EX-99.1 2 g02579exv99w1.htm EX-99.1 Ex-99.1
 

         
 
   Exhibit 99.1
 
     (CTC LOGO)
CT COMMUNICATIONS PRESS RELEASE
        
 
        
 
   For Immediate Release
 
   July 27, 2006
 
   Concord, NC
 
   Contact:
 
   Jim Hausman
 
     704.722.2410
 
   Ron Marino
 
     704.722.2212
CT Communications Announces Second Quarter 2006 Results
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

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      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.

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  •   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
  o   Revenue of $43.0 to $44.0 million
 
  o   Operating income of $5.5 to $6.5 million
 
  o   Depreciation expense of $8.1 to $8.3 million
 
  o   Diluted earnings per share of $0.20 to $0.22
 
  o   Capital expenditures of $10.0 to $12.0 million
  •   Full Year 2006
  o   Revenue of $173.0 to $175.0 million
 
  o   Operating income of $21.0 to $23.0 million
 
  o   Depreciation expense of $32.5 to $33.5 million

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  o   Diluted earnings per share of $0.71 to $0.75, excluding the $2.77 related to the estimated full-year impact of the PMN transaction
 
  o   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 www.ctc.net. If you are unable to listen during the live webcast, the call will be archived on the web site at 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

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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          

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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          

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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  
 
            

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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  
 
                        

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CT Communications, Inc.
Other Selected Financial Data
(Unaudited, in thousands)
Capital Expenditures
                                 
    Three Months Ended June 30,     Six Months 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 Ended June 30,     Six Months 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  
     

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