Citizens Communications Reports 2006 Third-Quarter Results.STAMFORD, Conn. -- Citizens Communications Citizens Communications is the parent company of Frontier Telephone, providing telephone and internet access in 24 states. The company headquarters are located at 3 High Ridge Park in Stamford, Connecticut. (NYSE NYSE See: New York Stock Exchange :CZN) today reported third quarter 2006 revenues of $507.2 million, 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. of $160.7 million, and net income of $128.5 million. The sale of Electric Lightwave, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (ELI Eli (ē`lī), in the Bible, high priest and judge of Israel, teacher of the boy Samuel. 1. (language) ELI - An early system on the IBM 705 and IBM 650. [Listed in CACM 2(5):16 (May 1959)]. 2. ) for $247.0 million (including $243.0 million in cash) closed on July 31, 2006. Excluding the after-tax gain on the sale, net income would have been $56.4 million. Third quarter 2006 revenue was $507.2 million, as compared to $501.2 million in the third quarter of 2005. We experienced growth in the third quarter of 2006 in data and internet services revenue, higher access service revenues (which include subsidy payments we receive from federal and state agencies) and, to a lesser extent, enhanced services/features revenues. Third quarter 2006 data and internet services revenue increased 29.7 percent compared to the third quarter of 2005. Revenues were negatively impacted in the third quarter of 2006 as compared to 2005 by a decline in local, long distance and equipment sales. In the third quarter of 2005, a missed filing deadline with the Universal Service Fund (USF USF University of South Florida USF Universal Service Fund (often part of phone bill in US) USF University of San Francisco USF University of Sioux Falls USF University of St. ) resulted in the postponement of the recognition of approximately $10.0 million of subsidy revenue until the fourth quarter of 2005. Other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreased by approximately $8.0 million or 4.2 percent, as compared to the third quarter of 2005 primarily driven by reductions in salaries and benefits, which included a $3.0 million accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for severance in 2005 and improved expense control in benefit costs. Depreciation and amortization expense for the third quarter of 2006 decreased $11.9 million or 9.2 percent as compared to the third quarter of 2005. The decrease is due to a declining asset base and changes in the projected useful lives of certain assets as determined by an independent study prepared last year. The company added approximately 12,300 high-speed internet See broadband. customers during the quarter and had more than 362,000 high-speed data subscribers at September 30, 2006. The number of the company's high-speed internet subscribers has increased by more than 72,000 or 25.0 percent since September 30, 2005. Operating income for the third quarter of 2006 was $160.7 million and operating income margin was 31.7 percent, compared to $136.9 million and 27.3 percent in the third quarter of 2005. Capital expenditures were $65.1 million for the third quarter of 2006 and $163.4 million for the first nine months of 2006. Free cash flow for the third quarter increased 3.0 percent to $127.6 million compared to the third quarter of 2005. The company's dividend represents a payout of 56.6 percent of free cash flow for the first nine months of 2006. The company uses certain non-GAAP financial measures in evaluating its performance. These include free cash flow. A reconciliation of the differences between free cash flow and the most comparable financial measure calculated and presented in accordance with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). is included in the tables that follow. The non-GAAP financial measures are by definition not measures of financial performance under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and are not alternatives to operating income or net income reflected in the statement of operations See Income statement. or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by the company may not be comparable to similarly titled measures of other companies. The company believes that presentation of non-GAAP financial measures provides useful information to investors regarding the company's financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) together provide a more comprehensive view of the company's core operations and ability to generate cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions, and (iii) presents measurements that investors and rating agencies have indicated to management are useful to them in assessing the company and its results of operations. Management uses these non-GAAP financial measures to plan and measure the performance of its core operations and its divisions' measure performance and report to management based upon these measures. In addition, the company believes that free cash flow, as the company defines it, can assist in comparing performance from period to period, without taking into account factors affecting cash flow reflected in the statement of cash flows, including changes in working capital and the timing of purchases and payments. Management uses these non-GAAP financial measures to (i) assist in analyzing the company's underlying financial performance from period to period, (ii) evaluate the financial performance of its business units, (iii) analyze and evaluate strategic and operational decisions, (iv) establish criteria for compensation decisions, and (v) assist management in understanding the company's ability to generate cash flow and, as a result, to plan for future capital and operational decisions. Management uses these non-GAAP financial measures in conjunction with related GAAP financial measures. The company believes that the non-GAAP financial measures are meaningful and useful for the reasons outlined above. While the company utilizes these non-GAAP financial measures in managing and analyzing its business and financial condition and believes they are useful to management and to investors for the reasons described above, these non-GAAP financial measures have certain shortcomings A shortcoming is a character flaw. Shortcomings may also be:
