Alamosa (NASDAQ:APCS)
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Highlights:
-- Revenue increased 16 percent over third quarter 2004 pro-forma
revenue to a record $349.4 million
-- Net income attributable to common stockholders was $1.8
million or $0.01 per common share, after $2.8 million of
expenses associated with Sprint negotiations and litigation
-- Adjusted EBITDA increased to $94.2 million, including $2.8
million of expenses associated with Sprint negotiations and
litigation
-- As previously announced:
-- Subscribers increased approximately 33,000 to 1.48
million
-- Average monthly customer churn was 2.5 percent
-- Completed the 3,000th cell site in its territory.
Alamosa Holdings, Inc. (Nasdaq/NM: APCS), a PCS Affiliate of
Sprint Nextel (NYSE: S) today reported financial and operational
results for the third quarter ended September 30, 2005, including
customer results for net subscriber additions, total direct
subscribers and average monthly customer churn previously reported on
October 13, 2005. The Company also provided an update on the status of
its discussions with Sprint Nextel and its financial and operating
guidance for the remainder of 2005.
The Company reported record revenue for the third quarter of
$349.4 million comprised of: $239.5 million in subscriber revenues,
$98.2 million in travel revenues (including wholesale and resale) and
$11.7 million in product sales revenues. Total revenue grew 3 percent
from the second quarter of 2005 and 16 percent from the third quarter
of 2004, on a pro-forma basis. Adjusted EBITDA was $94.2 million for
the third quarter compared to Adjusted EBITDA of $91.7 million in the
second quarter of 2005 and pro-forma $74 million in the third quarter
of 2004. During the third quarter, the Company incurred expenses of
approximately $2.8 million in legal, advisory and other expenses
associated with its dispute with Sprint Nextel and the lawsuit filed
by Alamosa subsidiary, AirGate PCS Inc., on August 8, 2005. Income
from operations for the quarter increased to a record $36.7 million, a
sequential increase of 5% and a 63 percent increase compared to the
third quarter of 2004, on a pro-forma basis. The Company reported
third quarter net income of $1.8 million or $0.01 per common share
after preferred stock dividends.
As previously announced, net subscriber additions totaled 33,000
during the third quarter compared to 52,000 net additions in the
second quarter of 2005 and 61,000 net additions in the same quarter
one year ago on a pro-forma basis. The Company ended the third quarter
with 1.480 million subscribers, a 2 percent increase over the second
quarter of 2005 and a 17 percent increase one year ago, on a pro-forma
basis. The Company also reported average monthly customer churn of 2.5
percent for the third quarter, compared to 2.1 percent in the second
quarter of 2005 and 2.5 percent one year ago, on a pro-forma basis.
Additionally, the Company spent approximately $35 million on fixed
asset additions including the launch of 117 new sites, 37 of which
were in the former AirGate properties, in the third quarter increasing
the covered population to 19.9 million.
"Alamosa delivered another record quarter for revenues, income
from operations, and Adjusted EBITDA, along with solid subscriber
growth in a challenging quarter," said David E. Sharbutt, Chairman and
Chief Executive Officer of Alamosa Holdings, Inc. "The mid-quarter
merger of Sprint and Nextel impacted our subscriber growth as those
companies were focused on the merger and the subsequent repositioning
of the new brand and messaging subsequent to the merger. We did not
allow the anticipated merger to affect our focus on continuing to grow
our company, as evidenced by our operating results and the continued
expansion of our distribution system and wireless network." Mr.
Sharbutt concluded by stating, "We remain focused on executing our
business plan to continue our rapid growth and on resolving our
dispute with Sprint."
As previously announced on August 8th, 2005, Alamosa through its
wholly-owned subsidiary, AirGate PCS, Inc., filed a complaint against
Sprint Corporation, certain of its affiliates and Nextel
Communications, Inc. in the Delaware Court of Chancery alleging, among
other things, that following the completion of the pending merger
between Sprint and Nextel, Sprint would breach the exclusivity
covenants contained in the agreements governing its relationship with
AirGate and that Nextel unlawfully interfered with AirGate's exclusive
rights under such agreements. The complaint seeks, among other things,
an order directing Sprint and its affiliates to specifically perform
their contractual obligations under their agreements with AirGate, an
injunction preventing Sprint and Nextel from taking any action or
entering into any agreement that would violate the exclusivity
covenants contained in the agreements, a declaratory judgment
declaring the rights, remedies and obligations of the parties under
the agreements, and damages. "Discussions with Sprint to date have
failed to lead to a mutually satisfactory agreement," stated Mr.
