Iowa Telecommunications Services, Inc. (NYSE: IWA) today
announced operating results for the fourth quarter and year ended
December 31, 2009. Quarterly highlights for the Company
include:
- Operating revenues were $65.7
million.
- Operating income was $10.8
million.
- Net loss was $1.7 million or
$(0.06) per diluted share.
- Adjusted EBITDA (as defined
herein) was $31.1 million.
“Our operational and financial performance during 2009 was very
strong, particularly in light of the year’s challenging economic
conditions,” said Alan L. Wells, Iowa Telecom Chairman and Chief
Executive Officer. “For the year, we generated revenues of $254.1
million, operating income of $53.0 million, net income of $10.3
million and Adjusted EBITDA of $124.2 million. More importantly, we
paid our shareholders $52.7 million in dividends. At year end, we
had 253,000 total telephone access lines as well as 158,500 long
distance subscribers, 95,200 DSL subscribers, 27,100 video
subscribers and 10,200 dial up subscribers, reflecting the
successful integration of several acquisitions completed during the
year.
“2009 was also an important year strategically for our Company
and shareholders. On November 23, 2009, our Board of Directors
approved an agreement for Windstream Corporation (“Windstream”) to
acquire our Company in a transaction valued at approximately $1.1
billion,” added Wells. “Our loss for the quarter was primarily the
result of costs related to this transaction. The transaction is
proceeding as planned and we continue to anticipate a closing in
mid-2010. I am excited about the prospects of this new combined
entity.”
FINANCIAL DISCUSSION FOR FOURTH QUARTER 2009:
- Revenues and Sales were
$65.7 million in the fourth quarter, compared to $65.0 million in
the fourth quarter of 2008 as the impact of our acquisitions offset
the impact of lost access lines and a $3.1 million decrease in CPE
sales.
- Operating Costs and
Expenses increased $7.4 million to $54.9 million in the fourth
quarter of 2009, compared to $47.5 million in the fourth quarter of
2008. The 2009 period includes $3.1 million of costs related to the
proposed transaction with Windstream and $938,000 of costs related
to business acquisitions. In addition, depreciation and
amortization increased $1.7 million for 2009, as compared to the
fourth quarter of 2008.
- Operating Income was
$10.8 million, compared to $17.5 million in the fourth quarter of
2008.
- Interest Expense was $8.3
million in the fourth quarter of both 2009 and 2008.
- Earnings Before Income
Taxes was $2.5 million, compared to $9.1 million in the fourth
quarter of 2008.
- Income Tax Expense for
the fourth quarter was $4.2 million, compared to $4.0 million in
the fourth quarter of 2008. The recorded book tax expense reflects
a higher effective tax rate on income before taxes in part due to
the $3.1 million of costs related to the proposed transaction with
Windstream, most of which are not deductible for tax purposes. The
recorded book tax expense did not impact the cash taxes paid during
the quarter. Cash income taxes reflect the continued utilization of
net operating loss carry forwards and continued goodwill
amortization for tax purposes. The Company paid no actual cash
income taxes during the quarter.
- Net loss was $1.7 million
for the quarter, compared to net income of $5.1 million in the
fourth quarter of 2008.
- Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA as
defined herein) was $31.1 million for the fourth quarter of
2009, compared with $33.1 million in the same period in 2008.
Adjusted EBITDA for the fourth quarter of 2009 includes
approximately $4.1 million of costs related to the proposed
transaction with Windstream and business acquisitions, of which
only $2.8 million is allowed to be added back in accordance with
the definition of Adjusted EBITDA in our credit agreement.
- Total Access Lines
decreased by 2,600 during the fourth quarter of 2009, as compared
to the third quarter in 2009, as ILEC access lines decreased by
3,800 lines and CLEC lines increased by 1,200 lines. DSL
subscribers and video subscribers each increased by 700, and long
distance subscribers and dial-up Internet subscribers each
decreased by 1,600.
