CT Communications Announces Second Quarter Results CONCORD, N.C.,
July 28 /PRNewswire-FirstCall/ -- CT Communications, Inc.
(NASDAQ:CTCI) announces consolidated operating revenue for the
quarter ended June 30, 2005 of $41.0 million, representing a 0.7%
increase over the same period last year. Operating revenue from
CT's non-ILEC operations grew 6.7% to $19.0 million from the $17.8
million reported in the second quarter of 2004. The non-ILEC growth
was driven by an 8.7% increase in Wireless revenue, a 28.8%
increase in Greenfield revenue and a 6.0% increase in Internet and
Data revenue. Offsetting these gains were decreases in the ILEC and
CLEC's operating revenue of 4.0% and 4.6%, respectively, driven by
lower access and interconnection revenue coupled with a decline in
customer recurring line revenue. Operating income for the second
quarter of 2005 was $3.5 million, or an 8.6% operating margin,
compared to $6.2 million, or a 15.2% operating margin, for the
second quarter of 2004. The decline in operating income was
attributable to a $2.9 million increase in operating expense, which
was driven by a $1.3 million increase in Wireless roaming and
network expenses, a $0.7 million increase in certain personnel
expenses and a $0.6 million increase in depreciation expense. The
increase in personnel expense was primarily due to changes in
certain of the Company's incentive programs for stock-based
compensation. These changes in compensation programs modified the
timing of expense recognition, but were designed to have no effect
on the total compensation that employees are eligible to receive
under the programs. Other Income for the second quarter of 2005
increased to $1.4 million from the $0.8 million reported in the
second quarter of 2004 primarily due to a $1.1 million gain on the
sale of an investment. Net income for the second quarter of 2005
was $3.0 million, or $0.15 per diluted common share, compared to
$4.2 million, or $0.22 per diluted common share in the second
quarter of 2004. Operating revenue for the six months ended June
30, 2005 increased $1.1 million, or 1.4%, to $82.4 million in
comparison to the same period in 2004. Operating income decreased
to $8.6 million from the $13.1 million reported in the same prior
year period. The decrease in operating income was attributable to a
$5.6 million increase in operating expense driven by a $1.9 million
increase in Wireless roaming and network expenses, a $1.2 million
increase in certain personnel expenses, a $1.0 million increase in
depreciation expense and a $0.8 million increase in professional
fees. The increase in personnel expense was largely attributable to
a $0.5 million increase in benefits expense and a $0.4 million
increase relating to changes in incentive programs for stock-based
compensation. Net income for the six months ended June 30, 2005 was
$5.9 million, or $0.31 per diluted common share, compared to $8.4
million, or $0.44 per diluted common share for the six months ended
June 30, 2004. In June 2005, CT announced that it had entered into
an agreement with Fixed Wireless Holdings, LLC, an affiliate of
Clearwire Corporation, to sell its Broadband Radio Service "BRS"
spectrum licenses and Educational Broadband Service "EBS" spectrum
lease rights for up to $16.0 million in cash. The closing of the
sale, which is expected to occur in 2005, is subject to the consent
of the EBS spectrum licensors, regulatory approvals and other
customary closing conditions. Results by business unit: - ILEC --
("Concord Telephone") Concord Telephone's operating revenue and
income decreased to $22.0 million and $4.1 million, respectively,
in the second quarter of 2005. The decline in operating results was
attributable to a $0.9 million decrease in operating revenue
coupled with a $1.4 million increase in operating expense. The
decrease in revenue was primarily due to a $0.5 million reduction
in access and interconnection revenue and a decline in long
distance revenue primarily attributable to the migration of
customers to flat rate unlimited long distance calling plans. The
growth in operating expense was primarily driven by an increase in
benefit costs and the changes to certain of the Company's
compensation programs regarding stock-based compensation. Concord
Telephone ended the second quarter of 2005 with 111,767 access
lines in service, a 2% decrease from the second quarter of 2004. -
Wireless Service -- ("CTC Wireless") CTC Wireless second quarter
2005 operating revenue increased 8.7% to $9.0 million from the $8.2
million reported in the second quarter of 2004. Contributing to the
increase in wireless revenue was a $0.2 million increase in
customer recurring revenue associated with an 11% growth in
wireless subscribers and an increase of $0.5 million, or 19.0%, in
settlement and roaming revenue. Minutes of use on CTC's wireless
network increased 28% in comparison to the second quarter of last
year. Operating expense for the second quarter of 2005 increased to
$8.6 million, a $1.5 million increase over the prior year period.
