CTE Achieves Recurring EBITDA of $160.6 Million for 2002 Full Year, a 15% Increase, Versus 2001 Full Year EBITDA of $140.1 Million, Excluding CTSI's Expansion Markets.Business and Technology Editors DALLAS Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. , Pa.--(BUSINESS WIRE)--Feb. 12, 2003 Commonwealth Telephone Enterprises, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTCO CTCO Chicago Transportation Coordination Office , CTCOB) CTE (Coefficient of Thermal Expansion) The difference between the way two materials expand when heat is applied. This is very critical when chips are mounted to printed circuit boards, because the silicon chip expands at a different rate than the plastic board. Reports 2002 Fourth Quarter Diluted Earnings Per Share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") of $0.78, and Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. EPS of $0.62, Excluding a Non-Recurring $0.05 Favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. Impact Resulting from Restructuring Charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. Reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its , and a Non-Recurring $0.11 Favorable Impact in Connection with a Tentative tentative, adj not final or definite, such as an experimental or clinical finding that has not been validated. Operating Tax Settlement CTE Reports 2002 Full Year EPS of $2.41, and 2002 Full Year Recurring EPS of $2.27 Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Mahoney Mahoney could refer to:
EST abbr. electroshock therapy ) this morning. Mr. Mahoney will review CTE's 2002 fourth quarter and full year results, and provide 2003 guidance. The call is expected to last approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 30 minutes. To access today's conference call, please call 1-800-482-2225. The conference call passcode is 2881760. The simultaneous webcast can be accessed via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.ct-enterprises.com. The conference call will be archived and available for replay for 48 hours following the call. To access the replay, please call 1-888-211-2648, passcode 2881760. The webcast will also be available for replay for 48 hours at www.ct-enterprises.com. Commonwealth Telephone Enterprises, Inc. ("CTE") (NASDAQ: CTCO, CTCOB) today announced financial results for the 2002 fourth quarter and full year. For the 2002 fourth quarter, CTE reported diluted earnings per share ("EPS") of $0.78, versus reported diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS of $0.40 in the 2001 fourth quarter. For the 2002 fourth quarter, CTE's recurring diluted EPS was $0.62, which reflects the exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of $0.05 per share resulting from an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. positive settlement in connection with certain restructuring charges recorded in the 2000 fourth quarter, as well as an $0.11 per share favorable impact resulting from a tentative operating tax settlement. The recurring fourth quarter diluted EPS of $0.62 compares to recurring diluted EPS of $0.48 in the 2001 fourth quarter. For the 2002 full year, CTE reported diluted EPS of $2.41, versus a reported diluted EPS of $1.83 for the 2001 full year. For the 2002 full year, CTE's recurring diluted EPS was $2.27, versus recurring diluted EPS of $1.39 for the 2001 full year. (Note: A fourth quarter and full year reconciliation of reported versus recurring diluted EPS for 2002 and 2001 is provided in an accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. unaudited table.) "I am pleased to report that CTE completed 2002 with a very solid fourth quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "We reported consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: access line growth of 5%, and now serve a total of 464,498 access lines in the combined Commonwealth Telephone Company and CTSI CTSI Census Tract Street Index (US Census Bureau) CTSI California Traffic Safety Institute