CONCORD, N.C., July 27 /PRNewswire-FirstCall/ -- Second Quarter
2006 Highlights - Company received $16.0 million from Clearwire
wireless spectrum transaction - Operating revenue increased 7.1% to
$44.0 million vs. year ago quarter - Operating income increased
34.3% to $4.8 million vs. year ago quarter - Net income increased
31.8% to $3.9 million vs. year ago quarter - DSL subscribers
increased 40% vs. year ago quarter - Wireless customer churn
improved to 1.3% while subscribers increased 7% Second Quarter 2006
Consolidated Results CT Communications, Inc. (NASDAQ:CTCI)
announces consolidated operating revenue for the quarter ended June
30, 2006 increased 7.1% to $44.0 million from $41.0 million in the
second quarter of 2005. The increase resulted primarily from a $0.8
million increase in customer recurring revenue, a $0.4 million
increase in Wireless roaming revenue and a $1.1 million increase in
access and interconnection revenue. The growth in customer
recurring revenue was driven by a 40% increase in DSL customers, a
15% increase in Greenfield access lines and a 7% increase in
Wireless subscribers. The increase in Wireless roaming revenue was
driven by higher roaming minutes of use on the Company's wireless
network. Operating expense in the second quarter of 2006 increased
4.6% to $39.2 million from $37.5 million in the second quarter of
2005. The increase in operating expense was primarily attributable
to a $0.9 million increase in marketing expense and to $0.7 million
in non-cash compensation expense related to fair value adjustments
for CTC stock units held in the Company's nonqualified deferred
compensation plan. The increase in marketing expense was related to
additional advertising and promotional efforts, as well as
proactive retention programs in preparation for the entrance of
cable telephone competition in the Company's ILEC service
territory. Operating income increased 34.3% to $4.8 million in the
second quarter of 2006, compared to $3.5 million in the second
quarter of 2005. Other income was $1.4 million in the second
quarter of 2006 and 2005. Net income for the second quarter of 2006
was $3.9 million, or $0.20 per diluted common share, compared to
$3.0 million, or $0.15 per diluted common share in the second
quarter of 2005. Consolidated operating revenue for the six months
ended June 30, 2006 increased 5.7% to $87.1 million compared to
$82.4 million in the same period last year. The increase in
operating revenue was mainly driven by a $1.3 million increase in
customer recurring revenue, a $0.8 million increase in roaming and
settlement revenue and a $1.6 million increase in access and
interconnection revenue. Operating expense for the six months ended
June 30, 2006 increased 4.7% to $77.2 million compared to $73.8
million in the same period last year. The increase in operating
expense was mainly due to an increase in administrative expense
related to marketing, professional fees and a charge for non-cash
compensation expense related to fair value adjustments for CTC
stock units held in the Company's nonqualified deferred
compensation plan. Operating income for the six months ended June
30, 2006 increased 14.3% to $9.9 million compared to $8.6 million
in the same period last year. Net income for the six months ended
June 30, 2006 was $61.4 million, or $3.17 per diluted common share,
compared to $5.9 million, or $0.31 per diluted common share.
