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NXTP:US  Nextel Partners Inc

More on NXTP:US NewsDetailed QuoteCharts

Nextel Partners Reports Record Results with First Quarter of
Positive Net Income in First Quarter 2004

High-Tech Writers / Business Editors
KIRKLAND, Wash.--(BUSINESS WIRE)--April 28, 2004
Nextel Partners, Inc. (Nasdaq:NXTP):

-- First Quarter of Positive Net Income of $4.7 Million or $0.02

per Share (Basic and Diluted)

-- $2 Year-over-Year Increase in First Quarter ARPU to $67

-- $74.1 Million Adjusted EBITDA

-- Free Cash Flow Increases to $15.3 Million

-- Net Cash from Operating Activities of $37.8 Million

-- 1.3 Million Ending Subscribers for 37% Year-Over-Year Growth

-- 43% Year-Over-Year Growth in Service Revenues to $287.3

Million

-- Raises Guidance

Nextel Partners, Inc. (Nasdaq:NXTP) today reported very strong
financial and operating results for the first quarter of 2004,
including its first quarter of positive net income attributable to
common stockholders of $4.7 million, or $6.2 million before the loss
on early retirement of debt. Basic and diluted net income per share
attributable to common stockholders for the period was $0.02, which
remains unchanged after adjusting for the loss on early retirement of
debt. Adjusted EBITDA in the first quarter of 2004 was $74.1 million,
representing a service revenue margin of 26% and a 185% increase over
first quarter 2003 Adjusted EBITDA of $26.0 million. Partners
generated $15.3 million of free cash flow during the first quarter of
2004, representing an $83.5 million increase over negative free cash
flow of $68.2 million in the first quarter of 2003. Net cash provided
by operating activities was $37.8 million for the first quarter of
2004 compared to $4.3 million used by operating activities for the
same period in 2003. Service revenues during the period grew 43% over
the prior year's first quarter to $287.3 million. Partners added
88,800 subscribers during the first quarter to end the period with
1,322,000 digital subscribers, representing 37% subscriber growth over
the past year.

"Nextel Partners achieved a very significant historical milestone
as we posted our first quarter of positive net income, one quarter
earlier than expected," said John Chapple, Partners' Chairman, CEO and
President. "Not only have we continued to lead the industry in revenue
growth, but our strong metrics indicate that the subscribers we are
adding are among the best in the industry. As a result of our
consistent success in executing on this strategy, we exceeded
expectations on all key financial metrics and maintain a positive
outlook for the remainder of 2004."

Average monthly revenue per subscriber unit, or ARPU, was
approximately $67 in the first quarter of 2004 -- remaining among the
highest in the wireless industry. Inclusive of roaming revenues, ARPU
was approximately $76 in the same period. Average monthly churn rate
was 1.5% in the first quarter, and remained among the lowest in the
industry.

"Nextel Partners delivered record results in the first quarter
with our first ever quarter of positive net income," said Barry Rowan,
Partners' Chief Financial Officer and Treasurer. "We are also very
pleased by the higher than expected Adjusted EBITDA from increased
scaling in our operations and continued positive free cash flow which
also exceeded estimates. We believe that the notable improvement in
both ARPU and churn for the quarter relative to the prior year period
speaks to the continued success we have had in acquiring and retaining
what we believe are the most valuable customers in the industry --
despite the increasingly competitive landscape -- as well as the
quality and value of our differentiated product offering. To this
point, first quarter lifetime revenue per subscriber (LRS) of $4,467
(implied by ARPU and churn) again ranked Partners' customers among the
most valuable in the industry."

During the first quarter, Partners retired $12.3 million principal
amount at maturity of its senior notes in exchange for cash through a
redemption and open-market purchases.

First quarter 2004 net capital expenditures, which excludes
capitalized interest, were $26.0 million. During the period, Partners
built 45 cell sites, bringing the total number of sites in its network
to approximately 3,650 at quarter-end.