Fourth Quarter 2009 Financial Summary (Unaudited)
(dollars in thousands, except per share amounts)
4th
Quarter
4th
Quarter
Change
2009
2008
Amount
Percent
Revenue $ 65,739 $ 65,020 $ 719 1.1 % Operating Income $
10,845 $ 17,538 $ (6,693 ) -38.2 % Interest Expense $ 8,272 $ 8,250
$ 22 0.3 % Earnings Before Income Taxes $ 2,513 $ 9,105 $ (6,592 )
-72.4 % Income Tax Expense $ 4,179 $ 4,034 $ 145 3.6 % Net Income $
(1,666 ) $ 5,071 $ (6,737 ) -132.9 % Basic Earnings Per
Share (1) $ (0.06 ) $ 0.16 $ (0.22 ) -137.5 % Diluted Earnings Per
Share (1) $ (0.06 ) $ 0.16 $ (0.22 ) -137.5 % Adjusted
EBITDA (2) $ 31,102 $ 33,127 $ (2,025 ) -6.1 % Capital Expenditures
$ 8,056 $ 8,044 $ 12 0.1 % Dividends Paid $ 13,285 $ 12,949 $ 336
2.6 %
(1) Basic and diluted earnings per
share amounts for 2008 have been retrospectively adjusted to
conform with new authoritative guidance for determining whether
instruments granted in share-based payment transactions are
participating securities, which was adopted by Iowa Telecom
effective January 1, 2009. The effect of adopting this
guidance was immaterial to all periods presented.
(2) See the definition of Adjusted
EBITDA under Explanation and Reconciliation to Non-GAAP Concepts at
the end of the financial statements.
Key Operating Statistics 4th
Quarter 4th Quarter
Change
2009(4)
2008 Amount
Percent Telephone Access Lines ILEC
Lines (1) 210,300 209,700 600 0.3% CLEC Lines (2)
42,700 32,400 10,300
31.8% Total Telephone Access Lines 253,000 242,100
10,900 4.5% Long Distance Subscribers 158,500 146,400 12,100
8.3% Dial-up Internet Subscribers 10,200 16,700 (6,500 ) -38.9% DSL
Subscribers 95,200 75,700 19,500 25.8% Video Subscribers (3) 27,100
20,300 6,800 33.5%
4th Quarter
3rd
Quarter
Change
2009(4)
2009(4)
Amount Percent
Telephone Access Lines ILEC Lines (1) 210,300 214,100
(3,800 ) -1.8 % CLEC Lines (2)
42,700
41,500 1,200 2.9
% Total Telephone Access Lines 253,000 255,600 (2,600
) -1.0 % Long Distance Subscribers 158,500 160,100 (1,600 )
-1.0 % Dial-up Internet Subscribers 10,200 11,800 (1,600 ) -13.6 %
DSL Subscribers 95,200 94,500 700 0.7 % Video Subscribers (3)
27,100 26,400 700 2.7 %
(1) Includes lines subscribed by
our incumbent local exchange carrier retail customers and lines
subscribed by our “wholesale” customers who are competing local
exchange carriers. Wholesale access lines include: lines subscribed
by our local exchange carrier competitors pursuant to
interconnection agreements on an unbundled network element basis,
for which the competitive local exchange carrier pays us a monthly
fee; lines that we provide to competitive local exchange carriers
for resale to their subscribers, for which the competitive local
exchange carrier pays us a monthly fee equal to what we would
charge our customers for local service less an agreed discount; and
shared lines, for which a competitive local exchange carrier pays
us a monthly fee to provide DSL service to its customers. We had
2,300 wholesale lines subscribed at December 31, 2008; 1,900 at
September 30, 2009; and 1,800 at December 31, 2009.
(2) Access lines subscribed by
customers of our competitive local exchange carrier subsidiaries,
Iowa Telecom Communications, Inc., IT Communications, LLC, En-Tel
Communications, LLC, Lakedale Link, Inc. and Lakedale Link,
LLC.
3 Includes subscribers served via
our facilities as well as subscribers of satellite services which
we resell.
4 Includes units acquired from
Sherburne Tele Systems, Inc. as of July 1, 2009.