Included in net income for the six months ended June 30, 2006 was
$54.2 million, or $2.80 per diluted common share, related to the
sale of Palmetto MobileNet's ("PMN") interests in several wireless
partnerships to Alltel. Excluding the PMN transaction, diluted
earnings per share increased 19.4% from the same six-month period
last year. Second Quarter 2006 Results by Business Unit * ILEC -
("Concord Telephone") Concord Telephone's operating revenue in the
second quarter of 2006 increased 7.1% to $23.6 million from $22.0
million in the same quarter last year. The $1.6 million increase in
operating revenue was driven by a $0.9 million increase in access
and interconnection revenue, a $0.4 million increase in telephone
system sales and a $0.3 million increase in universal service
revenue. Operating expense for the second quarter of 2006 increased
6.1% to $19.0 million from $17.9 million in the second quarter of
2005. The increase in operating expense was due to a $1.3 million
increase in selling, general and administrative expense that was
primarily attributable to a $0.7 million increase in personnel
expense largely due to a non-cash charge for compensation expense
related to fair value adjustments for CTC stock units held in the
Company's nonqualified deferred compensation plan and to a $0.5
million increase in marketing expense. Operating income for the
second quarter of 2006 increased to $4.6 million from $4.1 million
in the same period last year. Operating margin for the second
quarter of 2006 was 19.4% compared to 18.6% for the second quarter
of 2005. Concord Telephone ended the second quarter of 2006 with
109,356 access lines in service, a 2.2% decrease from the second
quarter of 2005. * Wireless Service - ("Wireless") Wireless
operating revenue in the second quarter of 2006 increased 7.6% to
$9.6 million from $9.0 million in the second quarter of 2005. The
increase was attributable to a $0.3 million increase in customer
recurring revenue driven by a 7% increase in Wireless subscribers,
as well as a $0.4 million increase in roaming and settlement
revenue. Operating expense in the second quarter of 2006 increased
$0.3 million to $8.9 million compared to the second quarter of
2005. The increase in operating expense was primarily attributable
to a $0.3 million increase in marketing expense and a $0.2 million
increase in Wireless handset and accessories expense associated
with retention and contract renewal programs targeted to reduce
customer churn. Partially offsetting these expense increases was a
$0.2 million reduction in roaming and settlement expense. Operating
income in the second quarter of 2006 increased to $0.8 million from
$0.4 million in the same period last year. Wireless ended the
second quarter of 2006 with 47,932 subscribers, a 7% increase in
customers compared to the second quarter of 2005. Customer churn in
the second quarter of 2006 improved to 1.3% from 1.7% in the second
quarter of 2005. * CLEC CLEC operating revenue in the second
quarter of 2006 was $4.8 million, which was relatively flat in
comparison to the same period last year. Operating revenue in the
second quarter of 2006 included a $0.2 million increase in access
and interconnection revenue from the recovery of previously
disputed billings, but was offset by a $0.1 million decrease in
customer recurring revenue. The operating loss for the second
quarter of 2006 and 2005 was $0.3 million. CLEC ended the second
quarter of 2006 with 34,372 access lines compared to 31,644 access
lines for the same quarter last year. * Greenfield Greenfield's
operating revenue in the second quarter of 2006 increased $0.1
million to $2.6 million compared to the second quarter of 2005. The
increase in operating revenue was attributable to growth in
customer recurring revenue driven by a 15% increase in access
lines. Operating expense in the second quarter of 2006 increased
$0.3 million to $3.4 million compared to the same period last year,
due primarily to a $0.2 million increase in depreciation expense.
Operating loss for the second quarter of 2006 was $0.8 million
compared to $0.6 million in the second quarter of 2005. Greenfield
ended the second quarter of 2006 with 15,895 access lines compared
to 13,864 access lines in the second quarter of 2005. As of June
30, 2006 the Company had 124 Greenfield projects, which represent a
potential of more than 54,500 marketable lines upon completion of
the projects. * Internet & Data - ("CTC Internet Services") CTC
Internet Services operating revenue in the second quarter of 2006
increased 17.3% to $3.4 million from $2.9 million in the same
period last year. DSL revenue increased $0.6 million, or 32.0% to
$2.5 million, while operating expense decreased 3.2% to $2.4
million from the same quarter last year. Operating income in the
second quarter of 2006 increased to $1.0 million from $0.4 million
in the same quarter last year. CTC Internet Services ended the
second quarter of 2006 with 22,907 DSL customers, an increase of
6,573 customers compared to the second quarter of 2005. Dial-up
customers declined to 5,594, while high-speed customers increased
to 754 at June 30, 2006. Future Period Guidance We currently expect
operating results to approximate the following during these future
periods: * 3rd Quarter 2006 -- Revenue of $43.0 to $44.0 million --
Operating income of $5.5 to $6.5 million -- Depreciation expense of
$8.1 to $8.3 million -- Diluted earnings per share of $0.20 to
$0.22 -- Capital expenditures of $10.0 to $12.0 million * Full Year
2006 -- Revenue of $173.0 to $175.0 million -- Operating income of
$21.0 to $23.0 million -- Depreciation expense of $32.5 to $33.5
million -- Diluted earnings per share of $0.71 to $0.75, excluding
$2.77 related to the estimated full-year impact of the PMN
transaction -- Capital expenditures of $35.5 to $39.5 million CT
Communications will host a conference call to discuss the results
of the second quarter on Friday, July 28, 2006 at 10:00 AM ET. You
are invited to listen to the conference call that will be broadcast
live over the Internet at http://www.ctc.net/. If you are unable to
listen during the live webcast, the call will be archived on the
web site at http://www.ctc.net/ until August 31, 2006.
