Nextel Reports 1999 Results - Announces 2-for-1 Stock Split - Company Financial Information

Cambridge Telcom Report, Feb 28, 2000

Nextel Communications, Inc., (Nasdaq: NXTL) Tuesday reported its 1999 financial results and announced Board of Directors approval for a 2-for-1 common stock split. Upon shareholder consideration and approval of a proposed increase in the authorized equity capitalization at the annual shareholders meeting scheduled for May 25, the new shares will be distributed on June 6 to shareholders of record as of May 26, 2000.

1999 financial highlights include: $698 million in positive domestic operating cash flow, the addition of 1,777,800 domestic digital subscribers, and a more than doubling of proportionate subscribers at Nextel International. Nextel ended 1999 with more than 4.9 million global digital subscribers. Fourth-quarter 1999 highlights include: record global digital subscriber additions of 549,100, consisting of a record 464,800 domestic subscriber additions, and a record 84,300 proportionate subscriber additions at Nextel International. Domestic operations achieved the important milestone of positive operating income with $6 million recorded during the fourth quarter.

"1999 was an outstanding year," said Tim Donahue, Nextel's president and CEO. "Nextel is harnessing the value of our growth initiatives while meeting the challenges of impressive global demand for our innovative wireless communications services. In 2000, Nextel will pursue several strategic initiatives including aggressively growing our domestic and global wireless operations, launching our Nextel Worldwide(SM) GSM/iDEN roaming services, and introducing innovative wireless Internet products and services."

During 1999, domestic digital subscribers increased 62% to 4,515,700 ending subscribers. Nextel International grew its proportionate subscribers in 1999 by 2.4 times, ending the year with 403,500 proportionate digital subscribers.

Consolidated revenue grew 80% over 1998's consolidated revenue of $1.847 billion to $3.326 billion for 1999, and was $980 million in the fourth quarter of 1999. Domestic revenue was $3.222 billion for the year and $945 million in the fourth quarter. International revenue was $104 million for the year and $35 million in the fourth quarter. Nextel's average monthly revenue per domestic subscriber unit remained among the best in the wireless industry, increasing $4 during the year to approximately $73 in 1999, as compared with approximately $69 in 1998. Fourth-quarter average monthly revenue per domestic subscriber was also $73. The domestic monthly churn rate for the fourth quarter remained at one of the best levels in the wireless industry at approximately 2%.

Domestic operating cash flow (earnings before interest, taxes, depreciation and amortization) was $698 million in 1999, compared with an operating cash flow loss of $99 million in 1998. In the fourth quarter, domestic operations produced $251 million in operating cash flow -- approximately six times 1998's fourth-quarter domestic cash flow of $42 million.

"Nextel exceeded projections in 1999 and in the fourth quarter," said Steve Shindler, Nextel's CFO. "Our fourth-quarter domestic cash flow of $251 million puts Nextel at an annualized run-rate of more than $1 billion in cash flow -- positioning Nextel as a powerful force in the emerging global wireless marketplace. Nextel's 1999 domestic conversion ratio of new revenue to cash flow was 56% and our fourth-quarter domestic monthly cash flow per subscriber of just over $19 is among the best in the wireless industry. Nextel ended 1999 in excellent condition with approximately $5.8 billion in cash and marketable securities and we will continue to use our resources to pursue high-growth strategies."

The consolidated net loss attributable to common stockholders decreased $271 million to $1.5 billion in 1999 as compared with a loss of $1.8 billion in 1998. The net loss was $4.79 per share in 1999, down 26% from the $6.46 per share loss in 1998. The consolidated fourth-quarter 1999 net loss per share before the extraordinary charge was $0.85 per share and decreased 41% as compared with $1.43 per share loss in the fourth quarter of 1998 and was approximately $0.15 cents better than consensus analyst expectations. In the fourth quarter of 1999, the consolidated net loss attributable to common stockholders was $369 million, or $1.04 per share and includes an extraordinary charge of $68 million, or $0.19 per share, for the early retirement of debt. The per share amounts mentioned above for 1999 results do not reflect the effect of the proposed year 2000 stock split.

During the fourth quarter, Nextel completed the largest primary offering of equity (i.e., a non-IPO, non-secondary stock offering) in U.S. history, successfully placing 33.8 million shares raising over $2.8 billion. In other fourth-quarter financing activities, Nextel completed a $2 billion debt offering to refinance approximately $1.7 billion in long term debt, and we expanded our Bank Facility to $5 billion. More recently, Nextel completed a convertible bond issue during the first quarter of 2000 raising $1.15 billion.