Commonwealth Telephone Enterprises Generates Record 15% Consolidated Revenue 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)--May 7, 1998-- Commonwealth Telephone Enterprises Generates Record 15% 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: Revenue Growth Core 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". Unit Achieves 8% Access Line Growth and 11% Growth in 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. Earnings Per Average Common Share Expanding Competitive Local Exchange Carrier Operation Continues Impressive Line Growth and Achieves Sequential One after the other in some consecutive order such as by name or number. Quarterly Revenue Growth of 41% 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 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 , CTCOB] today announced its 1998 first quarter financial results, reporting record consolidated revenue growth of 15% over the 1997 first quarter, along with an 11% increase in the diluted earnings per average common 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. ") from its core Incumbent Local Exchange Carrier ("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. ") unit versus results from the 1997 first quarter. For the period ending March 31, 1998, CTE's consolidated revenues reached $53.2 million versus $46.4 million in the 1997 first quarter, an increase of 15%. This strong revenue growth was fueled by an 8% growth in access lines and increased penetration The successful unauthorized breach of a security perimeter. See penetration test. of vertical services in CTE's core ILEC business, as well as strong access line additions and revenue growth in CTE's rapidly expanding Competitive Local Exchange Carrier ("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) ") business. The diluted EPS of the ILEC grew 11% to $0.42 on net income of $7.9 million, compared to $0.38 on net income of $7.0 million reported for the same period last year. On a consolidated basis, CTE reported diluted EPS of $0.21 on income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $5.1 million, versus diluted EPS of $0.30 on income from continuing operations of $6.5 million in the year ago quarter. As expected, the reduction in consolidated diluted EPS versus the 1997 first quarter reflects the impact of increased 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. associated with the rollout of the company's facilities-based CLEC. Underlying Volume Drivers Remained Strong The underlying volume drivers of CTE's overall business remained very strong in the 1998 first quarter. Specifically, in the quarter, CTE: - added just under 4,200 access lines in the core ILEC business resulting in an overall increase of 8% versus the number of access lines in service at the end of the 1997 first quarter; and - added nearly 5,200 access lines in the CLEC business bringing the total access lines served to just over 23,200, an increase of 1,048% versus the end of last year's first quarter when the business was launched, and 29% above the 1997 fourth quarter. "We are very pleased with the overall financial and operating performance of CTE," 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, CTE president and chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "Our access line growth in both our core ILEC and our expanding CLEC was very strong and drove our solid double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. revenue growth." "Our ILEC business continued to produce solid results, with impressive growth in access lines, revenues and 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 ("Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
"We are continuing to invest in our CLEC and remain pleased with its performance since its inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. in 1997. Now serving four select markets, the CLEC access lines and revenues have shown excellent growth. The CLEC EBITDA losses resulting from start-up Start-up The earliest stage of a new business venture. expenses and network deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. costs associated with launching this business declined as we increased penetration, gained scale and leveraged our network infrastructure in the markets we currently serve." ILEC Continues to Produce Solid Results Commonwealth Telephone Company ("CT"), CTE's ILEC business, continued to achieve results that rank it among the most efficient and profitably run ILEC operations in the industry. CT's key volume driver, access lines in service, grew at an industry-leading and company record rate of 8% over the past year, 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. by increased penetration of residential second lines. This represented an increase of more than 20,000 access lines, bringing CT's total access lines in service throughout 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 to nearly 263,000 as of March 31, 1998. Revenues reached $37.9 million, an increase of 8% versus the 1997 first quarter. The solid revenue growth was primarily driven by the growth in switched access lines and by the growth in residential value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: 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; (e.g., 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. , Voice Mail and Custom Calling). In total, revenues from residential value-added enhanced services increased by 23% versus the 