CTE Reports 2005 Second Quarter Results; CTE Reports Second Quarter Diluted Earnings Per Share of $0.66, Versus Reported Diluted Earnings Per Share of $0.68 in the 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. -- 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 ):
Consolidated Reported Operating Income Increases 3% Versus Year Ago
Quarter
Net New DSL Subscribers Increase 54% Versus Year Ago Quarter End
Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. J. Mahoney Mahoney could refer to:
abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ) today. Mr. Mahoney will review CTE's 2005 second quarter results, and 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 7363315. 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 7363315. The webcast will also be available for replay for 48 hours at www.ct-enterprises.com. Commonwealth Telephone Enterprises, Inc. ("CTE") (NASDAQ:CTCO), today announced financial results for the 2005 second quarter. CTE 2005 Second Quarter Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Results For the 2005 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 $0.66, 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 $0.68 in the 2004 second quarter. CTE's 2005 second quarter reported diluted EPS of $0.66 includes a $0.16 unfavorable effect resulting from the execution of CTE's overall dividend strategy, which was announced on May 3, 2005, and which included a special dividend and an initial quarterly dividend. The items comprising this unfavorable effect include advisory, legal and other fees related to the strategy; non-cash compensation expense related to certain stock-based compensation plans, which resulted from the dividend; and, the effect of including 2.1 million additional shares in the diluted EPS calculation due to the conversion rate adjustment made under CTE's 3 1/4 % Convertible Notes Due 2023 as a result of the dividends, as well as stock option exercises that took place in the quarter. Also included in the reported diluted EPS of $0.66 is a $0.02 favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect resulting from certain access revenue settlements and network costs settlements included in the 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"), results. Included in CTE's 2004 second 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 effect resulting from a positive 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. CTE ended the 2005 second quarter with a total of 466,524 switched access lines installed, reflecting a decrease of 9,238 switched access lines installed over the past 12 months, or a reduction of 2%. CTE's reported consolidated revenues in the 2005 second quarter were $83.0 million, down 1% versus 2004 second quarter revenues of $84.0 million. CTE's reported consolidated operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. in the 2005 second quarter was $27.5 million, versus $26.7 million in last year's second quarter, reflecting an increase of 3%. For the 2005 second quarter, CTE reported net income of $17.2 million, versus reported net income of $16.3 million in the 2004 second quarter. Consolidated capital expenditures ("CAPEX") were $10.3 million in the 2005 second quarter, versus CAPEX of $10.6 million in the year ago quarter. The table below sets forth highlights of CTE's 2005 second quarter reported consolidated results, versus the 2004 second quarter:
2005 2004 % Change
Second Quarter Second Quarter Inc./(Dec.)
-------------- -------------- -----------
Total Access Lines 466,524 475,762 ( 2%)
Revenues $83.0M $84.0M ( 1%)
Operating Income $27.5M $26.7M 3%
Depreciation and
Amortization $14.1M $18.0M (22%)
CAPEX $10.3M $10.6M ( 3%)
Reported EPS $0.66 $0.68 ( 3%)