About Citizens Communications More information about Citizens can be found at www.czn.net. This press release contains 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. that are made pursuant to the 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. provisions of 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. These statements are made on the basis of management's views and assumptions regarding future events and business performance. Words such as "believe," "anticipate," "expect," and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties are based on a number of factors, including but not limited to: our ability to complete the acquisition of Commonwealth Telephone Enterprises, Inc., to successfully integrate their operations and to realize the synergies from the acquisition; our ability to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. the bridge loan that will be used to finance the cash portion of the merger consideration with long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ; our ability to effectively manage our operations, costs and capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. ; our ability to successfully introduce new product offerings, including bundled service packages; our ability to sell enhanced services Enhanced service is service offered over commercial carrier transmission facilities used in interstate communications, that employs computer processing applications that act on the format, content, code, protocol, or similar aspects of the subscriber's transmitted information; ; our ability to comply with federal and state regulations; changes in the number of our revenue generating units; general and local economic and employment conditions; the effects of ongoing changes in the regulation of the communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. ; overall changes in the telecommunications market; and greater than anticipated competition from wireless or wireline carriers. These and other uncertainties related to our business are described in greater detail in our filings with the Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q and the foregoing information should be read in conjunction with these filings. We do not intend to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances. Additional Information and Where to Find It This material is not a substitute for the prospectus/proxy statement Citizens Communications Company and Commonwealth Telephone Enterprises, Inc. will file with the Securities and Exchange Commission. Investors are urged to read the prospectus/proxy statement, which will contain important information, including detailed risk factors, when it becomes available. The prospectus/proxy statement and other documents that will be filed by Citizens Communications Company and Commonwealth Telephone Enterprises, Inc. with the Securities and Exchange Commission will be available free of charge at the SEC's website, www.sec.gov, or by directing a request when such a filing is made to Citizens Communications Company, 3 High Ridge Park, Stamford, CT 06905, Attention: Investor Relations Investor relations The process by which the corporation communicates with its investors. ; or to Commonwealth Telephone Enterprises, Inc., 100 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. Drive, Dallas, Pennsylvania Dallas is a borough in Luzerne County, Pennsylvania, USA. The population was 2,557 at the 2000 census. It was named for George Dallas, the vice president of James Polk. The local government describes the borough as the "heart" of The Back Mountain, a census-designated place 18612, Attention: Investor Relations. The final prospectus/proxy statement will be mailed to shareholders of Commonwealth Telephone Enterprises, Inc. This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Citizens Communications Company and Commonwealth Telephone Enterprises, Inc., and certain of their respective directors, executive officers and other members of management and employees are participants in the solicitation of proxies in connection with the proposed transactions. Information about the directors and executive officers of Citizens Communications Company is set forth in the proxy statement Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. for Citizens Communications Company's 2006 annual meeting of shareholders. Information about the directors and executive officers of Commonwealth Telephone Enterprises, Inc. is set forth in the proxy statement for Commonwealth Telephone Enterprises, Inc.'s 2006 annual meeting of shareholders. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the prospectus/proxy statement for such proposed transactions when it becomes available. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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