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(Roseville, California)
- Integrated communications provider SureWest Communications ("SureWest")
(Nasdaq:SURW) announced financial results today for the quarter
ended June 30, 2002.
SureWest reported quarterly operating revenues of $43.8 million,
up 14.4 percent from $38.3 million in the second quarter of 2001.
This reflects a $3.0 million increase in local service revenue versus
the same period in 2001, an $800,000 increase in network access
revenue and a $2.0 million improvement in Wireless revenue.
Consolidated quarterly operating expenses were $40.7 million, up
7.7 percent from $37.8 million in the comparable period last year.
Expenses were impacted by a $1.1 million increase to bad debt expense
related to the Worldcom bankruptcy filing. In addition, depreciation
expense increased significantly. The costs of services and products
also increased over the comparable period last year as customers
for SureWest's integrated communications services rose in both reportable
segments, Telecom and Wireless.
Net income using generally accepted accounting principles (GAAP)
totaled $1.7 million in the quarter, or $0.12 per share, compared
to $1.5 million, or $0.10 per share, in the second quarter last
year. Absent increased bad debt expense related to Worldcom, earnings
per share would have increased by $0.06 year-over-year. Consolidated
earnings before interest, taxes, depreciation and amortization (EBITDA)
were $14.0 million in the second quarter of 2002, compared to $11.0
million a year ago.
SureWest's telecom segment, including incumbent local exchange
carrier Roseville Telephone Company, reported second quarter operating
revenues of $37.8 million, up 10.2 percent from $34.3 million in
the second quarter last year. Increases in both business and residential
access lines helped boost total access lines by 1.6 percent from
a year earlier to 136,300.
Revenues from SureWest's Internet, Long Distance and Directory
businesses, reported under the Telecom segment, totaled $6.3 million
in the quarter compared to $6.1 million in the same period last
year. SureWest Internet now serves 16,600 subscribers and SureWest
Long Distance achieved a 27.7 percent market share in the quarter
versus 23.7 percent a year ago.
SureWest Wireless revenues increased 46.3 percent to $6.0 million
in the second quarter compared to $4.1 million a year ago. Wireless
EBITDA loss fell to $1.9 million compared to an EBITDA loss of $4.7
million in the second quarter last year. Subscriber counts rose
to 35,800 versus 28,500 in the second quarter last year. The number
of contract subscribers rose seven percent from the first quarter
2002 and now represents 71 percent of total subscribers compared
to 50 percent in the second quarter last year. SureWest Wireless
also secured 28 new dealer locations during the quarter, significantly
enhancing distribution channels.
On July 12, SureWest completed its previously announced acquisition
of certain assets of Western Integrated Networks, which operated
since March 2002 under bankruptcy protection. The acquisition, which
was completed for $12 million, allows SureWest to provide bundled
digital cable, voice and high-speed data services in the Sacramento
region. Effective with the closing, SureWest added more than 5,000
bundled broadband subscribers, a hybrid fiber coaxial network passing
42,000 homes, and other assets suitable for deployment in SureWest's
other lines of business. SureWest's current plan is to pass an additional
100,000 or more homes by the end of 2006.
"We accomplished two key goals in the quarter," said Brian Strom,
SureWest's Chief Executive Officer. "First, our main business segments
showed steady internal growth and margin stability, typified by
strong DSL and Internet subscriber growth and significant EBITDA
improvement in our Wireless segment. Second, we positioned ourselves
to capitalize on an acquisition opportunity, WINfirst, which fuels
our strategic goal of regional dominance in the integrated communications
market. We think the 'triple threat' of enhanced capacity to bundle
services, strength of existing businesses, and expansive internal
growth opportunity positions SureWest well to create long-term shareholder
value." Strom added, however, "Our ongoing efforts to become the
dominant integrated communications provider in the Sacramento region
cannot be accomplished without shorter-term downward impacts on
our operating results. We believe that the combined effects of the
WINfirst acquisition, uncertainties in the telecommunications sector,
highlighted most recently by the WorldCom bankruptcy filing, and
the continued investment in our emerging businesses, will result
in significantly reduced results for SureWest in the second-half
and for full-year 2002 in comparison to prior period results. Nevertheless,
we remain convinced that the longer-term benefits from our strategies
and investments far outweigh the shorter-term effects on our operating
results."
