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(ROSEVILLE, CALIFORNIA) - Roseville Communications Company
(OTC: RVCL) today announced that net income was $125.8 million,
or $8.06 per share for 2000, compared to net income of $31.7 million,
or $2.01 per share for 1999. The 2000 net income was influenced
significantly by the previously announced sale to Verizon Wireless
in November 2000 of the company's 24.2 percent interest in a limited
partnership which provided cellular telephone services in portions
of Northern California and Nevada. The sale of the cellular partnership
interest resulted in a one-time gain in the amount of $119.8 million,
net of taxes.
Regarding the cellular partnership sale, Strom indicated "We had
realized the full benefits of the partnership and it was the optimum
time to liquidate this investment. The sale of our interest in the
partnership is a pivotal element in our strategy to focus our resources
on the expansion of our own wireless operation, RCS Wireless." RCS
Wireless recently became the first wireless carrier to offer an
unlimited local wireless calling plan in the Sacramento Valley.
Since the plan's introduction, RCS Wireless has experienced a vigorous
increase in the demand for its new service. "We are engaged in an
aggressive build-out program to provide the most advanced wireless
services to our current customers and to those beyond our traditional
service area," said Strom. "The 2000 territory coverage and customer
growth was impressive, with 20,000 RCS Wireless customers at year-end,"
added Strom.
In addition to the sale of the company's cellular partnership
interest, there were accounting and regulatory developments materially
affecting the company's 2000 results. As a result of accounting
changes described below, the company's net income was reduced by
an extraordinary non-cash charge and the cumulative effect of implementation
of a change in accounting principle in the aggregate amount of $14.2
million, net of taxes.
The extraordinary non-cash charge, in the amount of $10.9 million,
net of taxes, resulted from the company's determination that, due
to changes in the competitive environment relative to its regulated
operations, it no longer meets the criteria requiring the use of
Statement of Financial Accounting Standards No. 71 (SFAS No. 71),
"Accounting For the Effects of Certain Types of Regulation." Historically,
using SFAS No. 71, the company had determined, among other things,
depreciation expense for regulated operations using estimated lives
and methods prescribed by regulators rather than the economic lives
that apply to nonregulated enterprises.
An additional $3.3 million charge to income, net of taxes, resulted
from the cumulative effect of implementation of a change in accounting
principle, Staff Accounting Bulletin No. 101, (SAB No. 101) "Revenue
Recognition in Financial Statements" issued by the Securities and
Exchange Commission. SAB No. 101 requires companies to recognize
certain up-front fees over the life of the customer relationship
as opposed to in the year in which they were charged to customers.
Roseville Communications Company's operating revenues increased
to $143.3 million in 2000, a gain of $2.5 million, or 2 percent,
over 1999 due to an increase in data and broadband service revenue,
minutes-of-use volumes, and wireless revenues. These increases were
partially off-set by a revenue reduction in the fourth quarter due
to sharing obligations required by recent regulatory developments.
"2000 was an exciting and successful year as the company continued
to make significant strides in implementing its growth and diversification
strategies," said Brian Strom, president and chief executive officer
of the company. "The fact that we can have strong earnings, even
without considering the one-time benefits of the cellular partnership
sale, in the midst of our ongoing diversification program, shows
that we are beginning to realize the benefits associated with the
introduction of advanced products and services to customers both
within and beyond our traditional service territory. While the increased
spending on growth initiatives will continue to be somewhat dilutive
to earnings in the near term, we believe that the long-term potential
for wireless, Internet services, DSL and integrated data services
will contribute significantly to the overall financial strength
of the company in the future" said Strom.
Roseville Communications Company continues to expand its traditional
boundaries by penetrating new markets by providing competitive broadband,
integrated data services, Internet access and corporate network
solutions to medium and large businesses in the greater Sacramento
region. "We are applying our over 86 years of experience in the
communications industry to our new business initiatives throughout
the greater Sacramento region. Our strategy is to build a fully
diversified fiber optic network that will support today's applications
while promoting the development of future technologies and tomorrow's
applications. Today we have more than 5,000 miles of fiber outside
of our traditional local telephone service area" stated Strom.
The company's Internet subsidiary, RCS Internet, has experienced
robust demand for its high-speed connections to the Internet for
both home and business applications. This service is offered in
conjunction with Roseville Telephone Company's DSL service, which
turns ordinary copper telephone lines into broadband conduits for
reliable, high-speed access to the Internet. Because Roseville Telephone
can presently offer its DSL service in over 90 percent of its coverage
area, response to this service has been robust as reflected by the
over 7,000 customers currently enjoying the benefits of high-speed
Internet access.
The board of directors also declared its regular quarterly dividend
of $.25 per share payable March 15, 2001 to shareholders of record
on February 28, 2001.
Roseville Communications Company
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
| Period |
Revenue |
Net Income |
Basic Earnings Per Share
|
| Ended |
$000s |
%Change |
$000s |
%Change |
Latest |
Year Ago |
%Change |
| Year ended 12/31/00 |
143.3 |
1.8 |
125.8 |
296.2 |
8.06 |
2.01 |
301.0 |
Roseville Communications Company
Roseville Communications Company and its family of companies, including
Roseville Telephone Company, RCS Directories, RCS Internet, RCS
Wireless, RCS Coin Services, Roseville Long Distance and RTC Alarm
Monitoring, creates value for customers and shareholders through
an integrated network of advanced telecommunications products and
services. The company's principal operating subsidiary, Roseville
Telephone Company, is California's third largest telecommunications
company, and has provided telecommunications services for 86 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.
This material may contain forward-looking
statements. Forward-looking statements by the company are based
on estimates, projections, beliefs and assumptions of management
and are not guarantees of future performance. Actual results may
differ materially from those indicated in the forward-looking statements.
The company is under no obligation to update or revise any forward-looking
statements based on the occurrence of future events and the receipt
of new information or otherwise.
# # #
For more information, contact media@surewest.com.
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