1997 first quarter, while penetration levels, though solidly improved, remained below the industry averages, thereby offering opportunity for continued revenue growth from increased 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" of these products and services. CT's EBITDA before corporate management fees reached $22.8 million, a 9% increase versus the 1997 first quarter. CT's EBITDA margin before corporate management fees was 60%, slightly above last year's first quarter, and indicative indicative: see mood. of a level of operational and network efficiency, cost control and profitability that ranks it among the industry leaders. CT achieved 11% growth in its diluted EPS, earning $0.42, versus $0.38 in the year ago quarter. During the 1998 first quarter, CT received approval from the Pennsylvania PUC (Public Utility Commission) A regulatory body in every state in the U.S. that governs public utilities within its jurisdiction such as electricity, gas, oil, sewer, water, transportation and telephone service. Some states call it the Public Service Commission (PSC). to implement a revenue neutral rate rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting . This rebalancing, which was implemented effective April 1, 1998, resulted in a going-forward increase in local rates (only CT's second local rate increase in nearly 40 years) and a corresponding decrease in network access charges and prices charged for certain other services. This initial rate rebalancing, coupled with a previously implemented pure price cap arrangement covering the intrastate in·tra·state adj. Relating to or existing within the boundaries of a state. Adj. 1. intrastate - relating to or existing within the boundaries of a state; "intrastate as well as interstate commerce" operations of 100% of its lines, have provided CT with a very favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. 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. position. CLEC Operation Expanding Rapidly Commonwealth Telecom Services, Inc. ("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 "), CTE's CLEC operation, is one of the fastest growing CLECs in Pennsylvania. Rising from a virtual standing start at the beginning of 1997, CTSI reached just over 23,200 access lines in service at the end of the 1998 first quarter, as compared to just over 2,000 access lines at the end of the year ago quarter, and just over 18,000 access lines at year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 1997. The sequential quarterly growth in access lines was 29%. CTSI's revenues reached $3.9 million, versus $0.3 million in the year ago quarter, and versus $2.8 million in the 1997 fourth quarter. The sequential quarterly growth rate in revenues was 41%. CTSI's 1998 first quarter EBITDA loss before corporate management fees was $2.3 million versus a loss of $1.2 million in the 1997 first quarter and versus a loss of $2.7 million in the 1997 fourth quarter. The reduction in the EBITDA loss versus the sequential quarter is the result of increased revenues and a slowing in the growth rate of certain start-up expenses. CTSI is beginning to realize the benefits of leveraging its network infrastructure and its broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad sales and service organization. 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 is organized into two principal operating segments: Commonwealth Telephone Company ("CT"), the nation's 12th largest independent incumbent local exchange carrier ("ILEC") which has been operating in various rural Pennsylvania markets since 1897, and Commonwealth Telecom Services, Inc. ("CTSI"), a competitive local exchange carrier ("CLEC") which formally commenced operations in 1997. Additionally, CTE operates three support businesses that provide expertise to its two principal operating segments. These businesses consist of 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, 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) and Commonwealth Long Distance. A web site featuring current information regarding CTE can be reached at www.ct-enterprises.com. -0-
COMMONWEALTH TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000'S)
---------------------------------------
1ST QUARTER 1998
---------------------------------------
---------------------------------------
CT CTSI OTHER TOTAL
--------- --------- --------- ---------
Sales $37,864 $3,890 $11,481 $53,235
Costs & Expenses before
Corporate Management Fees
and Depreciation &
Amortization 15,048 6,205 10,625 31,878
Corporate Management Fees 1,325 136 402 1,863
Depreciation & Amortization 7,143 820 627 8,590
--------- --------- --------- ---------
Operating income (loss) 14,348 (3,271) (173) 10,904
Interest & Dividend income 928 - 101 1,029
Interest expense (1,839) - (1,241) (3,080)
Other (expense) income, net (69) 37 2 (30)
--------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes 13,368 (3,234) (1,311) 8,823
Provision (benefit) for income
taxes 5,503 (990) (638) 3,875
--------- --------- --------- ---------
Income (loss) from continuing
operations before equity
in unconsolidated entities 7,865 (2,244) (673) 4,948
Equity in income of
unconsolidated entities - 118 - 118
--------- --------- --------- ---------
Income (loss) from continuing
operations 7,865 (2,126) (673) 5,066
Discontinued operations - - 5 5
--------- --------- --------- ---------
Net income (loss) 7,865 (2,126) (668) 5,071
Preferred Stock Dividend and