Driving the increase in operating expense was a $0.9 million
increase in switching and other network expenses and a $0.4 million
increase in roaming expense. In February 2005, Cingular implemented
home-on-home roaming with another carrier in several North Carolina
market areas. This change has negatively impacted CTC Wireless
roaming costs and settlement revenue, shifting higher than expected
customer traffic to the other carrier's network. CTC Wireless is
working closely with Cingular to address this issue. Operating
income for the second quarter of 2005 was $0.4 million compared to
$1.2 million for the second quarter of 2004. Customer churn
declined 15% in the second quarter of 2005 compared to the same
period last year and was attributable to the Company's ongoing
focus on customer retention. CTC Wireless ended the second quarter
with 44,723 subscribers compared to 40,358 at the end of the second
quarter of 2004. - CLEC -- ("CTC Exchange Services") CLEC operating
revenue was $4.7 million in the second quarter of 2005 compared to
$5.0 million in the second quarter of 2004. The decline in
operating revenue was driven by a $0.2 million decrease in access
and interconnection revenue due to the June 2004 reduction in
interstate access rates. Offsetting the decline in operating
revenue was a $0.1 million reduction in operating expense driven by
lower line-related costs and a reduction in personnel expense.
Operating loss for the second quarter of 2005 was $0.3 million
compared to $0.2 million in the second quarter of 2004. CLEC ended
the second quarter of 2005 with 31,644 access lines in service
compared to 30,686 at the end of the second quarter of 2004. CLEC
ended the second quarter of 2005 with 24,739 long distance lines,
an increase of 2,568 long distance lines compared with the end of
the second quarter of 2004. - Greenfield -- ("CTC Exchange
Services") Greenfield's second quarter 2005 operating revenue
increased 28.8% to $2.4 million compared to the same period last
year. Greenfield line revenue and access lines grew 26.8% and 21%,
respectively, while operating expense for the second quarter grew
only 4.5% in comparison to the same quarter last year. Operating
loss for the second quarter of 2005 improved to $0.6 million
compared to an operating loss of $1.0 million for the second
quarter of 2004. Depreciation expense was $0.8 million and $0.7
million in the second quarter of 2005 and 2004, respectively.
Greenfield ended the second quarter of 2005 with 13,864 access
lines and 7,631 long distance lines in service, which represented
increases of 21% and 35%, respectively. As of June 30, 2005 the
Company had signed 111 agreements, which in total represent a
potential of more than 49,500 lines at the completion of the
projects. - Internet & Data -- ("CTC Internet Services") CTC
Internet Services' second quarter 2005 operating revenue grew 6.0%
to $2.9 million in comparison to the second quarter of 2004. DSL
revenue grew 35.9% while subscribers grew 41% from the same quarter
last year. Offsetting the DSL revenue growth was the continued
churn of dial-up customers and a decline in high-speed services
revenue due to continued price competition for data solutions for
business customers. Operating expense was relatively flat in the
second quarter of 2005 compared to the same period last year.
Operating income grew 40.4% to $0.4 million compared to the same
period last year. CTC Internet Services ended the second quarter of
2005 with 16,334 DSL subscribers compared to 11,582 subscribers at
the end of the second quarter of 2004. Dial-up accounts decreased
23% to 7,774 and high- speed accounts increased 10% to 632 at June
30, 2005 compared to June 30, 2004. Future Period Guidance We
currently expect operating results to approximate the following
during these future periods: - 3rd Quarter 2005 - Revenue of $42.5
to $43.5 million - Operating income of $5.2 to $5.8 million -
Depreciation expense of $8.0 to $8.1 million - Consolidated
earnings per diluted share of $0.20 to $0.22 - Capital expenditures
of $7.0 to $8.0 million - Full Year 2005 - Revenue of $166.0 to
$169.0 million - Operating income of $19.0 to $22.0 million -
Depreciation expense of $31.5 to $33.0 million - Consolidated
earnings per diluted share of $0.70 to $0.75 - Capital expenditures
of $27.5 to $30.5 million CT Communications will host a conference
call to discuss the results of the second quarter on Friday, July
29, 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 August 31, 2005. Additionally, a replay
of the call will be available until 5:00 PM ET on Friday, August
5th at 800-633-8284. Enter access number 21253152. 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 (Amendment No. 1) for the year
ended December 31, 2004. CT Communications, Inc. Consolidated
Statements of Income (Unaudited, in thousands, except per share
amounts) Three Months Ended June 30, % 2005 2004 Change Operating
