Financial: Western Wireless Announces Fourth Quarter and Year End 1998 Financial Results

Financial: Western Wireless Announces Fourth Quarter and Year End 1998 Financial Results – Company Financial Information

Western Wireless Corporation (Nasdaq:WWCA), a leading provider of cellular and personal communications services (“PCS”), announced Wednesday its financial and operating results for the fourth quarter and year ended December 31, 1998. “1998 has been a year of great accomplishments for Western Wireless,” said John Stanton, chairman and chief executive officer of Western Wireless. “Our business continues to be one of the fastest growing wireless providers in the country, adding over 330,000 new customers. In cellular, while growing the subscriber base rapidly, we also grew EBITDA (operating income before depreciation and amortization) by almost 50 percent and generated over $80 million in free cash flow (EBITDA less capital expenditures). We continue to be excited by the prospect of expanding our wireless service offering in rural America.” “During 1998 our VoiceStream Wireless business increased total subscribers by 151 percent over the prior year,” continued Stanton. “This growth in subscribers demonstrates that consumers are excited by the new alternative to wireless service that is being offered by VoiceStream. The launch of the Phoenix market in the fourth quarter of 1998 and the impending launch of our Seattle market are evidence that we continue to move the VoiceStream Wireless name forward in the West. Our international team continues to look for opportunities around the globe. We are pleased with their progress and excited by the future prospects in the international arena.” Total Company Results At the end of the fourth quarter 1998 the company had 982,800 subscribers, a 52 percent increase over the fourth quarter of 1997. The company reported revenues of $171.6 million for the quarter, up 51 percent over the same quarter a year ago. Net loss was $57.2 million, a loss of $0.75 per share for the quarter compared to a loss of $72.3 million, a loss of $0.99 per share, for the fourth quarter of 1997. Consolidated EBITDA in the fourth quarter was $8.2 million compared to an EBITDA loss of $2.2 million for the same quarter in 1997. For the year ended December 31, 1998, total revenues for the company were $584.6 million, a 54 percent increase from $380.6 million in 1997. The net loss for the year ended December 31, 1998, was $224.1 million, a loss of $2.95 per share, compared to a loss of $265.5 million, a loss of $3.76 per share, for the year ended December 31, 1997. Consolidated EBITDA for the year ended December 31, 1998 was $34.8 million compared to an EBITDA loss of $26.2 million for 1997. Western Wireless Cellular Results Cellular subscribers increased by 140,400 during the year (including acquisitions of 5,100). For the quarter ending December 31, 1998, cellular subscribers were 660,400, a 27 percent year to year increase. Cellular service revenues for the fourth quarter of 1998 increased 31 percent from the same quarter a year ago to $111.6 million. Cellular EBITDA for the quarter was $42.8 million, a 40 percent increase over the same quarter in 1997. Cellular capital expenditures were $23.9 million for the quarter. For the year ended December 31, 1998, cellular service revenues were $401.9 million, a 38 percent increase over 1997. Cellular EBITDA was $155.7 million for the year ended December 31, 1998, a 50 percent increase over 1997 EBITDA of $103.9 million. The cellular business generated $82.3 million in free cash flow for the year ended December 31, 1998. Western Wireless International 1998 was an exciting year for Western Wireless International (“WWI”), marked by the acquisition of three new licenses, the commercial launch of one new market, and the continued growth of its first two operations. WWI operating companies were awarded licenses in Ireland, Croatia, and Haiti in 1998. In May, Tal hf, WWI’s Icelandic operating company, launched commercial service, achieving a 3.9% penetration rate in its first eight months of operation. WWI’s operating companies in Latvia, Georgia, and Iceland provide service to over 75,000 subscribers at the end of 1998. VoiceStream Wireless Results VoiceStream Wireless subscribers increased by 193,800 during the year. For the quarter ending December 31, 1998, VoiceStream subscribers were 322,400, a 151 percent year to year increase. VoiceStream service revenues for the fourth quarter of 1998 increased 159 percent from the same quarter a year ago to $42.8 million. The VoiceStream EBITDA loss for the quarter was $34.6 million. EBITDA before marketing expenses (including the net loss on equipment sales) for the quarter ended December 31, 1998 was $7.6 million. VoiceStream capital expenditures were $104.1 million for the quarter, which includes expenditures to prepare for the Phoenix and Seattle launches. For the year ended December 31, 1998, VoiceStream service revenues were $127.5 million, a 142 percent increase over 1997. The VoiceStream EBITDA loss was $120.9 million for the year ended December 31, 1998. VoiceStream Wireless Spin-off On February 8, 1999, Western Wireless announced that it had received a favorable ruling from the Internal Revenue Service regarding the tax free nature of a potential spin-off of its 80.1 percent ownership of VoiceStream Wireless Corporation. On February 5, 1999, the Board of Directors of Western Wireless approved such a spin-off transaction and authorized the management of the company to effectuate the transaction. Completion of the spin off transaction is subject to conditions including receipt of certain third party consents and the review of filings by the Securities and Exchange Commission. It is anticipated that the spin off transaction will be completed during the second quarter of 1999. Based in Bellevue, Wash., Western Wireless Corp. is a leading provider of wireless communications services in the western United States. It currently offers cellular service marketed under the Cellular One name in 17 Western states. Marketed under the VoiceStream name, Western Wireless provides PCS service using the globally dominant GSM technology in 10 U.S. markets. In conjunction with joint ventures, Western Wireless provides VoiceStream PCS service in three additional markets. Western Wireless’ combined cellular and PCS licenses, along with its joint ventures, cover over half the land in the continental United States.

