Otelco Inc. (NASDAQ: OTEL), a wireline telecommunications services
provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire,
Vermont and West Virginia, today announced results for its third quarter
ended September 30, 2013. Key highlights for Otelco include:
-
Total revenues of $19.0 million for third quarter 2013.
-
Operating income of $4.3 million for third quarter 2013.
-
Adjusted EBITDA (a non-GAAP measure defined below) of $7.3 million for
third quarter 2013.
“Third quarter 2013 results produced Adjusted EBITDA of $7.3 million,”
said Mike Weaver, President and Chief Executive Officer of Otelco. “We
invested $1.6 million in capital equipment, returning to a more typical
spending level after a year of controlled investment during our balance
sheet restructuring.
“Business access line equivalents grew in third quarter in both our RLEC
and CLEC markets,” added Weaver. “The quality of our Hosted PBX product
is gaining attention as other carriers are exploring arrangements with
Otelco to potentially white label our product for their customers. We
expect to complete the first installation of these wholesale customers
in November, expanding our enterprise marketing footprint. Our capital
equipment investments continue to increase our capabilities to provide
the higher data speeds our customers require to meet their expanding
needs.
“We made our first scheduled principal payment of $1.7 million on our
new senior credit facility, completed the payment of our remaining
restructuring expenses, and ended the third quarter with $10.4 million
in cash, down only $0.8 million from the previous quarter. An additional
required principal payment of $0.3 million was made at the end of
October, reflecting the terms of our senior credit facility as we
continue to focus on reducing our leverage,” Weaver concluded.
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Third Quarter 2013 Financial Summary
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(Dollars in thousands, except per share amounts)
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(Unaudited)
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Three Months Ended September 30,
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Change
|
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2012
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2013
|
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Amount
|
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Percent
|
|
Revenues
|
|
|
$
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24,428
|
|
|
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$
|
18,980
|
|
|
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$
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(5,448
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)
|
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|
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(22.3
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)
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%
|
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Operating income
|
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$
|
6,487
|
|
|
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$
|
4,301
|
|
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$
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(2,186
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)
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|
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(33.7
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)
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%
|
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Interest expense
|
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$
|
(5,674
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)
|
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$
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2,470
|
|
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$
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8,144
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(143.5
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)
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%
|
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Net income available to stockholders
|
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$
|
316
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|
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$
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1,472
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$
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1,156
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365.8
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%
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Basic net income per share
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$
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0.12
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$
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0.47
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$
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0.35
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291.7
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%
|
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|
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Adjusted EBITDA(1) |
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$
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11,369
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$
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7,256
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$
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(4,113
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)
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(36.2
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%
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Capital expenditures
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$
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851
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$
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1,551
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$
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700
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82.3
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%
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Nine Months Ended September 30,
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Change
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2012
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2013
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Amount
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Percent
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Revenues
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$
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74,516
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$
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59,634
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$
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(14,882
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)
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(20.0
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)
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%
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Operating income (loss)
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$
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(134,957
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)
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$
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14,310
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$
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149,267
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*
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Interest expense
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$
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(17,162
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)
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$
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(10,248
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)
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$
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(6,914
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)
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(40.3
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)
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%
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Net income (loss) available to stockholders
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$
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(126,876
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)
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$
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109,346
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$
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236,222
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*
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Basic net income (loss) per share
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$
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(47.98
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)
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$
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38.24
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$
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86.22
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*
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Adjusted EBITDA(1) |
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$
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33,659
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$
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24,491
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$
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(9,168
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)
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(27.2
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)
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%
|
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Capital expenditures
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$
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3,396
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$
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3,133
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$
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(263
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)
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(7.7
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)
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%
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* Not a meaningful calculation
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Reconciliation of Adjusted EBITDA to Net
Income (Loss)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2012
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2013
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2012
|
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2013
|
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Net income (loss)
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$
|
316
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$
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1,472
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$
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(126,876
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)
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$
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109,346
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Add: Depreciation
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2,467
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2,397
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7,942
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7,166
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Interest expense - net of premium
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5,332
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2,217
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16,136
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9,421
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Interest expense - amortize loan cost
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342
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253
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1,026
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828
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Income tax expense (benefit)
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498
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(587
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(24,690
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4,284
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Change in fair value of derivatives
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-
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-
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(241
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)
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-
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Loan fees
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19
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6
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57
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|
39
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Amortization - intangibles
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2,147
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|
|
446
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7,076
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2,539
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Goodwill impairment
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(344
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)
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-
|
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143,654
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-
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Impairment of long-lived assets
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-
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-
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8,622
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-
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IXC tariff dispute settlement
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-
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112
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-
|
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|
181
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Cancellation of debt
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|
-
|
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|
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-
|
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-
|
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(118,209
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)
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Restructuring expense
|
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|
|
592
|
|
|
|
|
940
|
|
|
|
|
953
|
|
|
|
|
8,896
|
|
|
|
Adjusted EBITDA(1) |
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$
|
11,369
|
|
|
|
$
|
7,256
|
|
|
|
$
|
33,659
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|
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$
|
24,491
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(1) 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 or
increasing 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 or
consolidated statement of cash flows 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 Company’s 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.