Revised 2004 Guidance

Nextel Partners' 2004 guidance is forward-looking and is based
upon management's current beliefs as well as a number of assumptions
concerning future events and as such, should be taken in the context
of the risks and uncertainties outlined in the Securities and Exchange
Commission filings of Nextel Partners, Inc. Nextel Partners' current
outlook for 2004 results is as follows:

-- Net subscriber additions of at least 340,000, up from 330,000

-- Churn at or below 1.7%, lowered from 1.8%

-- Industry-leading ARPU in the mid- to high-$60's -- unchanged

-- 25% service revenue growth to over $1.2 billion -- unchanged

-- $325 million of Adjusted EBITDA, or more -- unchanged

-- Net capital expenditures of approximately $165 million --

unchanged

Non-GAAP Financial Measures

The information presented in this press release and in the
attached financial tables includes financial information prepared in
accordance with generally accepted accounting principles in the U.S.,
or GAAP, as well as other financial measures that may be considered
non-GAAP financial measures, including ARPU, Adjusted EBITDA, free
cash flow, net income (loss) excluding the loss on early retirement of
debt, income (loss) attributable to common stockholders excluding the
loss on early retirement of debt, service revenue margin, LRS and net
capital expenditures. Generally, a non-GAAP financial measure is a
numerical measure of a company's performance, financial position or
cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. As described more
fully in the notes to the attached financial tables, management
believes these non-GAAP measures provide meaningful additional
information about our performance and our ability to service our
long-term debt and other fixed obligations and to fund our continued
growth. The non-GAAP financial measures should be considered in
addition to, but not as a substitute for, the information prepared in
accordance with GAAP. Reconciliations from GAAP results to these
non-GAAP financial measures are provided in the notes to the attached
financial tables. In addition, to view these and other reconciliations
and information about how to access the conference call discussing
Nextel Partners' fourth quarter results, visit the 'Investor
Relations' tab at www.nextelpartners.com.

First Quarter 2004 Results Conference Call -- Wednesday, April 28,
2004

Nextel Partners will be hosting its first quarter 2004 conference
call on Wednesday, April 28, 2004 at 11:00 AM EDT. The call-in number
is 1-888-540-9242 or 1-484-630-1056. The passcode is PARTNER. Instant
replay of the call will be available until Friday, May 21, 2004 by
calling 1-888-562-6153 or 1-402-280-9982. The conference call will
also be available via a live webcast. To listen to the live call,
please go to http://www.nextelpartners.com at least fifteen minutes
early to register, download, and install any necessary software. For
those who cannot listen to the live broadcast, it will be archived on
the website following the call.

"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995. A number of the matters and subject areas
discussed in this press release that are not historical or current
facts deal with potential future circumstances and developments,
including without limitation, matters related to Nextel Partners'
growth strategies and future financial and operating results. The
words "believe," "expect," "intend," "estimate," "assume" and
"anticipate," variations of such words and similar expressions
identify forward-looking statements, but their absence does not mean
that a statement is not forward-looking. The discussion of such
matters and subject areas is qualified by the inherent risks and
uncertainties surrounding future expectations generally, and also may
materially differ from Nextel Partners' actual future experience
involving any one or more of such matters and subject areas. Nextel
Partners has attempted to identify, in context, certain of the factors
that it currently believes may cause actual future experience and
results to differ from Nextel Partners' current expectations regarding
the relevant matter or subject area. Such risks and uncertainties
include the economic conditions in our targeted markets, performance
of our technologies, competitive conditions, customer acceptance of
our services, access to sufficient capital to meet operating and
financing needs and those additional factors that are described from
time to time in Nextel Partners' reports filed with the SEC, including
Nextel Partners' annual reports on Form 10-K for the year ended
December 31, 2003 and its quarterly filings on Form 10-Q. This press
release speaks only as of its date, and Nextel Partners disclaims any
duty to update the information herein.

