CONCORD, N.C., Aug. 2 /PRNewswire-FirstCall/ -- Second Quarter 2007
Highlights * CT Communications, Inc. announces plan to merge with
Windstream Corporation and schedules a special meeting on August
23, 2007 for its shareholders to vote on the proposal to approve
the merger agreement * Operating revenue increased 5% to $46.3
million vs. year ago quarter * 25% increase in broadband customers
from second quarter last year Second Quarter 2007 Results CT
Communications, Inc. (NASDAQ:CTCI) announces operating revenue of
$46.3 million for the second quarter of 2007, an increase of 5.2%
compared to the second quarter of 2006. The increase in operating
revenue was driven by a $0.7 million increase in customer recurring
revenue due to strong customer growth in several of the Company's
businesses. Broadband customers increased 25%, Wireless subscribers
increased 5% and Greenfield access lines increased 6% compared to
the end of the second quarter of 2006. In addition, universal
service revenue increased $1.2 million compared to the second
quarter last year due to a true-up of the 2006 cost study and
higher 2007 recoveries based on current cost study projections.
Operating income was $4.7 million in the second quarter of 2007
compared to $4.8 million in the second quarter of 2006. Operating
expense in the second quarter of 2007 increased $2.4 million, or
6.0%, to $41.6 million compared to the same period last year. The
increase in operating expense was primarily attributable to $1.7
million in expenses related to the proposed Windstream merger and a
loss of $0.3 million related to the replacement of certain wireless
cell site equipment. Included in the second quarter 2007 merger
expenses was $0.8 million in stock compensation expense related to
market value adjustments for stock units held in the Company's
deferred compensation plan. Other income was $1.5 million for the
second quarter of 2007 compared to $1.4 million for the same period
in 2006. The second quarter of 2007 and 2006 include an approximate
$1.0 million and $0.8 million gain on the sale of an investment
security, respectively. Net income for the second quarter of 2007
and 2006 was $4.0 million and $3.9 million, respectively. Diluted
earnings per share were $0.20 in the second quarter of 2007 and
2006. Expenses related to the proposed Windstream merger
transaction were $0.05 per diluted share in the second quarter of
2007. Consolidated operating revenue for the six months ended June
30, 2007 increased to $91.7 million compared to $87.1 million for
the prior year. The increase in revenue was largely attributable to
a $2.0 million increase in customer recurring revenue, a $1.5
million increase in universal service revenue and a $0.6 million
increase in other revenue. The increase in customer recurring
revenue was driven by customer growth in the Company's broadband
and Wireless operations, as well as an increase in the average
revenue per Wireless subscriber. Operating expense for the six
months ended June 30, 2007 increased $3.6 million, or 4.7%, to
$80.9 million compared to the six months ended June 30, 2006. The
increase in operating expense was attributable to $1.8 million in
Windstream merger related expenses, a $1.1 million increase in cost
of service, a $0.4 million increase in benefits expense and a $0.3
million increase in selling expense. Operating income for the six
months ended June 30, 2007 increased 9.7% to $10.9 million compared
to $9.9 million in the same period last year. Other income in the
six months ended June 30, 2006 included the Company's income from
the operations of Palmetto MobileNet ("PMN") and an $89.2 million
gain from the sale of PMN's interests in ten wireless partnerships.
Excluding the effect of these items, other income increased
approximately $1.3 million from the same period last year mainly
due to an increase in investment income and a decrease in interest
expense. Net income for the six months ended June 30, 2007 was $8.6
million, or $0.42 per diluted share, compared to $61.3 million, or
$3.17 per diluted share. The six months ended June 30, 2007 and
2006 includes merger transaction related expenses of $1.8 million
or approximately $0.06 per diluted share and $54.2 million, or
$2.80 per diluted share, related to the PMN sale, respectively.
