CTCI CT Communications (MM)

CONCORD, N.C., Oct. 27 /PRNewswire-FirstCall/ -- CT Communications, Inc. (NASDAQ:CTCI) announces consolidated operating revenue increased 10.0% to $44.9 million for the quarter ended September 30, 2005, from the same period last year. The $4.1 million increase in operating revenue was driven by an increase in telephone system sales in the Company's ILEC to $2.1 million in the third quarter of 2005, a $0.7 million, or 48.0% increase from the same period last year. Wireless roaming and settlement revenue increased $1.1 million driven by customer growth and an increase in network usage, access and interconnection revenue increased $1.2 million in CTC's Wireline businesses and ILEC USF (Universal Service Fund) revenue increased $0.9 million. During the third quarter CTC added over 2,700 new DSL customers and ended the quarter with 17,921 DSL customers, a 44% increase from the same quarter last year. In addition, Greenfield access lines increased 17% and Wireless customers increased 10%, while ILEC access lines declined 2% from the third quarter last year. Operating income for the quarter increased 56.2% to $7.1 million from the $4.5 million reported in the third quarter last year, representing an operating margin of 15.7% compared to 11.1% in the third quarter last year. Operating expense was $37.9 million in the third quarter of 2005, a $1.5 million increase over the third quarter of 2004. The increase in operating expense was primarily attributable to a $0.8 million increase in Wireless roaming and switching expense related to the customer growth and higher network usage, a $0.3 million increase in the cost of Wireless handset and accessory sales, a $0.3 million increase in the cost of materials associated with the higher level of telephone system sales and a $0.6 million increase in personnel expense primarily related to changes in certain of the Company's incentive programs for stock-based compensation. Partially offsetting these increases was a $0.7 million decrease in access and interconnection expense, which included a $0.4 million favorable settlement of prior period disputed access charges. Other income for the third quarter of 2005 was $0.7 million compared to $0.7 million of expense reported in the third quarter of 2004. The third quarter of 2004 included a $1.5 million impairment charge on certain of the Company's investments. Net income for the third quarter of 2005 was $4.7 million, or $0.25 per diluted common share, compared to $2.2 million, or $0.12 per diluted common share in the third quarter of 2004. Operating revenue for the nine months ended September 30, 2005 increased 4.3% to $127.4 million compared to the same period in 2004. The $5.2 million growth in operating revenue was driven by a $1.4 million increase in customer recurring revenue, a $2.1 million increase in Wireless roaming and settlement revenue and a $1.4 million increase in ILEC USF revenue. Operating income for the nine-month period in 2005 decreased to $15.7 million from the $17.6 million reported in the same period last year. Operating expense increased $7.1 million from the same nine-month period last year due to a $3.0 million increase in wireless roaming and other network related expenses driven by the growing customer base and associated higher customer usage, a $2.1 million increase in certain other administrative expenses and a $0.7 million increase in depreciation expense. The increase in administrative expenses relates to a $1.7 million increase in personnel costs driven by changes in stock-based incentive programs and higher benefit expense and a $0.4 million increase in professional fees largely due to the 2004 year- end audit and Sarbanes-Oxley Section 404 compliance. Net income for the nine months ended September 30, 2005 was $10.7 million, or $0.56 per diluted common share, compared to $10.6 million, or $0.56 per diluted common share for the nine months ended September 30, 2004. Results by business unit: * ILEC - ("Concord Telephone") Concord Telephone's operating revenue increased 8.1% to $25.2 million in the third quarter of 2005 compared to the same period last year. The $1.9 million increase in operating revenue over the third quarter of 2004 was attributable to a $0.7 million increase in telephone system sales, a $0.9 million increase in USF revenue largely due to a $0.6 million NECA (National Exchange Carrier Association) settlement related to the completion of the 2004 cost study and a $0.7 million increase in access and interconnection revenue. Offsetting the increase in operating revenue was a decline in customer recurring revenue of $0.3 million associated with a 2% decline in access lines from the third quarter of 2004. Concord Telephone ended the third quarter of 2005 with 111,043 access lines in service. Operating expense increased $1.1 million from the same period last year primarily due to a $0.6 million increase in depreciation expense and a $0.3 million increase in the cost of sales associated with the higher telephone system sales. Operating income in the third quarter of 2005 increased 13.0% to $7.0 million from the $6.2 million reported in the same period last year. * Wireless Service - ("CTC Wireless") CTC Wireless's third quarter 2005 operating revenue increased 15.8%, or $1.3 million, to $9.5 million compared to the third quarter of 2004. The increase in wireless revenue was attributable to a $1.1 million increase in roaming and settlement revenue and $0.2 million increase in customer recurring revenue. The increase in roaming and settlement revenue was driven by a 44% increase in minutes of use on CTC Wireless's network from the same period last year. Operating expense for the third quarter of 2005 increased to $8.4 million, a $1.4 million increase over the same period in the prior year. The increase in operating expense was attributable to a $0.8 million increase in switching and other network related expenses driven by the higher minutes of use on CTC Wireless's network, a $0.4 million increase in roaming expense and a $0.3 million increase in the cost of handset and accessory sales. Operating income for the third quarter of 2005 was $1.1 million compared to $1.2 million for the third quarter of 2004. CTC Wireless ended the third quarter with 45,285 subscribers compared to 41,229 at the end of the third quarter of 2004. Customer churn was held to 1.7% in the third quarter of 2005 compared with 2.1% in the same period last year. * CLEC - ("CTC Exchange Services") CLEC operating revenue in the third quarter of 2005 increased 4.1% to $4.8 million compared to the third quarter of 2004. The $0.2 million increase in operating revenue was driven by a $0.4 million increase in access and interconnection revenue that was attributable to higher access billings and to the recovery of certain prior period billing disputes. Offsetting this increase was a $0.2 million decrease in customer recurring revenue due to continued pressure on service pricing. Operating expense of $5.1 million was flat compared to the same period last year. Operating loss for the third quarter of 2005 was $0.3 million compared to $0.5 million in the third quarter of 2004. Depreciation expense was $0.6 million in the third quarter of 2005 and 2004. CLEC ended the third quarter of 2005 with 31,853 access lines and 24,723 long distance lines in service compared to 31,194 and 22,819 at the end of the third quarter of 2004, respectively. * Greenfield - ("CTC Exchange Services") Greenfield's third quarter 2005 operating revenue increased 20.8% to $2.5 million compared to the same period last year. Greenfield's customer recurring revenue and access lines grew 21.4% and 17%, respectively, while operating expense for the third quarter of 2005 grew only 4.2% in comparison to the same period last year. Operating loss for the third quarter of 2005 improved to $0.6 million compared to an operating loss of $0.9 million for the third quarter of 2004. Depreciation expense was $0.9 million and $0.8 million in the third quarter of 2005 and 2004, respectively. Greenfield ended the third quarter of 2005 with 14,387 access lines and 8,080 long distance lines in service, which represented increases of 17% and 28%, respectively. As of September 30, 2005, the Company had signed 112 agreements with developers, which in total represent a potential of more than 50,000 lines at the completion of the projects. * Internet & Data - ("CTC Internet Services") CTC Internet Services' third quarter 2005 operating revenue grew 11.2% to $2.9 million compared to the third quarter of 2004. DSL revenue grew 33.0% while DSL customers grew 44% from the same period last year. DSL customer growth exceeded revenue growth due to initial promotional discounts offered to new DSL customers. Partially offsetting the growth in DSL revenue was the continued decline of dial-up and high- speed service revenue as customers migrate to more attractively priced broadband services. Operating expense in the third quarter of 2005 decreased 28.0%, or $1.0 million, to $2.5 million compared to the same period last year. The reduction in operating expense was due to a $1.1 million decrease in depreciation expense. Operating income in the quarter improved to $0.4 million compared to an operating loss of $0.8 million in the third quarter of 2004. CTC Internet Services added 2,718 new DSL customers in the third quarter to end the quarter with 17,921 DSL customers, a 44% increase from the same period last year. Future Period Guidance We currently expect operating results to approximate the following during these future periods: * 4th Quarter 2005 * Revenue of $41.5 to $42.5 million * Operating income of $4.5 to $5.5 million * Depreciation expense of $7.9 to $8.0 million * Consolidated earnings per diluted share of $0.17 to $0.19 * Capital expenditures of $6.0 to $7.0 million * Full Year 2005 * Revenue of $169.0 to $170.0 million * Operating income of $20.0 to $21.0 million * Depreciation expense of $31.6 to $31.7 million * Consolidated earnings per diluted share of $0.72 to $0.74 * Capital expenditures of $26.6 to $27.6 million CT Communications will host a conference call to discuss the results of the third quarter on Friday, October 28, 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 November 30, 2005. Additionally, a replay of the call will be available until 5:00 PM ET on Friday, November 4th at 800-633-8284. Enter access number 21265992. 