Sharbutt.
BUSINESS OUTLOOK
The following business outlook is being updated for the remainder
of 2005 and may be materially affected by competitive conditions,
continued development and acceptance of new Vision products and
services, changes in pricing plans, the integration of AirGate PCS,
Inc., the impact of the merger between Sprint and Nextel and general
economic conditions, among other things (See "Forward Looking
Statements" below):
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*T
AirGate Alamosa
From AirGate Pro-Forma
Feb. 16 Pro-Forma Combined
Alamosa 2005 Combined Year Year
------- ------- -------- ----------- ---------
Adjusted
EBITDA $267 $73 $340 $80 $347
million million million million million
Fixed Asset
Additions $90 $50 $140
million million million
Net Subscriber
Additions 170,000 35,000 205,000 51,000 221,000
Average Monthly
Churn 2.2%-2.3% 2.6%-2.7% 2.3%-2.4% 2.6%-2.7% 2.3%-2.4%
SUMMARY OF THIRD QUARTER 2005 OPERATING STATISTICS
(a)Consolidated results include Holding Company activity,
which is not presented separately
Alamosa Alamosa Alamosa
Holdings, Inc. Holdings, Inc. Holdings, Inc.
(consolidated)(a)(consolidated)(a)(consolidated)(a)
Q3 2005 Q2 2005 Q3 '04(Pro-Forma)
--------------- --------------- -----------------
Service Revenue
(millions) $ 337.8 $ 327.7 $ 289.8
Adjusted EBITDA
(millions) $ 94.2 $ 91.7 $ 74.0
Net Income (Loss)
(millions) $ 1.8 $ -- $ --
--------------- --------------- -----------------
Total Direct
Subscribers 1,480,000 1,447,000 1,260,000
Net Additions
(including
purchased
subscribers) 33,000 52,000 61,000
Wholesale/Resale
Subscribers 302,000 282,000 154,000
--------------- --------------- -----------------
ARPU (without
roaming &
wholesale) $ 55 $ 56 $ 57
ARPU (including
roaming &
wholesale) $ 77 $ 77 $ 79
CCPU (without
roaming) $ 29 $ 29 $ 29
CCPU (including
roaming) $ 43 $ 43 $ 42
CPGA $ 366 $ 357 $ 357
--------------- --------------- -----------------
Alamosa Alamosa AirGate,
Other Selected Holdings, Inc. (Delaware) PCS, Inc.
Operating Metrics (consolidated)(a) (stand alone) (stand alone)
(Q3 2005) --------------- ------------- -------------
Cash & ST
investments at
period-end
(millions) $ 189.3 $ 125.8 $ 52.9
Fixed Asset
Additions during
period (millions)$ 35.0 $ 19.3 $ 15.7
--------------- ------------- -------------
Licensed POPs
(millions) 23.2 15.8 7.4
Covered POPs
(millions) 19.9 13.5 6.4
Churn (net of
30-day returns) 2.5% 2.1% 2.9%
Penetration -
Covered POPs 7.4% 7.7% 6.8%
--------------- ------------- -------------
Total Voice System
Minutes of Use
(MOUs) (millions) 4,689 3,204 1,485
Average Voice MOUs
Per User
(without roaming) 766 725 863
Average Voice MOUs
Per User (including
roaming) 959 911 1,071
Inbound Roaming
Minutes (millions) 1,051 719 332
Inbound Wholesale &
Resale Minutes
(millions) 275 246 29
Outbound Roaming
Minutes (millions) 849 577 272
--------------- ------------- -------------
*T
THIRD QUARTER EARNINGS RELEASE & CONFERENCE CALL
Alamosa has scheduled a conference call, which will be broadcast
live over the Internet, on Tuesday, November 8, 2005 at 9:00 a.m. ET.
Investors and analysts may access the call live via phone by dialing
913-312-1303 and asking for the Alamosa call 10 minutes prior to the
start time or listen live over the Internet by logging on to
www.alamosapcs.com or www.earnings.com. A telephonic replay of the
conference call will be available through Tuesday, November 15, 2005,
and may be accessed by calling 719-457-0820 and using the passcode
8442996. An audio archive will be available shortly after the call on
the company's website at www.alamosapcs.com or www.earnings.com for 30
days.