Results by Business Unit Effective for the quarter ending March 31,
2007 the following presentation was modified to reflect the
Company's change in its business unit reporting. The Company made
these changes to report operating results based on the complete
product and service relationship with customers in each business
unit. As a result, the former Internet and Data Services business
unit results have been included in the ILEC, CLEC and Greenfield
business unit results for all periods presented. * ILEC - ("Concord
Telephone") Concord Telephone's operating revenue increased $1.1
million to $27.2 million in the second quarter of 2007 compared to
the same quarter in 2006. The increase in operating revenue was
mainly due to a $1.2 million increase in universal service revenue,
which was partially offset by a $0.2 million decrease in access and
interconnection revenue and a $0.1 million decrease in customer
recurring revenue. Broadband revenue increased $0.4 million driven
by a 24% increase in customers, but was offset by a decrease in
wireline customer revenue associated with a decline in access
lines. Operating expense increased $1.1 million to $21.6 million
primarily due to transaction related costs in the second quarter of
2007 compared to the same quarter in 2006. Operating income was
flat at $5.6 million in the second quarter of 2007 compared to the
same period last year. Operating margin for the second quarter of
2007 was 20.5% compared to 21.4% for the second quarter of 2006.
ILEC average monthly customer churn during the second quarter of
2007 was 1.6%, which was up from the 1.1% rate in the same quarter
last year. Broadband accounts increased to 24,775, an increase of
24% from the second quarter of 2006. Concord Telephone ended the
second quarter of 2007 with 102,641 access lines in service. *
Wireless Wireless operating revenue increased 9.2% to $10.6 million
in the second quarter of 2007 compared to the same period in 2006.
Customer recurring revenue increased $0.7 million driven by a 5%
growth in subscribers and an increase in average revenue per
subscriber. Operating expense increased $0.4 million, or 4.6%, from
the same period last year. The increase in operating expense was
driven primarily by the increase in wireless subscribers. Included
in the second quarter of 2007 operating expense was a $0.5 million
credit from Cingular associated with the annual true-up of
switching expenses, which was partially offset by a $0.3 million
loss related to the replacement of certain wireless cell site
equipment. Operating income in the second quarter of 2007 was $1.3
million compared to $0.8 million in the same period last year.
Wireless ended the second quarter of 2007 with 50,297 subscribers,
an increase of 5% compared to the end of the second quarter of
2006. * CLEC CLEC operating revenue in the second quarter of 2007
was $5.4 million, which was relatively flat compared to the same
quarter last year. Operating expense increased 1.2% to $5.8 million
in the second quarter of 2007 compared to the same period last
year. The increase in operating expense was due to an increase in
cost of service primarily attributable to an increase in the number
of CLEC access lines. Operating loss for the second quarter of 2007
was flat at $0.4 million compared to the second quarter of 2006.
CLEC ended the second quarter of 2007 with 36,811 access lines, an
increase of 7% compared to 34,372 access lines at the end of the
second quarter last year. In addition, CLEC ended the second
quarter with 817 broadband customers, an increase of 20% from the
679 at the end of the second quarter of 2006. * Greenfield
Greenfield's operating revenue increased 10.2% to $3.2 million in
the second quarter of 2007 compared to the same period last year.
The increase in operating revenue was driven by an increase in
customer recurring revenue that related to a 35% increase in
Greenfield broadband customers and a 6% increase in access lines.
Operating expense was relatively flat at $3.6 million in the second
quarter of 2007. Operating loss for the second quarter of 2007
improved to $0.5 million from a $0.7 million operating loss in the
second quarter of 2006. Greenfield ended the second quarter of 2007
with 16,818 access lines and 3,955 broadband customers, which
represent increases of 6% and 35%, respectively, from the end of
the second quarter of 2006. As of June 30, 2007, the Company had
130 Greenfield projects, which in total represent approximately
58,000 marketable access lines at the completion of the projects.
