| Leap Reports Results for First Fiscal Quarter of 2002 |
| SAN DIEGO, Apr 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- ~ Network Operations Costs for Cricket Service Falls to Less Than One Cent Per Minute Delivered ~ Leap Wireless International, Inc. (Nasdaq: LWIN), an innovator of wireless communications services, today reported results for the first quarter of fiscal year 2002. Leap reported net additions of approximately 268,000, ending the quarter with 1.387 million Cricket customers, up approximately 24 percent from the 1.119 million customers reported as of Dec. 31, 2001. Leap offers Cricket, its unlimited local wireless service, in 40 markets in 20 states stretching from New York to California.(Photo: http://www.newscom.com/cgi-bin/prnh/20010306/LATU057LOGO ) "On the heels of our rapid expansion in 2001, our first quarter results and the actions we have taken signal another strong year ahead for Leap," said Harvey P. White, Leap's chairman and CEO. "We are pleased with our business performance during the quarter, from top-line growth in revenue and customers to improvement in our bottom line. In March, we worked with our vendors to amend our financing agreements to better align them with the expanded scope of our business. We remain pleased with both our continued customer growth and our further reduction in our non-selling cash costs. We expect to be EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) positive on a consolidated basis for the fourth quarter of 2002." "We are focused on continuing to deliver operational excellence in markets from coast to coast," said Susan G. Swenson, Leap's president and chief operating officer. "We are committed to driving fixed and variable costs out of every aspect of our business, from network operations to general and administrative and selling and marketing expenses. At the same time, our team is dedicated to creating a quality experience for our growing Cricket customer base. Because of Cricket's predictability and simplicity, more than three- quarters of our customers are completely new to wireless or returning to the category after at least a year. Our Cricket Comfortable Wireless service continues to attract the growth segments of the wireless industry."
Cricket Operational Highlights:
Operational highlights from the first fiscal quarter of 2002 include:
-- Overall non-selling cash costs per user (CCU) for Leap's consolidated
business was approximately $26, down $9 from the previous quarter.
-- Billed average revenue per user per month (ARPU) rose to $38.40, up
from the approximately $38 reported for the fourth quarter of 2001.
-- Leap launched Cricket service in Buffalo, N.Y., completing the launch
of all markets in Leap's 40 Market Plan, and bringing the total
potential customers covered by Cricket networks to 25.4 million.
Throughout this release and until further announcement, Leap will
report its licensed and covered POPs based on 2002 population
estimates as reported by Claritas Inc.
-- Overall cost per gross customer addition (CPGA), including pre-launch
marketing expenses incurred during the launch of the Buffalo market,
was approximately $246 for the quarter, consistent with CPGA reported
for the previous quarter.
-- Aggregate average minutes of use across all of Leap's markets was
1,230 minutes per month.
Leap also reported the following first quarter results for its 14 mature
markets, which have been in operation for one-year or more and together
represent approximately 38 percent of the company's potential customers covered
under its 40 Market Plan:
-- Aggregate EBITDA for these markets was positive at the market level
for the quarter.
-- Aggregate earnings before interest, taxes, depreciation, amortization,
and marketing (EBITDAM) margin, based on service revenue, was greater
than 50 percent, at the market level for the quarter.
-- Penetration of the 9.6 million potential customers covered by Cricket
networks in these markets was 7.7 percent.
-- Combined churn was 3.4 percent.
Leap expects to report on the results of 20 mature markets for the second
quarter, which together will represent approximately 50 percent of the covered
potential customers under its 40 Market Plan.
Key consolidated financial performance measures for the first fiscal quarter of 2002, which continue to reflect the significant growth of Cricket during the quarter, were as follows:
-- Total revenues for Leap's operations were $140.2 million, an increase
of $36.3 million over the $103.9 million reported for the previous
quarter. Service revenue rose to $128.0 million, an increase of
$34.5 million over that reported for the fourth fiscal quarter of
2001.
-- Adjusted EBITDA loss for Leap was $65.9 million, a decrease of
$53.1 million from the adjusted EBITDA loss of $119.0 million reported
for the previous quarter. The adjusted EBITDA loss of $65.9 million
for the first quarter includes one time expenses of $1.4 million
associated with a reduction in force in the first quarter and was
adjusted to exclude a gain on the sale of a wireless license of
$0.4 million. The adjusted EBITDA loss of $119.0 million reported for
the previous quarter excluded a $136.3 million gain on the sale of
wireless licenses.