FINANCIAL DISCUSSION FOR YEAR ENDED DECEMBER 31,
2009:
- Operating Revenues
increased $7.2 million, or 2.9%, to $254.1 million for the year
ended December 31, 2009, as compared to 2008. The impact of our
acquisitions and increased data and internet services revenue more
than offset the impact of lost access lines and a $5.3 million
decrease in CPE sales.
- Costs and Expenses
increased $24.6 million, or 14.0%, to $201.1 million in 2009, as
compared to 2008. The 2009 period included $3.1 million of costs
related to the proposed transaction with Windstream, $3.2 million
of costs related to business acquisitions and a $1.8 million
one-time charge related to a network access matter. Costs of CPE
sales decreased by $3.9 million. The remaining increase in costs of
services and sales and selling, general and administrative costs is
primarily due to the impact of the Sherburne acquisition and the
full-year impact of the Bishop Communications acquisition.
Depreciation and amortization increased $7.4 million, or 13.8%, to
$61.1 million.
- Operating Income
decreased to $53.0 million in 2009, compared to $70.5 million in
2008.
- Interest Expense was
$31.8 million in 2009, compared to $31.4 million in 2008.
- Earnings Before Income
Taxes for the year was $23.5 million, a decrease of 41.9%,
compared to $40.4 million in 2008.
- Income Tax Expense for
2009 was $13.1 million, compared $17.3 million in 2008. The Company
paid actual cash income taxes in 2009 of only $62,000. The recorded
book tax expense reflects a higher effective tax rate on income
before taxes in part due to the $3.1 million of costs related to
the proposed transaction with Windstream, most of which are not
deductible for tax purposes.
- Net Income was $10.3
million for 2009, compared to net income of $23.0 million in
2008.
- Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA as
defined herein) was $124.2 million for 2009, as compared with
$128.3 million for 2008. Adjusted EBITDA for 2009 included
approximately $6.3 million of costs related to the proposed
transaction with Windstream and business acquisitions, of which
only $5.0 million is allowed to be added back in accordance with
the definition of Adjusted EBITDA in our credit agreement. In
addition, 2009 included a one-time $1.8 million charge related to a
network access billing matter.
- Total Access Lines
increased by 10,900, or 4.5%, for 2009, as compared to 2008
primarily due to the addition of access lines related to the
Sherburne acquisition. Incumbent local exchange carrier access
lines increased by 600 lines and competitive local exchange carrier
lines increased by 10,300 lines from the end of 2008.
2009 Financial Summary (Unaudited) (dollars in
thousands, except per share amounts)
Change
2009
2008 Amount
Percent
Revenue $ 254,142 $ 246,965 $ 7,177 2.9 % Operating Income $
53,009 $ 70,466 $ (17,457 ) -24.8 % Interest Expense $ 31,813 $
31,444 $ 369 1.2 % Earnings Before Income Taxes $ 23,454 $ 40,389 $
(16,935 ) -41.9 % Income Tax Expense $ 13,117 $ 17,345 $ (4,228 )
-24.4 % Net Income $ 10,337 $ 23,044 $ (12,707 ) -55.1 %
Basic Earnings Per Share (1) $ 0.29 $ 0.71 $ (0.42 ) -59.2 %
Diluted Earnings Per Share (1) $ 0.29 $ 0.70 $ (0.41 ) -58.6 %
Adjusted EBITDA(2) $ 124,172 $ 128,311 $ (4,139 ) -3.2 %
Capital Expenditures $ 24,307 $ 28,166 $ (3,859 ) -13.7 %
Dividends Paid $ 52,722 $ 51,748 $ 974 1.9 %
(1) Basic and diluted earnings per
share amounts for 2008 have been retrospectively adjusted to
conform with new authoritative guidance for determining whether
instruments granted in share-based payment transactions are
participating securities, which was adopted by Iowa Telecom
effective January 1, 2009. The effect of adopting this
guidance was immaterial to all periods presented.
(2) See the definition of Adjusted
EBITDA under Explanation and Reconciliation to Non-GAAP Concepts at
the end of the financial statements.
