CTE Reports 2004 Fourth Quarter Results; CTE Reports Fourth Quarter Diluted Earnings Per Share of $0.67, Reflecting an 18% Increase Versus Year Ago Quarter.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. -- Net New 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 Subscribers Increase 43% Versus End of 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:
EST abbr. electroshock therapy ) today. Mr. Mahoney will review CTE's 2004 fourth quarter results, and provide 2005 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 1-877-277-1088. The conference call passcode is 2841719. 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 2841719. The webcast will also be available for replay for 48 hours at www.ct-enterprises.com. Commonwealth Telephone Enterprises, Inc. ("CTE") (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 ), today announced financial results for the 2004 fourth quarter. CTE 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 (Note: Beginning with the 2004 fourth quarter, all 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 figures are presented on a comparable basis to reflect the change in accounting for contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the convertible securities as prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by the Emerging Issues Task Force of the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). .) For the 2004 fourth 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 $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 $0.57 in the 2003 fourth quarter. Included in the 2004 and 2003 fourth quarter reported diluted EPS are reductions of $0.08 per share and $0.06 per share, respectively, in connection with the revised accounting for contingent convertible securities. Also included in CTE's 2004 fourth 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 the settlement of a trunking See port aggregation. dispute with Verizon, a $1.7 million (pre-tax), or $0.04 per share (after-tax) favorable effect resulting primarily from certain network costs settlements, and a $1.2 million (after-tax), or $0.05 per share (after-tax) unfavorable effect resulting from a true-up of income tax liability. Included in CTE's 2003 fourth quarter reported diluted EPS is a $1.6 million (pre-tax), or $0.04 per share (after-tax), favorable effect resulting from an after-tax settlement in connection with certain 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. recorded in the 2000 fourth quarter. For the 2004 full year, CTE reported diluted EPS of $2.60, versus a reported diluted EPS of $2.92 for the 2003 full year. Included in the 2004 and 2003 full year reported diluted EPS are reductions of $0.28 per share and $0.15 per share, respectively, in connection with the revised accounting for contingent convertible securities. The 2003 full year also includes a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , after-tax gain of $13.2 million, or $0.51 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. A summary of certain items that are reflected in the 2004 full year and 2003 full year reported diluted EPS figures is detailed on an accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. schedule. The 2004 versus 2003 fourth quarter and full year reported diluted EPS results also reflect the accretive effect of CTE's common stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. during 2004. CTE's 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 program commenced in November November: see month. 2003. CTE ended the 2004 fourth quarter with a total of 471,842 switched access lines installed, reflecting a decrease of 5,287 switched access lines installed over the past 12 months, or a reduction of 1%. CTE's reported consolidated revenues in the 2004 fourth quarter were $83.6 million, down 1% versus 2003 fourth quarter revenues of $84.6 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 2004 fourth quarter was $27.7 million, versus $25.9 million in last year's fourth quarter, reflecting an increase of 7%. For the 2004 fourth quarter, CTE reported net income of $16.0 million, versus reported net income of $14.8 million in the 2003 fourth quarter. Consolidated capital expenditures ("CAPEX") were $12.1 million in the 2004 fourth quarter, versus CAPEX of $17.8 million in the year ago quarter. The table below sets forth highlights of CTE's 2004 fourth quarter consolidated results, versus the 2003 fourth quarter:
2004 2003 % Change
Fourth Quarter Fourth Quarter Inc./(Dec.)
-------------- -------------- ----------
Total Access Lines 471,842 477,129 (1%)
Revenues $83.6M $84.6M (1%)
Operating Income $27.7M $25.9M 7%
Depreciation and
Amortization $17.6M $18.1M (3%)
CAPEX $12.1M $17.8M (32%)
Reported EPS $0.67 $0.57 18%
"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 fourth quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "We exceeded the fourth quarter EPS guidance which we had previously provided, and had a solid quarter in terms of cash flow generation. Further, with the exception of consolidated access lines, where we came in just under our prior guidance, the results we achieved for the 2004 full year met, or exceeded, all of the line item guidance we had previously communicated." CTE's consolidated revenues for the 2004 full year were $335.8 million, slightly above the 2003 full year revenues of $335.7 million. Consolidated operating income was $106.4 million, versus $103.4 million for the 2003 full year. Consolidated capital expenditures were $43.5 million, versus $49.5 million for the 2003 full year. The table below sets forth highlights of CTE's 2004 full year consolidated results, versus the 2003 full year consolidated results:
2004 2003 % Change
Full Year Full Year Inc./(Dec.)