-- Leap's adjusted net loss for the first quarter of 2002 was
$181.1 million, or $4.89 per share, nearly $1.00 per share less than
the adjusted net loss of $215.9 million, or $5.88 per share, in the
previous quarter. The adjusted net loss of $181.1 million excludes
the gain on the sale of a wireless license of $0.4 million and
excludes a one-time income tax expense of $15.9 million resulting from
Leap's adoption of Statement of Financial Accounting Standard ("SFAS")
No. 142, "Goodwill and Other Intangible Assets." Leap adopted SFAS
No. 142 on January 1, 2002. Accordingly, amortization of goodwill and
wireless licenses ceased as of that date because they are indefinite
lived intangible assets. The adjusted net loss of $215.9 million
reported for the previous quarter excludes the gain on the sale of a
portion of Leap's wireless licenses in the Salt Lake City and Provo,
Utah Basic Trading Areas (BTAs).
-- Leap's total cash and cash equivalents, unrestricted investments, and
deposit on Auction #35 as of March 31, 2002 were $270.5 million.
During the quarter, Leap set aside approximately $21 million to fund
debt associated with wireless license acquisitions.
-- Leap's property and equipment, net of depreciation, rose to
$1,206.6 million at March 31, 2002, an increase of $94.3 million over
that reported at December 31, 2001.
Other Highlights:
-- Spectrum -- As part of Leap's strategy to maximize the value of its
spectrum assets, Leap announced in April 2002 that it had signed
definitive agreements to sell certain licenses to Skagit Wireless, LLC
for cash and signed a definitive agreement with AT&T Wireless, LLC to
exchange surplus licenses for a license in Rochester, N.Y. In
addition, Leap also recently closed a previously announced transaction
involving the transfer of eight licenses to NTCH/Cleartalk in exchange
for seven licenses in Ohio, New York, Pennsylvania and Texas. Leap
currently owns wireless licenses covering approximately 53.9 million
potential customers.
Assuming the completion of the transactions described above, Leap
would own wireless licenses covering approximately 53.4 million
potential customers. Leap was also the high bidder on 22 licenses
covering 24.0 million potential customers in Federal Communications
Commission (FCC) Auction #35 that ended in January 2001. Leap's right
to take ownership of the Auction #35 licenses is subject to resolution
of litigation between NextWave Telecom Inc. and the FCC, as well as
FCC approval of the license transfers. The FCC recently announced its
intention to return approximately $60 million of the approximately
$70 million Leap currently has on deposit with the FCC as a result of
the company's participation in Auction #35. Leap expects to receive
these funds from the FCC during the second quarter of 2002.
Business Outlook
Today, Leap provided guidance for fiscal year 2002 with respect to its 40 Market Plan. The following forward-looking statements are based on management's current expectations for future results and do not include the effect of further significant expansion of new services or the expansion of Cricket service to new markets. These expectations are based on current information, which management has assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. The following forward-looking statements speak only of management's views as of the date of this release, and Leap does not undertake any obligation to update this information from this date. Actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with Leap's business. Factors that could cause actual results to differ from these forward-looking statements include those described later in this release. Leap expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings Leap may reiterate the current published Business Outlook. At the same time, Leap will keep its Earnings Release publicly available on its web site, www.leapwireless.com. In response to the Securities and Exchange Commission's Regulation FD, Leap will publish its Business Outlook, based on current expectations, in conjunction with its quarterly earnings release and conference call. Leap will not provide further material guidance on analysts' financial models beyond the information provided in its earnings releases and conference calls. Based on the Company's expectation for the continued growth and performance of the Cricket markets launched under its 40 Market Plan, Leap expects to achieve the following consolidated results for fiscal year 2002:
-- Total customers under Leap's 40 Market Plan are expected to grow to at
least 1.5 million at the end of the second quarter and to at least two
million by the end of the year.
-- Consolidated churn across all markets is expected to be approximately
3.8 percent.
-- Cumulative gross revenue, including service and equipment revenue, is
expected to be at least $730 million.
-- As a result of trends seen in the first quarter, overall CPGA is now
expected to be between $220 and $225.
