Exhibit 99.1
Iowa Telecom Reports Results for Second Quarter Ended June 30, 2009
NEWTON, Iowa--(BUSINESS WIRE)--July 29, 2009--Iowa Telecommunications Services, Inc. (NYSE: IWA) today announced operating results for the second quarter ended June 30, 2009. Quarterly highlights for the Company include:
- Operating revenues were $58.8 million.
- Operating income was $12.4 million.
- Net income was $2.9 million or $0.08 per diluted share.
- Adjusted EBITDA (as defined herein) was $28.2 million.
“We are very pleased that our business continues to deliver solid revenues and free cash flows, despite a challenging macro economic environment.” said Alan L. Wells, Iowa Telecom Chairman and Chief Executive Officer. “We believe our results reflect the success of our bundling strategy, as the number of access lines lost during the quarter was the lowest since early 2007. Our DSL product growth continued, as we added 900 new customers in the quarter.
“Our Adjusted EBITDA for the quarter was $28.2 million, and was negatively impacted by a $1.8 million one-time charge, related to certain network access matters. Absent this one-time charge, our Adjusted EBITDA would have been $30.0 million.
“We’re especially pleased with the progress we made during the quarter to strategically expand our Minnesota operations,” Wells continued. “On July 1, 2009, we closed our acquisition of the assets of Sherburne Tele Systems, Inc. (“Sherburne”), a telecommunications company serving nine communities adjacent to the Minneapolis/St. Paul Metropolitan area, and headquartered just 30 miles from our existing Lakedale operations. We expect the transaction to be cash flow accretive on a per share basis, and are excited about the opportunity to grow our operations in the state. We now serve 26,000 ILEC access lines and 14,200 CLEC access lines in Minnesota. Midway through the quarter we eliminated approximately 20 positions at Lakedale, thereby realizing some of the synergies from our initial Bishop transaction. We are in the process of fully integrating Sherburne into our operations, and anticipate additional synergies as our Minnesota operations are combined and fully integrated.
“In addition, we recently announced two separate transactions in Minnesota,” Wells noted. “The first is an agreement to purchase WHComm, a CLEC with 2,000 lines which operates between our Sherburne and Lakedale ILEC properties. The second transaction we announced is our agreement to purchase New Ulm Telecom, Inc.’s ownership interests in our existing subsidiaries, SHAL, LLC, SHAL Networks, Inc. and EN-TEL Communications, LLC. As a result of this transaction, we will be the sole owner of SHAL’s 2,500 mile owned and leased fiber network across Minnesota. We believe that the assets we will acquire in these recent transactions, coupled with our existing Sherburne and Lakedale acquisitions, provide us with an outstanding opportunity to profitably grow our operations in Minnesota.
“As a result of the Sherburne transaction, we are slightly modifying our previous guidance. We expect capital expenditures for the year to be similar to 2008 levels, and will be between $26.0 million and $28.0 million. This is a $1.0 million increase over our prior guidance, and is primarily due to capital expenditures at Sherburne. We continue to expect cash interest expense to be between $29.0 million and $31.0 million, but expect it will be at the upper end of the range given our recent borrowing related to the Sherburne transaction,” said Wells. “For the first six months of this year, capital expenditures were $10.3 million, and our cash interest expense was $14.9 million.
“As we move into the balance of the year, our focus will be on continued integration and expansion of our Minnesota operations, expansion of our data and CPE business, growth of our DSL subscriber base, and retention of access lines through innovative bundled product offerings,” Wells concluded.
FINANCIAL DISCUSSION FOR SECOND QUARTER 2009:
- Revenues and Sales were $58.8 million in the second quarter compared to $58.2 million in the second quarter of 2008. Local services revenues increased $413,000, or 2.4%, primarily due to the increase in access lines from the acquisition of Bishop Communications. Network access services revenues decreased $630,000, or 3.1%, for the second quarter as the minutes of use per line and the average revenue per minute decreased. Data and internet services revenue increased $1.4 million, or 16.6%, primarily due to $1.2 million of growth in revenue from our DSL Internet access service. Other services and sales revenue decreased by $339,000, or 5.4%, for the second quarter primarily due to lower CPE sales, offset by the acquisition of Bishop Communications and from increased revenue from video services.
