CTE Announces Plan to Pay $13.00 Per Share Special Dividend and to Initiate a $2.00 Per Share Annual Dividend to Be Paid Quarterly.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. -- 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 ):
CTE Reports First Quarter Diluted Earnings Per Share of $0.67, Versus
Reported Diluted Earnings Per Share of $0.60 in the Year Ago Quarter
Net New DSL Subscribers Increase 48% Versus Year Ago Quarter
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:
abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) today. Mr. Mahoney will review CTE's announced dividend action and 2005 first quarter results. 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 1-877-277-1088. The conference call passcode is 4880411. 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 1-800-642-1687, passcode 4880411. The webcast will also be available for replay for 48 hours at www.ct-enterprises.com. Commonwealth Telephone Enterprises, Inc. ("CTE") (NASDAQ:CTCO), announced today that it plans to pay a $13.00 per share special dividend, and to initiate INITIATE. A right which is incomplete. By the birth of a child, the husband becomes tenant by the curtesy initiate, but his estate is not consummate until the death of the wife. 2 Bouv. Inst. n. 1725. a $2.00 per share annual dividend to be paid quarterly. In connection with this plan, CTE's Board of Directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a special dividend of $13.00 per share, and an initial $0.50 per share quarterly dividend for the quarter ending June June: see month. 30, 2005. Both the special dividend and the first quarterly dividend will be paid on June 30, 2005, to holders of record on June 15, 2005. CTE further announced today that it will enter into a new $85 million, 364-day revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility with CoBank CoBank, ACB, a part of the United States Farm Credit System, is an agricultural credit bank serving cooperatives in the agricultural sector. It lends money to farm credit associations, agricultural businesses, and rural utilities, who collectively own CoBank. , following the May 31, 2005, expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of CTE's currently existing $35 million CoBank revolving facility. The new $85 million credit line will be used to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. the outstanding balance of $35 million under the existing facility, and to provide CTE with enhanced financial flexibility. "Our primary financial objective is to enhance the value of our 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. over the long term," stated Michael J. Mahoney, CTE's president and chief executive officer. "We are confident that today's announced dividend plan is the most appropriate step at this time in pursuit of this objective. We are also confident in the sustainability of our ongoing dividend, given our record of consistent cash flow generation. "The plan we have announced today allows us to maintain the flexibility to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our business plans," added Mahoney. "We will continue to prudently pru·dent adj. 1. Wise in handling practical matters; exercising good judgment or common sense. 2. Careful in regard to one's own interests; provident. 3. Careful about one's conduct; circumspect. manage our capital expenditures, which have trended down in the recent past, with the aim of maximizing max·i·mize tr.v. max·i·mized, max·i·miz·ing, max·i·miz·es 1. To increase or make as great as possible: our return on our invested capital. We also expect to continue to utilize our excess cash to opportunistically repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. common shares in connection with our remaining authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: common stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program." CTE 2005 First Quarter 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: Results For the 2005 first quarter, CTE reported 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 $0.67, 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 $0.60 in the 2004 first quarter. Included in CTE's 2005 first quarter reported diluted EPS is a $0.8 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), or $0.02 per share (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. ), favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect resulting from certain access revenue settlements, and a $0.6 million (pre-tax), or $0.01 per share (after-tax) favorable effect resulting from certain network costs settlements. Both items were associated with 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 ("CTSI"). CTE ended the 2005 first quarter with a total of 471,133 switched access lines installed, reflecting a decrease of 6,847 switched access lines installed over the past 12 months, or a reduction of 1%. CTE's reported consolidated revenues in the 2005 first quarter were $83.5 million, down 1% versus 2004 first quarter revenues of $84.4 million. CTE's reported consolidated operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the 2005 first quarter was $26.1 million, versus $26.4 million in last year's first quarter, reflecting a decrease of 1%. For the 2005 first quarter, CTE reported net income of $15.9 million, versus reported net income of $14.6 million in the 2004 first quarter. Consolidated capital expenditures ("CAPEX") were $7.8 million in the 2005 first quarter, versus CAPEX of $9.3 million in the year ago quarter. The table below sets forth highlights of CTE's 2005 first quarter consolidated results, versus the 2004 first quarter:
2005 2004 % Change
First Quarter First Quarter Inc./(Dec.)