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 September 30, % 2005 2004 Change Operating Revenue ILEC Services $25,237 $23,350 8.1% Wireless Services 9,521 8,222 15.8% CLEC Services 4,785 4,596 4.1% Greenfield Services 2,463 2,039 20.8% Internet & Data Services 2,937 2,641 11.2% Total Operating Revenue 44,943 40,848 10.0% Operating Expense ILEC Services 18,194 17,118 6.3% Wireless Services 8,391 7,006 19.8% CLEC Services 5,113 5,123 (0.2%) Greenfield Services 3,075 2,951 4.2% Internet & Data Services 2,492 3,463 (28.0%) Other 600 657 (8.7%) Total Operating Expense 37,865 36,318 4.3% Operating Income 7,078 4,530 56.2% Other Income (Expense) Investment, Equity Method 1,434 1,820 (21.2%) Gains, Interest, Dividends 396 184 115.2% Impairment on Investments - (1,454) NMF Other Expenses, Principally Interest (1,162) (1,205) (3.6%) Total Other Income 668 (655) (202.0%) Pre-Tax Income 7,746 3,875 99.9% Income Tax Expense 3,010 1,631 84.5% Net Income $4,736 $2,244 111.1% Weighted Average Diluted Shares 18,975 19,054 Earnings Per Diluted Common Share $0.25 $0.12 CT Communications, Inc. Consolidated Statements of Income (Unaudited, in thousands, except per share amounts) Nine Months Ended September 30, % 2005 2004 Change Operating Revenue ILEC Services $69,912 $69,955 (0.1%) Wireless Services 26,976 23,591 14.3% CLEC Services 14,641 14,585 0.4% Greenfield Services 7,181 5,869 22.4% Internet & Data Services 8,663 8,161 6.2% Total Operating Revenue 127,373 122,161 4.3% Operating Expense ILEC Services 53,349 49,072 8.7% Wireless Services 24,632 20,812 18.4% CLEC Services 15,356 15,253 0.7% Greenfield Services 9,052 8,775 3.2% Internet & Data Services 7,606 8,780 (13.4%) Other 1,652 1,828 (9.6%) Total Operating Expense 111,647 104,520 6.8% Operating Income 15,726 17,641 (10.9%) Other Income (Expense) Investment, Equity Method 3,982 4,549 (12.5%) Gains, Interest, Dividends 2,073 934 121.9% Impairment on Investments (529) (1,494) (64.6%) Other Expenses, Principally Interest (3,693) (3,657) 1.0% Total Other Income 1,833 332 452.1% Pre-Tax Income 17,559 17,973 (2.3%) Income Tax Expense 6,881 7,324 (6.0%) Net Income $10,678 $10,649 0.3% Weighted Average Diluted Shares 18,986 19,010 Earnings Per Diluted Common Share $0.56 $0.56 CT Communications, Inc. Consolidated Balance Sheets (Unaudited, in thousands) September 30, December 31, 2005 2004 ASSETS Cash and Cash Equivalents $23,004 $28,358 Marketable Securities 2,427 - Accounts Receivable and Unbilled Revenue, Net 17,986 17,371 Wireless Spectrum Held-for-Sale 15,507 - Other Assets 6,623 6,244 Current Assets 65,547 51,973 Investment Securities 2,615 5,190 Investments in Unconsolidated Companies 17,082 16,002 Property, Plant and Equipment, Net 202,573 207,072 Other Assets 35,744 50,395 TOTAL ASSETS $323,561 $330,632 LIABILITIES AND STOCKHOLDERS' EQUITY Current Portion of Long-Term Debt $20,000 $5,000 Accounts Payable 6,834 6,822 Customer Deposits and Advance Billings 3,106 3,307 Other Accrued Liabilities 17,260 18,475 Liabilities of Discontinued Operations 270 604 Current Liabilities 47,470 34,208 Long-Term Debt 41,250 65,000 Deferred Credits and Other Liabilities 41,510 43,196 Stockholders' Equity 193,331 188,228 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $323,561 $330,632 CT Communications, Inc. Customer Information September 30, September 30, % 2005 2004 Change ILEC Access Lines Business Lines 28,532 28,912 (1.3%) Residential Lines 82,511 84,816 (2.7%) Total ILEC Access Lines 111,043 113,728 (2.4%) CLEC Access Lines 31,853 31,194 2.1% Greenfield Access Lines 14,387 12,284 17.1% Total Wired Access Lines 157,283 157,206 0.0% Wireless Subscribers 45,285 41,229 9.8% Long Distance Lines In ILEC 84,723 84,760 - In CLEC 24,723 22,819 8.3% In Greenfield 8,080 6,328 27.7% Total Long Distance Lines 117,526 113,907 3.2% Internet Access Customers Dial-Up 7,197 9,686 (25.7%) DSL 17,921 12,477 43.6% High Speed 649 561 15.7% Total Internet Access Customers 25,767 22,724 13.4% Greenfield Projects Lines in Potential Total Service Lines Projects By Year Signed Previous Years 9,306 27,033 51 2002 3,763 12,694 24 2003 869 4,846 18 2004 413 3,864 12 2005 36 1,867 7 Total 14,387 50,304 112 By Type Mall 2,529 2,800 3 Single Family Homes 8,160 34,954 60 Multi-Dwelling Units 2,950 11,289 40 Business 748 1,261 9 Total 14,387 50,304 112 CT Communications, Inc. Other Selected Financial Data (Unaudited, in thousands) Capital Expenditures Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ILEC $3,921 $4,221 $12,128 $9,773 Wireless 225 1,286 1,692 1,904 CLEC 348 144 1,008 540 Greenfield 1,055 1,201 4,058 3,141 Internet 352 408 950 1,084 Other 326 270 739 852 Total $6,227 $7,530 $20,575 $17,294 % of Revenue 13.9% 18.4% 16.2% 14.2% Depreciation Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ILEC $5,040 $4,487 $15,278 $14,159 Wireless 601 488 1,681 1,436 CLEC 635 629 1,898 1,888 Greenfield 868 774 2,518 2,239 Internet 431 1,538 1,365 2,337 Other 334 334 1,008 1,039 Total $7,909 $8,250 $23,748 $23,098 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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