CTE Reports 2006 First Quarter Results.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:CTCO CTCO Chicago Transportation Coordination Office ):
CTE Reports First Quarter Diluted Earnings Per Share of $0.61
Consolidated Reported Operating Income Increases 8% Versus Year
Ago Quarter
Net New DSL Subscribers Increase 61% Versus Year Ago Quarter End
CTE Completes $150 Million Authorized Stock Repurchase Program
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 2006 first quarter results. The call is expected to last approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 30 minutes. To access today's conference call, please call 1-877-277-1088. The conference call passcode is 7923285. 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 7923285. 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 2006 first quarter. CTE 2006 First Quarter Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Results For the 2006 first quarter, CTE reported diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") of $0.61, 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 $0.67 in the 2005 first quarter. CTE's 2006 first quarter reported diluted EPS, versus last year's first quarter, reflects the effect of including additional shares in the diluted EPS calculation due to the conversion rate adjustments made under CTE's Convertible Notes in connection with CTE's dividend strategy. Specifically, the 2006 first quarter average fully diluted share count includes an additional 2.1 million shares in connection with the payment of our dividends and their effect on our convertible debt, versus the prior year's comparable period. The additional shares had a $0.05 unfavorable impact on CTE's 2006 first quarter reported diluted EPS. Included in CTE's 2005 first quarter reported diluted EPS was a $0.8 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), or $0.02 per share (after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ), favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. effect resulting from certain access revenue settlements, and a $0.6 million (pre-tax), or $0.01 per share (after-tax), favorable effect resulting from certain network costs settlements. Both items were reflected in the results of CTSI CTSI Census Tract Street Index (US Census Bureau) CTSI California Traffic Safety Institute CTSI Corbett Technology Solutions, Inc. (Chantilly, VA) CTSI Central Terminal Signaling Interface , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("CTSI"). CTE ended the 2006 first quarter with a total of 458,562 switched access lines in service, reflecting a decrease of 12,571 switched access lines in service over the past 12 months, or a reduction of 3%. CTE's reported consolidated revenues in the 2006 first quarter were $82.2 million, versus 2005 first quarter reported revenues of $83.5 million. CTE's 2005 first quarter revenues would have been $82.8 million without the effect of 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. 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 2006 first quarter was $28.1 million, versus reported consolidated operating income of $26.1 million in last year's first quarter, reflecting an increase of 8%. Excluding the effect of the previously mentioned access revenue and network costs settlements, CTE's 2005 first quarter operating income would have been $24.7 million. For the 2006 first quarter, CTE reported net income of $16.2 million, versus reported net income of $15.9 million in the 2005 first quarter. Consolidated capital expenditures ("CAPEX") were $10.6 million in the 2006 first quarter, versus CAPEX of $7.8 million in the year ago quarter. The table below sets forth highlights of CTE's 2006 first quarter reported consolidated results, versus the 2005 first quarter:
2006 2005 % Change
First Quarter First Quarter Inc./(Dec.)
------------- ------------- -----------
Total Access Lines 458,562 471,133 ( 3%)
DSL Subscribers 33,946 21,135 61%
Revenues $82.2M $83.5M ( 2%)
Operating Income $28.1M $26.1M 8%
Depreciation and
Amortization $10.8M $17.7M (39%)
CAPEX $10.6M $7.8M 35%
Reported EPS $0.61 $0.67 ( 9%)
"We are off to a solid start in 2006," said Michael J. Mahoney, CTE's president and chief executive officer. "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 the overall performance of 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, as well as the 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 we achieved 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 consolidated net subscriber growth of 61%, versus the end of last year's first quarter. "I'm also pleased to report that we have completed the remaining $31 million of our authorized stock Authorized Stock The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet. 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. program," continued Mahoney. "These accretive share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. were accomplished at attractive prices, with roughly 55% of the recently repurchased shares settling prior to the end of the first quarter. Even with these repurchases, we ended the first quarter with a strong balance sheet and cash position, which was further bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. , subsequent to the quarter end, by the receipt of $30 million of cash proceeds related to the Rural Telephone Bank dissolution Act or process of dissolving; termination; winding up. In this sense it is frequently used in the phrase dissolution of a partnership. The dissolution of a contract is its Rescission by the parties themselves or by a court that nullifies its binding force and reinstates each . We continue to be well positioned operationally and financially as we move ahead in 2006." Authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: Common Stock Repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. Program Completed On April 17, 2006, CTE completed the remaining $31 million of its overall $150 million authorized stock repurchase program. During the 2006 first quarter and into April, CTE repurchased 947,905 common shares in open market 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 $33.19 per share, or just over $31 million. Of the 947,905 repurchased shares, 524,300 shares settled in the 2006 first quarter. Rural Telephone Bank Stock Redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. Payment Received In connection with the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy and dissolution of the Rural Telephone Bank ("RTB RTB Return(ed) to Base RTB Reasons to Believe (website) RTB Reasons to Believe (Pasadena, CA) RTB Right to Buy (UK home buying) "), CTE received cash proceeds of just over $30 million on April 11, 2006. These proceeds represented the liquidation of CTE's $6.4 million book investment in RTB Class C stock. This gain will be recorded in the 2006 second quarter. After taking into account the effect of state and federal income taxes, the net cash proceeds to CTE will be approximately $19 million. CTE's investment in RTB stock was made many years ago in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with RTB debt incurred by Commonwealth Telephone Company. Commonwealth Telephone Company Results Commonwealth Telephone Company ("CT") had a total of 320,097 switched access lines in service at the end of the 2006 first quarter - reflecting a reduction of 3% versus last year's first quarter. CT's residential additional line penetration The successful unauthorized breach of a security perimeter. See penetration test. was 32% at the end of the quarter, down from 36% in the year ago quarter. CT's 2006 first quarter reported revenues were $57.1 million, versus revenues of $56.4 million in the 2005 first quarter, reflecting a growth rate of just over 1%. CT's 2006 first quarter reported operating income was $30.2 million, versus $24.2 million in the 2005 first quarter, or an increase of 25%. CT's 2006 first quarter CAPEX were $6.9 million, versus $4.7 million in the 2005 first quarter. CTSI Results CTSI had a total of 138,465 switched access lines in service at the end of the 2006 first quarter - reflecting a 1% decline versus the 139,585 switched access lines in service at the end of the 2005 first quarter. The decline in CTSI's access lines in service 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 continued to weaken. CTSI's general business access lines in service increased 5% over the past year. At the end of the 2006 first quarter, 99% of CTSI's access lines were "on-switch," and 54% 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 2006 first quarter was 92%/8%, reflecting a slightly higher business component versus the end of the 2005 first quarter. CTSI's 2006 first quarter reported revenues were $20.5 million, versus revenues of $22.1 million in the 2005 first quarter. CTSI's 2005 first quarter revenues included a favorable effect of $0.8 million resulting from certain access revenue settlements. CTSI's reported operating income in the 2006 first quarter was $1.9 million, versus reported operating income of $3.7 million in the 2005 first quarter. CTSI's 2005 first quarter reported operating income included a $1.4 million favorable effect resulting from the aforementioned $0.8 million of favorable access revenue settlements, and a favorable $0.6 million effect resulting from certain network costs settlements. CTSI's 2006 first quarter capital expenditures were $3.3 million, versus $2.9 million in the year ago quarter. DSL In the 2006 first quarter, CTE installed a record 4,684 net new DSL subscribers. CTE had 33,946 DSL subscribers in service at the end of the 2006 first quarter, having added a record total of 12,811 net new subscribers over the past four quarters, which reflected a growth rate of 61% versus the end of last year's first quarter. DSL is marketed in CTE's CT and CTSI geographies. 2006 Guidance Outlined The table below sets forth CTE's consolidated 2006 full year guidance and 2006 second quarter EPS guidance, which Mr. Mahoney will review on this morning's conference call and webcast:
Previously
Communicated Updated
2006 2006
Full Year Full Year
Item Guidance (1) Guidance (1)
----------------------- -------------- -------------
Consolidated CTE Access Line Growth (3%) - (1%) Unchanged
Revenue Growth (1%) - 0% Unchanged
Operating Income $109M - $111M Unchanged
Depreciation and
Amortization $45M - $46M Unchanged
Effective Tax Rate 38% - 39% Unchanged
Diluted EPS - 2Q06(2)(3) n/a $1.11- $1.13
Diluted EPS - FY06(2)(4) $2.43 - $2.49 $2.97- $3.02
CAPEX $44M - $47M 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 2006 (subject to declaration by CTE's Board of Directors).
(3) 2006 second quarter diluted EPS guidance reflects a net favorable
effect of $0.47 per diluted share in connection with the Rural
Telephone Bank liquidation and dissolution.
(4) 2006 full year diluted EPS guidance, versus prior guidance,
reflects a net favorable effect of $0.47 per diluted share in
connection with the Rural Telephone Bank liquidation and
dissolution, as well as a $0.02 unfavorable effect per diluted
share due to the elimination of RTB dividends in the third and
fourth quarters.
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), a rural dial-up Internet service provider 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. ("ISP"), and Commonwealth Communications, a provider of telecommunications equipment and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. services. A web site featuring current information regarding Commonwealth Telephone Enterprises, Inc., can be found on the Internet at www.ct-enterprises.com. However, the information on this web site does not form a part of this release. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and CTE intends that such forward-looking statements be subject to these safe harbors Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. . Such forward-looking statements involve risks and uncertainties that could significantly affect expected results in the future differently than expressed in any forward-looking statements made by CTE. These risks and uncertainties include, but are not limited to, uncertainties related to CTE's ability to further penetrate its markets and the related costs of that effort, economic conditions, acquisitions and divestitures, government and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. policies, the pricing and availability of equipment, materials and inventories, technological developments, reductions in rates or traffic that are subject to access charges, changes in the competitive environment in which CTE operates and receipt of necessary regulatory approvals.
