| Contact: | Curtis Garner |
| | Chief Financial Officer |
| | Otelco Inc. |
| | 205-625-3571 |
| | Curtis@otelcotel.com |
Otelco Reports Fourth Quarter and Year 2008 Results
ONEONTA, Alabama (Feb. 17, 2009) – Otelco Inc. (NASDAQ: OTT; TSX: OTT.un), a wireline telecommunications services provider in Alabama, Maine, Massachusetts, Missouri and West Virginia, today announced results for its fourth quarter and year ended December 31, 2008. The results include the Company’s announced acquisition of three Country Road Communications LLC entities as of October 31, 2008. Key quarterly and annual highlights for Otelco include:
| | · | Total revenues of $23.3 million for fourth quarter and $77.1 million for 2008. |
| | · | Operating income of $5.3 million for fourth quarter and $21.1 million for 2008. |
| | · | Adjusted EBITDA (as defined below) of $11.0 million for fourth quarter and $37.4 million for 2008. |
“We are pleased with our fourth quarter results as both our operating and financial metrics experienced growth,” stated Mike Weaver, President and Chief Executive Officer of Otelco. “We completed the acquisition of the Country Road entities on favorable financial terms, significantly increasing our presence in New England. The acquisition adds over 29,000 voice and data access lines, bringing the combined Company to over 100,000 voice and data access lines. The acquisition also added more than 98,000 wholesale network connections, significantly expanding our switching capability and providing additional network scale, particularly in New England. In the fourth quarter, the combined Maine CLEC entities added over 1,400 voice and data access lines.
“Revenue increased 30.7% in the fourth quarter compared to last year, putting us on a trajectory to exceed $100 million for 2009. Adjusted EBITDA was $11.0 million for the quarter, including $2.2 million from the acquisition, and $37.4 million for the year, a growth of 26.6% for the quarter and 7.9% for the year,” added Weaver. “Our senior debt agreement has a maturity date of October 2013. The lower market interest rates have allowed us to hedge our interest expense into early 2012 at very favorable rates.
“The integration process is moving forward on schedule. We remain focused on this task and expect the process to be completed in the third quarter of this year,” noted Weaver. “As evidenced by our sixteenth consecutive IDS distribution payment in December, 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 February 20, 2009. The scheduled interest and any dividend declared will be paid on March 30, 2009 to holders of record as of the close of business on March 16, 2009. The interest payment will cover the period from December 30, 2008 through March 29, 2009. Currently, it is anticipated that the Company’s dividends in 2009 will continue to be treated as a return of capital for tax purposes. The Company has made sixteen successive quarterly distributions of dividends and interest since its IDS units were originally offered to the public in December 2004.
Otelco Reports Fourth Quarter Results
Page 2
| Fourth Quarter 2008 Financial Summary |
| (Dollars in thousands, except per share amounts) |
| | | | | | | | | | | | | |
| | | | | | | | | Change | |
| | | | 4Q 2007 | | | | 4Q 2008 | | | Amount | | | Percent | |
| | | | | | | | | | | | | | | |
| Revenues | | $ | 17,864 | | | $ | 23,349 | | | $ | 5,485 | | | | 30.7 | % |
| Operating income | | $ | 4,989 | | | $ | 5,276 | | | $ | 287 | | | | 5.8 | % |
| Interest expense | | $ | (4,745 | ) | | $ | (7,578 | ) | | $ | 2,833 | | | | 59.7 | % |
| Net income available to stockholders | | $ | 1,070 | | | $ | (1,390 | ) | | $ | (2,460 | ) | | | (229.9 | )% |
| Basic net income per share | | $ | 0.08 | | | $ | (0.11 | ) | | $ | (0.19 | ) | | | * | % |
| Diluted net income per share | | $ | 0.04 | | | $ | (0.13 | ) | | $ | (0.17 | ) | | | * | % |
