Best Voip Service Providers Chart
		$9.95 - $16.58
		$19.99 - $39.99
		$9.95 - $15.95

SureWest Reports Third Quarter 2005 Results

Leading independent telecommunications holding company SureWest Communications (Nasdaq: SURW) announced operating results today for the quarter ended September 30, 2005. Highlights from the most recent quarter, with comparisons to the third quarter of 2004 include: (Logo: http://www.newscom.com/cgi-bin/prnh/20050908/SFSUREWESTLOGO ) * Consolidated operating EBITDA of $18.5 million, up 59%; Broadband segment up 73%, Wireless segment up 89% and Telecom segment up 11% * Consolidated net income of $2.0 million, compared to a $1.6 million loss in the prior year period * Broadband revenues of $13.0 million, up 30% * Wireless revenues of $8.8 million, up 9% Consolidated operating revenues of $56.1 million represent a 5% increase over the same period a year ago, while operating expenses exclusive of depreciation and amortization dropped 10% compared to the third quarter of 2004. Depreciation expense increases resulted from ongoing investment in new facilities, primarily the continued build-out of the fiber network. Income from operations rose to $4.8 million in the third quarter of 2005, from a loss of $1.5 million in the third quarter of 2004. For the nine months ended September 30, 2005, income from operations more than tripled over the year earlier period, to $12.3 million. Operating earnings before interest, taxes, depreciation and amortization (defined as Operating EBITDA and reconciled to GAAP results in the accompanying tables) increased 59% to $18.5 million in the third quarter of 2005, compared to $11.7 million in the third quarter of 2004. For the nine months ended September 30, 2005, operating EBITDA increased 30% to $52.1 million. Operating EBITDA gains are attributable in large part to improved performance in the Wireless and Broadband segments. Net income for the quarter totaled $2.0 million, or $0.13 per share, up from a loss of $1.6 million or an $0.11 loss per share in the third quarter of 2004. "It is an exciting time for us at SureWest," commented Brian Strom, president and chief executive officer. "Our cost-cutting initiatives are paying off and we are seeing the benefits of the reorganization undertaken earlier this year. Broadband and Wireless are continuing to post excellent EBITDA improvements as a result of revenue growth and cost containment efforts. "In addition, we have been announcing exciting advances on the technology front, and our strong commitment to customer satisfaction is evidenced by declining customer churn. Our decision to diversify was leading edge in the mid-1990's and we are now beginning to see the benefits of having been proactive in anticipating changes in the telecom industry." Third Quarter Highlights * Revenue per Employee -- Labor-related expenses declined as a result of the Company's efforts to manage and grow its business with fewer employees. As of September 30, 2005, the number of regular and temporary employees decreased 14% compared to the third quarter of 2004. This reduction, coupled with an increase in revenues over the year earlier period, resulted in an increase in revenue per regular employee of 17%, to approximately $61,000, for the third quarter of 2005. * EBITDA Improvement -- Ongoing efforts to reduce expenses continue to have a positive impact on operating results. While revenues in the third quarter of 2005 increased by 5%, operating expenses exclusive of depreciation and amortization, nevertheless decreased by 10%. As a result, income from operations increased $6.3 million in the third quarter of 2005 over the year earlier period. On a segment basis, Broadband segment EBITDA improved 73% for the quarter and 58% for the nine months ended September 30, 2005 compared to the same periods in 2004. Wireless segment EBITDA improved 89% for the quarter and 81% for the nine months ended September 30, 2005 compared to the year earlier periods. * Focus on the Customer -- The ability to provide excellent customer service in the midst of strong cost containment efforts is reflected in customer statistics. Contract churn in the Wireless segment declined from 3.4% in the year earlier period to 3.2% in the third quarter of 2005. On the fiber platform, where the Company offers its advanced InfinitAccess(TM) bundled services, customer churn declined to 1.6% from 1.9% in the prior year period. * Restructuring -- The on-going corporate restructuring has resulted in greater labor force integration and consolidation of reporting responsibilities, which among other things now results in both the Wireless and Broadband segments reporting directly to Fred Arcuri, Senior Vice President and Chief Operating Officer. Consistent with other cost-cutting initiatives, the restructuring should provide operating efficiencies that will be recognized in future periods. Broadband Segment Broadband segment revenues increased 30% in the third quarter of 2005 to $13.0 million, from $10.0 million in the year earlier period. Strong revenue growth was fueled by a 30% increase in