ABOUT ALAMOSA
Alamosa Holdings, Inc. is the largest Sprint PCS Affiliate of
Sprint Nextel (NYSE: S), which operates the largest all-digital,
all-CDMA Third-Generation (3G) wireless network in the United States.
Alamosa has the exclusive right to provide digital wireless mobile
communications network services under the Sprint Nextel brand name
throughout its designated territory located in Texas, New Mexico,
Oklahoma, Arizona, Colorado, Utah, Wisconsin, Minnesota, Missouri,
Washington, Oregon, Arkansas, Kansas, Illinois, California, and
subsequent to year end in Georgia, South Carolina, North Carolina and
Tennessee which includes licensed population of 23.2 million
residents.
FORWARD LOOKING STATEMENTS
Statements contained in this news release that are forward-looking
statements, such as statements containing terms such as can, may,
will, expect, plan, and similar terms, 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 Alamosa's forward-looking statements, including the following
factors: Alamosa's dependence on its affiliation with Sprint Nextel;
shifts in populations or network focus; changes or advances in
technology; changes in Sprint Nextel's national service plans or fee
structure with us; change in population; difficulties in network
construction; increased competition in our markets and adverse changes
in financial position, condition or results of operations. For a
detailed discussion of these and other cautionary statements and
factors that could cause actual results to differ from Alamosa's
forward-looking statements, please refer to Alamosa's filings with the
Securities and Exchange Commission, especially in the "risk factors"
sections of Alamosa's Annual Report on Form 10-K for the year ended
December 31, 2004 and in subsequent filings with the Securities and
Exchange Commission. Investors and analysts should not place undue
reliance on forward-looking statements.
Definitions of Operating and Non-GAAP Financial Measures
We provide readers financial measures generated using generally
accepted accounting principles ("GAAP") and using adjustments to GAAP
("Non-GAAP"). These financial measures reflect conventions or standard
measures of liquidity, profitability or performance commonly used by
the investment community in the telecommunications industry for
comparability purposes.
The Non-GAAP financial measures used in this release include the
following:
-- Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") are defined as net income/
(loss) plus income taxes, net interest expense, depreciation
expense, amortization expense and other non-cash expense
items. Adjusted EBITDA is a measure used by the investment
community in the telecommunications industry for comparability
and is not intended to represent the results of our operations
in accordance with GAAP.
The financial measures and other operating metrics used in this
release include the following:
-- ARPU, or average monthly revenue per user, is a measure used
to determine the average monthly subscriber revenue earned for
subscribers based in our territory. This measure is calculated
by dividing subscriber revenues (ARPU) or total service
revenues (ARPU with roaming) in our consolidated statement of
operations by our average daily subscribers during the period
divided by the number of months in the period.
-- CCPU, or cash cost per user, is a measure of the costs to
operate our business on a per subscriber basis consisting of
costs of service and operations, general and administrative
expenses and debt exchange expenses in our consolidated
statement of operations, plus handset subsidies on equipment
sold to existing subscribers (CCPU with roaming) less roaming
charges paid to Sprint PCS (CCPU before roaming). These costs
are divided by average daily subscribers during the period
divided by the number of months in the period to calculate
CCPU.
-- CPGA, or cost per gross addition, is used to measure the
average cost we incur to add a new subscriber in our
territory. Costs we incur in calculating this measure include
handset subsidies on new subscriber activations, commissions,
rebates and other selling and marketing costs. We calculate
CPGA by dividing (a) the sum of cost of products sold and
selling and marketing expenses associated with transactions
with new subscribers during the measurement period, less
product sales revenues associated with transactions with new
subscribers during the measurement period, by (b) the total
number of subscribers activated in our territory during the
period (net of activations deactivated within 30 days and
activations due to transfers from Sprint PCS and other PCS
Affiliates of Sprint into our territory).
-- Average monthly churn is used to measure the rate at which
subscribers based in our territory deactivate service on a
voluntary or involuntary basis. We calculate average monthly
churn based on the number of subscribers deactivated during
the period (net of transfers out of our service area and those
who deactivated within 30 days of activation) as a percentage
of our average daily subscriber base during the period divided
by the number of months during the period.