Additionally, a replay of the call will be available until 5:00 PM
ET on Friday, August 4, 2006 at 800-633-8284. Enter access number
21299818. CT Communications, Inc. is headquartered in Concord, N.C.
and 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
local and long distance telephone services, Internet and data
services and wireless 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 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, and 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,
2005. CT Communications, Inc. Consolidated Statements of Income
(Unaudited, in thousands, except per share amounts) Three Months
Ended June 30, % 2006 2005 Change Operating Revenue ILEC Services
$23,558 $21,996 7.1% Wireless Services 9,645 8,963 7.6% CLEC
Services 4,763 4,721 0.9% Greenfield Services 2,559 2,427 5.4%
Internet & Data Services 3,432 2,926 17.3% Total Operating
Revenue 43,957 41,033 7.1% Operating Expense ILEC Services 18,981
17,894 6.1% Wireless Services 8,870 8,554 3.7% CLEC Services 5,049
4,992 1.1% Greenfield Services 3,351 3,014 11.2% Internet &
Data Services 2,431 2,511 (3.2%) Other 511 520 (1.7%) Total
Operating Expense 39,193 37,485 4.6% Operating Income 4,764 3,548
34.3% Other Income (Expense) Investment, Equity Method 263 1,305
Gains, Interest, Dividends 1,945 1,529 Impairment on Investments -
(111) Other Expenses, Principally Interest (838) (1,356) Total
Other Income (Expense) 1,370 1,367 Pre-Tax Income 6,134 4,915
Income Tax Expense 2,241 1,962 Net Income $3,893 $2,953 Diluted
Weighted Average Shares 19,452 19,090 Diluted Earnings Per Share
$0.20 $0.15 CT Communications, Inc. Consolidated Statements of
Income (Unaudited, in thousands, except per share amounts) Six
Months Ended June 30, % 2006 2005 Change Operating Revenue ILEC
Services $47,145 $44,675 5.5% Wireless Services 18,772 17,455 7.5%
CLEC Services 9,393 9,856 (4.7%) Greenfield Services 5,070 4,718
7.5% Internet & Data Services 6,716 5,726 17.3% Total Operating
Revenue 87,096 82,430 5.7% Operating Expense ILEC Services 36,758
35,155 4.6% Wireless Services 17,476 16,241 7.6% CLEC Services
10,256 10,243 0.1% Greenfield Services 6,628 5,977 10.9% Internet
& Data Services 4,900 5,114 (4.2%) Other 1,195 1,052 13.6%
Total Operating Expense 77,213 73,782 4.7% Operating Income 9,883
8,648 14.3% Other Income (Expense) Investment, Equity Method 90,103
2,548 Gains, Interest, Dividends 2,758 1,677 Impairment on
Investments (876) (529) Other Expenses, Principally Interest
(1,872) (2,531) Total Other Income (Expense) 90,113 1,165 Pre-Tax
Income 99,996 9,813 Income Tax Expense 38,614 3,871 Net Income
$61,382 $5,942 Diluted Weighted Average Shares 19,359 19,035
Diluted Earnings Per Share $3.17 $0.31 CT Communications, Inc.
