CTCI CT Communications (MM)

CT Communications Announces First Quarter Results CONCORD, N.C., May 3 /PRNewswire-FirstCall/ -- CT Communications, Inc. (NASDAQ:CTCI) announces consolidated operating revenue for the quarter ended March 31, 2005 of $41.4 million, representing a 2.1% increase over the same period last year. Operating revenue from CT's non-ILEC operations grew 11.0% to $18.7 million from the $16.9 million reported in the first quarter of 2004. The non-ILEC growth was driven by a 12% increase in Wireless subscribers, a 26% increase in Greenfield access lines and a 41% increase in DSL subscribers. These gains were offset by a decrease in Concord Telephone's operating revenue due to lower access and interconnection revenue and a decline in line revenue related to access line losses. Operating income for the first quarter of 2005 was $5.1 million or a 12.3% operating margin, compared to $6.9 million or a 17.1% operating margin for the first quarter of 2004. Operating margin improvements in the Wireless, Greenfield and Internet Services businesses were offset by declining operating margin in the Company's ILEC business. Operating expense in the ILEC increased $1.8 million from the first quarter last year, with the increases mainly attributable to a $0.9 million increase in general administrative expense driven by an increase in professional fees related to the year-end audit and Sarbanes-Oxley 404 compliance, a $0.4 million increase in depreciation expense and a $0.3 million increase in access and interconnection expense. Access and interconnection expense in the first quarter of 2004 was favorably impacted by a one-time settlement of disputed access charges that reduced expense by $0.2 million in that period. Wireless operating expense increased $0.9 million from the first quarter last year primarily due to a larger subscriber base that resulted in a $0.5 million increase in customer operations expense, as well as a $0.4 million increase in subscriber acquisition and retention costs. The Company's acquisition and retention initiatives resulted in an 11% increase in net subscriber additions and a 20% decline in the customer churn rate to 1.6% when compared to the first quarter of 2004. Other Income (Expense) for the first quarter was negatively impacted due to an impairment charge of $0.4 million associated with investment securities held by the Company. Net income for the first quarter of 2005 was $3.0 million, or $0.16 per diluted common share, compared to $4.2 million, or $0.22 per diluted common share in the first quarter of 2004. During the first quarter of 2005 the Company continued to enhance its network infrastructure, reduced its debt and increased its dividend. Capital expenditures for the first quarter 2005 were $7.8 million, representing a $3.8 million increase over the same period last year. The increase in capital expenditures was primarily driven by the broadband capital plan to enhance the ILEC network's bandwidth capabilities, which is progressing according to schedule. In addition, the Wireless business invested approximately $1.1 million in the first quarter to add one cell site and expand service capacity at several other sites. In the first quarter of 2005, the Company reduced its outstanding debt by $6.3 million and announced a 43% increase in the dividend payable to its shareholders. Results by business unit: - ILEC - ("Concord Telephone") Concord Telephone's operating revenue and income decreased to $22.7 million and $5.4 million, respectively, in the first quarter of 2005 compared to the same quarter in 2004. The decline in operating results was attributable to a $1.0 million decrease in operating revenue coupled with a $1.8 million increase in operating expense. The decrease in revenue was due to a $0.6 million reduction in access and interconnection revenue associated with the recovery of disputed billings during the first quarter of 2004 and a $0.5 million decline in line revenue from access line losses. The growth in operating expense was driven by an increase in general administrative expense related to professional fees for the Company's year-end audit and Sarbanes-Oxley Section 404 compliance, access and interconnection expense and depreciation expense. Concord Telephone ended the first quarter of 2005 with 112,821 access lines in service, a