RURAL CELLULAR CORP
8-K, EX-99.1, 2000-11-07
RADIOTELEPHONE COMMUNICATIONS
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Exhibit 99.1

Rural Cellular Corporation Reports
Strong Operating Results and Customer Additions
for Third Quarter 2000

For Immediate Release

    November 6, 2000—Alexandria, MN—Rural Cellular Corporation ("RCC") (Nasdaq/NMS: RCCC) today reported record consolidated revenues and earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter ended September 30, 2000.

    Richard P. Ekstrand, president and chief executive officer, commented: "Our business fundamentals remain strong highlighted by our industry leading retention together with solid customer growth. Our revenue base continues to benefit from solid local customer service revenues."

    Ekstrand continued, "RCC's focus is on the right track and I feel confident in our ability to continue delivering excellent customer growth while showing strong financial results."

    The 3rd quarter 2000 operating results reflect the April 2000 acquisition of the Alabama, Kansas, Mississippi, Oregon and Washington cellular licenses, operations and related assets of Triton Cellular Partners, L.P.

    On November 7, 2000 at 8:00 AM CST, a teleconference will be held to discuss the third quarter operating results and expectations regarding RCC's fourth quarter. This teleconference will be broadcast live and archived for replay on the WEB at WWW.RCCWIRELESS.COM. To access the audio stream, click on the Investor Relations section.

    Rural Cellular Corporation, based in Alexandria, Minnesota, provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 14 states.

    Statements about RCC's anticipated performance are forward looking and therefore involve certain risks and uncertainties, including but not limited to: competitive considerations, success of customer enrollment initiatives, the ability to increase wireless usage and reduce customer acquisition costs, the successful integration of newly acquired operations with RCC's existing operations, the ability to service debt incurred in connection with expansion, and other factors discussed from time to time in RCC's filings with the Securities and Exchange Commission.

Contact:   Wesley Schultz, Executive V.P. Finance and CFO (320) 762-2000
    Chris Boraas, Investor Relations Manager (320) 808-2451

World Wide Web address: http://www.rccwireless.com

# # #

RURAL CELLULAR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

 
   Three Months Ended September 30,
   Nine months ended
September 30,
  
 
   2000
   1999
   2000
   1999
  
REVENUES:                          
  Service   $ 69,936   $ 33,554   $ 170,138   $ 92,857  
  Roamer     35,409     15,845     72,857     33,422  
  Equipment     4,800     2,809     13,536     5,704  
       
 
 
 
 
    Total revenues     110,145     52,208     256,531     131,983  
       
 
 
 
 
OPERATING EXPENSES:                          
  Network costs     26,088     10,385     59,619     29,058  
  Cost of equipment sales     8,125     3,501     24,772     8,145  
  Selling, general and administrative     27,007     14,331     67,509     39,318  
  Depreciation and amortization     26,687     9,896     63,682     29,549  
       
 
 
 
 
    Total operating expenses     87,907     38,113     215,582     106,070  
       
 
 
 
 
OPERATING INCOME     22,238     14,095     40,949     25,913  
       
 
 
 
 
OTHER INCOME (EXPENSE):                          
  Interest expense     (29,552 )   (6,692 )   (63,122 )   (20,207 )
  Interest and dividend income     344     59     2,657     289  
  Minority interest     —     —     —     1,538  
  Other     (2 )   92     (24 )   (210 )
       
 
 
 
 
    Other expense, net     (29,210 )   (6,541 )   (60,489 )   (18,590 )
       
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAX AND EXTRAORDINARY ITEM     (6,972 )   7,554     (19,540 )   7,323  
INCOME TAX PROVISION     —     —     —     34  
       
 
 
 
 
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM     (6,972 )   7,554     (19,540 )   7,289  
       
 
 
 
 
EXTRAORDINARY ITEM     —     —     (925 )   —  
       
 
 
 
 
NET INCOME (LOSS)     (6,972 )   7,554     (20,465 )   7,289  
       
 
 
 
 
PREFERRED STOCK DIVIDEND     (12,271 )   (4,032 )   (31,216 )   (11,765 )
       
 
 
 
 
NET INCOME (LOSS) APPLICABLE TO COMMON SHARES   $ (19,243 ) $ 3,522   $ (51,681 ) $ (4,476 )
       
 
 
 
 
NET INCOME (LOSS) PER BASIC COMMON SHARE   $ (1.63 ) $ 0.39   $ (4.53 ) $ (0.50 )
NET INCOME (LOSS) PER DILUTED COMMON SHARE   $ (1.63 ) $ 0.36   $ (4.53 ) $ (0.50 )
       
 
 
 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC     11,799     9,055     11,408     9,029  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, DILUTED     11,799     9,725     11,408     9,029  
       
 
 
 
 

RURAL CELLULAR CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

 
   September 30,
2000
   December 31,
1999
  
 
   (Unaudited)

   (Audited)

  
CURRENT ASSETS:              
  Cash   $ 3,731   $ 1,285  
  Accounts receivable, less allowance of $3,011 and $894     51,790     17,036  
  Inventories     6,626     4,419  
  Other current assets     2,573     633  
   
 
 
    Total current assets     64,720     23,373  
   
 
 
PROPERTY AND EQUIPMENT, less accumulated depreciation of $97,306 and $68,604     220,370     130,651  
   
 
 
LICENSES AND OTHER ASSETS:              
  Licenses and other intangible assets, less accumulated amortization of $51,858 and $19,728     1,455,642     318,632  
  Deferred debt issuance costs, less accumulated amortization of $4,385 and $1,753     23,410     11,099  
  Restricted funds in escrow     10,000     35,000  
  Other assets     6,766     7,523  
   
 
 