--------- --------- ----------
Total Access Lines 471,842 477,129 (1%)
Revenues $335.8M $335.7M -
Operating Income $106.4M $103.4M 3%
Depreciation and
Amortization $71.0M $71.1M -
CAPEX $43.5M $49.5M (12%)
Reported EPS $2.60 $2.92(a) (11%)
(a) Includes a one-time, after-tax gain of $13.2 million, or $0.51 per
diluted share, in connection with the previously announced
adoption of new accounting rules on asset retirement obligations
under SFAS 143 (Statement of Financial Accounting Standards No.
143), which were effective January 1, 2003.
Common Stock Repurchase Program Update In the 2004 fourth quarter, CTE did not 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. any additional shares of common stock. Since the stock repurchase program began in November 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 executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. at CTE's discretion, based on ongoing assessments of the Company's capital needs and the market value of CTE's common stock. Commonwealth Telephone Company ("CT") Results CT had a total of 333,022 switched access lines installed at the end of the 2004 fourth quarter - reflecting a reduction of slightly less than 2% versus last year's fourth 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 line growth in the 2004 fourth quarter was modestly positive versus the 2003 fourth quarter. CT's 2004 fourth quarter revenues were $56.2 million, versus revenues of $57.3 million in the 2003 fourth quarter. For the 2004 full year, revenues were $227.7 million, versus $223.8 million for the 2003 full year, a growth rate of 2%. CT's 2004 fourth quarter operating income was $23.9 million, versus $24.6 million in the 2003 fourth quarter. For the 2004 full year, operating income was $100.4 million, versus $97.2 million for the 2003 full year, a growth rate of 3%. CT's 2004 fourth quarter CAPEX were $8.0 million, versus $10.4 million in the 2003 fourth quarter. For the 2004 full year, CAPEX were $27.0 million, versus $28.6 million for the 2003 full year. 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 Results CTSI had a total of 138,820 switched access lines installed at the end of the 2004 fourth quarter - slightly above the 138,667 switched access lines installed at the end of the 2003 fourth quarter. At the end of the 2004 fourth 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 2004 fourth quarter was 91%/9%. CTSI's 2004 fourth quarter revenues were $21.6 million, versus revenues of $20.7 million in the 2003 fourth quarter. CTSI's 2004 fourth quarter and full year revenues include a $0.8 million favorable effect resulting from the settlement of a trunking dispute with Verizon. For the 2004 full year, CTSI's revenues were $83.6 million, versus 2003 full year revenues of $85.3 million. The 2004 full year revenue figure also reflects the loss of approximately $7.0 million of access revenues in connection with the previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). PLU PLU Pacific Lutheran University PLU People Like Us (LGBT community) PLU Price Look-Up PLU Primary Logical Unit PLU Product Look-Up PLU Phi Lambda Upsilon (National Chemistry Honor Society) issue versus the 2003 full year. CTSI's operating income in the 2004 fourth quarter was $4.5 million, versus operating income of $2.9 million in the 2003 fourth quarter. CTSI's 2004 fourth quarter and full year operating income include a $0.8 million favorable effect resulting from the settlement of a trunking dispute with Verizon, as well as a $1.7 million favorable effect primarily resulting from certain network costs settlements. For the 2004 full year, CTSI's operating income was $10.4 million, versus 2003 full year operating income of $10.6 million. The 2004 full year operating income also reflects the loss of approximately $7.0 million of operating income in connection with the PLU issue versus the 2003 full year. CTSI's 2004 fourth quarter capital expenditures were $3.4 million, versus $6.5 million in the year ago quarter. For the 2004 full year, CTSI's CAPEX were $14.9 million, versus 2003 full year CAPEX of $19.2 million. Jack Flash(R) DSL In the 2004 fourth quarter, CTE's DSL (digital subscriber line See DSL. (communications, protocol) Digital Subscriber Line - (DSL, or Digital Subscriber Loop, xDSL - see below) A family of digital telecommunications protocols designed to allow high speed data communication over the existing copper telephone lines between end-users and ) product, Jack Flash(R), installed 1,583 net new DSL subscribers. Jack Flash(R) had 18,612 installed DSL subscribers at the end of the 2004 fourth quarter, having added a record total of 5,622 net new subscribers over the past 12 months. 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. 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:
2005 Full Year
Item Guidance(b)
---- --------------
Consolidated Access Line Growth (2%) - 0%
Revenue Growth (1%) - 0%
Operating Income $95M - $97M
Depreciation and Amortization $70M - $71M
Effective Tax Rate 38%
Diluted EPS - 1Q05 $0.57 - $0.59
Diluted EPS - FY05 $2.42 - $2.45
CAPEX $40M - $42M
(b) The 2005 full year guidance does not reflect any additional common
stock repurchases.