CTSI Corbett Technology Solutions, Inc. (Chantilly, VA) CTSI Central Terminal Signaling Interface , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control operations. We achieved consolidated revenue growth of 6% versus last year's fourth quarter, while growing recurring consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become 10%, and expanding our recurring EBITDA margin to 51%. We reduced our debt by $27.0 million in the quarter, and ended the quarter with a Debt/EBITDA ratio of 0.9x, excluding the tentative tax settlement. "Our fourth quarter performance was the culmination of an excellent year for CTE," continued Mahoney. "A year marked by four steady and consistently solid quarters. At the outset of 2002, we focused on continuing the positive trends we established in 2001 in terms of consolidated EBITDA growth, EBITDA margin performance, and CAPEX and debt reduction, and we accomplished our objectives on all fronts. For the 2002 full year, we achieved record recurring EBITDA of $160.6 million, a 15% growth rate versus last year, excluding CTSI's expansion markets. Our 2002 full year CAPEX declined to $53.4 million from a level of $69.2 million in 2001. "We remain steadfastly focused on continuing the successful execution of our RLEC RLEC Rural Local Exchange Carrier RLEC Report Log Exception Condition and RLEC 'edge-out' business plans, on maintaining and enhancing the financial strength and flexibility that we have worked hard to build over the past two years, and on delivering value to our shareholders." CTE Consolidated Results CTE's consolidated revenues in the 2002 fourth quarter were $81.6 million, a growth rate of 6% versus the 2001 fourth quarter. Reported consolidated EBITDA (earnings before interest, taxes, voluntary employee retirement program, restructuring charges (reversals), depreciation and amortization, other income (expense) and equity in income of unconsolidated entities) was $44.5 million versus $38.0 million in last year's fourth quarter. CTE's recurring consolidated EBITDA, excluding the impact of the tentative tax settlement, was $41.9 million, a growth rate of 10% versus last year's fourth quarter. CTE's recurring consolidated EBITDA margin was 51% in the fourth quarter, versus an EBITDA margin of 49% in the year ago quarter, an increase of over 200 basis points. Consolidated capital expenditures were $17.5 million, versus $22.7 million in the 2001 fourth quarter. The table below sets forth highlights of CTE's 2002 fourth quarter recurring consolidated results (excluding the operating tax settlement) versus the 2001 fourth quarter:
2002 2001
Fourth Fourth % Change
Quarter Quarter Inc./(Dec.)
------- ------- --------
Total Access Lines 464,498 443,062 5%
Revenue $81.6M $77.0M 6%
Recurring EBITDA $41.9M $38.0M 10%
Recurring EBITDA Margin 51.4% 49.3% 210 bps
CAPEX $17.5M $22.7M (23%)
Total Debt $151.3M $225.3M (33%)
Debt/EBITDA (Last 12 months) 0.9x 1.6x (44%)
Recurring EPS $0.62 $0.48 29%
CTE's consolidated reported revenues for the 2002 full year were $318.6 million, a growth rate of 4% versus the 2001 full year. Consolidated reported EBITDA was $163.2 million versus $137.4 million for the 2001 full year. Consolidated capital expenditures were $53.4 million, versus $69.2 million for the 2001 full year. Excluding the impact of the CTSI expansion markets in CTE's 2001 results, CTE's 2002 full year consolidated revenue growth was 6%. Excluding the impact of CTSI's expansion markets for 2001, and the impact of the tentative operating tax settlement in the 2002 fourth quarter, CTE's recurring 2002 full year EBITDA was $160.6 million, which reflects 15% growth versus recurring EBITDA of $140.1 million for the 2001 full year. The table below sets forth highlights of CTE's 2002 full year recurring consolidated results (excluding the operating tax settlement) versus the 2001 full year consolidated results (excluding the CTSI expansion markets if applicable):
2002 2001
Full Full % Change
Year Year Inc./(Dec.)
