CTE Reports 2003 Second Quarter Results; CTE Reports Net Income of $15.2 million, Versus $14.1 million in the 2002 Second Quarter.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)--Aug. 5, 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 Reports Fully Diluted Earnings Per Share of $0.64,
Versus $0.60 in the 2002 Second Quarter
CTE Reports Consolidated 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 second quarter results, and 2003 guidance. The call is expected to last approximately 30 minutes. To access today's conference call, please call 1-800-482-5519. The conference call passcode is 198004. 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 1-800-615-3210, passcode 198004. 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 second quarter. CTE Consolidated Results For the 2003 second 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 $0.64, 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 2002 second quarter. Included in CTE's 2003 second quarter reported diluted EPS is a $1.5 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), or $0.04 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. ), charge reflecting legal and financial advisory expenses in connection with CTE's proposed 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. , which was announced on April 25, 2003. CTE's 2002 second quarter reported diluted EPS included the effect of a $2.0 million (pre-tax) charge, or $0.05 per share (after-tax), related to the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of WorldCom The former name of MCI. Based in Jackson, MS, WorldCom, Inc. was a major, international telecommunications carrier. It was founded in 1983 by Bernard Ebbers as Long Distance Discount Service (LDDS), a reseller of AT&T WATS lines to small businesses. receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , and a $2.1 million (pre-tax), or $0.05 per share (after-tax), positive settlement in connection with CTE's 2000 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. . CTE ended the 2003 second quarter with a total of 473,375 switched access lines installed, reflecting an increase of 18,437 switched access lines installed in the past 12 months, or a growth rate of 4%. CTE's consolidated revenues in the 2003 second quarter were $83.0 million, a growth rate of 6% versus the 2002 second quarter. The 2002 second quarter consolidated revenues of $78.3 million included a $2.0 million charge in connection with WorldCom receivables. CTE's 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 2003 second quarter was $25.2 million, which reflected a 4% growth rate versus last year's second quarter. CTE's 2002 second quarter operating income of $24.1 million reflected both the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. $2.0 million pre-tax WorldCom charge against revenues, as well as the aforementioned $2.1 million pre-tax positive settlement related to CTE's 2000 restructuring charge. For the 2003 second quarter, CTE reported net income of $15.2 million, versus reported net income of $14.1 million in the 2002 second quarter. Consolidated capital expenditures ("CAPEX") were $12.1 million in the 2003 second quarter, versus CAPEX of $14.0 million in the year ago quarter. The table below sets forth highlights of CTE's 2003 second quarter consolidated results, versus the 2002 second quarter:
2003 2002 % Change
Second Second Inc./
Quarter Quarter (Dec.)
-------- -------- --------
Total Access Lines 473,375 454,938 4%
Revenues $83.0M $78.3M 6%
Operating Income $25.2M $24.1M 4%
Depreciation and Amortization $17.5M $16.5M 6%
CAPEX $12.1M $14.0M (14%)
Gross Debt $121.8M $190.8M (36%)
Reported EPS $0.64 $0.60 7%
"We have completed a solid second quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "The fundamental operating and financial performance of CTE is on track as we head into the second half of 2003. We again achieved 4% consolidated switched access line growth by adding over 18,400 lines to our base of lines over the past 12 months - including 4,790 in the second quarter. Commonwealth Telephone Company's revenue growth and operating income margin performance were solid, while 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 grew its base of lines impressively in the quarter." Vote for Proposed Recapitalization Set for September September: see month. 3, 2003 As previously announced, on April 25, 2003, CTE, Level 3 Communications