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Key Operating Statistics
|
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(Unaudited)
|
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|
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Quarterly
|
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|
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|
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|
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% Change
|
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December 31,
|
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March 31,
|
|
June 30,
|
|
September 30,
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|
from
|
|
|
|
|
|
|
|
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2011
|
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2012
|
|
2013
|
|
2013
|
|
2013
|
|
June 30, 2013
|
|
Otelco access line equivalents(1) |
|
|
|
102,378
|
|
|
99,395
|
|
|
98,839
|
|
|
97,496
|
|
|
96,980
|
|
(0.5
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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RLEC and other services:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice access lines
|
|
|
|
|
46,202
|
|
|
43,021
|
|
|
42,274
|
|
|
41,354
|
|
|
41,036
|
|
(0.8
|
)
|
%
|
|
|
Data access lines
|
|
|
|
|
22,904
|
|
|
22,742
|
|
|
22,718
|
|
|
22,604
|
|
|
22,333
|
|
(1.2
|
)
|
%
|
|
|
|
Access line equivalents(1) |
|
|
|
69,106
|
|
|
65,763
|
|
|
64,992
|
|
|
63,958
|
|
|
63,369
|
|
(0.9
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable television customers
|
|
|
|
4,201
|
|
|
4,155
|
|
|
4,102
|
|
|
4,027
|
|
|
3,963
|
|
(1.6
|
)
|
%
|
|
|
Satellite television customers
|
|
|
|
226
|
|
|
233
|
|
|
235
|
|
|
237
|
|
|
237
|
|
0.0
|
|
%
|
|
|
Security
|
|
|
|
|
|
-
|
|
|
63
|
|
|
96
|
|
|
111
|
|
|
121
|
|
9.0
|
|
%
|
|
|
Additional internet customers
|
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|
|
5,414
|
|
|
4,506
|
|
|
4,312
|
|
|
4,124
|
|
|
2,957
|
|
(28.3
|
)
|
%
|
|
|
|
RLEC dial-up
|
|
|
|
|
301
|
|
|
198
|
|
|
169
|
|
|
153
|
|
|
141
|
|
(7.8
|
)
|
%
|
|
|
|
Other dial-up
|
|
|
|
|
2,797
|
|
|
1,895
|
|
|
1,726
|
|
|
1,590
|
|
|
455
|
|
(71.4
|
)
|
%
|
|
|
|
Other data lines
|
|
|
|
|
2,316
|
|
|
2,413
|
|
|
2,417
|
|
|
2,381
|
|
|
2,361
|
|
(0.8
|
)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLEC:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice access lines
|
|
|
|
|
30,189
|
|
|
30,470
|
|
|
30,589
|
|
|
30,252
|
|
|
30,337
|
|
0.3
|
|
%
|
|
|
Data access lines
|
|
|
|
|
3,083
|
|
|
3,162
|
|
|
3,258
|
|
|
3,286
|
|
|
3,274
|
|
(0.4
|
)
|
%
|
|
|
|
Access line equivalents(1) |
|
|
|
33,272
|
|
|
33,632
|
|
|
33,847
|
|
|
33,538
|
|
|
33,611
|
|
0.2
|
|
%
|
|
|
Wholesale network connections
|
|
|
|
157,144
|
|
|
162,117
|
|
|
2,608
|
|
|
2,709
|
|
|
2,756
|
|
1.7
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
|
|
For the Three Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2012
|
|
2013
|
|
2013
|
|
2013
|
|
|
|
|
Total Revenues (in millions):
|
|
|
$
|
101.8
|
|
$
|
98.4
|
|
$
|
21.0
|
|
$
|
19.7
|
|
$
|
19.0
|
|
|
|
|
|
RLEC(2) |
|
|
|
|
$
|
57.4
|
|
$
|
62.8
|
|
$
|
14.5
|
|
$
|
13.5
|
|
$
|
14.1
|
|
|
|
|
|
CLEC
|
|
|
|
|
$
|
44.4
|
|
$
|
35.6
|
|
$
|
6.5
|
|
$
|
6.2
|
|
$
|
4.9
|
|
|
|
|
|
|
(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).