subscribers on the fiber-to-the-premise network to more than 19,000 subscribers, and a 36% increase in marketable homes to 84,500 at September 30, 2005. In addition, DSL subscribers increased nearly 21% to more than 26,500 subscribers, including more than 2,000 video subscribers on the IPTV platform, more than double the number at the end of the third quarter of 2004. Operating expenses exclusive of depreciation and amortization declined by 6% in the third quarter of 2005 compared to the third quarter of 2004, resulting in operating EBITDA improvement of 73% over the same period. Higher revenues and lower overall expenses combined to reduce the Broadband segment net loss by 35% to a loss of $3.9 million for the third quarter of 2005. Wireless Segment The Company is maintaining its competitiveness in the Wireless segment. Contract churn continues to decrease. In the 12-month period ended September 30, 2005, wireless customers increased 10%, to more than 53,800 subscribers, of which 92% were on contract, compared to 85% one year earlier. Wireless segment third quarter revenues increased 9% to $8.8 million from $8.1 million in 2004, while total operating expenses increased only by a negligible amount. Operating EBITDA in the Wireless segment increased by more than $0.8 million in the third quarter, an increase of 89% over the third quarter of 2004, and the quarterly net loss of $2.1 million represents a 21% improvement over the year earlier period. Telecom Segment Access line losses in the Telecom segment slowed in the third quarter of 2005 compared to the third quarter of 2004, indicative of a leveling off of access line erosion in the ILEC market during this period. Consolidated access lines experienced a gain of just less than 1%, resulting from strong access line additions in the CLEC market. Long distance lines remain strong, with a penetration rate under 40% and an 11% increase in presubscribed customer lines over the year earlier period. Telecom segment revenues declined slightly to $34.3 million in the third quarter of 2005 compared to the third quarter of 2004, while operating expenses exclusive of depreciation and amortization dropped by 9% over the same period. Operating EBITDA increased by 11% to $20.1 million, and Telecom segment net income increased 13% to $8.0 million for the quarter ended September 30, 2005 compared to 2004. Balance Sheet Summary Consolidated capital expenditures decreased sharply in the third quarter of 2005 to $13.4 million, representing a decline of 25% sequentially and 18% over the third quarter of 2004. Expectations for capital expenditures in 2005 remain in the $75 - 80 million range as the Company continues to focus on success-based capital projects resulting from continuing customer demand for our advanced services. Cash and equivalents at September 30, 2005 were $12.8 million and long-term debt, excluding the current portion, totaled $89.1 million. SureWest paid $3.6 million in dividends in the third quarter of 2005, representing a quarterly payment of $0.25 per share. Conference Call and Webcast SureWest Communications will provide details about its results and business strategy on Monday, November 7, 2005 at 11:00 a.m. Eastern Time. A simultaneous live webcast of the call will be available at http://www.surw.com and will be archived shortly after the conclusion of the call for replay through the fourth quarter of 2005. Additionally, a telephone replay of the call will be available through Saturday, November 12, 2005 by dialing (888) 286-8010 and entering passcode 38574034. About SureWest With more than 90 years in Northern California, SureWest and its family of companies together provide a wide variety of highly reliable advanced communications products and services. SureWest provides digital TV, fiber optics, PCS wireless, DSL, high-speed Internet access, data transport, local and long distance telephone service, and directories with the highest standards of customer care. For more information, visit the SureWest web site at http://www.surewest.com. Safe Harbor Statement Statements made in this news release that are not historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements may be identified by the use of words such as may, will, should, expect, plan, anticipate, or project or the negative of those words or other comparable words. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the company's actual results to differ from those projected in such forward-looking statements. Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to: advances in telecommunications technology, changes in the telecommunications regulatory environment, changes in the financial stability of other telecommunications providers who are customers of the company, changes in competition in markets in which the company operates, adverse circumstances affecting the economy in California in general, and in the Sacramento, California Metropolitan area in particular, the availability of future financing, changes in the demand for services and products, new product and service development and introductions, pending and future litigation, the internal control issues identified by the Company, and unanticipated changes in the growth of the company's emerging businesses, including the wireless, Internet, video and Competitive Local Exchange Carrier operating entities. Contact: Karlyn Oberg Director of Investor Relations 916-786-1799 k.oberg@surewest.com SUREWEST COMMUNICATION ONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in thousands, except per share amounts) QuarterQuarter Ended Ended September September % 30, 2005 30, 2004 Change Operating Revenues: Local service $15,870$16,567 -4.2% Network access service 11,575 11,940 -3.1% Directory advertising4,409 4,151 6.2% Long distance service1,607 1,408 14.1% Wireless service8,832 8,121 8.8% Internet service4,537 4,041 12.3% Residential broadband service 6,062 4,427 36.9% Business broadband service2,380 1,498 58.9% Other 824 1,086-24.1% Total operating revenues 56,096 53,239 5.4% Operating expenses: Cost of services and products(exclusive of depreciation an mortization) 20,208 21,260 -4.9% Customer operations and selling8,385 9,150 -8.4% General and administrative8,954 11,154-19.7% Depreciation and amortization 13,752 13,192 4.2% Total operating expenses 51,299 54,756 -6.3% Income (loss) from operations 4,797 (1,517) 416.2% Other income (expense): Interest income 4462-29.0% Interest expense (1,459)(1,137)28.3% Other, net (170) (87)95.4% Total other expense, net (1,585)(1,162)36.4% Income (loss) before income taxes3,212 (2,679) 219.9% Income tax expense (benefit)1,252 (1,077) 216.2% Net income (loss)$1,960$(1,602) 222.3% Earnings (loss) per share: Basic $0.13 $(0.11) 218.2% Diluted $0.13 $(0.11) 218.2% Cash dividends per share $0.25 $0.25 0.0% Shares of common stock used to calculate earnings (loss) per share: Basic14,548 14,531 0.1% Diluted 14,659 14,531 0.9% SUREWEST COMMUNICATIONS YTD CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Amounts in thousands, except per share amounts) Nine Months Nine Months Ended Ended Sept. 30, Sept. 30, % 2005 2004 Change Operating Revenues: Local service $47,831$50,400 -5.1% Network access service 34,009 35,310 -3.7% Directory advertising 13,045 12,192 7.0% Long distance service4,503 3,961 13.7% Wireless service 25,764 23,170 11.2% Internet service 13,230 12,461 6.2% Residential broadband service 17,596 12,064 45.9% Business broadband service5,854 4,130 41.7% Other 2,807 3,255 -13.8% Total operating revenues 164,639156,943 4.9% Operating expenses: Cost of services and products(exclusive of depreciation an mortization) 59,098 57,898 2.1% Customer operations and selling 25,832 26,258 -1.6% General and administrative 27,595 32,714 -15.6% Depreciation and amortization 39,851 36,061 10.5% Total operating expenses 152,376152,931 -0.4% Income from operations12,263 4,012 205.7% Other income (expense): Interest income 183 165 10.9% Interest expense (4,083)(3,294) 24.0% Other, net (249) (245) 1.6% Total other expense, net (4,149)(3,374) 23.0% Income before income taxes 8,114 6381171.8% Income tax expense3,164 298 961.7% Net income $4,950 $3401355.9% Earnings per share: Basic $0.34 $0.021600.0% Diluted $0.34 $0.021600.0% Cash dividends per share $0.75 $0.75 0.0% Shares of common stock used to calculate earnings per share: Basic14,544 14,535 0.1% Diluted 14,637 14,581 0.4% SUREWEST COMMUNICATIONS CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands) September 30, December 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $12,750 $18,119 Accounts receivable, net 22,071 20,155 Inventories5,803 5,578 Deferred directory costs 4,274 5,599 Prepaid expenses4,560 2,359 Total current assets 49,458 51,810 Property, plant and equipment, net 375,467 365,613 Intangible and other assets: Wireless spectrum licenses, net 13,566 13,566 Goodwill 2,171 2,171 Intangible asset relating to pension plans 802802 Intangible asset relating to favorable operating leases, net 414506 Deferred charges and other assets706714 17,659 17,759 $442,584$435,182 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $25,000 $10,000 Current portion of long-term debt 3,672 3,779 Accounts payable3,537 2,886 Other accrued liabilities16,070 22,250 Current portion of contractual shareable earnings obligations2,909 3,040 Estimated shareable earnings obligations 304396 Advance billings and deferred revenues 10,021 9,883 Accrued income taxes 2,052 1,549 Accrued pension benefits 4,219 3,216 Accrued compensation 5,830 5,830 Total current liabilities 73,614 62,829 SUREWEST COMMUNICATIONS CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Amounts in thousands) (Continued) September 30, December 31, 2005 2004 Long-term debt 89,09189,091 Long-term contractual shareable earnings obligations4,378 6,202 Deferred income taxes 26,25824,134 Other liabilities and deferred revenues 12,72111,589 Commitments and contingencies Shareholders' equity: Common stock, without par value; 100,000 shares authorized, 14,590 and 14,591 shares issued and outstanding at September 30, 2005 and December 31, 2004, respectively 163,534 161,824 Deferred stock-based compensation (1,483) (949) Accumulated other comprehensive