Level 3 Communications NASDAQ: LVLT is a communications and information services company headquartered in Broomfield, Colorado, USA. , Inc. ("Level 3 Communications"), and Eldorado Equity Holdings, Inc., an indirect wholly-owned subsidiary of Level 3 Communications, 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 would 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 would be reduced from approximately 29% to approximately 5%. Pursuant to the terms of the recapitalization agreement, Level 3 Communications has agreed to vote in favor of upon the side of; favorable to; for the advantage of. See also: favor the recapitalization. The transaction is subject to customary conditions, including shareholder approval. CTE's Definitive 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. was filed with the Securities and Exchange Commission on July July: see month. 16, 2003, and CTE's Annual Meeting of Shareholders has been scheduled for September 3, 2003. Shareholders will vote on the recapitalization at the Annual Meeting. "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 approximately 42% to 91%. The transaction also eliminates the possibility that another investor could acquire a large voting position in CTE by purchasing the CTE Class B Common Stock held by Level 3 Communications - which presently represents approximately 4% of the economic ownership of CTE, but roughly 29% of the voting power. I look forward to the support of all of our shareholders as we work to improve the ownership structure of CTE going forward." CTE Closes on $300 Million of Convertible Notes Due 2023 On July 18, 2003, CTE closed the sale of $300 million of 3.25% convertible notes due 2023. CTE intends to use the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from this offering for working capital, capital expenditures and other general corporate purposes, including potential acquisitions, debt retirement and potential common stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. . The notes are convertible under certain circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or into shares of CTE's common stock at an initial conversion rate of 17.5439 shares per $1,000 principal amount of notes. This represents a conversion price of $57 per common share. We also terminated our 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 aggregate commitments of $240 million, on July 17, 2003. "Our recent successful financing is an important step in positioning CTE for the future," said Mahoney. "We were able to raise $300 million in the capital markets in a transaction that generated significant demand, and was accomplished at a very attractive 3.25% interest rate. We undertook this financing to take advantage of the historic low interest rates, and to increase our financial flexibility as we pursue our objectives to grow CTE and enhance the wealth of our shareholders over the long term." Commonwealth Telephone Company ("CT") Results CT had a total of 338,340 switched access lines installed at the end of the 2003 second quarter - a growth rate of 1% versus last year. CT's residential additional line penetration was 40% at the end of the quarter. CT's business line growth in the 2003 second quarter was 3% versus the 2002 second quarter. CT's 2003 second quarter revenues grew 8% to $51.2 million, versus revenues of $47.5 million in the 2002 second quarter. The 2002 second quarter revenue figure reflects a $2.0 million charge in connection with WorldCom receivables. CT's second quarter 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 2002, and 6% 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 second quarter operating income was $23.1 million, a 22% increase over last year. This solid growth in operating income was primarily driven by growth in high-margin access revenues, continued focus on cost control and the impact of the $2.0 million WorldCom receivables charge, which is included in CT's 2002 second quarter results. CT's 2003 second quarter CAPEX were $5.9 million versus $8.0 million in the 2002 second quarter. The change in CAPEX is substantially due to timing. CTSI, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("CTSI") During the 2003 second quarter, CTSI installed 4,453 net access lines, ending the quarter with 135,035 net access lines installed - a growth rate of 13% versus the 2002 second quarter. At the end of the 2003 second 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 second quarter was 90%/10%. CTSI's 2003 second quarter revenues were $21.5 million, a growth rate of 1% versus revenues of $21.3 million in the 2002 second quarter. This relatively flat growth rate was expected due to several factors that affected the quarter-over-prior-year-same-quarter access revenue comparison at CTSI, including a modification to transport billings related to access trunking See port aggregation. in last year's third quarter, the continued implementation of the Federal Communications Commission's ("FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. ") mandated interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. access rate reduction and further implementation of the FCC Order related to local reciprocal Bilateral; two-sided; mutual; interchanged. Reciprocal obligations are duties owed by one individual to another and vice versa. A reciprocal contract is one in which the parties enter into mutual agreements. compensation. CTSI's operating income