Nextel Partners, Inc., (Nasdaq:NXTP), based in Kirkland, Wash.,
has the exclusive right to provide digital wireless communications
services using the Nextel brand name in mid-sized and rural markets in
31 states where approximately 53 million people reside. Nextel
Partners offers its customers the same fully integrated, digital
wireless communications services available from Nextel Communications
(Nextel) including Nationwide Direct Connect(R), cellular voice,
cellular wireless Internet access and short messaging, all in a single
wireless phone. Nextel Partners customers can seamlessly access these
services anywhere on Nextel's or Nextel Partners' all-digital wireless
network, which currently covers 294 of the top 300 U.S. markets. To
learn more about Nextel Partners, visit www.nextelpartners.com. To
learn more about Nextel's services, visit www.nextel.com.

- more -

NEXTEL PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(in thousands, except for per share amounts)
(unaudited)

For the Three Months
Ended
March 31,
-----------------------
2004 2003
---------- ----------
REVENUES:
Service revenues $ 287,262 $ 200,542
Equipment revenues 18,869 7,267
---------- ----------
Total revenues (1) 306,131 207,809
OPERATING EXPENSES:
Cost of service revenues 83,331 71,581
Cost of equipment revenues (1) 35,306 21,602
Selling, general and administrative 113,422 88,635
---------- ----------
ADJUSTED EBITDA (2) 74,072 25,991
Stock based compensation 217 263
Depreciation and amortization 36,569 32,506
---------- ----------
INCOME (LOSS) FROM OPERATIONS 37,286 (6,778)
Interest expense, net (3) (30,952) (40,293)
Interest income 677 801
Loss on early retirement of debt (1,558) (45)
---------- ----------
INCOME (LOSS) BEFORE DEFERRED INCOME TAX
PROVISION 5,453 (46,315)
Deferred income tax provision (799) (2,874)
---------- ----------
NET INCOME (LOSS) 4,654 (49,189)
Mandatorily redeemable preferred stock
dividends (3) - (1,049)
---------- ----------
INCOME (LOSS) ATTRIBUTABLE TO COMMON
STOCKHOLDERS $ 4,654 $ (50,238)
========== ==========

Income (Loss) per share attributable to
common stockholders:
Basic $ 0.02 $ (0.20)
========== ==========
Diluted $ 0.02 $ (0.20)
========== ==========

Weighted average number of shares
outstanding:
Basic 262,399 250,434
========== ==========
Diluted 271,086 250,434
========== ==========

NEXTEL PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)

December
March 31, 31,
2004 2003
---------- ----------
Cash and cash equivalents $ 125,792 $ 122,620
Short-term investments 136,323 146,191
Accounts receivable, net of allowance $15,790
and $14,873, respectively 151,952 150,219
Subscriber equipment inventory 28,851 24,007
Other current assets 15,402 19,006
---------- ----------
Total current assets 458,320 462,043
---------- ----------

Property, plant and equipment, net 1,014,816 1,025,096
FCC licenses, net of accumulated amortization
of $8,744 373,717 371,898
Other long-term assets 29,114 30,273
---------- ----------
Total assets $1,875,967 $1,889,310
========== ==========

Current liabilities $ 176,474 $ 185,425

Long-term debt 1,640,647 1,653,539
Other long-term liabilities 63,466 63,642
---------- ----------
Total liabilities 1,880,587 1,902,606

Total stockholders' equity (deficit) (4,620) (13,296)
---------- ----------
Total liabilities and stockholders' equity
(deficit) $1,875,967 $1,889,310
========== ==========

