Exhibit 99.1
Davel Communications, Inc. Reports Third Quarter 2004 Financial Results
CLEVELAND--(BUSINESS WIRE)--Nov. 16, 2004--Davel Communications, Inc.,
(OTCBB:DAVL) a Cleveland based independent payphone provider, today announced
financial results for the nine-month and three-month periods ended September 30,
2004.
Total revenues for the third quarter of 2004 were $14.6 million compared to
$23.5 million in the same period of 2003, primarily due to a 27.1% reduction in
the average number of payphones in service as well as a decline in average
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 prompted the Company to aggressively pursue its previously announced
strategy to remove low revenue payphones during 2003 and the beginning of 2004.
Third quarter 2003 revenues were also favorably impacted by $4.0 million of
dial-around true-up adjustments relating to a mandatory industry-wide
reconciliation among long-distance carriers and payphone providers resulting
from retroactive rate changes ordered by the FCC. Such adjustments were $2.2
million in the third quarter of 2004. Without these dial-around adjustments,
total revenues would have decreased by $7.1 million, or 36.4%
On August 12, 2004, the FCC released an order to increase the dial-around
compensation rate from $0.24 per call to $0.494 per call, which became effective
on September 27, 2004. Although the company expects a significant increase in
its non-coin revenues from dial-around compensation beginning with the fourth
quarter of 2004, the Company is unable to determine the potential increase in
revenues due to the uncertainty regarding the effect of the rate increase, if
any, on the volume of dial-around calls.
On November 11, 2004, the Company assigned its right to receive up to $18.0
million of future regulatory receipts (dial-around true-up receipts and refunds
of prior year telephone charges from local exchange carriers resulting from
certain types of regulatory proceedings) to the Company's former secured lenders
in exchange for an $18.0 million reduction in the principal balance of the
Company's secured debt. The Company expects to record an $18.0 million gain in
the fourth quarter of 2004 in connection with this transaction.
Total operating expenses for the third quarter of 2004 declined by $7.5
million, or 33.2%, due to the decrease in the average number of payphones in
service during the third quarter of 2004 and cost saving measures initiated by
the Company during 2003 and 2004. The Company expects further cost savings
during 2004 as a result of its efforts to reduce telephone charges by utilizing
competitive local exchange and alternate carriers, by outsourcing certain
payphone collection and maintenance activities and other operating expense
reductions.
The net loss for the third quarter of 2004 was $2.1 million, or $0.01 per
common share, compared to a net loss of $0.7 million, or $0.01 per common share,
in 2003. Without the adjustments to dial-around revenues referred to above, the
Company's net loss would have declined by $0.4 million, or 8.5%.
Total revenues in the nine months ended September 30, 2004 were $41.9
million compared to $66.2 million in the first nine months of 2003. Total
revenues include $4.6 million and $7.9 million of net revenues from dial-around
compensation adjustments in the first nine months of 2004 and 2003,
respectively. Without these adjustments, total revenues decreased by $21.0
million, or 36.0%, primarily due to the decrease in the average number of
payphones in service and the decrease in revenues per phone as discussed above.
Operating expenses declined by $26.1 million, or 35.6%, from $73.4 million
in the first nine months of 2003 to $47.3 million in the first nine months of
2004. This decrease is primarily due to the reduction in pay telephones and the
cost savings initiatives described above. The Company's operating loss decreased
from $34.4 million in the first nine months of 2003 to $5.3 million in 2004
primarily due to $27.1 million of asset impairment charges in the second quarter
of 2003 to write-down carrying value of the Company's payphone assets and
goodwill to their fair values. The net loss for the nine months ended September
30, 2004 was $10.0 million, or $0.02 per common share, compared to a net loss of
$39.1 million, or $0.06 per common share in 2003. Without the asset impairment
charges, the Company's net loss would have declined by $1.9 million, or 15.8%.
As previously announced, MobilePro Corp. acquired from the Company's former
secured lenders all of the Company's existing secured debt and approximately
95.2% of the Company's issued and outstanding common stock, which resulted in a
change in control of the Company on November 15, 2004. MobilePro funded the
purchase price from the proceeds of a $15.2 million secured credit agreement in
which the Company became jointly and severally liable with MobilePro following
the closing of the credit agreement. In addition, the MobilePro credit agreement
became secured by substantially all of the assets of the Company and is senior
in right of payment to the Company's existing secured debt that was acquired by
MobilePro.
Founded in 1979, Davel is one of the largest independent providers 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, 2003 and its Form 10-Q for the quarter
ended September 30, 2004 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 COMMUNICATIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for share and per share amounts)
- ----------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30 September 30
(Unaudited) (Unaudited)
------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues:
Coin calls $8,605 $12,872 $26,355 $39,571
Non-coin calls 3,785 6,632 10,934 18,645
Dial-around
compensation
adjustments 2,196 4,016 4,618 7,944
------------ ------------ ------------ ------------
14,586 23,520 41,907 66,160
Operating expenses:
Operating expenses 15,066 22,590 47,255 73,410
Asset impairment
charges - - - 27,141
------------ ------------ ------------ ------------
15,066 22,590 47,255 100,551
------------ ------------ ------------ ------------
Income (loss) from
operations (480) 930 (5,348) (34,391)
Interest expense,
net (1,757) (1,485) (5,038) (4,734)
Other income 95 (126) 331 (14)
------------ ------------ ------------ ------------
Net loss $(2,142) $(681) $(10,055) $(39,139)
============ ============ ============ ============
Net loss per common
share, basic and
diluted ($0.01) ($0.01) ($0.02) ($0.06)
============ ============ ============ ============
Weighted average
shares outstanding,
basic and diluted 615,018,963 615,018,963 615,018,963 615,018,963
============ ============ ============ ============
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
- ----------------------------------------------------------------------
September 30
2004 December 31
(Unaudited) 2003
------------ -----------
Assets
Total current assets $11,390 $18,672
Property and equipment, net 16,150 22,878
Intangible assets, net 4,515 6,746
Other assets 1,563 2,026
------------ -----------
Total assets $33,618 $50,322
============ ===========
Liabilities and shareholders' deficit
Current liabilities $21,406 $26,861
Long-term debt 124,768 125,962
Shareholders' deficit (112,556) (102,501)
------------ -----------
Total liabilities and shareholders' deficit $33,618 $50,322
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CONTACT: Davel Communications, Inc., Cleveland
Woody McGee or Donald L. Paliwoda, 216-241-2555