D&E Communications Reports 2003 Results.Business Editors/High-Tech Writers EPHRATA Ephrata (ĕf`rətə), borough (1990 pop. 12,133), Lancaster co., SE Pa., in a prosperous farm area; inc. 1891. There is varied manufacturing. A noted semimonastic religious community was founded (c. , Pa.--(BUSINESS WIRE)--March 15, 2004 D&E Communications, Inc. ("D&E") (Nasdaq: DECC DECC Duluth Entertainment Convention Center (Duluth, MN) DECC Defense Enterprise Computing Centers DECC Distance Education Coordinating Council DECC Danish-Estonian Chamber of Commerce (Tallinn, Estonia) ), a leading provider of integrated communications services in central and eastern 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 , today announced the following operating results for the year ended December December: see month. 31, 2003 (dollar amounts in thousands, except per share information):
Year Ended December 31,
2003 2002(1)(2) Change
---------- ---------- ----------
Operating Revenues $173,125 $137,334 $35,791
Operating Income 23,767 7,275 16,492
Income (Loss) from Continuing
Operations 3,877 (7,105) 10,982
Net Income 4,084 48,394 (44,310)
Basic and Diluted Earnings
Per Common Share $0.26 $3.95 ($3.69)
(1) D&E's results for the year ended December 31, 2002, reflect the
results of the operations of Conestoga Enterprises, Inc.
("Conestoga") since its acquisition on May 24, 2002.
(2) Net income of $48,394, and earnings per common share of $3.95, for
the year ended December 31, 2002 reflect D&E's sale of our
discontinued D&E Wireless segment operations on April 1, 2002,
which resulted in the recognition of an after-tax gain of $55.5
million in the year ended December 31, 2002.
More information regarding D&E's operating results for the year ended December 31, 2003 can be found in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , which was filed today with the 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. Securities and Exchange Commission. Overview of 2003 Compared to 2002 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: operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. 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 in 2003 increased $35,791, or 26.1%, to $173,125 in 2003 from $137,334 in 2002. The revenue increase was primarily due to the inclusion of $95,965 of Conestoga's revenues for the full twelve months in 2003, compared to only $60,933 for seven months in 2002, after the May 24, 2002 acquisition. Conestoga revenues include the decrease in revenues due to the sale of Conestoga Wireless in January January: see month. 2003, which resulted in decreased revenue of $7,180. 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. from continuing operations for 2003 increased $16,492, to $23,767 in 2003 from $7,275 in 2002. The increased operating income in 2003 was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to Conestoga's contribution to income of $18,629 for a full twelve months compared with $7,513 for the seven months in 2002. Further, 2003 results did not include merger related costs similar to the $973 experienced in 2002. The full effect of the reduction of expenses, primarily related to staff reductions at the date of the merger and over the following six months, were reflected in the 2003 results. Income from continuing operations increased $10,982 to income of $3,877 in 2003 from a loss of $7,105 in 2002 primarily due to the increase in operating income discussed above, net of taxes. Also, in 2003, there was an increase of $3,789 in realized gains/losses on the disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of investments available for sale, a $892 reduction in expenses