[GRAPHIC OMITTED]
FINANCIAL NEWS Contact: Kelly Prentiss
(214) 765-3874
[email protected]
WebLink Wireless Reports Third Quarter Results
Impressive Wireless Data sales momentum, T900 and Telemetry off and running
DALLAS - November 9, 2000 - WebLink Wireless, Inc. (Nasdaq: WLNK)
today announced third quarter results highlighted by strong sales momentum in
the Wireless Data Division with a record 81,055 Wireless Data net subscriber
additions in the quarter. This increase represents a 221% annualized growth
rate in units in service. The Company reported consolidated earnings before
interest, taxes, depreciation and amortization, and amortization of stock
compensation (EBITDA) of $7.0 million for the quarter. The Wireless Data
Division reported $14.1 million of negative EBITDA reflecting the considerable
start-up technical and marketing costs of the Company's nationwide two-way
wireless data business. The Traditional Paging Division reported $21.3 million
of EBITDA. Total company capital expenditures were $12.6 million.
"Wireless Data, despite the start-up losses, is demonstrating the high
potential we expected. It is where most of our capital is employed and where
most of our value resides," said John D. Beletic, Chairman and CEO.
"We are delighted with the market acceptance of Motorola's Talkabout
T900 I-Messaging subscriber device and the quarter-over-quarter increase in
subscriber additions we are experiencing," added Beletic. "Motorola's
manufacturing capacity of the T900 is sufficient to meet current product demand
and we are presently able to fulfill all current channel orders. These are
exciting times for our company with more than 6,000 retail stores stocked for
the holidays and the awareness being created by Motorola's advertising
campaign. It is our goal to add over 110,000 wireless data units in the fourth
quarter."
Wireless Data Division
The Wireless Data Division's 81,055 net subscriber additions in the
third quarter continued the strong growth momentum from 12,574 in the fourth
quarter of 1999, 32,722 in the first quarter of 2000 and 52,512 in the second
quarter of 2000. As of September 30, 2000, the Company had 227,864 Wireless
Data units in service.
The Wireless Data Division's recurring revenues increased 37% over the
prior quarter. Average Revenue per Unit (ARPU) declined $1.62 to $12.04 which
the Company does not consider significant, as ARPU will be volatile as long as
high growth results in a high percentage of the customer base being added in a
quarter. Selling expenses increased to $4.8 million and are expected to
continue to increase in the coming quarters as the Company increases its
quarterly net subscriber additions.
<PAGE>
During the quarter, the Company initiated its national retail sales
efforts for the new Motorola T900 product. This sales program includes certain
sales incentives paid to retailers when the product is sold. These sales
incentives, which result in a loss on the product, are recorded as a reduction
to equipment revenue in the period the products are shipped to retailers, which
is consistent with the recently released EITF 00-14. However, due to the
newness of this product and the nature of the arrangements with national
retailers, the Company is not recognizing revenue on these units until the
retailers sell them to consumers. The Company recorded $4.3 million of sales
incentives for units held in retailers' inventory at September 30, 2000. Before
the effect of this item, Wireless Data's negative EBITDA would have been $9.8
million.
Five models of Wireless Data subscriber devices were sold in the
quarter: the Motorola PageWriter 2000X, the Glenayre AccessLink II, the
Motorola PF1500, the Glenayre AccessMate and the Motorola Talkabout T900. The
Motorola P935 has just been announced and is now available. The T900 was the
major contributor to subscriber growth in the quarter and is available at
RadioShack, Best Buy, OfficeMax, the good guys!, The Wiz and Fry's Electronics
stores.
On October 16, 2000, WebLink Wireless and Yahoo! announced an
agreement to jointly develop and distribute personalized Yahoo! content and
services, including Yahoo! Mail, to co-branded Yahoo!-WebLink Wireless wireless
data devices. These devices will be available online through Yahoo! Shopping
and through WebLink Wireless' retail channel stores. "This is a very
significant relationship for WebLink Wireless as we will be able to provide
integrated services to Yahoo! users. The companies expect to have the first set
of services available in the first quarter of next year," said Beletic.
On October 17, 2000, WebLink Wireless and Bell Mobility announced the
availability of the first international ReFLEX (TM) wireless data network. Bell
Mobility began offering wireless data service to consumers in Ontario and
Quebec and expects to extend service to the rest of Canada by the end of this
year.
In July, WebLink Wireless reported its first telemetry unit sales, or
machine-to-machine applications, ushering in a new era where the Company's
customers will not only be humans but also machines. Telemetry is expected to
become an increasingly important part of the Company's net additions over the
next several years.
Traditional Paging Division
The Traditional Paging Division reported a net decline of 175,373
traditional paging units in service. The Company believes its traditional
paging base will continue to decline, reflecting the market for traditional
paging in general. The ongoing decline may also be affected by migration to
Wireless Data devices.
