CTE Reports 2003 First Quarter Results.Business 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)--May 1, 2003 Commonwealth Telephone Enterprises, Inc. ("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. ") (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 Reports Net Income of $28.2 Million, Versus $10.7 Million in the 2002 First Quarter CTE Reports Fully 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 of $1.19, Versus $0.45 in the 2002 First Quarter CTE Reports 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: Switched Access Line Growth of 4%, and Consolidated Revenue Growth of 6% 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 ) this morning. Mr. Mahoney will review CTE's 2003 first quarter results, and 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 1-800-491-3127. The conference call passcode is 3376155. 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 3376155. 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 2003 first quarter. For the 2003 first quarter, CTE reported diluted earnings per share ("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 $1.19, 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 $0.45 in the 2002 first quarter. CTE Consolidated Results CTE ended the 2003 first quarter with a total of 468,585 switched access lines installed, reflecting an increase of 19,737 switched access lines installed in the past 12 months, or a growth rate of 4.4%. CTE's consolidated revenues in the 2003 first quarter were $83.2 million, a growth rate of 6.1% versus the 2002 first quarter. For the 2003 first quarter, CTE reported net income of $28.2 million, versus reported net income of $10.7 million in the 2002 first quarter. Consolidated capital expenditures ("CAPEX") were $7.4 million in the 2003 first quarter, versus CAPEX of $9.6 million in the year ago quarter. The table below sets forth highlights of CTE's 2003 first quarter consolidated results, versus the 2002 first quarter:
2003 2002 % Change
First Quarter First Quarter Inc./(Dec.)
------------- ------------- -------------
Total Access Lines 468,585 448,848 4%
Revenues $83.2M $78.4M 6%
CAPEX $7.4M $9.6M (23%)
Total Debt $149.1M $213.1M (30%)
Reported EPS $1.19 $0.45 164%
To supplement the reporting of CTE's consolidated financial information under 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 ), CTE will continue to present certain non-GAAP financial measures, including 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. operating results, 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 (earnings before interest, taxes, Voluntary Retirement Program, restructuring charges 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. (reversals), depreciation and amortization, other income (expense) and equity in income of unconsolidated entities) and EBITDA margin (EBITDA divided by revenues). A reconciliation of these measures to the most directly comparable GAAP measures is included in the 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. financial tables, and is also available on CTE's web site at www.ct-enterprises.com by clicking on Press Releases under the CTE News section. Recurring operating results exclude the one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. cumulative effect of an accounting change in the 2003 first quarter, and the effect of a one-time charge in connection with a Voluntary Retirement Program in the 2002 first quarter. The presentation of recurring operating results enables investors to further evaluate our quarter-over-quarter operating results. Further, CTE management believes that EBITDA and EBITDA margin are meaningful indicators of profitability for capital-intensive Capital-intensive Used to describe industries that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive. businesses such as CTE's, and they continue to be key valuation 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. in the investment community. Recurring operating results, EBITDA and EBITDA margin are among the primary indicators that CTE management utilizes for planning and operating its business. This supplemental information should not be considered in isolation, or as a substitute for CTE's consolidated financial information presented under GAAP. The 2003 first quarter includes a one-time, 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. gain of $13.2 million, or $0.56 per diluted share, in connection with the previously announced adoption of new accounting rules on asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 143 (Statement of Financial Accounting Standards No. 143), which were effective January January: see month. 1, 2003. Excluding this one-time gain, CTE's net income was $15.0 million, reflecting diluted EPS of $0.63. The 2002 first quarter net income included a one-time, after-tax charge in connection with a Voluntary Retirement Program of $1.4 million, or $0.06 per diluted share. Excluding this one-time charge, CTE's 2002 first quarter net income was $12.2 million, or $0.51 per diluted share. "We are off to a very solid start in 2003," said Michael J. Mahoney, CTE's president and chief executive officer. "We achieved 6% consolidated revenue growth in the first quarter, which was largely driven by increased high-margin access revenues. This revenue growth, coupled with our ongoing focus on cost control, resulted in 10% consolidated EBITDA growth, and a record 52.1% consolidated EBITDA margin. Our first quarter performance has led us to increase our 2003 recurring diluted EPS guidance to a range of $2.45 to $2.47 per share, from our prior recurring diluted EPS guidance of $2.35 to $2.37." The table below sets forth CTE's 2003 first quarter consolidated EBITDA, EBITDA margin and recurring EPS results, versus the 2002 first quarter:
2003 2002 % Change
First Quarter First Quarter Inc./(Dec.)
