iPCS, Inc. Reports Second Quarter Results

Company Reports Record Adjusted EBITDA and Free Cash Flow
SCHAUMBURG, Ill.--(Business Wire)--
iPCS, Inc. (NASDAQ: IPCS), a PCS Affiliate of Sprint Nextel Corporation, today
reported financial and operational results for its second quarter ended June 30,
2009.

Second Quarter 2009 Highlights:

* Service revenue of $107.2 million, compared to $94.2 million for the prior
year quarter, a year over year increase of 14%.
* Net income of $7.4 million, or $0.43 per diluted share, compared to a net loss
of $0.6 million, or $0.04 per diluted share, for the prior year quarter.
* Adjusted EBITDA of $29.3 million, compared to $23.4 million in the prior year
quarter, a year over year increase of 25%. Included in Adjusted EBITDA for the
second quarter is approximately $2.3 million in Sprint Nextel related litigation
expenses compared to approximately $1.8 million in the prior year quarter.
* Capital expenditures of $11.7 million, compared to $26.6 million for the prior
year quarter.
* Positive Free Cash Flow of $7.8 million, compared to negative Free Cash Flow
of $8.4 million for the prior year quarter.
* Subscriber activity for the quarter as follows:

* Gross additions of approximately 55,300, compared to 61,800 for the prior year
quarter.
* Net additions of approximately 10,100 in the quarter, compared to 13,400 for
the prior year quarter.
* Churn, net of 30 day deactivations, of approximately 2.0%, compared to 2.3%
for the prior year quarter.
* Ending subscribers of approximately 710,200, compared to 654,000 for the prior
year quarter, a year over year increase of 9%.

"We are very pleased with our performance for the quarter. Despite the
challenging economic conditions, we were able to report the second consecutive
quarter of positive EPS and the highest Adjusted EBITDA in our history,"
remarked Timothy M. Yager, President and CEO of iPCS. "We continue to grow our
subscriber base, reduce churn and generate higher ARPU due in large part to our
substantial investment in the network over the last several years."

"The strong cash flow momentum we demonstrated during the first six months of
the year has allowed us to repurchase nearly $6.0 million of our common stock to
date. After consideration of our strong operational cash flow and the
improvements in our working capital position as well as the cash benefit of our
first quarter settlement with Sprint, we are increasing our Free Cash Flow
guidance for 2009. However, given the current state of the U.S. economy, the
competitive landscape and our efforts to improve churn by more tightly managing
credit, we currently expect to be at or slightly below the low end of previously
issued gross addition guidance range for the year. Nevertheless, our strong
results for the first half of 2009 reinforce our confidence in reaffirming our
previously issued 2009 Adjusted EBITDA guidance," concluded Yager.

iPCS revises and reaffirms the following full year 2009 guidance as follows:

* Revised gross additions to be at or slightly below the low end of the range of
250,000 to 275,000.

* Reaffirmed Adjusted EBITDA of $100 million to $120 million, excluding expenses
related to the Sprint Nextel litigation and the $4.3 million gain on the Sprint
settlement.
* Reaffirmed capital expenditures of $35 million to $45 million.
* Revised Free Cash Flow of $25 million to $35 million, from $15 million to $25
million.

Conference Call to be held tomorrow, July 31st, at 11:00am ET (10:00am CT)

The Company will conduct a conference call to discuss its financial and
subscriber results for the second quarter on Friday, July 31, 2009 at 11:00 a.m.
Eastern Time (10:00 a.m. Central Time). To listen to the call, dial
1-888-424-6214 at least five minutes before the conference call begins and
reference the "iPCS Earnings Conference Call." Those calling in from
international locations should dial 973-935-8755. A replay of the call will be
available beginning at 12:00 p.m. Eastern Time on July 31, 2009 and be available
through midnight August 7, 2009. To access the replay, dial 1-800-642-1687 using
a pass code of 19094407. To access the replay from international locations, dial
706-645-9291 and use the same pass code. The call will also be webcast and can
be accessed at the Investor Relations page of the iPCS website at
www.ipcswirelessinc.com.