| | | | | | | | | | | | | | | | | |
Adjusted EBITDA(a) | | $ | 8,708 | | | $ | 11,020 | | | $ | 2,312 | | | | 26.6 | % |
| Capital expenditures | | $ | 2,186 | | | $ | 2,395 | | | $ | 209 | | | | 9.6 | % |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | Change | |
| | | 2007 | | | 2008 | | | Amount | | | Percent | |
| | | | | | | | | | | | | |
| Revenues | | $ | 69,749 | | | $ | 77,115 | | | $ | 7,366 | | | | 10.6 | % |
| Operating income | | $ | 19,266 | | | $ | 21,087 | | | $ | 1,821 | | | | 9.5 | % |
| Interest expense | | $ | (21,378 | ) | | $ | (21,808 | ) | | $ | 430 | | | | 2.0 | % |
| Net income available to stockholders | | $ | 179 | | | $ | 214 | | | $ | 35 | | | | 19.6 | % |
| Basic net income per share | | $ | 0.02 | | | $ | 0.02 | | | $ | - | | | | - | % |
| Diluted net income per share | | $ | (0.10 | ) | | $ | (0.03 | ) | | $ | 0.07 | | | | * | % |
| | | | | | | | | | | | | | | | | |
Adjusted EBITDA(a) | | $ | 34,636 | | | $ | 37,366 | | | $ | 2,730 | | | | 7.9 | % |
| Capital expenditures | | $ | 6,572 | | | $ | 9,244 | | | $ | 2,672 | | | | 40.7 | % |
| * Not a meaningful calculation | | | | | | | | | | | | | | | | |
(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 Reports Fourth Quarter Results
Page 3
Otelco Inc. (including Acquired Entities at date of acquisition)
| | | | | | | | | | | | Quarter | |
| | | | | | Sept. 30, | | | Dec. 31, | | | % Change | |
| Key Operating Statistics | | 2007 | | | 2008 | | | 2008 | | | 2008 | |
| RLEC access lines: | | | | | | | | | | | | |
| Voice lines | | | 36,687 | | | | 35,600 | | | | 51,530 | | | | 44.7 | % |
| Data lines | | | 12,160 | | | | 13,395 | | | | 18,709 | | | | 39.7 | % |
| RLEC access line | | | | | | | | | | | | | | | | |
equivalents (1) | | | 48,847 | | | | 48,995 | | | | 70,239 | | | | 43.4 | % |
| | | | | | | | | | | | | | | | | |
| CLEC access lines: | | | | | | | | | | | | | | | | |
| Voice lines | | | 16,973 | | | | 18,229 | | | | 26,558 | | | | 45.7 | % |
| Data lines | | | 2,571 | | | | 2,864 | | | | 3,246 | | | | 13.3 | % |
| CLEC access line | | | | | | | | | | | | | | | | |
equivalents (1) | | | 19,544 | | | | 21,093 | | | | 29,804 | | | | 41.3 | % |
| | | | | | | | | | | | | | | | | |
| Otelco access line | | | | | | | | | | | | | | | | |
equivalents (1) | | | 68,391 | | | | 70,088 | | | | 100,043 | | | | 42.7 | % |
| | | | | | | | | | | | | | | | | |
| Cable television customers | | | 4,169 | | | | 4,115 | | | | 4,082 | | | | (0.8 | )% |
| Wholesale network connections | | | - | | | | - | | | | 98,187 | | | | * | % |
| Dial-up internet customers | | | 15,249 | | | | 12,537 | | | | 11,864 | | | | (5.4 | )% |
| * Not a meaningful calculation | | | | | | | | | | | | | | | | |
Country Road Communications LLC Acquired Entities
| | | Oct. 31, | | | Dec. 31, | | | % Change | |
| Key Operating Statistics | | 2008 | | | 2008 | | | 2008 | |
| RLEC access lines: | | | | | | | | | |
| Voice lines | | | 16,933 | | | | 16,360 | | | | (3.4 | )% |
| Data lines | | | 5,229 | | | | 5,158 | | | | (1.4 | )% |
| RLEC access line | | | | | | | | | | | | |
equivalents (1) | | | 22,162 | | | | 21,518 | | | | (2.9 | )% |
| | | | | | | | | | | | | |
| CLEC access lines: | | | | | | | | | | | | |
| Voice lines | | | 6,583 | | | | 7,707 | | | | 17.1 | % |
| Data lines | | | 367 | | | | 391 | | | | 6.5 | % |
| CLEC access line | | | | | | | | | | | | |
equivalents (1) | | | 6,950 | | | | 8,098 | | | | 16.5 | % |
| | | | | | | | | | | | | |
| Acquired access line | | | | | | | | | | | | |
equivalents (1) | | | 29,112 | | | | 29,616 | | | | 1.7 | % |
| | | | | | | | | | | | | |
| Wholesale network connections | | | 93,994 | | | | 98,187 | | | | 4.5 | % |
| Dial-up internet customers | | | 251 | | | | 214 | | | | (14.7 | )% |
| | | | | | | | | | | | | |
(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).