"We had a solid second quarter," said Michael J. Mahoney, CTE's president and chief executive officer. "Our two primary operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , Commonwealth Telephone Company and CTSI, both achieved solid results for the quarter and remain on track with our plans for the year. We continue to achieve record subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. growth with our 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 product - attaining net subscriber growth of 54%, versus the end of last year's second quarter. Our diluted EPS for the quarter, apart from the effect of our dividend strategy, came in above our prior guidance and above the Street consensus mean estimate, and our guidance for the 2005 full year remains unchanged, again, with the exception of the effect of our overall dividend strategy." Commonwealth Telephone Company ("CT") Results CT had a total of 329,385 switched access lines installed at the end of the 2005 second quarter - reflecting a reduction of 2%, versus last year's second quarter. CT's residential additional line penetration The successful unauthorized breach of a security perimeter. See penetration test. was 35% at the end of the quarter, versus 37% at the end of the prior year quarter. CT's 2005 second quarter revenues were $57.0 million, versus revenues of $56.9 million in the 2004 second quarter. CT's 2005 second quarter operating income was $28.4 million, versus $25.4 million in the 2004 second quarter. CT's 2005 second quarter CAPEX were $6.1 million, versus $7.1 million in the 2004 second quarter. CTSI Results CTSI had a total of 137,139 switched access lines installed at the end of the 2005 second quarter - reflecting a 2% decline, versus the 139,316 switched access lines installed at the end of the 2004 second quarter. The decline in CTSI's access lines installed was primarily due to a reduction in ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. customer lines, as the 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. ISP business has continued to slow. CTSI's non-ISP related access lines installed increased slightly over the past 12 months. At the end of the 2005 second quarter, 99% of CTSI's access lines were "on-switch," and 55% were "on-net Connected to the Internet, or connected to a LAN or WAN. Contrast with off-net. " (defined as 100% on CTSI's owned network). CTSI's business/residential line split at the end of the 2005 second quarter was 91%/9%, identical to the split at the end of the 2004 second quarter. CTSI's 2005 reported second quarter revenues were $21.5 million, versus revenues of $20.8 million in the 2004 second quarter. CTSI's 2005 second quarter reported revenues include a $0.5 million favorable effect resulting from certain access revenue settlements. CTSI's reported operating income in the 2005 second quarter was $3.3 million, versus operating income of $2.6 million in the 2004 second quarter. CTSI's 2005 second quarter reported operating income includes a $0.9 million favorable effect resulting from the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. access revenue settlements and certain network costs settlements. CTSI's 2004 second quarter reported operating income includes the previously mentioned $0.8 million (pre-tax) favorable effect resulting from a positive settlement in connection with certain restructuring charges recorded in the 2000 fourth quarter. CTSI's 2005 second quarter capital expenditures were $3.8 million, versus $3.3 million in the year ago quarter. DSL In the 2005 second quarter, CTE installed 2,497 net new DSL subscribers. CTE had 23,632 installed DSL subscribers at the end of the 2005 second quarter, having added a record total of 8,306 net new subscribers over the past 12 months, which reflected a growth rate of 54%, versus the end of last year's second quarter. DSL is marketed in CTE's CT and CTSI geographies. 2005 Guidance Outlined The table below sets forth CTE's consolidated 2005 full year guidance, which Mr. Mahoney will review on this morning's conference call and webcast:
Previously
Communicated Updated
2005 Full Year 2005 Full Year
Item Guidance (1) Guidance (1)
------------------ ---------------- ----------------
Consolidated CTE Access Line Growth (2%) - 0% Unchanged
Revenue Growth (1%) - 0% Unchanged
Operating Income $108M - $110M Unchanged
Depreciation and
Amortization $58M - $59M Unchanged
Effective Tax Rate 38% Unchanged
Diluted EPS -
3Q05(2) n/a $0.57 - $0.59
Diluted EPS -
FY05(2) $2.81 - $2.84 $2.53 - $2.56
CAPEX $40M - $42M Unchanged
(1) Does not reflect any additional common stock repurchases or
conversions of notes.
(2) Includes the effect of anticipated quarterly dividends to be paid
in the 2005 third and fourth quarters (subject to declaration by
CTE's Board of Directors).