About iPCS, Inc.

iPCS, through its operating subsidiaries, is a Sprint PCS Affiliate of Sprint
Nextel Corporation with the exclusive right to sell wireless mobility
communications network products and services under the Sprint brand in 81
markets including markets in Illinois, Michigan, Pennsylvania, Indiana, Iowa,
Ohio and Tennessee. The territory includes key markets such as Grand Rapids
(MI), Fort Wayne (IN), the Tri-Cities region of Tennessee (Johnson City,
Kingsport and Bristol), Scranton (PA), Saginaw-Bay City (MI), Central Illinois
(Peoria, Springfield, Decatur, and Champaign) and the Quad Cities region of
Illinois and Iowa (Bettendorf and Davenport, IA, and Moline and Rock Island,
IL). As of June 30, 2009, iPCS's licensed territory had a total population of
approximately 15.1 million residents, of which its wireless network covered
approximately 12.6 million residents, and iPCS had approximately 710,200
subscribers. iPCS is headquartered in Schaumburg, Illinois. For more
information, please visit iPCS's website at www.ipcswirelessinc.com.

Definitions of Operating and Non-GAAP Financial Measures

iPCS provides readers financial measures calculated using generally accepted
accounting principles ("GAAP") and other measures which are derived from GAAP
("Non-GAAP Financial Measures"). These financial measures reflect conventions or
standard measures of liquidity, profitability or performance commonly used by
the investment community in the telecommunications industry for comparability
purposes. These financial measures are a supplement to GAAP financial measures
and should not be considered as an alternative to, or more meaningful than, GAAP
financial measures.

The Non-GAAP Financial Measures and non-financial terms used in this release
include the following:

* Gross subscriber additions for the period represent the number of new
activations during the period (excluding transfers into our territory).
* Net subscriber additions for the period represented is calculated as the gross
subscriber additions in the period less the number of subscribers deactivated
plus the net subscribers transferred in or out of our markets during the period.

* Churn is a measure of the average monthly rate at which subscribers based in
our territory deactivate service on a voluntary or involuntary (credit-related)
basis. We calculate average monthly churn based on the number of subscribers
deactivated during the period (net of those who deactivate within 30 days of
activation and excluding transfers out of our territory) as a percentage of our
average monthly subscriber based during the period divided by the number of
months during the period.
* Adjusted EBITDA represents earnings before interest, taxes, depreciation and
amortization as adjusted for gain or loss on the disposal of property and
equipment, stock-based compensation expense and debt extinguishment costs.
Adjusted EBITDA is a measure used by the investment community in the
telecommunications industry for comparability and is not intended to represent
the results of our operations in accordance with GAAP.
* ARPU, or average revenue per user, is a measure of the average monthly service
revenue earned from subscribers based in our territory. This measure is
calculated by dividing subscriber revenue or subscriber revenue plus roaming
revenue in our consolidated statement of operations by the number of our average
monthly subscribers during the period divided by the number of months in the
period.
* CCPU, or cash cost per user, is a measure of the monthly costs to operate our
business on a per subscriber basis consisting of costs of service and
operations, and general and administrative expenses in our consolidated
statement of operations, plus handset subsidies on equipment sold to existing
subscribers, less stock-based compensation expense. These costs are divided by
the number of our average monthly subscribers during the period divided by the
number of months in the period.
* CPGA, or cost per gross addition, is a measure of the average cost we incur to
add a new subscriber in our territory. These costs include handset subsidies on
new subscriber activations, commissions, rebates and other selling and marketing
costs. We calculate CPGA by dividing (a) the sum of cost of products sold less
product sales revenue associated with transactions with new subscribers, and
selling and marketing expense, net of stock-based compensation expense, during
the measurement period, by (b) the total number of subscribers activated in our
territory during the period.
* Licensed Population represents the number of residents in the markets in our
territory for which we have an exclusive right to provide wireless mobility
communications services under the Sprint brand name. The number of residents
located in our territory does not represent the number of wireless subscribers
that we serve or expect to serve in our territory.
* Covered Population represents the number of residents covered by our portion
of the wireless network of Sprint. The number of residents covered by our
network does not represent the number of wireless subscribers that we serve or
expect to serve in our territory.
* Free Cash Flowis defined as the net increase (decrease) in cash and cash
equivalents less the change in debt (including payment in kind, or "PIK"
interest), proceeds from the exercise of common stock options or the issuance or
repurchase of common stock and other financing activities, net. This non-GAAP
measure should be used in addition to, but not as a substitute for, the analysis
provided in the statement of cash flows. We believe that Free Cash Flow provides
useful information to investors, analysts and our management about the cash
generated by our core operations after interest and dividends and our ability to
fund or refinance scheduled debt maturities and other financing activities,
including discretionary refinancing and retirement of debt, the repurchase of
common stock and purchase or sale of investments.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