NEXTEL PARTNERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

For the Three Months
Ended
March 31,
-----------------------
2004 2003
---------- ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,654 $ (49,189)
Adjustments to reconcile net income
(loss) to net cash from operating
activities:
Depreciation and amortization 36,569 32,506
Loss on early retirement of debt 1,558 45
Other non-cash items in net loss 1,141 17,989
Change in current assets and liabilities (6,114) (5,689)
---------- ----------
Net cash from operating activities $ 37,808 $ (4,338)
---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (31,667) (65,267)
FCC licenses (2,336) (13,441)
Proceeds from sale and maturities of
short-term investments, net 9,868 43,046
---------- ----------
Net cash from investing activities $ (24,135) $ (35,662)
---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash from financing activities $ (10,501) $ 661
---------- ----------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS $ 3,172 $ (39,339)

CASH AND CASH EQUIVALENTS, beginning of period $ 122,620 $ 67,522
---------- ----------

CASH AND CASH EQUIVALENTS, end of period $ 125,792 $ 28,183
========== ==========

NEXTEL PARTNERS, INC. AND SUBSIDIARIES
Other Data
(unaudited)

Digital units in service as of:

March 31, 2004 1,322,000
===========
December 31, 2003 1,233,200
===========
March 31, 2003 964,600
===========

For the
Three
Months
Ended
March 31,
2004
(in
thousands)
------------

Net capital expenditures (excludes capitalized
interest) (4) $ 26,039
===========

NEXTEL PARTNERS, INC. AND SUBSIDIARIES
Supplemental Schedule
(in thousands, except ARPU, Lifetime Revenue per Subscriber
and Per Share Data)
(unaudited)

(1) Impact of SEC Staff Accounting Bulletin (SAB) No. 101- Revenue
Recognition and Emerging Issues Task Force (EITF) No.
00-21-Revenue Arrangements with Multiple Deliverables (EITF No.
00-21)
We adopted EITF No. 00-21, "Revenue Arrangements with Multiple
Deliverables" beginning July 1, 2003 using the "prospective"
method of adoption. Under EITF No. 00-21, we are no longer
required to consider whether a customer is able to realize utility
from the phone in the absence of the undelivered service. Given
that we meet the criteria stipulated in EITF No. 00-21, we account
for the sale of a phone as a unit of accounting separate from the
subsequent service to the customer. Accordingly, we began
recognizing revenue from phone equipment sales and the related
cost of phone equipment revenues when title to the phone equipment
passes to the customer beginning July 1, 2003. In accordance with
EITF No. 00-21, we also report activation fees as part of
equipment revenues effective July 1, 2003. Previously, in
accordance with SAB No. 101, "Revenue Recognition in Financial
Statements," activation fees and handset revenues were deferred
and recognized over three years, the estimated customer
relationship period. Concurrently, related costs for the handsets
were deferred, but only to the extent of deferred revenues,
resulting in no change to income (loss) from operations. Since we
adopted EITF No. 00-21 prospectively, all previously deferred
activation fees, handset revenues and related costs for the
handsets will continue to be amortized over their remaining
customer relationship period. The following is a summary of the
revenues and cost of equipment revenues (handset costs) as
reported and without the effect of SAB No. 101 and EITF No. 00-21.
(In December of 2003, the SEC staff issued SAB No. 104, "Revenue
Recognition," which updated SAB No. 101 to reflect the impact of
the issuance of EITF No. 00-21.)

For the Three
Months Ended
March 31,
-------------------
2004 2003
-------------------

Service revenues as reported $287,262 $200,542
Activation fees deferred (SAB No.101) - 1,631
Activation fees amortization (SAB No. 101) (1,039) (1,009)
Activation fees to equipment revenues (EITF No.
00-21) 2,181 -
-------------------
Total service revenues without SAB No. 101 and
EITF No. 00-21 effect $288,404 $201,164
-------------------

Equipment revenues as reported $ 18,869 $ 7,267
Equipment revenues deferred (SAB No. 101) - 10,028
Equipment revenues amortization (SAB No. 101) (5,695) (6,234)
Activation fees from service revenues (EITF No.
00-21) (2,181) -
-------------------
Total equipment revenues without SAB No. 101 and
EITF No. 00-21 effect $ 10,993 $ 11,061
-------------------