from reduced equity losses in affiliates, and other miscellaneous income increases. This reduction was offset by the $6,179 increase in interest expense related to larger borrowings for the full twelve months. Net income in 2003 of $4,084 was a decrease of $44,310. The decrease was due to the sale of our discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: D&E Wireless segment operations on April 1, 2002, which resulted in the recognition of an 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. gain of $55,506. Results of Operations D&E's business segments are as follows: incumbent Refers to an entity that is currently in power. For example, in politics, the "incumbent senator" is the person who holds that office today. An "incumbent company" is an organization that has been providing goods and services for some time. See ILEC. rural local exchange carrier (RLEC RLEC Rural Local Exchange Carrier RLEC Report Log Exception Condition ), 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) ), 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, systems integration and Conestoga Wireless. The following table is a summary of our operating results by segment for the years ended December 31, 2003 and 2002:
Internet Systems
RLEC CLEC Services Integration
---------- ---------- --------- -----------
2003(1)
------
Revenues -- External $105,087 $ 34,830 $6,862 $23,378
Revenues -- Intercompany 8,207 923 479 31
---------- ---------- --------- -----------
Total Revenues 113,294 35,753 7,341 23,409
---------- ---------- --------- -----------
Depreciation and
Amortization 31,591 4,036 794 1,734
Other Operating Expenses 48,040 35,554 6,656 25,997
---------- ---------- --------- -----------
Total Operating Expenses 79,631 39,590 7,450 27,731
---------- ---------- --------- -----------
Operating Income (Loss) $33,663 $(3,837) $(109) $(4,322)
---------- ---------- --------- -----------
2002(1)
------
Revenues -- External $ 77,091 $ 21,626 $4,748 $23,582
Revenues -- Intercompany 6,915 478 282 37
---------- ---------- --------- -----------
Total Revenues 84,006 22,104 5,030 23,619
---------- ---------- --------- -----------
Depreciation and
Amortization 23,497 2,775 476 1,592
Other Operating Expenses 42,851 23,532 5,050 25,169
---------- ---------- --------- -----------
Total Operating Expenses 66,348 26,307 5,526 26,761
---------- ---------- --------- -----------
Operating Income (Loss) $17,658 $(4,203) $(496) $(3,142)
---------- ---------- --------- -----------
Corporate,
Conestoga Other and Total
Wireless Eliminations Company
---------- ------------ -----------
2003(1)
------
Revenues -- External $456 $2,512 $ 173,125
Revenues -- Intercompany 4 (9,644) --
---------- ------------ -----------
Total Revenues 460 (7,132) 173,125
---------- ------------ -----------
Depreciation and
Amortization -- 471 38,626
Other Operating Expenses 1,140 (6,655) 110,732
---------- ------------ -----------
Total Operating Expenses 1,140 (6,184) 149,358
---------- ------------ -----------
Operating Income (Loss) $(680) $(948) $23,767
---------- ------------ -----------
2002(1)
------
Revenues -- External $7,568 $2,719 $ 137,334
Revenues -- Intercompany 72 (7,784) --
---------- ------------ -----------
Total Revenues 7,640 (5,065) 137,334
---------- ------------ -----------
Depreciation and
Amortization -- 350 28,690
Other Operating Expenses 9,405 (4,638) 101,369
---------- ------------ -----------
Total Operating Expenses 9,405 (4,288) 130,059
---------- ------------ -----------
Operating Income (Loss) $(1,765) $(777) $7,275
---------- ------------ -----------
(1) We acquired Conestoga Enterprises, Inc. on May 24, 2002.