------------- ------------- ----------
Total Access Lines 471,133 477,980 (1%)
Revenues $83.5M $84.4M (1%)
Operating Income $26.1M $26.4M (1%)
Depreciation and Amortization $17.7M $17.6M 1%
CAPEX $ 7.8M $ 9.3M (16%)
Reported EPS $0.67 $0.60 12%
"Overall, I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in pleased with our performance in the first quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "We exceeded the first quarter EPS guidance which we had previously provided. We also had a solid quarter in terms of cash flow generation, and we came out of the first quarter on track with our overall plans for the year." Common Stock Repurchase Program Update In the 2005 first quarter, CTE did not repurchase any additional shares of common stock. Since the stock repurchase program began in November November: see month. 2003, CTE has repurchased 3,047,244 shares of common stock in open market and block transactions at an average all-in cost All-In Cost Shorthand for "all-included" costs, which are expressed as the interest paid or received for total costs of a financial transaction. Notes: All-in costs include the spread, commission, interest payments, and any other fees resulting from the transaction. of approximately $38.90 per share, or just under $119 million. Repurchased shares have been placed in Treasury and may be used for the Company's employee benefit plans. No time limit has been set for the completion of the remaining $31 million of authorized common stock repurchases. The remaining authorized repurchases will be executed at CTE's discretion, based on ongoing assessments of the Company's capital needs and the market value of CTE's common stock. CTE plans to evaluate the feasibility fea·si·ble adj. 1. Capable of being accomplished or brought about; possible: a feasible plan. See Synonyms at possible. 2. of additional future common stock repurchases. Commonwealth Telephone Company ("CT") Results CT had a total of 331,548 switched access lines installed at the end of the 2005 first quarter - reflecting a reduction of slightly less than 2% versus last year's first quarter. CT's residential additional line penetration The successful unauthorized breach of a security perimeter. See penetration test. was 36% at the end of the quarter. CT's business lines installed at the end of the 2005 first quarter were essentially flat versus the 2004 first quarter. CT's 2005 first quarter revenues were $56.4 million, versus revenues of $57.5 million in the 2004 first quarter. CT's 2005 first quarter operating income was $24.2 million, versus $26.4 million in the 2004 first quarter. CT's 2005 first quarter CAPEX were $4.7 million, versus $5.1 million in the 2004 first quarter. CTSI Results CTSI had a total of 139,585 switched access lines installed at the end of the 2005 first quarter - slightly below the 140,403 switched access lines installed at the end of the 2004 first quarter. CTSI's 2005 first quarter access lines installed came in 765 lines higher than the 138,820 access lines installed as of the end of the 2004 fourth quarter. At the end of the 2005 first quarter, 98% of CTSI's access lines were "on-switch," and 55% 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 the end of the 2005 first quarter was 91%/9%. CTSI's 2005 reported first quarter revenues were $22.1 million, versus revenues of $20.6 million in the 2004 first quarter. CTSI's 2005 first quarter reported revenues include a $0.8 million favorable effect resulting from certain access revenue settlements. CTSI's reported operating income in the 2005 first quarter was $3.7 million, versus operating income of $1.7 million in the 2004 first quarter. CTSI's 2005 first quarter reported operating income includes a $1.4 million favorable effect resulting from the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. access revenue settlements and certain network costs settlements. CTSI's 2005 first quarter capital expenditures were $2.9 million, versus $4.0 million in the year ago quarter. 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 2005 first quarter, CTE installed a record 2,523 net new DSL subscribers. CTE had 21,135 installed DSL subscribers at the end of the 2005 first quarter, having added a record total of 6,846 net new subscribers over the past 12 months, which reflected a growth rate of 48% versus the end of last year's first quarter. DSL is marketed in CTE's CT and CTSI geographies. 2005 Guidance Outlined The table below sets forth CTE's consolidated 2005 full year guidance, which Mr. Mahoney will discuss on this morning's conference call and webcast:
