American Cellular Corporation Reports Results for Quarter Ended September 30, 1999 - Company Financial Information

Cambridge Telcom Report, Nov 22, 1999

American Cellular Corporation, one of the largest independent rural cellular telephone system operators in the United States, generated a net increase of approximately 23,200 subscribers for the three months and 63,400 subscribers for the nine months ended September 30, 1999 compared to 19,100 and 49,800 subscribers added in the same periods in 1998, excluding 11,600 units acquired in the Tennessee 4 RSA acquisition completed in January 1998. The Company ended the third quarter of 1999 with approximately 397,900 subscribers resulting in penetration of 8.13% compared to 305,100 subscribers and penetration of 6.24% for the same period of the prior year. The Company's churn rate was 1.65% for the period.

Financial Highlights On June 25, 1998, American Cellular acquired the operations of PriCellular Corporation. The financial highlights for the nine months ended September 30, 1998 include the combined results of American Cellular and PriCellular Corporation.

                        Three Months Ended      Nine Months Ended
                       --------------------     ------------------
                       9/30/99      9/30/98     9/30/99    9/30/98
                       -------      -------     -------    -------
                            (in thousands, except subscribers)
Revenues              $ 84,705     $ 61,105    $212,069   $158,635
Operating expenses      31,185       24,552      85,819     69,918
                        ------       ------      ------     ------
Operating income
 excluding depreciation
 and amortization       53,520       36,553     126,250     88,717
Non-recurring charges      ---          (76)        ---     (9,043)
Loss on sale of assets     ---          ---         ---       (133)
Other income (expense)      23          250          82      1,760
Interest expense, net  (26,000)     (28,287)    (77,166)   (67,505)
Depreciation and
 amortization          (24,696)     (22,506)    (72,607)   (40,059)
Income tax provision       (11)         ---         (67)       ---
                        ------       ------      ------     ------
Net income (loss)        2,836      (14,066)    (23,508)   (26,263)
                         =====      ========    ========   ========

Net subscribers added
 through internal growth23,200       19,100      63,400     49,800
Ending subscribers
 in service            397,900      305,100     397,900    305,100

Capital expenditures    $9,647      $ 6,457     $43,581   $ 26,974

Revenues were $84.7 million for the three months and $212.1 million for the nine months ended September 30, 1999 compared to $61.1 million and $158.6 million for the same periods in the prior year. The increase represents the continuing growth in the cellular industry impacting both subscriber and roaming revenues, which are 25% and 48 % ahead of 1998, respectively.

Operating expenses increased from $24.5 million for the three months and $ 69.9 million for the nine months in 1998 to $31.2 million for the three months and in $85.8 million for the nine months ended September 30, 1999. The primary factor contributing to the increase in expenses is the growth in the Company's subscriber base and the increase in cellular service minutes provided. Cost of cellular service represents 8.9% and 9.1% of cellular service, roaming and toll revenue for the three months and the nine months ended September 30, 1999 compared to 8.5% and 10.0% for the same periods in 1998. Selling, general and administrative expense decreased as a percent of total revenue from 26.8% and 29.4% for the three months and nine months ended September 30, 1998 to 22.5% and 25.7% for the same periods this year. These decreases reflect the Company's ability to leverage fixed expenses over the increasing revenue base. Non-recurring charges in 1998 related to the acquisition of PriCellular by the Company. The increase in depreciation and amortization expense reflects the acquisition of PriCellular by the Company.

The decrease in net interest expense from $28.3 million for the three months ended September 30, 1998 to $26.0 million for the same period in 1999 is primarily the result of the decrease in marginal interest rates charged by the banks on the Company's credit facility. The increase in net interest expense from $67.5 million for the nine months ended September 30, 1998 to $77.2 million for the same period in 1999 is primarily the result of the acquisition of PriCellular by the Company and the related financing. Other income decreased between periods principally due to amortization of a covenant not to compete that was fully amortized in 1998.

The provision for income taxes in 1999 relates to current state income tax requirements.