Accretion Requirements - - 1,062 1,062
--------- --------- --------- ---------
Net Income (Loss) to Common
Shareholders $7,865 ($2,126) ($1,730) $4,009
========= ========= ========= =========
---------------------------------------
1ST QUARTER 1997
---------------------------------------
---------------------------------------
CT CTSI OTHER TOTAL
--------- --------- --------- ---------
Sales $35,068 $294 $11,051 $46,413
Costs & Expenses before
Corporate Management Fees
and Depreciation &
Amortization 14,081 1,490 10,703 26,274
Corporate Management Fees 1,401 52 209 1,662
Depreciation & Amortization 6,639 59 531 7,229
--------- --------- --------- ---------
Operating income (loss) 12,947 (1,307) (392) 11,248
Interest & Dividend income 972 15 - 987
Interest expense (2,067) - (12) (2,079)
Other (expense) income, net (134) (2) 823 687
--------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes 11,718 (1,294) 419 10,843
Provision (benefit) for income
taxes 4,712 (433) 126 4,405
--------- --------- --------- ---------
Income (loss) from continuing
operations before equity
in unconsolidated entities 7,006 (861) 293 6,438
Equity in income of
unconsolidated entities - - 108 108
--------- --------- --------- ---------
Income (loss) from continuing
operations 7,006 (861) 401 6,546
Discontinued operations - - (12,885) (12,885)
--------- --------- --------- ---------
Net income (loss) 7,006 (861) (12,484) (6,339)
Preferred Stock Dividend and
Accretion Requirements - - 1,062 1,062
--------- --------- --------- ---------
Net Income (Loss) to Common
Shareholders $7,006 ($861) ($13,546) ($7,401)
========= ========= ========= =========
COMMONWEALTH TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
QUARTER ENDED
March 31,
--------------------
1998 1997
SALES $53,235 $46,413
COSTS & EXPENSES, EXCLUDING MANAGEMENT FEES AND
DEPRECIATION AND AMORTIZATION 31,878 26,274
MANAGEMENT FEES 1,863 1,662
DEPRECIATION AND AMORTIZATION 8,590 7,229
--------------------
OPERATING INCOME 10,904 11,248
INTEREST & DIVIDEND INCOME 1,029 987
INTEREST EXPENSE (3,080) (2,079)
OTHER (EXPENSE) INCOME, NET (30) 687
--------------------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 8,823 10,843
PROVISION FOR INCOME TAXES 3,875 4,405
--------------------
INCOME FROM CONTINUING OPERATIONS BEFORE
EQUITY IN UNCONSOLIDATED ENTITIES 4,948 6,438
EQUITY IN INCOME OF UNCONSOLIDATED ENTITIES 118 108
--------------------
INCOME FROM CONTINUING
OPERATIONS 5,066 6,546
DISCONTINUED OPERATIONS 5 (12,885)
--------------------
NET INCOME (LOSS) 5,071 (6,339)
PREFERRED STOCK DIVIDEND AND
ACCRETION REQUIREMENTS 1,062 1,062
--------------------
NET INCOME (LOSS) TO
COMMON SHAREHOLDERS $4,009 ($7,401)
====================
COMMONWEALTH TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
Quarter Ended
March 31,
----------------------
1998 1997
BASIC EARNINGS (LOSS)
PER AVERAGE COMMON SHARE
INCOME FROM CONTINUING
OPERATIONS $0.22 $0.30
======================
DISCONTINUED OPERATIONS - $(.70)
======================
NET INCOME (LOSS) TO COMMON SHAREHOLDERS $0.22 $(.40)
======================
AVERAGE COMMON SHARES OUTSTANDING 18,337,584 18,316,971
DILUTED EARNINGS (LOSS)
PER AVERAGE COMMON SHARE
INCOME FROM CONTINUING OPERATIONS $0.21 $0.30
======================
DISCONTINUED OPERATIONS - $(.70)
======================
NET INCOME (LOSS) TO COMMON SHAREHOLDERS $0.21 $(.40)
======================
AVERAGE COMMON SHARES AND COMMON STOCK
EQUIVALENTS OUTSTANDING 18,932,914 18,416,756
COMMONWEALTH TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
March 31, December 31,
1998 1997
---------------------
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $5,738 $14,017
Accounts receivable from related parties 574 3,743
Other current assets 50,713 48,510
Deferred income taxes 5,691 5,170
---------------------
Total current assets 62,716 71,440
---------------------
PROPERTY, PLANT AND EQUIPMENT
(NET OF ACCUMULATED DEPRECIATION OF
$230,295 IN 1998 AND $223,051 IN 1997) 298,528 287,956
---------------------
INVESTMENTS 8,571 8,815
---------------------
DEFERRED CHARGES AND OTHER ASSETS 6,009 5,456
---------------------
TOTAL ASSETS $375,824 $373,667
=====================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $9,010 $9,010
Advance billings & customer deposits 3,358 3,540
Accrued taxes 5,356 1,498
Accrued interest 620 638
Accounts payable to related parties 883 7,944
Other current liabilities 55,622 52,828
---------------------
Total current liabilities $74,849 $75,458
---------------------
COMMONWEALTH TELEPHONE ENTERPRISES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
March 31, December 31,
1998 1997
---------------------
LONG-TERM DEBT $165,095 $167,347
---------------------
DEFERRED INCOME TAXES AND INVESTMENT
TAX CREDITS 41,888 42,086
---------------------
OTHER DEFERRED CREDITS 8,807 8,328
---------------------
REDEEMABLE PREFERRED STOCK 42,929 42,517
---------------------
COMMON SHAREHOLDERS' EQUITY:
Common stock 22,380 22,377
Additional paid-in capital 150,008 151,041
Retained earnings 7,109 3,750
Treasury stock at cost, 3,993,522 shares
at March 31, 1998 and 4,048,218
shares at December 31, 1997 (137,241) (139,237)
---------------------
Total common shareholders' equity 42,256 37,931
---------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $375,824 $373,667
CONTACT: David G. Weselcouch (Investors) 717-674-2805 Mike Burnside (Media) 717-674-2806 |
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