RLEC segment revenues increased $29,288, or 34.9%, to $113,294 in 2003. In 2003, the Conestoga acquisition added $64,512 of revenue, versus $36,794 for the seven months included in 2002. D&E revenues increased $1,570, to $48,782 in 2003, from $47,212 in 2002. D&E local telephone service revenues increased $792, or 5.4%, to $15,509 in 2003, from $14,717 in 2002 as a result of increases in 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; sold and rate increases in July July: see month. 2003. D&E network access revenues increased $994, or 4.2%, to $24,427 in 2003, from $23,433 in 2002. This increase resulted partially from a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. change in the 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) ) average schedule settlement formula for 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. access that took effect in July 2003. Other RLEC revenue increased $5,220 in 2003 from 2002 as a result of the additional Conestoga revenue that was primarily from directory revenue. D&E other revenue decreased $213 in 2003 compared to 2002 primarily from a decrease in long distance revenues. RLEC segment 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. increased $13,283, or 20.0%, to $79,631, in 2003. These increases were primarily attributable to including twelve months in 2003 of Conestoga operating expenses and seven months since the acquisition in 2002. The synergies resulting from the Conestoga acquisition, including staff reductions and other cost savings have contributed to the improved profitability in 2003. These savings are expected to continue at the same level, but are not likely to result in similar incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. increases in operating income in future years. CLEC segment revenues increased $13,649, or 61.7%, to $35,753 in 2003. In 2003, the Conestoga acquisition added $24,294 of revenues versus $13,682 in 2002. D&E's revenues increased $3,037, to $11,459, in 2003, from $8,422 in 2002. The increases in 2003 were attributable to the Conestoga acquisition and the expanding of the CLEC business customer base in our edge-out markets. CLEC segment operating expenses increased $13,283, or 50.5%, to $39,590 in 2003. These increases were partially attributable to including twelve months in 2003 of Conestoga operating expenses and due to increased costs of services related to an increase in our customer base. 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. decreased $366, or 8.7%, to $3,837 in 2003 primarily due to changes in operating efficiencies as the customer base grew. Operating results are expected to continue to improve as more customers are added to cover the fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). of operations and as we expand the number of customers completely on our own network. Internet Services segment revenues increased $2,311, or 45.9%, to $7,341 in 2003. The Conestoga acquisition added $1,567 to revenue in 2003, versus $1,116 in 2002. The primary source of the revenue increase was from the addition of new Internet See Web 2.0 and Internet2. subscribers. Operating expenses were $7,450 in 2003, and $5,526 in 2002, resulting in an operating loss of $109 in 2003, compared to a loss of $496 in 2002. The decrease in the operating losses was due to improved operating efficiencies as the customer base grows. Systems Integration segment revenues decreased $210, or 0.9%, to $23,409 in 2003. In 2003, the Conestoga acquisition added $8,458 of revenue, versus $3,961 of revenue from the seven months since the acquisition in 2002. Increases in revenue due to the Conestoga acquisition were offset by decreases in D&E revenues of $4,707 in 2003. The 2003 decreases were primarily $304 of communication services and $4,379 of product sales. We believe these decreases partially relate to the effects of a slow economy and reductions in customer spending for communications related infrastructure and consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" . Revenues are expected to grow as business demand for integrated voice and high speed data services increases. Operating expenses increased $970, or 3.6%, to $27,731 in 2003. The 2003 expenses increased as a result of a full year of expenses from the Conestoga operations acquired in May 2002, selling expense increases and increased expenses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc integration of software systems. Operating losses increased $1,180 to $4,322 in 2003. We expect Systems Integration results to improve as a result of improved economic conditions and expanding data sales efforts. Conestoga Wireless segment revenues were $460, earned in the first quarter before the sale of the segment was completed on January 14, 2003. Revenues were $7,640 from the May 24, 2002 date of acquisition until December 31, 2002. The 2003 operating loss of $680 included the first quarter activity plus an additional cost accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. in the third quarter related to a change in the estimated amount necessary to satisfy the commitment to Mountain Union Telecom under the Build-to-Suit agreement that D&E assumed with the Conestoga acquisition.