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED MARCH 31, 2006
--------------------------------------
CT CTSI OTHER TOTAL
-- ---- ----- -----
Sales $57,098 $20,512 $4,581 $82,191
Costs & Expenses (excluding
depreciation and amortization) 20,905 13,884 8,505 43,294
Depreciation & Amortization 5,950 4,682 215 10,847
--------- --------- -------- ---------
Operating Income (Loss) 30,243 1,946 (4,139) 28,050
Interest and Dividend Income 1,868
Interest Expense (3,511)
Other Income (Expense), Net (151)
Equity in Income of
Unconsolidated Entities 445
---------
Income before Income Taxes 26,701
Provision for Income Taxes 10,537
---------
Net Income $16,164
=========
THREE MONTHS ENDED MARCH 31, 2005
--------------------------------------
CT CTSI OTHER TOTAL
-- ---- ----- -----
Sales $56,377 $22,122 $5,030 $83,529
Costs & Expenses (excluding
depreciation and amortization) 19,807 13,461 6,473 39,741
Depreciation & Amortization 12,352 4,929 457 17,738
--------- --------- -------- ---------
Operating Income (Loss) 24,218 3,732 (1,900) 26,050
Interest and Dividend Income 2,590
Interest Expense (3,514)
Other Income (Expense), Net (27)
Equity in Income of
Unconsolidated Entities 245
---------
Income before Income Taxes 25,344
Provision for Income Taxes 9,426
---------
Net Income $15,918
=========
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands, Except Per Share Amounts)
(GAAP)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2006 2005
----------- -----------
Net Income $16,164 $15,918
Net Income Adjustment for Interest on
Convertible Debt, Net of Tax 1,878 1,869
-----------------------
Net Income, as Adjusted $18,042 $17,787
=======================
Weighted Average Common Shares Outstanding -
Basic 21,894,330 21,160,470
Effect of Dilutive Securities on Shares
Outstanding:
Stock Options and Restricted Stock 102,798 242,327
Convertible Debt 7,400,190 5,263,170
-----------------------
Weighted Average Common Shares Outstanding -
Diluted 29,397,318 26,665,967
=======================
Basic Earnings per Average Common Share:
Net Income $0.74 $0.75
=======================
Diluted Earnings per Average Common Share:
Net Income $0.61 $0.67
=======================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
MARCH 31, DECEMBER 31,
2006 2005
-------------------------
ASSETS
CURRENT ASSETS:
Cash and Temporary Cash Investments $89,705 $104,968
Accounts Receivable and Unbilled Revenues,
Net of Allowance for Doubtful Accounts of
$1,326 in 2006 and $1,362 in 2005 37,201 36,528
Other Current Assets 17,362 8,830
Deferred Income Taxes 11,967 11,275
-------------------------
Total Current Assets 156,235 161,601
-------------------------
PROPERTY PLANT AND EQUIPMENT (NET OF
ACCUMULATED DEPRECIATION OF $555,570 IN
2006 AND $550,007 IN 2005) 368,326 368,506
INVESTMENTS 10,216 10,269
DEFERRED CHARGES AND OTHER ASSETS 14,182 15,018
-------------------------
TOTAL ASSETS $548,959 $555,394
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
MARCH 31, DECEMBER 31,
2006 2005
-------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $35,000 $35,000
Capital Lease Obligation 209 360
Accounts Payable 25,622 26,590
Advance Billings and Customer Deposits 5,406 5,248
Accrued Expenses 38,598 38,937
-------------------------
Total Current Liabilities 104,835 106,135
-------------------------
LONG TERM DEBT 300,000 300,000
DEFERRED INCOME TAXES 75,412 72,490
OTHER LONG TERM LIABILITIES 22,140 20,904
COMMON SHAREHOLDERS' EQUITY:
Common Stock 24,226 24,226
Additional Paid-in Capital 100,636 118,723
Deferred Compensation - (16,861)
Other Comprehensive Loss (2,346) (2,415)
Retained Earnings 31,445 26,327
Treasury Stock at Cost, 2,816,638 Shares at
March 31, 2006 and 2,383,564 at December
31, 2005 (107,389) (94,135)
-------------------------
Total Common Shareholders' Equity 46,572 55,865
-------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $548,959 $555,394
=========================
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in Thousands)
(GAAP)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2006 2005
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $22,471 $31,582
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant & Equipment (10,605) (7,848)
Other 435 434
------------ ------------
Net Cash Used in Investing Activities (10,170) (7,414)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends Paid (10,902) -
Proceeds from Exercise of Stock Options 638 639
Capital Lease Payments (151) (181)
Stock Repurchases (17,149) -
------------ ------------
Net Cash (Used in)/Provided by Financing
Activities (27,564) 458
------------ ------------
Net (Decrease)/Increase in Cash and Temporary
Cash Investments (15,263) 24,626
------------ ------------
Cash and Temporary Cash Investments at
Beginning of Period 104,968 312,260
------------ ------------
Cash and Temporary Cash Investments at End
of Period $89,705 $336,886
============ ============
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion