CTE Reports Record 17% Consolidated Revenue Growth and 26% Consolidated EBITDA Growth.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)--Nov. 4, 1999-- Commonwealth Telephone Company Achieves 7% Access Line Growth; 10% Revenue Growth; and Record 59% EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Margin 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 , Inc., Installs Record 12,629 Access Lines, Ends Third Quarter with 73,406 Access Lines Installed Commonwealth Telephone Enterprises, Inc. ("CTE (Coefficient of Thermal Expansion) The difference between the way two materials expand when heat is applied. This is very critical when chips are mounted to printed circuit boards, because the silicon chip expands at a different rate than the plastic board. ") [Nasdaq: CTCO CTCO Chicago Transportation Coordination Office , CTCOB] today announced results for its third quarter ended September 30, 1999, which included strong growth in both of its primary operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , Commonwealth Telephone Company (CT) and CTSI, Inc. (CTSI). "In the two years since the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of C-TEC, CTE has consistently delivered exemplary results," said Michael I Michael I, Byzantine emperor Michael I (Michael Rangabe), d. c.845, Byzantine emperor (811–13), son-in-law of Nicephorus I. He supported orthodoxy against iconoclasm and recalled Theodore of Studium from exile. . Gottdenker, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "These results reflect a laser-like focus on the execution of our business plan. At Commonwealth Telephone Company, we continue to set the industry standard among pure-play ILECs in terms of both growth and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . At CTSI, the third quarter was particularly significant. CTSI proved its capability to quickly scale its business by installing over 40% more lines than in any prior quarter while dramatically decreasing its operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and improving key performance indicators Key Performance Indicators (KPI) are financial and non-financial metrics used to quantify objectives to reflect strategic performance of an organization. KPIs are used in Business Intelligence to assess the present state of the business and to prescribe a course of action. . CTSI's near-flawless execution of its business plan has resulted in higher revenue per line, greater quality of revenues, higher market share, a higher percentage of lines `on-net' and `on-switch,' higher margins and lower capital investment per line installed than its CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) peers. We are very excited to have recently expanded CTSI into its sixth regional market, Syracuse, NY, where we intend to build on our success." On a consolidated basis, CTE's revenues during the quarter increased 17% to $67.7 million from $57.7 million last year. Consolidated EBITDA increased 26% to $25.9 million from $20.5 million last year driven by EBITDA growth at CT and lower losses at CTSI. CTE reported third quarter consolidated net income to common shareholders of $6.2 million, or $0.27 per 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. average common share, compared to $3.4 million, or $0.15 per diluted average common share last year. The increase in consolidated net income to common shareholders was primarily the result of 20% net income growth at CT, along with the elimination of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividend and accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the requirements resulting from the redemption of CTE's outstanding preferred stock in February of 1999, partially offset by increased interest expense. CT Results CT had a total of 291,252 access lines installed at the end of the 1999 third quarter - a growth rate of over 7% versus last year. In the 1999 third quarter, CT installed 4,474 access lines, versus 3,909 access lines installed in the 1998 third quarter. CT's highly successful residential "add a line" marketing campaign has continued to drive industry-leading access line growth. Revenue growth at CT continues to be strong. CT's 1999 third quarter revenues grew 10% to $43.1 million. Continued access line growth and increased penetration of popular vertical services, particularly Caller ID A telephone company service that sends