|
|
(2) Includes regulated and unregulated RLEC revenue.
|
FINANCIAL DISCUSSION FOR THIRD QUARTER 2013 (unaudited):
Revenue
Total revenues of $19.0 million decreased 22.3% in the three months
ended September 30, 2013, when compared to the three months ended
September 30, 2012. The expiration of the Time Warner Cable (“TWC”)
contract at the end of 2012 was the primary reason for the decrease in
2013, accounting for 73.2% of the total revenue decline.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Change
|
|
|
|
|
|
|
2012
|
|
|
2013
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
|
|
(dollars in thousands)
|
|
|
Local services
|
|
|
$
|
11,003
|
|
|
$
|
7,081
|
|
|
$
|
(3,922
|
)
|
|
|
(35.6
|
)
|
%
|
|
|
Network access
|
|
|
|
7,500
|
|
|
|
6,112
|
|
|
|
(1,388
|
)
|
|
|
(18.5
|
)
|
|
|
|
Internet
|
|
|
|
3,683
|
|
|
|
3,630
|
|
|
|
(53
|
)
|
|
|
(1.4
|
)
|
|
|
|
Transport services
|
|
|
|
1,454
|
|
|
|
1,413
|
|
|
|
(41
|
)
|
|
|
(2.8
|
)
|
|
|
|
Cable television
|
|
|
|
788
|
|
|
|
744
|
|
|
|
(44
|
)
|
|
|
(5.6
|
)
|
|
|
|
Total
|
|
|
$
|
24,428
|
|
|
$
|
18,980
|
|
|
$
|
(5,448
|
)
|
|
|
(22.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Local services revenue decreased 35.6% in the third quarter of 2013 to
$7.1 million from $11.0 million in the third quarter ended September 30,
2012. TWC related revenue decreased $3.2 million. The decline in RLEC
voice access lines and reductions in toll calling decreased revenue by
$0.7 million. Network access revenue decreased 18.5% in the third
quarter of 2013 to $6.1 million from $7.5 million in the quarter ended
September 30, 2012. TWC related access revenue declined $0.8 million.
End user-related access revenue, net of payments from the new Connect
America Fund, decreased $0.6 million, reflecting reduced subscriber
usage and lower intrastate calling revenue associated with the FCC’s
InterCarrier Compensation order. Internet revenue for the third quarter
2013 decreased 1.4% to $3.6 million from just under $3.7 million in the
quarter ended September 30, 2012. The decline in dial-up internet
services and a pricing change for multiple email addresses was partially
offset by an increase in fiber revenue. Transport services revenue
decreased 2.9% to $1.4 million in the three months ended September 30,
2013 from just under $1.5 million for the three months ended September
30, 2012. The decrease was associated with contract renewal pricing.
Cable television revenue in the three months ended September 30, 2013
decreased 5.6% to just over $0.7 million compared to just under $0.8
million in the same period in 2012. The decrease was associated with
reduced subscriber base which was only partially offset by increased
security services revenue in our Alabama territory.
Operating Expenses
Operating expenses in the three months ended September 30, 2013
decreased 18.2% to $14.7 million from $17.9 million in the three months
ended September 30, 2012. Cost of services decreased 14.0% to $8.9
million from $10.4 million for the three months ended September 30,
2012. Costs in 2012 associated with TWC were $0.6 million compared to no
cost in third quarter 2013. New access recovery fees in 2013 offset $0.3
million in costs; restructuring of our CLEC sales force and customer
service function reduced costs $0.2 million; lower circuit and facility
expense reduced costs $0.2 million; and other network efficiencies
reduced costs $0.2 million. Selling, general and administrative expenses
decreased 11.7% to $2.9 million in the three months ended September 30,
2013, from $3.3 million in the three months ended September 30, 2012.
Reorganization expenses are separately classified in 2013 but are
included in selling, general and administrative expenses in the amount
of $0.6 million in 2012. Other changes include an increase of $0.2
million in compensation expense and $0.1 million for the settlement of
disputed charges in 2013, which were partially offset by $0.1 million in
lower property taxes. Depreciation and amortization for third quarter
2013 decreased 38.4% to $2.8 million from $4.6 million in the third
quarter 2012. The amortization of intangible assets associated with the
TWC contract decreased $1.6 million. The amortization of a telephone
plant adjustment decreased $0.1 million and RLEC depreciation decreased
$0.1 million.
Interest Expense
Interest expense decreased 56.5% to $2.5 million in the quarter ended
September 30, 2013, from $5.7 million a year ago. The exchange of the
Company’s senior subordinated notes for new Class A common stock during
second quarter 2013 compared to interest accrued on those notes in the
same period of 2012 represents a decrease of $3.5 million. Interest on
our senior subordinated notes increased $0.4 million, reflecting the
higher interest rate floor in our new senior credit facility.
Amortization of loan costs decreased $0.1 million.
Reorganization Items
Separate classification of reorganization items began in first quarter
2013 when we filed the Reorganization Cases. All reorganization expenses
prior to that period are reflected in selling, general and
administrative expenses. We expensed approximately $0.9 million during
the third quarter of 2013 associated with our balance sheet
restructuring process with no comparable expense in 2012 reflected as
reorganization items. This brings the total for 2013 to $7.5 million
(excluding cancellation of debt income).
Adjusted EBITDA
Adjusted EBITDA for the three months ended September 30, 2013 was $7.3
million compared to $11.4 million for the same period in 2012 and $8.4
million in the second quarter of 2013. See financial tables for a
reconciliation of Adjusted EBITDA to net income.
Balance Sheet
As of September 30, 2013, the Company had cash and cash equivalents of
$10.4 million compared to $32.5 million at the end of 2012, reflecting
the Company’s payment of $28.7 million on its long-term notes payable in
second quarter and another $1.7 million in third quarter 2013. The
payments reduce the outstanding notes payable balance to $131.6 million,
including the current portion of $7.0 million which includes $0.3
million for the Company’s first Excess Cash Flow payment to the senior
lenders which was paid on October 31, 2013. The Company’s senior credit
facility extends through April 2016 and includes a $5.0 million undrawn
revolver.
Capital Expenditures
Capital expenditures were $1.6 million for the third quarter as the
Company continues to invest in its infrastructure, including enhancing
available broadband speeds in its service area.
Third Quarter Investors Conference Call
Otelco has scheduled a conference call, which will be broadcast live
over the internet, on Tuesday, November 12, 2013, at 11:30 a.m. ET. To
participate in the call, participants should dial (719) 457-2697 and ask
for the Otelco call 10 minutes prior to the start time. Investors and
the general public will also have the opportunity to listen to the
conference call free over the internet by visiting the Company's website
at www.OtelcoInc.com.
To listen to the live call online, please visit the website at least 15
minutes early to register, download and install any necessary audio
software. For those who cannot listen to the live webcast, a replay of
the webcast will be available on the Company's website at www.OtelcoInc.com
for 30 days. A two-week telephonic replay may also be accessed by
calling (719) 457-0820 and using the confirmation code 5382593.
ABOUT OTELCO
Otelco Inc. provides wireline telecommunications services in Alabama,
Maine, Massachusetts, Missouri, New Hampshire, Vermont and West
Virginia. The Company’s services include local and long distance
telephone, digital high-speed data lines, transport services, network
access, cable television and other related services. With approximately
97,000 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 eleven incumbent telephone companies serving rural
markets, or rural local exchange carriers. It also provides competitive
retail and wholesale communications services through several
subsidiaries. For more information, visit the Company’s website 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 INC.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
(unaudited)
|
|
(in thousands, except share par value and share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2013
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
32,516
|
|
|
|
$
|
10,350
|
|
|
|
|
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
Due from subscribers, net of allowance for doubtful accounts of