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 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("CTSI"), a local exchange carrier operating in competitive markets outside CT's territory, that formally commenced operations in 1997. Jack Flash(R), a broadband data service that uses DSL technology to offer high-speed Internet access and digital connectivity solutions, is offered throughout CTE's service territories. 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 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. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for forward-looking statements. Certain information included in this press release is forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. . Such forward-looking information involves important risks and uncertainties that could significantly affect expected results in the future and cause them to be different from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, uncertainties related to the Company's ability to further penetrate its markets and the related costs of that effort, economic conditions, acquisitions and divestitures, government and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies, the pricing and availability of equipment, materials and inventories, technological developments and changes in the competitive environment in which the Company operates and receipt of necessary approvals.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED DECEMBER 31, 2004
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $56,248 $21,563 $5,830 $83,641
Costs & Expenses (excluding other
operating expenses) 20,125 12,142 6,080 38,347
Depreciation & Amortization 12,260 4,895 481 17,636
Restructuring Reversals - - - -
-------- -------- -------- --------
Operating Income (Loss) 23,863 4,526 (731) 27,658
Interest and Dividend Income 1,726
Interest Expense (4,403)
Other Income (Expense), Net 199
Equity in Income of Unconsolidated
Entities 971
--------
Income before Income Taxes and
Cumulative Effect of Accounting
Change 26,151
Provision for Income Taxes 10,122
--------
Income before Cumulative Effect of
Accounting Change 16,029
Cumulative Effect of Accounting
Change, Net of Tax -
--------
Net Income $16,029
========
THREE MONTHS ENDED DECEMBER 31, 2003
-----------------------------------
CT CTSI OTHER TOTAL
-------- -------- -------- --------
Sales $57,335 $20,665 $6,602 $84,602
Costs & Expenses (excluding other
operating expenses) 20,823 14,055 7,292 42,170
Depreciation & Amortization 11,947 5,354 820 18,121
Restructuring Reversals - (1,636) - (1,636)
-------- -------- -------- --------
Operating Income (Loss) 24,565 2,892 (1,510) 25,947
Interest and Dividend Income 1,186
Interest Expense (4,535)
Other Income (Expense), Net 229
Equity in Income of Unconsolidated
Entities 843
--------
Income before Income Taxes and
Cumulative Effect of Accounting
Change 23,670
Provision for Income Taxes 8,866
--------
Income before Cumulative Effect of
Accounting Change 14,804
Cumulative Effect of Accounting
Change, Net of Tax -
--------
Net Income $14,804
========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
YEAR ENDED DECEMBER 31, 2004
---------------------------------------
CT CTSI OTHER TOTAL
--------- --------- --------- ---------
Sales $227,666 $83,568 $24,577 $335,811
Costs & Expenses (excluding
other operating expenses) 79,219 53,809 26,161 159,189
Depreciation & Amortization 48,047 20,205 2,722 70,974
Restructuring Reversals - (799) - (799)
--------- --------- --------- ---------
Operating Income (Loss) 100,400 10,353 (4,306) 106,447
Interest and Dividend Income 5,773
Interest Expense (16,800)
Other Income (Expense), Net 686
Equity in Income of
Unconsolidated Entities 3,236
---------
Income before Income Taxes and
Cumulative Effect of
Accounting Change 99,342
Provision for Income Taxes 37,311
---------
Income before Cumulative Effect
of Accounting Change 62,031
Cumulative Effect of Accounting
Change, Net of Tax -
---------
Net Income $62,031
=========