- Operating Costs and Expenses increased $4.9 million, or 11.7%, in the second quarter of 2009 as compared to the second quarter of 2008. Cost of service and sales decreased $92,000. Selling, general and administrative costs increased $3.3 million compared to the year-ago period, due to a $1.8 million charge related to certain network access matters, additional operating expenses from our acquisition of Bishop Communications, and $296,000 of acquisition related costs that are now charged to expense in accordance with SFAS No. 141(R). Depreciation and amortization increased $1.7 million, or 13.1%, during the second quarter compared to 2008, primarily due to $1.2 million of depreciation and amortization expense at Bishop Communications, and higher plant balances.
- Operating Income was $12.4 million in the second quarter of 2009 as compared to $16.6 million in the same period in 2008.
- Interest Expense for the second quarter increased $149,000, or 2.0%, to $7.6 million compared to $7.5 million in the same period in 2008. The increase was the result of a higher average balance on our revolving credit facility, and the costs of EN-TEL debt assumed in the acquisition of Bishop Communications.
- Earnings Before Income Taxes for the second quarter of 2009 were $5.0 million compared to $9.3 million in the second quarter of 2008.
- Income Tax Expense for the second quarter was $2.1 million compared to $4.0 million in the second quarter of 2008. The recorded book tax expense did not impact the cash taxes paid during the quarter. Cash income taxes reflect the continued utilization of net operating loss carry forwards and continued goodwill amortization for tax purposes. The Company paid actual cash income taxes during the quarter of $70,000.
- Net Income was $2.9 million for the quarter compared to net income of $5.3 million in the second quarter of 2008.
- Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA as defined herein) was $28.2 million for the second quarter of 2009, as compared with $30.3 million in the same period in 2008.
- Total Access Lines decreased by 3,000 during the second quarter of 2009 from the first quarter in 2009, as ILEC access lines declined by 2,900 lines and CLEC lines decreased by 100 lines.
| Second Quarter 2009 Financial Summary |
| (Unaudited) |
(dollars in thousands, except per share amounts) |
| |
| | 2nd Quarter | | 2nd Quarter | | Change |
| | | 2009 | | 2008 | | Amount | | Percent |
| | | | | | | | | | |
| Revenue | | $ | 58,819 | | $ | 58,177 | | $ | 642 | | | | 1.1 | % |
| Operating Income | | $ | 12,380 | | $ | 16,618 | | $ | (4,238 | ) | | | -25.5 | % |
| Interest Expense | | $ | 7,612 | | $ | 7,463 | | $ | 149 | | | | 2.0 | % |
| Earnings Before Income Taxes | | $ | 5,047 | | $ | 9,327 | | $ | (4,280 | ) | | | -45.9 | % |
| Income Tax Expense | | $ | 2,126 | | $ | 4,034 | | $ | (1,908 | ) | | | -47.3 | % |
| Net Income | | $ | 2,921 | | $ | 5,293 | | $ | (2,372 | ) | | | -44.8 | % |
| Basic Earnings Per Share | | $ | 0.08 | | $ | 0.16 | | $ | (.08 | ) | | | -50.0 | % |
| Diluted Earnings Per Share | | $ | 0.08 | | $ | 0.15 | | $ | (.07 | ) | | | -46.7 | % |
Adjusted EBITDA (1) | | $ | 28,200 | | $ | 30,315 | | $ | (2,115 | ) | | | -7.0 | % |
| Capital Expenditures and | | | | | | | | | | | |
| Acquisitions | | $ | 6,713 | | $ | 7,135 | | $ | (422 | ) | | | -5.9 | % |
| Dividends Paid | | $ | 13,241 | | $ | 12,959 | | $ | 282 | | | | 2.2 | % |
| | | | | | | | | | |
(1) See the definition of Adjusted EBITDA under Explanation and Reconciliation to Non-GAAP Concepts at the end of the financial statements. |
| | | | | | | | | | |
| | 2nd Quarter | | 2nd Quarter | | Change |
Key Operating Statistics | | 2009 | | 2008 | | Amount | | Percent |
| | | | | | | | | | |
| Telephone Access Lines | | | | | | | | | | | |
ILEC Lines (1) | | | 203,200 | | | 206,000 | | | (2,800 | ) | | | -1.4 | % |