About CTE Headquartered in Dallas, PA, Commonwealth Telephone Enterprises, Inc., serves business and residential customers with a full array of technologically advanced data and voice telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. products and services, including broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). data services and high-speed Internet See broadband. access, delivered over its 100% digitally switched, fiber-rich network. CTE's primary operating segments are: Commonwealth Telephone Company ("CT"), the nation's eighth largest publicly held independent local exchange carrier, which has been operating in various rural Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York markets since 1897; and, CTSI, LLC ("CTSI"), a local exchange carrier operating in competitive markets outside CT's territory, that formally commenced operations in 1997. CTE deploys broadband DSL technology to offer high-speed Internet access in the CT and CTSI service territories. CTE's support businesses include epix(R) Internet Services (www.epix.net), one of the Northeast's largest rural dial-up Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. ("ISPs"), and Commonwealth Communications, a provider of telecommunications equipment and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. services. A web site featuring current information regarding Commonwealth Telephone Enterprises, Inc., can be found on the Internet at www.ct-enterprises.com. However, the information on this web site does not form a part of this release. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and CTE intends that such forward-looking statements be subject to these safe harbors Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. . Such forward-looking statements involve risks and uncertainties that could significantly affect expected results in the future differently than expressed in any forward-looking statements made by CTE. These risks and uncertainties include, but are not limited to, uncertainties related to CTE's ability to further penetrate its markets and the related costs of that effort, economic conditions, acquisitions and divestitures, government and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies, the pricing and availability of equipment, materials and inventories, technological developments, reductions in rates or traffic that are subject to access charges, changes in the competitive environment in which CTE operates and receipt of necessary regulatory approvals.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED JUNE 30, 2005
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------
Sales $ 56,955 $ 21,500 $ 4,563 $ 83,018
Costs & Expenses
(excluding other
operating expenses) 19,490 13,421 8,552 41,463
Depreciation &
Amortization 9,077 4,776 255 14,108
Restructuring Reversals - (31) - (31)
---------- ---------- ---------- ----------
Operating Income (Loss) 28,388 3,334 (4,244) 27,478
Interest and Dividend
Income 2,910
Interest Expense (3,431)
Other Income (Expense),
Net (1,397)
Equity in Income of
Unconsolidated Entities 1,865
----------
Income before Income Taxes 27,425
Provision for Income Taxes 10,231
----------
Net Income $ 17,194
==========
THREE MONTHS ENDED JUNE 30, 2004
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------
Sales $ 56,925 $ 20,780 $ 6,309 $ 84,014
Costs & Expenses
(excluding other
operating expenses) 19,588 13,803 6,662 40,053
Depreciation &
Amortization 11,977 5,212 836 18,025
Restructuring Reversals - (799) - (799)
---------- ---------- ---------- ----------
Operating Income (Loss) 25,360 2,564 (1,189) 26,735
Interest and Dividend
Income 1,216
Interest Expense (4,325)
Other Income (Expense),
Net 502
Equity in Income of
Unconsolidated Entities 1,790
----------
Income before Income Taxes 25,918
Provision for Income Taxes 9,600
----------
Net Income $ 16,318
==========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
SIX MONTHS ENDED JUNE 30, 2005
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------
Sales $ 113,332 $ 43,622 $ 9,593 $ 166,547
Costs & Expenses
(excluding other
operating expenses) 39,297 26,882 15,025 81,204
Depreciation &
Amortization 21,429 9,705 712 31,846
Restructuring Reversals - (31) - (31)
---------- ---------- ---------- ----------
Operating Income (Loss) 52,606 7,066 (6,144) 53,528
Interest and Dividend
Income 5,500
Interest Expense (6,945)
Other Income (Expense),
Net (1,424)
Equity in Income of
Unconsolidated Entities 2,110
----------
Income before Income Taxes 52,769
Provision for Income Taxes 19,657
----------
Net Income $ 33,112
==========
SIX MONTHS ENDED JUNE 30, 2004
