Nextel Rocks Q3

RESTON, Va. -- Nextel Communications, Inc. (NASDAQ:NXTL), today announced record financial results for the third quarter of 2002 including income of $526 million, or $0.58 per share. Revenue was $2.3 billion, a 26% increase over last year's third quarter. Domestic operating cash flow was $878 million, increasing by 67% over the same period last year. Nextel retired approximately $1.5 billion in debt and preferred stock during the third quarter, bringing total debt and preferred stock retirements to $2.6 billion thus far this year. Nextel added approximately 480,000 domestic subscribers during the third quarter, finishing the quarter with approximately 10.1 million domestic subscribers. "Nextel continues to attract high value customers at a healthy pace. We are growing market share with the best product and service portfolio in the industry and our cash flow margin improved to 41%," said Tim Donahue, Nextel's CEO. "Our base of more than 10 million customers continues to grow due to strong add-on sales, strong business customer referrals and growth in targeted segments including construction and government sectors. At the same time, Nextel is improving its back-office systems, scaling network expenditures, and keeping our network quality and customer satisfaction at high levels while reducing customer churn. Nextel will continue to expand our Direct Connect capabilities, add new products to our portfolio and continue to pursue our smart growth strategies." Nextel's average monthly service revenue per domestic subscriber remained at $71, significantly higher than other national wireless carriers. Customer churn was approximately 2% during the quarter and is the best among the national wireless carriers. Nextel's consolidated income available to common stockholders during the third quarter was $526 million, or $0.58 per basic share. Gains of $401 million or $0.44 per basic share were recognized during the quarter related to gains on retirement of debt and preferred stock. Net of these gains and a $3 million reduction in investment fair value, Nextel's income available to basic common stockholders was $128 million or $0.14 per share. "Today's financial results show that Nextel continues to deliver on our business plan. We are driving top-line growth by focusing on high-value customers. We are simultaneously driving higher EBITDA margins by creating operating efficiencies in the business and we have instilled a more disciplined approach to capital spending. Together these actions are driving greater cash flow, which is enabling Nextel to significantly reduce our debt and preferred stock obligations," said Paul Saleh, Nextel's EVP and CFO. "During the third quarter, Nextel retired approximately $1.5 billion in principal amount of debt and preferred securities. Thus far during 2002, we have retired approximately $2.6 billion in principal amount of our securities. These transactions allow Nextel to avoid payments of approximately $4.4 billion in principal, interest and dividends over the life of these securities, or approximately $235 million in interest and dividend savings annually." For the quarter ended September 30, 2002, Nextel retired $1.5 billion in principal amount of its outstanding debt and mandatorily redeemable preferred stock in exchange for approximately 83 million newly issued shares of Class A common stock and approximately $394 million in cash. Thus far this year, Nextel has retired approximately $2.6 billion in principal amount of debt and mandatorily redeemable preferred stock. Nextel may from time to time as it deems appropriate enter into similar transactions which in the aggregate may be material. Domestic capital expenditures were $401 million in the third quarter of 2002. Total domestic system minutes of use on the Nextel National Network increased 40% during the quarter when compared with the same period in 2001 to approximately 19.2 billion total system minutes of use. Nextel Communications Inc.