-- Licensed POPs represent the number of residents (usually
expressed in millions) in our territory in which we have an
exclusive right to provide wireless mobility communications
services under the Sprint brand name in the PCS wireless
spectrum. The number of residents located in our territory
does not represent the number of wireless subscribers that we
serve or expect to serve in our territory.
-- Covered POPs represent the number of residents (usually
expressed in millions) covered by our portion of the PCS
network of Sprint in our territory. The number of residents
covered by our network does not represent the number of
wireless subscribers that we serve or expect to serve in our
territory.
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*T
ALAMOSA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands, except share information)
September 30, 2005 December 31, 2004
------------------ -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 102,248 $ 129,917
Short term investments 87,073 50,418
Customer accounts receivable, net 72,857 44,687
Receivable from Sprint 34,777 24,809
Interest receivable 202 216
Inventory 13,333 9,136
Prepaid expenses and other assets 18,259 13,170
Deferred customer acquisition costs 5,282 6,337
Deferred tax asset 15,941 4,230
------------------ -----------------
Total current assets 349,972 282,920
Property and equipment, net 546,553 441,808
Debt issuance costs, net 8,334 9,086
Early redemption option on
preferred stock -- 21,387
Goodwill 245,410 --
Intangible assets, net 767,923 416,716
Other noncurrent assets 5,668 4,188
------------------ -----------------
Total assets $ 1,923,860 $ 1,176,105
================== =================
LIABILITIES, MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,110 $ 24,692
Accrued expenses 61,417 43,916
Payable to Sprint 34,394 35,852
Interest payable 19,493 21,076
Deferred revenue 32,981 22,549
Current installments of
capital leases 106 110
------------------ -----------------
Total current liabilities 165,501 148,195
------------------ -----------------
Long term liabilities:
Capital lease obligations 671 749
Other noncurrent liabilities 11,631 5,835
Deferred tax liability 49,587 16,362
Senior notes 1,094,475 739,141
------------------ -----------------
Total long term liabilities 1,156,364 762,087
------------------ -----------------
Total liabilities 1,321,865 910,282
------------------ -----------------
Commitments and contingencies -- --
Mandatorily redeemable convertible
preferred stock:
Series B preferred stock,
$.01 par value; 750,000
shares authorized;
220,301 and 478,987
shares issued and
outstanding, respectively 66,666 161,148
Series C preferred stock,
$.01 par value; 500,000
shares authorized; no
shares issued -- --
------------------ -----------------
Total mandatorily
redeemable
convertible preferred
stock 66,666 161,148
------------------ -----------------
Stockholders' equity:
Preferred stock, $.01 par
value; 8,750,000 shares
authorized; no shares
issued -- --
Common stock, $.01 par
value; 290,000,000 shares
authorized; 163,389,291
and 114,895,245 shares
issued and outstanding,
respectively 1,634 1,149
Additional paid-in capital 1,289,563 860,425
Accumulated deficit (754,213) (756,834)
Unearned compensation (1,655) (65)
------------------ -----------------
Total stockholders'
equity 535,329 104,675
------------------ -----------------
Total liabilities and
stockholders' equity $ 1,923,860 $ 1,176,105
================== =================
ALAMOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(dollars in thousands, except per share amounts)
For the three months ended
September 30,
------------------------------
2005 2004
------------ -------------
Revenues:
Subscriber revenues $ 239,474 $ 143,623
Roaming and wholesale revenues 98,284 59,106
------------- -------------
Service revenues 337,758 202,729
Product sales 11,667 8,637
------------- -------------
Total revenue 349,425 211,366
------------- -------------
Costs and expenses:
Cost of service and operations 170,652 99,250
Cost of products sold 28,763 20,265
Selling and marketing 46,982 40,090
General and administrative expenses 8,826 5,861
Merger related expenses -- --
Depreciation and amortization 55,995 25,886
Loss on disposal of property and
equipment 406 172
Non-cash compensation 1,101 30
------------- -------------
Total costs and expenses 312,725 191,554
------------- -------------
Income from operations 36,700 19,812
Loss on debt extinguishment -- --
Gain (loss) on derivative instruments 571 1,200
Interest and other income 1,737 362
Interest expense (26,088) (19,206)
------------- -------------
Income (loss) before income taxes 12,920 2,168
Income tax expense (10,053) --
------------- -------------
Net income (loss) 2,867 2,168
Preferred stock dividend (1,041) (2,282)
Preferred stock conversion premium -- (160)
------------- -------------
Net income (loss) attributable to common
stockholders $ 1,826 $ (274)
============= =============
Net income (loss) per common share:
Basic $ 0.01 $ (0.00)
============= =============
Diluted $ 0.01 $ (0.00)
============= =============