in the 2003 second quarter was $2.5 million, versus operating income of $5.3 million in the 2002 second quarter. CTSI's 2002 second quarter operating income included a $2.1 million positive settlement in connection with CTE's 2000 restructuring charge. CTSI's 2003 second quarter capital expenditures were $5.6 million, versus $5.4 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 second 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 831 net new DSL subscribers. Jack Flash(R) had 11,369 installed DSL subscribers at the end of the 2003 second 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 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, including the effect of CTE's recent debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay , which Mr. Mahoney will discuss on this morning's conference call and webcast (share amounts in EPS guidance are not adjusted for the proposed recapitalization):
Previously
Communicated Updated
2003 Full Year 2003 Full Year
Item Guidance Guidance
---- --------------- --------------
Consolidated CTE
Access Line Growth 3% - 4% Unchanged
Revenue Growth 5% - 6% Unchanged
Operating Income $98M - $100M $100M - $102M
Depreciation and
Amortization Approx. $70M Unchanged
Effective Tax Rate Approx. 40% 38% -39%
Diluted EPS - 3Q03 n/a $0.58 - $0.60
Diluted EPS - FY03 $2.45 - $2.47(a) $2.42 - $2.45(a)
CAPEX $50M - $55M Unchanged
(a) Excludes an after-tax gain of $13.2 million, or $0.56 per diluted share, which was recorded in the 2003 first quarter 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), effective January January: see month. 1, 2003. Including this gain, the previously communicated 2003 full year guidance for diluted EPS would have been $3.01 - $3.03, and the updated 2003 full year diluted EPS guidance would be $2.98 - $3.01. 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 7th 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'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 was mailed to security holders of CTE, and CTE filed a proxy statement with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT, BECAUSE IT CONTAINS IMPORTANT INFORMATION. The proxy statement and other relevant materials, 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. 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 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 is set forth in the proxy statement for the annual shareholders' meeting. 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. 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 JUNE 30, 2003
--------------------------------
CT CTSI OTHER TOTAL
------- ------- ------- -------
Sales $51,180 $21,474 $10,347 $83,001
Costs & Expenses (excluding
other operating
expenses itemized below) 16,743 13,827 9,755 40,325
Management Fees - - - -
Depreciation & Amortization 11,334 5,109 1,066 17,509
Restructuring Charges (Reversals) - - - -
------- ------- ------- -------
Operating Income (Loss) 23,103 2,538 (474) 25,167
Interest and Dividend Income 440 - 34 474
Interest Expense (1,005) - (1,203) (2,208)
Other Income (Expense), net (54) 6 (1,145) (1,193)
Equity in Unconsolidated Entities - - 1,423 1,423
------- ------- ------- -------
Income (Loss) before Income Taxes
and Cumulative Effect of Accounting
Change 22,484 2,544 (1,365) 23,663
Provision (Benefit) for Income
Taxes 8,243 769 (563) 8,449
------- ------- ------- -------
Income (Loss) before Cumulative
Effect of Accounting Change 14,241 1,775 (802) 15,214
Cumulative Effect of Accounting
Change, Net of Tax - - - -
------- ------- ------- -------
Net Income (Loss) $14,241 $1,775 $(802)$15,214
======= ======= ======= =======
THREE MONTHS ENDED JUNE 30, 2002
--------------------------------
CT CTSI OTHER TOTAL
------- ------- ------- -------
Sales $47,543 $21,324 $9,433 $78,300
Costs & Expenses (excluding other
operating expenses itemized below) 17,063 13,347 9,029 39,439
Management Fees 300 99 (99) 300
Depreciation & Amortization 11,262 4,630 613 16,505
Restructuring Charges
(Reversals) - (2,057) - (2,057)
------- ------- ------- -------
Operating Income (Loss) 18,918 5,305 (110) 24,113
Interest and Dividend
Income 423 - 68 491
Interest Expense (1,355) - (1,893) (3,248)
Other Income (Expense), net (100) 501 (22) 379
Equity in Unconsolidated
Entities - 1,345 - 1,345
------- ------- ------- -------
Income (Loss) before Income
Taxes and Cumulative Effect of
Accounting Change 17,886 7,151 (1,957) 23,080
Provision (Benefit) for
Income Taxes 7,004 2,726 (748) 8,982
------- ------- ------- -------
Income (Loss) before
Cumulative Effect of Accounting
Change 10,882 4,425 (1,209) 14,098
Cumulative Effect of
Accounting Change,
Net of Tax - - - -
------- ------- ------- -------
Net Income (Loss) $10,882 $4,425 $(1,209)$14,098
======= ======= ======= =======
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
SIX MONTHS ENDED JUNE 30, 2003
----------------------------------
CT CTSI OTHER TOTAL
-------- ------- ------- ---------