------------- ------------- -------------
EBITDA $43.3M $39.3M 10%
EBITDA Margin 52.1% 50.2% 190 bps
Debt/EBITDA (Last 12
months) 0.9x 1.5x (40%)
Recurring EPS $0.63 $0.51 24%
CTE and Level 3 Communications
Level 3 Communications NASDAQ: LVLT is a communications and information services company headquartered in Broomfield, Colorado, USA. Enter into Recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. Agreement As previously announced, on April 25, 2003, CTE, Level 3 Communications, Inc. ("Level 3 Communications"), and Eldorado Equity Holdings, Inc., an indirect wholly-owned subsidiary of Level 3 Communications, announced that they had entered into a recapitalization agreement that provides for the reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. and conversion of each outstanding share of CTE Class B Common Stock into 1.09 shares of CTE Common Stock. An independent Special Committee of the CTE Board of Directors approved the recapitalization agreement and the reclassification, and concluded that the transaction is fair to the holders of CTE Common Stock and fair to the holders of CTE Class B Common Stock, other than Level 3 Communications, as to which no determination of fairness was made. At the conclusion of the reclassification, CTE will have only one class of common stock, with each share having one vote in corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. matters. As a result of the recapitalization, Level 3 Communications' CTE voting power will be reduced from 29.3% to 4.6%. The transaction is subject to customary conditions, including shareholder approval and receipt of applicable 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. approvals. "Management believes this is a good transaction for CTE and its shareholders," said Mahoney. "The transaction eliminates our common stock dual class structure, and puts all of our shareholders on equal footing, with voting power commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with each respective shareholder's economic ownership of CTE. Further, the dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. to existing holders of CTE Common Stock is minimal - less than 1% - while the collective voting power of existing holders of CTE Common Stock will increase from 41.6% to 90.7%. The transaction also eliminates the possibility that another investor could acquire voting control of CTE by purchasing the Level 3 CTE Class B Share position - which presently represents just over 4% of the economic ownership of CTE, but over 29% of the voting power. I look forward to the support of all of our shareholders as we enact this transaction and improve the ownership structure of CTE going forward." Commonwealth Telephone Company ("CT") Results CT had a total of 338,003 access lines installed at the end of the 2003 first quarter - a growth rate of 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 2003 first quarter was 5% versus the 2002 first quarter. CT's 2003 first quarter revenues grew 7% to $52.1 million, versus revenues of $48.6 million in the 2002 first quarter. This solid revenue growth was primarily driven by increased access minutes of use, rate 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 that took effect in July July: see month. 2002, and 8% 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; . CT's 2003 first quarter EBITDA was $35.0 million, a 12% increase over last year, resulting in a 67% EBITDA margin. This solid EBITDA margin expansion was primarily driven by growth in high-margin access revenues, as well as continued focus on cost control. CT's 2003 first quarter CAPEX was $3.2 million versus $5.0 million in the 2002 first quarter. 