CTCI CT Communications (MM)

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/

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