| [February 26, 2008] |
 |
Citizens Communications Reports 2007 Fourth-Quarter Results; Announces New Stock Repurchase Program
STAMFORD, Conn. --(Business Wire)-- Citizens Communications (NYSE:CZN) today reported fourth quarter 2007 revenue of $577.2 million, operating income of $174.9 million, and net income of $59.0 million.
"We delivered another quarter of strong financial and operating results," said Maggie Wilderotter, Chairman and CEO of Citizens. "Continued customer product revenue growth along with disciplined expense control, realized synergies on our Commonwealth acquisition and other expense reduction initiatives generated a 55.4 percent operating cash flow margin. Our penetration levels increased on all bundled products as our fourth quarter promotions drove residential high speed penetration to 32 percent and high speed revenues continue to be over $40.00 per customer per month. Our wireless data roll-out is now up and running in 13 municipalities, four colleges and universities and over 50 hot spots in our territory. Finally, our integration of Global Valley Networks is well underway."
Revenue for the fourth quarter of 2007 was $577.2 million, as compared to $504.4 million in the fourth quarter of 2006, a 14 percent increase. The fourth quarter 2007 increase of $72.8 million is primarily the result of $82.4 million of revenues contributed by the operations of Commonwealth Telephone Enterprises, which was acquired on March 8, 2007, and Global Valley, which was acquired on October 31, 2007, and a $15.8 million increase in data and internet services revenue, offset by declines in Federal and state subsidies and a decline in basic access lines.
Other operating expenses and network access expenses for the fourth quarter of 2007 were $257.2 million, as compared to $229.5 million in the fourth quarter of 2006, a 12 percent increase. The fourth quarter 2007 increase of $27.7 million is primarily the result of $20.7 million in expenses attributable to the acquired operations of Commonwealth Telephone Enterprises and Global Valley ($35.1 million excluding the impact of a pension curtailment gain of $14.4 million, resulting from the freeze placed on certain pension benefits of the former Commonwealth employees). The purchases of Commonwealth Telephone Enterprises and Global Valley have enabled the Company to leverage its centralized back office, customer service and administrative support functions over a larger customer base.
Operating income for the fourth quarter of 2007 was $174.9 million and operating income margin was 30.3 percent, as compared to operating income of $157.0 million and operating income margin of 31.1 percent in the fourth quarter of 2006. The fourth quarter 2007 increase of $17.9 million is primarily the result of $32.2 million contributed by the acquired operations of Commonwealth Telephone Enterprises and Global Valley, partially offset by increases in network access expenses and a reduction in revenue.
The Company added approximately 22,400 high-speed internet customers during the fourth quarter of 2007 and had more than 523,800 high-speed internet customers at December 31, 2007. The Company added approximately 9,400 video customers during the fourth quarter of 2007 and had more than 93,500 video customers at December 31, 2007. These fourth quarter net additions to high-speed internet and video customers exclude the impact of the Global Valley acquisition.
The Global Valley acquisition was completed on October 31, 2007. Global Valley represents $2.3 million of revenue for the two months in the quarter, 15,300 access lines and 4,200 high-speed internet customers.
Capital expenditures were $113.2 million for the fourth quarter of 2007 and $315.8 million for the year, including $34.3 million related to the acquired properties since the date of their respective acquisitions.
Free cash flow was $105.3 million for the fourth quarter of 2007 and $528.0 million for the year. The Company's $1 per common share annual dividend represents a payout of 64 percent of free cash flow for the year.
During the fourth quarter, the Company repurchased 2,175,000 shares of its common stock for $30.9 million and completed its $250.0 million authorized stock repurchase program.
The Company's Board of Directors has authorized a new common stock share repurchase program. Under the new program, up to $200 million of common stock may be repurchased over the next 12 months.
The Company expects that its capital expenditures and free cash flow for the full year 2008 will be approximately $300 million to $310 million and approximately $450 million to $475 million, respectively. The Company's 2008 free cash flow expectations take into consideration an estimate of cash taxes in the range of $130 million to $140 million. The Company's 2008 cash tax estimate does not reflect the impact of the "Economic Stimulus Act of 2008," which the Company is currently evaluating.