Statements in this press release regarding iPCS's business which are not
historical facts are "forward-looking statements." Forward-looking statements
generally can be identified by the use of forward-looking terminology such as
"may," "will," "expect," "intend," "estimate," "anticipate," "believe" or
"continue" or the negative thereof or variations thereon or similar terminology.
Such statements are based upon the current beliefs and expectations of
management and are subject to significant risks and uncertainties. A variety of
factors could cause actual results to differ materially from those anticipated
in iPCS's forward-looking statements, including, but not limited to, the
following factors: (1) iPCS's dependence on its affiliation with Sprint; (2) the
final outcome of iPCS's litigation with Sprint concerning the scope of iPCS's
exclusivity under

its affiliation agreements; (3) changes in Sprint's affiliation strategy; (4)
changes in Sprint's ability to devote as much of its personnel and resources to
the remaining Sprint Affiliates of Sprint Nextel; (5) iPCS's reliance on
Sprint's internal support systems and its related execution of back office
activities, including customer care, billing and back office support; (6)
changes in iPCS's customer default rates and/or in the level of bad debt
expense; (7) changes or advances in technology; (8) changes in Sprint's national
service plans, products and services or its fee structure with iPCS; (9) adverse
changes in the amounts of, and the relationship between, roaming revenue iPCS
receives and roaming expense iPCS pays; (10) iPCS's reliance on the timeliness,
accuracy and sufficiency of financial and other data and information received
from Sprint; (11) difficulties in network construction, expansion and upgrades;
(12) increased competition in iPCS's markets; (13) iPCS's dependence on
independent third parties for a sizable percentage of its sales; and (14) the
depth and duration of the economic downturn in the United States and its effect
on our vendors, distribution partners and customers. For a detailed discussion
of these and other cautionary statements and factors that could cause actual
results to differ from iPCS's forward-looking statements, please refer to iPCS's
filings with the SEC, especially in the "risk factors" section of the Annual
Report on Form 10-K for the fiscal year ended December 31, 2008, our Form 10-Q
for the quarter ended March 31, 2009 and our Form 10-Q for the quarter ended
June 30, 2009 to be filed following the earnings call referenced in this press
release.Investors and analysts should not place undue reliance on
forward-looking statements. The forward-looking statements in this document
speak only as of the date of the document and iPCS assumes no obligation to
update the forward-looking statements or to update the reasons why actual
results could differ from those contained in the forward-looking statements.

iPCS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share and per share amounts)

June 30, December 31,
2009 2008

Assets
Current Assets:
Cash and cash equivalents $ 75,639 $ 55,940
Accounts receivable, net 42,321 37,859
Receivable from Sprint 27,867 25,623
Inventories, net 6,175 5,465
Assets held for sale - 389
Prepaid expenses 7,069 7,223
Other current assets 101 63
Total current assets 159,172 132,562
Property and equipment, net 157,577 162,014
Financing costs, net 5,731 6,419
Deferred customer activation costs 3,178 3,816
Intangible assets, net 86,014 90,602
Goodwill 141,783 141,783
Other assets 411 416
Total assets $ 553,866 $ 537,612

Liabilities and Stockholders' Deficiency
Current Liabilities:
Accounts payable $ 6,205 $ 5,051
Accrued expenses 17,335 18,337
Payable to Sprint 47,078 41,067
Deferred revenue 14,336 13,410
Accrued interest 5,287 5,519
Current maturities of long-term debt and capital lease obligations 40 37
Total current liabilities 90,281 83,421
Deferred customer activation fee revenue 3,178 3,816
Interest rate swap 13,596 16,621
Other long-term liabilities 5,872 6,551
Long-term debt and capital lease obligations, excluding current maturities 475,381 475,401
Total liabilities 588,308 585,810