------- ------- --------
Total Access Lines 464,498 443,062 5%
Revenue $318.6M $301.1M 6%
Recurring EBITDA $160.6M $140.1M 15%
Recurring EBITDA Margin 50.4% 46.5% 390 bps
CAPEX $53.4M $69.2M (23%)
Total Debt $151.3M $225.3M (33%)
Debt/EBITDA (Last 12 months) 0.9x 1.6x (44%)
Recurring EPS $2.27 $1.39 63%
Pension-Related Equity Adjustment In the 2002 fourth quarter, in connection with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). (generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ) accounting requirements for CTE's pension plan, CTE recorded a balance sheet adjustment for additional minimum liability ("AML AML - A Manufacturing Language "), in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with FAS 87 (Statement of Financial Accounting Standards No. 87). This AML adjustment primarily represents the difference between the funded status and the accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. benefit obligation for CTE's pension plan as of December December: see month. 31, 2001. The non-cash adjustment was recorded on CTE's balance sheet as an after-tax reduction to the Other Comprehensive Loss component of Total Common Shareholders' Equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of approximately $2.8 million. Commonwealth Telephone Company ("CT") Results CT had a total of 337,849 access lines installed at the end of the 2002 fourth quarter - a growth rate of just over 2% versus last year. CT's residential additional line penetration The successful unauthorized breach of a security perimeter. See penetration test. was 40% at the end of the quarter. CT's business line growth in the 2002 fourth quarter was roughly 6% versus the 2001 fourth quarter. CT's 2002 fourth quarter revenues grew 6% to $52.0 million, versus revenues of $48.9 million in the 2001 fourth quarter. This solid revenue growth was primarily driven by increased access revenues resulting from changes in the NECA NECA National Electrical Contractors Association NECA National Exchange Carrier Association NECA National Electrical and Communications Association (Australia) NECA National Electricity Code Administrator (Australia) (National Exchange Carrier Association) average schedule settlement formula, increased demand for special circuits and 11% growth in enhanced services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; . For the 2002 full year, revenues were $198.8 million, versus $189.3 million for the 2001 full year, a growth rate of 5%. CT's 2002 fourth quarter EBITDA was $34.4 million, a 9% increase over last year, resulting in a 66% EBITDA margin. For the 2002 full year, CT's EBITDA was $128.8 million, versus $120.9 million for the 2001 full year, a growth rate of 7%. CT's 2002 full year reported EBITDA margin expanded to 65% versus 64% for the 2001 full year. CT's margin expansion in the 2002 full year versus the 2001 full year resulted primarily from growth in high-margin access revenues, as well as continued focus on cost control and productivity improvements. CT's 2002 fourth quarter CAPEX was $10.0 million versus $12.9 million in the 2001 fourth quarter. For the 2002 full year, CT's CAPEX was $29.0 million, versus $40.4 million for the 2001 full year. CTSI, LLC ("CTSI") "Edge-Out" Market Results (Note: The results discussed below reflect only the performance of CTSI's "edge-out" markets.) During the 2002 fourth quarter, CTSI installed 3,515 net access lines. For the 2002 full year, CTSI installed 14,253 net access lines, ending the year with 126,649 net access lines installed - a growth rate of 13% versus year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2001. At year-end 2002, 98% of CTSI's access lines were "on-switch," and 52% were "on-net Connected to the Internet, or connected to a LAN or WAN. Contrast with off-net. " (defined as 100% on CTSI's owned network). CTSI's business/residential line split at year-end 2002 was 89%/11%. CTSI's 2002 fourth quarter revenues were $20.9 million, a growth rate of 9% versus revenues of $19.2 million in the 2001 fourth quarter. For the 2002 full year, CTSI's revenues increased 15% to $84.0 million. CTSI's EBITDA in the 2002 fourth quarter was $7.2 million, versus EBITDA of $6.6 million in the 2001 fourth quarter, reflecting EBITDA growth of 9%. CTSI's 2002 fourth quarter