decline of only 95 lines from year end 2004, and a 2% decrease from the first quarter of 2004. - Wireless Service - ("CTC Wireless") CTC Wireless' operating revenue increased 19.2% to $8.5 million from the $7.1 million reported in the first quarter of 2004. Contributing to the increase in wireless revenue was a $0.8 million increase in customer revenue associated with a 12% growth in wireless subscribers and an increase of $0.5 million or 28% in settlement and roaming revenue. Operating income for the first quarter of 2005 was $0.8 million compared to $0.3 million for the first quarter of 2004. Driving the increase in operating income was the higher settlement and roaming revenue coupled with the increasing scale of this business that held expense growth to 13.5%. The first quarter decline in customer churn to 1.6% was attributable to the Company's ongoing focus on customer retention initiatives. CTC Wireless ended the first quarter with 44,091 subscribers compared to 39,250 at the end of the first quarter of 2004. - CLEC - ("CTC Exchange Services") CLEC first quarter 2005 operating revenue grew to $5.1 million, representing a 1.9% increase over first quarter 2004 revenue. The increase in operating revenue was driven by increased line revenue attributable to a 5% growth in access lines that was somewhat offset by a decline in revenue per customer due to the competitive market environment and advancement of alternative lower-cost voice and data service offerings. Operating income for the first quarter of 2005 was relatively flat with the first quarter of 2004. CLEC ended the first quarter of 2005 with 31,861 access lines in service compared to 30,415 at the end of the first quarter of 2004. CLEC ended the first quarter of 2005 with 24,443 long distance lines, an increase of 2,751 long distance lines compared with the end of the first quarter of 2004. - Greenfield - ("CTC Exchange Services") Greenfield's first quarter 2005 operating revenue increased 17.8% to $2.3 million compared to the same period last year. Greenfield line revenue and access lines grew 27.9% and 26%, respectively, while operating expense for the first quarter was flat with the same quarter last year. Operating loss for the first quarter of 2005 improved to $0.7 million compared to an operating loss of $1.0 million for the first quarter of 2004. Depreciation expense was $0.8 million and $0.7 million in the first quarter of 2005 and 2004, respectively. Greenfield ended the first quarter of 2005 with 13,451 access lines and 7,326 long distance lines in service, which represented increases of 26% and 43%, respectively. As of March 31, 2005 the Company had signed 110 agreements, which in total represent a potential of more than 49,000 lines at the completion of the projects. - Internet & Data - ("CTC Internet Services") CTC Internet Services' operating revenue of $2.8 million was flat in comparison to the first quarter of 2004. DSL revenue grew 32.6% while subscribers grew 41% for the quarter. DSL revenue growth was lower than the customer growth due to discounted promotional service rates new DSL customers currently receive during their first three months of service. Offsetting the DSL revenue growth was the continued churn of dial-up customers and a decline in high-speed services revenue due to lower priced data solutions for business customers. Operating expense decreased $0.2 million or 8.7% in the first quarter of 2005 compared to the same period last year. Operating income was $0.2 million compared to an operating loss of $0.1 million for the first quarter of 2004. CTC Internet Services ended the first quarter of 2005 with 15,523 DSL subscribers compared to 10,987 subscribers at the end of the first quarter of 2004, with over 1,600 net customers added in the first quarter. Dial-up accounts decreased 19% to 8,494 and high-speed accounts increased 9% to 617 at March 31, 2005 compared to March 31, 2004. Future Period Guidance We currently expect operating results to approximate the following during these future periods: - 2nd Quarter 2005 - Revenue of $41 to $42 million - Operating income of $5.2 to $5.7 million - Depreciation expense of $7.9 to $8.0 million - Consolidated earnings per diluted share of $0.16 to $0.18 - Capital expenditures of $6 to $7 million - Full Year 2005 - Revenue of $164 to $168 million - Operating income of $20.0 to $23.0 million - Depreciation expense of $31.5 to $33.0 million - Consolidated earnings per diluted share of $0.70 to $0.75 - Capital expenditures of $29 to $32 million CT Communications will host a conference call to discuss the results of the first quarter on Wednesday, May 4, 2005 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 May 31, 2005. Additionally, a replay of the call will be available until 5:00 PM ET on Friday, May 6th at 800-633-8284. Enter access number 21245562. 