-- Consolidated cash cost per user, including Leap corporate expenses, is
expected to be less than $20 for the fourth quarter.
-- Network operations cost per minute of use are expected to be less than
$0.01 per minute.
-- As a result of trends seen in the first quarter, consolidated EBITDA
loss for Leap's entire business during fiscal year 2002 is now
expected to be between $75 million to $85 million. Consolidated
-- EBITDA is expected to be positive for the fourth quarter of fiscal
year 2002.
-- Cumulative capital expenditures for Leap's 40 Market Plan are expected
to be approximately $1.5 billion, reflecting both the completion of
network build-outs and the continued investment Leap expects to make
to support customer growth within its 40 Market Plan.
In addition, the Company expects unlevered free cash flow (UFCF), defined as
EBITDA minus capital expenditures, income taxes and changes in working capital,
to become positive in the first half of fiscal year 2003.
Conference Call Note Leap will hold a conference call to discuss these results today at 11:00 a.m. ET, Wednesday, April 24, 2002. Forward-looking and other material information may also be discussed during this call and a live broadcast will be available online at www.leapwireless.com . To listen to the call, please go to the Web site at least 15 minutes prior to the start time to register, download and install any necessary audio software. An online replay is planned to follow shortly after the live conference call and will be available until May 15, 2002. The conference call is also planned to be rebroadcast telephonically for seven days beginning at 1:30 p.m. ET, on Wednesday, April 24th. You can access the rebroadcast by dialing 800-642-1687 or 706-645-9291 and entering the reservation number 3742200 followed by the # key. For persons who do not have access to the Internet, please contact Leap's Investor Relations department at 858-882-6206 for the telephone access number. About Leap Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered the Cricket Comfortable Wireless service that lets customers make all their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. Leap has begun offering new services designed to further transform wireless communications for consumers. For more information, please visit www.leapwireless.com . Except for the historical information contained herein, this news release contains "forward-looking statements" reflecting management's current forecast of certain aspects of Leap's future. Some forward-looking statements can be identified by forward-looking words such as "believe," "think," "may," "could," "will," "estimate," "continue," "anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar expressions. This news release is based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Factors that could cause actual results to differ include, but are not limited to:
-- changes in the economic conditions of the various markets our
subsidiaries serve which could adversely affect the market for
wireless services;
-- our ability to access capital markets;
-- a failure to meet the operational, financial or other covenants
contained in our credit facilities;
-- a deterioration in our relationships with our equipment vendors and
related lenders, including our failure to obtain amendments to the
credit facilities which we may request from time to time;
-- failure of network systems to perform according to expectations;
-- the effect of competition;
-- the acceptance of our product offering by our target customers;
-- our ability to retain customers;
-- our ability to maintain our cost, market penetration and pricing
structure in the face of competition and fraud;
-- technological challenges in developing wireless information services
and customer acceptance of such services if developed;
-- our ability to integrate the businesses and technologies we acquire;
-- rulings by courts or the FCC adversely affecting our rights to own
and/or operate certain wireless licenses or impacting our rights and
obligations to acquire the licenses on which we were the winning
bidder in the FCC's broadband PCS auction completed in January 2001
(Auction 35);
-- the impacts on the global and domestic economies and the financial
markets of recent terrorist activities, the ensuing declaration of war
on terrorism and the continued threat of terrorist activity and other
acts of war or hostility; and
-- other factors detailed in the section entitled "Risk Factors" included
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 and in our other SEC filings.
The forward-looking statements should be considered in the context of these risk
factors. Investors and prospective investors are cautioned not to place undue
reliance on such forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
In addition, EBITDA and EBITDAM are financial measures used in the financial community and ARPU, CCU, CPGA, penetration and churn are metrics used in the wireless telecommunications industry. None of these terms are measures of financial performance under generally accepted accounting principles in the United States. Leap and the Leap logo design are trademarks of Leap Wireless International, Inc. Cricket and Comfortable Wireless are registered trademarks of Cricket Communications, Inc.