Cost of equipment revenues as reported $ 35,306 $ 21,602
Equipment revenues deferred (SAB No. 101) - 11,659
Equipment revenues amortization (EITF No. 00-21) (6,734) (7,243)
-------------------
Total cost of equipment revenues without SAB No.
101 and EITF No. 00-21 effect $ 28,572 $ 26,018
-------------------

Income (loss) from operations as reported $ 37,286 $ (6,778)
===================

Income (loss) from operations without SAB No. 101
and EITF No. 00-21 effect $ 37,286 $ (6,778)
===================

(2) Adjusted EBITDA
The term "EBITDA" refers to a financial measure that is defined as
earnings (loss) before interest, taxes, depreciation and
amortization; we use the term "Adjusted EBITDA" to reflect that
our financial measure also excludes cumulative effect of change in
accounting principle, loss from disposal of assets, loss from
early extinguishment of debt and stock-based compensation.
Adjusted EBITDA is commonly used to analyze companies on the basis
of leverage and liquidity. However, Adjusted EBITDA is not a
measure determined under GAAP in the United States of America and
may not be comparable to similarly titled measures reported by
other companies. Adjusted EBITDA should not be construed as a
substitute for operating income or as a better measure of
liquidity than cash flow from operating activities, which are
determined in accordance with GAAP. We have presented Adjusted
EBITDA to provide additional information with respect to our
ability to meet future debt service, capital expenditure and
working capital requirements. The following schedule reconciles
Adjusted EBITDA to net cash from operating activities reported on
our Consolidated Statements of Cash Flows, which we believe is the
most directly comparable GAAP measure:

For the Three Months
Ended Guidance for the
March 31, Year Ended
----------------------
December 31,
2004 2003 2004
----------- -------- ----------------
(in thousands) (in millions)
Net cash from operating
activities (as reported on
Consolidated Statements of
Cash Flows) $ 37,808 $ (4,338) $212.9 or higher
Adjustments to reconcile to
Adjusted EBITDA:
Cash paid interest expense, net
of capitalized amount 42,774 21,585 123.5 or
higher/lower
Interest income (677) (801) (2.8) or
higher/lower
Change in working capital (5,833) 9,545 (8.6) or
higher/lower
-------------------- ----------------
Adjusted EBITDA $ 74,072 $ 25,991 $325.0 or higher
==================== ================

(3) Impact of Statement of Financial Accounting Standards (SFAS)
Number 150-Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity
In May 2003, the Financial Accounting Standards Board (FASB)
issued SFAS No. 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity." This
statement establishes standards for how an issuer classifies and
measures in its statement of financial position certain financial
instruments with characteristics of both liabilities and equity.
It required that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some
circumstances) because that financial instrument embodies an
obligation of the issuer. This statement was effective for all
freestanding financial instruments entered into or modified after
May 31, 2003; otherwise it was effective at the beginning of the
first interim period beginning after June 15, 2003. We identified
that our mandatorily redeemable preferred stock was within the
scope of this statement and effective July 1, 2003 reclassified it
as long-term debt. Additionally, the mandatorily redeemable
preferred stock dividends were recorded as interest expense
beginning on July 1, 2003. We redeemed all of our outstanding
Series B mandatorily redeemable preferred stock on November 21,
2003. The following schedule shows the impact of SFAS No. 150 had
it been effective in the prior period.

