November 8, 2007

Consolidated Communications Holdings Reports Third Quarter 2007 Results

  • Total Connections Top 300,000
  • DSL Subscribers Increase 4,300 and IPTV Subscribers Increase 1,500 in the Quarter
  • High Definition TV Service Launches in Illinois
  • Successful Completion of Billing Integration

MATTOON, Ill., Nov. 8 /PRNewswire-FirstCall/ -- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) today announced results for the third quarter and nine months ended September 30, 2007. The company reported:

    --  Revenues of $80.3 million for the quarter and $244.2 million for the
        nine-month period.
    --  Adjusted EBITDA of $33.5 million for the quarter and $106.7 million
        for the nine-month period.
    --  Net cash provided by operating activities of $15.7 million for the
        quarter and $52.8 million for the nine-month period.
    --  Dividend payout ratio of 92.6 percent for the quarter and 77.7 percent
        for the nine-month period.  Excluding a prior period subsidy
        settlement, the dividend payout ratio would have been 77.4 percent and
        73.2 percent for the quarter and nine-month period, respectively.

"We had another solid quarter, both operationally and financially," said Bob Currey, Consolidated's president and chief executive officer. "Total connections grew by 4,000 in the third quarter and now exceed 300,000. Broadband growth continues to be a strategic focus for the company and the results demonstrate our success. DSL increased by over 4,300 net new subscribers in the quarter, making this the strongest third quarter in the company's history and increasing the penetration of primary residential lines to 38.6 percent. IPTV growth was also strong, adding almost 1,500 subscribers and bringing the total subscriber base to over 11,000."

Currey continued, "With the launch of our high definition (HD) product in Illinois midway through the third quarter, we have successfully completed the HD rollout there and in Texas. Customer reaction continues to be positive. Our digital video recorder (DVR) product is scheduled for release in the fourth quarter, which will complete our current product suite."

"Additionally, the North Pittsburgh acquisition is on track. Assuming approval by the NPSI shareholders on November 13, 2007, we anticipate completing the regulatory approval process and closing on the transaction by either the end of 2007 or early in 2008," Currey concluded.

    Operating Statistics at September 30, 2007, Compared to September 30, 2006
    --  Total connections were 300,795, an increase of 9,814, or 3.4 percent.
    --  Total local access lines were 227,186, a decrease of 8,797, or 3.7
        percent.
    --  Broadband connections were 73,609, an increase of 18,611 or 33.8
        percent.
        -- DSL subscribers were 62,546, an increase of 13,186, or 26.7
           percent.
        -- IPTV subscribers were 11,063, an increase of 5,425, or 96.2
           percent.


    Cash Available to Pay Dividends

For the quarter and nine-month period, cash available to pay dividends, or CAPD, was $10.9 million and $38.8 million, respectively, and the dividend payout ratios were 92.6 percent and 77.7 percent, respectively. After excluding the prior period subsidy settlement, the dividend payout ratios in the third quarter and nine-month period would have been 77.4 percent and 73.2 percent, respectively. At September 30, 2007, cash and cash equivalents were $24.4 million. The company made capital expenditures of $8.0 million during the third quarter.