$239 and $298, respectively
|
|
|
|
4,206
|
|
|
|
|
3,893
|
|
|
|
|
Unbilled receivables
|
|
|
|
|
|
|
2,004
|
|
|
|
|
1,941
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
5,336
|
|
|
|
|
2,639
|
|
|
|
|
Materials and supplies
|
|
|
|
|
|
|
1,845
|
|
|
|
|
1,794
|
|
|
|
|
Prepaid expenses
|
|
|
|
|
|
|
|
1,982
|
|
|
|
|
1,841
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
1,843
|
|
|
|
|
2,960
|
|
|
|
|
|
Total current assets
|
|
|
|
|
|
|
49,732
|
|
|
|
|
25,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
|
|
|
58,243
|
|
|
|
|
53,939
|
|
|
|
Goodwill
|
|
|
|
|
|
|
|
|
44,957
|
|
|
|
|
44,957
|
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
|
6,671
|
|
|
|
|
4,420
|
|
|
|
Investments
|
|
|
|
|
|
|
|
|
1,919
|
|
|
|
|
1,900
|
|
|
|
Deferred financing costs, net
|
|
|
|
|
|
|
4,037
|
|
|
|
|
2,340
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
6,276
|
|
|
|
|
1,556
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
490
|
|
|
|
|
569
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
|
$
|
172,325
|
|
|
|
$
|
135,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Deficit
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
|
|
|
$
|
2,007
|
|
|
|
$
|
935
|
|
|
|
|
Accrued expenses
|
|
|
|
|
|
|
|
14,901
|
|
|
|
|
5,904
|
|
|
|
|
Advance billings and payments
|
|
|
|
|
|
1,560
|
|
|
|
|
1,460
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
431
|
|
|
|
|
469
|
|
|
|
|
Customer deposits
|
|
|
|
|
|
|
|
91
|
|
|
|
|
84
|
|
|
|
|
Current maturity of long-term notes payable
|
|
|
|
|
270,990
|
|
|
|
|
7,000
|
|
|
|
|
|
Total current liabilities
|
|
|
|
|
|
|
289,980
|
|
|
|
|
15,852
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
22,670
|
|
|
|
|
23,182
|
|
|
|
Advance billings and payments
|
|
|
|
|
|
|
789
|
|
|
|
|
749
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
484
|
|
|
|
|
159
|
|
|
|
Long-term notes payable, less current maturities
|
|
|
|
|
-
|
|
|
|
|
124,634
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
|
313,923
|
|
|
|
|
164,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Common Stock, $.01 par value-authorized 20,000,000 shares;
issued and outstanding 13,221,404 shares
|
|
|
|
132
|
|
|
|
|
-
|
|
|
|
|
Class A Common Stock, $.01 par value-authorized 10,000,000 shares;
issued and outstanding 2,870,948 shares
|
|
|
|
-
|
|
|
|
|
29
|
|
|
|
|
Class B Common Stock, $.01 par value-authorized 250,000 shares;
issued and outstanding 232,780 shares
|
|
|
|
-
|
|
|
|
|
2
|
|
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
-
|
|
|
|
|
2,876
|
|
|
|
|
Retained deficit
|
|
|
|
|
|
|
|
(141,730
|
)
|
|
|
|
(32,384
|
)
|
|
|
|
|
Total stockholders' deficit
|
|
|
|
|
|
|
(141,598
|
)
|
|
|
|
(29,477
|
)
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
|
|
$
|
172,325
|
|
|
|
$
|
135,099
|
|
|
|
|
|
|
|
|
|
|
OTELCO INC.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
$
|
24,428
|
|
|
|
$
|
18,980
|
|
|
|
$
|
74,516
|
|
|
|
$
|
59,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
|
10,361
|
|
|
|
|
8,912
|
|
|
|
|
32,038
|
|
|
|
|
27,318
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
3,310
|
|
|
|
|
2,924
|
|
|
|
|
10,140
|
|
|
|
|
8,300
|
|
|
|
Depreciation and amortization
|
|
|
|
4,614
|
|
|
|
|
2,843
|
|
|
|
|
15,019
|
|
|
|
|
9,706
|
|
|
|
Long-lived assets impairment - property, plant and equipment
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,874
|
|
|
|
|
-
|
|
|
|
Long-lived assets impairment - intangibles
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
5,748
|
|
|
|
|
-
|
|
|
|
Goodwill impairment
|
|
|
|
(344
|
)
|
|
|
|
-
|
|
|
|
|
143,654
|
|
|
|
|
-
|
|
|
|
|
Total operating expenses
|
|
|
|
17,941
|
|
|
|
|
14,679
|
|
|
|
|
209,473
|
|
|
|
|
45,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
|
6,487
|
|
|
|
|
4,301
|
|
|
|
|
(134,957
|
)
|
|
|
|
14,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
(5,674
|
)
|
|
|
|
(2,470
|
)
|
|
|
|
(17,162
|
)
|
|
|
|
(10,248
|
)
|
|
|
Change in fair value of derivatives
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
241
|
|
|
|
|
-
|
|
|
|
Other income (expense)
|
|
|
|
1
|
|
|
|
|
(6
|
)
|
|
|
|
312
|
|
|
|
|
255
|
|
|
|
|
Total other expenses
|
|
|
|
(5,673
|
)