The Company is not providing future period guidance due to the
proposed transaction with Windstream Corporation. CT
Communications, Inc., headquartered in Concord, N.C., is a growing
provider of integrated telecommunications and related services to
residential and business customers located primarily in North
Carolina. CT Communications, Inc. offers a comprehensive package of
telecommunications services, including broadband high-speed
Internet services, local and long distance telephone services, and
digital wireless voice and data services. Certain statements
contained in this press release are "forward-looking statements,"
within the meaning of federal securities laws. We intend these
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to risks, uncertainties and assumptions made
by management about us, including, among other things, changes in
industry conditions created by the Telecommunications Act of 1996
and related state and federal legislation and regulations, the
ability to obtain necessary regulatory and shareholder approvals
for the proposed transaction with Windstream, the impact of
economic conditions related to financial performance of customers,
business partners, competitors and peers within the
telecommunications industry, the recovery of the substantial costs
incurred over the past few years in connection with our expansion
into new businesses, retention of our existing customer base and
our ability to attract new customers, our ability to control
pricing and product offerings in a highly competitive industry, our
ability to attract and retain key personnel, the performance of our
investments, rapid changes in technology, our ability to manage
capital expenditures related to changes in technology, actions of
our competitors, the impact of economic and political events on our
business, operating regions and customers, including terrorist
attacks. In some cases, these forward-looking statements can be
identified by the use of words such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict,"
"project," "intend" or "potential" or the negative of those words
or other comparable words. These forward-looking statements may
differ materially from actual events or results because they
involve estimates, assumptions and uncertainties and should be
viewed with caution. We undertake no obligation to update or revise
any forward-looking statements, whether as the result of new
information, future events or otherwise. Readers are also directed
to consider the risks, uncertainties and other factors discussed in
documents filed by us with the Securities and Exchange Commission,
including those matters summarized under the caption "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31,
2006. CT Communications, Inc. Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts) Three Months
Ended June 30, % 2007 2006 Change Operating Revenue ILEC Services
$27,182 $26,105 4.1% Wireless Services 10,572 9,683 9.2% CLEC
Services 5,377 5,354 0.4% Greenfield Services 3,175 2,882 10.2%
Total Operating Revenue 46,306 44,024 5.2% Operating Expense ILEC
Services 21,607 20,521 5.3% Wireless Services 9,276 8,870 4.6% CLEC
Services 5,783 5,716 1.2% Greenfield Services 3,640 3,575 1.8%
Other 1,258 511 146.2% Total Operating Expense 41,564 39,193 6.0%
Operating Income 4,742 4,831 (1.8%) Other Income (Expense)
Investment, Equity Method 2 263 Gains, Interest, Dividends 2,178
1,945 Impairment on Investments - - Other Expenses, Principally
Interest (664) (838) Total Other Income (Expense) 1,516 1,370
Pre-Tax Income 6,258 6,201 Income Tax Expense 2,286 2,258 Net
Income $3,972 $3,943 Diluted Weighted Average Shares 20,251 19,452
Diluted Earnings Per Share $0.20 $0.20 CT Communications, Inc.
Consolidated Statements of Income (Unaudited, in thousands, except
per share amounts) Six Months Ended June 30, % 2007 2006 Change
Operating Revenue ILEC Services $54,304 $52,028 4.4% Wireless
Services 20,333 18,840 7.9% CLEC Services 10,742 10,573 1.6%
Greenfield Services 6,339 5,678 11.6% Total Operating Revenue
91,718 87,119 5.3% Operating Expense ILEC Services 42,331 39,884
6.1% Wireless Services 18,371 17,476 5.1% CLEC Services 11,433
11,577 (1.2%) Greenfield Services 7,117 7,081 0.5% Other 1,601
1,195 34.0% Total Operating Expense 80,853 77,213 4.7% Operating
Income 10,865 9,906 9.7% Other Income (Expense) Investment, Equity
Method 13 90,103 Gains, Interest, Dividends 3,529 2,758 Impairment
on Investments - (876) Other Expenses, Principally Interest (1,317)
(1,872) Total Other Income (Expense) 2,225 90,113 Pre-Tax Income
13,090 100,019 Income Tax Expense 4,492 38,710 Net Income $8,598
$61,309 Diluted Weighted Average Shares 20,240 19,359 Diluted
Earnings Per Share $0.42 $3.17 CT Communications, Inc. Consolidated
Balance Sheets (Unaudited, in thousands) June 30, December 31, 2007
2006 ASSETS Cash and Cash Equivalents $7,459 $14,063 Short-Term
Investments 92,619 86,741 Accounts Receivable and Unbilled Revenue,
Net 16,168 16,419 Other Assets 11,540 11,775 Current Assets 127,786
128,998 Investments 7,464 10,960 Property, Plant and Equipment, Net
214,852 209,908 Other Assets 37,906 37,492 TOTAL ASSETS $388,008
$387,358 LIABILITIES AND STOCKHOLDERS' EQUITY Current Portion of
Long-Term Debt $5,000 $5,000 Accounts Payable 6,949 12,553 Customer
Deposits and Advance Billings 4,754 4,618 Other Accrued Liabilities
15,235 12,714 Current Liabilities 31,938 34,885 Long-Term Debt
32,500 35,000 Deferred Credits and Other Liabilities 39,005 38,095
Stockholders' Equity 284,565 279,378 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $388,008 $387,358 CT Communications, Inc.