The Company's next regular quarterly cash dividend of $0.25 per share will be paid on March 31, 2008 to shareholders of record on March 10, 2008. The Company expects that dividends paid to stockholders in 2008 will be treated as dividends for federal income tax purposes. Shareholders are encouraged to consult with their tax advisors.
The Company uses certain non-GAAP financial measures in evaluating its performance. These include free cash flow and operating cash flow. A reconciliation of the differences between free cash flow and operating cash flow and the most comparable financial measures calculated and presented in accordance with GAAP is included in the tables that follow. The non-GAAP financial measures are by definition not measures of financial performance under generally accepted accounting principles and are not alternatives to operating income or net income reflected in the statement of operations or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by the Company may not be comparable to similarly titled measures of other companies.
The Company believes that presentation of non-GAAP financial measures provides useful information to investors regarding the Company's financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) together provide a more comprehensive view of the Company's core operations and ability to generate cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions, and (iii) presents measurements that investors and rating agencies have indicated to management are useful to them in assessing the Company and its results of operations. Management uses these non-GAAP financial measures to plan and measure the performance of its core operations, and its divisions measure performance and report to management based upon these measures. In addition, the Company believes that free cash flow and operating cash flow, as the Company defines them, can assist in comparing performance from period to period, without taking into account factors affecting cash flow reflected in the statement of cash flows, including changes in working capital and the timing of purchases and payments. The Company has shown adjustments to its financial presentations to exclude $14.4 million in pension curtailment gain in the fourth quarter and full year of 2007, and $3.2 million of severance and early retirement costs in the fourth quarter of 2006, and severance and early retirement costs of $13.9 million for the full year of 2007 and $7.2 million for the full year 2006, because the Company believes that the magnitude of such gains and costs in the third and fourth quarters of 2007 materially exceeds that which has been incurred by the Company in any other quarter during 2006 and 2007.
Management uses these non-GAAP financial measures to (i) assist in analyzing the Company's underlying financial performance from period to period, (ii) evaluate the financial performance of its business units, (iii) analyze and evaluate strategic and operational decisions, (iv) establish criteria for compensation decisions, and (v) assist management in understanding the Company's ability to generate cash flow and, as a result, to plan for future capital and operational decisions. Management uses these non-GAAP financial measures in conjunction with related GAAP financial measures. The Company believes that the non-GAAP financial measures are meaningful and useful for the reasons outlined above.
While the Company utilizes these non-GAAP financial measures in managing and analyzing its business and financial condition and believes they are useful to management and to investors for the reasons described above, these non-GAAP financial measures have certain shortcomings. In particular, free cash flow does not represent the residual cash flow available for discretionary expenditures, since items such as debt repayments and dividends are not deducted in determining such measure. Operating cash flow has similar shortcomings as interest, income taxes, capital expenditures, debt repayments and dividends are not deducted in determining this measure. Management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures. The information in this press release should be read in conjunction with the financial statements and footnotes contained in our documents filed with the U.S. Securities and Exchange Commission.
About Citizens Communications
Citizens Communications Company (NYSE:CZN) operates under the brand name of Frontier and offers telephone, television and internet services in 24 states with approximately 5,900 employees. More information is available at www.czn.com, www.frontieronline.com and www.frontier.myway.com.