|
|
|
|
(2,476
|
)
|
|
|
|
(16,609
|
)
|
|
|
|
(9,993
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before reorganization items and income tax
|
|
|
|
814
|
|
|
|
|
1,825
|
|
|
|
|
(151,566
|
)
|
|
|
|
4,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorganization items
|
|
|
|
-
|
|
|
|
|
(940
|
)
|
|
|
|
-
|
|
|
|
|
109,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax
|
|
|
|
814
|
|
|
|
|
885
|
|
|
|
|
(151,566
|
)
|
|
|
|
113,630
|
|
|
Income tax benefit (expense)
|
|
|
|
(498
|
)
|
|
|
|
587
|
|
|
|
|
24,690
|
|
|
|
|
(4,284
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
$
|
316
|
|
|
|
$
|
1,472
|
|
|
|
$
|
(126,876
|
)
|
|
|
$
|
109,346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding (restated for
2012)
|
|
|
|
2,644,281
|
|
|
|
|
3,103,728
|
|
|
|
|
2,644,281
|
|
|
|
|
2,859,699
|
|
|
Net income (loss) per common share
|
|
|
$
|
0.12
|
|
|
|
$
|
0.47
|
|
|
|
$
|
(47.98
|
)
|
|
|
$
|
38.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per common share
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
0.18
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTELCO INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited)
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2013
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
$
|
(126,876
|
)
|
|
|
$
|
109,346
|
|
|
|
Adjustments to reconcile net income (loss) to cash flows provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
7,942
|
|
|
|
|
7,166
|
|
|
|
|
|
Amortization
|
|
|
|
|
7,077
|
|
|
|
|
2,540
|
|
|
|
|
|
Long-lived assets impairment - property, plant and equipment
|
|
|
|
2,874
|
|
|
|
|
-
|
|
|
|
|
|
Long-lived assets impairment - intangibles
|
|
|
|
5,748
|
|
|
|
|
-
|
|
|
|
|
|
Goodwill impairment
|
|
|
|
|
143,654
|
|
|
|
|
-
|
|
|
|
|
|
Amortization of loan costs
|
|
|
|
1,026
|
|
|
|
|
827
|
|
|
|
|
|
Amortization of notes payable premium
|
|
|
|
(86
|
)
|
|
|
|
(31
|
)
|
|
|
|
|
Change in fair value of derivatives
|
|
|
|
(242
|
)
|
|
|
|
-
|
|
|
|
|
|
Provision (benefit) for deferred income taxes
|
|
|
|
(24,765
|
)
|
|
|
|
4,154
|
|
|
|
|
|
Provision for uncollectible accounts receivable
|
|
|
|
352
|
|
|
|
|
304
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(123
|
)
|
|
|
|
2,768
|
|
|
|
|
|
|
|
Material and supplies
|
|
|
|
(219
|
)
|
|
|
|
51
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
(443
|
)
|
|
|
|
62
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
|
4,840
|
|
|
|
|
480
|
|
|
|
|
|
|
|
Advance billings and payments
|
|
|
|
162
|
|
|
|
|
(140
|
)
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
195
|
|
|
|
|
(331
|
)
|
|
|
|
|
Reorganization adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash reorganization income
|
|
|
|
-
|
|
|
|
|
(114,210
|
)
|
|
|
|
|
|
|
|
Net cash from operating activities
|
|
|
|
21,116
|
|
|
|
|
12,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
Acquisition and construction of property and equipment
|
|
|
|
(3,396
|
)
|
|
|
|
(3,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(3,396
|
)
|
|
|
|
(3,133
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in financing activities:
|
|
|
|
|
|
|
|
|
Cash dividends paid
|
|
|
|
|
|
(2,330
|
)
|
|
|
|
-
|
|
|
|
Principal repayment of long-term notes payable
|
|
|
|
-
|
|
|
|
|
(30,366
|
)
|
|
|
Loan origination costs
|
|
|
|
|
(599
|
)
|
|
|
|
(1,653
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
(2,929
|
)
|
|
|
|
(32,019
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
14,791
|
|
|
|
|
(22,166
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
12,394
|
|
|
|
|
32,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
27,185
|
|
|
|
$
|
10,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
|
|
$
|
13,059
|
|
|
|
$
|
6,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
|
|
|
$
|
77
|
|
|
|
$
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan fees paid via issuance of Class B common stock
|
|
|
$
|
-
|
|
|
|
$
|
2,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of Class A common stock
|
|
|
$
|
-
|
|
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Class A common stock
|
|
|
$
|
-
|
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copyright Business Wire 2013