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UbiquiTel Reports Fourth Quarter and 2005 ResultsCONSHOHOCKEN, Pa., Feb. 27 /PRNewswire-FirstCall/ -- UbiquiTel Inc. , a PCS Affiliate of Sprint Nextel , today reported financial and operating results for the fourth quarter and full year ended December 31, 2005. Highlights for the 4th quarter and full year 2005: - Net income for the year ended December 31, 2005 was $47.7 million, or $0.49 per diluted share, compared to a net loss of $(15.3) million, or $(0.16) per diluted share, for 2004. In the fourth quarter and year ended December 31, 2005, the company incurred $2.6 million and $4.3 million, respectively, of expense associated with litigation against Sprint Nextel. The company also recognized a deferred income tax benefit of $32.1 million in the fourth quarter 2005 due to the elimination of the deferred tax asset valuation allowance. Excluding the litigation expense and income tax benefit, net income for the year ended December 31, 2005 was $19.9 million, or $0.20 per diluted share. - Adjusted EBITDA for the fourth quarter and year ended December 31, 2005 was $26.8 million and $110.5 million, respectively, representing increases of 30% and 52% over the same periods of 2004. Excluding the above litigation expense, Adjusted EBITDA for the fourth quarter and year ended December 31, 2005 was $29.5 million, reflecting a 43% year over year increase, and $114.9 million, reflecting a 58% year over year increase, respectively. - Free cash flow for the fourth quarter and year ended December 31, 2005 was $24.2 million and $26.5 million, respectively, compared to $11.7 million and $28.4 million in the same periods of 2004. - Service revenues grew 9% and 15% in the fourth quarter 2005 and year ended December 31, 2005, respectively. - The company added approximately 13,600 net subscribers during the fourth quarter 2005 bringing total subscribers, excluding reseller subscribers, to approximately 447,900. The company added approximately 17,900 reseller subscribers during the fourth quarter 2005, bringing total reseller subscribers to 145,000. "UbiquiTel reached another milestone in 2005 by generating our first full year of positive net income. Through operating leverage and continued improvement to our cost structure, Adjusted EBITDA margin, excluding Sprint Nextel litigation expenses, expanded to 28% in 2005 from 21% in 2004, exceeding the target we set at this time last year," said Donald A. Harris, chairman and CEO of UbiquiTel Inc. For the full year 2005, total revenues were $422.7 million, comprised of $281.6 million of subscriber revenues, $125.6 million of roaming and wholesale revenues and $15.5 million of equipment revenues. Subscriber revenues grew 13% and roaming and wholesale revenues grew 22% in 2005. Operating income for 2005 was $56.3 million, representing a 189% increase from 2004. SUMMARY OF QUARTERLY OPERATING AND FINANCIAL METRICS: Q4 2005 Q3 2005 Q4 2004 Net additions 13,600 10,700 15,100 Churn 2.7% 2.6% 2.9% Ending subscribers 447,900 434,300 398,500 Penetration-Covered POPs 5.4% 5.2% 5.0% Covered POPs 8.3 million 8.3 million 7.9 million Reseller subscribers 145,000 127,100 98,600 ARPU $55 $56 $57 CPGA $445 $493 $505 CCPU $42(1) $42(2) $43(3) Adjusted EBITDA $26.8 million(1) $29.9 million(2) $20.6 million(3) Capital expenditures $5.5 million $7.7 million $8.5 million Free cash flow $24.2 million $5.8 million $11.7 million Minutes of use per subscriber 987 1,003 930 System minutes 1,530 million 1,544 million 1,315 million Reseller minutes 94 million 93 million 78 million Roaming minutes-Inbound 328 million 361 million 318 million Roaming minutes- Outbound 196 million 201 million 170 million Roaming inbound to outbound ratio 1.7 to 1 1.8 to 1 1.9 to 1 (1) Includes approximately $2 per user, or $2.6 million, of expense associated with litigation against Sprint Nextel. (2) Includes approximately $2 per user, or $1.7 million, of expense associated with litigation against Sprint Nextel. (3) Includes approximately $1 per user, or $1.2 million, of non-recurring net adjustments. SUMMARY OF ANNUAL OPERATING AND FINANCIAL METRICS: 2005 2004 Net additions 53,300 70,800 Churn 2.5% 2.9% Ending subscribers 447,900(1) 398,500 Penetration-Covered POPs 5.4% 5.0% Covered POPs 8.3 million 7.9 million Reseller subscribers 145,000(1) 98,600 ARPU $56 $57 CPGA $487 $471 CCPU $41(2) $43(3) Adjusted EBITDA $110.5 million(2) $72.8 million(3) Capital expenditures $43.3 million $27.0 million Free cash flow $26.5 million $28.4 million Minutes of use