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. These statements are made on the basis of management's views and assumptions regarding future events and business performance. Words such as "believe," "anticipate," "expect," and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties are based on a number of factors, including but not limited to: reductions in the number of our access lines and high-speed internet subscribers; the effects of competition from cable, wireless and other wireline carriers (through voice over internet protocol (VOIP) or otherwise); the effects of greater than anticipated competition requiring new pricing, marketing strategies or new product offerings and the risk that we will not respond on a timely or profitable basis; the effects of general and local economic, business, industry and employment conditions on our revenues; our ability to effectively manage service quality; our ability to successfully introduce new product offerings, including our ability to offer bundled service packages on terms that are both profitable to us and attractive to our customers; our ability to sell enhanced and data services in order to offset ongoing declines in revenue from local services, switched access services and subsidies; changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles or regulators; the effects of ongoing changes in the regulation of the communications industry as a result of federal and state legislation and regulation, including potential changes in state rate of return limitations on our earnings, access charges and subsidy payments, and regulatory network upgrade and reliability requirements; our ability to effectively manage our operations, operating expenses and capital expenditures, to pay dividends and to reduce or refinance our debt; adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations, which could limit or restrict the availability and/or increase the cost of financing; the effects of bankruptcies in the telecommunications industry, which could result in potential bad debts; the effects of technological changes and competition on our capital expenditures and product and service offerings, including the lack of assurance that our ongoing network improvements will be sufficient to meet or exceed the capabilities and quality of competing networks; the effects of increased medical, retiree and pension expenses and related funding requirements; changes in income tax rates, tax laws, regulations or rulings, and/or federal or state tax assessments; the effects of state regulatory cash management policies on our ability to transfer cash among our subsidiaries and to the parent company; our ability to successfully renegotiate union contracts expiring in 2008 and thereafter; our ability to pay a $1.00 per common share dividend annually, which may be affected by our cash flow from operations, amount of capital expenditures, debt service requirements, cash paid for income taxes (which will increase in the future) and our liquidity; the effects of fully utilizing our federal net operating loss carryforwards and AMT tax credit carryforwards that were generated in prior years, which have significantly increased our cash taxes in 2007 and will continue to do so in 2008 and 2009; the effects of any future liabilities or compliance costs in connection with worker health and safety matters; and the effects of any unfavorable outcome with respect to any of our current or future legal, governmental or regulatory proceedings, audits or disputes. These and other uncertainties related to our business are described in greater detail in our filings with the Securities and Exchange Commission, including our reports on Forms 10-K and 10-Q and the foregoing information should be read in conjunction with these filings. We do not intend to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances.
Citizens Communications Company
Consolidated Financial Data (1)
For the quarter For the year ended
ended December 31,
December 31,
-------------------- -----------------------
(Amounts in
thousands,
except per
share % %
amounts) 2007 2006 Change 2007 2006 Change
--------------------------- -----------------------------
Income
Statement
Dat
a
Revenue $577,228 $504,396 14% $2,288,015 $2,025,367 13%
--------- --------- ----------- ----------
Network
access
expenses 66,601 49,836 34% 228,242 171,247 33%
Other
operating
expenses 190,580 179,664 6% 808,501 733,143 10%
Depreciation
and
amortization 145,156 117,923 23% 545,856 476,487 15%
--------- --------- ----------- ----------
Total
operating
expenses 402,337 347,423 16% 1,582,599 1,380,877 15%
--------- --------- ----------- ----------
Operating
income 174,891 156,973 11% 705,416 644,490 9%
Investment
and other
income
(loss), net
(2) 7,276 14,070 -48% 17,948 82,443 -78%
Interest
expense 92,925 83,526 11% 380,696 336,446 13%
--------- --------- ----------- ----------
Income from
continuing
operations
before
income
taxes 89,242 87,517 2% 342,668 390,487 -12%
Income tax
expense 30,229 23,576 28% 128,014 136,479 -6%
--------- --------- ----------- ----------
Income from
continuing
operations 59,013 63,941 -8% 214,654 254,008 -15%
Income (loss)
from
discontinued
operations,
net
of tax
(3) - (30) 100% - 90,547 -100%
--------- --------- ----------- ----------
Net income
attributable
to common
shareholders$ 59,013 $ 63,911 -8% $ 214,654 $ 344,555 -38%
========= ========= =========== ==========
Weighted
average
shares
outst
anding 327,028 320,774 2% 331,037 322,641 3%
Basic net
income per
share
attributable
to
common[FEED_CR
LF]shareholders
(4)
Income from
continuing
operations $ 0.18 $ 0.20 -10% $ 0.65 $ 0.79 -18%
Income from
discontinued
operations - - 0% - 0.28 -100%
--------- --------- ----------- ----------
Net income
per common
share $ 0.18 $ 0.20 -10% $ 0.65 $ 1.07 -39%
========= ========= =========== ==========
Other
Financial
Data
Capital[
FEED_CRLF]expenditures$113,152 $105,450 7% $ 315,793 $ 268,806 17%
Operating
cash flow
(5) 320,047 274,896 16% 1,251,272 1,120,977 12%
Free cash
flow (5) 105,293 101,348 4% 528,005 561,784 -6%
Dividends
paid 81,941 80,556 2% 336,025 323,671 4%
Dividend
payout ratio
(6) 78% 79% -1% 64% 58% 10%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
(2) In April 2007, we redeemed $495.2 million principal amount of our
7.625% Senior Notes due 2008. The debt retirement generated a
pre-tax loss on the early extinguishment of approximately $16.3
million. In April 2006, we received $64.6 million upon the
liquidation of the Rural Telephone Bank.
(3) On July 31, 2006, we sold our CLEC business, Electric Lightwave,
LLC (ELI), for $247.0 million in cash plus the assumption of
approximately $4.0 million in capital lease obligations. We
recognized an after-tax gain on the disposal of ELI of $71.6
million.
(4) Calculated based on weighted average shares outstanding.
(5) A reconciliation to the most comparable GAAP measure is presented
at the end of these tables.
(6) Represents dividends paid divided by free cash flow.
Citizens Communications Company
Consolidated Financial and Operating Data (1)
For the quarter ended For the year ended
December 31, December 31,
---------------------- -----------------------
(Amounts in
thousands,
except
operating % %
data) 2007 2006 Change 2007 2006 Change
---------------------------- -----------------------------
Select
Income
Statem
ent
Data
Revenue
Local
services $ 219,977 $ 199,729 10% $ 875,762(2)$ 809,584 8%
Data and
internet
services 147,292 111,378 32% 543,764(2) 424,209 28%
Access
services 113,881 107,147 6% 479,462 427,959 12%
Long
distance
services 45,313 36,493 24% 180,525 153,272 18%
Directory
services 28,910 28,423 2% 114,586 114,138 0%
Other 21,855 21,226 3% 93,916 96,205 -2%
---------- ---------- ---------- ----------
Total
revenue 577,228 504,396 14% 2,288,015 2,025,367 13%
---------- ---------- ---------- ----------
Expenses
Network
access
expenses 66,601 49,836 34% 228,242(2) 171,247 33%
Other
operating
expenses
(3) 190,580 179,664 6% 808,501(2) 733,143 10%
Deprecia-
tion and
amor-
tization 145,156 117,923 23% 545,856 476,487 15%
---------- ---------- ---------- ----------
Total
operating
expenses 402,337 347,423 16% 1,582,599 1,380,877 15%
---------- ---------- ---------- ----------
Operating
Income $ 174,891 $ 156,973 11% $ 705,416 $ 644,490 9%
========== ========== ========== ==========
Other
Financial
and
Operating
Data
Employees 5,939 5,446 9% 5,939 5,446 9%
Access
lines 2,431,676 2,126,574 14% 2,431,676 2,126,574 14%
High-speed
internet
(HSI)
sub-
scribers 523,845 393,184 33% 523,845 393,184 33%
Video
sub-
scribers 93,596 62,851 49% 93,596 62,851 49%
Long
distance
sub-
scribers 1,569,620 1,382,411 14% 1,569,620 1,382,411 14%
Switched
access
minutes
of use
(in
millions) 2,605 2,434 7% 10,592 10,227 4%
Average
monthly
revenue
per
average
access
line (4) $ 78.64 $ 78.48 0% $ 81.50 $ 77.25 6%
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
(2) Reflects a reclassification of $14.1 million of revenue of our CTE
acquisition from local services to data and internet services.
Also, expenses reflect a reclassification of $2.4 million of
expenses of our CTE acquisition from other operating expenses to
network access expenses.
(3) For the year ended December 31, 2007, includes severance and early
retirement costs of $13.9 million. For the quarter and year ended
December 31, 2006, includes severance and early retirement costs
of $3.2 million and $7.2 million, respectively. For the quarter
and year ended December 31, 2007, includes pension curtailment
gain of $14.4 million.
(4) For the year ended December 31, 2007, the calculation excludes CTE
and GVN data and includes the $38.7 million favorable impact from
the first quarter 2007 settlement of a switched access dispute.
The amount is $79.94 without the $38.7 million favorable impact
from the settlement.
Citizens Communications Company
Condensed Consolidated Balance Sheet Data (1)
(Amounts in thousands)
December December
31, 2007 31, 2006
---------- ----------
ASSETS
------------------------------------------------
Curr
ent assets:
Cash and cash equivalents $ 226,466 $1,041,106
Accounts receivable and other current assets 297,688 231,887
---------- ----------
Total current assets 524,154 1,272,993
Property, plant and equipment, net 3,335,244 2,983,504
Other long-term assets 3,396,671 2,541,039
---------- ----------
Total assets $7,256,069 $6,797,536
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------------
Curr
ent liabilities:
Long-term debt due within one year $ 2,448 $ 39,271
Accounts payable and other current liabilities 443,443 386,372
---------- ----------
Total current liabilities 445,891 425,643
Deferred income taxes and other liabilities 1,075,382 846,775
Long-term debt 4,736,897 4,467,086
Shareholders' equity 997,899 1,058,032
---------- ----------
Total liabilities and shareholders' equity $7,256,069 $6,797,536
========== ==========
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
Citizens Communications Company
Consolidated Cash Flow Data (1)
(Amounts in thousands)
For the year ended
December 31,
------------------------
2007 2006
------------ -----------
Cash flows provided by (used in) operating
activities:
Net income $ 214,654 $ 344,555
Deduct: Income from discontinued
operations - (18,912)
Gain on sale of discontinued
operations - (71,635)
Adjustments to reconcile income to net cash
provided
by operating activities:
Depreciation and amortization expense 545,856 476,487
Stock based compensation expense 9,022 10,340
Loss on debt exchange - 2,420
Losses on extinguishment of debt 20,186 -
Investment gain - (61,428)
Other non-cash adjustments (7,598) 5,204
Deferred income taxes 81,011 132,031
Legal settlement (7,905) -
Change in accounts receivable (4,714) 15,333
Change in accounts payable and other
liabilities (36,257) (3,064)
Change in other current assets 7,428 (2,148)
------------ -----------
Net cash provided by continuing operating
activities 821,683 829,183
Cash flows provided from (used by) investing
activities:
Capital expenditures (315,793) (268,806)
Cash paid for acquisitions, net (725,548) -
Proceeds from sale of discontinued
operations - 255,305
Other assets (purchased) distributions
received, net 6,629 67,050
------------ -----------
Net cash (used by) provided from investing
activities (1,034,712) 53,549
Cash flows provided from (used by) financing
activities:
Long-term debt borrowings 950,000 550,000
Debt issuance costs (12,196) (6,948)
Premium paid to retire debt (20,186) -
Long-term debt payments (946,070) (227,693)
Issuance of common stock 13,808 27,200
Dividends paid (336,025) (323,671)
Common stock repurchased (250,000) (135,239)
Other (942) (264)
------------ -----------
Net cash used by financing activities (601,611) (116,615)
Cash flows of discontinued operations:
Operating activities - 17,833
Investing activities - (6,593)
Financing activities - -
------------ -----------
Net cash provided by discontinued operations - 11,240
(Decrease) increase in cash and cash
equivalents (814,640) 777,357
Cash and cash equivalents at January 1, 1,041,106 263,749
------------ -----------
Cash and cash equivalents at December 31, $ 226,466 $1,041,106
============ ===========
Cash paid during the period for:
Interest $ 364,381 $ 332,204
Income taxes $ 54,407 $ 5,365
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
Schedule A
Reconciliation of Non-GAAP Financial Measures (1)
For the quarter For the year ended
ended December 31, December 31,
---------------------------------------
(Amounts in thousands) 2007 2006 2007 2006
--------- --------- --------- ---------
Net Income to Free Cash Flow;
-------------------------------
Net Cash Provided by
Operating Activities
-------------------------------
Net income $ 59,013 $ 63,911 $214,654 $344,555
Add back:
Depreciation and
amortization 145,156 117,923 545,856 476,487
Income tax expense 30,229 23,576 128,014 136,479
Stock based compensation 1,213 2,380 9,022 10,340
Subtract:
Cash paid (refunded) for
income taxes 737 (2,965) 54,407 5,365
Pension curtailment gain
(non-cash) 14,379 - 14,379 -
Investment and other income
(loss), net
of interest income 2,050 4,401 (15,038) 60,271
Capital expenditures 113,152 105,450 315,793 268,806
Gain (loss) on sale of
discontinued operations - (444) - 71,635