CLEC Lines (2) | | | 32,300 | | | 27,300 | | | 5,000 | | | | 18.3 | % |
| Total Telephone Access Lines | | | 235,500 | | | 233,300 | | | 2,200 | | | | 0.9 | % |
| | | | | | | | | | |
| Long Distance Subscribers | | | 143,200 | | | 139,200 | | | 4,000 | | | | 2.9 | % |
| Dial-up Internet Subscribers | | | 13,700 | | | 18,800 | | | (5,100 | ) | | | -27.1 | % |
| DSL Subscribers | | | 79,100 | | | 67,600 | | | 11,500 | | | | 17.0 | % |
| Video Subscribers | | | 22,500 | | | 12,800 | | | 9,700 | | | | 75.8 | % |
| | | | | | | | | | |
| | 2nd Quarter | | 1st Quarter | | Change |
| | | 2009 | | 2009 | | Amount | | Percent |
| | | | | | | | | | |
| Telephone Access Lines | | | | | | | | | | | |
ILEC Lines (1) | | | 203,200 | | | 206,100 | | | (2,900 | ) | | | -1.4 | % |
CLEC Lines (2) | | | 32,300 | | | 32,400 | | | (100 | ) | | | -0.3 | % |
| Total Telephone Access Lines | | | 235,500 | | | 238,500 | | | (3,000 | ) | | | -1.3 | % |
| | | | | | | | | | |
| Long Distance Subscribers | | | 143,200 | | | 145,000 | | | (1,800 | ) | | | -1.2 | % |
| Dial-up Internet Subscribers | | | 13,700 | | | 15,100 | | | (1,400 | ) | | | -9.3 | % |
| DSL Subscribers | | | 79,100 | | | 78,200 | | | 900 | | | | 1.2 | % |
| Video Subscribers | | | 22,500 | | | 21,400 | | | 1,100 | | | | 5.1 | % |
| | | | | | | | | | | | | | |
(1) | | Includes lines subscribed by our incumbent local exchange carrier retail customers and lines subscribed by our “wholesale” customers who are competing local exchange carriers. Wholesale access lines include: lines subscribed by our local exchange carrier competitors pursuant to interconnection agreements on an unbundled network element basis, for which the competitive local exchange carrier pays us a monthly fee; lines that we provide to competitive local exchange carriers for resale to their subscribers, for which the competitive local exchange carrier pays us a monthly fee equal to what we would charge our customers for local service less an agreed discount; and shared lines, for which a competitive local exchange carrier pays us a monthly fee to provide DSL service to its customers. We had 2,600 wholesale lines subscribed at June 30, 2008; 2,100 at March 31, 2009; and 2,000 at June 30, 2009. |
| | |
(2) | | Access lines subscribed by customers of our competitive local exchange carrier subsidiaries, Iowa Telecom Communications, Inc. and IT Communications, LLC. |
| | |
Investor Call
As previously announced, Iowa Telecom’s management will hold a conference call to discuss the second quarter 2009 results on Wednesday, July 29, 2009, at 8:30 a.m. (Eastern Time). To listen to the call, participants should dial (719) 457-2638 approximately 10 minutes prior to the start of the call. A telephonic replay will become available after 12:00 p.m. (Eastern Time) on Wednesday, July 29, 2009 and will remain available through August 5, 2009 by dialing (719) 457-0820 and entering Confirmation Code 5411976.
The live broadcast of Iowa Telecom’s quarterly conference call will be available online at www.iowatelecom.com or www.earnings.com on July 29, 2009, beginning at 8:30 a.m. (Eastern Time). The online replay will become available after 12:00 p.m. (Eastern Time) and will continue to be available for 30 days.
Forward-Looking Statements
The press release may contain forward-looking statements that are not based on historical fact, including without limitation statements containing the words “believes,” “may,” “plans,” “will,” “estimate,” “continue,” “anticipates,” “intends,” “expects,” and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from future results, events or developments described in the forward-looking statements. Such factors include those risks described in Iowa Telecom’s Form 10-K on file with the SEC. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information is current as of the date this press release is issued, and Iowa Telecom undertakes no duty to update this information.