Weighted average common shares outstanding:
Basic 162,434,441 112,845,429
============= =============
Diluted 165,344,812 112,845,429
============= =============
For the three months ended
September 30,
-------------------------------
2005 2004
------------ -------------
Revenues:
Subscriber revenues $ 667,146 $ 401,938
Roaming and wholesale revenues 256,428 153,964
-------------- -------------
Service revenues 923,574 555,902
Product sales 33,002 25,483
-------------- -------------
Total revenue 956,576 581,385
-------------- -------------
Costs and expenses:
Cost of service and operations 455,523 276,528
Cost of products sold 87,295 56,427
Selling and marketing 138,270 102,922
General and administrative expenses 27,141 17,284
Merger related expenses 1,280 --
Depreciation and amortization 152,554 78,793
Loss on disposal of property and
equipment 513 3,082
Non-cash compensation 2,588 81
-------------- -------------
Total costs and expenses 865,164 535,117
-------------- -------------
Income from operations 91,412 46,268
Loss on debt extinguishment (482) (13,101)
Gain (loss) on derivative instruments (13,505) 1,946
Interest and other income 4,410 751
Interest expense (73,737) (56,393)
-------------- -------------
Income (loss) before income taxes 8,098 (20,529)
Income tax expense (5,477) (557)
-------------- -------------
Net income (loss) 2,621 (21,086)
Preferred stock dividend (4,041) (8,078)
Preferred stock conversion premium (5,506) (6,600)
-------------- -------------
Net income (loss) attributable to common
stockholders $ (6,926) $ (35,764)
=============== =============
Net income (loss) per common share:
Basic $ (0.05) $ (0.35)
=============== ==============
Diluted $ (0.05) $ (0.35)
=============== ==============
Weighted average common shares outstanding:
Basic 149,609,302 103,441,770
=============== =============
Diluted 149,609,302 103,441,770
=============== =============
ALAMOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands)
For the nine months
ended September 30,
2005 2004
--------- ---------
Cash flows from operating activities:
Net income (loss) $ 2,621 $ (21,086)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Non-cash compensation 2,588 81
Non-cash interest expense on
derivative instruments -- 6
Non-cash accretion of asset
retirement obligations 222 139
Non-cash (gain) loss on derivative
instruments 13,505 (1,946)
Provision for bad debts 10,054 7,603
Depreciation and amortization of
property and equipment 75,183 54,269
Amortization of intangible assets 77,371 24,524
Amortization of financing costs
included in interest expense 681 718
Amortization of debt premium (2,039) --
Loss on debt extinguishment 482 13,101
Deferred income taxes 4,033 --
Interest accreted on discount notes 15,371 18,351
Loss on disposal of property and
equipment 513 3,082
Merger related expenses 1,280 --
(Increase) decrease in:
Receivables (7,398) (20,318)
Inventory 134 531
Prepaid expenses and other assets 524 1,816
Increase (decrease) in:
Accounts payable and accrued
expenses (46,037) 7,571
--------- --------
Net cash provided by operating
activities 149,088 88,442
--------- ---------
Cash flows from investing activities:
Proceeds from sale of assets 303 569
Purchases of property and equipment (112,453) (63,765)
Purchase of intangible asset -- (453)
Acquisition of business, net of cash
paid (70,790) --
Merger related expenses (436) --
Change in restricted cash -- 1
Change in short-term investments 7,969 (50,342)
--------- ---------
Net cash used in investing activities (175,407) (113,990)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of senior notes -- 250,000
Redemption of senior notes (6,800) --
Repayments of borrowings under senior
secured debt -- (200,000)
Merger related expenses (844) --
Debt issuance costs -- (8,206)
Preferred stock dividends (4,849) (8,349)
Preferred stock conversion premium -- (276)
Stock options exercised 10,058 1,441
Shares issued to employee stock
purchase plan 1,165 978
Proceeds from restricted stock sales 2 --
Payments on capital leases (82) (415)
--------- ---------
Net cash provided by (used in)
financing activities (1,350) 35,173
--------- ---------
Net increase (decrease) in cash and cash
equivalents (27,669) 9,625
Cash and cash equivalents at beginning of
period 129,917 99,644
--------- ---------
Cash and cash equivalents at end of period $ 102,248 $ 109,269
========= =========
Supplemental disclosure of non-cash
financing and investing activities:
Stock issued in business combination $ 330,848 $ --
Warrants assumed in business
combination 2,568 --
Fair value of assets acquired in
business combination 879,457 --
Fair value of liabilities assumed in
business combination (441,796) --
Conversion of preferred stock 87,031 67,219
Preferred stock issued in debt exchange -- 51
Non-cash fixed asset additions 1,277 --
Asset retirement obligations
capitalized 437 143
Capitalized lease obligations incurred -- 67
Change in accounts payable for
purchases of property and equipment (9,233) (9,532)
BALANCE SHEETS
AS OF SEPTEMBER 30, 2005
(dollars in thousands)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
ASSETS Inc. Inc. Inc.