Previously
Communicated Updated
2005 Full Year 2005 Full Year
Item Guidance(1) Guidance(1)(2)
---- -------------- ---------------
Consolidated CTE Access Line Growth (2%) - 0% Unchanged
Revenue Growth (1%) - 0% Unchanged
Operating Income $95M - $97M $108M - $110M
Depreciation and
Amortization $70M - $71M $ 58M - $ 59M
Effective Tax Rate 38% Unchanged
Diluted EPS -
2Q05 n/a $0.73 - $0.75
Diluted EPS -
FY05(3) $2.42 - $2.45 $2.81 - $2.84
CAPEX $40M - $42M Unchanged
(1) Does not reflect any additional common stock repurchases or
conversions of notes.
(2) Does not include expenses in connection with announced exchange
offer and dividend plan.
(3) Updated 2005 full year diluted EPS guidance reflects an estimated
$0.28 increase resulting from a corresponding reduction in
non-cash depreciation and amortization expense. This reduction,
made in connection with a preliminary periodic depreciation and
capital recovery study, was based on changes in the estimated
useful lives of certain asset classes and our updated view
regarding the deployment of network technology going forward,
including the effect of our recently approved Chapter 30 plan.
Updated 2005 full year diluted EPS guidance also reflects a $0.04
increase related to the delay of the FASB requirement to expense
stock options until 2006, at which time CTE intends to adopt this
accounting change.
About CTE Headquartered in Dallas, PA, Commonwealth Telephone Enterprises, Inc., serves business and residential customers with a 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 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). 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 seventh largest publicly held independent local exchange carrier, 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"), a local exchange carrier operating in competitive markets outside CT's territory, that formally commenced operations in 1997. CTE deploys broadband DSL technology to offer high-speed Internet access in the CT and CTSI service territories. CTE's support businesses include epix(R) Internet Services (www.epix.net), one of the Northeast's largest rural 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. 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 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. A web site featuring current information regarding Commonwealth Telephone Enterprises, Inc., can be found on the Internet at www.ct-enterprises.com. However, the information on this web site does not form a part of this release. 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. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and CTE intends that such forward-looking statements be subject to these safe harbors 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. . Such forward-looking statements involve risks and uncertainties that could significantly affect expected results in the future differently than expressed in any forward-looking statements made by CTE. These risks and uncertainties include, but are not limited to, uncertainties related to CTE'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, reductions in rates or traffic that are subject to access charges, changes in the competitive environment in which CTE operates and receipt of necessary regulatory approvals.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED MARCH 31, 2005
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $56,377 $22,122 $ 5,030 $83,529
Costs & Expenses (excluding
depreciation and amortization) 19,807 13,461 6,473 39,741
Depreciation & Amortization 12,352 4,929 457 17,738
-------- -------- -------- --------
Operating Income (Loss) 24,218 3,732 (1,900) 26,050
Interest and Dividend Income 2,590
Interest Expense (3,514)
Other Income (Expense), Net (27)
Equity in Income of Unconsolidated
Entities 245
--------