Windstream Merger Agreement
On November 23, 2009, we entered into a definitive Agreement and
Plan of Merger (the “Merger Agreement”) with Windstream and Buffalo
Merger Sub, Inc., a wholly-owned subsidiary of Windstream
(“Newco”). The Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the Merger Agreement, we
will merge with and into Newco, with Newco continuing as the
surviving corporation (the “Merger”).
Pursuant to the Merger Agreement, at the effective time and as a
result of the Merger, each share of Iowa Telecom common stock
outstanding immediately prior to the effective time of the Merger
will be converted into and become exchangeable for (i) shares of
common stock of Windstream at a fixed exchange ratio of 0.804 and
(ii) $7.90 in cash.
The transaction is expected to close in the middle of 2010.
Completion of the Merger with Windstream is conditioned upon the
receipt of certain governmental consents and approvals, and our
shareholders’ approval. The special meeting of the Company’s
shareholders to vote on the Merger has been scheduled for March 25,
2010, and the proxy statement/prospectus for the special meeting
was mailed to shareholders on or about February 22, 2010. No
assurance can be given that the required conditions to closing will
be satisfied or that the Merger will be completed.
The merger agreement is attached as Exhibit 2.1 to the Current
Report on Form 8-K that Iowa Telecom filed with the Securities and
Exchange Commission on November 24, 2009.
Iowa Telecom will not host an investor call with respect to the
financial results.
Additional Information and Where to Find It
In connection with the proposed transaction, Windstream has
filed a registration statement on Form S-4 with the SEC, which
includes the Company’s proxy statement and also constitutes a
prospectus with respect to the Windstream securities. On or about
February 22, 2010, the Company mailed the proxy
statement/prospectus to its shareholders.
INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT
AND PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS) BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors
may obtain free copies of the registration statement and proxy
statement/prospectus, as well as other filings containing
information about Windstream and the Company, without charge, at
the SEC’s Internet web site (www.sec.gov). These documents may also
be obtained for free from the Company’s Investor Relations web site
(www.iowatelecom.com) or by directing a request to the Company at
403 W. Fourth Street North, Newton, Iowa 50208 or by calling (641)
787-2000. Copies of Windstream’s filings may be obtained for free
from Windstream’s Investor Relations Web Site (www.windstream.com)
or by directing a request to Windstream at Windstream Investor
Relations, 4001 Rodney Parham Road, Little Rock, Arkansas 72212 or
by calling (866) 320-7922.
The Company, Windstream and their respective officers and
directors may be deemed, under SEC rules, to be participants in the
solicitation of proxies from the Company’s shareholders with
respect to the proposed Merger. Information regarding the officers
and directors of the Company is included in its definitive proxy
statement for its 2009 annual meeting filed with the SEC on
April 29, 2009. Information regarding the officers and
directors of Windstream is included in its Form 10-K for 2009 filed
on February 22, 2010, and in its definitive proxy statement for its
2009 annual meeting filed with the SEC on March 23, 2009. More
detailed information regarding the identity of potential
participants in the solicitation, and their direct or indirect
interests, by securities, holdings or otherwise, which interests
may be different from those of the Company’s shareholders
generally, are set forth in the proxy statement/prospectus and
other materials to be filed with SEC in connection with the
proposed transaction.
About Iowa Telecom
Iowa Telecommunications Services, Inc. (d/b/a Iowa Telecom) is a
telecommunications service provider that offers local telephone,
long distance, Internet, broadband and network access services to
business and residential customers. The Company and its
subsidiaries serve over 450 Iowa communities and 10 Minnesota
communities, and employ nearly 800 people. The company’s
headquarters are in Newton, Iowa. The Company trades on the New
York Stock Exchange under the symbol IWA. For further information
regarding Iowa Telecom, please go to www.iowatelecom.com and select
“Investor Relations.” The Iowa Telecom logo is a registered
trademark of Iowa Telecommunications Services, Inc. in the United
States.
Forward-Looking Statements
The press release may contain forward-looking statements that
are not based on historical fact, including without limitation
statements containing the words “believes,” “may,” “plans,” “will,”
“estimate,” “continue,” “anticipates,” “intends,” “expects,” and
similar expressions. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause
actual results, events or developments to be materially different
from future results, events or developments described in the
forward-looking statements. Such factors include those risks
described in Iowa Telecom’s Form 10-K on file with the SEC. In
addition, with respect to the forward-looking information contained
in this release relating to the Merger, if the Company does not
receive the required shareholder approval or fails to satisfy other
conditions to closing, the Merger may not be consummated, and the
following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements relating to the Merger: risks associated with
uncertainty as to whether the Merger will be completed, costs and
potential litigation associated with the transaction, the failure
to obtain approval of the Company’s shareholders, the failure of
either party to meet the closing conditions set forth in the Merger
Agreement, and the extent and timing of regulatory approvals. These
and the factors referenced above should be considered carefully and
readers are cautioned not to place undue reliance on such
forward-looking statements. All information is current as of the
date this press release is issued, and Iowa Telecom undertakes no
duty to update this information.
IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES
Balance Sheets (Unaudited) (dollars in thousands,
except per share amounts) As of As of
December 31, 2009 December 31,
2008 ASSETS CURRENT ASSETS Cash and cash
equivalents $ 12,259 $ 11,605 Accounts receivable, net 22,632
23,320 Inventories 5,105 3,946 Prepayments and other current assets
7,857 3,149
Total Current Assets
47,853
42,020 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 672,270 601,782 Accumulated
depreciation
(365,631 )
(310,936 ) Property, Plant and Equipment, net
306,639 290,846
GOODWILL 492,956 473,984 INTANGIBLE ASSETS AND OTHER, NET
51,238 36,904 INVESTMENT IN AND RECEIVABLE FROM THE RURAL TELEPHONE
FINANCE COOPERATIVE
17,141
16,174 Total Assets
$
915,827 $ 859,928
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES Revolving credit facility $ 37,000 $ 39,000
Accounts payable 12,408 11,017 Advanced billings and customer
deposits 10,470 8,615 Accrued and other current liabilities 33,195
32,429 Current maturities of long-term debt
3,276
1,219
Total Current Liabilities
96,349
92,280
LONG-TERM DEBT
565,214 489,003 DEFERRED TAX LIABILITIES 60,783 47,575 OTHER
LONG-TERM LIABILITIES
25,914
28,326 Total long-term liabilities
651,911 564,904
Total Liabilities
748,260
657,184 STOCKHOLDERS’ EQUITY Common
stock, $.01 par value, 100,000,000 shares authorized, 32,193,036
and 31,500,687 shares issued and outstanding 322 315 Additional
paid-in capital 332,722 327,264 Accumulated deficit (153,383 )
(110,814 ) Accumulated other comprehensive loss
(12,094 )
(14,308 ) Total Iowa
Telecom stockholders’ equity 167,567 202,457 Noncontrolling
interest
- 287
Total Stockholders’ Equity
167,567
202,744 Total Liabilities
and Stockholders’ Equity
$ 915,827
$ 859,928 IOWA
TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES Income
Statements (Unaudited) (in thousands, except per
share amounts)
Three Months Ended
December
31,
Twelve Months Ended
December
31,
2009
2008 2009
2008 REVENUE AND
SALES Local services $ 19,321 $ 18,005 74,859 $ 71,131 Network
access services 22,817 23,563 87,690 89,420 Toll services 5,529
5,616 22,234 23,010 Data and internet services 11,923 9,548 43,040
35,163 Other services and sales
6,149
8,288 26,319
28,241 Total revenues and sales 65,739
65,020 254,142 246,965 OPERATING COSTS AND EXPENSES
Cost of services and sales
(exclusive of items shown separately below)
