ONEONTA, AL,
- Total revenues of $26.4 million.
- Operating income of $6.2 million.
- Adjusted EBITDA (as defined below) of $12.8 million.
"Otelco delivered another quarterly increase in revenue and EBITDA while the economy continued to struggle," said
"Our capital expenditures for the quarter were
"The integration of the Country Road entities is complete with the successful billing system conversion this quarter," Weaver concluded. "With the integration behind us, our focus will be on CLEC growth by expanding our operations in northern Maine and neighboring New England states. As evidenced by our nineteenth consecutive IDS dividend, we remain committed to returning cash to our shareholders."
Distribution to Income Deposit Security Holders
-----------------------------------------------
Each quarter, the Board will consider the declaration of dividends during its normally scheduled meeting. For this quarter, the Board is meeting on
Third Quarter 2009 Financial Summary
(Dollars in thousands, except per share amounts)
Three Months Ended Change
Sept. 30, --------------------
2008 2009 Amount Percent
-------------------------------------------------------------------------
Revenues $ 18,238 $ 26,403 $ 8,165 44.8%
Operating income $ 5,665 $ 6,209 $ 544 9.6%
Interest expense $ (4,774) $ (6,469) $ 1,695 35.5%
Net income (loss)
available to
stockholders $ 789 $ (12) $ (801) *
Basic net income
(loss) per share $ 0.06 $ (0.00) $ (0.06) *
Diluted net income
(loss) per share $ 0.04 $ (0.01) $ (0.05) *
Adjusted EBITDA(a) $ 9,013 $ 12,784 $ 3,771 41.8%
Capital expenditures $ 2,901 $ 2,815 $ (86) (3.0)%
Nine Months Ended Change
Sept. 30, --------------------
2008 2009 Amount Percent
-------------------------------------------------------------------------
Revenues $ 53,766 $ 77,700 $ 23,934 44.5%
Operating income $ 15,811 $ 16,390 $ 579 3.7%
Interest expense $ (14,230) $ (19,515) $ 5,285 37.1%
Net income (loss)
available to
stockholders $ 1,603 $ (1,599) $ (3,202) *
Basic net income
(loss) per share $ 0.13 $ (0.13) $ (0.26) *
Diluted net income
(loss) per share $ 0.10 $ (0.13) $ (0.23) *
Adjusted EBITDA(a) $ 26,345 $ 36,637 $ 10,292 39.1%
Capital expenditures $ 6,849 $ 6,392 $ (457) (6.7)%
* Not a meaningful calculation
Reconciliation of Adjusted EBITDA to Net Income (Loss)
------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2009 2008 2009
------------ ------------ ------------ ------------
Adjusted EBITDA
Net income (loss) $ 789 $ (12) $ 1,603 $ (1,599)
Add: Depreciation 2,748 3,417 8,276 10,594
Interest expense -
net of premium 4,167 5,683 12,443 17,393
Interest expense -
caplet cost 253 469 723 1,169
Interest expense -
bond premium (19) (21) (54) (61)
Interest expense -
amortize loan
cost 373 338 1,118 1,014
Gain/loss from
investment - - (45) -
Income tax expense
(benefit) 464 (144) 696 (1,109)
Change in fair
value of
derivative (174) (74) (100) (149)
Loan fees 19 19 57 57
Amortization -
intangibles 393 3,109 1,628 9,328
------------ ------------ ------------ ------------
Adjusted EBITDA $ 9,013 $ 12,784 $ 26,345 $ 36,637
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
(a) Adjusted EBITDA is defined as consolidated net income (loss) plus
interest expense, depreciation and amortization, income taxes and
certain non-recurring fees, expenses or charges and other non-cash
charges reducing consolidated net income. Adjusted EBITDA is not a
measure calculated in accordance with generally acceptable accounting
principles (GAAP). While providing useful information, Adjusted
EBITDA should not be considered in isolation or as a substitute for
consolidated statement of operations data prepared in accordance with
GAAP. The Company believes Adjusted EBITDA is useful as a tool to
analyze the Company on the basis of operating performance and
leverage. The definition of Adjusted EBITDA corresponds to the
definition of Adjusted EBITDA in the indenture governing the
Company's senior subordinated notes and its credit facility and
certain of the covenants contained therein. The Company's
presentation of Adjusted EBITDA may not be comparable to similarly
titled measures used by other companies.