YEAR ENDED DECEMBER 31, 2003
---------------------------------------
CT CTSI OTHER TOTAL
--------- --------- --------- ---------
Sales $223,827 $85,336 $26,559 $335,722
Costs & Expenses (excluding
other operating expenses) 79,730 55,610 27,500 162,840
Depreciation & Amortization 46,944 20,748 3,445 71,137
Restructuring Reversals - (1,636) - (1,636)
--------- --------- --------- ---------
Operating Income (Loss) 97,153 10,614 (4,386) 103,381
Interest and Dividend Income 3,372
Interest Expense (13,560)
Other Income (Expense), Net (884)
Equity in Income of
Unconsolidated Entities 2,698
---------
Income before Income Taxes and
Cumulative Effect of
Accounting Change 95,007
Provision for Income Taxes 35,372
---------
Income before Cumulative Effect
of Accounting Change 59,635
Cumulative Effect of Accounting
Change, Net of Tax 13,230
---------
Net Income $72,865
=========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Income before
Cumulative Effect of
Accounting Change $16,029 $14,804 $62,031 $59,635
Cumulative Effect of
Accounting Change, Net
of Tax - - - 13,230
----------------------- -----------------------
Net Income 16,029 14,804 62,031 72,865
Net Income Adjustment
for Interest on
Convertible Debt, Net
of Tax 1,869 1,822 7,480 3,369
----------------------- -----------------------
Net Income, as Adjusted $17,898 $16,626 $69,511 $76,234
======================= =======================
Weighted Average Common
Shares Outstanding -
Basic 21,003,357 23,498,967 21,325,907 23,515,367
Effect of Dilutive
Securities on Shares
Outstanding:
Stock Options and
Restricted Stock 262,122 157,901 190,608 182,469
Convertible Debt 5,263,170 5,263,170 5,263,170 2,408,081
----------------------- -----------------------
Weighted Average Common
Shares Outstanding -
Diluted 26,528,649 28,920,038 26,779,685 26,105,917
======================= =======================
Basic Earnings per
Average Common Share:
Income before
Cumulative Effect of
Accounting Change $0.76 $0.63 $2.91 $2.54
Cumulative Effect of
Accounting Change, Net
of Tax $0.00 $0.00 $0.00 $0.56
----------------------- -----------------------
Net Income $0.76 $0.63 $2.91 $3.10
======================= =======================
Diluted Earnings per
Average Common Share:
Income before
Cumulative Effect of
Accounting Change $0.67 $0.57 $2.60 $2.41
Cumulative Effect of
Accounting Change, Net
of Tax $0.00 $0.00 $0.00 $0.51
----------------------- -----------------------
Net Income $0.67 $0.57 $2.60 $2.92
======================= =======================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
SUMMARY OF CERTAIN ITEMS INCLUDED IN REPORTED EPS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Data)
YEAR ENDED DECEMBER 31, 2004
-----------------------------
Favorable/(Unfavorable) Items Pre-tax After-tax EPS
--------- --------- ---------
Restructuring Reversals $799 $504 $0.02
Network Costs Settlements $1,701 $1,060 $0.04
Verizon Trunking Dispute Settlement $760 $473 $0.02
True-Up of Income Tax Liability $(979) $(1,228) $(0.05)
YEAR ENDED DECEMBER 31, 2003
-----------------------------
Favorable/(Unfavorable) Items Pre-tax After-tax EPS
--------- --------- ---------
Asset Retirement Obligation (SFAS 143) $21,689 $13,230 $0.51
Recapitalization Costs $(1,450) $(885) $(0.03)
Sale of WorldCom Impaired Receivables $965 $605 $0.02
Restructuring Reversals $1,636 $1,026 $0.04
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED QUARTERLY STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)
THREE MONTHS ENDED
MARCH 31, JUNE 30, SEPTEMBER 30,
---------------------------------------
2004 2004 2004
------------ ------------ -------------
Income before Cumulative
Effect of Accounting Change $14,565 $16,318 $15,119
Cumulative Effect of
Accounting Change, Net of Tax - - -
---------------------------------------
Net Income 14,565 16,318 15,119
Net Income Adjustment for
Interest on Convertible Debt,
Net of Tax 1,869 1,874 1,868
---------------------------------------
Net Income, as Adjusted $16,434 $18,192 $16,987