EBITDA margin was 34%, which was essentially unchanged from the year ago quarter. CTSI's full year 2002 EBITDA was $29.6 million compared to EBITDA of $19.4 million for the 2001 full year, or a growth rate of 53%. CTSI's 2002 full year EBITDA margin was 35% versus an EBITDA margin of 27% for the 2001 full year. CTSI's EBITDA growth and margin expansion in the 2002 full year were primarily driven by year-over-year access line growth and growth in access minutes of use. Additionally, ongoing cost control initiatives, including reduced expenses resulting from a 210 basis point increase in the percentage of "on-net" access lines versus the year ago quarter, have positively impacted CTSI's EBITDA and EBITDA margin performance. CTSI's 2002 fourth quarter capital expenditures were $5.9 million, versus $7.9 million in the year ago quarter. For the 2002 full year, CTSI's CAPEX was $20.9 million, versus 2001 full year CAPEX of $22.4 million. The $20.9 million of CAPEX in 2002 was effectively all success-based in support of line growth. CTSI Extends "Edge-Out" Geography geography, the science of place, i.e., the study of the surface of the earth, the location and distribution of its physical and cultural features, the areal patterns or places that they form, and the interrelation of these features as they affect humans. In the 2002 fourth quarter, CTSI concluded a comprehensive assessment regarding a potential extension of its existing "edge-out" footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. . As a result of this assessment, CTSI has begun an extension of its existing business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets into select areas of Pennsylvania's Lehigh Valley The Lehigh Valley or the Allentown-Bethlehem-Easton, PA-NJ metropolitan area is a metropolitan region in eastern Pennsylvania and western New Jersey, in the United States. It is the third-most populated metropolitan region in Pennsylvania, after Philadelphia and Pittsburgh. . CTSI views this opportunity as an extension of its current activities, rather than the establishment of a fourth regional market, and expects to gain incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. access lines and revenues utilizing existing network backbone backbone: see spinal column. The part of a network that handles the major traffic. It employs the highest-speed transmission paths in the network and may also run the longest distances. and switching facilities, and by capitalizing on the positive attributes (e.g., name recognition, customer service reputation, etc.) that have made CTSI a success. "We have been studying this opportunity for some time, and I am pleased to inform you today that we are undertaking a targeted extension of our existing capabilities to select businesses in a geography that is adjacent to existing CT and CTSI territory," said Mahoney. "As I've I've Contraction of I have. I've I have I've have stated in the past, name recognition and reputation are two of the most important factors in the success we have achieved with our 'edge-out' strategy, and, following a detailed assessment, we have reached a decision to extend the reach of CTSI. Further, because of the manner in which CTSI's fiber-rich network has evolved over the years, we possess the capability to 'extend' into this geography with modest incremental at-risk at-risk adj. Being endangered, as from exposure to disease or from a lack of parental or familial guidance and proper health care: efforts to make the vaccine available to at-risk groups of children. capital." Jack Flash(R) DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary In the 2002 fourth quarter, CTE's DSL (digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and ) product, Jack Flash(R), installed 580 net new DSL subscribers. Jack Flash(R) had 9,705 installed DSL subscribers at the end of the 2002 fourth quarter. For the 2002 full year, Jack Flash(R) added 2,674 net new subscribers. Jack Flash(R) is marketed in CTE's CT and CTSI "edge-out" geographies. Jack Flash(R) utilizes DSL technology to provide broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. over standard telephone lines at speeds over 50 times faster than today's traditional dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. modems. 2003 Guidance Outlined For 2003, CTE will be providing guidance for key consolidated metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. as outlined below. "We believe that the consolidated guidance we are providing today for 2003 presents the appropriate metrics for valuing our company going forward," stated Mahoney. "We will continue to report our quarterly results on a segmented basis as required by GAAP accounting." The table below sets forth CTE's consolidated 2003 full year guidance, which Mr. Mahoney will discuss on this morning's conference call and webcast:
2003
Full Year
Item Guidance
---- --------
Consolidated CTE Access Line Growth 3% - 4%
Revenue Growth 4% - 5%
Reported EBITDA $166M - $168M
Effective Tax Rate 40%
Diluted EPS - 1Q03 $0.56 - $0.57
Diluted EPS - FY03 $2.35 - $2.37
CAPEX $50M - $55M
Year-End Total Debt $75M - $85M
About CTE Headquartered in Dallas, PA, Commonwealth Telephone Enterprises, Inc., serves a growing base of business and residential customers with the full array of technologically advanced data and voice telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. products and services, including broadband data services and high-speed Internet See broadband. access, delivered over its 100% digitally switched, fiber-rich network. CTE's primary operating segments are: Commonwealth Telephone Company ("CT"), the nation's eighth largest publicly held independent rural local exchange carrier ("RLEC"), which has been operating in various rural Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York markets since 1897; and, CTSI, LLC ("CTSI"), an RLEC "edge-out" local exchange carrier operating outside CT's territory, that formally commenced operations in 1997. CTE's support businesses include epix(R) Internet Services (www.epix.net), one of the northeast's largest rural Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. ("ISPs"); and, Jack Flash(R), a broadband data service that uses DSL technology to offer high-speed Internet access and digital connectivity solutions. Additionally, CTE operates two other support businesses that provide expertise to its CT and CTSI operations. These businesses are Commonwealth Communications, a provider of telecommunications equipment and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. services; and, CLD CLD Called CLD Cloud CLD Cleared CLD Chronic Lung Disease CLD Council for Learning Disabilities CLD Cooled CLD Chronic Liver Disease CLD Clear Direction Flag CLD Certified LabVIEW Developer CLD Causal Loop Diagram , a long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. . A web site featuring current information regarding Commonwealth Telephone Enterprises, Inc., can be found on the Internet at www.ct-enterprises.com. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements. Certain information included in this press release is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . Such forward-looking information involves important risks and uncertainties that could significantly affect expected results in the future and cause them to be different from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, uncertainties related to the Company's ability to further penetrate its markets and the related costs of that effort, economic conditions, acquisitions and divestitures, government and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies, the pricing and availability of equipment, materials and inventories, technological developments and changes in the competitive environment in which the Company operates.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
THREE MONTHS ENDED DECEMBER 31, 2002
-------------------------------------
CT CTSI OTHER(1) TOTAL
------- ------- ------- -------
Sales $51,960 $20,905 $ 8,690 $81,555
Costs & Expenses
(excluding other operating
expenses itemized below) 17,213 13,634 5,878 36,725
Management Fees 300 99 (99) 300
------- ------- ------- -------
EBITDA 34,447 7,172 2,911 44,530
Depreciation & Amortization 11,674 5,052 884 17,610
Restructuring
Charges (Reversals) - (1,883) - (1,883)
Voluntary Employee
Retirement Program - - - -
Operating Income (Loss) 22,773 4,003 2,027 28,803
Interest and Dividend Income 423 - 57 480
Interest Expense (1,177) - 88 (1,089)
Other Income (Expense), net (62) 317 (20) 235
Income (Loss)