Stockholders' Deficiency:
Preferred stock, par value $.01 per share; 25,000,000 shares authorized; none issued - -
Common stock, par value $.01 per share; 75,000,000 shares authorized, 173 172
17,263,483 and 17,163,221 shares issued, respectively
Additional paid-in-capital 169,835 167,531
Accumulated deficiency (186,130 ) (199,280 )
Accumulated other comprehensive loss (13,596 ) (16,621 )
Treasury stock, at cost; 400,899 and 0 shares, respectively (4,724 ) -
Total stockholders' deficiency (34,442 ) (48,198 )
Total liabilities and stockholders' deficiency $ 553,866 $ 537,612

iPCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in thousands, except share data)

For the Three Months Ended For the Six Months Ended

June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008

Revenue:
Service revenue $ 107,139 $ 94,174 $ 211,120 $ 186,273
Roaming revenue 28,153 31,657 55,773 61,801
Equipment and other 4,867 3,540 9,430 6,955
Total revenue 140,159 129,371 276,323 255,029
Operating Expense:
Cost of service and roaming 71,650 70,463 143,800 138,647
Cost of equipment 15,320 12,874 31,532 24,537
Selling and marketing 17,336 16,444 33,986 34,303
General and administrative 7,736 7,992 16,617 15,080
Gain on Sprint settlement - - (4,273 ) -
Depreciation 9,961 11,556 20,247 23,217
Amortization of intangible assets 2,294 2,293 4,588 4,587
Loss on disposal of property and equipment, net 417 248 516 258
Total operating expense 124,714 121,870 247,013 240,629
Operating income 15,445 7,501 29,310 14,400
Interest income 78 384 164 1,104
Interest expense (7,997 ) (8,221 ) (16,031 ) (17,136 )
Other income, net 22 15 27 30
Income (loss) before provision for income tax 7,548 (321 ) 13,470 (1,602 )
Provision for income tax 170 325 320 650
Net income (loss) $ 7,378 $ (646 ) $ 13,150 $ (2,252 )

Income (loss) per share of common stock:
Basic $ 0.44 $ (0.04 ) $ 0.78 $ (0.13 )
Diluted $ 0.43 $ (0.04 ) $ 0.77 $ (0.13 )

Weighted average shares of common stock outstanding:
Basic 16,820,907 17,154,237 16,946,548 17,145,140
Diluted 17,046,214 17,154,237 17,059,469 17,145,140

iPCS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)

For the Six Months Ended

June 30, 2009 June 30, 2008

Cash Flows from Operating Activities:
Net income (loss) $ 13,150 $ (2,252 )
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Loss on disposal of property and equipment 517 258
Depreciation and amortization 24,835 27,804
Non-cash interest expense 688 688
Payment-in-kind interest 1,491 -
Stock-based compensation expense 2,314 3,660
Provision for doubtful accounts 4,864 10,149
Changes in assets and liabilities:
Accounts receivable (9,326 ) (14,945 )
Receivable from Sprint (2,245 ) 2,025
Inventories, net (709 ) (319
Prepaid expenses, other current and long-term assets 822 1,068
Accounts payable, accrued expenses and other long-term liabilities (1,606 ) (1,179 )
Payable to Sprint 6,011 810
Deferred revenue 289 717
Net cash flows provided by operating activities 41,095 28,484
Cash Flows from Investing Activities:
Purchases of property and equipment (17,022 ) (40,990 )
Proceeds from disposition of property and equipment 185 163
Net cash flows used in investing activities (16,837 ) (40,827 )
Cash Flows from Financing Activities:
Payments on capital lease obligations (17 ) (15 )
Proceeds from the exercise of stock options - 396
Payment of special cash dividend (59 ) (72 )
Repurchase of common stock (4,483 ) (11 )
Net cash flows (used in) provided by financing activities (4,559 ) 298
Net increase (decrease) in cash and cash equivalents 19,699 (12,045 )
Cash and cash equivalents at beginning of period 55,940 77,599
Cash and cash equivalents at end of period $ 75,639 $ 65,554

Supplemental disclosure of cash flow information - cash paid for interest 15,536 17,004
(net of amount capitalized)
Supplemental disclosure for non-cash investing activities:
Accounts payable and accrued expenses incurred for the acquisition of property, $ 1,202 $ 5,326
equipment and construction in progress

iPCS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(UNAUDITED)
(In thousands)

