CTCI CT Communications (MM)

CONCORD, N.C., April 27 /PRNewswire-FirstCall/ -- First Quarter 2006 Highlights - Company receives $97.4 million from Palmetto MobileNet transaction - Net income grows to $57.2 million, including $54.1 million from Palmetto transaction - Operating revenue increases 4.2% to $43.1 million vs. year ago quarter - Best ever quarter for net DSL additions; 35% higher than previous record - Wireless customer churn improves to 1.4% while subscribers increase 7% First Quarter 2006 Consolidated Results CT Communications, Inc. (NASDAQ:CTCI) announces net income of $57.2 million and earnings per diluted common share of $2.98 for the first quarter of 2006. The first quarter diluted earnings per share include CTC's share of Palmetto MobileNet's sale of its interests in several wireless partnerships to Alltel, which contributed $2.82 to the quarter results. Asset impairment charges related to certain fixed wireless broadband equipment and certain investment securities totaled $0.03 per share. Diluted earnings per share, excluding the effect of these items, was $0.19 in the first quarter of 2006. Consolidated operating revenue for the quarter ended March 31, 2006 increased 4.2% to $43.1 million from $41.4 million in the first quarter of 2005. The increase resulted primarily from a $0.5 million increase in customer recurring revenue, a $0.5 million increase in Wireless roaming revenue and a $0.5 million increase in access and interconnection revenue. The growth in customer recurring revenue was driven by a 40% increase in DSL customers, a 14% increase in Greenfield access lines and a 7% increase in Wireless subscribers. Partially offsetting the growth in these business units was a 2.6% decline in ILEC access lines. The increase in Wireless roaming revenue was driven by higher roaming minutes of use on the Company's wireless network, while the increase in access and interconnection revenue was primarily due to an increase in facility billings. Operating expense in the first quarter of 2006 increased 4.7% to $38.0 million from $36.3 million in the first quarter of 2005. The increase in operating expense was primarily attributable to a $0.7 million increase in cost of service, a $0.6 million increase in administrative expense, a $0.3 million increase in depreciation expense and an asset impairment charge of $0.2 million. The increase in cost of service was primarily related to a $0.5 million increase in Wireless handset and accessories expense associated with retention and contract renewal programs targeted to improve customer churn. Also contributing to the increase in cost of service was a $0.2 million increase in Wireless roaming and settlement expense related to CTC Wireless customers' higher minutes of use on other carriers' networks. The increase in administrative expense was largely due to increases in medical claims and to changes made during 2005 to certain incentive programs for stock based compensation. The asset impairment charge relates to certain fixed wireless broadband equipment. First Quarter 2006 Results by Business Unit * ILEC - ("Concord Telephone") Concord Telephone's operating revenue in the first quarter of 2006 increased 4.0% to $23.6 million from $22.7 million in the same quarter last year. The $0.9 million increase in operating revenue was primarily due to a $0.8 million increase in access and interconnection revenue associated with higher facility billings. Operating expense for the first quarter of 2006 increased 3.0% to $17.8 million from $17.3 million in the first quarter of 2005. The increase in operating expense was mainly due to a $0.4 million increase in personnel expense due to an increase in medical benefit costs and to changes made during 2005 to certain incentive programs for stock based compensation. Operating income for the first quarter of 2006 increased 7.2% to $5.8 million from $5.4 million in the same period last year. Operating margin for the first quarter of 2006 was 24.6% compared to 23.9% for the first quarter of 2005. Concord Telephone ended the first quarter of 2006 with 109,871 access lines in service, a 2.6% decrease from the first quarter of 2005. * Wireless Service - ("Wireless") Wireless' operating revenue in the first quarter of 2006 increased 7.5% to $9.1 million from $8.5 million in the first quarter of 2005. The increase