--------- --------- --------- ---------
Free cash flow 105,293 101,348 528,005 561,784
Add back:
Deferred income taxes 26,887 28,138 81,011 132,031
Non-cash (gains)/losses,
net (18,990) 2,471 21,610 17,964
Investment and other income
(loss), net
of interest income 2,050 4,401 (15,038) (1,157)
Pension curtailment gain
(non-cash) 14,379 - 14,379 -
Cash paid (refunded) for
income taxes 737 (2,965) 54,407 5,365
Capital expenditures 113,152 105,450 315,793 268,806
Subtract:
Changes in current assets
and liabilities (56,353) (37,744) 41,448 (10,121)
Income tax expense 30,229 23,576 128,014 136,479
Stock based compensation 1,213 2,380 9,022 10,340
Income from discontinued
operations - 414 - 18,912
--------- --------- --------- ---------
Net cash provided by operating
activities $268,419 $250,217 $821,683 $829,183
========= ========= ========= =========
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
Schedule B
Reconciliation of Non-GAAP Financial Measures (1)
For the quarter ended December 31, 2007
------------------------------------------------
(Amounts in
thousands)
Operating Cash Flow
and Pension
Operating Cash Flow As Curtailment As
Margin Reported Gain Adjusted
------------------- ----------- ----------- -----------
Operating Income $ 174,891 $14,379 $ 160,512
Add back:
Depreciation
and
amortization 145,156 - 145,156
----------- ----------- -----------
Operating cash flow $ 320,047 $14,379 $ 305,668
=========== =========== ===========
Revenue $ 577,228 $ 577,228
=========== ===========
Operating income
margin
(Operating income
divided by
revenue) 30.3% 27.8%
=========== ===========
Operating cash flow
margin
(Operating cash
flow divided by
revenue) 55.4% 53.0%
=========== ===========
For the year ended December 31, 2007
------------------------------------------------
Operating Cash Flow Severance
and and Early Pension
Operating Cash Flow As Retirement Curtailment As
Margin Reported Costs Gain Adjusted
------------------- ----------- ----------- ------------ -----------
Operating Income $ 705,416 $(13,874) $14,379 $ 704,911
Add back:
Depreciation
and
amortization 545,856 - - 545,856
----------- ----------- ----------- -----------
Operating cash flow $1,251,272 $(13,874) $14,379 $1,250,767
=========== =========== =========== ===========
Revenue $2,288,015 $2,288,015
=========== ===========
Operating income
margin
(Operating
income divided
by
revenue) 30.8% 30.8%
=========== ===========
Operating cash flow
margin
(Operating cash
flow divided by
revenue) 54.7% 54.7%
=========== ===========
For the quarter ended December 31,
2006
-----------------------------------
(Amounts in thousands)
Severance
and Early
Operating Cash Flow and As Retirement As
Operating Cash Flow Margin Reported Costs Adjusted
---------------------------------- ------------ ---------- -----------
Operating Income $ 156,973 $(3,237) $ 160,210
Add back:
Depreciation and amortization 117,923 - 117,923
------------ ---------- -----------
Operating cash flow $ 274,896 $(3,237) $ 278,133
============ ========== ===========
Revenue $ 504,396 $ 504,396
============ ===========
Operating income margin
(Operating income divided by
revenue) 31.1% 31.8%
============ ===========
Operating cash flow margin
(Operating cash flow divided by
revenue) 54.5% 55.1%
============ ===========
For the year ended December 31,
2006
-----------------------------------
Severance
and Early
Operating Cash Flow and As Retirement As
Operating Cash Flow Margin Reported Costs Adjusted
---------------------------------- ------------ ---------- -----------
Operating Income $ 644,490 $(7,193) $ 651,683
Add back:
Depreciation and amortization 476,487 - 476,487
------------ ---------- -----------
Operating cash flow $1,120,977 $(7,193) $1,128,170
============ ========== ===========
Revenue $2,025,367 $2,025,367
============ ===========
Operating income margin
(Operating income divided by
revenue) 31.8% 32.2%
============ ===========
Operating cash flow margin
(Operating cash flow divided by
revenue) 55.3% 55.7%
============ ===========
(1) On March 8, 2007, we acquired Commonwealth Telephone Enterprises,
Inc. (CTE) for approximately $1.1 billion, and on October 31,
2007, we acquired Global Valley Networks Inc. and GVN Services
(together GVN) for $62.0 million, and have included the
historical results of CTE and GVN from the dates of acquisition.
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