per subscriber 985 899 System minutes 5,942 million 4,648 million Reseller minutes 371 million 184 million Roaming minutes-Inbound 1,337 million 1,164 million Roaming minutes-Outbound 761 million 649 million Roaming inbound to outbound ratio 1.8 to 1 1.8 to 1 (1) Reflects adjustment in the second quarter 2005 to reclassify approximately 3,900 subscribers to resellers. (2) Includes approximately $1 per user, or $4.3 million, of expense associated with litigation against Sprint Nextel. (3) Includes approximately $1 per user, or $2.0 million, of non-recurring net adjustments. BUSINESS OUTLOOK The table below provides a range of selected financial guidance for 2006. A variety of factors referenced elsewhere in this press release under "Special Note Regarding Forward-Looking Statements" could cause actual results to differ materially from this guidance. 2006 Guidance Low High Service revenues growth rate 8% 10% Adjusted EBITDA growth rate* 20% 27% Capital expenditures $40.0 million $50.0 million * Excludes Sprint Nextel litigation expense in both 2005 and 2006. Sprint Nextel Litigation Update In July 2005, UbiquiTel filed in the Delaware Court of Chancery an action against Nextel Communications, Inc., Sprint Corporation and various Sprint- related entities, alleging that, among other things, following the consummation of the Sprint-Nextel merger in 2005, Sprint would breach its exclusivity and confidentiality obligations to UbiquiTel under the company's written agreements with Sprint and that Nextel improperly interfered with the company's exclusivity rights under those agreements. The nine-day trial of UbiquiTel's claims, which the Court consolidated with a similar case brought by iPCS subsidiaries Horizon Personal Communications, Inc. and Bright Personal Communications Services, LLC, occurred in January 2006. The Vice Chancellor presiding over the actions has requested post-trial briefs and has tentatively scheduled final arguments for April 4, 2006. The Vice Chancellor will issue a ruling at some time following the final arguments. Conference Call to be held February 28th at 10:30 a.m. ET UbiquiTel's management will conduct a conference call on Tuesday, February 28, at 10:30 a.m., Eastern Time, to discuss its results for the three months and year ended December 31, 2005 and discuss selected guidance for 2006. Investors and interested parties may listen to the call via a live webcast accessible through the company's website, http://www.ubiquitelpcs.com/. To listen, please register and download audio software at the site at least 15 minutes prior to the start of the call. The call may be accessed by dialing 866-203-3436 (domestic) or 617-213-8849 (international), passcode: 28817659. The webcast will be archived on the site, while a telephone replay of the call will be available for 7 days beginning at 12:30 p.m., Eastern Time, February 28, at 888-286-8010 or 617-801-6888, passcode: 91180733. About UbiquiTel Inc. UbiquiTel is the exclusive provider of Sprint digital wireless mobility communications network products and services under the Sprint brand name to midsize markets in the Western and Midwestern United States that include a population of approximately 10.8 million residents and cover portions of California, Nevada, Washington, Idaho, Wyoming, Utah, Indiana, Kentucky and Tennessee. Financial Measures and Definitions of Terms Used UbiquiTel provides certain financial measures that are calculated in accordance with accounting principles generally accepted in the United States (GAAP) and adjustments to GAAP (non-GAAP) to assess the company's financial performance. In addition, the company uses certain non-financial terms, such as churn, which are metrics used in the wireless communications industry and are not measures of financial performance under GAAP. The non-GAAP financial measures reflect industry measures of liquidity, profitability or performance and the non-financial metrics reflect industry conventions, both of which are commonly used by the investment community for comparability purposes. The reconciliation of the non-GAAP financial measures with comparable measures under GAAP are included in an attachment to this release. Because the company does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, the company does not provide reconciliations to GAAP of its forward-looking financial measures. The non- financial metrics and non-GAAP financial measures used in this release include the following: Churn is the monthly rate of customer turnover expressed as the percentage