Selected Operating Statistics
December 31, 2003 December 31, 2002 Change
----------------- ----------------- --------
RLEC Lines 142,799 145,310 (1.7)%
CLEC Lines 35,140 29,072 +20.9%
DSL Subscribers 7,303 5,615 +30.1%
Dial-up Subscribers 12,859 12,652 +1.6%
Web Hosting Customers 814 651 +25.0%
Other Matters On March 5, 2004, we completed a syndicated senior secured debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay in the amount of $260 million jointly arranged by CoBank CoBank, ACB, a part of the United States Farm Credit System, is an agricultural credit bank serving cooperatives in the agricultural sector. It lends money to farm credit associations, agricultural businesses, and rural utilities, who collectively own 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 and SunTrust Bank. The credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities are in the form of a $25 million revolving line of credit Revolving line of credit A bank line of credit on which the customer pays a commitment fee and can take and repay funds at will. Normally a revolving LOC involves a firm commitment from the bank for a period of several years. , term loans in the amounts of $50 million and $150 million, respectively, and the assumption of $35 million of term indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. of a D&E subsidiary. The proceeds of the credit facilities were used to restructure indebtedness under our prior credit facilities and for general corporate purposes. The facilities received ratings of BB- and Ba3 from Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. and Moody's Investors Services Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. , respectively. The effect of the refinancing Refinancing An extension and/or increase in amount of existing debt. was to allow us to lower the interest rates on our indebtedness, provide greater flexibility in our financial covenants and extend the amortization of principal. There are approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $2 million in annual interest savings under the new facilities and approximately $2 million of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs associated with closing the facilities. We will incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. a one-time write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of approximately $6.3 million of the $7.9 million unamortized debt issuance costs associated with the company's previous financings. 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. . These forward-looking statements are found in various places throughout this press release and include, statements regarding financial and other information. These statements are based upon the current beliefs and expectations of D&E's management concerning the development of our business, are not guarantees of future performance and involve a number of risks, uncertainties, and other important factors that could cause actual developments and results to differ materially from our expectations. Those factors include, but are not limited to, the risk that Conestoga's business will not be successfully integrated into D&E; the significant indebtedness of the combined company; increased competition; and other key factors that we have indicated could adversely affect our business and financial performance contained in our past and future filings and reports, including those filed with the United States Securities and Exchange Commission. D&E undertakes no obligation to revise or update its forward-looking statements whether as a result of new information, future events, or otherwise. D&E Communications, Inc. is a leading provider of integrated communications services to residential and business customers in markets throughout central and eastern Pennsylvania. D&E offers its customers a comprehensive package of communications services including local and long distance telephone service, high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data services and Internet access See how to access the Internet. service. D&E also provides business customers with systems integration services including voice and data network solutions.
D&E COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
-----------------------------------
2003 2002 2001
----------- ----------- -----------
(In thousands, except per-share
amounts)
OPERATING REVENUES
Communication service revenues $ 158,486 $ 121,243 $ 61,674
Communication products sold 12,255 14,266 12,858