During the quarter, EBITDA was positively affected by a reduction of
$3.7 million in technical expense related to the effect on interconnection
arrangements with local exchange carriers of the Telecommunications Act of 1996
and associated FCC and court rulings, as well as $3.2 million of other one-time
adjustments. Before the effect of these items, EBITDA would have been $14.4
million. The Company does not expect any future reductions in technical expense
related to the interconnection arrangements.
WebLink's approximately $450 million internet-protocol-based network
(capital expenditures for infrastructure and licenses), which was designed to
provide two-way wireless data services, is also used to deliver traditional
paging services. As a result of this design strategy implemented over the past
four years, the Company expects to have virtually no stranded assets as the
traditional paging business declines. In fact, the decline in traditional
paging is expected to free up capacity in all areas of the Company for the
growth of wireless data.
<PAGE>
Due to the decline in traditional paging units, WebLink expects that,
after the end of the fourth quarter of this year, it will not be in compliance
with certain covenants in its bank credit facility related to the traditional
paging business. WebLink has begun discussions with its banks with a view to
amending the covenants to reflect the emergence of wireless data as the
Company's primary business and the decline in traditional paging units. The
Company believes it will obtain an amendment to its credit facility. The
outstanding balance under the credit facility is $48 million as of the end of
the third quarter. The Company expects to borrow an additional $2-3 million in
the fourth quarter.
WebLink also filed a shelf registration statement for 8.5 million of
its common securities with the Securities and Exchange Commission on November
3, 2000. The Company anticipates that the sale of these equity securities will
commence in the fourth quarter or early next year. The registration statement
has not yet become effective. The securities registered pursuant to such
registration statement may not be sold nor may offers to buy be accepted prior
to the time the registration statement has become effective. This news release
does not constitute an offer to sell or the solicitation of an offer to buy,
nor shall there be any sale of the securities in any state in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
This press release includes forward-looking statements that involve
risks and uncertainties that are detailed from time to time in the Company's
SEC filings, including its current report on Form 8-K filed on November 3,
2000. Actual results - including sales and earnings growth for the Wireless
Data Division - may differ materially from those projected due to increased
competition, pricing pressures, delays in new service introductions, delays in
the introduction of new subscriber devices, slower than expected market
acceptance of new subscriber devices, regulatory issues and other business
factors. There is no assurance that the Company will be able to amend its
credit facility, or, if covenant noncompliance occurs, borrow additional
amounts under the credit facility or not be subject to early repayment of
outstanding debt under the credit facility. These forward-looking statements
represent the Company's judgement as of the date of this release. The Company
disclaims, however, any intent or obligation to update these forward-looking
statements.
<PAGE>
<TABLE>
WebLink Wireless, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share and unit data)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
1999 2000 1999 2000
------------ ------------ ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating Data:
Recurring revenues $ 66,360 $ 58,988 $ 195,764 $ 185,684
Network revenues - 800 - 3,707
Equipment revenues 20,908 12,761 49,006 43,085
------------ ------------ ------------ ------------
87,268 72,549 244,770 232,476
Cost of equipment sold 22,593 19,377 55,267 55,571
------------- ------------ ------------ ------------
Net revenues 64,675 53,172 189,503 176,905
Operating expenses:
Technical 19,492 14,789 58,650 48,581
General and administrative 12,008 18,027 37,906 57,364
Selling 20,254 13,354 60,704 38,705
Depreciation and amortization 19,962 19,821 57,689 59,150
Amortization of stock compensation - 2,134 - 6,400
------------ ------------ ------------ ------------
Total operating expenses 71,716 68,125 214,949 210,200
------------ ------------ ------------ ------------
Operating income (loss) (7,041) (14,953) (25,446) (33,295)
Interest and other expense, net 17,202 16,007 49,348 45,192
------------ ------------ ------------ ------------
Loss before extraordinary item ($24,243) ($30,960) ($74,794) ($78,487)
Extraordinary item:
Early extinguishment of debt - - - 2,322
------------ ------------ ------------ ------------
Net loss ($24,243) ($30,960) ($74,794) ($76,165)
============ ============ ============ ============
Net loss per share before extraordinary item ($0.60) ($0.68) ($1.85) ($1.74)
Net loss per share ($0.60) ($0.68) ($1.85) ($1.69)
EBITDA-Traditional Paging $20,976 $21,302 $58,564 $60,369
EBITDA-Wireless Data (7,954) (14,143) (25,950) (27,624)
EBITDA-International (101) (157) (371) (490)
------------ ------------ ------------ ------------
EBITDA-Consolidated 12,921 7,002 32,243 32,255
Units in service-United States 2,671,531 2,333,146 2,671,531 2,333,146
Units in service-Canada
(Proportionate share) 39,743 - 39,743 -
Capital expenditures: Traditional Paging $4,257 $1,056 $13,629 $7,696
Capital expenditures: Wireless Data $7,645 $11,499 $21,768 $26,067
At December 31, At Sept. 30,
1999 2000
--------------- ------------
(Unaudited)
Balance Sheet Data:
Cash and cash equivalents $ 10,440 $ 10,479
Property and equipment, net 245,596 222,378
NPCS licenses, net 129,228 126,733
Long-term debt 538,185 477,240
Number of shares outstanding (in 000's) 40,764 46,468
</TABLE>
<PAGE>
<TABLE>
Selected Quarterly Results of Operations
The tables below set forth management's presentation of results of Wireless Data and Traditional Paging Divisions'
operations and other data on a quarterly basis for the six most recent fiscal quarters (in thousands, except other data).
