increase is from the inclusion of R&B, $1.1 million is from the CLEC segment
(excluding R&B CLEC) and the remainder came primarily from the Internet segment.
Other than the increase from the VA Alliance and WV Alliance consolidations and
the acquisition of VA East, other changes within the wireless businesses netted
to a decrease of $.2 million. Operating expenses, excluding depreciation and
amortization, from the other communication service businesses decreased $1.7
million due primarily to the disposition of the analog cellular business in July
2000.
On a proforma basis, operating expenses, excluding depreciation and
amortization, increased $6.4 million, or 15%, in the three months ended March
31, 2001 as compared to the three months ended March 31, 2000 and increased $2.3
million, or 5%, as compared to the fourth quarter of 2000. During these same
comparative periods, revenues increased by 26% and 14%, respectively.
COST OF SALES--Cost of sales increased $7.8 million, from $2.4 million for the
three months ended March 31, 2000 to $10.2 million for the three months ended
March 31, 2001. Cost of sales as a percent of wireless sales remained constant
at just over 40% for both periods.
MAINTENANCE AND SUPPORT EXPENSES--Maintenance and support expenses increased
$8.3 million, or 151%, from $5.5 million to $13.8 million for the three months
ended March 31, 2000 and 2001, respectively. This increase was primarily
attributable to the explosive growth by acquisition in the wireless segment, as
this accounted for $6.4 million of the total. In addition, CLEC accounted for
$1.4 million and the other remaining increase was spread relatively evenly among
the other segments. The largest driver of expense increase in all cases relates
to network access and other plant related expenses due to geographic expansions
and new facilities related costs from acquisitions. These types of expenses
represent the largest start-up expense from geographic expansion.
DEPRECIATION AND AMORTIZATION EXPENSES--Depreciation and amortization expenses
increased $12.9 million from $3.3 million for the three months ended March 31,
2000 to $16.2 million for the three months ended March 31, 2001. The digital PCS
acquisitions accounted for $12.1 million of the total increase, with $2.6
million coming from goodwill and other intangible asset amortization and $2.8
million coming from the PCS license amortization. Also, the addition of R&B
operations accounted for $.8 million, most of which was in the ILEC and CLEC
segments. Other depreciation increases, primarily in Internet, were offset by
the exclusion of depreciation from the analog cellular assets, disposed of in
July 2000.
CUSTOMER OPERATIONS EXPENSES--Customer operations expenses increased $11.2
million, from $3.6 million in the first quarter of 2000 to $14.8 million in the
first quarter of 2001. Of this total increase, $10.3 million occurred in the
wireless segment from the VA Alliance, WV Alliance, and VA East acquisitions.
The total customer operations increase relates primarily to marketing and sales
activities and customer care costs primarily associated with adding new
customers.
CORPORATE OPERATIONS EXPENSES--Corporate operations expenses increased $2.8
million, or 132%, from $2.1 million to $4.9 million for the three months ended
March 31, 2000 and 2001, respectively. This was due to the growth in the
infrastructure needed to support the acquired PCS businesses ($2.6 million) and
other geographic expansion in the markets which the CLEC and Internet businesses
served by the end of March 2001.
OTHER INCOME (EXPENSES)
Total other income (expenses) increased $12.4 million, from a net other expense
of $4.1 million for the three months ended March 31, 2000 to a net other expense
amount of $16.5 million for the three months ended March 31, 2001. This is
primarily due to interest associated with debt of between $556 million and $586
million during the first quarter of 2001 as compared to debt of less than $45
million during the first quarter of 2000.
Interest expense increased $17.7 million from $.5 million for the three months
ended March 31, 2000 to $18.2 million for the three months ended March 31, 2001.
As noted above, this increase is due to additional financing to fund
acquisitions and other third quarter 2000 transactions, and to fund future
growth activity in an expanded market (see Note 4 and overview above). Interest
income increased $2.8 million, from $.2 million to $3.0 million for the three
months ended March 31, 2000 and 2001, respectively. This increase is due to the
interest earned on restricted cash during the first quarter of 2001.
16
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
Our share of losses from the VA Alliance was $1.5 million in the first quarter
of 2000. The VA Alliance was consolidated in July 2000; therefore, no such line
item exists in our 2001 income statement. Our share of losses from the WV
Alliance, which commenced being consolidated on February 13, 2001 concurrent
with our merger with R&B, decreased $.8 million, or 40.0%, from $2.1 million in
the first quarter of 2000 to $1.3 million in 2001; therefore, the equity method
of reporting was used for only a partial period. The WV Alliance losses over
these comparative quarters went from $4.8 million in 2000 to $5.9 million in
2001 due primarily to the high cost of customer acquisition associated with
record growth in the current quarter. Our ownership interests in the VA Alliance
and the WV Alliance increased to 91% and 79%, respectively, upon completion of
the R&B merger (Notes 3 and 4) on February 13, 2001.