Customer Information June 30, June 30, % 2007 2006 Change Wired
Access Lines ILEC Access Lines 102,641 109,356 (6.1%) CLEC Access
Lines 36,811 34,372 7.1% Greenfield Access Lines 16,818 15,895 5.8%
Total Wired Access Lines 156,270 159,623 (2.1%) Broadband
Customers* 29,547 23,661 24.9% Wireless Subscribers 50,297 47,932
4.9% Revenue Generating Units ILEC Residential Access Lines 74,512
80,952 (8.0%) Business Access Lines 28,129 28,404 (1.0%) Broadband
Customers 24,775 20,053 23.5% Total ILEC 127,416 129,409 (1.5%)
CLEC Business Access Lines 36,811 34,372 7.1% Broadband Customers
817 679 20.3% Total CLEC 37,628 35,051 7.4% Greenfield Residential
Access Lines 10,950 10,633 3.0% Business Access Lines 5,868 5,262
11.5% Broadband Customers 3,955 2,929 35.0% Total Greenfield 20,773
18,824 10.4% Wireless Subscribers 50,297 47,932 4.9% Total Revenue
Generating Units 236,114 231,216 2.1% * - Broadband customers
include DSL and High Speed customers previously reported
separately. CT Communications, Inc. Other Selected Financial Data
(Unaudited, in thousands, except per share amounts) Capital
Expenditures Three Months Ended Six Months Ended June 30, June 30,
2007 2006 2007 2006 ILEC $5,858 $3,298 $13,410 $7,041 Wireless
2,363 491 2,627 687 CLEC 423 493 768 1,773 Greenfield 1,222 1,376
2,357 2,995 Other 713 406 1,920 555 Total $10,579 $6,064 $21,082
$13,051 Depreciation Three Months Ended Six Months Ended June 30,
June 30, 2007 2006 2007 2006 ILEC $5,145 $5,347 $10,300 $10,825
Wireless 693 641 1,386 1,276 CLEC 700 728 1,421 1,443 Greenfield
1,129 1,032 2,243 2,046 Other 226 225 451 503 Total $7,893 $7,973
$15,801 $16,093 Reconciliation of Prior Period Reported Results to
Normalized Results For the six months ended June 30, 2006 Palmetto
GAAP MobileNet* Normalized Operating Revenue $87,119 $ - $87,119
Operating Expense 77,213 - 77,213 Operating Income 9,906 - 9,906
Other Income (Expense) 90,113 (89,164) 949 Pre-Tax Income 100,019
(89,164) 10,855 Income Tax Expense 38,710 (34,943) 3,767 Net Income
$61,309 $(54,221) $7,088 Diluted EPS $3.17 $(2.80) $0.37 * Equity
income related to the March 2006 sale of PMN's ownership interests
in ten wireless partnerships. DATASOURCE: CT Communications, Inc.
CONTACT: Jim Hausman, +1-704-722-2410, or Ron Marino,
+1-704-722-2212, both of CT Communications, Inc. Web site:
http://www.ctc.net/
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