CT Communications (NASDAQ:CTCI)
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CT Communications Announces Third Quarter Results
CONCORD, N.C., Oct. 26 /PRNewswire-FirstCall/ -- CT Communications, Inc.
(NASDAQ:CTCI) announces operating income growth of 12.4% to $4.9 million in the
third quarter compared to the same period last year. Operating revenue
increased to $40.7 million in the quarter. Operating revenue from CT's
competitive businesses increased $1.0 million or 6.2% and includes a 10.1%
increase in wireless revenue of $0.8 million and a 32.4% increase in Greenfield
revenue of $0.5 million. Wireless and Greenfield customers increased 12% and
35%, respectively, from the third quarter last year. In addition, Internet and
Data revenue increased $0.1 million related to the continued growth of digital
subscriber line (DSL) customers. Competitive local exchange carrier revenue
decreased $0.3 million primarily due to lower interconnection and access
revenue. The increase in revenue from CT's competitive businesses was
substantially offset by a $1.0 million decline in incumbent telephone company
revenue due primarily to a $0.5 million reduction in phone system sales and a
$0.5 million reduction in line related revenue.
The 12.4% increase in operating income to $4.9 million is mainly attributable
to a $0.5 million decrease in operating expense. Factors driving the expense
reductions include a $0.4 million reduction in Internet and Data services
transport expense primarily from improvements in network efficiencies, a $0.6
million decrease in phone system cost of sales and directory expense and a $0.4
million reduction in wireless expense associated with handset costs and
marketing/sales expense. Offsetting these expense reductions were an increase
of $0.4 million in professional fees associated with the Company's
Sarbanes-Oxley Section 404 compliance activities and a $0.3 million increase in
access and interconnection expense in the ILEC.
Other expense was $0.7 million in the third quarter of 2004 compared to income
of $0.5 million in the third quarter of 2003. The $1.2 million decrease in
other income/expense was primarily due to a $1.0 million increase in impairment
charges associated with certain investment securities.
Net income for the third quarter of 2004 was $2.5 million, or $0.13 per diluted
common share, compared to net income of $3.1 million, or $0.17 per diluted
common share in the third quarter of 2003. The impairment charges recorded in
the third quarter of 2004 lowered diluted earnings per share by approximately
$0.05.
For the nine months ended September 30, 2004, operating revenue increased 2.2%
to $121.8 million, while operating income increased 21.7% to $16.9 million
compared to the same period last year. Net income for the first three quarters
of 2004 was $10.1 million compared to $16.0 million in 2003. Net income for the
nine months ended September 30, 2003 included a $9.7 million after tax gain on
the sale of an investment.
"We are pleased with the continued growth of our competitive businesses and
improvement in operating income. Our recently announced broadband initiative
is underway, and we are focused on delivering the enhanced product and service
capabilities demanded by our customers," said Michael R. Coltrane, President
and Chief Executive Officer of CT Communications, Inc.
Results by business unit:
- ILEC -- ("Concord Telephone")
Concord Telephone's operating revenue decreased 4.0% to $23.2 million
for the third quarter of 2004 compared to the same quarter in 2003.
Operating income for the third quarter of 2004 was $6.0 million, a
25.9% operating margin, compared to operating income of $6.9 million
and a 28.7% operating margin for the third quarter of 2003. The
decline in operating income is primarily the result of lower phone
system sales, a decrease in certain regulatory settlements and a
reduction in line revenue associated with access line losses. In
addition, access and interconnection expense related to wireless
interconnection agreements increased $0.3 million. Concord Telephone
ended the third quarter of 2004 with 113,728 access lines in service,
a 2% decrease from the third quarter of 2003. Concord Telephone ended
the third quarter of 2004 with 84,760 long distance lines, a 75%
penetration of access lines.
- Digital Wireless Service -- ("CTC Wireless")
CTC Wireless' operating revenue increased 10.1% to $8.2 million for
the third quarter of 2004 compared to $7.5 million reported in the
third quarter of 2003. Contributing to the increase in wireless
revenue was a $0.6 million increase in recurring revenue primarily due
to a 12% growth in subscribers and a $0.3 million increase in
settlement and roaming revenue. Operating income for the third
quarter of 2004 was $1.2 million, a 15.1% operating margin, compared
to $0.2 million, a 2.2% operating margin for the third quarter of
2003. Driving the increase in operating margin were increases in
operating revenue coupled with a $0.3 million decrease in operating
expense relating to sales commissions, marketing and handset and
accessory costs. CTC Wireless ended the third quarter with 41,229 post
pay subscribers.