Current Assets: ---------- -------- ----------
Cash and cash equivalents $ 74,263 $ 17,372 $ 102,248
Short-term investments 51,553 35,520 87,073
Customer accounts receivable, net 50,863 21,994 72,857
Receivable from Sprint 29,711 5,066 34,777
Interest receivable 202 -- 202
Intercompany receivable 19,521 -- --
Inventory 10,150 3,183 13,333
Prepaid expenses and other assets 10,844 7,366 18,259
Deferred customer acquisition
costs 4,865 417 5,282
Deferred tax asset 4,230 11,711 15,941
---------- -------- ----------
Total current assets 256,202 102,629 349,972
Property and equipment, net 445,127 101,426 546,553
Debt issuance costs, net 8,334 -- 8,334
Goodwill -- 255,628 245,410
Intangible assets, net 397,497 370,426 767,923
Other noncurrent assets 4,040 1,628 5,668
---------- -------- ----------
Total assets $1,111,200 $831,737 $1,923,860
========== ======== ==========
LIABILITIES, MANDATORILY REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 13,604 $ 3,506 $ 17,110
Accrued expenses 44,991 15,331 61,417
Payable to Sprint 20,784 13,610 34,394
Interest payable 13,086 6,407 19,493
Intercompany payable -- 2,984 --
Deferred revenue 24,429 8,552 32,981
Current installments of capital
leases 106 -- 106
---------- -------- ----------
Total current liabilities 117,000 50,390 165,501
Capital lease obligations 671 -- 671
Other noncurrent liabilities 8,519 1,358 11,631
Deferred tax liability 28,877 27,700 49,587
Senior notes 748,123 346,352 1,094,475
---------- -------- ----------
Total liabilities 903,190 425,800 1,321,865
---------- -------- ----------
Mandatorily redeemable convertible
preferred stock -- -- 66,666
---------- -------- ----------
Stockholders' Equity:
Preferred stock -- -- --
Common stock -- -- 1,634
Additional paid-in capital 932,059 424,560 1,289,563
Accumulated deficit (722,593) (18,623) (754,213)
Unearned compensation (1,456) -- (1,655)
---------- -------- ----------
Total stockholders' equity 208,010 405,937 535,329
---------- -------- ----------
Total liabilities and
stockholders' equity $1,111,200 $831,737 $1,923,860
========== ======== ==========
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
(dollars in thousands)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
Inc. Inc. Inc.
Revenues: -------- -------- --------
Subscriber revenues $166,850 $ 72,624 $239,474
Roaming and wholesale revenues 71,761 27,729 98,284
-------- -------- --------
Service revenues 238,611 100,353 337,758
Product sales 8,329 3,338 11,667
-------- -------- --------
Total revenue 246,940 103,691 349,425
-------- -------- --------
Costs and expenses:
Cost of service and operations 116,293 55,565 170,652
Cost of products sold 20,690 8,073 28,763
Selling and marketing 33,245 13,737 46,982
General and administrative expenses 4,064 4,566 8,826
Depreciation and amortization 29,387 26,608 55,995
Loss on disposal of property and
equipment 286 120 406
Non-cash compensation 922 -- 1,101
--------- -------- --------
Income (loss) from operations 42,053 (4,978) 36,700
Gain on derivative instruments -- -- 571
Interest and other income 967 694 1,737
Interest expense (19,813) (6,275) (26,088)
-------- -------- --------
Income (loss) before income
taxes 23,207 (10,559) 12,920
Income tax (expense) benefit (5,288) 4,099 (10,053)
-------- -------- --------
Net income (loss) $ 17,919 $ (6,460) $ 2,867
======== ======== ========
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(dollars in thousands)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
Inc. Inc.(1) Inc.
