EXHIBIT 99.1
Davel Communications, Inc. Reports Third Quarter 2003 Financial
Results
CLEVELAND--(BUSINESS WIRE)--Nov. 14, 2003--Davel Communications,
Inc. ("Davel" or the "Company") (OTCBB:DAVL) today announced financial
results for the three-month and nine-month periods ended September 30,
2003. The financial results in 2003 and part of the third quarter of
2002 include the results of PhoneTel Technologies, Inc. ("PhoneTel"),
which have been reflected in the Company's operations since July 24,
2002, the date on which the Company acquired PhoneTel.
Total revenues for the third quarter were $23.5 million compared
to $22.9 million last year. Total revenues in 2003 include a $4.0
million adjustment for the recovery of prior years' dial-around
compensation relating to the industry-wide true-up among long-distance
carriers and payphone providers resulting from retroactive rate
changes ordered by the FCC. Without this adjustment, total revenues
decreased by $3.4 million, or 15% due to a reduction in the average
number of payphones in service and a decline in revenues per phone.
The decline in revenues per phone is attributable to the decline in
payphone usage arising from the impact of wireless communications,
which has resulted in the continuing strategic removal of low revenue
phones. A significant reduction in the number of payphones is expected
in the fourth quarter of 2003 in an effort to improve profit margins
on the Company's payphones.
Operating expenses for the third quarter decreased by $5.6
million, or 20%, compared to last year primarily due to fewer
payphones in service during the third quarter of 2003 and $2.8 million
of merger-related costs incurred in 2002 to eliminate the redundant
headquarters facility and personnel in Tampa, FL. The Company's
operating income increased from a $5.3 million loss in the third
quarter of 2002 to $0.9 million of income in 2003 primarily as a
result of the dial-around revenue adjustment and the decrease in
operating expenses.
The net loss for the third quarter was $0.7 million, or $0.01 per
common share, compared to net income of $173.7 million, or $0.38 per
common share, in 2002. The third quarter 2002 net income included a
non-cash gain of $181.0 million related to the Company's
debt-for-equity exchange immediately prior to the PhoneTel merger in
which the Company exchanged approximately $219 million of indebtedness
for approximately 380.6 million shares of common stock. Following the
debt-for-equity exchange and the PhoneTel merger, the Company had
approximately 615.0 million shares of common stock outstanding.
Total revenues for the nine months ended September 30, 2003 were
$66.2 million compared to $57.6 million in the prior year. This
increase reflects $7.9 million of adjustments to dial-around revenue,
including $3.9 million in the first quarter of 2003 relating to the
sale of a portion of the Company's bankruptcy claim due from WorldCom
for $4.9 million. Without these adjustments, total revenues increased
by $0.7 million, or 1%, compared to the first nine months of last year
due to the increase in the average number of payphones in service in
2003 as a result of the PhoneTel merger offset by the continuing
decline in revenues per phone resulting from the impact of wireless
communications.
Operating expenses for the nine months ended September 30, 2003
increased by $5.4 million over last year primarily due to the PhoneTel
merger. Operating expenses in both year-to-date periods reflect net
reductions in telephone charges of $0.8 million in 2003 and $3.3
million in 2002, primarily due to regulatory refunds received from
local exchange carriers under the FCC's "New Services Test". The
Company's operating loss increased from $10.4 million in the first
nine months of 2002 to $34.4 million in 2003 primarily as a result
asset impairment charges. In the second quarter of 2003, the Company
completed an evaluation of its payphone assets and goodwill and
recognized impairment losses of $27.1 million to write-down the
carrying values of such assets to their fair values. Interest expense
decreased by $6.6 million in 2003 due to the debt-for-equity exchange
in 2002. The net loss for first the nine months of 2003 was $39.1
million, or $0.06 per common share, compared to net income of $159.4
million, or $0.99 per common share, in 2002 as a result of the $181.0
million gain on extinguishment of debt described above.
The Company has executed an agreement with its lenders that grants
forbearance through January 30, 2004 with respect to certain payments
due under its secured credit agreement and certain financial
covenants. In addition, the Company has engaged in discussions with
its lenders regarding the possible restructuring of the $126.3 million
debt outstanding under its secured credit agreement and the payments
due thereunder. While the Company's lenders have expressed a
willingness to negotiate once they receive the Company's revised
operating plan, there can be no assurance that the Company's lenders,
who own more than 90% of the Company's Common Stock, will restructure
the debt or related debt payments. Until such time as the Company is
able to negotiate revised payment terms with its lenders, the Company
has classified its debt as a current liability in its September 30,
2003 consolidated balance sheet.
Founded in 1979, Davel is the largest independent provider of pay
telephones and related services in the United States with operations
in 45 states and the District of Columbia. Davel serves a wide array
of customers operating principally in the shopping center,
hospitality, health care, convenience store, university, service
station, retail and restaurant industries.
Forward-Looking Statements
Certain of the statements contained herein may be, within the
meaning of the federal securities laws, "forward-looking statements"
that are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements.
See the Company's Form 10-K for the year ended December 31, 2002 and
its Form 10-Q for the quarter ended September 30, 2003 for a
discussion of such risks, uncertainties, and other factors. These
forward-looking statements are based on management's expectations as
of the date hereof, and the Company does not undertake any
responsibility to update any of these statements in the future.
Davel Comminications, Inc.
Condensed Consolidated Statements of Operations
(In thousands except for share and per share amounts)
- ----------------------------------------------------------------------
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
-----------------------------------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues:
Coin calls $ 12,872 $ 15,829 $ 39,571 $ 41,158
Non-coin calls 6,632 7,062 18,645 16,395
Dial-around
compensation
adjustment 4,016 - 7,944 -
------------ ------------ ------------ ------------
23,520 22,891 66,160 57,553
Operating
expenses:
Operating
expenses 22,590 28,205 73,410 67,973
Asset
impairment
charges - - 27,141 -
------------ ------------ ------------ ------------
22,590 28,205 100,551 67,973
------------ ------------ ------------ ------------
Income (loss)
from
operations 930 (5,314) (34,391) (10,420)
Interest
expense, net (1,485) (2,072) (4,734) (11,338)
Gain on debt
extinguishment - 180,977 - 180,977
Other income
(expense) (126) 103 (14) 150
------------ ------------ ------------ ------------
Net income
(loss) ($681) $ 173,694 ($39,139) $ 159,369
============ ============ ============ ============
Net income
(loss) per
common share,
basic and
diluted ($0.01) $ 0.38 ($0.06) $ 0.99
============ ============ ============ ============
Weighted
average number
of shares,
basic and
diluted 615,018,963 457,493,829 615,018,963 161,579,124
============ ============ ============ ============
Condensed Consolidated Balance Sheets
(In thousands)
- ----------------------------------------------------------------------
(Unaudited)
September 30 December 31
2003 2002
------------ ------------
Current assets $ 18,686 $ 26,947
Property and
equipment, net 26,912 41,855
Intangible
assets, net 7,816 18,043
Goodwill - 17,455
Other assets 2,376 2,316
------------ ------------
Total
assets
$ 55,790 $ 106,616
============ ============
Current
liabilities $ 151,239 $ 44,697
Long-term debt - 118,229
Shareholders'
equity
(deficit) (95,449) (56,310)
------------ ------------
Total
liabilities
and
shareholders'
equity
(deficit) $ 55,790 $ 106,616
============ ============
CONTACT: Davel Communications, Inc.
Woody McGee or Donald L. Paliwoda, 216-241-2555