- CLEC -- ("CTC Exchange Services")
CTC Exchange Services' operating revenue decreased 6.4% to
$4.6 million for the third quarter of 2004 compared to the same
quarter last year. The decrease in operating revenue is mainly due to
a $0.2 million decline in interstate access revenue caused by a
mandated June 2004 rate reduction and the one-time collection of
approximately $0.4 million in previously disputed access fees in the
three months ended September 30, 2003. Partially offsetting the
reduction in access revenue is a $0.2 million increase in line revenue
associated with the 9% growth in customer access lines to 31,194 at
September 30, 2004. Operating expense declined 3.5% from the same
quarter last year due to the company's continued focus on expense
control. Operating loss for the third quarter of 2004 was
$0.5 million compared to an operating loss of $0.4 million for the
third quarter of 2003. CTC Exchange Services ended the third quarter
of 2004 with 22,819 long distance lines compared with 20,598 lines at
the end of the third quarter of 2003.
- Greenfield
Greenfield's operating revenue increased 32.4% to $2.0 million for the
third quarter of 2004 compared to the third quarter of 2003. Operating
loss for the third quarter of 2004 declined to $0.9 million, a 28.8%
improvement from the $1.3 million operating loss reported for the
third quarter of 2003. Greenfield ended the third quarter of 2004
with 12,284 access lines and 6,328 long distance lines in service,
which represented increases of 35% and 52%, respectively, from the
third quarter of 2003. Greenfield ended the quarter with 104 signed
agreements representing a potential of more than 48,000 lines at
completion of the projects.
- Internet & Data -- ("CTC Internet Services")
CTC Internet Services' operating revenue increased 3.5% to $2.6
million for the third quarter of 2004 compared to $2.5 million
reported in the third quarter last year. The $0.1 million increase in
revenue was attributable to a 30% increase in DSL customers, partially
offset by a continuing decrease in dial-up customers. Operating loss
for the third quarter of 2004 declined to $0.2 million from the
$0.4 million operating loss reported for the third quarter of 2003.
Depreciation expense increased $0.4 million to $0.9 million from the
same quarter last year. CTC Internet Services ended the third quarter
of 2004 with 12,477 DSL lines compared to 9,591 lines at the end of
the third quarter of 2003. Dial-up accounts decreased 16% to 9,686
and high-speed accounts increased 5% to 561 at September 30, 2004
compared to September 30, 2003.
Future Period Guidance
We currently expect operating results to approximate the following during these
future periods:
- 4th Quarter 2004
* Revenue of $40 to $41 million
* Operating income of $4.5 to $5.0 million
* Consolidated earnings per share of $0.16 to $0.18
* Capital expenditures of $9 to $12 million
- Full Year 2004
* Revenue of $162 to $163 million
* Operating income of $21 to $22 million
* Consolidated earnings per share of $0.69 to $0.71
* Capital expenditures of $26 to $29 million
CT Communications will host a conference call to discuss the results of the
third quarter on Wednesday, October 27, 2004 at 9:00 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 November 30,
2004. Additionally, a replay of the call will be available until 11:30 AM ET
on Friday, October 29th at 800-633-8284. Enter access number 21211719.
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
digital 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, 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, 2003.
CT Communications, Inc.
Consolidated Statements of Income
(unaudited, in thousands, except per share amounts)
Three Months Ended Three Months Ended %
September 30, 2004 September 30, 2003 Change
Operating Revenue
ILEC Services $23,161 $24,132 (4.0%)
CLEC Services 4,596 4,911 (6.4%)
Greenfield Services 2,039 1,540 32.4%
Digital Wireless Services 8,222 7,468 10.1%
Internet & Data Services 2,641 2,552 3.5%
Total Operating Revenue 40,659 40,603 0.1%
Operating Expense
ILEC Services 17,171 17,207 (0.2%)
CLEC Services 5,123 5,311 (3.5%)
Greenfield Services 2,951 2,820 4.6%
Digital Wireless Services 6,984 7,302 (4.4%)
Internet & Data Services 2,847 2,988 (4.7%)
Other 657 594 10.6%
Total Operating Expense 35,733 36,222 (1.4%)
Operating Income 4,926 4,381 12.4%
Other Income (Expense)
Investment, Equity Method 1,820 1,787 1.8%
Gains, Interest, Dividends 184 858 (78.6%)
Impairment On Investments (1,454) (460) 216.1%
Other Expenses, Principally
Interest (1,225) (1,682) (27.2%)
Total Other Income (Expense) (675) 503 (234.2%)
Pre-Tax Income From
Continuing Operations 4,251 4,884 (13.0%)
Income Tax Expense 1,780 1,735 2.6%
Net Income $2,471 $3,149 (21.5%)
Weighted Average
Diluted Shares 19,054 18,853
Earnings Per Diluted
Common Share $0.13 $0.17
CT Communications, Inc.