the caller's telephone number between the first and second ring of the call. If the calling number is not blocked, the calling number is displayed on the handset or base station of the called party. and Custom Calling features, were largely responsible for the revenue growth. Vertical services revenues increased 38% versus the 1998 third quarter. CT's 1999 third quarter EBITDA was $25.6 million, nearly a 15% increase over last year, resulting in a record 59% EBITDA margin. CT's net income grew by 20% to $9.5 million, resulting in a 22% net margin. CT's 1999 third quarter results include a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. one-time National Exchange Carrier Association (NECA NECA National Electrical Contractors Association NECA National Exchange Carrier Association NECA National Electrical and Communications Association (Australia) NECA National Electricity Code Administrator (Australia) ) revenue adjustment of approximately $0.7 million resulting from a true-up of 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. average schedule settlements. The impact of this revenue adjustment on CT's and CTE's third quarter net income was $0.4 million. CTSI Ended Third Quarter with 73,406 Access Lines Installed - 33% "On-Net" At the end of the 1999 third quarter (CTSI's eleventh In music or music theory an eleventh is the note eleven scale degrees from the root of a chord and also the interval between the root and the eleventh. Since there are only seven degrees in a diatonic scale the eleventh degree is the same as the subdominant and the interval quarter of operation), CTSI had a total of 73,406 access lines installed. This figure compares to the 60,777 access lines installed at the end of the 1999 second quarter, a record increase of 12,629 access lines or a sequential quarterly growth rate of 21%. Over the past four quarters, CTSI has installed 37,473 access lines, an annual growth rate of 104%. CTSI's 1999 third quarter revenues were $11.2 million, resulting in a sequential quarterly growth rate of 21% and an annual growth rate of 80%. Less than 3% of CTSI's revenues in the quarter were from 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. 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 EBITDA loss in the 1999 third quarter was $1.4 million versus an EBITDA loss of $2.3 million in the 1999 second quarter and $2.0 million in last year's third quarter. The reduction in EBITDA loss is primarily due to higher market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market penetration - the act of entering into or through something; "the penetration of upper management by women" resulting in increased leverage of CTSI's network infrastructure. In addition, CTSI continued to increase the percentage of lines "on-net," thereby lowering the cost of providing service and improving gross margins. At the end of the 1999 third quarter, 33% of CTSI's access lines were "on-net" (defined as 100% on CTSI's owned network) versus 31% at the end of the prior quarter. CTSI's "on-switch" percentage was 93% at the end of the 1999 third quarter. Cumulative CAPEX per cumulative lines installed was $1,888 at the end of the quarter. This compares to $2,005 and $ 2,074 at the end of the second quarter and the end of the 1998 third quarter, respectively. CTSI Expands Into Syracuse Market On October 4, 1999, CTSI announced the launch of its sixth regional market, Syracuse, NY. Having spent the last few months obtaining the necessary governmental authorizations; designing, engineering and installing the backbone network A backbone network provides a path for the exchange of information between different LANs or subnetworks.[1] A backbone can tie together diverse networks in the same building, in different buildings in a campus environment, or over wide areas. and switching; and recruiting, hiring and training the sales and operations personnel, CTSI is today selling its services to all-sized businesses in the communities of Syracuse, North Syracuse, Mattydale, Liverpool, Camillus and Clay, as well as Auburn Auburn (ô`bərn). 1 City (1990 pop. 33,830), Lee co., E Ala.; inc. 1839. The city's economy centers around Auburn Univ.; there is some manufacturing. 