of customers of the beginning customer base that both voluntarily and involuntarily discontinued service during the period. Churn is computed by dividing the number of customers that discontinued service during the month, net of 30 day returns, by the beginning customer base for the period. ARPU is average revenue per user and summarizes the average monthly service revenue per customer, excluding roaming and wholesale revenues. ARPU is computed by dividing subscriber revenues by the average subscribers for the period. The company believes ARPU is a useful measure to assist in evaluating the company's past and forecasting its future subscriber revenues. In addition, it provides a gauge to compare the company's subscriber revenues 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. CPGA is cost per gross addition and summarizes the average cost to acquire new customers during the period. CPGA is computed by adding the statement of operations components of selling and marketing and the cost of products sold, and reducing that amount by the equipment revenue recorded. The net result of these components is then divided by the gross customers acquired during the period. The company 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 cost of products sold net of the equipment revenues earned is critical to the company's understanding of the costs to the company of acquiring a new customer. CCPU is cash cost per user and summarizes the average monthly cash costs to provide digital wireless mobility communications services per customer. CCPU is computed by dividing the sum of cost of service and operations and general and administrative expenses by the average subscribers for the period. The company's calculation of CCPU excludes depreciation, amortization and accretion expenses. The company believes CCPU is a useful measure used to compare the company's cash cost of operations per customer 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. Adjusted EBITDA represents net income (loss) before income tax expense (benefit), gain on debt retirement, interest expense, interest income, depreciation, amortization and accretion and non-cash compensation expense. The company believes Adjusted EBITDA is an important operating measure for comparability to other wireless companies and it is not intended to represent the results of the company's operations in accordance with GAAP. Adjusted EBITDA should not be considered as a substitute for net income, income from operations, net cash provided by operating activities or any other operating or liquidity measure prepared in accordance with GAAP. Additionally, the company's Adjusted EBITDA computation may not be comparable to other similarly titled measures of other companies. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by service revenues. Free cash flow summarizes the cash flow from operating activities and capital expenditures and is computed by adding net cash provided by operating activities, capital expenditures and proceeds from disposal of equipment. The company believes free cash flow is an important measure of liquidity to meet the company's debt service requirements. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Statements contained in this news release that are forward-looking statements are subject to various risks and uncertainties. Such forward- looking statements are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995 and are made based on management's current expectations or beliefs as well as assumptions made by, and information currently available to, management. A variety of factors could cause actual results to differ materially from those anticipated in UbiquiTel's forward-looking statements, including the following factors: UbiquiTel's dependence on its affiliation with Sprint; the impact of the Sprint-Nextel merger on UbiquiTel's affiliation with Sprint as well as Sprint's competitiveness in the wireless industry; the outcome of UbiquiTel's, and any other PCS affiliate of Sprint's, litigation with Sprint concerning the Sprint-Nextel merger; changes in Sprint's affiliation strategy as a result of the Sprint-Nextel merger or any other merger involving Sprint Nextel; the competitiveness of and changes in Sprint's pricing plans, products and services; increased competition in UbiquiTel's markets; rates of penetration in the wireless communications industry; the potential to experience a high rate of customer turnover; customer quality; potential declines in roaming and wholesale revenue; UbiquiTel's reliance