Otelco Reports Fourth Quarter Results
Page 4
FINANCIAL DISCUSSION FOR FOURTH QUARTER 2008:
All financial information includes three entities acquired from Country Road Communications LLC on and as of October 31, 2008.
Revenue
Total revenues grew 30.7% in the three months ended December 31, 2008 to $23.3 million from $17.9 million in the three months ended December 31, 2007. The growth in revenue was associated with the acquisition. Local services revenue grew 48.0% in the fourth quarter to $9.9 million from $6.7 million in the quarter ended December 31, 2007. The acquisition provided an increase of $3.5 million for the quarter. Network access revenue increased 23.4% in the fourth quarter to $8.0 million from $6.5 million in the quarter ended December 31, 2007. The acquisition provided an increase of $1.6 million for the quarter. Cable television revenue for the existing subsidiaries in the three months ended December 31, 2008 increased 24.8% to just under $0.7 million from just over $0.5 million in the three months ended December 31, 2007. Internet revenue for the fourth quarter 2008 increased 14.0% to $3.4 million from $3.0 million in the quarter ended December 31, 2007, primarily associated with the acquisition. Transport services revenue for the existing subsidiaries grew 16.7% to over $1.3 million in the three months ended December 31, 2008 from just under $1.2 million in the same period in 2007.
Operating Expenses
Operating expenses in the three months ended December 31, 2008 increased 40.4% to $18.1 million from $12.9 million in the three months ended December 31, 2007. Cost of services increased 38.8% to $9.1 million in the quarter ending December 31, 2008 from $6.6 million in the same period last year, included $2.7 million from the acquisition and a reduction of $0.2 million from the existing units. Selling, general and administrative expenses increased 14.5% to $3.2 million in the quarter ended December 31, 2008 from $2.8 million in the quarter ended December 31, 2007. Selling, general and administrative included $0.6 million from the acquisition and a reduction of $0.2 million from the existing units. Depreciation and amortization for fourth quarter increased 64.5% to $5.7 million from $3.5 million. Depreciation and amortization included $2.5 million from the acquisition including amortization of intangible assets acquired and a reduction of $0.3 million from the existing units.
Interest Expense
Interest expense increased 59.7% to $7.6 million in the quarter ended December 31, 2008 from $4.7 million a year ago. The results reflect $1.4 million in one time amortization of loan costs for extinguished loans. The balance reflects the increased senior debt associated with the acquisition.
Adjusted EBITDA
Adjusted EBITDA for the three months ended December 31, 2008 was $11.0 million compared to $8.7 million for the same period in 2007. Adjusted EBITDA included $2.2 million from the acquisition and an increase of $0.1 million from the existing units. For the year ended December 31, 2008, Adjusted EBITDA was $37.4 million, an increase of 7.9% from $34.6 million the year ended December 31, 2007. See financial tables for a reconciliation of Adjusted EBITDA to net income.
Balance Sheet
As of December 31, 2008, the Company had cash and cash equivalents of $13.5 million compared to $12.8 million at the end of 2007. Total long-term debt increased to $278.8 million, reflecting the acquisition. The fourth quarter distribution of $5.3 million in interest and dividends to our share owners and $0.3 million to our bond holders occurred on December 30, 2008. This represents the sixteenth consecutive quarterly distribution since going public in December 2004.
Otelco Reports Fourth Quarter Results
Page 5
Capital Expenditures
Capital expenditures were $2.4 million for the quarter and $9.2 million for all of 2008. In addition to the acquisition, the Company completed the initial deployment of IPTV in Alabama; added DSL capacity in each subsidiary; added 43 miles to its fiber backbone in Maine; purchased competitive customer specific equipment; and upgraded other network and switching facilities.