2 City (1990 pop. 24,309), seat of Androscoggin co. and Cortland. Additionally, CTSI will provide its services to residential customers in select portions of the Syracuse market, as it has done in every market it serves. CT Closes New Credit Facility On September 30, 1999, CT closed on a new $30 million line of credit with CoBank, ACB ACB American Council of the Blind ACB Asia Commercial Bank ACB America's Community Bankers ACB Adjusted Cost Base ACB Alliance for the Chesapeake Bay ACB Amphibious Construction Battalion (US Navy) ACB Australian Cricket Board . This facility provides a low cost financing vehicle which further reduces CTE's overall borrowing costs and improves financial flexibility. About CTE Headquartered in Dallas, PA, Commonwealth Telephone Enterprises, Inc., is a diversified diversified (di·verˑ·s telecommunications company See telecom company. providing advanced solutions to deliver communications, information and entertainment services to business and residential users in a rapidly expanding set of select United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. markets. CTE's primary operating segments include: Commonwealth Telephone Company, the nation's ninth largest independent incumbent local exchange carrier ILEC, short for incumbent local exchange carrier, is a local telephone company in the United States that was in existence at the time of the break up of AT&T into the Regional Bell Operating Companies (RBOCs) also known as the "Baby Bells". , 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; CTSI, Inc., a competitive local exchange carrier that commenced operations in 1997 and is focused on tier-two markets; and epix(TM) 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 Services (www.epix.net), one of the northeast's largest rural ISPs, with over 43,000 dial-up Internet access See dial-up. subscribers. Additionally, CTE operates two other support businesses that provide expertise to its CLEC and ILEC (Incumbent Local Exchange Carrier) A traditional local telephone company such as one of the Regional Bell companies (RBOCs). Contrast with CLEC. See ELEC and TELRIC. operations. These businesses are Commonwealth Communications, a telecommunications engineering Telecommunications Engineers or Telecom Engineers come in a variety of different types from basic circuit designers to strategic mass developments. A Telecom Engineer is responsible for designing and overseeing the installation of telecommunications equipment and facilities, such and consulting business; 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 facilities-based long-distance 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. 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 results expressed in any forward-looking statements made in this press release. These risks and uncertainties include, but are not limited to, uncertainties related to the Company's ability to penetrate new 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. -0-
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
3RD QUARTER 1999
CT CTSI OTHER TOTAL
Sales $ 43,111 $ 11,178 $ 13,383 $ 67,672
Costs & Expenses before
Corporate Management
Fees and Depreciation
& Amortization 16,859 12,356 11,507 40,722
Corporate
Management Fees 665 176 204 1,045
EBITDA 25,587 (1,354) 1,672 25,905
Depreciation
& Amortization 8,298 2,383 843 11,524
Operating Income
(Loss) 17,289 (3,737) 829 14,381
Interest and
Dividend Income 651 - 77 728
Interest Expense (1,605) - (2,223) (3,828)
Other Income
(Expense), net (80) 16 (105) (169)
Income (Loss) before
Income Taxes 16,255 (3,721) (1,422) 11,112
Provision (Benefit)
for Income Taxes 6,755 (1,233) (464) 5,058
Income (Loss)
before Equity in
Unconsolidated
Entities 9,500 (2,488) (958) 6,054
Equity in
Unconsolidated Entities - 179 - 179
Net Income (Loss) 9,500 (2,309) (958) 6,233
Preferred Stock Dividend
and Accretion
Requirements - - - -
Net Income (Loss) to
Common Shareholders $ 9,500 $ (2,309) $ (958) $ 6,233
3RD QUARTER 1998
CT CTSI OTHER TOTAL
Sales $ 39,166 $ 6,205 $ 12,377 $ 57,748
Costs & Expenses before
Corporate Management
Fees and Depreciation
& Amortization 15,443 8,004 11,787 35,234
Corporate
Management Fees 1,371 217 433 2,021
EBITDA 22,352 (2,016) 157 20,493
Depreciation
& Amortization 7,627 1,415 738 9,780
Operating Income
(Loss) 14,725 (3,431) (581) 10,713
Interest and
Dividend Income 618 - 22 640
Interest Expense (1,775) (1) (1,594) (3,370)
Other Income
(Expense), net (61) 45 6 (10)
Income (Loss) before
Income Taxes 13,507 (3,387) (2,147) 7,973
Provision (Benefit)
for Income Taxes 5,575 (1,096) (731) 3,748