WESTERN WIRELESS CORPORATION

Consolidated Statements of Operations

(Dollars in thousands, except per share data)

(Unaudited)

Three months ended Twelve months ended

Dec 31, Dec 31,

1998 1997 1998 1997

Revenues:

Subscriber revenues $ 129,940 $ 88,207 $ 454,016 $ 297,724

Roamer revenues 23,135 12,167 70,250 39,977

Equipment sales and

other revenues 18,532 13,008 60,316 42,877

Total revenues 171,607 113,382 584,582 380,578

Operating expenses:

Cost of service 31,544 23,621 106,570 90,184

Cost of equipment sales 33,113 25,671 110,220 83,167

General and administrative43,685 33,694 164,231 112,543

Sales and marketing 55,113 32,621 168,756 120,875

Depreciation and

amortization 42,686 36,543 158,169 133,470

Total operating expenses 206,141 152,150 707,946 540,239

Operating loss (34,534) (38,768) (123,364) (159,661)

Other income (expense):

Interest and financing

expense, net (32,847) (31,167) (126,345) (98,964)

Equity in net loss of

unconsolidated affiliates(7,154) (3,951) (28,866) (11,058)

Other, net 2,579 1,593 10,471 4,149

Total other income

(expense) (37,422) (33,525) (144,740) (105,873)

Minority interest in net loss

of consolidated

subsidiaries 14,750 — 44,035 —

Net loss $(57,206) $(72,293) $(224,069) $(265,534)

Basic loss per

common share $(0.75) $(0.99) $(2.95) $(3.76)

Weighted average common

shares used in computing

basic loss per

common share 75,968,000 72,758,000 75,863,000 70,692,000

WESTERN WIRELESS CORPORATION

SUPPLEMENTARY FINANCIAL AND OPERATIONAL DATA

(Dollars in thousands)

(Unaudited)

(Note: The following table sets forth certain selected financial

and operating data of the company for the three months and years

ended December 31, 1998 and 1997)

Three Months Ended December 31,

1998 1997

Cellular PCS Cellular PCS

Revenues:

Subscriber

revenues $ 88,248 $ 41,692 $ 71,904 $ 16,303

Roamer revenues 22,075 1,060 11,940 227

Equipment sales 4,602 12,633 3,948 7,736

Other revenues 1,297 1,324

Total revenues 116,222 55,385 89,116 24,266

Operating expenses:

Cost of service 15,579 15,965 12,424 11,197

Cost of equipment

sales 8,925 24,188 9,654 16,017

General and administra-

tive 24,527 19,158 18,416 15,278

Sales and marketing24,410 30,703 18,049 14,572

Depreciation and amortiza-

tion 20,161 22,525 17,267 19,276

Total operating

expenses 93,602 112,539 75,810 76,340

Operating income

(loss) $ 22,620 $ (57,154) $ 13,306 $ (52,074)

EBITDA $ 42,781 $ (34,629) $ 30,573 $ (32,798)

Ending subscribers660,400 322,400 520,000 128,600

Twelve Months Ended December 31,

Cellular PCS Cellular PCS

Revenues:

Subscriber

revenues $ 330,050 $ 123,966 $ 245,364 $ 52,360

Roamer revenues 66,744 3,506 39,750 227

Equipment sales 14,699 40,490 12,353 25,143

Other revenues 5,127 5,381

Total revenues 416,620 167,962 302,848 77,730

Operating expenses:

Cost of service 55,592 50,978 47,001 43,183

Cost of equipment

sales 33,149 77,071 29,698 53,469

General and administra-

tive 88,888 75,343 60,865 51,678

Sales and marketing83,309 85,447 61,409 59,466

Depreciation and amortiza-

tion 74,402 83,767 66,595 66,875

Total operating

expenses 335,340 372,606 265,568 274,671

Operating income

(loss) $ 81,280 $(204,644) $ 37,280 $(196,941)

EBITDA $ 155,682 $(120,877) $ 103,875 $(130,066)

Ending subscribers 660,400 322,400 520,000 128,600

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