LEAP WIRELESS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
2002 2001
(Unaudited)
Assets
Cash and cash equivalents $120,700 $242,979
Short-term investments 77,524 81,105
Restricted cash equivalents and
short-term investments 62,793 27,628
Inventories 35,808 45,338
Other current assets 16,162 22,044
Total current assets 312,987 419,094
Property and equipment, net 1,206,621 1,112,284
Wireless licenses, net 718,206 718,222
Goodwill and other intangible assets, net 41,888 43,613
Restricted investments -- 13,127
Deposits for wireless licenses 70,283 85,000
Other assets 67,165 59,555
Total assets $2,417,150 $2,450,895
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $84,449 $147,695
Current portion of long-term debt 59,672 26,049
Other current liabilities 69,911 55,843
Total current liabilities 214,032 229,587
Long-term debt 1,871,176 1,676,845
Other long-term liabilities 168,659 186,023
Total liabilities 2,253,867 2,092,455
Stockholders' equity:
Preferred stock -- --
Common stock 4 4
Additional paid-in capital 1,148,857 1,148,337
Unearned stock-based compensation (3,416) (5,138)
Accumulated deficit (982,842) (786,195)
Accumulated other comprehensive income 680 1,432
Total stockholders' equity 163,283 358,440
Total liabilities and
stockholders' equity $2,417,150 $2,450,895
LEAP WIRELESS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In Thousands, Except Per Share Data)
Three Months Ended
March 31,
2002 2001
Revenues:
Service revenues $128,020 $25,655
Equipment revenues 12,161 11,098
Total revenues 140,181 36,753
Operating expenses:
Cost of service (41,891) (12,226)
Cost of equipment (84,011) (30,938)
Selling and marketing (30,159) (17,015)
General and administrative (49,994) (24,686)
Depreciation and amortization (1) (61,888) (14,787)
Total operating expenses (267,943) (99,652)
Gain on sale of wireless license 364 --
Operating loss (127,398) (62,899)
Equity in net loss of investment in and loans
receivable from unconsolidated wireless
operating company -- (26,182)
Interest income 1,760 10,899
Interest expense (52,909) (37,611)
Other income, net 92 2,341
Loss before income taxes (178,455) (113,452)
Income taxes (1) (18,192) (933)
Net loss $(196,647) $(114,385)
Basic and diluted net loss per common share $(5.32) $(3.88)
Shares used in per share calculations:
Basic and diluted 36,998 29,462
(1) Leap adopted Statement of Financial Accounting Standard ("SFAS")
No. 142, "Goodwill and Other Intangible Assets" on January 1, 2002.
Accordingly, amortization of goodwill and wireless licenses ceased as
of that date because they are indefinite lived intangible assets.
These assets will be subject to periodic impairment tests.
Amortization of goodwill and wireless licenses totaled $1.2 million
for the three months ended March 31, 2001. Furthermore, Leap recorded
a non-cash charge of $15.9 million, or $0.43 per share, to income tax
expense to increase the valuation allowance related to Leap's net
operating losses in connection with the adoption of SFAS No. 142.
LEAP WIRELESS INTERNATIONAL, INC.
SUPPLEMENTARY DISCLOSURES
OPERATIONAL METRICS
(UNAUDITED)
As of and for the Three Months Ended
March 31, December September June 30, March 31,
31, 30,
2002 2001 2001 2001 2001
Gross additions 391,417 473,372 301,189 179,883 163,929
Deactivations 122,698 78,724 48,792 47,026 17,364
Net additions 268,719 394,648 252,397 132,857 146,565
End of period
customers 1,387,825 1,119,106 724,458 472,061 339,204
Weighted average
customers 1,260,679 898,876 560,544 394,124 262,048
Cost per gross
addition $246 $246 $243 $245 $214
Equipment subsidy
associated
with customer
gross additions
(in 000s) $66,198 $72,640 $42,106 $23,063 $18,636
Selling &
marketing
associated with
customer gross
additions
(in 000s) $30,057 $43,850 $31,209 $20,985 $16,504
Consolidated cash
costs per user $25.80 $35.40 $40.60 $43.40 $48.50
Covered POPs
(2002 estimate
in millions) 25.4 24.3 19.6 12.9 9.6
Penetration of
covered POPs 5.5 4.6 3.7 3.7 3.5
Cumulative markets
launched 40 39 25 20 14
Cumulative BTAs
launched 48 47 28 23 17
Cumulative mature
markets (1) 14 10 2 2 2
Churn in mature
markets 3.4% 3.6% 3.5% 3.8% 3.4%
Cell sites in
service 2,323 2,186 1,562 1,132 753
(1) Defined as those markets that have been in operation for one year or
more.