Income (Loss)
before Equity in
Unconsolidated
Entities 7,932 (2,291) (1,416) 4,225
Equity in
Unconsolidated Entities - 243 - 243
Net Income (Loss) 7,932 (2,048) (1,416) 4,468
Preferred Stock Dividend
and Accretion
Requirements - - 1,062 1,062
Net Income (Loss) to
Common Shareholders $ 7,932 $ (2,048) $ (2,478) $ 3,406
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Dollars in Thousands)
NINE MONTHS ENDED SEPTEMBER 30, 1999
CT CTSI OTHER TOTAL
Sales $ 125,589 $ 28,519 $ 37,819 $ 191,927
Costs & Expenses before
Corporate Management
Fees and Depreciation
& Amortization 48,828 34,175 34,015 117,018
Corporate Management
Fees 3,106 689 939 4,734
EBITDA 73,655 (6,345) 2,865 70,175
Depreciation
& Amortization 24,416 6,127 2,438 32,981
Operating Income (Loss) 49,239 (12,472) 427 37,194
Interest and
Dividend Income 2,252 - 160 2,412
Interest Expense (4,755) - (5,545) (10,300)
Other Income
(Expense), net (195) 492 (85) 212
Income (Loss)
before Income Taxes 46,541 (11,980) (5,043) 29,518
Provision (Benefit)
for Income Taxes 19,352 (3,728) (1,696) 13,928
Income (Loss) before
Equity in
Unconsolidated
Entities 27,189 (8,252) (3,347) 15,590
Equity in
Unconsolidated
Entities - 1,290 - 1,290
Net Income (Loss) 27,189 (6,962) (3,347) 16,880
Preferred Stock
Dividend and
Accretion
Requirements - - - -
Net Income (Loss) to
Common Shareholders $ 27,189 $ (6,962) $ (3,347) $ 16,880
NINE MONTHS ENDED SEPTEMBER 30, 1998
CT CTSI OTHER TOTAL
Sales $ 115,500 $ 15,084 $ 36,078 $ 166,662
Costs & Expenses before
Corporate Management
Fees and Depreciation
& Amortization 45,230 21,434 33,798 100,462
Corporate Management
Fees 4,043 528 1,263 5,834
EBITDA 66,227 (6,878) 1,017 60,366
Depreciation
& Amortization 22,011 3,264 2,048 27,323
Operating Income (Loss) 44,216 (10,142) (1,031) 33,043
Interest and
Dividend Income 2,151 - 144 2,295
Interest Expense (5,409) (1) (4,162) (9,572)
Other Income
(Expense), net (259) 503 2 246
Income (Loss)
before Income Taxes 40,699 (9,640) (5,047) 26,012
Provision (Benefit)
for Income Taxes 16,788 (2,863) (1,944) 11,981
Income (Loss) before
Equity in
Unconsolidated
Entities 23,911 (6,777) (3,103) 14,031
Equity in
Unconsolidated
Entities - 1,433 - 1,433
Net Income (Loss) 23,911 (5,344) (3,103) 15,464
Preferred Stock
Dividend and
Accretion
Requirements - - 3,187 3,187
Net Income (Loss) to
Common Shareholders $ 23,911 $ (5,344) $ (6,290) $ 12,277
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
Basic Earnings per
Average Common Share:
Net Income (Loss) to
Common Shareholders $0.28 $0.15 $0.76 $0.56
Weighted Average Common
Shares Outstanding 22,107,865 22,017,524 22,093,286 22,052,284
Diluted Earnings per
Average Common Share:
Net Income (Loss) to
Common Shareholders $0.27 $0.15 $0.74 $0.54
Weighted Average
Common Shares and
Common Stock
Equivalents
Outstanding 23,119,846 22,624,170 22,995,048 22,659,701
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
Sept. 30, Dec. 31,
1999 1998
ASSETS
CURRENT ASSETS
Cash and Temporary Cash Investments $ 15,120 $ 16,968
Accounts Receivable from Related Parties 521 3,850
Other Current Assets 59,892 50,503
Deferred Income Taxes 9,324 7,816
Total Current Assets 84,857 79,137
PROPERTY PLANT AND EQUIPMENT
(NET OF ACCUMULATED
DEPRECIATION OF $271,503 IN
1999 AND $251,226 IN 1998) 385,144 338,947
INVESTMENTS 9,781 8,898
DEFERRED CHARGES AND OTHER ASSETS 7,937 5,960
TOTAL ASSETS $487,719 $432,942
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Maturities of Long Term Debt $ 9,010 $ 9,010
Advance Billings and Customer Deposits 4,428 4,516
Accrued Taxes 1,098 3,064
Accrued Interest 1,487 556
Accounts Payable to Related Parties 585 1,580
Other Current Liabilities 67,036 66,831
Total Current Liabilities 83,644 85,557
COMMONWEALTH TELEPHONE ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in Thousands)
Sept. 30, Dec. 31,
1999 1998
LONG TERM DEBT 200,581 116,838
DEFERRED INCOME TAXES 46,821 44,094
OTHER DEFERRED CREDITS 15,081 9,717
REDEEMABLE PREFERRED STOCK -- 52,000
COMMON SHAREHOLDERS' EQUITY:
Common Stock 26,061 26,059
Additional Paid-in Capital 223,219 223,584
Retained Earnings 28,070 11,840
Treasury Stock at Cost,
3,952,880 shares at
September 30, 1999 and
3,979,983 shares at
December 31, 1998 (135,758) (136,747)
Total Common Shareholders' Equity 141,592 124,736
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 487,719 $ 432,942
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