Sales $103,277 $42,969 $19,913 $166,159
Costs & Expenses (excluding other
operating expenses itemized below) 33,850 27,111 19,191 80,152
Management Fees - - - -
Depreciation & Amortization 22,833 10,169 2,134 35,136
Restructuring Charges (Reversals) - - - -
Voluntary Retirement Program - - - -
-------- ------- ------- ---------
Operating Income (Loss) 46,594 5,689 (1,412) 50,871
Interest and Dividend Income 1,109 - 71 1,180
Interest Expense (2,042) - (2,554) (4,596)
Other Income (Expense), net (83) 18 (1,093) (1,158)
Equity in Unconsolidated Entities - - 1,654 1,654
-------- ------- ------- ---------
Income (Loss) before Income Taxes
and Cumulative Effect of Accounting
Change 45,578 5,707 (3,334) 47,951
Provision (Benefit) for Income
Taxes 16,923 1,934 (1,074) 17,783
-------- ------- ------- ---------
Income (Loss) before Cumulative
Effect of Accounting Change 28,655 3,773 (2,260) 30,168
Cumulative Effect of Accounting
Change, Net of Tax 13,230 - - 13,230
-------- ------- ------- ---------
Net Income (Loss) $ 41,885 $ 3,773 $(2,260)$ 43,398
======== ======= ======= =========
SIX MONTHS ENDED JUNE 30, 2002
---------------------------------
CT CTSI OTHER TOTAL
---------------------------------
Sales $96,159 $42,205 $18,332 $156,696
Costs & Expenses (excluding other
operating
expenses itemized below) 34,176 26,480 17,547 78,203
Management Fees 600 198 (198) 600
Depreciation & Amortization 22,284 9,125 2,069 33,478
Restructuring Charges (Reversals) - (2,057) - (2,057)
Voluntary Retirement Program - - 2,333 2,333
------- ------- ------- ---------
Operating Income (Loss) 39,099 8,459 (3,419) 44,139
Interest and Dividend Income 1,230 - 142 1,372
Interest Expense (2,652) - (3,945) (6,597)
Other Income (Expense), net (95) 491 (26) 370
Equity in Unconsolidated Entities - 1,573 - 1,573
------- ------- ------- ---------
Income (Loss) before Income Taxes
and Cumulative Effect of Accounting
Change 37,582 10,523 (7,248) 40,857
Provision (Benefit) for Income
Taxes 14,570 3,965 (2,525) 16,010
------- ------- ------- ---------
Income (Loss) before Cumulative
Effect of Accounting Change 23,012 6,558 (4,723) 24,847
Cumulative Effect of Accounting
Change, Net of Tax - - - -
------- ------- ------- ---------
Net Income (Loss) $23,012 $6,558 $(4,723) $24,847
======= ======= ======= =========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2003 2002 2003 2002
Basic Earnings per
Average Common Share:
Income before
Cumulative Effect of
Accounting Change $0.65 $0.60 $1.29 $1.06
Cumulative Effect of
Accounting Change, Net
of Tax $0.00 $0.00 $0.56 $0.00
----------------------- -----------------------
Net Income (Loss) $0.65 $0.60 $1.85 $1.06
======================= =======================
Weighted Average Common
Shares Outstanding 23,515,230 23,374,395 23,476,185 23,363,307
Diluted Earnings per
Average Common Share:
Income before
Cumulative Effect of
Accounting Change $0.64 $0.60 $1.27 $1.05
Cumulative Effect of
Accounting Change, Net
of Tax $0.00 $0.00 $0.56 $0.00
----------------------- -----------------------
Net Income (Loss) $0.64 $0.60 $1.83 $1.05
======================= =======================
Weighted Average Common
Shares and Common
Stock Equivalents
Outstanding 23,937,200 23,690,464 23,819,639 23,683,912
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
June 30, Dec. 31,
2003 2002
-------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $46,686 $34,935
Accounts Receivable and Unbilled Revenues,
net of Allowance for Doubtful Accounts of
$5,749 in 2003 and $5,520 in 2002 59,830 52,866
Other Current Assets 12,243 10,138
Deferred Income Taxes 20,731 23,669
-------------------
Total Current Assets 139,490 121,608
-------------------
PROPERTY PLANT AND EQUIPMENT (NET OF ACCUMULATED
DEPRECIATION OF $431,017 IN 2003 AND $432,435 IN
2002) 416,861 411,370
INVESTMENTS 9,076 9,718
DEFERRED CHARGES AND OTHER ASSETS 11,243 11,343
-------------------
TOTAL ASSETS $576,670 $554,039
===================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
June 30, Dec. 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 32,653 30,503
Advance Billings and Customer Deposits 4,881 5,870
Accrued Expenses 44,930 49,955
Accrued Restructuring Expenses 1,875 2,029
-------------------
Total Current Liabilities 158,349 162,367
-------------------
LONG TERM DEBT 47,795 77,299
DEFERRED INCOME TAXES 69,360 61,083
OTHER DEFERRED CREDITS 31,533 32,300
COMMON SHAREHOLDERS' EQUITY:
Common Stock 27,584 27,307
Additional Paid-in Capital 266,140 256,594
Deferred Compensation (7,838) (2,676)
Other Comprehensive Loss (6,512) (6,961)
Retained Earnings 121,367 77,969
Treasury Stock at Cost, 3,825,181 shares at June
30, 2003 and 3,829,133 at December 31, 2002 (131,108) (131,243)
-------------------
Total Common Shareholders' Equity 269,633 220,990
-------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $576,670 $554,039
===================
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