Selected Information on Acquisition
Otelco’s results include two months of the results of the entities acquired from Country Road Communications LLC. Selected financial information for those entities, as included in the reported Otelco financial statements, is provided below.
| | | | |
| Revenue | | ($000) | |
| Local services | | $ | 3,481 | |
| Network access | | | 1,596 | |
| Internet | | | 411 | |
| Total Revenue | | $ | 5,488 | |
| | | | | |
| Cost of services and products | | | 2,733 | |
| General and Administrative | | | 563 | |
| | | | | |
| Margin on revenue | | $ | 2,192 | |
| | | | | |
| Capital expenditures | | $ | 123 | |
| | | | | |
Fourth Quarter Earnings Conference Call
Otelco has scheduled a conference call, which will be broadcast live over the Internet, on Wednesday, February 18, 2009, at 11:00 a.m. ET. To participate in the call, dial (913) 312-6691 and ask for the Otelco call 10 minutes prior to the start time. Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting the Company's Web site at www.OtelcoInc.com or www.earnings.com. To listen to the live call online, please visit the Web site at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live Web cast, a replay of the Web cast will be available on the Company's website at www.OtelcoInc.com or www.earnings.com for 30 days. A one-week telephonic replay may also be accessed by calling 719-457-0820 and using the passcode 3842477.
ABOUT OTELCO
Otelco Inc., headquartered in Oneonta, Alabama, provides wireline telecommunications services in Alabama, Maine, Massachusetts, Missouri and West Virginia. The Company’s services include local and long distance telephone, network access, transport, digital high-speed 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 United States based on number of access lines. Otelco operates ten incumbent telephone companies serving rural markets, or rural local exchange carriers, each of which can trace its history as a local telecommunications provider as far back as the early 1900s. It also provides competitive retail and wholesale communications services through several subsidiaries. For more information, visit the Company’s web site at www.OtelcoInc.com.
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 Reports Fourth Quarter Results
Page 6
OTELCO INC.
Consolidated Balance Sheets
| | | | | | | |
| | | As of | | | As of | |
| | | December 31, 2007 | | | December 31, 2008 | |
| | | | | | | |
| Assets | | | | | | |
| Current assets | | | | | | |
| Cash and cash equivalents | | $ | 12,810,497 | | | $ | 13,542,255 | |
| Accounts receivable: | | | | | | | | |
| Due from subscribers, net of allowance | | | | | | | | |
| for doubtful accounts of $257,862 and | | | | | | | | |
| $318,446 respectively | | | 2,753,451 | | | | 5,207,731 | |
| Unbilled receivables | | | 2,616,867 | | | | 2,567,730 | |
| Other | | | 1,760,207 | | | | 4,348,044 | |
| Materials and supplies | | | 1,991,724 | | | | 2,305,755 | |
| Prepaid expenses | | | 1,149,180 | | | | 1,141,908 | |
| Income tax receivable | | | 469,546 | | | | 181,644 | |
| Deferred income taxes | | | 1,486,439 | | | | 6,725,068 | |
| Total current assets | | | 25,037,911 | | | | 36,020,135 | |
| | | | | | | | | |
| Property and equipment, net | | | 54,610,355 | | | | 75,407,062 | |
| Goodwill | | | 134,570,435 | | | | 189,334,837 | |
| Intangible assets, net | | | 9,514,772 | | | | 44,390,644 | |
| Investments | | | 1,207,183 | | | | 2,015,583 | |
| Deferred financing costs | | | 5,878,943 | | | | 8,315,921 | |
| Interest rate cap | | | 1,510,951 | | | | 7,765 | |
| Deferred charges | | | 155,573 | | | | 49,540 | |
| Total assets | | $ | 232,486,123 | | | $ | 355,541,487 | |
| | | | | | | | | |
| Liabilities and Stockholders’ Equity | | | | | | | | |
| Current liabilities | | | | | | | | |
| Accounts payable | | $ | 2,058,989 | | | $ | 2,312,920 | |
| Accrued expenses | | | 3,716,880 | | | | 6,632,287 | |
| Advanced billings and payments | | | 2,077,713 | | | | 2,024,123 | |
| Customer deposits | | | 185,147 | | | | 180,582 | |
| Total current liabilities | | | 8,038,729 | | | | 11,149,912 | |
| Deferred income taxes | | | 25,223,656 | | | | 45,962,402 | |
| Advance billings and payments | | | 797,498 | | | | 739,736 | |
| Other liabilities | | | 183,756 | | | | 188,346 | |
| Long-term notes payable | | | 170,019,705 | | | | 278,799,513 | |
| Total liabilities | | | 204,263,344 | | | | 336,839,909 | |
| | | | | | | | | |
| Derivative liability | | | 814,005 | | | | 238,054 | |
| 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 | | | 28,215,056 | | | | 19,277,959 | |
| Retained deficit | | | (4,084,797 | ) | | | (3,870,923 | ) |
| Accumulated other comprehensive loss | | | (938,732 | ) | | | (1,160,759 | ) |
| | | | | | | | | |
| Total stockholders’ equity | | | 23,323,741 | | | | 14,378,491 | |
| | | | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 232,486,123 | | | $ | 355,541,487 | |
| | | | | | | | | |
Otelco Reports Fourth Quarter Results
Page 7
OTELCO INC.