loss (2,126) (2,126) Retained earnings 76,59782,588 Total shareholders' equity 236,522 241,337 $442,584 $435,182 OPERATING EBITDA RECONCILIATION TO NET INCOME (Unaudited) (Amounts in thousands) Quarter Ended September 30, 2005 Telecom Broadband Wireless Consol Net income/(loss) $7,954 $(3,851) $(2,143) $1,960 Add back: Income Taxes 5,434 (2,691) (1,491) 1,252 Less: Other Income/(Expense) (200) (848) (537) (1,585) Add back: Depreciation & Amortization 6,552 4,215 2,985 13,752 Operating EBITDA (1) $20,140 $(1,479) $(112) $18,549 Quarter Ended September 30, 2004 Telecom Broadband Wireless Consol Net income/(loss) $7,034 $(5,937) $(2,699) $(1,602) Add back: Income Taxes 4,859 (4,062) (1,874) (1,077) Less: Other Income/(Expense) (48) (539) (575) (1,162) Add back: Depreciation & Amortization 6,192 3,981 3,019 13,192 Operating EBITDA (1) $18,133 $(5,479) $(979) $11,675 (1) Operating EBITDA represents net income (loss) excluding amounts for income taxes, depreciation and amortization and all other non-operating income/expenses, and is a common measure of operating performance in the telecommunications industry. Operating EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be construed as a substitute for consolidated net income as a measure of performance. OPERATING EBITDA RECONCILIATION TO NET INCOME (Unaudited) (Amounts in thousands) Nine Months Ended September 30, 2005Telecom Broadband Wireless Consol Net income/(loss) $23,333 $(11,834) $(6,549) $4,950 Add back: Income Taxes 15,994 (8,278) (4,552) 3,164 Less: Other Income/(Expense) (573) (2,179) (1,397) (4,149) Add back: Depreciation & Amortization 18,910 11,846 9,095 39,851 Operating EBITDA (1) $58,810 $(6,087) $(609) $52,114 Nine Months Ended September 30, 2004Telecom Broadband Wireless Consol Net income/(loss) $22,872 $(14,446) $(8,086) $340 Add back: Income Taxes 15,819 (9,903) (5,618)298 Less: Other Income/(Expense) (257) (1,648) (1,469) (3,374) Add back: Depreciation & Amortization 18,7198,270 9,072 36,061 Operating EBITDA (1) $57,667 $(14,431) $(3,163) $40,073 (1) Operating EBITDA represents net income (loss) excluding amounts for income taxes, depreciation and amortization and all other non-operating income/expenses, and is a common measure of operating performance in the telecommunications industry. Operating EBITDA is not a measure of financial performance under generally accepted accounting principles and should not be construed as a substitute for consolidated net income as a measure of performance. SUREWEST COMMUNICATIONS Selected Operating Metrics As of and for the quarter ended Sept. 30, Sept. 30, Pct2005 2004 Change LINE SUMMARY ILEC access lines130,000 132,981-2.2% Broadband access lines (1) 16,858 12,53534.5% Total SureWest access lines146,858 145,516 0.9% TELECOM ILEC access lines130,000 132,981-2.2% ILEC voice-grade equivalents (2)373,100 448,600 -16.8% Long distance lines 51,213 46,19110.9% Long distance penetration 39.4% 34.7%13.4% BROADBAND CLEC access lines 2,175 1,77022.9% CLEC voice-grade equivalents (2)285,300 141,700 101.3% DSL subscribers 26,945 22,30020.8% DSL ARPU$50.86 $52.60-3.3% DSL revenue-generating units (RGUs) (3) 28,430 22,94123.9% Video RGUs 2,021971 108.1% Data RGUs 26,815 22,15621.0% FTTP subscribers 19,245 14,78630.2% FTTP ARPU $99.48 $100.37-0.9% FTTP revenue-generating units (RGUs) (4) 44,793 34,61929.4% Voice RGUs 14,683 10,76536.4% Video RGUs 13,713 11,47819.5% Data RGUs 16,397 12,37632.5% FTTP marketable homes 84,500 62,10036.1% FTTP marketable homes penetration (5) 22.5% 23.6%-4.7% FTTP churn1.6% 1.9% -15.8% WIRELESS Total subscribers 53,818 49,072 9.7% Contract subscribers 49,374 41,89717.8% POPs 3,532,000 3,477,000 1.6% POPs covered 2,759,000 2,711,000 1.8% Net contract additions 595 1,274 -53.3% Net non-contract additions -138 -733 -81.2% Contract churn (6) 3.2% 3.4%-5.3% ARPU $50.17 $51.02-1.7% (1) The sum of CLEC access lines and FTTP voice RGUs. (2) Voice-grade equivalents (VGEs) are calculated by dividing the capacity of all circuits in use by 64 kilobits (bandwidth representing a voice access line), excluding ethernet service and Broadband FTTP data RGUs. DSL VGEs are counted as two 64 kbps channels. (3) Revenue-generating units (RGUs) are the sum of all primary digital video and high-speed data connections, excluding additional units. Telephony units are included in ILEC Access Lines. (4) Revenue-generating units (RGUs) are the sum of all primary digital video, telephony and high-speed data connections, excluding additional units. (5) FTTP marketable home penetration is calculated on residential marketable homes passed and residential FTTP subscribers. The total FTTP subscribers also includes 219 and 106 Small-Medium Enterprise customers in 2005 and 2004, respectively, which are not included in the penetration rate. (6) Quarterly turnover in contract customers (total contract customer disconnects divided by sum of monthly average contract subscribers). Available Topic Expert(s): For information on the listed expert(s), click appropriate link. Phil Grybas http://profnet.prnewswire.com/ud_public.jsp?userid=10002029