Revenue ILEC Services $21,996 $22,906 (4.0%) Wireless Services
8,963 8,247 8.7% CLEC Services 4,721 4,951 (4.6%) Greenfield
Services 2,427 1,885 28.8% Internet & Data Services 2,926 2,760
6.0% Total Operating Revenue 41,033 40,749 0.7% Operating Expense
ILEC Services 17,894 16,499 8.5% Wireless Services 8,554 7,031
21.7% CLEC Services 4,992 5,106 (2.2%) Greenfield Services 3,014
2,885 4.5% Internet & Data Services 2,511 2,465 1.9% Other 520
583 (10.8%) Total Operating Expense 37,485 34,569 8.4% Operating
Income 3,548 6,180 (42.6%) Other Income (Expense) Investment,
Equity Method 1,305 1,338 (2.5%) Gains, Interest, Dividends 1,529
495 208.9% Impairment on Investments (111) (21) NMF Other Expenses,
Principally Interest (1,356) (1,020) 32.9% Total Other Income 1,367
792 72.6% Pre-Tax Income 4,915 6,972 (29.5%) Income Tax Expense
1,962 2,807 (30.1%) Net Income $2,953 $4,165 (29.1%) Weighted
Average Diluted Shares 19,090 19,051 Earnings Per Diluted Common
Share $0.15 $0.22 CT Communications, Inc. Consolidated Statements
of Income (Unaudited, in thousands, except per share amounts) Six
Months Ended June 30, % 2005 2004 Change Operating Revenue ILEC
Services $44,675 $46,605 (4.1%) Wireless Services 17,455 15,369
13.6% CLEC Services 9,856 9,989 (1.3%) Greenfield Services 4,718
3,830 23.2% Internet & Data Services 5,726 5,520 3.7% Total
Operating Revenue 82,430 81,313 1.4% Operating Expense ILEC
Services 35,155 31,954 10.0% Wireless Services 16,241 13,806 17.6%
CLEC Services 10,243 10,130 1.1% Greenfield Services 5,977 5,824
2.6% Internet & Data Services 5,114 5,317 (3.8%) Other 1,052
1,171 (10.2%) Total Operating Expense 73,782 68,202 8.2% Operating
Income 8,648 13,111 (34.0%) Other Income (Expense) Investment,
Equity Method 2,548 2,729 (6.6%) Gains, Interest, Dividends 1,677
750 123.6% Impairment on Investments (529) (40) NMF Other Expenses,
Principally Interest (2,531) (2,452) 3.2% Total Other Income 1,165
987 18.0% Pre-Tax Income 9,813 14,098 (30.4%) Income Tax Expense
3,871 5,694 (32.0%) Net Income $5,942 $8,404 (29.3%) Weighted
Average Diluted Shares 19,035 18,999 Earnings Per Diluted Common
Share $0.31 $0.44 CT Communications, Inc. Consolidated Balance
Sheets (Unaudited, in thousands) June 30, December 31, 2005 2004
ASSETS Cash and Cash Equivalents $21,257 $28,358 Accounts
Receivable and Unbilled Revenue, Net 15,851 17,371 Wireless
Spectrum Held-for-Sale 15,507 - Other Assets 5,583 6,244 Current
Assets 58,198 51,973 Investment Securities 4,724 5,190 Investments
in Unconsolidated Companies 17,048 16,002 Property, Plant and
Equipment, Net 204,377 207,072 Other Assets 35,549 50,395 TOTAL
ASSETS $319,896 $330,632 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Portion of Long-Term Debt $20,000 $5,000 Accounts Payable
5,736 6,822 Customer Deposits and Advance Billings 2,952 3,307
Other Accrued Liabilities 17,755 18,475 Liabilities of Discontinued
Operations 364 604 Current Liabilities 46,807 34,208 Long-Term Debt
42,500 65,000 Deferred Credits and Other Liabilities 40,689 43,196
Stockholders' Equity 189,900 188,228 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $319,896 $330,632 CT Communications, Inc.
Customer Information June 30, June 30, % 2005 2004 Change ILEC
Access Lines Business Lines 28,560 29,068 (1.7%) Residential Lines
83,207 85,394 (2.6%) Total ILEC Access Lines 111,767 114,462 (2.4%)
CLEC Access Lines 31,644 30,686 3.1% Greenfield Access Lines 13,864
11,479 20.8% Total Wired Access Lines 157,275 156,627 0.4% Wireless
Subscribers 44,723 40,358 10.8% Long Distance Lines In ILEC 84,774
84,763 - In CLEC 24,739 22,171 11.6% In Greenfield 7,631 5,655
34.9% Total Long Distance Lines 117,144 112,589 4.0% Internet
Access Customers Dial-Up 7,774 10,038 (22.6%) DSL 16,334 11,582
41.0% High Speed 632 577 9.5% Total Internet Access Customers
24,740 22,197 11.5% Greenfield Projects Lines in Potential Total
Service Lines Projects By Year Signed Previous Years 9,220 27,002
51 2002 3,532 12,694 24 2003 790 4,846 18 2004 302 3,864 12 2005 20
1,417 6 Total 13,864 49,823 111 By Type Mall 2,520 2,800 3 Single
Family Homes 7,679 34,505 59 Multi-Dwelling Units 2,946 11,289 40
Business 719 1,229 9 Total 13,864 49,823 111 CT Communications,
Inc. Other Selected Financial Data (Unaudited, in thousands)
Capital Expenditures Three Months Six Months Ended June 30, Ended
June 30, 2005 2004 2005 2004 ILEC $3,748 $3,564 $8,207 $5,552
Wireless 374 236 1,467 618 CLEC 437 185 660 396 Greenfield 1,655
1,198 3,003 1,940 Internet 170 379 598 676 Other 206 289 413 582
Total $6,590 $5,851 $14,348 $9,764 % of Revenue 16.1% 14.4% 17.4%
12.0% Depreciation Three Months Six Months Ended June 30, Ended
June 30, 2005 2004 2005 2004 ILEC $5,129 $4,958 $10,238 $9,672
Wireless 576 479 1,080 948 CLEC 634 624 1,263 1,259 Greenfield 840
745 1,650 1,465 Internet 455 283 934 799 Other 339 334 674 705
Total $7,973 $7,423 $15,839 $14,848 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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