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") During the 2003 first quarter, CTSI installed 3,933 net access lines, ending the quarter with 130,582 net access lines installed - a growth rate of 13% versus the 2002 first quarter. At the end of the 2003 first quarter, 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 the end of the 2003 first quarter was 89%/11%. CTSI's 2003 first quarter revenues were $21.5 million, a growth rate of 3% versus revenues of $20.9 million in the 2002 first quarter. CTSI's EBITDA in the 2003 first quarter was $8.2 million, versus EBITDA of $7.6 million in the 2002 first quarter, reflecting EBITDA growth of 7%. CTSI's 2003 first quarter EBITDA margin was 38%, versus an EBITDA margin of 37% in the year ago quarter. CTSI's 2003 first quarter capital expenditures were $3.1 million, versus $4.1 million in the year ago quarter. 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 2003 first 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 833 net new DSL subscribers. Jack Flash(R) had 10,538 installed DSL subscribers at the end of the 2003 first quarter. Jack Flash(R) is marketed in CTE's CT and CTSI 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 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:
Previously
Communicated Revised
2003 Full Year 2003 Full Year
Item Guidance Guidance
Consolidated CTE Access Line Growth 3% - 4% Unchanged
Revenue Growth 4% - 5% 5% - 6%
EBITDA $166M - $168M $168M - $170M
Effective Tax Rate Approx. 40% Unchanged
Diluted EPS - 2Q03 n/a $0.57 - $0.59
Diluted EPS - FY03 $2.35 - $2.37 $2.45 - $2.47
CAPEX $50M - $55M Unchanged
Year-End Total Debt $75M - $85M Unchanged
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 RLEC Rural Local Exchange Carrier RLEC Report Log Exception Condition "), 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 products, services and 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. Additional Information and Where to Find It In connection with the annual shareholders' meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation. , a proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. will be mailed to security holders of CTE, and CTE will file a proxy statement with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT CONTAINS IMPORTANT INFORMATION. The proxy statement and other relevant materials (when they become available), and any other documents filed by CTE with the Commission, may be obtained free of charge at the Commission's web site at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . In addition, investors and security holders may obtain free copies of the proxy statement and the other documents filed by CTE with the Commission by writing to us at: Investor Relations Investor relations The process by which the corporation communicates with its investors. Department, Commonwealth Telephone Enterprises, Inc., 100 CTE Drive, Dallas, Pennsylvania Dallas is a borough in Luzerne County, Pennsylvania, USA. The population was 2,557 at the 2000 census. It was named for George Dallas, the vice president of James Polk. The local government describes the borough as the "heart" of The Back Mountain, a census-designated place 18612-9774, Attn: David G. Weselcouch, e-mail: dwes@epix.net; (570) 631-2700. Investors and security holders are urged to read the proxy statement and other relevant materials when they become available before making any voting decision with respect to the annual meeting. CTE and its directors, executive officers and other members of its management and employees may be soliciting proxies from shareholders in connection with the annual meeting under the rules of the Commission. Information about persons who may be considered participants in the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies, including their ownership of CTE, is set forth in CTE's public filing on Schedule 14A with the Commission on April 25, 2003, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. on May 1, 2003. This document is available for free at the Commission's web site at www.sec.gov. Information about the directors and executive officers of CTE and a description of their interests will also be set forth in the proxy statement for the annual shareholders' meeting when it becomes available. 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 policies, the pricing and availability of equipment, materials and inventories, technological developments and changes in the competitive environment in which the Company operates and receipt of necessary approvals.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED MARCH 31, 2003