was attributable to a $0.5 million increase in roaming and settlement revenue and a $0.2 million increase in customer recurring revenue driven by a 7% increase in Wireless subscribers. Operating expense in the first quarter of 2006 increased $0.9 million to $8.6 million compared to the first quarter of 2005. The increase in operating expense was primarily attributable to a $0.5 million increase in Wireless handset and accessories expense associated with retention and contract renewal programs targeted to reduce customer churn and to a $0.2 million increase in roaming and settlement expense. Operating income in the first quarter of 2006 decreased to $0.5 million from $0.8 million in the same period last year. Wireless ended the first quarter of 2006 with 47,145 subscribers, a 7% increase in customers compared to the first quarter of 2005. Customer churn in the first quarter of 2006 improved to 1.4% from 1.6% in the first quarter of 2005. * CLEC CLEC operating revenue in the first quarter of 2006 decreased $0.5 million to $4.6 million compared to the same period last year. The decline in operating revenue was due to a $0.3 million decrease in access and interconnection revenue and a $0.2 million decrease in customer recurring revenue. Access and interconnection revenue in the first quarter of 2005 included $0.5 million in recoveries of previously disputed billings, while the decline in customer recurring revenue was attributable to lower average rates for customer contract renewals. Operating loss for the first quarter of 2006 was $0.6 million compared to an operating loss of $0.1 million in the first quarter of 2005. CLEC ended the first quarter of 2006 with 33,390 access lines compared to 31,861 access lines for the same quarter last year. * Greenfield Greenfield's operating revenue in the first quarter of 2006 increased 9.6% to $2.5 million from $2.3 million in the first quarter of 2005. The increase in operating revenue was attributable to growth in customer recurring revenue driven by a 14% increase in access lines. Operating expense in the first quarter of 2006 increased $0.3 million to $3.3 million compared to the same period last year, due primarily to a $0.2 million increase in depreciation expense. Operating loss for the first quarter of 2006 was $0.8 million compared to $0.7 million in the first quarter of 2005. Greenfield ended the first quarter of 2006 with 15,324 access lines compared to 13,451 access lines in the first quarter of 2005. As of March 31, 2006 the Company had 122 Greenfield projects, which represent a potential of more than 54,000 marketable lines at the completion of the projects. * Internet & Data - ("CTC Internet Services") CTC Internet Services' operating revenue in the first quarter of 2006 increased 17.3% to $3.3 million from $2.8 million in the same period last year. DSL revenue increased $0.6 million, or 32.0% to $2.3 million, while operating expense decreased 5.1% to $2.5 million from the same quarter last year. Operating income in the first quarter of 2006 increased to $0.8 million from $0.2 million in the same quarter last year. CTC Internet Services ended the first quarter of 2006 with 21,710 DSL customers, an increase of 6,187 customers compared to the first quarter of 2005. Dial-up customers declined to 6,031, while high-speed customers increased to 716 at March 31, 2006. Future Period Guidance We currently expect operating results to approximate the following during these future periods: - 2nd Quarter 2006 -- Revenue of $41.5 to $43.5 million -- Operating income of $4.9 to $5.3 million -- Depreciation expense of $8.1 to $8.3 million -- Diluted earnings per share of $0.16 to $0.18 -- Capital expenditures of $7.0 to $9.0 million - Full Year 2006 -- Revenue of $168.0 to $172.0 million -- Operating income of $17.0 to $21.0 million -- Depreciation expense of $32.0 to $34.0 million -- Diluted earnings per share of $3.44 to $3.50 -- Capital expenditures of $35.5 to $39.5 million CT Communications will host a conference call to discuss the results of the first quarter on Friday, April 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 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, 2006. Additionally, a replay of the call will be available until 5:00 PM ET on Friday, May 5, 2006 at 800-633-8284. Enter access number 21290420. 