before Income Taxes 21,957 4,320 2,152 28,429
Provision
(Benefit) for Income Taxes 7,925 1,925 817 10,667
Income (Loss) before Equity
in Unconsolidated Entities 14,032 2,395 1,335 17,762
Equity in
Unconsolidated Entities - 680 - 680
Net Income (Loss) $14,032 $ 3,075 $ 1,335 $18,442
======= ======= ======= =======
THREE MONTHS ENDED DECEMBER 31, 2001
-------------------------------------
CT CTSI OTHER TOTAL
------- ------- ------- -------
Sales $48,894 $19,243 $ 8,841 $76,978
Costs & Expenses
(excluding other operating
expenses itemized below) 16,929 12,540 9,253 38,722
Management Fees 300 99 (99) 300
------- ------- ------- -------
EBITDA 31,665 6,604 (313) 37,956
Depreciation & Amortization 10,809 4,324 1,484 16,617
Restructuring
Charges (Reversals) - (609) - (609)
Voluntary Employee
Retirement Program - - 5,388 5,388
Operating Income (Loss) 20,856 2,889 (7,185) 16,560
Interest and Dividend Income 936 - 66 1,002
Interest Expense (1,533) - (2,159) (3,692)
Other Income (Expense), net (127) 210 (114) (31)
Income (Loss)
before Income Taxes 20,132 3,099 (9,392) 13,839
Provision
(Benefit) for Income Taxes 6,625 1,245 (3,134) 4,736
Income (Loss) before Equity
in Unconsolidated Entities 13,507 1,854 (6,258) 9,103
Equity in
Unconsolidated Entities - 480 - 480
Net Income (Loss) $13,507 $ 2,334 $(6,258) $ 9,583
======= ======= ======= =======
(1) Other fourth quarter and full year 2002 results include the effect
of a tentative operating tax settlement. This tentative settlement
reduced costs & expenses by $2.6m and interest expense by $1.5m;
and, increased income taxes by $1.6m and net income by $2.5m, or
$0.11 per diluted share.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 2002
-------------------------------------
CT CTSI OTHER(1) TOTAL
------- ------- ------- -------
Sales $198,836 $84,006 $35,713 $318,555
Costs & Expenses
(excluding other operating
expenses itemized below) 68,812 53,983 31,356 154,151
Management Fees 1,200 396 (396) 1,200
------- ------- ------- --------
EBITDA 128,824 29,627 4,753 163,204
Depreciation & Amortization 45,427 18,913 3,876 68,216
Restructuring
Charges (Reversals) - (3,940) - (3,940)
Voluntary Employee
Retirement Program - - 2,333 2,333
Operating Income (Loss) 83,397 14,654 (1,456) 96,595
Interest and Dividend Income 1,986 - 253 2,239
Interest Expense (5,057) - (5,426) (10,483)
Other Income (Expense), net (265) 639 (132) 242
Income (Loss)
before Income Taxes 80,061 15,293 (6,761) 88,593
Provision (Benefit)
for Income Taxes(2)(3) 30,095 6,081 (2,323) 33,853
Income (Loss) before Equity
in Unconsolidated Entities 49,966 9,212 (4,438) 54,740
Equity in
Unconsolidated Entities - 2,384 - 2,384
Net Income (Loss) $49,966 $11,596 $(4,438) $57,124
======= ======= ======= =======
YEAR ENDED DECEMBER 31, 2001
-------------------------------------
CT CTSI OTHER TOTAL
------- ------- ------- -------
Sales $189,264 $78,624 $38,726 $306,614
Costs & Expenses
(excluding other operating
expenses itemized below) 67,158 61,476 39,336 167,970
Management Fees 1,200 396 (396) 1,200
------- ------- ------- -------
EBITDA 120,906 16,752 (214) 137,444
Depreciation & Amortization 42,193 16,862 5,527 64,582
Restructuring
Charges (Reversals) - (9,287) - (9,287)
Voluntary Employee
Retirement Program - - 5,388 5,388
Operating Income (Loss) 78,713 9,177 (11,129) 76,761
Interest and Dividend Income 2,726 - 496 3,222
Interest Expense (7,496) (1) (10,851) (18,348)
Other Income (Expense), net (267) 683 (113) 303
Income (Loss)
before Income Taxes 73,676 9,859 (21,597) 61,938
Provision (Benefit)
for Income Taxes(2)(3) 25,938 2,154 (7,197) 20,895
Income (Loss) before Equity
in Unconsolidated Entities 47,738 7,705 (14,400) 41,043
Equity in
Unconsolidated Entities - 2,089 - 2,089
Net Income (Loss) $47,738 $ 9,794 $(14,400) $43,132
======= ======= ======== =======
(1) Other fourth quarter and full year 2002 results include the effect
of a tentative operating tax settlement. This tentative settlement
reduced costs & expenses by $2.6m and interest expense by $1.5m;
and, increased income taxes by $1.6m and net income by $2.5m, or
$0.11 per diluted share.
(2) In 2002, CT, CTSI and Total include the effect of year-to-date tax
benefits which were recorded in the third quarter in connection
with certain tax strategies of $0.2m, $0.7m and $0.9m,
respectively.
