Press Release
11-05-07 - D&E COMMUNICATIONS REPORTS THIRD QUARTER 2007 RESULTS
D&E COMMUNICATIONS, INC. | CONTACT PERSON: |
EPHRATA, PENNSYLVANIA (November 5, 2007) - D&E Communications, Inc. ("D&E" or "Company") (Nasdaq: DECC), a leading provider of integrated communications services in central and eastern Pennsylvania, today announced the results of its operations for the third quarter ended September 30, 2007.
For the third quarter of 2007 the Company reported total operating revenues of $38.2 million, compared to $40.6 million in the third quarter of 2006. Operating income for the third quarter of 2007 was $8.5 million compared to operating income of $6.2 million in the third quarter of 2006. Net income for the third quarter of 2007 was $3.8 million, or $0.26 per share, compared to a net income of $0.7 million, or $0.05 per share, for the same period last year. The third quarter 2007 results were affected by a decrease in depreciation expense in the Wireline segment of $1.8 million ($1.2 million, or $0.08 per share, after tax) primarily due to revisions in the estimated useful lives of certain fixed assets to update composite depreciation rates for regulated telephone property and certain fixed assets becoming fully depreciated in June 2007. The third quarter 2006 results were affected by the loss on early extinguishment of debt of $1.1 million ($0.6 million, or $0.04 per share, after tax) and a loss from discontinued operations of $0.9 million, or $0.06 per share. Net income before these items was $2.6 million, or $0.18 per share, for the third quarter of 2007, compared to $2.2 million, or $0.15 per share, for the third quarter of 2006.
The revenue decrease of $2.4 million was primarily the result of a decline in directory revenue of $3.2 million, due to the terms of a directory contract which became effective in the fourth quarter of 2006 and which covers three of the four directories that we publish. Directory expenses decreased $3.0 million as a result of this contract, under which the responsibility for publication and distribution of the directory and the related financial risks became the responsibility of the publisher. As a result, our directory revenue, as the new directories that are covered by this contract are published, will only be the annual fee paid to the Company for access to our customers.
For the nine months ended September 30, 2007, the Company reported total operating revenue of $113.8 million, compared to $122.3 million in the same period last year. Net income for the nine months ended September 30, 2007 was $8.7 million, or $0.60 per share, as compared to $3.3 million, or $0.23 per share, for the same period last year. Included in the 2007 results were a gain of $0.6 million ($0.6 million, or $0.04 per share, after tax) from life insurance proceeds and a decrease in depreciation expense in the Wireline segment of $1.8 million ($1.2 million, or $0.08 per share, after tax) described above. Included in the 2006 results were a loss on early extinguishment of debt of $1.1 million ($0.6 million, or $0.04 per share, after tax), a customer relationships intangible asset impairment loss recognized in continuing operations of $1.9 million ($1.1 million, or $0.08 per share, after tax) and a loss from discontinued operations of $1.2 million, or $0.08 per share. Net income before these items was $6.9 million, or $0.48 per share, for the nine months ended September 30, 2007, compared to $6.2 million, or $0.43 per share, for the nine months ended September 30, 2006.
"I am pleased with the progress that we are making in growing our broadband connections, the number of subscribers in our CLEC markets and in the improving financial performance of our Systems Integration segment," said James W. Morozzi, President and CEO of D&E Communications. "During the third quarter, we increased the number of DSL/High-speed Internet subscribers by 2,704. We also increased the percentage of CLEC customers that are serviced entirely on our own network to 33.2%. We were able to reduce the Systems Integration operating loss by 50% during this quarter compared to the third quarter of last year. By continuing to focus on these objectives and by controlling our operating expenses, we have been able to improve our financial performance."
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