    Financial Highlights for the Third Quarter Ended September 30, 2007
    --  Revenues were $80.3 million, compared to $80.3 million in the third
        quarter of 2006.  An increase in Data and Internet revenue was offset
        by declines in Subsidies and Local Calling Service revenues.  The
        reduction in Subsidies revenue was largely attributable to an increase
        in prior period settlements.  In the third quarter of 2007 the company
        experienced a net $2.1 million negative subsidy draw, compared to a
        negative $1.2 million draw in the third quarter of 2006.  The effect
        of this was to decrease revenue by $0.9 million period over period.
        The reduction in Local Calling Service revenue was primarily
        attributable to the decline in access lines.  The growth in Data and
        Internet Services revenue was driven by increased DSL and IPTV
        subscribers.
    --  Income from operations was $14.5 million, compared to $15.5 million in
        the third quarter of 2006.  The decline reflected the revenue items
        mentioned above, as well as a $0.6 million increase in non-cash
        compensation expense associated with the company's restricted share
        plan, an additional $0.4 million in weather related overtime expense,
        and an additional $0.6 million in expense associated with the
        resolution of several vendor settlements.  These expense increases
        were partially offset by a reduction in depreciation and amortization
        expense.
    --  Interest expense, net was $11.9 million, compared to $11.2 million in
        the same quarter last year.  The increase was driven by additional
        borrowings associated with the share repurchase in July of 2006 and
        the replacement of expiring interest rate swap agreements, with the
        new swap agreements carrying a higher interest rate.
    --  Income tax expense was $2.0 million, compared to $3.9 million in 2006.
        The decrease was driven by both the change in pre-tax income and the
        recognition of $0.8 million in incremental tax expense in the third
        quarter of 2006 associated with finalizing and filing the company's
        2005 federal tax return and amending its 2003 and 2004 returns.
    --  Net income was $2.3 million, compared to $2.0 million in the third
        quarter of 2006.
    --  Net income per common share was $0.09, compared to $0.07 per common
        share in the third quarter of 2006.  "Adjusted net income per share"
        excludes certain items in the manner described in the table provided
        in this release. On that basis, "adjusted net income per share" for
        the quarter ended September 30, 2007 was $0.14, compared to $0.15 in
        the third quarter of 2006.
    --  Adjusted EBITDA was $33.5 million and would have been $35.6 million
        excluding the prior period subsidy settlements.  Net cash provided by
        operating activities was $15.7 million compared to $26.2 million for
        the third quarter of 2006. The total net debt to last twelve month
        adjusted EBITDA coverage ratio was 4.0 times to one, and all other
        coverage ratios were also within compliance levels of our credit
        facility.


    Financial Highlights for the Nine Months Ended September 30, 2007
    --  Revenues were $244.2 million, compared to $239.1 million for the prior
        year period. This reflects increases in Data and Internet Services and
        Network Access Services, partially offset by declines in Subsidies and
        Local Calling Services.
    --  Net income was $12.5 million, compared to $13.8 million for the prior
        year period.  The year-over-year decrease was due to the impact of
        Texas tax law changes and increased interest expense, partially offset
        by greater income from operations.
    --  Net income per common share was $0.48.  "Adjusted net income per
        share" excludes certain items in the manner described in the table
        provided in this release. On that basis, "adjusted net income per
        share" for the nine months ended September 30, 2007 was $0.54,
        compared to $0.47 in the same period last year.
    --  Adjusted EBITDA was $106.7 million and net cash provided by operating
        activities was $52.8 million, compared to $104.1 million and $59.6
        million, respectively.  The increase in adjusted EBITDA was primarily
        due to revenue growth, operating efficiency improvements and increased
        cash distributions from cellular partnership investments.


    North Pittsburgh Acquisition Update
    --  On July 2, 2007, the company announced a definitive agreement to
        acquire North Pittsburgh Systems, Inc. for $375.1 million in cash and
        stock.  The transaction is expected to close late in the fourth
        quarter of 2007 or early 2008.
    --  North Pittsburgh shareholders are scheduled to meet November 13, 2007
        to vote on the transaction.
    --  Regulatory Update:
          --  Received notice of early termination of the Hart-Scott-Rodino
              Act waiting period.
          --  FCC has approved both the foreign and domestic 214 applications.
          --  Pennsylvania PUC process is nearing completion and anticipate
              PUC vote in December 2007.
    --  Financing Update:
          --  Moody's and Standard and Poor's have affirmed existing credit
              ratings for Consolidated.
          --  Syndication of the bank deal is expected to launch on November
              14, 2007.
          --  Anticipate closing and funding the transaction shortly after
              receiving PUC approval.
    --  Integration Update:
          --  Identified officers from both companies to lead the integration
              efforts.
          --  Detailed planning discussions are well underway between process
              owners from both Consolidated and North Pittsburgh.


    Financial Guidance

For 2007, the company updated the following guidance for the full year (excluding any effects of North Pittsburgh acquisition, should it close by year-end): Capital expenditures are expected to be in the range of $32.5 million to $33.5 million; cash interest expense is expected to be in the range of $44.0 million to $44.5 million; and cash income taxes are expected to be in the range of $13.0 million to $14.0 million.

Dividend Payments

The company paid its latest quarterly dividend of $0.38738 per common share on November 1, 2007 to stockholders of record on October 15, 2007. On November 6, 2007, the company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on February 1, 2008 to stockholders of record at the close of business on January 15, 2008.

For 2007, the company expects approximately 10 percent of its distributions to be classified as non-dividend distribution (return of capital), with the remainder being classified as ordinary dividends. This is an estimate and will be updated as appropriate.