22,104 20,310 83,640 78,091 Selling, general and administrative
16,428 12,484 56,401 44,714 Depreciation and amortization
16,362 14,688
61,092 53,694 Total
operating costs and expenses 54,894 47,482 201,133 176,499
OPERATING INCOME 10,845 17,538 53,009 70,466 OTHER INCOME
(EXPENSE) Interest and dividend income 138 209 1,880 938 Interest
expense (8,272 ) (8,250 ) (31,813 ) (31,444 ) Other, net
(198 )
(392 )
378 429 Total other
expense, net (8,332 ) (8,433 ) (29,555 ) (30,077 ) EARNINGS
BEFORE INCOME TAXES 2,513 9,105 23,454 40,389 INCOME TAX
EXPENSE
4,179 4,034
13,117 17,345
NET INCOME (LOSS) (1,666 ) 5,071 10,337 23,044
Noncontrolling interest
-
105 195
105
NET INCOME (LOSS) ATTRIBUTABLE TO
IOWA TELECOMMUNICATIONS
$
(1,666 ) $
5,176 $ 10,532
$ 23,149 COMPUTATION OF
EARNINGS PER SHARE (1) Basic - Earnings Per Share $ (0.06 ) $ 0.16
$ 0.29 $ 0.71
Basic - Weighted average number of
shares outstanding
32,093 31,501 31,934 31,477 Diluted - Earnings Per Share $
(0.06 ) $ 0.16 $ 0.29 $ 0.70
Diluted - Weighted average number
of shares outstanding
32,093 32,095 32,203 32,056
(1) Basic and diluted earnings per
share amounts for 2008 have been retrospectively adjusted to
conform with new authoritative guidance for determining whether
instruments granted in share-based payment transactions are
participating securities, which was adopted by Iowa Telecom
effective January 1, 2009. The effect of adopting this
guidance was immaterial to all periods presented.
IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES
Statements of Cash Flows (Unaudited) (in
thousands)
Three Months Ended
December
31,
Twelve Months Ended
December
31,
2009
2008 2009
2008 CASH FLOWS
FROM OPERATING ACTIVITIES Net income $ (1,666 ) $ 5,071 $ 10,337 $
23,044 Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation 15,425 13,906 58,403
51,747 Amortization of intangible assets 937 782 2,689 1,947
Amortization of debt issuance costs 384 174 1,113 640 Deferred
income taxes 4,176 4,613 12,843 17,286
Non-cash stock-based compensation
expense
969 893 3,771 3,553 Changes in operating assets and liabilities:
Receivables 11 (2,032 ) 3,164
(1,754
)
Inventories
493
265
326
(15
)
Accounts payable 2,382 739 (48 ) 1,267
Pension and postretirement benefit
plan obligations
(31 ) (2,746 ) (687 ) (4,147 ) Other assets and liabilities
4,469 920
(733 )
(5,012 ) Net cash provided
by operating activities 27,549 22,585 91,178 88,556 CASH
FLOWS FROM INVESTING ACTIVITIES Capital expenditures (8,056 )
(8,044 ) (24,307 ) (28,166 ) Business acquisitions (net of cash
acquired) (1,136 ) 319 (81,179 ) (33,100 ) Purchase of wireless
licenses
- -
- (5,938 ) Net cash
used in investing activities (9,192 ) (7,725 ) (105,486 ) (67,204 )
CASH FLOWS FROM FINANCING ACTIVITIES Net change in revolving
credit facility (4,000 ) 2,000 (2,000 ) 21,000 Proceeds from
exercise of stock options 26 - 703 - Payment of debt issuance costs
- - (2,009 ) (351 ) Issuance of long-term debt - - 75,000 - Payment
on long-term debt (498 ) (291 ) (1,585 ) (599 ) Acquisition of
noncontrolling interest - - (1,890 ) - Capital contributions from
noncontrolling interests - 520 390 520 Shares reacquired (432 ) -
(925 ) (488 ) Dividends paid
(13,285 )
(12,949 )
(52,722 )
(51,748 )
Net cash provided by (used in)
financing activities
(18,189 ) (10,720 ) 14,962 (31,666 ) Net Change in Cash and
Cash Equivalents
168
4,140 654
(10,314 )
Cash and Cash Equivalents at
Beginning of Period
12,091 7,465
11,605 21,919
Cash and Cash Equivalents at End
of Period
$ 12,259 $
11,605 $ 12,259
$ 11,605 IOWA
TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES
EXPLANATIONS AND RECONCILIATIONS TO NON-GAAP CONCEPTS
(Unaudited) (in thousands)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2009
2008(1)
2009 2008
(1) ADJUSTED EBITDA: Net income $
(1,666 ) $ 5,176 $ 10,337 $ 23,149 Income tax expense 4,179 4,034
13,117 17,345 Interest expense 8,272 8,250 31,813 31,444
Depreciation and amortization 16,362 14,688 61,092 53,694
Unrealized (gains) losses on
financial derivatives
189 455 729 (314 )