LEAP WIRELESS INTERNATIONAL, INC.
SUPPLEMENTARY DISCLOSURES
40 MARKET PLAN
State Market BTA Licensed POPs Covered POPs
(2002 est.)(1) (2002 est.)(1)
AR Central Arkansas Little Rock 979,869 421,640
Pine Bluff 155,312 70,024
Hot Springs 142,209 37,430
Fort Smith(2) Fort Smith 333,623 132,346
Jonesboro Jonesboro 184,285 98,293
Northwest Arkansas(3) Fayetteville 340,740 230,918
AZ Phoenix Phoenix 3,622,225 2,980,826
Tucson Tucson 870,435 739,596
CA Modesto-Merced Modesto 513,881 447,946
Merced 232,925 152,323
Visalia Visalia 509,867 376,942
CO Denver(4) Denver/Boulder 2,808,808 2,356,632
North Colorado(5) Fort Collins 261,360 212,620
Greeley 188,382 160,697
Pueblo Pueblo 319,522 134,810
GA Columbus Columbus 367,939 186,227
Macon Macon 674,123 230,210
ID Boise Boise 609,200 384,112
KS Wichita Wichita 664,523 497,825
MI Kalamazoo and Kalamazoo 382,152 158,326
Battle Creek
Battle Creek 242,434 75,791
Flint Flint 508,715 326,302
Jackson Jackson 207,485 97,516
NC Charlotte(6) Charlotte 2,139,136 1,050,020
Triad Area Greensboro/ 1,485,806 640,984
Winston-Salem
Hickory(7) Hickory 349,288 123,735
NE Lincoln(8) Lincoln 352,539 234,992
Omaha(9) Omaha 1,004,837 663,159
NM Albuquerque(10) Albuquerque 853,280 650,617
Santa Fe(11) Santa Fe 225,450 80,522
NV Reno-Sparks and Reno 612,437 350,218
Carson City
NY Buffalo Buffalo 1,210,156 988,667
Syracuse Syracuse 779,144 467,249
OH Dayton Dayton/ 1,221,241 868,470
Springfield
Toledo Toledo 790,134 482,011
Sandusky 139,506 47,096
OK Tulsa Tulsa 966,936 646,871
OR Eugene(12) Eugene 328,965 259,553
Salem(13) Salem 541,410 280,524
PA Pittsburgh Pittsburgh 2,464,811 1,977,465
TN Chattanooga Chattanooga 576,867 314,543
Knoxville Knoxville 1,144,419 496,194
Memphis Memphis 1,579,375 1,001,033
Middle Tennessee Nashville 1,811,753 1,078,088
Clarksville 272,253 129,209
UT Wasatch Front Salt Lake City/ 1,677,325 1,324,361
Ogden
Provo 392,981 312,379
WA Spokane Spokane 760,885 475,230
Total 40 48 38,800,948 25,452,542
(1) Information relating to population and potential customers is based
on 2002 population estimates provided by Claritas Inc.
(2) "Sister City" calling plan available with Northwest Arkansas market.
(3) "Sister City" calling plan available with Fort Smith market.
(4) "Sister City" calling plan available with Northern Colorado market.
(5) "Sister City" calling plan available with Denver market.
(6) "Sister City" calling plan available with Hickory market.
(7) "Sister City" calling plan available with Charlotte market.
(8) "Sister City" calling plan available with Omaha market.
(9) "Sister City" calling plan available with Lincoln market.
(10) "Sister City" calling plan available with Santa Fe market.
(11) "Sister City" calling plan available with Albuquerque market.
(12) "Sister City" calling plan available with Salem market.
(13) "Sister City" calling plan available with Eugene market.
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SOURCE Leap Wireless International, Inc.
CONTACT: Jessica Levy, Media Relations of Bock Communications, Inc.,
+1-714-540-1030, jlevy@bockpr.com, for Leap; or Sarah Thailing, Media
Relations, +1-858-882-6018, sthailing@leapwireless.com, or Jim Seines,
Investor Relations, +1-858-882-6084, jseines@leapwireless.com, both of Leap
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