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/A for the year ended December 31, 2004. CT Communications, Inc. Consolidated Statements of Income (unaudited, in thousands, except per share amounts) Three Months Ended March 31, % 2005 2004 Change Operating Revenue ILEC Services $22,679 $23,699 (4.3%) Wireless Services 8,492 7,122 19.2% CLEC Services 5,135 5,038 1.9% Greenfield Services 2,291 1,945 17.8% Internet & Data Services 2,800 2,760 1.4% Total Operating Revenue 41,397 40,564 2.1% Operating Expense ILEC Services 17,261 15,455 11.7% Wireless Services 7,687 6,775 13.5% CLEC Services 5,251 5,024 4.5% Greenfield Services 2,963 2,939 0.8% Internet & Data Services 2,603 2,852 (8.7%) Other 532 588 (9.5%) Total Operating Expense 36,297 33,633 7.9% Operating Income 5,100 6,931 (26.4%) Other Income (Expense) Investment, Equity Method 1,243 1,391 (10.6%) Gains, Interest, Dividends 148 255 (42.0%) Impairment on Investments (418) (19) NMF Other Expenses, Principally Interest (1,175) (1,432) (17.9%) Total Other Income (Expense) (202) 195 (203.6%) Pre-Tax Income 4,898 7,126 (31.3%) Income Tax Expense 1,909 2,887 (33.9%) Net Income $2,989 $4,239 (29.5%) Weighted Average Diluted Shares 18,980 18,953 Earnings Per Diluted Common Share $0.16 $0.22 CT Communications, Inc. Consolidated Balance Sheets (unaudited, in thousands) March 31, December 31, 2005 2004 ASSETS Cash and Cash Equivalents $15,739 $28,358 Accounts Receivable and Unbilled Revenue, Net 16,460 17,371 Other Assets 7,966 6,244 Current Assets 40,165 51,973 Investment Securities 4,590 5,190 Investments in Unconsolidated Companies 17,239 16,002 Property, Plant and Equipment, Net 206,964 207,072 Other Assets 50,648 50,395 TOTAL ASSETS $319,606 $330,632 LIABILITIES AND STOCKHOLDERS' EQUITY Current Portion of Long-Term Debt $20,000 $5,000 Accounts Payable 6,897 6,822 Customer Deposits and Advance Billings 3,152 3,307 Other Accrued Liabilities 11,727 18,475 Liabilities of Discontinued Operations 483 604 Current Liabilities 42,259 34,208 Long-Term Debt 43,750 65,000 Deferred Credits and Other Liabilities 43,072 43,196 Stockholders' Equity 190,525 188,228 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $319,606 $330,632 CT Communications, Inc. Customer Information March 31, March 31, % 2005 2004 Change ILEC Access Lines Business Lines 28,647 29,130 (1.7%) Residential Lines 84,174 86,191 (2.3%) Total ILEC Access Lines 112,821 115,321 (2.2%) CLEC Access Lines 31,861 30,415 4.8% Greenfield Access Lines 13,451 10,674 26.0% Total Wired Access Lines 158,133 156,410 1.1% Wireless Subscribers 44,091 39,250 12.3% Long Distance Lines In ILEC 84,900 84,811 0.1% In CLEC 24,443 21,692 12.7% In Greenfield 7,326 5,130 42.8% Total Long Distance Lines 116,669 111,633 4.5% Internet Access Customers Dial-Up 8,494 10,484 (19.0%) DSL 15,523 10,987 41.3% High Speed 617 565 9.2% Total Internet Access Customers 24,634 22,036 11.8% Greenfield Projects Lines in Potential Total Service Lines Projects By Year Signed Previous Years 9,206 27,001 51 2002 3,292 12,694 24 2003 675 4,846 18 2004 278 3,864 12 2005 - 1,324 5 Totals 13,451 49,729 110 By Type Mall 2,506 2,800 3 Single Family Homes 7,330 34,411 58 Multi-Dwelling Units 2,925 11,289 40 Business 690 1,229 9 Totals 13,451 49,729 110 CT Communications, Inc. Other Selected Financial Data (unaudited, in thousands) Capital Expenditures Three Months Ended March 31, 2005 2004 ILEC $4,459 $1,988 Wireless 1,093 382 CLEC 223 211 Greenfield 1,348 742 Internet 428 297 Other 207 293 Total $7,758 $3,913 % of Revenue 18.7% 9.6% Depreciation Three Months Ended March 31, 2005 2004 ILEC $5,109 $4,714 Wireless 504 469 CLEC 629 635 Greenfield 810 720 Internet 479 516 Other 335 371 Total $7,866 $7,425 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/

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