Consolidated Balance Sheets (Unaudited, in thousands) June 30,
December 31, 2006 2005 ASSETS Cash and Cash Equivalents $16,882
$23,011 Short-term Investments 94,869 - Accounts Receivable and
Unbilled Revenue, Net 15,563 16,336 Wireless Spectrum Held-for-Sale
- 15,646 Other Assets 8,479 7,220 Current Assets 135,793 62,213
Investment Securities 5,270 5,845 Investments in Unconsolidated
Companies 7,145 15,618 Property, Plant and Equipment, Net 196,897
200,179 Other Assets 38,365 37,565 TOTAL ASSETS $383,470 $321,420
LIABILITIES AND STOCKHOLDERS' EQUITY Current Portion of Long-Term
Debt $5,000 $15,000 Accounts Payable 7,877 8,482 Customer Deposits
and Advance Billings 2,307 2,538 Income Taxes Payable 15,887 2,107
Other Accrued Liabilities 9,240 11,814 Current Liabilities 40,311
39,941 Long-Term Debt 37,500 40,000 Deferred Credits and Other
Liabilities 45,055 45,599 Stockholders' Equity 260,604 195,880
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $383,470 $321,420 CT
Communications, Inc. Customer Information June 30, June 30, % 2006
2005 Change ILEC Access Lines Business Lines 28,404 28,560 (0.5%)
Residential Lines 80,952 83,207 (2.7%) Total ILEC Access Lines
109,356 111,767 (2.2%) CLEC Access Lines 34,372 31,644 8.6%
Greenfield Access Lines 15,895 13,864 14.6% Total Wired Access
Lines 159,623 157,275 1.5% Wireless Subscribers 47,932 44,723 7.2%
Long Distance Lines In ILEC 86,422 84,774 1.9% In CLEC 23,605
24,739 (4.6%) In Greenfield 9,633 7,631 26.2% Total Long Distance
Lines 119,660 117,144 2.1% Internet Access Customers Dial-Up 5,594
7,774 (28.0%) DSL 22,907 16,334 40.2% High Speed 754 632 19.3%
Total Internet Access Customers 29,255 24,740 18.2% Greenfield
Projects Projected Lines in Marketable Total Service Lines Projects
By Year Signed Previous Years 13,918 40,000 75 2003 1,070 5,000 18
2004 743 4,000 12 2005 100 4,500 13 2006 64 1,000 6 Total 15,895
54,500 124 By Type Mall 2,591 3,000 3 Single Family Homes 9,412
38,500 69 Multi-Dwelling Units 2,844 11,500 41 Business 1,048 1,500
11 Total 15,895 54,500 124 CT Communications, Inc. Other Selected
Financial Data (Unaudited, in thousands) Three Months Six Months
Capital Expenditures Ended June 30, Ended June 30, 2006 2005 2006
2005 ILEC $3,077 $3,748 $6,635 $8,207 Wireless 491 374 687 1,467
CLEC 441 437 1,683 660 Greenfield 1,342 1,655 2,934 3,003 Internet
307 170 557 598 Other 406 206 555 413 Total $6,064 $6,590 $13,051
$14,348 % of Revenue 13.8% 16.1% 15.0% 17.4% Depreciation Three
Months Six Months Ended June 30, Ended June 30, 2006 2005 2006 2005
ILEC $5,105 $5,129 $10,307 $10,238 Wireless 641 576 1,276 1,080
CLEC 677 634 1,335 1,263 Greenfield 996 840 1,969 1,650 Internet
329 455 703 934 Other 225 339 503 674 Total $7,973 $7,973 $16,093
$15,839 Reconciliation of Reported Results to Normalized Results
For the six months ended June 30, 2006 Palmetto GAAP MobileNet
Normalized Operating Revenue $87,096 $- $87,096 Operating Expense
77,213 - 77,213 Operating Income 9,883 - 9,883 Other Income
(Expense) 90,113 (89,164) 949 Pre-Tax Income 99,996 (89,164) 10,832
Income Tax Expense 38,614 (34,943) 3,671 Net Income $61,382
$(54,221) $7,161 Diluted EPS $3.17 $(2.80) $0.37 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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