For the Three Months
Ended
March 31,
-----------------------
2004 2003
----------------------

Net income (loss) $ 4,654 $ (49,189)
Add: Mandatorily redeemable preferred stock
dividends - (1,049)
-----------------------
Net income (loss) including classification of
preferred stock dividends as interest expense $ 4,654 $ (50,238)
=======================

Net income (loss) per share including
mandatorily redeemable preferred stock
dividends:
Basic $ 0.02 $ (0.20)
=======================
Diluted $ 0.02 $ (0.20)
=======================

Weighted average number of common shares
outstanding:
Basic 262,399 250,434
=======================
Diluted 271,086 250,434
=======================

(4) Net Capital Expenditures
Net capital expenditures exclude capitalized interest and are
offset by net proceeds from the sale and lease-back transactions
of telecommunication towers and related assets to third parties
accounted for as operating leases. Net capital expenditures as
defined are not a measure determined under GAAP in the United
States of America and may not be comparable to similarly titled
measures reported by other companies. Net capital expenditures
should not be construed as a substitute for capital expenditures
reported on our Consolidated Statements of Cash Flows, which is
determined in accordance with GAAP. We report net capital
expenditures in this manner because we believe it reflects the net
cash used by us for capital expenditures and to satisfy the
reporting requirements for our debt covenants. The following
schedule reconciles net capital expenditures to capital
expenditures reported on our Consolidated Statements of Cash
Flows, which we believe is the most directly comparable GAAP
measure:

For the Three
Months Ended
March 31, 2004
----------------
Capital expenditures (as reported on Consolidated
Statements of Cash Flows) $ 31,667
Less: cash paid portion of capitalized interest (209)
Less: cash proceeds from sale and lease-back
transactions accounted for as operating leases (389)
Change in capital expenditures accrued or unpaid (5,030)
----------------
Net capital expenditures $ 26,039
================

Although we have stated that for the full year 2004 we expect to
have net capital expenditures of $165.0 million, we are currently
unable to provide a quantitative reconciliation of capital
expenditures as reported on the Consolidated Statement of Cash Flows
to the anticipated net capital expenditures because significant
information that would be necessary to determine our anticipated net
capital expenditures for the full year 2004 is currently unavailable
or ascertainable with the requisite specificity without unreasonable
effort.

Other Non-GAAP Reconciliations:

ARPU -- Average Revenue per Unit

ARPU is an industry term that measures total service revenues per
month from our subscribers divided by the average number of
subscribers in commercial service during the period. ARPU, itself, is
not a measurement determined under GAAP in the United States of
America and may not be similar to ARPU measures of other companies;
however, ARPU uses GAAP measures as the basis for calculation. We
believe that ARPU provides useful information concerning the appeal of
our rate plans and service offering and our performance in attracting
high value customers. The following schedule reflects the ARPU
calculation and provides a reconciliation of service revenues used for
the ARPU calculation to service revenues reported on our Consolidated
Statements of Operations, which we believe is the most directly
comparable GAAP measure to the service revenues measure used for the
ARPU calculation:

ARPU (without roaming revenues)
-------------------------------

For the Three Months
Ended Guidance for the
March 31, Year Ended
---------------------
December 31,
2004 2003 2004
--------------------- ----------------
(in thousands, except (in millions,
ARPU) except ARPU)
Service revenues (as reported
on Consolidated Statements of
Operations) $ 287,262 $ 200,542 $1,223 or higher
Activation fees deferred
(recognized) for SAB No. 101 (1,039) 622
Add: activation fees
reclassified for EITF No. 00-
21 2,181 -
Less: roaming revenues and
other non-service revenues (33,964) (22,949) (133) or higher
--------------------- ----------------
Service revenues for ARPU - $1,090 or higher
three months $ 254,440 $ 178,215
===================== ================

Average units (subscribers) 1,271 921 1,398 or higher
===================== ================

ARPU $ 67 $ 65 $65 or higher
===================== ================

ARPU (including roaming revenues)
---------------------------------

For the Three Months
Ended
March 31,
---------------------
2004 2003
---------------------
Service revenues (as reported
on Consolidated Statements of
Operations) $ 287,262 $ 200,542
Activation fees deferred
(recognized) for SAB No. 101 (1,039) 622
Add: activation fees
reclassified for EITF No. 00-
21 2,181 -
Less: other non-service
revenues (177) -
---------------------
Service plus roaming revenues
for ARPU - three months $ 288,227 $ 201,164
=====================