Non-cash stock-based compensation
expense (2)
969 893 3,771 3,553 Extraordinary or unusual (gains) losses - - - -
Non-cash portion of RTFC Capital Allocation (3) 23 (369 ) (651 )
(560 ) Other non-cash losses (gains) - - (1,036 ) -
Loss (gain) on disposal of assets
not in ordinary course
- - - - Transaction costs
2,774 -
5,000 - ADJUSTED EBITDA
$
31,102 $ 33,127 $ 124,172 $
128,311
(1) The FASB issued amended
guidance regarding “Noncontrolling Interest in Consolidated
Financial Statements.” The amended guidance was adopted
by Iowa Telecom effective January 1, 2009 and the Statement of
Operations has been retrospectively adjusted to conform to new
authoritative guidance. The Adjusted EBITDA calculation as
presented for 2008 is calculated in accordance with the definition
of Adjusted EBITDA, as defined in our credit agreement, and
financial statements prepared in accordance with the authoritative
guidance in effect at that time.
(2) Included in Selling, General
and Administrative Expense on the Consolidated Statements of
Operations.
(3) Included in Interest and
Dividend Income on the Consolidated Statements of Operations.
We present Adjusted EBITDA because we believe it is a useful
indicator of our historical debt capacity and our ability to
service debt and pay dividends. We also present Adjusted EBITDA
because covenants in our credit facilities contain ratios based on
Adjusted EBITDA.
Adjusted EBITDA is defined in our credit facilities as: (1)
consolidated net income, as defined therein; plus (2) the following
items, to the extent deducted from consolidated net income: (a)
interest expense; (b) provision for income taxes; (c) depreciation
and amortization; (d) transaction expenses related to the IPO and
the related debt refinancing and other limited expenses related to
permitted securities offerings, investments and acquisitions
incurred after the closing date of the IPO, to the extent not
exceeding $5.0 million; (e) unrealized losses on financial
derivatives; (f) non-cash stock-based compensation expense; (g)
extraordinary or unusual losses (including extraordinary or unusual
losses on permitted sales of assets and casualty events); (h)
losses on sales of assets other than in the ordinary course of
business; and (i) all other non-cash charges that represent an
accrual for which no cash is expected to be paid in the next twelve
months; minus (3) the following items, to the extent any of them
increases consolidated net income: (w) extraordinary or unusual
gains (including extraordinary or unusual gains on permitted sales
of assets and casualty events); (x) gains on asset disposals not in
the ordinary course; (y) unrealized gains on financial derivatives;
and (z) all other non-cash income (including the non-cash portion
of any RTFC patronage capital allocation). If our Adjusted EBITDA
were to decline below certain levels, covenants in our credit
facilities that are based on Adjusted EBITDA, including our fixed
charge coverage and total leverage ratio covenants, may be violated
and could cause, among other things, a default or mandatory
prepayment under our credit facilities, or result in our inability
to pay dividends.
We believe that net income is the most directly comparable
financial measure to Adjusted EBITDA under GAAP. Adjusted EBITDA
should not be considered in isolation or as a substitute for
consolidated statement of operations and cash flows data prepared
in accordance with GAAP. Adjusted EBITDA is not a complete measure
of an entity’s profitability because it does not include costs and
expenses identified above; nor is Adjusted EBITDA a complete net
cash flow measure because it does not include reductions for cash
payments for an entity’s obligation to service its debt, fund its
working capital, capital expenditures and acquisitions and pay its
income taxes and dividends.
Iowa Telecom (NYSE:IWA)
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Iowa Telecom (NYSE:IWA)
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From Oct 2023 to Oct 2024