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $52,097 $21,495 $ 9,566 $83,158
Costs & Expenses (excluding other
operating expenses itemized
below) 17,107 13,284 9,436 39,827
Management Fees - - - -
Depreciation & Amortization 11,499 5,060 1,068 17,627
Voluntary Retirement Program - - - -
-------- -------- -------- --------
Operating Income (Loss) 23,491 3,151 (938) 25,704
Interest and Dividend Income 669 - 37 706
Interest Expense (1,037) - (1,351) (2,388)
Other Income (Expense), net (29) 12 52 35
Equity in Unconsolidated Entities - - 231 231
-------- -------- -------- --------
Income (Loss) before Income Taxes
and Cumulative Effect of
Accounting Change 23,094 3,163 (1,969) 24,288
Provision (Benefit) for Income
Taxes 8,680 1,165 (511) 9,334
-------- -------- -------- --------
Income (Loss) before Cumulative
Effect of Accounting Change 14,414 1,998 (1,458) 14,954
Cumulative Effect of Accounting
Change, Net of Tax 13,230 - - 13,230
-------- -------- -------- --------
Net Income (Loss) $27,644 $ 1,998 $(1,458) $28,184
======== ======== ======== ========
THREE MONTHS ENDED MARCH 31, 2002
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $48,616 $20,881 $ 8,899 $78,396
Costs & Expenses (excluding other
operating expenses itemized below) 17,113 13,133 8,518 38,764
Management Fees 300 99 (99) 300
Depreciation & Amortization 11,022 4,495 1,456 16,973
Voluntary Retirement Program - - 2,333 2,333
-------- -------- -------- --------
Operating Income (Loss) 20,181 3,154 (3,309) 20,026
Interest and Dividend Income 807 - 74 881
Interest Expense (1,297) - (2,052) (3,349)
Other Income (Expense), net 5 (10) (4) (9)
Equity in Unconsolidated Entities - 228 - 228
-------- -------- -------- --------
Income (Loss) before Income Taxes
and Cumulative Effect of
Accounting Change 19,696 3,372 (5,291) 17,777
Provision (Benefit) for Income
Taxes 7,566 1,239 (1,777) 7,028
-------- -------- -------- --------
Income (Loss) before Cumulative
Effect of Accounting Change 12,130 2,133 (3,514) 10,749
Cumulative Effect of Accounting
Change, Net of Tax - - - -
-------- -------- -------- --------
Net Income (Loss) $12,130 $ 2,133 $(3,514) $10,749
======== ======== ======== ========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2003 2002
Basic Earnings per
Average Common Share:
Income before Cumulative Effect of Accounting
Change $0.64 $0.46
Cumulative Effect of Accounting Change, Net of
Tax $0.56 $0.00
-----------------------
Net Income (Loss) $1.20 $0.46
=======================
Weighted Average Common Shares Outstanding 23,436,706 23,352,097
Diluted Earnings per
Average Common Share:
Income before Cumulative Effect of Accounting
Change $0.63 $0.45
Cumulative Effect of Accounting Change, Net of
Tax $0.56 $0.00
-----------------------
Net Income (Loss) $1.19 $0.45
=======================
Weighted Average Common Shares and Common
Stock Equivalents Outstanding 23,707,481 23,677,562
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATION
RECONCILIATION TO GAAP RESULTS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
Special and
Non-Recurring
Items
--------------
3 Mos. Ended
3 Mos. Ended Cumulative 3/31/03
3/31/03 Effect of Before
Reported Accounting Non-Recurring
(GAAP) Change Items
--------------------------------------------
Sales $ 83,158 - $ 83,158
Costs & Expenses
(excluding other
operating expenses
itemized below) 39,827 - 39,827
Management Fees - - -
Depreciation &
Amortization 17,627 - 17,627
Voluntary Retirement
Program - - -
--------------------------------------------
Operating Income (Loss) 25,704 - 25,704
Interest and Dividend
Income 706 - 706
Interest Expense (2,388) - (2,388)
Other Income (Expense),
net 35 - 35
Equity in Unconsolidated
Entities 231 - 231
--------------------------------------------
Income (Loss) before
Income Taxes and
Cumulative Effect of
Accounting Change 24,288 - 24,288
Provision (Benefit) for
Income Taxes 9,334 - 9,334
--------------------------------------------
Income (Loss) before
Cumulative Effect of
Accounting Change 14,954 - 14,954
Cumulative Effect of
Accounting Change,
Net of Tax 13,230 (13,230) -
--------------------------------------------
Net Income (Loss) $ 28,184 $ (13,230) $ 14,954
============================================
Basic Earnings per Average
Common Share (1) $ 1.20 $ (0.56) $ 0.64
Diluted Earnings per
Average Common Share (1) $ 1.19 $ (0.56) $ 0.63
(1) EPS totals may not add across due to rounding.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATION
RECONCILIATION TO GAAP RESULTS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
Special and
Non-Recurring
Items
--------------
3 Mos. Ended
3 Mos. Ended 3/31/02
3/31/02 Voluntary Before
Reported Retirement Non-Recurring
(GAAP) Program Items
--------------------------------------------
Sales $ 78,396 - $ 78,396
Costs & Expenses
(excluding other
operating expenses
itemized below) 38,764 - 38,764
Management Fees 300 - 300
Depreciation &
Amortization 16,973 - 16,973
Voluntary Retirement
Program 2,333 (2,333) -
--------------------------------------------
Operating Income (Loss) 20,026 2,333 22,359
Interest and Dividend
Income 881 - 881
Interest Expense (3,349) - (3,349)
Other Income (Expense),
net (9) - (9)
Equity in Unconsolidated
Entities 228 - 228
--------------------------------------------
Income (Loss) before
Income Taxes and
Cumulative Effect of
Accounting Change 17,777 2,333 20,110
Provision (Benefit) for
Income Taxes 7,028 910 7,938
--------------------------------------------
Income (Loss) before
Cumulative Effect of
Accounting Change 10,749 1,423 12,172
Cumulative Effect of
Accounting Change, Net of
Tax - -
--------------------------------------------
Net Income (Loss) $ 10,749 $ 1,423 $ 12,172
============================================
Basic Earnings per Average
Common Share (1) $ 0.46 $ 0.06 $ 0.52
Diluted Earnings per
Average Common Share (1) $ 0.45 $ 0.06 $ 0.51
(1) EPS totals may not add across due to rounding.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
SELECTED FINANCIAL RESULTS
RECONCILIATION TO GAAP RESULTS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
A reconciliation of net income (loss) and net income (loss) margin to
EBITDA and EBITDA margin is as follows:
Three months ended March 31, 2003
CT Margin CTSI Margin
----------- ---------- ----------- ----------
Net Income (Loss) $ 27,644 53.1% $ 1,998 9.3%
Cumulative Effect of
Accounting Change, Net
of Tax (13,230) -25.4% - 0.0%
Provision (Benefit) for
Income Taxes 8,680 16.7% 1,165 5.4%
Equity in Unconsolidated
Entities - 0.0% - 0.0%
Other Income (Expense),
net 29 0.1% (12) -0.1%
Interest Expense 1,037 2.0% - 0.0%
Interest and Dividend
Income (669) -1.3% - 0.0%
----------- -----------
Operating Income (Loss) 23,491 45.1% 3,151 14.7%
----------- -----------
Depreciation &
Amortization 11,499 22.1% 5,060 23.5%
----------- -----------
EBITDA $ 34,990 67.2% $ 8,211 38.2%
=========== ===========
Other Margin Total Margin
----------- ---------- ----------- ----------
Net Income (Loss) $ (1,458) -15.2% $ 28,184 33.9%
Cumulative Effect of
Accounting Change, Net
of Tax - 0.0% (13,230) -15.9%
Provision (Benefit) for
Income Taxes (511) -5.3% 9,334 11.2%
Equity in Unconsolidated
Entities (231) -2.4% (231) -0.3%
Other Income (Expense),
net (52) -0.5% (35) 0.0%
Interest Expense 1,351 14.1% 2,388 2.9%
Interest and Dividend
Income (37) -0.4% (706) -0.8%
----------- -----------
Operating Income (Loss) (938) -9.8% 25,704 30.9%
----------- -----------
Depreciation &
Amortization 1,068 11.2% 17,627 21.2%
----------- -----------
EBITDA $ 130 1.4% $ 43,331 52.1%
=========== ===========
Three months ended March 31, 2002
CT Margin CTSI Margin
----------- ---------- ----------- ----------
Net Income (Loss) $ 12,130 25.0% $ 2,133 10.2%
Provision (Benefit) for