Income before Income Taxes 25,344
Provision for Income Taxes 9,426
--------
Net Income $15,918
========
THREE MONTHS ENDED MARCH 31, 2004
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $57,516 $20,552 $ 6,312 $84,380
Costs & Expenses (excluding
depreciation and amortization) 19,464 13,804 7,119 40,387
Depreciation & Amortization 11,693 5,089 825 17,607
-------- -------- -------- --------
Operating Income (Loss) 26,359 1,659 (1,632) 26,386
Interest and Dividend Income 1,076
Interest Expense (4,487)
Other Income (Expense), Net 17
Equity in Income of Unconsolidated
Entities 235
--------
Income before Income Taxes 23,227
Provision for Income Taxes 8,662
--------
Net Income $14,565
========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
(GAAP)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2005 2004
------------ ------------
Net Income $ 15,918 $ 14,565
Net Income Adjustment for Interest on
Convertible Debt, Net of Tax 1,869 1,869
-------------------------
Net Income, as Adjusted $ 17,787 $ 16,434
=========================
Weighted Average Common Shares Outstanding -
Basic 21,160,470 22,142,626
Effect of Dilutive Securities on Shares
Outstanding:
Stock Options and Restricted Stock 242,327 161,724
Convertible Debt 5,263,170 5,263,170
-------------------------
Weighted Average Common Shares Outstanding -
Diluted 26,665,967 27,567,520
=========================
Basic Earnings per
Average Common Share:
Net Income $ 0.75 $ 0.66
=========================
Diluted Earnings per
Average Common Share:
Net Income $ 0.67 $ 0.60
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
MARCH 31, DECEMBER 31,
2005 2004
-------------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $ 336,886 $ 312,260
Accounts Receivable and Unbilled Revenues,
Net of Allowance for Doubtful Accounts of
$1,889 in 2005 and $2,185 in 2004 38,017 40,089
Other Current Assets 15,034 8,805
Deferred Income Taxes 12,414 13,388
-------------------------
Total Current Assets 402,351 374,542
-------------------------
PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $521,832
IN 2005 AND $506,711 IN 2004) 372,804 382,523
INVESTMENTS 10,042 10,338
DEFERRED CHARGES AND OTHER ASSETS 14,876 16,028
-------------------------
TOTAL ASSETS $ 800,073 $ 783,431
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
MARCH 31, DECEMBER 31,
2005 2004
--------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 35,000 $ 35,000
Capital Lease Obligation 721 721
Accounts Payable 25,382 25,012
Advance Billings and Customer Deposits 5,458 5,316
Accrued Expenses 56,102 55,057
Accrued Restructuring Expenses 407 344
--------------------------
Total Current Liabilities 123,070 121,450
--------------------------
LONG TERM DEBT 300,000 300,000
CAPITAL LEASE OBLIGATION 180 361
DEFERRED INCOME TAXES 76,137 77,279
OTHER LONG TERM LIABILITIES 16,998 18,411
COMMON SHAREHOLDERS' EQUITY:
Common Stock 24,193 24,172
Additional Paid-in Capital 290,538 284,358
Deferred Compensation (16,039) (10,093)
Other Comprehensive Loss (533) (830)
Retained Earnings 102,849 86,931
Treasury Stock at Cost, 3,013,893 shares at
March 31, 2005 and 3,049,114 at December
31, 2004 (117,320) (118,608)
--------------------------
Total Common Shareholders' Equity 283,688 265,930
--------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 800,073 $ 783,431
==========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 31,582 $ 28,541
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment (7,848) (9,323)
Other 434 764
--------- ---------
Net Cash Used in Investing Activities (7,414) (8,559)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-Term Debt - (1,406)
Proceeds from Exercise of Stock Options 639 1,949
Capital Lease Payments (181) (213)
Payment Made for Debt Issuance Costs - (32)
Stock Repurchases - (52,816)
--------- ---------
Net Cash Provided By/(Used) in Financing
Activities 458 (52,518)
--------- ---------
Net Increase/(Decrease) in Cash and Temporary Cash
Investments 24,626 (32,536)
--------- ---------
Cash and Temporary Cash Investments at Beginning of
Period 312,260 336,035
--------- ---------
Cash and Temporary Cash Investments at End of
Period $336,886 $303,499
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