    Total licenses and other assets     1,495,818     372,254  
   
 
 
    $ 1,780,908   $ 526,278  
       
 
 
CURRENT LIABILITIES:              
  Accounts payable   $ 19,760   $ 16,220  
  Advance billings and customer deposits     7,287     3,271  
  Accrued interest     11,430     3,683  
  Dividends payable     9,491     2,102  
  Other accrued expenses     8,197     3,984  
   
 
 
    Total current liabilities     56,165     29,260  
LONG TERM LIABILITIES     1,174,270     339,742  
   
 
 
    Total liabilities     1,230,435     369,002  
   
 
 
PREFERRED SECURITIES     438,772     147,849  
SHAREHOLDERS' EQUITY:              
  Class A common stock; $.01 par value; 200,000 and 15,000 shares authorized, 11,030 and 8,090 issued     110     81  
  Class B common stock; $.01 par value; 10,000 and 5,000 shares authorized, 782 and 1,032 issued     8     10  
  Additional paid-in capital     190,844     36,916  
  Accumulated deficit     (79,261 )   (27,580 )
   
 
 
    Total shareholders' equity     111,701     9,427  
   
 
 
    $ 1,780,908   $ 526,278  
       
 
 
 
   Three Months Ended September 30,
   Nine Months Ended September 30,
  
 
   2000
   1999
   2000
   1999
  
 
   Unaudited

   Unaudited

  
SEGMENT INFORMATION
(In Thousands)		                          
Revenues                          
  RCC Cellular   $ 107,160   $ 49,932   $ 247,702   $ 125,316  
  Wireless Alliance     3,050     2,350     9,075     6,981  
  Eliminating     (65 )   (74 )   (246 )   (314 )
   
 
 
 
 
    Total revenues     110,145     52,208     256,531     131,983  
Operating expenses                          
  RCC Cellular     83,743     33,909     201,916     93,656  
  Wireless Alliance     4,229     4,278     13,912     12,728  
  Eliminating     (65 )   (74 )   (246 )   (314 )
   
 
 
 
 
    Total operating expenses     87,907     38,113     215,582     106,070  
Operating income                          
  RCC Cellular     23,417     16,023     45,786     31,660  
  Wireless Alliance     (1,179 )   (1,928 )   (4,837 )   (5,747 )
   
 
 
 
 
    Total operating income     22,238     14,095     40,949     25,913  
Depreciation and amortization                          
  RCC Cellular     25,402     8,727     59,842     25,883  
  Wireless Alliance     1,285     1,169     3,840     3,666  
   
 
 
 
 
    Total depreciation and amortization     26,687     9,896     63,682     29,549  
EBITDA                          
  RCC Cellular     48,819     24,750     105,628     57,543  
  Wireless Alliance     106     (759 )   (997 )   (2,081 )
   
 
 
 
 
    Total EBITDA     48,925     23,991     104,631     55,462  
CAPITAL EXPENDITURES                          
  RCC Cellular     16,837     4,893     27,463     12,584  
  Wireless Alliance     342     675     1,918     3,110  
   
 
 
 
 
    Total capital expenditures   $ 17,179   $ 5,568   $ 29,381   $ 15,694  
Other Operating Data:                          
Retention: (excluding prepaids)                          
  RCC Cellular     98.3 %   98.3 %   98.3 %   98.4 %
  Wireless Alliance—PCS     96.9 %   97.5 %   96.4 %   98.1 %
Acquisition cost per customer:                          
  RCC Cellular   $ 307   $ 364   $ 328   $ 367  
  Wireless Alliance—PCS   $ 676   $ 526   $ 723   $ 518  
Average monthly revenue per customer:                          
  RCC Cellular   $ 66   $ 72   $ 62   $ 63  
  Wireless Alliance—PCS   $ 49   $ 51   $ 50   $ 52  
Cell Sites:                          
  RCC Cellular                 546     257  
  Wireless Alliance—PCS                 60     57  
Penetration:                          
  RCC Cellular                 10.8 %   9.0 %
  Wireless Alliance—PCS                 2.3 %   1.6 %
Wireless customers at period end:                          
  RCC Cellular:                          
      Postpaid                 494,725     217,689  
      Prepaid                 18,928     1,736  
               
 
 
                  513,653     219,425  
  Wireless Alliance                 16,701     12,950  
  Paging                 12,508     12,054  
               
 
 
  Total customers                 542,862     244,429  
               
 
 

    The following unaudited pro forma information presents the consolidated results of operations as if the acquisition of Triton Cellular had occurred as of January 1, 1999. This summary is not necessarily indicative of what the results of operations of RCC and Triton Cellular would have been if they had been a single entity during such period, nor does it purport to represent results of operations for any future periods.

Unaudited Pro forma Condensed Consolidated Statements of Operations
(in thousands)

 
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2000
   1999
   2000
   1999
 
   Unaudited

   Unaudited
REVENUES:                        
  Service   $ 69,936   $ 59,993   $ 196,533   $ 167,619
  Roamer     35,409     35,317     86,442     77,654
  Equipment     4,800     4,637     15,804     10,610
   
 
 
 
    Total revenues     110,145     99,947     298,779     255,883
   
 
 
 
OPERATING EXPENSES:                        
  Network costs     26,088     20,985     69,985     58,364
  Cost of equipment sales     8,125     6,253     27,725     16,085
  Selling, general and administrative     27,007     26,999     79,028     72,359
  Depreciation and amortization     26,687     23,934     80,871     74,461
   
 
 
 
    Total operating expenses     87,907     78,171     257,609     221,269
OPERATING INCOME     22,238     21,776     41,170     34,614
   
 
 
 
EBITDA   $ 48,925   $ 45,710   $ 122,041   $ 109,075
       
 
 
 



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