Nextel Reports a Profit

Nextel's record 2002 results included revenue of $8.7B, up 24% year-over-year, for net income of $1.66B, or $1.88 per share

February 20, 2003

4 Min Read

RESTON, Va. -- Nextel Communications, Inc. (NASDAQ: NXTL - News), today announced record financial results for 2002 including income available to common stockholders of $1.66 billion, or $1.88 per share. Revenue was $8.7 billion, a 24% increase over last year. Domestic EBITDA (earnings before interest, taxes, depreciation and amortization) was $3.13 billion in 2002, increasing by 67% over the prior year. For the fourth quarter, revenue was $2.33 billion and EBITDA was $886 million. Nextel retired approximately $3.2 billion in debt and preferred stock during 2002, including $588 million during the fourth quarter. Nextel added approximately 503,000 subscribers during the fourth quarter, bringing total subscribers to 10.61 million at year-end. "2002 was a breakthrough year for Nextel as we grew revenues by 24%, fueled by strong customer demand of nearly 2 million new subscribers for Nextel's differentiated wireless services," said Tim Donahue, Nextel's president and CEO. "More importantly, Nextel expanded its EBITDA by 67% to more than $3.1 billion and reduced capital expenditures by 22% to $1.86 billion. During 2002, Nextel produced positive earnings per share and positive free cash flow, ahead of schedule and for the first time in Nextel's history. In 2003, Nextel will continue our smart growth strategies and make Nationwide Direct Connect(TM) a reality. We will also introduce an innovative voice coding technology, which we expect will double our cellular capacity and enhance voice quality - enabling Nextel to continue to provide high-quality wireless services. We expect continued excellence in 2003 and I am confident we will have another great year." "There should be no doubt that Nextel is capturing an increasing share of the best wireless subscribers in the highly competitive wireless marketplace," said Tom Kelly, Nextel's executive vice president and COO. "Nextel will continue to expand distribution channels, improve network capabilities and scale operations to further enhance our differentiation and maintain Nextel's industry leading subscriber metrics. In 2003, customer lifecycle management will also be a key priority in order to drive world class customer satisfaction." Nextel's average monthly service revenue per subscriber was approximately $70 for the full year and $69 for the fourth quarter, essentially flat with the same periods in 2001 and significantly higher than other national wireless carriers. Customer churn was approximately 2.1% for the fourth quarter of 2002 compared with 2.2% in the fourth quarter of last year. Nextel's net income available to common stockholders for the year was $1.66 billion or $1.88 per share and includes gains from the deconsolidation of NII Holdings and from balance sheet de-leveraging activities and other items. Without these items, earnings per share would have been $0.27 cents per share. (See attached reconciliation of EPS data.) During the fourth quarter, Nextel reported income available to common stockholders of $1.46 billion, or $1.49 per share, including gains related to the retirement of debt and preferred stock totaling $35 million or $0.04 per share and a gain on the deconsolidation of NII Holdings of $1.2 billion or $1.24 per share. Net of these items, the fourth quarter net income was $209 million or $0.21 per share. "Nextel achieved positive free cash flow of $122 million and positive full year earnings in 2002 - ahead of schedule and in what can only be described as a challenging environment," said Paul Saleh, Nextel's executive vice president and CFO. "Nextel increased stockholders' equity by $3.4 billion from a deficit to more than $2.8 billion and also significantly improved its financial flexibility in 2002 by retiring $3.2 billion in debt and preferred obligations. Nextel's de-leveraging activities in 2002 will enable the company to avoid payments of approximately $5.4 billion in principal, interest and dividends over the life of these securities. Nextel plans to build on this progress in 2003 by focusing on generating in excess of $500 million free cash flow while driving for even greater capital and operating efficiencies." For the quarter ended December 31, 2002, Nextel retired $588 million in principal amount of its outstanding debt and mandatorily redeemable preferred stock in exchange for approximately 28 million newly issued shares of class A common stock and approximately $154 million in cash. Nextel may from time to time as it deems appropriate enter into similar transactions, which in the aggregate may be material. Capital expenditures for the full year of 2002 were $1.86 billion - down 22% from 2001 capital expenditures of $2.38 billion. Total minutes of use on the Nextel National Network grew by 41% in 2002 to 72.9 billion. Nextel added approximately 800 cell sites to its network, bringing the total number of sites to approximately 16,300 at year-end. During the fourth quarter, Nextel added approximately 200 cell sites and capital expenditures were $533 million, excluding capitalized interest. 2003 Guidance:

  • Free cash flow of $500 million or more

  • Earnings per share of at least 75 cents

  • EBITDA of $3.8 billion or more

  • Capital expenditures of $1.8 billion or less

  • Net subscriber additions of 1.7 million or more

Nextel Communications Inc.

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