Wireless Data Division
----------------------------------------------------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30,
1999 1999 1999 2000 2000 2000
----------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Recurring revenues $ 675 $ 1,811 $ 2,809 $ 4,049 $ 4,939 $ 6,768
Network revenues - - - 654 2,253 800
Equipment revenues 2,873 3,760 806 2,296 5,595 3,213
---------- ---------- ---------- ---------- ---------- ---------
Total revenues 3,548 5,571 3,615 6,999 12,787 10,781
Cost of equipment sold 3,053 3,725 942 2,486 6,662 9,050
Technical expenses 7,297 6,818 6,736 7,077 7,764 7,713
General and administrative expenses 1,270 1,445 1,804 1,307 1,383 3,329
Selling expenses 1,481 1,537 1,927 2,730 3,858 4,832
Depreciation and amortization expense 8,128 9,390 9,951 10,059 10,398 10,841
Amortization of stock compensation - - - 1,067 1,066 1,067
---------- ---------- ---------- ---------- ---------- ---------
Operating loss (EBIT) ($17,681) ($17,344) ($17,745) ($17,727) ($18,344) ($26,051)
========== ========== ========== ========== ========== =========
EBITDA (1) ($9,553) ($7,954) ($7,794) ($6,601) ($6,880) ($14,143)(3)
========== ========== ========== ========== ========== =========
Other data:
Ending units in service 24,416 49,001 61,575 94,297 146,809 227,864
ARPU (2) $ 15.69 $ 16.44 $ 16.94 $ 17.32 $ 13.66 $ 12.04
----------------------------------------------------------------------------------------------------------------------------
Traditional Paging Division
----------------------------------------------------------------------------------------
June 30, Sept. 30, Dec. 31, March 31, June 30, Sept. 30,
1999 1999 1999 2000 2000 2000
----------------------------------------------------------------------------------------
(Unaudited)
Recurring revenues $ 64,006 $ 64,549 $ 62,029 $ 58,964 $ 58,744 $ 52,220
Equipment revenues 16,329 17,052 14,514 11,416 10,879 9,519
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 80,335 81,601 76,543 70,380 69,623 61,739
Cost of equipment sold 18,556 18,827 15,656 12,626 14,115 10,265
---------- ---------- ---------- ---------- ---------- ----------
Net revenues 61,779 62,774 60,887 57,754 55,508 51,474
Technical expenses 13,146 12,674 11,229 9,654 9,297 7,076
General and administrative expenses 18,102 18,809 18,211 18,448 18,199 14,698
Selling expenses 10,346 10,315 10,411 9,734 8,863 8,398
Depreciation and amortization expense 10,949 10,572 10,507 9,439 9,433 8,980
Amortization of stock compensation - - - 1,067 1,066 1,067
---------- ---------- ---------- ---------- ---------- ----------
Operating income (EBIT) $ 9,236 $ 10,404 $ 10,529 $ 9,412 $ 8,650 $ 11,255
========== ========== ========== ========== ========== ==========
EBITDA (1) $ 20,185 $ 20,976 $ 21,036 $ 19,918(4) $ 19,149(5) $ 21,302(6)
========== ========== ========== ========== =========== ==========
Other data:
Ending units in service 2,564,053 2,622,530 2,559,353 2,387,444 2,280,655 2,105,282
ARPU (2) $ 8.38 $ 8.30 $ 7.98 $ 7.95 $ 8.39 $ 7.94
----------------------------------
(1) Earnings (loss) before interest, taxes, depreciation and amortization, and amortization of stock compensation.
(2) Calculated by dividing recurring revenues for the quarter by the simple average number of units in service during that
quarter. Stated as the monthly average for the quarter.
(3) Excluding $4.3 million of sale incentives for units held in retailers' inventory, EBITDA would have been $9.8 million
for the quarter.
(4) Excluding certain comparable items to those listed in footnote (5), EBITDA would have been $17.7 million for the quarter.
(5) Excluding one-time revenues, reductions in technical expense associated with the Telecommunications Act, and the
increased equipment losses associated with the PerComm launch, EBITDA would have been $14.8 million for the quarter.
(6) Excluding reductions in technical expense associated with the Telecommunications Act and certain other one-time items,
EBITDA would have been $14.4 million for the quarter.
</TABLE>