About Iowa Telecom
Iowa Telecommunications Services, Inc. (d/b/a Iowa Telecom) is a telecommunications service provider that offers local telephone, long distance, Internet, broadband and network access services to business and residential customers. Today, the Company and its subsidiaries serve over 450 Iowa communities and 10 Minnesota communities and employ nearly 800 people. The company’s headquarters are in Newton, Iowa. The Company trades on the New York Stock Exchange under the symbol IWA. For further information regarding Iowa Telecom, please go to www.iowatelecom.com and select “Investor Relations.” The Iowa Telecom logo is a registered trademark of Iowa Telecommunications Services, Inc. in the United States.
| IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES |
| Balance Sheets |
| (Unaudited) |
| (dollars in thousands, except per share amounts) |
| |
| | | As of | | | | As of | |
| | | June 30, 2009 | | | | December 31, 2008 | |
ASSETS | | | | | | | | |
| | | | | | | | |
| CURRENT ASSETS | | | | | | | | |
| Cash and cash equivalents | | $ | 5,642 | | | $ | 11,605 | |
| Accounts receivable, net | | | 19,766 | | | | 23,320 | |
| Inventories | | | 4,388 | | | | 3,946 | |
| Prepayments and other current assets | | | 3,124 | | | | 3,149 | |
| Total Current Assets | | | 32,920 | | | | 42,020 | |
| | | | | | | | |
| PROPERTY, PLANT AND EQUIPMENT | | | | | | | | |
| Property, plant and equipment | | | 609,838 | | | | 601,782 | |
| Accumulated depreciation | | | (336,250 | ) | | | (310,936 | ) |
| Net Property, Plant and Equipment | | | 273,588 | | | | 290,846 | |
| | | | | | | | |
| GOODWILL | | | 473,834 | | | | 473,984 | |
| INTANGIBLE ASSETS AND OTHER, net | | | 35,576 | | | | 36,904 | |
| INVESTMENT IN AND RECEIVABLE FROM | | | | | | | | |
| THE RURAL TELEPHONE FINANCE | | | | | | | | |
| COOPERATIVE | | | 16,226 | | | | 16,174 | |
| Total Assets | | $ | 832,144 | | | $ | 859,928 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Revolving credit facility | | $ | 31,000 | | | $ | 39,000 | |
| Accounts payable | | | 7,607 | | | | 11,017 | |
| Advanced billings and customer deposits | | | 9,108 | | | | 8,615 | |
| Accrued and other current liabilities | | | 28,056 | | | | 32,429 | |
| Current maturities of long-term debt | | | 1,266 | | | | 1,219 | |
| Total Current Liabilities | | | 77,037 | | | | 92,280 | |
| | | | | | | | |
| LONG-TERM DEBT | | | 488,358 | | | | 489,003 | |
| DEFERRED TAX LIABILITIES | | | 54,235 | | | | 47,575 | |
| OTHER LONG-TERM LIABILITIES | | | 24,772 | | | | 28,326 | |
| Total long-term liabilities | | | 567,365 | | | | 564,904 | |
| | | | | | | | |
| TOTAL LIABILITIES | | | 644,402 | | | | 657,184 | |
| | | | | | | | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Common stock, $.01 par value, 100,000,000 | | | | | | | | |
| shares authorized, 32,017,203 and | | | | | | | | |
| 31,500,687 shares issued and outstanding | | | 320 | | | | 315 | |
| Additional paid-in-capital | | | 329,479 | | | | 327,264 | |
| Accumulated deficit | | | (129,701 | ) | | | (110,814 | ) |
| Accumulated other comprehensive loss | | | (12,721 | ) | | | (14,308 | ) |
| Total Iowa Telecom Stockholders’ Equity | | | 187,377 | | | | 202,457 | |
| Non controlling interest | | | 365 | | | | 287 | |
| Total Stockholder’s Equity | | | 187,742 | | | | 202,744 | |
| | | | | | | | |
| Total Liabilities and Stockholders’ Equity | | $ | 832,144 | | | $ | 859,928 | |
| | | | | | | | |
| IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES |
Income Statements |
| (Unaudited) |
(in thousands, except per share amounts) |
| |
| | | Three Months Ended | | | | Six Months Ended | |
| | | June 30, | | | | June 30, | |
| | | 2009 | | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | | | | | | | | | |
| REVENUE AND SALES | | | | | | | | | | | | | | | | | |
| Local services | | $ | 17,835 | | | | $ | 17,422 | | | $ | 35,920 | | | $ | 35,113 | |
| Network access services | | | 19,713 | | | | | 20,343 | | | | 41,567 | | | | 43,005 | |
| Toll services | | | 5,481 | | | | | 5,679 | | | | 11,047 | | | | 11,549 | |
| Data and internet services | | | 9,804 | | | | | 8,408 | | | | 19,459 | | | | 16,486 | |
| Other services and sales | | | 5,986 | | | | | 6,325 | | | | 12,114 | | | | 12,869 | |
| Total revenues and sales | | | 58,819 | | | | | 58,177 | | | | 120,107 | | | | 119,022 | |
| | | | | | | | | | | | | | | | | |
| OPERATING COSTS AND EXPENSES | | | | | | | | | | | | | | | | | |
| Cost of services and sales (exclusive | | | | | | | | | | | | | | | | | |
| of items shown separately below) | | | 18,652 | | | | | 18,744 | | | | 38,886 | | | | 37,357 | |
| Selling, general and administrative | | | 13,459 | | | | | 10,150 | | | | 25,661 | | | | 20,265 | |
| Depreciation and amortization | | | 14,328 | | | | | 12,665 | | | | 28,318 | | | | 25,270 | |
| Total operating costs and expenses | | | 46,439 | | | | | 41,559 | | | | 92,865 | | | | 82,892 | |
| | | | | | | | | | | | | | | | | |
| OPERATING INCOME | | | 12,380 | | | | | 16,618 | | | | 27,242 | | | | 36,130 | |
| | | | | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSE) | | | | | | | | | | | | | | | | | |
| Interest and dividend income | | | 389 | | | | | 172 | | | | 1,262 | | | | 550 | |
| Interest expense | | | (7,612 | ) | | | | (7,463 | ) | | | (15,208 | ) | | | (15,161 | ) |
| Other, net | | | (110 | ) | | | | - | | | | (269 | ) | | | (259 | ) |
| Total other expense, net | | | (7,333 | ) | | | | (7,291 | ) | | | (14,215 | ) | | | (14,870 | ) |
| | | | | | | | | | | | | | | | | |
| EARNINGS BEFORE INCOME TAXES | | | 5,047 | | | | | 9,327 | | | | 13,027 | | | | 21,260 | |
| | | | | | | | | | | | | | | | | |
| INCOME TAX EXPENSE | | | 2,126 | | | | | 4,034 | | | | 5,597 | | | | 9,010 | |
| | | | | | | | | | | | | | | | | |
| NET INCOME | | | 2,921 | | | | | 5,293 | | | | 7,430 | | | | 12,250 | |
| | | | | | | | | | | | | | | | | |
| Net loss attributable to | | | | | | | | | | | | | | | | | |
| Noncontrolling interest | | | 74 | | | | | - | | | | 172 | | | | - | |
| | | | | | | | | | | | | | | | | |
| NET INCOME ATTRIBUTABLE TO | | | | | | | | | | | | | | | | | |
| IOWA TELECOMMUNICATIONS | | | | | | | | | | | | | | | | | |
| SERVICES, INC. | | $ | 2,995 | | | | $ | 5,293 | | | $ | 7,602 | | | $ | 12,250 | |
| | | | | | | | | | | | | | | | | |
| COMPUTATION OF EARNINGS | | | | | | | | | | | | | | | | | |
| PER SHARE | | | | | | | | | | | | | | | | | |
| Basic - Earnings Per Share | | $ | 0.08 | | | | $ | 0.16 | | | $ | 0.22 | | | $ | 0.38 | |
| Basic - Weighted average number | | | | | | | | | | | | | | | | | |
| of shares outstanding | | | 32,003 | | | | | 31,471 | | | | 31,800 | | | | 31,457 | |
| | | | | | | | | | | | | | | | | |
| Diluted - Earnings Per Share | | $ | 0.08 | | | | $ | 0.15 | | | $ | 0.22 | | | $ | 0.37 | |
| Diluted - Weighted average number | | | | | | | | | | | | | | | | | |
| of shares outstanding | | | 32,208 | | | | | 32,048 | | | | 32,161 | | | | 32,021 | |
| | | | | | | | | | | | | | | | | |
| IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES |
Statements of Cash Flows |
| (Unaudited) |
| (in thousands) |
| |
| | | Three Months Ended | | | | Six Months Ended | |
| | | June 30, | | | | June 30, | |
| | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | | | | | | | | |
| CASH FLOWS FROM OPERATING | | | | | | | | | | | | | | | | |
| ACTIVITIES | | | | | | | | | | | | | | | | |
| Net income | | $ | 2,921 | | | $ | 5,293 | | | $ | 7,430 | | | $ | 12,250 | |
| Adjustments to reconcile net income | | | | | | | | | | | | | | | | |