Other 2,384 1,825 1,523
----------- ----------- -----------
Total operating revenues 173,125 137,334 76,055
----------- ----------- -----------
OPERATING EXPENSES
Communication service expenses
(exclusive of depreciation and
amortization below) 60,846 50,140 28,072
Cost of communication products
sold 9,317 12,497 10,215
Depreciation and amortization 38,626 28,690 15,289
Marketing and customer services 16,073 15,093 8,885
Merger-related costs -- 973 --
General and administrative
services 24,496 22,666 14,124
----------- ----------- -----------
Total operating expenses 149,358 130,059 76,585
----------- ----------- -----------
Operating income (loss) 23,767 7,275 (530)
OTHER INCOME (EXPENSE)
Equity in net income (losses) of
affiliates (2,537) (3,429) 91
Interest expense (18,074) (11,895) (2,242)
Gain (loss) on investments 790 (2,999) 3,036
Other, net 1,964 422 1,546
Loss on early extinguishment of
debt -- -- (3,623)
----------- ----------- -----------
Total other income (expense) (17,857) (17,901) (1,192)
----------- ----------- -----------
Income (loss) from
continuing operations
before income taxes and
dividends on
utility preferred stock 5,910 (10,626) (1,722)
INCOME TAXES AND DIVIDENDS ON
UTILITY PREFERRED STOCK
Income taxes (benefit) 1,968 (3,586) (3,597)
Dividends on utility preferred
stock 65 65 65
----------- ----------- -----------
Total income taxes and
dividends on utility
preferred stock 2,033 (3,521) (3,532)
----------- ----------- -----------
Income (loss) from
continuing operations 3,877 (7,105) 1,810
Discontinued operations:
Loss from operations of
discontinued D&E Wireless
segment prior to December 31,
2001, net of income tax
benefit of $2,585 -- -- (5,955)
Gain on disposal of discontinued
D&E Wireless segment, net of
operating losses during
phase-out period and net of
income taxes of $29,337 -- 55,506 --
Loss from operations of Paging
business, net of income tax
benefit of $27, $3 and $9 (53) (7) (14)
----------- ----------- -----------
Income (loss) before
extraordinary item and
cumulative effect of change
in accounting Principle 3,906 48,394 (4,159)
Extraordinary item, income tax
benefit of $107 -- -- 107
Cumulative effect of change in
accounting principle, net of
income taxes of $177 260 -- --
----------- ----------- -----------
NET INCOME (LOSS) $4,084 $48,394 $(4,052)
=========== =========== ===========
Weighted average common shares
outstanding (basic) 15,484 12,254 7,376
Weighted average common shares
outstanding (diluted) 15,541 12,254 7,376
BASIC AND DILUTED EARNINGS (LOSS)
PER COMMON SHARE
Income (loss) from continuing
operations $ 0.25 $ (0.58) $ 0.25
Income (loss) from discontinued
operations -- 4.53 (0.81)
Extraordinary item -- -- 0.01
Cumulative effect of accounting
change 0.01 -- --
----------- ----------- -----------
Net income (loss) per common
share $0.26 $3.95 $(0.55)
=========== =========== ===========
Dividends per common share $0.50 $0.50 $0.50
=========== =========== ===========
D&E COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
---------------------
2003 2002
---------- ----------
(In thousands,
except share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 12,446 $ 15,514
Accounts receivable, net of reserves of
$1,410 and $1,416 20,956 19,368
Inventories, lower of cost or market, at
average cost 3,552 3,475
Prepaid expenses 8,914 7,454
Other 1,141 1,074
---------- ----------
TOTAL CURRENT ASSETS 47,009 46,885
---------- ----------
INVESTMENTS
Investments in and advances to affiliated
companies 3,611 5,142
Investments available-for-sale -- 1,313
---------- ----------
3,611 6,455
---------- ----------
PROPERTY, PLANT AND EQUIPMENT
In service 320,720 307,000
Under construction 5,964 3,456
---------- ----------
326,684 310,456
Less accumulated depreciation 137,533 109,351
---------- ----------
189,151 201,105
---------- ----------
OTHER ASSETS
Assets held for sale -- 6,665
Goodwill 149,127 147,488
Intangible assets, net of accumulated
amortization 173,594 178,964
Other 11,756 14,256
---------- ----------
334,477 347,373
---------- ----------
TOTAL ASSETS $574,248 $601,818
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Long-term debt maturing within one year $11,001 $132
Accounts payable and accrued liabilities 18,507 20,112
Accrued taxes 2,120 19,520
Accrued interest and dividends 1,949 1,840
Advance billings, customer deposits and other 10,323 8,535
---------- ----------
TOTAL CURRENT LIABILITIES 43,900 50,139
---------- ----------
LONG-TERM DEBT 222,765 244,966
---------- ----------
OTHER LIABILITIES