(3) In 2001, CT, CTSI and Total include the effect of year-to-date tax
benefits which were recorded in the third quarter in connection
with certain tax strategies of $3.4m, $2.1m and $5.5m,
respectively.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CTSI SEGMENT
(UNAUDITED)
(Dollars in Thousands)
THREE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, 2002 DECEMBER 31, 2001
------------------------- -------------------------
CTSI CTSI TOTAL CTSI CTSI TOTAL
Edge-out Expansion CTSI Edge-out Expansion CTSI
------------------------- -------------------------
Sales $20,905 $- $20,905 $19,243 $- $19,243
Costs & Expenses
(excluding other
operating expenses
itemized below) 13,634 - 13,634 12,540 - 12,540
Management Fees 99 - 99 99 - 99
------------------------- -------------------------
EBITDA $7,172 $- $7,172 $6,604 $- $6,604
========================= =========================
YEAR ENDED YEAR ENDED
DECEMBER 31, 2002 DECEMBER 31, 2001
------------------------- -------------------------
CTSI CTSI TOTAL CTSI CTSI TOTAL
Edge-out Expansion CTSI Edge-out Expansion CTSI
------------------------- -------------------------
Sales $84,006 $- $84,006 $73,061 $5,563 $78,624
Costs & Expenses
(excluding other
operating expenses
itemized below) 53,983 - 53,983 53,263 8,213 61,476
Management Fees 396 - 396 396 - 396
------------------------- -------------------------
EBITDA $29,627 $- $29,627 $19,402 $(2,650) $16,752
========================= =========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2002 2001 2002 2001
Basic Earnings per
Average Common Share:
Net Income (Loss) $0.79 $0.41 $2.44 $1.86
======================= =======================
Weighted Average Common
Shares Outstanding 23,421,407 23,338,734 23,390,939 23,157,784
Diluted Earnings per
Average Common Share:
Net Income (Loss) $0.78 $0.40 $2.41 $1.83
======================= =======================
Weighted Average
Common Shares and
Common Stock
Equivalents
Outstanding 23,652,610 23,743,997 23,664,322 23,575,757
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
REPORTED AND RECURRING DILUTED EARNINGS PER SHARE RECONCILIATION
(UNAUDITED)
THREE MONTHS YEAR
ENDED ENDED
DEC. 31, DEC. 31,
------------- ---------------
2002 2001 2002 2001
------ ------ ------ ------
Reported Diluted Earnings per Share $0.78 $0.40 $2.41 $1.83
------ ------ ------ ------
Restructuring (Reversals) Charges (0.05) (0.02) (0.10) (0.24)
Voluntary Retirement Program - 0.15 0.06 0.15
WorldCom Charge - - 0.05 -
Tax Strategies Impacting Prior Periods - (0.05) (0.04) (0.28)
Non-Recurring Revenues and Local Loop
Credits - - - (0.07)
Tentative Operating Tax Settlement (0.11) - (0.11) -
------ ------ ------ ------
Recurring Diluted Earnings per Share $0.62 $0.48 $2.27 $1.39
------ ------ ------ ------
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
Dec. 31, Dec. 31,
2002 2001
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $34,935 $27,298
Accounts Receivable from Related Parties 65 249
Other Current Assets 62,939 61,994
Deferred Income Taxes 23,669 20,115
-------------------
Total Current Assets 121,608 109,656
-------------------
PROPERTY PLANT AND EQUIPMENT (NET OF ACCUMULATED
DEPRECIATION OF $432,435 IN 2002 AND $381,888 IN
2001) 411,370 428,916
INVESTMENTS 9,718 9,428
DEFERRED CHARGES AND OTHER ASSETS 11,343 16,604
-------------------
TOTAL ASSETS $554,039 $564,604
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $65,000 $65,000
Current Maturities of Long Term Debt 9,010 9,010
Advance Billings and Customer Deposits 5,870 5,258
Accrued Interest 1,413 1,701
Accrued Income Taxes - -
Accrued Restructuring Expenses 2,029 7,381
Accounts Payable to Related Parties 10 1,424
Other Current Liabilities 79,035 92,985
-------------------
Total Current Liabilities 162,367 182,759
-------------------
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
Dec. 31, Dec. 31,
2002 2001
--------- ---------
LONG TERM DEBT 77,299 151,309
CAPITAL LEASE OBLIGATION 186 317
DEFERRED INCOME TAXES 61,083 33,779
OTHER DEFERRED CREDITS 32,114 30,924
COMMON SHAREHOLDERS' EQUITY:
Common Stock 27,307 27,265
Additional Paid-in Capital 256,594 255,570
Deferred Compensation (2,676) (4,306)
Other Comprehensive Loss (6,961) (2,879)
Retained Earnings 77,969 20,845
Treasury Stock at Cost, 3,829,133
shares at December 31, 2002
and 3,821,883 at December 31, 2001 (131,243) (130,979)
-------------------
Total Common Shareholders' Equity 220,990 165,516
-------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $554,039 $564,604
===================
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