INCOME TAXES
Income tax benefits increased $10.6 million, from a tax benefit of $.2 million
for the three months ended March 31, 2000 to a tax benefit of $10.8 million for
the three months ended March 31, 2001. This increase was due to the change in
the pre-tax income for the comparable periods. The effective tax rate for 2001
is anticipated to be adversely impacted due to non-deductible amortization
resulting from the R&B merger (Notes 4 and 7). The effective tax rates in 2000
were greatly impacted by favorable tax treatment of certain items which had a
significant effect on the effective tax rate as the pre-tax income was
relatively low.
LIQUIDITY AND CAPITAL RESOURCES
We have funded our working capital requirements and capital expenditures from
net cash provided from operating activities and borrowings under credit
facilities. At March 31, 2001, we had $130 million in unused borrowings
available under our senior credit facility. We borrowed an additional $20
million against our senior credit facility in the first quarter of 2001.
OPERATING CASH FLOWS
During the first quarter of 2001, net cash provided by operating activities was
$2.3 million, with $3.8 million used in operations offset by net positive
changes in operating assets and liabilities totaling $1.5 million. Principle
changes in operating assets and liabilities were as follows: accounts receivable
increased $4.0 million in total, which was a result primarily from the increase
in revenues of $9.6 million from the fourth quarter of 2000; inventories and
supplies decreased $4.6 million due to year end inventory stock build up being
sold through the first quarter busy sales season; income taxes went from a
receivable at the 2000 year end of $2.9 million to a $.2 million payable
position at March 31, 2001 due to the receipt of the year end receivable and the
state minimum tax payable at March 31, 2001; and, accounts payable and other
liabilities (excluding additional payables from R&B and the WV Alliance)
decreased by $1.3 million with accrued interest decreasing by $14.9 million due
to the $20 million February semi-annual interest payment, offset by increases in
accounts payable and accrued liabilities due to capital expenditure activity and
growth in operations.
During the first quarter of 2000, net cash provided by operating activities was
$6.5 million, with $3.4 million provided by operations and $2.3 million provided
by the net positive changes in operating assets and liabilities and $.8 million
provided by discontinued operations. Principal changes in operating assets and
liabilities were as follows: income taxes went from a $2.0 million asset at
December 31, 1999 to a $1.3 million liability on March 31, 2000; and accounts
payable decreased $1.3 million due to the timing of payments.
Our cash flows used in investing activities for the first quarter of 2001
aggregated $13.3 million and include the following:
o $25.5 million for the purchase of property and equipment;
o $3.5 million of proceeds from the final payment from the sale of the
directory assistance operation (Note 5);
o $4.1 million of cash and cash equivalents on hand at R&B at the time of the
merger;
o $3.6 million of net advances to and investment in the WV Alliance prior to
the February 13, 2001 transaction date (Note 4), after which these entire
amounts were included in the WV Alliance acquisition and were eliminated in
consolidation;
o $8.0 million of deposits refunded at the conclusion of an FCC license
auction as no additional licenses were purchased from this auction; and,
o $1.1 million received from the sale of four towers in West Virginia.
17
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
During the first quarter of 2000, our investing activities included:
o the investment of $8.4 million in property and equipment;
o $2.0 million in net advances to the Alliances; and
o $3.2 million in proceeds from the sale of 10 towers.
Net cash provided by financing activities for the first quarter of 2001
aggregated $18.4 million, which includes the following:
o $20 million in additional draws against the senior credit facility; and,
o $1.7 million in other debt payments, primarily on capital leases.
During the first quarter of 2000, net cash provided by financing activities
aggregated $5.6 million, which included $1.5 million used to pay dividends on
common shares, $12.7 million for payment on senior debt, and a net of $19.4
million of borrowings against the line of credit outstanding during this period.
Under restrictions related to the new debt financing (see Note 6 in our 2000
Annual Report), we discontinued payment of dividends to common shareholders
effective for the quarter ending June 30, 2000. This was done to allow us to
retain future earnings, if any, to fund the development and growth of our
businesses and to service our debt obligations.
As a result of the Transactions, our liquidity needs will be influenced by
numerous factors including:
o significantly reduced EBITDA that we expect to continue through at least
2001, as a result of acquiring capital intensive businesses in their early
stages, entering new markets and disposing of businesses that generate
positive EBITDA;
o increased capital expenditures to support planned PCS network growth and
customer expansion;
o our own continuing capital expenditures due to our ongoing strategy of
offering our services in new markets, adding new products and services, and
enhancing organic growth;
o significant capital expenditures to become an integrated communications
provider in many of our existing, newly acquired and other potential
markets by offering a broader range of products and services;
o future acquisitions; and
o significantly increased interest expense.
As a result of the Transactions, our liquidity sources include:
o cash flows from operations, if any;
o approximately $52.8 million at March 31, 2001 held in the escrow account to
fund the next three semi-annual interest payments on the senior notes, the
first of which occurred in February 2001;
o $130 million available under our new credit facility subject to certain
conditions;
o public and private debt and equity markets; and,
o disposition of additional non-core businesses and assets, such as
additional cell towers owned in VA East, wireline cable operations and
investments.
18
NTELOS Inc.