Average units (subscribers) 1,271 921
=====================

ARPU, including roaming
revenues $ 76 $ 73
=====================

Free Cash Flow (FCF)

We define free cash flow as net cash from operating activities
less capital expenditures and payments for FCC licenses. Free cash
flow is not a measure determined under GAAP in the United States of
America and may not be similar to free cash flow measures of other
companies. We believe that free cash flow provides useful information
to investors, analysts and our management about the amount of cash our
business is generating, after interest payments and reinvestments in
the business, which may be used to fund scheduled debt maturities and
other financing activities, including refinancings and early
retirement of debt. Free cash flow is most directly comparable to the
GAAP measure of net cash from operating activities reported on our
Consolidated Statements of Cash Flows. The following schedule
reconciles free cash flow to net cash from operating activities:

For the Three
Months Ended
March 31,
-------------------
2004 2003
-------------------

Net cash from operating activities (as reported on
Consolidated Statements of Cash Flows) $ 37,808 $ (4,338)
Aggregate adjustments to reconcile net income
(loss) to net cash from operating activities (as
reported on Consolidated Statements of Cash
Flows) (33,154) (44,851)
-------------------
Net income (loss) (as reported on Consolidated
Statements of Operations) $ 4,654 $(49,189)
Add: depreciation and amortization 36,569 32,506
Add: non-cash items in net income (loss) 2,699 18,034
Less: net capital expenditures (See Note 4 above) (26,039) (55,753)
Less: cash paid portion of capitalized interest
(See Note 4 above) (209) (321)
Less: FCC licenses (2,336) (13,441)
-------------------
Free cash flow (negative) $ 15,338 $(68,164)
===================

Net Income (Loss) Excluding the Loss on Early Retirement of Debt

Net income (loss) excluding the loss on early retirement of debt is
calculated using net income (loss) and adding back the loss on early
retirement of debt. We show this non-GAAP financial measure to allow
us to compare our net income (loss) in the periods ended March
31, 2004 to the same periods in the prior year, in which we did not
record a significant loss on early retirement of debt. Net income
(loss) excluding the loss on early retirement of debt is not a measure
determined under GAAP in the United States of America and may not be
comparable to similarly titled measures reported by other companies
and should not be construed as a substitute for net income (loss),
which is determined in accordance with GAAP. The following schedule
reconciles net income (loss) excluding the loss on early retirement of
debt to net income (loss) reported on our Consolidated Statement of
Operations, which we believe is the most directly comparable GAAP
measure:

For the Three Months
Ended
March 31,
----------------------
2004 2003
----------------------

Net income (loss) (as reported on Consolidated
Statements of Operations) $ 4,654 $ (49,189)
Add: loss on early retirement of debt 1,558 45
----------------------
Net income (loss) excluding the loss on early
retirement of debt $ 6,212 $ (49,144)
======================

Income (Loss) Attributable to Common Stockholders Excluding the Loss
on Early Retirement of Debt

Income (loss) attributable to common stockholders excluding the
loss on early retirement of debt is calculated using income (loss)
attributable to common stockholders (as reported on Consolidated
Statements of Operations) and adding back the loss on early retirement
of debt. We show this non-GAAP financial measure to allow us to
compare our income (loss) attributable to common stockholders in the
periods ended March 31, 2004 to the same periods in the prior year, in
which we did not record a significant loss on early retirement of
debt. Income (loss) attributable to common stockholders excluding the
loss on early retirement of debt and income (loss) per share
attributable to common stockholders excluding the loss on early
retirement of debt are not measures determined under GAAP in the
United States of America and may not be comparable to similarly titled
measures reported by other companies and should not be construed as
substitutes for income (loss) attributable to common stockholders and
income (loss) per share attributable to common stockholders, which are
determined in accordance with GAAP. The following schedule reconciles
income (loss) attributable to common stockholders excluding the loss
on early retirement of debt and income (loss) per share attributable
to common stockholders excluding the loss on early retirement of debt
to income (loss) attributable to common stockholders and income (loss)
per share attributable to common stockholders, respectively, as
reported on our Consolidated Statements of Operations, which we
believe are the most directly comparable GAAP measures:

For the Three
Months Ended
March 31,
-------------------
2004 2003
-------------------

Income (loss) attributable to common stockholders
(as reported on Consolidated Statements of
Operations) $ 4,654 $(50,238)
Add: loss on early retirement of debt 1,558 45
-------------------
Income (loss) attributable to common stockholders
excluding the loss on early retirement of debt $ 6,212 $(50,193)
===================

Income (loss) per share attributable to common
stockholders, basic (as reported on Consolidated
Statements of Operations) $ 0.02 $ (0.20)
Add: loss per share on early retirement of debt $ - $ -
-------------------
Income (loss) per share attributable to common
stockholders excluding the
loss on early retirement of debt, basic $ 0.02 $ (0.20)
===================

Weighted average number of common shares
outstanding, basic 262,399 250,434
===================

Income (loss) per share attributable to common
stockholders, diluted (as reported on
Consolidated Statements of Operations) $ 0.02 $ (0.20)
Add: loss per share on early retirement of debt $ - $ -
-------------------
Income (loss) per share attributable to common
stockholders excluding the
loss on early retirement of debt, diluted $ 0.02 $ (0.20)
===================

Weighted average number of common shares
outstanding, diluted 271,086 250,434
===================

Service Revenue Margin

The measure "service revenue margin" is a non-GAAP measure that is
determined by dividing "Adjusted EBITDA" (see Note 2 above) by service
revenue (as reported on our Consolidated Statements of Operations).
Service revenue margin, as defined, is not a measure determined under
GAAP in the United States of America and may not be comparable to
similarly titled measures reported by other companies. We believe that
service revenue margin is a useful indicator of our ability to fund
future spending requirements, such as capital expenditures and other
investments, and our ability to incur and service debt. The following
schedule reflects the service revenue margin calculation and
incorporates the Adjusted EBITDA reconciliation set forth in Item 2
above:

For the Three
Months Ended
March 31, 2004
-----------------
Adjusted EBITDA (see Note 2) $ 74,072
Divided by: service revenues (as reported on
Consolidated Statements of Operations) 287,262
-----------------
Service revenue margin 26%
=================

LRS -- Lifetime revenue per subscriber

LRS is an industry term calculated by dividing ARPU (see above) by
the subscriber churn rate. The subscriber churn rate is an indicator
of subscriber retention and represents the monthly percentage of the
subscriber base that disconnects from service. Subscriber churn is
calculated by dividing the number of handsets disconnected from
commercial service during the period by the average number of handsets
in commercial service during the period. LRS, itself, is not a
measurement determined under GAAP in the United States of America and
may not be similar to LRS measures of other companies; however, LRS
uses GAAP measures as the basis for calculation. We believe that LRS
is an indicator of the expected lifetime revenue of our average
subscriber, assuming that churn and ARPU remain constant as indicated.
We also believe that this measure, like ARPU, provides useful
information concerning the appeal of our rate plans and service
offering and our performance in attracting and retaining high value
customers. The following schedule reflects the LRS calculation:

For the Three
Months ended
March 31, 2004
----------------
ARPU (without roaming revenues) $ 67
Divided by: Churn 1.5%
----------------
Lifetime revenue per subscriber (LRS) $ 4,467
================

CONTACT:
Nextel Partners, Inc.
Investors:
Alice Kang Ryder, 425-576-3696
Media:
Susan Johnston, 425-576-3617
-0- Apr/28/2004 11:30 GMT

Last Updated: April 28, 2004 07:30 EDT

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