Revenues: -------- -------- --------
Subscriber revenues $485,752 $181,394 $667,146
Roaming and wholesale revenues 198,656 60,645 256,428
-------- -------- --------
Service revenues 684,408 242,039 923,574
Product sales 25,011 7,991 33,002
-------- -------- --------
Total revenue 709,419 250,030 956,576
-------- -------- --------
Costs and expenses:
Cost of service and operations 328,391 130,005 455,523
Cost of products sold 67,096 20,199 87,295
Selling and marketing 103,383 34,887 138,270
General and administrative expenses 13,125 13,388 27,141
Merger related expenses 436 -- 1,280
Depreciation and amortization 83,843 68,711 152,554
Loss on disposal of property and
equipment 393 120 513
Non-cash compensation 2,028 -- 2,588
--------- -------- --------
Income (loss) from operations 110,724 (17,280) 91,412
Loss on debt extinguishment (482) -- (482)
Loss on derivative instruments -- -- (13,505)
Interest and other income 2,566 1,719 4,410
Interest expense (58,965) (14,772) (73,737)
-------- -------- --------
Income (loss) before income
taxes 53,843 (30,333) 8,098
Income tax (expense) benefit (12,332) 11,710 (5,477)
-------- --------- --------
Net income (loss) $ 41,511 $(18,623) $ 2,621
======== ======== ========
(1) Includes AirGate PCS, Inc. activity from acquisition (February
15, 2005) through September 30, 2005.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
(dollars in thousands)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
Inc. Inc.(1) Inc.
-------- --------- ---------
Cash flows from operating activities:
Net income (loss) $ 41,511 $ (18,623) $ 2,621
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Non-cash compensation 2,028 -- 2,588
Non-cash accretion of asset
retirement obligations 178 44 222
Non-cash loss on derivative
instruments -- -- 13,505
Provision for bad debts 6,804 3,250 10,054
Depreciation and amortization
of property and equipment 61,047 14,136 75,183
Amortization of intangible
assets 22,797 54,574 77,371
Amortization of financing costs
included in interest expense 681 -- 681
Amortization of debt premium -- (2,039) (2,039)
Loss on debt extinguishment 482 -- 482
Interest accreted on discount
notes 15,371 -- 15,371
Deferred income taxes 12,273 (11,710) 4,033
Loss on disposal of property
and equipment 393 120 513
Merger related expenses 436 -- 1,280
(Increase) decrease in:
Receivables from/payable
to Parent (21,889) 2,986 --
Receivables (17,867) 10,469 (7,398)
Inventory (1,014) 1,148 134
Prepaid expenses and other
assets 2,285 (3,690) 524
Decrease in:
Accounts payable and accrued
expenses (18,814) (27,483) (46,037)
-------- --------- ---------
Net cash provided by
operating activities 106,702 23,182 149,088
-------- --------- ---------
Cash flows from investing activities:
Proceeds from sale of assets 303 -- 303
Purchases of property and equipment (76,319) (36,134) (112,453)
Acquisition of business, net of
cash paid (865) 36,220 (70,790)
Merger related expenses (436) -- (436)
Change in short term investments (1,142) 9,104 7,969
-------- ---------- ---------
Net cash provided by (used in)
investing activities (78,459) 9,190 (175,407)
-------- --------- ---------
Cash flows from financing activities:
Repayment of senior notes (6,800) -- (6,800)
Merger related expenses -- -- (844)
Preferred stock dividends -- -- (4,849)
Stock options exercised -- -- 10,058
Shares issued to employee stock
purchase plan -- -- 1,165
Proceeds from sale of restricted
stock -- -- 2
Capital distribution to Parent (74,230) (15,000) --
Payments on capital leases (82) -- (82)
-------- ---------- ---------
Net cash used in financing
activities (81,112) (15,000) (1,350)
-------- --------- ---------
Net increase (decrease) in cash and
cash equivalents (52,869) 17,372 (27,669)
Cash and cash equivalents at
beginning of period 127,132 -- 129,917
-------- --------- ---------
Cash and cash equivalents at end of
period $ 74,263 $ 17,372 $ 102,248
======== ========= =========
Supplemental disclosure of non-cash
financing and investing activities:
Capital infusion in business
combination $ -- $ 333,416 $ --
Stock issued in business
combination -- -- 330,848
Warrants assumed in business
combination -- -- 2,568
Fair value of assets acquired in
business combination -- 879,074 879,457
Fair value of liabilities assumed
in business combination -- (449,829) (441,796)
Conversion of preferred stock -- -- 87,031
Non-cash fixed asset additions 1,277 -- 1,277
Asset retirement obligations
capitalized 376 60 437
Change in accounts payable for
purchases of property and
equipment (11,636) 2,403 (9,233)
(1) Includes AirGate PCS, Inc. activity from acquisition (February 15,
2005) through September 30, 2005.