on the timeliness, accuracy and sufficiency of financial and other data and information received from Sprint; the ability of Sprint to provide back office, customer care and other services; UbiquiTel's debt level; adequacy of bad debt and other reserves; UbiquiTel's ability to manage anticipated growth and rapid expansion; changes in population; changes or advances in technology; effects of mergers and consolidations within the wireless communications industry and unexpected announcements or developments from others in the wireless communications industry; and general market and economic conditions. Certain of these and other applicable risks, cautionary statements and factors that could cause actual results to differ from UbiquiTel's forward-looking statements are included in UbiquiTel's filings with the Securities and Exchange Commission ("SEC"), specifically in the "Business-Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of its Annual Report on Form 10-K for the fiscal year ended December 31, 2004, and in subsequent filings with the SEC. Except as otherwise required under federal securities laws and the rules and regulations of the SEC, the company does not have any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise. -Financial Tables Follow- UbiquiTel Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except per share data) December 31, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents $121,127 $91,781 Accounts receivable, net of allowance for doubtful accounts of $3,435 and $3,358 at December 31, 2005 and December 31, 2004, respectively 30,082 22,609 Inventory, net 4,777 4,025 Prepaid expenses and other assets 17,411 17,680 Deferred income taxes 20,290 - Total current assets 193,687 136,095 PROPERTY AND EQUIPMENT, NET 244,163 243,679 CONSTRUCTION IN PROGRESS 2,169 1,867 DEFERRED FINANCING COSTS, NET 9,184 10,868 GOODWILL 38,138 38,138 INTANGIBLES, NET 60,261 64,565 DEFERRED INCOME TAXES 13,038 - OTHER LONG-TERM ASSETS 2,223 2,595 Total assets $562,863 $497,807 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $240 $223 Accounts payable 11,062 3,124 Accrued expenses 18,230 18,824 Accrued compensation and benefits 4,770 4,591 Interest payable 13,825 13,825 Taxes payable 2,677 2,672 Deferred revenue 12,455 12,274 Other 3,165 1,501 Total current liabilities 66,424 57,034 LONG-TERM LIABILITIES, EXCLUDING CURRENT MATURITIES 423,475 423,893 OTHER LONG-TERM LIABILITIES 11,357 11,462 Total long-term liabilities 434,832 435,355 Total liabilities 501,256 492,389 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, par value $0.001; 10,000 shares authorized; 0 shares issued and outstanding at December 31, 2005 and December 31, 2004 - - Common stock, par value $0.0005; 240,000 shares authorized; 94,209 and 93,016 shares issued and outstanding at December 31, 2005 and December 31, 2004, respectively 47 46 Additional paid-in-capital 312,305 303,830 Accumulated deficit (250,745) (298,458) Total stockholders' equity 61,607 5,418 Total liabilities and stockholders' equity $562,863 $497,807 UbiquiTel Inc. and Subsidiaries Consolidated Statements of Operations (In thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 REVENUES: Subscriber revenues $73,190 $66,154 $281,622 $250,034 Roaming and wholesale revenues 31,092 29,445 125,649 102,920 Service revenues 104,282 95,599 407,271 352,954 Equipment revenues 3,558 2,705 15,456 13,089 Total revenues 107,840 98,304 422,727 366,043 COSTS AND EXPENSES: Cost of service and operations (exclusive of depreciation as shown separately below) 48,603 45,750 185,384 170,265 Cost of products sold 8,107 9,841 36,166 38,314 Selling and marketing 17,197 17,524 67,450 67,485 General and administrative 7,093 4,594 23,197 17,185 Non-cash compensation expense 1,514 3,371 2,906 3,371 Depreciation, amortization and accretion 13,137 11,909 51,312 49,913 Total costs and expenses 95,651 92,989 366,415 346,533 OPERATING INCOME 12,189 5,315 56,312 19,510 INTEREST INCOME 1,118 396 3,110 877 INTEREST EXPENSE (10,825) (10,817) (43,469) (40,070) GAIN ON DEBT RETIREMENTS - 3,837 40 4,947 INCOME (LOSS) BEFORE INCOME TAXES 2,482 (1,269) 15,993 (14,736) INCOME TAX BENEFIT (EXPENSE) 32,161 (84) 31,720 (561) NET INCOME (LOSS) $34,643 $(1,353) $47,713 $(15,297) NET INCOME (LOSS) PER COMMON SHARE: BASIC $0.37 $(0.01) $0.51 $(0.16) DILUTED $0.35 $(0.01) $0.49 $(0.16) WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 94,109 92,935 93,576 92,761 DILUTED 98,058 92,935 97,582 92,761 UbiquiTel Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2005 2004 