| to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
| Depreciation | | | 13,919 | | | | 12,292 | | | | 27,501 | | | | 24,523 | |
| Amortization of intangible assets | | | 409 | | | | 373 | | | | 817 | | | | 747 | |
| Amortization of debt issuance costs | | | 174 | | | | 148 | | | | 348 | | | | 296 | |
| Deferred income taxes | | | 2,107 | | | | 3,825 | | | | 5,528 | | | | 8,594 | |
| Non-cash stock-based compensation | | | | | | | | | | | | | | | | |
| expense | | | 958 | | | | 904 | | | | 1,843 | | | | 1,770 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | | | | | |
| Receivables | | | 1,652 | | | | (474 | ) | | | 3,554 | | | | 1,304 | |
| Inventory | | | 12 | | | | (21 | ) | | | (442 | ) | | | (439 | ) |
| Accounts payable | | | (958 | ) | | | 2,152 | | | | (3,405 | ) | | | 1,088 | |
| Other assets and liabilities | | | 145 | | | | 544 | | | | (4,312 | ) | | | (5,904 | ) |
| Net cash provided by operating activities | | | 21,339 | | | | 25,036 | | | | 38,862 | | | | 44,229 | |
| | | | | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | | | | |
| Capital expenditures | | | (6,713 | ) | | | (7,135 | ) | | | (10,340 | ) | | | (12,993 | ) |
| Business acquisitions, net of cash acquired | | | - | | | | - | | | | (324 | ) | | | - | |
| Purchase of wireless licenses | | | - | | | | (4,032 | ) | | | - | | | | (5,938 | ) |
| Net cash used in investing activities | | | (6,713 | ) | | | (11,167 | ) | | | (10,664 | ) | | | (18,931 | ) |
| | | | | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | | | | |
| Net change in revolving credit facility | | | (2,000 | ) | | | (2,000 | ) | | | (8,000 | ) | | | (17,000 | ) |
| Proceeds from exercise of stock options | | | 85 | | | | - | | | | 674 | | | | - | |
| Payment on long-term debt | | | (301 | ) | | | - | | | | (598 | ) | | | - | |
| Cash contributions from non controlling interest | | | 105 | | | | - | | | | 300 | | | | - | |
| Shares reacquired | | | (347 | ) | | | (278 | ) | | | (347 | ) | | | (278 | ) |
| Dividends paid | | | (13,241 | ) | | | (12,959 | ) | | | (26,190 | ) | | | (25,846 | ) |
| Net cash used in financing activities | | | (15,699 | ) | | | (15,237 | ) | | | (34,161 | ) | | | (43,124 | ) |
| | | | | | | | | | | | | | | | |
| Net Change in Cash and Cash Equivalents | | | (1,073 | ) | | | (1,368 | ) | | | (5,963 | ) | | | (17,826 | ) |
| Cash and Cash Equivalents at Beginning | | | | | | | | | | | | | | | | |
| of Period | | | 6,715 | | | | 5,461 | | | | 11,605 | | | | 21,919 | |
| | | | | | | | | | | | | | | | |
| Cash and Cash Equivalents at End | | | | | | | | | | | | | | | | |
| of Period | | $ | 5,642 | | | $ | 4,093 | | | $ | 5,642 | | | $ | 4,093 | |
| | | | | | | | | | | | | | | | |
| IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES |
| EXPLANATIONS AND RECONCILIATIONS TO NON-GAAP CONCEPTS |
| (Unaudited) |
(in thousands) |
| |
| | | Three Months Ended | | | | Six Months Ended | |
| | | June 30, | | | | June 30, | |
| | | 2009 | | | | 2008 | | | | 2009 | | | | 2008 | |
| | | | | | | | | | | | | | | | |
ADJUSTED EBITDA: | | | | | | | | | | | | | | | | |
| Net Income | | $ | 2,921 | | | $ | 5,293 | | | $ | 7,430 | | | $ | 12,250 | |
| Income Tax Expense | | | 2,126 | | | | 4,034 | | | | 5,597 | | | | 9,010 | |
| Interest Expense | | | 7,612 | | | | 7,463 | | | | 15,208 | | | | 15,161 | |
| Depreciation and Amortization | | | 14,328 | | | | 12,665 | | | | 28,318 | | | | 25,270 | |
| Unrealized (gains) losses on | | | | | | | | | | | | | | | | |
| financial derivatives | | | 131 | | | | - | | | | 304 | | | | 259 | |
| Non-cash stock-based compensation | | | | | | | | | | | | | | | | |
expense (1) | | | 958 | | | | 904 | | | | 1,843 | | | | 1,770 | |
| Extraordinary or unusual (gains) losses | | | - | | | | - | | | | - | | | | - | |