-------------------------------------------
CT CTSI OTHER TOTAL
---------- ---------- ---------- ----------
Sales $ 114,441 $ 41,332 $ 12,621 $ 168,394
Costs & Expenses
(excluding other
operating expenses) 39,052 27,607 13,781 80,440
Depreciation &
Amortization 23,670 10,301 1,661 35,632
Restructuring Reversals - (799) - (799)
---------- ---------- ---------- ----------
Operating Income (Loss) 51,719 4,223 (2,821) 53,121
Interest and Dividend
Income 2,292
Interest Expense (8,812)
Other Income (Expense),
Net 519
Equity in Income of
Unconsolidated Entities 2,025
----------
Income before Income Taxes 49,145
Provision for Income Taxes 18,262
----------
Net Income $ 30,883
==========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(GAAP)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net Income $ 17,194 $ 16,318 $ 33,112 $ 30,883
Net Income Adjustment for
Interest on Convertible
Debt, Net of Tax 1,870 1,874 3,739 3,743
--------------------- ---------------------
Net Income, as Adjusted $ 19,064 $ 18,192 $ 36,851 $ 34,626
===================== =====================
Weighted Average Common
Shares Outstanding -
Basic 21,501,624 21,207,371 21,331,990 21,674,971
Effect of Dilutive
Securities on Shares
Outstanding:
Stock Options and
Restricted Stock 237,194 180,113 276,087 161,315
Convertible Debt 7,091,882 5,263,170 6,182,578 5,263,170
--------------------- ---------------------
Weighted Average Common
Shares Outstanding -
Diluted 28,830,700 26,650,654 27,790,655 27,099,456
===================== =====================
Basic Earnings per
Average Common Share:
Net Income $ 0.80 $ 0.77 $ 1.55 $ 1.42
===================== =====================
Diluted Earnings per
Average Common Share:
Net Income $ 0.66 $ 0.68 $ 1.33 $ 1.28
===================== =====================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
JUNE 30, DECEMBER 31,
2005 2004
-------------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $ 81,717 $ 312,260
Accounts Receivable and Unbilled Revenues,
Net of Allowance for Doubtful Accounts of
$1,699 in 2005 and $2,185 in 2004 38,645 40,089
Other Current Assets 13,294 8,805
Deferred Income Taxes 12,271 13,388
-------------------------
Total Current Assets 145,927 374,542
-------------------------
PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $531,198 IN
2005 AND $506,711 IN 2004) 369,068 382,523
INVESTMENTS 10,481 10,338
DEFERRED CHARGES AND OTHER ASSETS 13,640 16,028
-------------------------
TOTAL ASSETS $ 539,116 $ 783,431
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
JUNE 30, DECEMBER 31,
2005 2004
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 35,000 $ 35,000
Capital Lease Obligation 721 721
Accounts Payable 26,229 25,012
Advance Billings and Customer Deposits 5,403 5,316
Accrued Expenses 43,944 55,057
Accrued Restructuring Expenses 374 344
-------------------------
Total Current Liabilities 111,671 121,450
-------------------------
LONG TERM DEBT 300,000 300,000
CAPITAL LEASE OBLIGATION - 361
DEFERRED INCOME TAXES 75,815 77,279
OTHER LONG TERM LIABILITIES 15,961 18,411
COMMON SHAREHOLDERS' EQUITY:
Common Stock 24,193 24,172
Additional Paid-in Capital 116,857 284,358
Deferred Compensation (21,235) (10,093)
Other Comprehensive Loss (405) (830)
Retained Earnings 11,157 86,931
Treasury Stock at Cost, 2,404,282 shares at
June 30, 2005 and 3,049,114 at December 31,
2004 (94,898) (118,608)
-------------------------
Total Common Shareholders' Equity 35,669 265,930
-------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 539,116 $ 783,431
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
SIX MONTHS ENDED
JUNE 30,
-------------------------
2005 2004
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 57,896 $ 62,344
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment (18,124) (19,921)
Other 1,764 2,336
------------ ------------
Net Cash Used in Investing Activities (16,360) (17,585)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of Long-Term Debt - (29,521)
Redemption of Short-Term Debt - (15,000)
Dividends Paid (294,138) -
Proceeds from Exercise of Stock Options 22,420 2,751
Capital Lease Payments (361) (417)
Payment Made for Debt Issuance Costs - (82)
Stock Repurchases - (74,362)
------------ ------------
Net Cash Used in Financing Activities (272,079) (116,631)
------------ ------------
Net Decrease in Cash and Temporary Cash
Investments (230,543) (71,872)
------------ ------------
Cash and Temporary Cash Investments at
Beginning of Period 312,260 336,035
------------ ------------
Cash and Temporary Cash Investments at End
of Period $ 81,717 $ 264,163
============ ============
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