Consolidated Statements of Income
(unaudited, in thousands, except per share amounts)
Nine Months Ended Nine Months Ended %
September 30, 2004 September 30, 2003 Change
Operating Revenue
ILEC Services $69,637 $71,232 (2.2%)
CLEC Services 14,585 14,759 (1.2%)
Greenfield Services 5,869 4,417 32.9%
Digital Wireless Services 23,591 21,149 11.5%
Internet & Data Services 8,161 7,695 6.1%
Total Operating Revenue 121,843 119,252 2.2%
Operating Expense
ILEC Services 50,315 50,057 0.5%
CLEC Services 15,233 15,955 (4.5%)
Greenfield Services 8,782 8,236 6.6%
Digital Wireless Services 20,740 19,389 7.0%
Internet & Data Services 8,072 8,904 (9.3%)
Other 1,828 2,852 (35.9%)
Total Operating Expense 104,970 105,393 (0.4%)
Operating Income 16,873 13,859 21.7%
Other Income (Expense)
Investment, Equity Method 4,714 4,235 11.3%
Gains, Interest, Dividends 934 16,122 (94.2%)
Impairment On Investments (1,494) (1,744) (14.3%)
Other Expenses, Principally
Interest (3,984) (5,558) (28.3%)
Total Other Income (Expense) 170 13,055 (98.7%)
Pre-Tax Income From
Continuing Operations 17,043 26,914 (36.7%)
Income Tax Expense 6,971 10,501 (33.6%)
Income From Continuing
Operations 10,072 16,413 (38.6%)
(Loss) From Discontinued
Operations, Net Of Tax - (424) (100.0%)
Net Income $10,072 $15,989 (37.0%)
Weighted Average
Diluted Shares 19,010 18,791
Earnings Per Diluted
Common Share $0.53 $0.85
CT Communications, Inc.
Consolidated Balance Sheets
(unaudited, in thousands)
September 30, December 31,
2004 2003
ASSETS
Cash and Cash Equivalents $24,742 $16,957
Accounts Receivable and Unbilled Revenue, Net 20,116 22,301
Other Assets 4,636 5,372
Current Assets 49,494 44,630
Investment Securities 5,430 5,841
Investments in Unconsolidated Companies 16,753 15,206
Property, Plant and Equipment, Net 202,430 208,370
Other Assets 48,277 47,621
TOTAL ASSETS $322,384 $321,668
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of Long-Term Debt $3,750 $-
Accounts Payable 7,146 6,414
Customer Deposits 2,476 2,665
Other Accrued Liabilities 19,097 17,314
Liabilities of Discontinued Operations 682 1,072
Current Liabilities 33,151 27,465
Long-Term Debt 66,250 80,000
Deferred Credits and Other Liabilities 38,238 36,673
Stockholders' Equity 184,745 177,530
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $322,384 $321,668
CT Communications, Inc.
Customer Information
September 30, 2004 September 30, 2003 % Change
ILEC Access Lines
Business Lines 28,912 29,263 (1.2%)
Residential Lines 84,816 86,951 (2.5%)
Total ILEC Lines 113,728 116,214 (2.1%)
CLEC Access Lines 31,194 28,756 8.5%
Greenfield Access Lines 12,284 9,109 34.9%
Total Wired Access Lines 157,206 154,079 2.0%
Wireless Subscribers 41,229 36,778 12.1%
Long Distance Lines
In ILEC 84,760 85,045 (0.3%)
In CLEC 22,819 20,598 10.8%
In Greenfield 6,328 4,154 52.3%
Total Long Distance Lines 113,907 109,797 3.7%
Internet Access Customers
Dial-Up 9,686 11,535 (16.0%)
DSL Lines 12,477 9,591 30.1%
High Speed 561 536 4.7%
Total Internet Access Customers 22,724 21,662 4.9%
Greenfield Projects
# Of Potential Lines # Of
Lines In Service At Completion Projects
By Year Signed
1999 1,365 1,523 2
2000 4,264 11,906 17
2001 3,272 13,577 32
2002 2,901 12,694 24
2003 430 4,846 18
2004 52 3,814 11
Totals 12,284 48,360 104
By Type
Mall 2,495 2,800 3
Single Family Homes 6,275 33,403 55
Multi-Dwelling Units 3,007 10,974 39
Business 507 1,183 7
Totals 12,284 48,360 104
CT Communications, Inc.
Other Selected Financial Data
(unaudited, in thousands)
Capital Expenditures
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
ILEC $4,221 $2,712 $9,773 $8,887
CLEC 144 242 540 707
Greenfield 1,201 996 3,141 3,148
Wireless 1,286 784 1,904 965
Internet 408 639 1,084 1,954
Other 270 327 852 1,262
Total $7,530 $5,700 $17,294 $16,923
% of Revenue 18.5% 14.0% 14.2% 14.2%
Depreciation Expense
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2004 2003 2004 2003
ILEC $4,540 $4,990 $14,918 $15,442
CLEC 629 635 1,900 1,721
Greenfield 774 659 2,221 2,074
Wireless 488 450 1,449 1,250
Internet 922 540 1,708 1,512
Other 334 331 1,039 992
Total $7,687 $7,605 $23,235 $22,991
DATASOURCE: CT Communications, Inc.
CONTACT: Jim Hausman, +1-704-722-2410, or Duane Johnson,
+1-704-722-3231, both of CT Communications, Inc.
Web site: http://www.ctc.net/