Income Taxes 7,566 15.6% 1,239 5.9%
Equity in Unconsolidated
Entities - 0.0% (228) -1.1%
Other Income (Expense),
net (5) 0.0% 10 0.0%
Interest Expense 1,297 2.7% - 0.0%
Interest and Dividend
Income (807) -1.7% - 0.0%
----------- -----------
Operating Income (Loss) 20,181 41.5% 3,154 15.1%
----------- -----------
Voluntary Retirement
Program
Depreciation &
Amortization 11,022 22.7% 4,495 21.5%
----------- -----------
EBITDA $ 31,203 64.2% $ 7,649 36.6%
=========== ===========
Other Margin Total Margin
----------- ---------- ----------- ----------
Net Income (Loss) $ (3,514) -39.5% $ 10,749 13.7%
Provision (Benefit) for
Income Taxes (1,777) -20.0% 7,028 9.0%
Equity in Unconsolidated
Entities - 0.0% (228) -0.3%
Other Income (Expense),
net 4 0.0% 9 0.0%
Interest Expense 2,052 23.1% 3,349 4.3%
Interest and Dividend
Income (74) -0.8% (881) -1.1%
----------- -----------
Operating Income (Loss) (3,309) -37.2% 20,026 25.5%
----------- -----------
Voluntary Retirement
Program 2,333 26.2% 2,333 3.0%
Depreciation &
Amortization 1,456 16.4% 16,973 21.7%
----------- -----------
EBITDA $ 480 5.4% $ 39,332 50.2%
=========== ===========
Margin is calculated by dividing the relevant line item by sales. The
reconciliation of margin percentage may not add due to rounding.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
SELECTED FINANCIAL RESULTS
RECONCILIATION TO GAAP RESULTS
(UNAUDITED)
(Dollars in Millions, Except Per Share Amounts)
A reconciliation of full year projected net income (loss) to full year
EBITDA guidance is as follows:
Full year 2003
Range
-------------------------
Consolidated Consolidated
------------ ------------
Diluted Earnings Per Share $ 2.45 $ 2.47
============ ============
Projected Net Income $ 71.2 $ 71.7
Cumulative Effect of Accounting Change, Net
of Tax (13.2) (13.2)
Provision for Income Taxes 38.7 38.9
Other Income (Expense), net and Equity in
Unconsolidated Entities (2.8) (2.8)
Interest Expense, net 4.2 5.2
------------ ------------
Operating Income (Loss) 98.1 99.8
------------ ------------
Depreciation & Amortization 69.9 70.2
------------ ------------
EBITDA $ 168.0 $ 170.0
============ ============
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
March 31, December 31,
2003 2002
---------------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $ 53,054 $ 34,935
Accounts Receivable and Unbilled Revenues,
net of Allowance for Doubtful Accounts of
$5,633 in 2003 and $5,520 in 2002 58,394 52,866
Other Current Assets 15,282 10,138
Deferred Income Taxes 21,816 23,669
---------------------------
Total Current Assets 148,546 121,608
---------------------------
PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $415,747 IN
2003 AND $432,435 IN 2002) 422,448 411,370
INVESTMENTS 9,484 9,718
DEFERRED CHARGES AND OTHER ASSETS 11,372 11,343
---------------------------
TOTAL ASSETS $ 591,850 $ 554,039
===========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
March 31, December 31,
2003 2002
---------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 65,000 $ 65,000
Current Maturities of Long-Term Debt 9,010 9,010
Accounts Payable 29,033 30,503
Advance Billings and Customer Deposits 5,207 5,870
Accrued Expenses 50,809 49,955
Accrued Restructuring Expenses 1,523 2,029
---------------------------
Total Current Liabilities 160,582 162,367
---------------------------
LONG-TERM DEBT 75,047 77,299
DEFERRED INCOME TAXES 70,394 61,083
OTHER DEFERRED CREDITS 34,827 32,300
COMMON SHAREHOLDERS' EQUITY:
Common Stock 27,492 27,307
Additional Paid-in Capital 263,259 256,594
Deferred Compensation (7,964) (2,676)
Other Comprehensive Loss (6,697) (6,961)
Retained Earnings 106,153 77,969
Treasury Stock at Cost, 3,829,133 shares at
March 31, 2003 and 3,829,133 at December
31, 2002 (131,243) (131,243)
---------------------------
Total Common Shareholders' Equity 251,000 220,990
---------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 591,850 $ 554,039
===========================
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