| Non-cash portion of RTFC Capital | | | | | | | | | | | | | | | | |
Allocation (2) | | | (172 | ) | | | (44 | ) | | | (509 | ) | | | (146 | ) |
| Other non-cash losses (gains) | | | - | | | | - | | | | - | | | | - | |
| Loss (gain) on disposal of assets not in | | | | | | | | | | | | | | | | |
| ordinary course | | | - | | | | - | | | | - | | | | - | |
| Transaction costs | | | 296 | | | | - | | | | 1,460 | | | | - | |
| ADJUSTED EBITDA | | $ | 28,200 | | | $ | 30,315 | | | $ | 59,651 | | | $ | 63,574 | |
| |
(1) | | Included in Selling, General and Administrative Expense on the Consolidated Statements of Operations. |
| | |
(2) | | Included in Interest and Dividend Income on the Consolidated Statements of Operations. |
| | |
We present Adjusted EBITDA because we believe it is a useful indicator of our historical debt capacity and our ability to service debt and pay dividends. We also present Adjusted EBITDA because covenants in our credit facilities contain ratios based on Adjusted EBITDA.
Adjusted EBITDA is defined in our credit facilities as: (1) consolidated net income, as defined therein; plus (2) the following items, to the extent deducted from consolidated net income: (a) interest expense; (b) provision for income taxes; (c) depreciation and amortization; (d) transaction expenses related to the IPO and the related debt refinancing and other limited expenses related to permitted securities offerings, investments and acquisitions incurred after the closing date of the IPO, to the extent not exceeding $5.0 million; (e) unrealized losses on financial derivatives recognized in accordance with SFAS No. 133; (f) non-cash stock-based compensation expense; (g) extraordinary or unusual losses (including extraordinary or unusual losses on permitted sales of assets and casualty events); (h) losses on sales of assets other than in the ordinary course of business; and (i) all other non-cash charges that represent an accrual for which no cash is expected to be paid in the next twelve months; minus (3) the following items, to the extent any of them increases consolidated net income: (w) extraordinary or unusual gains (including extraordinary or unusual gains on permitted sales of assets and casualty events); (x) gains on asset disposals not in the ordinary course; (y) unrealized gains on financial derivatives recognized in accordance with SFAS No. 133; and (z) all other non-cash income (including the non-cash portion of any RTFC patronage capital allocation). If our Adjusted EBITDA were to decline below certain levels, covenants in our credit facilities that are based on Adjusted EBITDA, including our fixed charge coverage and total leverage ratio covenants, may be violated and could cause, among other things, a default or mandatory prepayment under our credit facilities, or result in our inability to pay dividends.
We believe that net income is the most directly comparable financial measure to Adjusted EBITDA under GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for consolidated statement of operations and cash flows data prepared in accordance with GAAP. Adjusted EBITDA is not a complete measure of an entity’s profitability because it does not include costs and expenses identified above; nor is Adjusted EBITDA a complete net cash flow measure because it does not include reductions for cash payments for an entity’s obligation to service its debt, fund its working capital, capital expenditures and acquisitions and pay its income taxes and dividends.
CONTACT:
Corporate Communications, Inc.
Investor Relations Contacts:
Kevin Inda, 407-566-1180
Kevin.Inda@cci-ir.com
or
Craig Knock, 641-787-2089
Chief Financial Officer
or
Media Contact:
Julie White, 641-787-2040
Director, Corporate Communications
Julie.White@iowatelecom.com