Otelco Inc. (including Acquired Entities at date of acquisition)
----------------------------------------------------------------
June 30 -
Sept. 30
March June Sept. %
Key Operating December 31, 31, 30, 30, Change
Statistics 2007 2008 2009 2009 2009 2009
-------- -------- -------- -------- -------- --------
RLEC access lines:
Voice lines 36,687 51,530 50,807 50,078 48,998 (2.2)%
Data lines 12,160 18,709 19,365 19,596 19,784 1.0%
-------- -------- -------- -------- -------- --------
RLEC access line
equivalents(1) 48,847 70,239 70,172 69,674 68,782 (1.3)%
CLEC access
lines:
Voice lines 16,973 26,558 26,744 27,110 28,153 3.8%
Data lines 2,571 3,246 3,228 3,298 3,297 (0.0)%
-------- -------- -------- -------- -------- --------
CLEC access line
equivalents(1) 19,544 29,804 29,972 30,408 31,450 3.4%
Otelco access line
equivalents(1) 68,391 100,043 100,144 100,082 100,232 0.1%
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Cable television
customers 4,169 4,082 4,132 4,114 4,126 0.3%
Wholesale network
connections - 98,187 113,855 122,471 127,317 4.0%
Dial-up internet
customers 15,249 11,864 10,885 10,165 9,651 (5.1)%
(1) We define access line equivalents as voice access lines and data
access lines (including cable modems, digital subscriber lines, and
dedicated data access trunks).
FINANCIAL DISCUSSION FOR THIRD QUARTER 2009:
All financial information includes three entities acquired from Country
-----------------------------------------------------------------------
Road Communications LLC on and as of October 31, 2008.
------------------------------------------------------
Revenue
-------
Total revenues grew 44.8% in the three months ended
Operating Expenses
------------------
Operating expenses in the three months ended
Interest Expense
----------------
Interest expense increased 35.5% to
Adjusted EBITDA
---------------
Adjusted EBITDA for the three months ended
Balance Sheet
-------------
As of
Capital Expenditures
--------------------
Capital expenditures were
Third Quarter Earnings Conference Call
--------------------------------------
Otelco has scheduled a conference call, which will be broadcast live over the Internet, on
ABOUT OTELCO
Otelco Inc., headquartered in Oneonta, Alabama, provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri, New Hampshire and West Virginia. The Company's services include local and long distance telephone, network access, transport, digital high-speed data lines and dial-up Internet access, cable television and other telephone related services. With more than 100,000 voice and data access lines, which are collectively referred to as access line equivalents, Otelco is among the top 25 largest local exchange carriers in the
FORWARD LOOKING STATEMENTS
Statements in this press release that are not statements of historical or current fact constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes", "belief," "expects," 'intends," "anticipates," "plans," or similar terms to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the Securities and Exchange Commission.
OTELCO INC.
Consolidated Balance Sheets
As of As of
December 31, September 30,
2008 2009
-------------- --------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 13,542,255 $ 16,717,829
Accounts receivable:
Due from subscribers, net of allowance
for doubtful accounts of $318,446 and
$365,076 respectively 5,207,731 4,707,292
Unbilled receivables 2,567,730 2,488,917
Other 4,348,044 3,327,553
Materials and supplies 2,305,755 2,092,842
Prepaid expenses 1,141,908 1,052,704
Income tax receivable 181,644 6,000
Deferred income taxes 827,686 827,686
-------------- --------------
Total current assets 30,122,753 31,220,823
-------------- --------------
Property and equipment, net 75,407,062 70,057,795
Goodwill 189,334,837 188,190,078
Intangible assets, net 44,390,644 36,261,961
Investments 2,015,583 1,996,451
Deferred financing costs 8,315,921 7,301,991
Deferred income taxes 5,897,382 6,123,703
Interest rate cap 7,765 -
Other assets 49,540 203,233
-------------- --------------
Total assets $ 355,541,487 $ 341,356,035
-------------- --------------
-------------- --------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 2,312,920 $ 2,304,996
Accrued expenses 6,632,287 5,853,988
Advance billings and payments 2,024,123 1,660,142
Customer deposits 180,582 191,324
-------------- --------------
Total current liabilities 11,149,912 10,010,450
-------------- --------------
Deferred income taxes 45,962,402 45,328,310
Interest rate swaps - 1,318,608
Advance billings and payments 739,736 708,698
Other liabilities 188,346 158,387
Long-term notes payable 278,799,513 273,738,754
-------------- --------------
Total liabilities 336,839,909 331,263,207
-------------- --------------
Derivative liability 238,054 89,318
Class B common convertible to senior
subordinated notes 4,085,033 4,085,033
Stockholders' equity
Class A Common stock, $.01 par value-
authorized 20,000,000 shares; issued
and outstanding 12,676,733 shares 126,767 126,767
Class B Common stock, $.01 par value-
authorized 800,000 shares; issued and
outstanding 544,671 shares 5,447 5,447
Additional paid in capital 19,277,959 12,575,136
Retained deficit (3,870,923) (5,470,262)
Accumulated other comprehensive loss (1,160,759) (1,318,611)
-------------- --------------
Total stockholders' equity 14,378,491 5,918,477
-------------- --------------
Total liabilities and stockholders'
equity $ 355,541,487 $ 341,356,035
-------------- --------------
-------------- --------------
OTELCO INC.
Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2008 2009 2008 2009
------------- ------------- ------------- -------------
Revenues
Local services $ 6,678,826 $ 12,396,806 $ 20,116,902 $ 36,315,205
Network access 6,694,486 8,517,512 19,237,269 24,876,708
Cable television 601,025 614,114 1,713,457 1,833,164
Internet 3,028,963 3,500,870 9,060,822 10,542,696
Transport
services 1,234,274 1,373,832 3,637,276 4,132,208
------------- ------------- ------------- -------------
Total revenues 18,237,574 26,403,134 53,765,726 77,699,981
------------- ------------- ------------- -------------
Operating expenses
Cost of services
and products 6,654,860 10,445,442 20,052,583 31,245,153
Selling, general
and
administrative
expenses 2,777,411 3,222,825 7,998,818 10,142,354
Depreciation and
amortization 3,140,688 6,525,796 9,903,702 19,922,383
------------- ------------- ------------- -------------
Total operating
expenses 12,572,959 20,194,063 37,955,103 61,309,890
------------- ------------- ------------- -------------
Income from
operations 5,664,615 6,209,071 15,810,623 16,390,091
------------- ------------- ------------- -------------
Other income
(expense)
Interest expense (4,773,647) (6,468,875) (14,229,727) (19,514,730)
Change in fair
value of
derivative 173,842 74,274 99,787 148,736
Other income 188,160 29,540 618,785 267,911
------------- ------------- ------------- -------------
Total other
expenses (4,411,645) (6,365,061) (13,511,155) (19,098,083)
------------- ------------- ------------- -------------
Income (loss)
before income tax 1,252,970 (155,990) 2,299,468 (2,707,992)
Income tax
(expense) benefit (463,727) 144,251 (696,049) 1,108,652
------------- ------------- ------------- -------------
Net income (loss)
available to
common
stockholders $ 789,243 $ (11,739) $ 1,603,419 $ (1,599,340)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average
shares outstanding:
Basic 12,676,733 12,676,733 12,676,733 12,676,733
Diluted 13,221,404 13,221,404 13,221,404 13,221,404
Net income (loss)
per share:
Basic $ 0.06 $ (0.00) $ 0.13 $ (0.13)
Diluted $ 0.04 $ (0.01) $ 0.10 $ (0.13)
Dividends declared
per share $ 0.18 $ 0.18 $ 0.53 $ 0.53
OTELCO INC.
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended
September 30,
2008 2009
-------------- --------------
Cash flows from operating activities:
Net income (loss) $ 1,603,419 $ (1,599,340)
Adjustments to reconcile net income to
cash flows from operating activities:
Depreciation 8,275,580 10,594,257
Amortization 1,628,122 9,328,126
Interest rate caplet 722,527 1,168,521
Amortization of debt premium (54,117) (60,759)
Amortization of loan costs 1,118,481 1,013,930
Change in fair value of derivative (99,787) (148,736)
Provision for deferred income taxes - 114,171
Provision for uncollectible revenue 229,404 271,536
Gain on early lease termination (121,124) -
Changes in assets and liabilities; net
of assets and liabilities acquired:
Accounts receivables (582,528) 1,147,822
Material and supplies (268,213) 212,913
Prepaid expenses and other assets 601,101 89,204
Income tax receivable 255,106 175,644
Accounts payable and accrued
liabilities 1,302,625 (616,048)
Advance billings and payments (181,015) (395,019)
Other liabilities 5,539 (19,216)
-------------- --------------
Net cash from operating activities 14,435,120 21,277,006
-------------- --------------
Cash flows from investing activities:
Acquisition and construction of property
and equipment (6,848,799) (6,392,058)
Deferred charges (533,098) (6,551)
-------------- --------------
Net cash used in investing activities (7,381,897) (6,398,609)
-------------- --------------
Cash flows from financing activities:
Cash dividends paid (6,702,822) (6,702,823)
Repayment of long-term notes payable - (5,000,000)
-------------- --------------
Net cash used in financing activities (6,702,822) (11,702,823)
-------------- --------------
Net increase in cash and cash equivalents 350,401 3,175,574
Cash and cash equivalents, beginning of
period 12,810,497 13,542,255
-------------- --------------
Cash and cash equivalents, end of period $ 13,160,898 $ 16,717,829
-------------- --------------
-------------- --------------
Supplemental disclosures of cash flow
information:
Interest paid $ 12,705,214 $ 17,763,703
-------------- --------------
-------------- --------------
Income taxes paid (received) $ (122,606) $ 53,658
-------------- --------------
-------------- --------------
Non-cash gain on early lease termination $ (121,124) $ -
-------------- --------------
For further information: Curtis Garner, Chief Financial Officer, Otelco Inc., (205) 625-3571, [email protected]
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