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 for the year ended December 31, 2005. CT Communications, Inc. Consolidated Statements of Income (Unaudited, in thousands, except per share amounts) Three Months Ended March 31, % 2006 2005 Change Operating Revenue ILEC Services $23,587 $22,679 4.0% Wireless Services 9,127 8,492 7.5% CLEC Services 4,630 5,135 (9.8%) Greenfield Services 2,511 2,291 9.6% Internet & Data Services 3,284 2,800 17.3% Total Operating Revenue 43,139 41,397 4.2% Operating Expense ILEC Services 17,777 17,261 3.0% Wireless Services 8,606 7,687 12.0% CLEC Services 5,207 5,251 (0.8%) Greenfield Services 3,277 2,963 10.6% Internet & Data Services 2,469 2,603 (5.1%) Other 684 532 28.6% Total Operating Expense 38,020 36,297 4.7% Operating Income 5,119 5,100 0.4% Other Income (Expense) Investment, Equity Method 89,840 1,243 Gains, Interest, Dividends 812 148 Impairment on Investments (876) (418) Other Expenses, Principally Interest (1,034) (1,175) Total Other Income (Expense) 88,742 (202) Pre-Tax Income 93,861 4,898 Income Tax Expense 36,705 1,909 Net Income $57,156 $2,989 Diluted Weighted Average Shares 19,187 18,980 Diluted Earnings Per Share $2.98 $0.16 CT Communications, Inc. Consolidated Balance Sheets (Unaudited, in thousands) March 31, December 31, 2006 2005 ASSETS Cash and Cash Equivalents $46,555 $23,011 Temporary Investments 61,704 - Accounts Receivable and Unbilled Revenue, Net 15,058 16,336 Wireless Spectrum Held-for-Sale 15,646 15,646 Other Assets 8,739 7,220 Current Assets 147,702 62,213 Investment Securities 5,584 5,845 Investments in Unconsolidated Companies 7,324 15,618 Property, Plant and Equipment, Net 198,827 200,179 Other Assets 37,949 37,565 TOTAL ASSETS $397,386 $321,420 LIABILITIES AND STOCKHOLDERS' EQUITY Current Portion of Long-Term Debt $5,000 $15,000 Accounts Payable 7,490 8,482 Customer Deposits and Advance Billings 2,507 2,538 Income Taxes Payable 36,847 2,107 Other Accrued Liabilities 6,707 11,814 Current Liabilities 58,551 39,941 Long-Term Debt 38,750 40,000 Deferred Credits and Other Liabilities 46,446 45,599 Stockholders' Equity 253,639 195,880 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $397,386 $321,420 CT Communications, Inc. Customer Information March 31, March 31, % 2006 2005 Change ILEC Access Lines Business Lines 28,241 28,647 (1.4%) Residential Lines 81,630 84,174 (3.0%) Total ILEC Access Lines 109,871 112,821 (2.6%) CLEC Access Lines 33,390 31,861 4.8% Greenfield Access Lines 15,324 13,451 13.9% Total Wired Access Lines 158,585 158,133 0.3% Wireless Subscribers 47,145 44,091 6.9% Long Distance Lines In ILEC 85,999 84,900 1.3% In CLEC 23,485 24,443 (3.9%) In Greenfield 9,088 7,326 24.1% Total Long Distance Lines 118,572 116,669 1.6% Internet Access Customers Dial-Up 6,031 8,494 (29.0%) DSL 21,710 15,523 39.9% High Speed 716 617 16.0% Total Internet Access Customers 28,457 24,634 15.5% Greenfield Projects Projected Lines in Marketable Total Service Lines Projects By Year Signed Previous Years 13,622 40,000 75 2003 1,003 5,000 18 2004 614 4,000 12 2005 85 4,000 13 2006 - 1,000 4 Total 15,324 54,000 122 By Type Mall 2,551 3,000 3 Single Family Homes 9,014 38,000 67 Multi-Dwelling Units 2,867 11,000 41 Business 892 2,000 11 Total 15,324 54,000 122 CT Communications, Inc. Other Selected Financial Data (Unaudited, in thousands) Capital Expenditures Three Months Ended March 31, 2006 2005 ILEC $3,558 $4,459 Wireless 196 1,093 CLEC 1,242 223 Greenfield 1,592 1,348 Internet 250 428 Other 149 207 Total $6,987 $7,758 % of Revenue 16.2% 18.7% Depreciation Three Months Ended March 31, 2006 2005 ILEC $5,202 $5,109 Wireless 635 504 CLEC 658 629 Greenfield 973 810 Internet 374 479 Other 278 335 Total $8,120 $7,866 Reconciliation of Reported Results to Normalized Results Three Months Ended March 31, 2006 Fixed Investment Palmetto Asset Securities GAAP MobileNet Impairment Impairment Normalized Operating Revenue $43,139 $ - $- $- $43,139 Operating Expense 38,020 - (190) - 37,830 Operating Income 5,119 - 190 - 5,309 Other Income (Expense) 88,742 (88,939) - 876 679 Pre-Tax Income 93,861 (88,939) 190 876 5,988 Income Tax Expense 36,705 (34,817) 74 343 2,305 Net Income $57,156 $(54,122) $116 $533 $3,683 Diluted EPS $2.98 $(2.82) $0.01 $0.03 $0.19 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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