SureWest Communications
Selected Financial Data
(Unaudited)
(amounts in thousands, except per share amounts)
|
|
Quarter
Ended |
|
|
|
|
|
|
June
30, 2002 |
June
30, 2001(1) |
|
|
|
|
|
Total
operating revenues |
$43,793 |
$38,336 |
|
|
|
|
|
Net
income |
$1,702 |
$1,475 |
|
|
|
|
|
Basic
and diluted earnings per share |
$0.12 |
$0.10 |
|
|
|
|
|
Cash
dividends per share |
$0.25 |
$0.25 |
|
Gross
property, plant and |
|
|
|
Equipment |
$545,879 |
$510,897 |
|
Total
assets |
$377,827 |
$418,224 |
|
Long-term
debt |
$41,071 |
$43,214 |
|
|
|
|
|
Shares
of common stock used to |
|
|
|
|
14,775 |
15,360 |
|
|
|
|
|
|
|
|
|
|
As
of and for the Six Months Ended |
|
|
|
|
|
|
June
30, 2002 |
June
30, 2001 |
|
|
|
|
|
Total
operating revenues |
$87,757 |
$80,600 |
|
|
|
|
|
Net
income |
$7,312 |
$6,461 |
|
|
|
|
|
Basic
and diluted
earnings
per share(2) |
$0.49 |
$0.42 |
|
|
|
|
|
|
|
|
|
Cash
dividends per share |
$0.50 |
$0.50 |
|
Gross
property, plant and |
|
|
|
Equipment |
$545,879 |
$510,897 |
|
Total
assets |
$377,827 |
$418,224 |
|
Long-term
debt |
$41,071 |
$43,214 |
|
|
|
|
|
Shares
of common stock used to |
|
|
|
|
15,006 |
15,415 |
|
|
|
|
|
|
|
|
Selected Operating Statistics
|
As
of and for the six months ended |
|
|
|
|
June
2002 |
June
2001 |
TELECOM |
|
|
| Access Lines |
136,300 |
134,200 |
| Voice-grade Equivalents |
325,000 |
282,000 |
| Gross PPE(in millions) |
$440 |
$425 |
| Fiber Miles |
31,000 |
18,000 |
| CLEC Fiber Miles |
20,000 |
12,000 |
| Total Fiber Miles |
51,000 |
30,000 |
| |
13,700 |
9,000 |
| ISP subscribers(3) |
16,600 |
8,500 |
| Long Distance Rev(in millions) |
$3.1 |
$2.9 |
| Directory Rev(in millions) |
$7.4 |
$7.3 |
|
|
|
|
WIRELESS |
|
|
| Subscribers |
35,800 |
28,500 |
| POPs |
3,300,000 |
3,300,000 |
| POPs Covered |
2,500,000 |
1,700,000 |
|
|
|
(1)
Certain amounts
in the Company's 2001 condensed consolidated financial statements
have been reclassified to conform with the presentation
of its condensed consolidated financial statements.
(2)
2002 EPS includes
$0.17 gain from sale of Alarm Monitoring in Q102.
(3)
Includes 3,000
dial-up accounts from SureWest's July 2001 acquisition of
QuikNet.
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About SureWest Communications
SureWest Communications and its family of companies, including
Roseville Telephone Company, SureWest Wireless, SureWest Broadband,
SureWest Internet, SureWest Directories and SureWest Long Distance,
create value for customers and shareholders through an integrated
network of highly reliable advanced communications products and
services with unsurpassed customer care. The company's principal
operating subsidiary, Roseville Telephone Company, is California's
third largest telecommunications company, and has provided telecommunications
services for nearly 90 years as the Incumbent Local Exchange Carrier
(ILEC) to the communities of Roseville, Citrus Heights, Granite
Bay, Antelope and parts of Rocklin. The company, through its Competitive
Local Exchange Carrier (CLEC) and subsidiaries, is licensed to provide
fiber optics, 39 GHz wireless, PCS wireless, DSL, high-speed Internet
access and data transport. For more information, visit the SureWest
web site at www.surewest.com.
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.
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 competition
in markets in which the company operates, the availability of future
financing, changes in the demand for services and products, new
product and service development and introductions, pending and future
litigation and unanticipated changes in the growth of the company's
emerging businesses, including the PCS, Internet and CLEC operating
entities.
# # #
For more information, contact media@surewest.com.
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