Computation of Adjusted EBITDA and Reconciliation
of Non-GAAP Liquidity Measures
(Unaudited)
(dollars in thousands)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
Inc. Inc. Inc.
------------------------------------
For the For the For the
three months three months three months
ended ended ended
Sept. 30, Sept. 30, Sept. 30,
2005 2005 2005
------------------------------------
Net income (loss) $ 2,867 $ 17,919 $(6,460)
Income tax expense (benefit) 10,053 5,288 (4,099)
Net interest expense 24,351 18,846 5,581
Depreciation and amortization 55,995 29,387 26,608
Non-cash compensation 1,101 922 --
Gain on derivative instruments (571) -- --
Loss on disposal of property
and equipment 406 286 120
-------- -------- -------
Adjusted EBITDA 94,202 72,648 21,750
Provision for bad debts 4,881 2,941 1,940
Non-cash accretion of asset
retirement obligation 78 63 15
Non-cash interest items 1,830 2,427 (597)
Current income tax (expense)
benefit (5,800) 6,985 --
Net interest expense (24,351) (18,846) (5,581)
Working capital changes 4,251 (16,773) 9,615
-------- -------- -------
Cash flows from
operating activities $ 75,091 $ 49,445 $27,142
======== ======== =======
Computation of Average Revenue per User (ARPU)
Computation of Cash Cost per User (CCPU)
Computation of Cost per Gross Addition (CPGA)
(Unaudited)
Alamosa AirGate Alamosa
(Delaware), PCS, Holdings,
Inc. Inc. Inc.
------------------------------------
For the For the For the
three months three months three months
ended ended ended
Sept. 30, Sept. 30, Sept. 30,
2005 2005 2005
------------------------------------
Subscriber revenues (000s) $239,474 $166,850 $ 72,624
Roaming and wholesale
revenue (000s) 98,284 71,761 27,729
-------- -------- --------
Service revenue (000s) $337,758 $238,611 $100,353
======== ======== ========
Average subscribers (000s) 1,464 1,030 434
======== ======== ========
ARPU $ 55 $ 54 $ 56
======== ======== ========
ARPU with roaming $ 77 $ 77 $ 77
======== ======== ========
Cost of service and
operations (000s) $170,652 $116,293 $ 55,565
Less Sprint roaming
expense (000s) (60,493) (40,542) (21,156)
General and administrative
expenses (000s) 8,826 4,064 4,566
Upgrade costs in selling and
marketing expenses (000s) 8,084 5,749 2,335
-------- -------- --------
$127,069 $ 85,564 $ 41,310
======== ======== ========
Average subscribers (000s) 1,464 1,030 434
======== ======== ========
CCPU $ 29 $ 28 $ 32
======== ======== ========
CCPU with roaming $ 43 $ 41 $ 48
======== ======== ========
Selling and marketing
expenses (000s) $ 46,982 $ 33,245 $ 13,737
Less upgrade costs in selling
and marketing costs (000s) (8,084) (5,749) (2,335)
Cost of products sold (000s) 28,763 20,690 8,073
Product sales revenues (000s) (11,667) (8,329) (3,338)
-------- -------- --------
$ 55,994 $ 39,857 $ 16,137
======== ======== ========
Activations (000s) 153 107 46
======== ======== ========
CPGA $ 366 $ 372 $ 351
======== ======== ========
*T