Consolidated Statements of Operations
| | | Three Months Ended | | | Twelve Months Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2008 | | | 2007 | | | 2008 | |
| | | | | | | | | | | | | |
| Revenues | | | | | | | | | | | | |
| Local services | | $ | 6,709,706 | | | $ | 9,929,632 | | | $ | 26,101,800 | | | $ | 30,013,901 | |
| Network access | | | 6,490,828 | | | | 8,011,824 | | | | 25,670,619 | | | | 27,281,727 | |
| Cable television | | | 541,087 | | | | 675,428 | | | | 2,184,072 | | | | 2,388,885 | |
| Internet | | | 2,970,429 | | | | 3,387,954 | | | | 11,517,514 | | | | 12,448,776 | |
| Transport services | | | 1,152,489 | | | | 1,344,376 | | | | 4,275,429 | | | | 4,981,651 | |
| Total revenues | | | 17,864,539 | | | | 23,349,214 | | | | 69,749,434 | | | | 77,114,940 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Cost of services and products | | | 6,587,164 | | | | 9,139,404 | | | | 25,718,634 | | | | 29,191,987 | |
| Selling, general and administrative | | | | | | | | | | | | | | | | |
| expenses | | | 2,820,918 | | | | 3,229,767 | | | | 10,418,760 | | | | 11,228,585 | |
| Depreciation and amortization | | | 3,467,108 | | | | 5,704,024 | | | | 14,346,620 | | | | 15,607,726 | |
| Total operating expenses | | | 12,875,190 | | | | 18,073,195 | | | | 50,484,014 | | | | 56,028,298 | |
| | | | | | | | | | | | | | | | | |
| Income from operations | | | 4,989,349 | | | | 5,276,019 | | | | 19,265,420 | | | | 21,086,642 | |
| | | | | | | | | | | | | | | | | |
| Other income (expense) | | | | | | | | | | | | | | | | |
| Interest expense | | | (4,744,927 | ) | | | (7,578,074 | ) | | | (21,378,434 | ) | | | (21,807,800 | ) |
| Change in fair value of derivative | | | 315,809 | | | | 224,271 | | | | 970,281 | | | | 324,058 | |
| Other income | | | 232,348 | | | | 20,999 | | | | 947,737 | | | | 639,784 | |
| Total other expense | | | (4,196,770 | ) | | | (7,332,804 | ) | | | (19,460,416 | ) | | | (20,843,958 | ) |
| | | | | | | | | | | | | | | | | |
| Income (loss) before income taxes | | | 792,579 | | | | (2,056,785 | ) | | | (194,996 | ) | | | 242,684 | |
| | | | | | | | | | | | | | | | | |
| Income tax benefit | | | 277,296 | | | | 667,239 | | | | 374,375 | | | | (28,810 | ) |
| | | | | | | | | | | | | | | | | |
| Net income (loss) available to common | | | | | | | | | | | | | | | | |
| stockholders | | $ | 1,069,875 | | | $ | (1,389,546 | ) | | $ | 179,379 | | | $ | 213,874 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 12,676,733 | | | | 12,676,733 | | | | 11,156,185 | | | | 12,676,733 | |
| Diluted | | | 13,221,404 | | | | 13,221,404 | | | | 11,700,856 | | | | 13,221,404 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.08 | | | $ | (0.11 | ) | | $ | 0.02 | | | $ | 0.02 | |
| Diluted | | $ | 0.04 | | | $ | (0.13 | ) | | $ | (0.10 | ) | | $ | (0.03 | ) |
| | | | | | | | | | | | | | | | | |
| Dividends declared per share | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.71 | | | | 0.71 | |
Otelco Reports Fourth Quarter Results
Page 8
OTELCO INC.