Adjusted EBITDA For the Three Months Ended For the Six Months Ended
June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008

Net income (loss) $ 7,378 $ (646 ) $ 13,150 $ (2,252 )
Net interest expense 7,919 7,837 15,867 16,032
Provision for income tax 170 325 320 650
Depreciation and amortization 12,255 13,849 24,835 27,804
Stock-based compensation expense 1,194 1,819 2,314 3,660
Loss on disposal of property and equipment, net 417 248 516 258
Adjusted EBITDA $ 29,333 $ 23,432 $ 57,002 $ 46,152

Free Cash Flow For the Three Months Ended For the Six Months Ended
June 30, 2009 June 30, 2008 June 30, 2009 June 30, 2008
Net increase (decrease) in cash and cash equivalents $ 4,943 $ (8,232 ) $ 19,699 $ (12,045 )
Add back: Cash Flows from Financing Activities
Payments on capital lease obligations 8 8 17 15
Proceeds from the exercise of stock options - (259 ) - (396 )
Payment of special cash dividend 30 36 59 72
Repurchases of common stock 2,857 11 4,483 11
Free cash flow $ 7,838 $ (8,436 ) $ 24,258 $ (12,343 )

iPCS, INC. AND SUBSIDIARIES
Summary of Operating Statistics
(UNAUDITED)

For the Three Months Ended
June 30, 2009 March 31, 2009 June 30, 2008

Subscribers
Gross Additions 55,300 60,600 61,800
Net Additions 10,100 9,000 13,400
Total Subscribers 710,200 700,100 654,000
Churn, net 2.0 % 2.3 % 2.3 %

Average Revenue Per User, Monthly
Including Roaming $ 64 $ 63 $ 65
Without Roaming $ 51 $ 50 $ 48

Cash Cost Per User, Monthly
Including Roaming $ 39 $ 40 $ 41
Without Roaming $ 29 $ 31 $ 32

Cost Per Gross Addition $ 429 $ 402 $ 358

Licensed Population (Millions) 15.1 15.1 15.1
Covered Population (Millions) 12.6 12.5 12.2
Cell Sites 1,941 1,912 1,763

iPCS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measures
(UNAUDITED)

(Dollars in thousands except per user and per gross addition amounts)

For the Three Months Ended
June 30, 2009 March 31, 2009 June 30, 2008
ARPU
Service revenue $ 107,139 $ 103,981 $ 94,174
Roaming revenue 28,153 27,620 31,657
Total service and roaming revenue $ 135,292 $ 131,601 $ 125,831
Average subscribers 704,400 695,400 648,030

Average revenue per user including roaming, monthly $ 64 $ 63 $ 65
Average revenue per user without roaming, monthly $ 51 $ 50 $ 48

CCPU
Cost of service and roaming $ 71,650 $ 72,150 $ 70,463
plus: General and administrative 7,736 8,881 7,992
less: Stock-based compensation expense (1,050 ) (984 ) (1,615 )
less: Retail equipment upgrade revenue (1,563 ) (1,273 ) (912 )
plus: Retail equipment cost of upgrades 5,482 5,091 4,406
Total cash costs including roaming $ 82,255 $ 83,865 $ 80,333
less: Roaming expense (20,409 ) (19,261 ) (18,304 )
Total cash costs without roaming $ 61,846 $ 64,604 $ 62,029
Average subscribers 704,400 695,400 648,030

Cash cost per user, monthly $ 39 $ 40 $ 41
Cash cost per user without roaming, monthly $ 29 $ 31 $ 32

CPGA
Selling and marketing $ 17,336 $ 16,650 $ 16,444
less: Stock-based compensation expense (144 ) (136 ) (204 )
less: Equipment revenue, net of upgrade revenue (3,293 ) (3,275 ) (2,608 )
plus: Equipment costs, net of cost of upgrades 9,838 11,121 8,468
CPGA Costs $ 23,737 $ 24,360 $ 22,100
Gross additions 55,300 60,600 61,800

Cost per gross addition $ 429 $ 402 $ 358

Investor:
Financial Dynamics
Nathan Elwell, 312-553-6706

Copyright Business Wire 2009

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