Item 2. Management's Discussion And Analysis
Of Financial Condition And Results Of Operations
Continued
We expect capital expenditures for the remainder of 2001 to be between $60
million and $80 million. We expect these capital expenditures to be used to:
o support the continued expansion of VA East, VA Alliance and WV Alliance
operations;
o support continued expansion of PCS, CLEC and Internet access services; and,
o add office space and furnishings to support employee additions commensurate
with the growth in digital PCS, Internet and CLEC customers.
Based on our assumptions about the future of our operating results, our capital
expenditure needs, many of which are discretionary, and the availability of
borrowings under our new credit facility and our other sources of liquidity, we
believe that we will have sufficient capital resources until we begin generating
significant positive EBITDA. However, if any of our assumptions prove incorrect
or if we make additional acquisitions, we may not have sufficient capital
resources. If so, we may have to delay or abandon some of our anticipated
capital expenditures and our ability to make interest and principal payments on
the notes will be significantly impaired.
Item 3. Quantitative and qualitative disclosures about market risk
The Company's senior credit facility of $325 million, $195 million of which
was outstanding at March 31, 2001, bear interest at rates 3% to 4% above the
Eurodollar rate or 2.5% to 3% above the federal funds rates. The Company's
unsecured senior notes and unsecured subordinated notes are at fixed interest
rates of 13% and 13.5%, respectively. The Company has other fixed rate, long-
term debt totaling $34.4 million.
The Company is exposed to market risks primarily related to interest rates.
To manage its exposure to interest rate risks and in accordance with conditions
of the Senior notes agreement, the Company entered into two, five year interest
rate swap agreements with notional amounts of $162.5 million in September 2000.
These swap agreements manage the Company's exposure to interest rate movements
by effectively converting a portion of the long-term debt from variable to fixed
rates. Fixed interest rate payments are at a per annum rate of 6.76%. Variable
rate payments are based on one month US dollar LIBOR. The weighted average LIBOR
rate applicable to these agreements was 5.08% as of March 31, 2001. The notional
amounts do not represent amounts exchanged by the parties, and thus are not a
measure of exposure of the Company. The amounts exchanged are normally based on
the notional amounts and other terms of the swaps. Interest rate differentials
paid or received under these agreements are recognized over the one-month
maturity periods as adjustments to interest expense. The fair values of our
interest rate swap agreements are based on dealer quotes. Neither the Company
nor the counterparties, which are prominent bank institutions, are required to
collateralize their respective obligations under these swaps. The Company is
exposed to loss if one or more of the counterparties default. At March 31, 2001,
the Company had no exposure to credit loss on interest rate swaps. At March 31,
2001, the swap agreements had a fair value $10.3 million below their face value.
The effects of a 1% change in LIBOR rates would change the fair value of the
swap agreements by $6.5 million for a 1% increase in the rate (to $3.8 million
below face value) and $6.8 million for a 1% decrease in the rate (to $17.1
million below face value). The Company does not believe that any reasonably
likely change in interest rates would have a material adverse effect on the
financial position, the results of operations or cash flows of the Company.
At March 31, 2001, fair value of the Company's financial
assets approximates their related carrying amounts.
19
NTELOS, Inc.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For a description of Legal Proceeding, see the Form 10-Q filed by the
Company for the quarter ended March 31, 2000.
Item 2. Changes In Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission Of Matters To A Vote Of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
Not applicable
(B) Reports on Form 8-K
Form 8-K dated January 24, 2001, updating certain financial
information and attaching the unaudited pro forma consolidated
financial information of the Company, the unaudited interim
condensed consolidated financial statements of R&B Communications,
Inc. and the unaudited interim condensed financial statements of
West Virginia PCS Alliance, L.C.
Form 8-K dated February 1, 2001, pertaining to presentations to be
made by Mr. James S. Quarforth, Chairman and Chief Executive
Officer, and Mr. Michael B. Moneymaker, Chief Financial Officer, at
investor meetings, providing an overview of NTELOS' strategy,
transactions and performance through the fourth quarter of 2000.
Form 8-K dated February 13, 2001, pertaining to the closing of the
agreement and plan of merger between the Company and R&B
Communications, Inc.
Form 8-K dated March 6, 2001, pertaining to presentations to be
made by Mr. James S. Quarforth, Chief Executive Officer, and Mr.
Michael B. Moneymaker, Chief Financial Officer, at investor
meetings, providing an overview of NTELOS' strategy, transactions
and performance through the fourth quarter of 2000.
20
Form 8-K dated March 16, 2001, pertaining to presentations to be
made by Mr. James S. Quarforth, Chief Executive Officer, and Mr.
Michael B. Moneymaker, Chief Financial Officer, at investor
meetings, providing an overview of NTELOS' strategy, transactions
and performance through the fourth quarter of 2000 and certain
guidance for 2001.
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NTELOS Inc.
May 15, 2001 /s/J. S. Quarforth
-----------------------------------------------------
J. S. Quarforth, Chairman and Chief Executive Officer
May 15, 2001 /s/M. B. Moneymaker
-----------------------------------------------------
M. B. Moneymaker, Senior Vice President and
Chief Financial Officer, Treasurer, and Secretary