Deferred income taxes 88,295 85,516
Other 17,248 19,148
---------- ----------
105,543 104,664
---------- ----------
PREFERRED STOCK OF UTILITY SUBSIDIARY,
Series A 4 1/2%, par value $100, cumulative,
callable at par at the option of the Company,
authorized 20,000 shares, outstanding
14,456 shares 1,446 1,446
---------- ----------
COMMITMENTS
SHAREHOLDERS' EQUITY
Common stock, par value $0.16, authorized
shares 30,000,000
Outstanding shares: 15,546,788 at
December 31, 2003 and 15,413,640 at
December 31, 2002 2,533 2,512
Additional paid-in capital 159,515 158,101
Accumulated other comprehensive income (loss) (4,865) (7,071)
Retained earnings 48,693 52,343
Treasury stock at cost, 306,919 shares at
December 31, 2003 and 306,910 shares at
December 31, 2002 (5,282) (5,282)
---------- ----------
200,594 200,603
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $574,248 $601,818
========== ==========
D&E COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
2003 2002 2001
---------- ---------- ----------
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 4,084 $ 48,394 $ (4,052)
Add: Loss (income) from discontinued
operations 53 (55,499) 5,969
Extraordinary item -- -- (107)
Cumulative effect of accounting
change (260) -- --
---------- ---------- ----------
Income (loss) from continuing
operations 3,877 (7,105) 1,810
Adjustments to reconcile net income
(loss) from continuing operations
to net cash provided by operating
activities, net of effects of
acquisitions of businesses:
Depreciation and amortization 38,626 28,690 15,289
Bad debt expense 745 1,406 403
Deferred income taxes 1,105 (905) (3,112)
Equity in net (income) losses of
affiliates 2,537 3,429 (91)
(Gain) loss on investments (790) 2,999 (3,036)
Loss on retirement of property,
plant and equipment 209 72 166
Loss on early extinguishment of
debt -- -- 3,623
Changes in operating assets and
liabilities net of effects of
acquisitions of businesses:
Accounts receivable (2,333) (1,126) 1,745
Inventories (77) 224 299
Prepaid expenses (1,460) 906 (1,050)
Accounts payable and accrued
liabilities (1,300) (3,788) (775)
Accrued taxes and accrued
interest 3,268 (5,452) (132)
Advance billings, customer
deposits and other 1,788 4,345 (4)
Other, net (1,287) 1,466 (1,451)
---------- ---------- ----------
Net Cash Provided by Operating
Activities from Continuing
Operations 44,908 25,161 13,684
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net of
proceeds from sales and removal
costs (20,153) (19,240) (34,068)
Proceeds from sale of businesses 10,005 -- --
Proceeds from sale of temporary
investments -- -- 34,671
Purchase of temporary investments -- -- (26,002)
Acquisition of businesses, net of
cash acquired of $0, $989 and $0 -- (156,819) (937)
Proceeds from sale of investments 2,470 -- --
Purchase of FCC licenses (828) -- --
Investments in and advances to
affiliates (1,232) (2,187) (10,769)
Investment returns and repayments
from affiliates 226 667 849
---------- ---------- ----------
Net Cash Used in Investing
Activities from Continuing
Operations (9,512) (177,579) (36,256)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends on common stock (7,408) (6,414) (3,433)
Proceeds from long term debt
financing 12,000 160,000 58,000
Payment of debt issuance costs -- (8,152) (2,546)
Payments on long-term debt (23,332) (45,022) (25,378)
Payments on notes payable for
acquired businesses (379) (345) (859)
Net proceeds from (payments on)
revolving lines of credit -- (11,757) 1,757
Proceeds from issuance of common
stock 1,037 865 343
Purchase of treasury stock -- (178) (1,082)
Proceeds from sale of treasury stock -- -- 102
---------- ---------- ----------
Net Cash Provided By (Used in)
Financing Activities from
Continuing Operations (18,082) 88,997 26,904
---------- ---------- ----------
CASH PROVIDED BY (USED IN) CONTINUING
OPERATIONS 17,314 (63,421) 4,332
CASH PROVIDED BY (USED IN)
DISCONTINUED OPERATIONS
Cash provided by (used in) operating
activities of discontinued
operations (20,553) 70 1,036
Cash provided by (used in) investing
activities of discontinued
operations 171 78,250 (8,280)
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Net Cash Provided By (Used in)
Discontinued Operations (20,382) 78,320 (7,244)
---------- ---------- ----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (3,068) 14,899 (2,912)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 15,514 615 3,527
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $12,446 $15,514 $615
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