Press Release
03-12-07 - D&E COMMUNICATIONS REPORTS FOURTH QUARTER AND YEAR END 2006 RESULTS
D&E COMMUNICATIONS, INC. FOR IMMEDIATE RELEASE March 12, 2007 | FOR IMMEDIATE RELEASE CONTACT PERSON: |
EPHRATA, PENNSYLVANIA (March 12, 2007) - D&E Communications, Inc. ("D&E") (Nasdaq: DECC), a leading provider of integrated communications services in central and eastern Pennsylvania, today announced the results of its operations for the fourth quarter and year ended December 31, 2006.
For the fourth quarter of 2006 the company reported total operating revenue of $39.8 million, as compared to $41.9 million in the fourth quarter of 2005. Operating income for the fourth quarter of 2006 was $7.2 million compared to operating income of $7.1 million in the fourth quarter of 2005. Net income for the fourth quarter was $3.5 million, or $0.24 per share, compared to a net income of $7.1 million, or $0.49 per share, for the same period last year.
Included in the fourth quarter 2006 results was a gain on investment of $1.0 million ($0.7 million, or $0.05 per common share, after tax) as a result of a $1.0 million cash payment received in December related to advances to our international operations that had been written off in a previous year. Results for the fourth quarter of 2005 included income of $6.4 million ($6.0 million, or $0.42 per common share, after tax) from the sale of the company's direct and indirect investment in Pilicka Telefonia Sp. z o.o. ("Pilicka") on December 19, 2005. Net income before these items was $2.8 million, or $0.19 per share, for the fourth quarter of 2006, compared to $1.1 million, or $0.07 per share, for the fourth quarter of 2005.
Total operating revenue for the full year 2006 was $162.1 million, compared to $164.6 million for the previous year. Operating income for 2006 was $22.5 million compared to operating income of $22.8 million in 2005. Net income for the year was $6.7 million, or $0.47 per share, as compared to a net income of $13.7 million, or $0.96 per share, for 2005.
Results for 2006 included a gain on investment of $1.0 million ($0.7 million, or $0.05 per common share, after tax) as a result of a $1.0 million cash payment received in December related to advances to our international operations that had been written off in a previous year, a loss on early extinguishment of debt of $1.1 million ($0.6 million, or $0.04 per share after tax), a non-cash customer relationships intangible asset impairment loss of $1.9 million ($1.1 million, or $0.08 per share, after tax) and a loss on the sale of the Voice Systems Business of $1.0 million, net of tax, or $0.07 per share. Results for 2005 include income of $6.4 million ($6.0 million, or $0.42 per common share, after tax) from the sale of the company's direct and indirect investment in Pilicka, a gain on investment of $2.0 million ($1.3 million, or $0.09 per common share, after tax) from the sale of our interest in PenTeleData and a reduction of income tax expense of $0.4 million, or $0.02 per share, due to adjusting federal and state tax provisions for 2004 to the actual tax returns filed in 2005. Net income before these items was $8.7 million, or $0.61 per share, for the year ended December 31, 2006, compared to $6.0 million, or $0.43 per share, for the year ended December 31, 2005.
"D&E made solid progress in 2006," stated James Morozzi, D&E's President and Chief Executive Officer. "We placed corporate emphasis on broadband growth and have increased DSL/ High-speed Internet subscribers by 41% over last year. We have also realized success in our CLEC's "On-Net" initiative with an increase to 30% of our customers being served entirely on our own network at year-end as compared to 26% On-Net at year-end 2005. This focus on converting existing customers to our own facilities, as well as emphasizing customer acquisition on our network, is a key to the profitability of our CLEC. To that end, we expanded our network in January 2007 with the purchase of a 26-mile fiber optic network in the Harrisburg area and contracts with two central Pennsylvania school districts. In 2006, our CLEC crossed a milestone by generating operating income for the first time."
Morozzi also noted, "We certainly realize that 2007 is a critical year for our Systems Integration segment. We feel that we positioned ourselves for success in October with the sale of the assets of our commercial voice equipment and service operation to eCommunications Systems Corporation. This move away from a non-strategic business will allow us to put more focus on data, professional and managed services which provide recurring revenue for D&E."
Morozzi concluded, "Despite the competitive pressures our RLECs face, we experienced solid performance from this area as a result of cost containment initiatives and the continued emphasis on service to our customers. Our employees continue to strive to Deliver Excellence to every customer, every day."
Summary Statistics
| December 31, 2006 | December 31,2005 | Change | %Change | |
| RLEC lines | 129,848 | 134,698 | (4,850) | (3.6%) |
| CLEC lines | 43,720 | 40,796 | 2,924 | 7.2% |
| DSL/High-speed Internet Subscribers | 31,724 | 22,504 | 9,220 | 41.0% |
| Dial-up Internet subscribers | 5,337 | 7,959 | (2,622) | (32.9%) |
| Video subscribers | 7,437 | 6,630 | 807 | 12.2% |
| Web hosting customers | 951 | 952 | (1) | (0.1%) |
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