=======================================
Weighted Average Common Shares
Outstanding - Basic 22,142,626 21,207,371 20,957,919
Effect of Dilutive Securities
on Shares Outstanding:
Stock Options and
Restricted Stock 161,724 180,113 206,862
Convertible Debt 5,263,170 5,263,170 5,263,170
---------------------------------------
Weighted Average Common Shares
Outstanding - Diluted 27,567,520 26,650,654 26,427,951
=======================================
Diluted Earnings per
Average Common Share (as
reported):
Income before Cumulative
Effect of Accounting Change $0.65 $0.76 $0.71
Cumulative Effect of
Accounting Change, Net of Tax $0.00 $0.00 $0.00
---------------------------------------
Net Income $0.65 $0.76 $0.71
=======================================
Diluted Earnings per
Average Common Share (as
adjusted):
Income before Cumulative
Effect of Accounting Change $0.60 $0.68 $0.64
Cumulative Effect of
Accounting Change, Net of Tax $0.00 $0.00 $0.00
---------------------------------------
Net Income $0.60 $0.68 $0.64
=======================================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
DECEMBER 31, DECEMBER 31,
2004 2003
-------------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $312,260 $336,035
Accounts Receivable and Unbilled Revenues,
Net of Allowance for Doubtful Accounts of
$2,185 in 2004 and $2,329 in 2003 40,090 50,240
Other Current Assets 8,804 9,387
Deferred Income Taxes 13,388 17,016
-------------------------
Total Current Assets 374,542 412,678
-------------------------
PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $506,711 IN
2004 AND $452,989 IN 2003) 382,523 410,485
INVESTMENTS 10,338 10,204
DEFERRED CHARGES AND OTHER ASSETS 16,028 18,286
-------------------------
TOTAL ASSETS $783,431 $851,653
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
DECEMBER 31, DECEMBER 31,
2004 2003
------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $35,000 $65,000
Capital Lease Obligation 721 777
Current Maturities of Long Term Debt - 5,623
Accounts Payable 25,012 29,135
Advance Billings and Customer Deposits 5,316 5,212
Accrued Expenses 55,057 54,331
Accrued Restructuring Expenses 344 812
------------------------
Total Current Liabilities 121,450 160,890
------------------------
LONG TERM DEBT 300,000 323,898
CAPITAL LEASE OBLIGATION 361 1,082
DEFERRED INCOME TAXES 77,279 79,876
OTHER LONG TERM LIABILITIES 18,411 23,178
COMMON SHAREHOLDERS' EQUITY:
Common Stock 24,172 24,014
Additional Paid-in Capital 284,358 267,076
Deferred Compensation (10,093) (6,451)
Other Comprehensive Loss (830) (2,490)
Retained Earnings 86,931 24,900
Treasury Stock at Cost, 3,049,114 shares at
December 31, 2004 and 1,207,016 at December
31, 2003 (118,608) (44,320)
------------------------
Total Common Shareholders' Equity 265,930 262,729
------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $783,431 $851,653
========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
YEAR ENDED
DECEMBER 31,
---------------------
2004 2003
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES $142,505 $150,275
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment (43,519) (47,372)
Other 3,655 3,636
---------- ----------
Net Cash Used in Investing Activities (39,864) (43,736)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Long-Term Debt - 300,000
Redemption of Long-Term Debt (29,521) (56,788)
Redemption of Short-Term Debt (30,000) -
Proceeds from Exercise of Stock Options 9,136 3,881
Capital Lease Payments (777) (491)
Payment Made for Debt Issuance Costs (77) (8,674)
Stock Repurchases (75,177) (43,367)
---------- ----------
Net Cash Used in Financing Activities (126,416) 194,561
---------- ----------
Net (Decrease)/Increase in Cash and Temporary
Cash Investments (23,775) 301,100
---------- ----------
Cash and Temporary Cash Investments at Beginning
of Period 336,035 34,935
---------- ----------
Cash and Temporary Cash Investments at End of
Period $312,260 $336,035
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