Author:  

Email:    

Topic:    

Content:

Related Telecom Articles

• BroadGroup Announces Keynotes at Forthcoming Telecom Finance 2006 London UK
  8 November 2005



• Ihug Says Telecom Broadband Figures Not Good
  7 November 2005



• Allixon International Corporation Provides RFID System with URIS 2005, Allixon's RFID Middleware, to Korean Telecom
  6 November 2005



• T.On Telecom Replaces Existing Trunked Radio System with Motorola’s TETRA Solution
  6 November 2005



• Koor Industries' Holding ECI Telecom Ltd. Announces Third Quarter and Nine Months 2005 Results
  3 November 2005



• Quebecor Inc. Reports Third Quarter 2005 Results
  2 November 2005



• Symsoft AB Delivers to Saudi Telecom
  31 October 2005



• Cutting-Edge Technologies, Heavy-Hitting Speakers, Standing-Room Only Sessions Show TELECOM '05 Attendees 'What's Next' for Communications
  29 October 2005



• VoxBox World Telecom Inc., Through Its Partnership With Gulf Coast Wireless, to Provide VoxBox VoIP Solutions
  26 October 2005



• Sunrise Telecom Reschedules Third Quarter 2005 Earnings Release and Conference Call to November 7, 2005
  26 October 2005