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $47,713 $(15,297) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of deferred financing costs 1,776 1,497 Amortization of debt (premium) discount (124) 823 Amortization of intangible assets 4,304 4,304 Depreciation and accretion 47,008 45,609 Interest accrued on discount notes - 9,749 Non-cash compensation from stock options granted to employees 2,906 3,371 Deferred income taxes (32,055) 316 Gain on disposal of equipment (421) (308) Gain on debt retirements (40) (4,947) Changes in operating assets and liabilities exclusive of capital expenditures, net (1,252) 10,274 Net cash provided by operating activities 69,815 55,391 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (43,333) (26,984) Proceeds from disposal of equipment 5 - Change in restricted cash - 1,137 Net cash used in investing activities (43,328) (25,847) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of 9.875% senior notes - 420,552 Repayments under senior secured credit facility - (230,000) Repayment of 14% Series B senior discount notes - (12,478) Purchases of 14% senior discount notes and 14% senior subordinated discount notes (14) (155,194) Financing costs (92) (12,396) Change in book cash overdraft - (5,671) Proceeds from issuance of common stock 436 262 Proceeds from exercise of stock options and warrants 2,801 420 Repayment of other long-term debt (223) (305) Repurchase of common stock (49) (178) Net cash provided by financing activities 2,859 5,012 NET INCREASE IN CASH AND CASH EQUIVALENTS 29,346 34,556 CASH AND CASH EQUIVALENTS, beginning of period 91,781 57,225 CASH AND CASH EQUIVALENTS, end of period $121,127 $91,781 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $41,809 $17,605 Cash paid for income taxes 361 320 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY: Network equipment acquired but not yet paid $4,488 $- SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITY: Tax benefits from stock-based employee compensation plan $2,382 $- UbiquiTel Inc. and Subsidiaries Reconciliation of Adjusted EBITDA and Non-GAAP Financial Measures (Unaudited) Three Months Ended Year Ended December 31, December 31, 2005 2004 2005 2004 ADJUSTED EBITDA: Net income (loss) $34,643,000 $(1,353,000) $47,713,000 $(15,297,000) Income tax expense (benefit) (32,161,000) 84,000 (31,720,000) 561,000 Gain on debt retirement - (3,837,000) (40,000) (4,947,000) Interest expense 10,825,000 10,817,000 43,469,000 40,070,000 Interest income (1,118,000) (396,000) (3,110,000) (877,000) Depreciation, amortization and accretion 13,137,000 11,909,000 51,312,000 49,913,000 Non-cash compensation expense 1,514,000 3,371,000 2,906,000 3,371,000 Adjusted EBITDA 26,840,000 20,595,000 110,530,000 72,794,000 Sprint Nextel litigation expense 2,642,000 - 4,368,000 - Adjusted EBITDA excluding Sprint Nextel litigation expense $29,482,000 $20,595,000 $114,898,000 $72,794,000 AVERAGE REVENUE PER USER (ARPU): Subscriber revenues $73,190,000 $66,154,000 $281,622,000 $250,034,000 Average subscribers 440,322 389,390 422,455 365,120 ARPU $55 $57 $56 $57 CASH COST PER USER (CCPU): Cost of service and operations $48,603,000 $45,750,000 $185,384,000 $170,265,000 Add: General and administrative 7,093,000 4,594,000 23,197,000 17,185,000 Total cash costs 55,696,000 50,344,000 208,581,000 187,450,000 Sprint Nextel litigation expense (2,642,000) - (4,368,000) - Total cash costs excluding Sprint Nextel litigation expense $53,054,000 $50,344,000 $204,213,000 $187,450,000 Average subscribers 440,322 389,390 422,455 365,120 CCPU $42 $43 $41 $43 Sprint Nextel litigation expense (2) - (1) - CCPU excluding Sprint Nextel litigation expense $40 $43 $40 $43 COST PER GROSS ADDITION (CPGA): Selling and marketing $17,197,000 $17,524,000 $67,450,000 $67,485,000 Add: Cost of products sold 8,107,000 9,841,000 36,166,000 38,314,000 Less: Equipment revenue (3,558,000) (2,705,000) (15,456,000) (13,089,000) Total cost of gross additions $21,746,000 $24,660,000 $88,160,000 $92,710,000 Gross additions 48,900 48,800 181,200 196,600 CPGA $445 $505 $487 $471 FREE CASH FLOW: Net cash provided by operating activities $29,758,000 $20,116,000 $69,815,000 $55,391,000 Capital expenditures (5,524,000) (8,462,000) (43,333,000) (26,984,000) Proceeds from disposal of equipment - - 5,000 - Free cash flow $24,234,000 $11,654,000 $26,487,000 $28,407,000 First Call Analyst: FCMN Contact: [email protected] UbiquiTel Inc. CONTACT: Brighid de Garay of UbiquiTel Inc., +1-610-832-3311, or+1-610-453-7495 Web site: http://www.ubiquitelpcs.com/ |