Consolidated Statements of Cash Flows
| | | Twelve Months Ended | |
| | | December 31, | |
| | | 2007 | | | 2008 | |
| Cash flows from operating activities: | | | | | | |
| Net income | | $ | 179,379 | | | $ | 213,874 | |
| Adjustments to reconcile net income to cash | | | | | | | | |
| flows from operating activities: | | | | | | | | |
| Depreciation | | | 11,751,673 | | | | 11,772,191 | |
| Amortization | | | 2,594,943 | | | | 3,835,535 | |
| Interest rate caplet | | | 890,840 | | | | 1,029,264 | |
| Amortization of debt premium | | | (33,552 | ) | | | (73,224 | ) |
| Amortization of loan costs | | | 2,606,422 | | | | 2,874,164 | |
| Change in fair value of derivative | | | (970,281 | ) | | | (324,058 | ) |
| Provision for deferred income taxes | | | (208,771 | ) | | | (114,845 | ) |
| Provision for uncollectible revenue | | | 225,615 | | | | 416,892 | |
| Gain on early lease termination | | | - | | | | (121,124 | ) |
| Changes in assets and liabilities; net of assets and | | | | | | | | |
| liabilities acquired: | | | | | | | | |
| Accounts receivables | | | (422,708 | ) | | | (1,394,629 | ) |
| Material and supplies | | | (183,373 | ) | | | (124,010 | ) |
| Income tax receivable | | | (469,546 | ) | | | 287,902 | |
| Prepaid expenses and other assets | | | (86,233 | ) | | | 404,306 | |
| Accounts payable and accrued liabilities | | | (1,843,834 | ) | | | 143,551 | |
| Advance billings and payments | | | 755,510 | | | | (111,352 | ) |
| Other liabilities | | | (15,630 | ) | | | (25,909 | ) |
| Net cash from operating activities | | | 14,770,454 | | | | 18,688,528 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Acquisition and construction of property and equipment | | | (6,572,336 | ) | | | (9,244,137 | ) |
| Proceeds from retirement of investment | | | 7,557 | | | | (2,453 | ) |
| Payment for the purchase CR Companies, net of | | | | | | | | |
| cash acquired | | | - | | | | (108,677,338 | ) |
| Deferred charges/acquisition | | | (110,923 | ) | | | 51,222 | |
| Net cash from investing activities | | | (6,675,702 | ) | | | (117,872,706 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Cash dividends paid | | | (9,585,120 | ) | | | (8,937,096 | ) |
| Proceeds from long-term notes payable | | | - | | | | 108,853,032 | |
| Direct cost of subsequent public offering | | | (2,314,980 | ) | | | - | |
| Repayment of long-term notes payable | | | (55,353,032 | ) | | | - | |
| Loan origination costs and transaction costs | | | (1,832,972 | ) | | | - | |
| Proceeds from issuance of Income Deposit Securities (IDS) | | | 59,400,000 | | | | - | |
| | | | | | | | | |
| Net cash from financing activities | | | (9,686,104 | ) | | | 99,915,936 | |
| | | | | | | | | |
| Net increase (decrease) in cash and cash equivalents | | | (1,591,352 | ) | | | 731,758 | |
| Cash and cash equivalents, beginning of period | | | 14,401,849 | | | | 12,810,497 | |
| | | | | | | | | |
| Cash and cash equivalents, end of period | | $ | 12,810,497 | | | $ | 13,542,255 | |
| | | | | | | | | |
| Supplemental disclosures of cash flow information: | | | | | | | | |
| Interest paid | | $ | 20,636,959 | | | $ | 17,267,118 | |
| | | | | | | | | |
| Income taxes received | | $ | (133,218 | ) | | $ | (220,221 | ) |