Conference Call Information

The company will host a conference call today at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time. The call is being webcast and can be accessed from the "Investor Relations" section of the company's website at http://www.consolidated.com. The webcast will also be archived on the company's website. If you do not have internet access, the conference call dial-in number is 1-800-642-1783. International parties can access the call by dialing 1-706-679-5600. A telephonic replay of the conference call will also be available starting two hours after completion of the call until November 12, 2007 at midnight Eastern Time. To hear the replay, parties in the United States and Canada should call 1-800-642-1687 and international parties should call 1-706-645-9291 and enter pass code 19281852.

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding "Adjusted EBITDA", "cash available to pay dividends", "cumulative available cash", " adjusted EBITDA excluding subsidy settlements", "payout ratio excluding subsidy settlements", "total net debt to last twelve month Adjusted EBITDA coverage ratio", and "adjusted net income per share", all of which are non-GAAP financial measures. Accordingly, they should not be construed as alternatives to net cash from operating or investing activities, cash and cash equivalents, cash flows from operations or net income (loss) as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. In addition, not all companies use identical calculations, and these non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation of the differences between these non-GAAP financial measures and the most directly comparable financial measures presented in accordance with GAAP is included in the tables that follow.

Adjusted EBITDA, which corresponds to consolidated EBITDA as used and defined in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2006, is comprised of historical EBITDA, as adjusted for certain adjustments permitted and contemplated by our credit facility.

EBITDA is defined as net earnings (loss) before interest expense, income taxes, depreciation and amortization on an historical basis. We believe net cash provided by operating activities is the most directly comparable financial measure to EBITDA under GAAP. EBITDA is a non-GAAP financial measure.

Cash available to pay dividends represents Adjusted EBITDA plus cash interest income less (1) cash interest expense, (2) capital expenditures, (3) cash taxes and (4) stock repurchases.

We present Adjusted EBITDA and cash available to pay dividends for several reasons. Management believes Adjusted EBITDA and cash available to pay dividends are useful as a means to evaluate our ability to fund our estimated uses of cash (including interest on our debt) and pay dividends. In addition, we have presented Adjusted EBITDA and cash available to pay dividends to investors in the past because they are frequently used by investors, securities analysts and other interested parties in the evaluation of companies in our industry, and management believes presenting them here provides a measure of consistency in our financial reporting. Adjusted EBITDA and cash available to pay dividends, referred to as Available Cash in our credit agreement, and cumulative available cash are also components of the restrictive covenants and financial ratios contained in the agreements governing our debt that require us to maintain compliance with these covenants and limit certain activities, such as our ability to incur debt and to pay dividends. The definitions in these covenants and ratios are based on Adjusted EBITDA, cash available to pay dividends and cumulative available cash after giving effect to specified charges. Other information related to these three non-GAAP financial measures, specifically "total net debt to last twelve month Adjusted EBITDA coverage ratio", help put these three measures in context. As a result, management believes the presentation of Adjusted EBITDA and cash available to pay dividends, as supplemented by these other items, provides important additional information to investors. In addition, Adjusted EBITDA and cash available to pay dividends provide our board of directors with meaningful information to determine, with other data, assumptions and considerations, our dividend policy and our ability to pay dividends under the restrictive covenants in the agreements governing our debt and to measure our ability to service and repay debt. In addition, "adjusted EBITDA excluding subsidy settlements" allows investors, securities analysts and other interested parties to evaluate our company over time.

These non-GAAP financial measures have certain shortcomings. In particular, Adjusted EBITDA does not represent the residual cash flows available for discretionary expenditures, since items such as debt repayment and interest payments are not deducted from such measure. Similarly, while we may generate cash available to pay dividends, we are not required to use any such cash to pay dividends, and the payment of any dividends is subject to declaration by our board of directors, compliance with applicable law and the terms of our credit agreement and the indenture governing our senior notes.

Because Adjusted EBITDA is a component of the Dividend Payout Ratio and the ratio of total net debt to last twelve month Adjusted EBITDA, these measures are also subject to the material limitations discussed above. In addition, the ratio of total net debt to last twelve month Adjusted EBITDA is subject to the risk that we may not be able to use the cash on the balance sheet to reduce our debt on a dollar-for-dollar basis. Management believes these ratios are useful as a means to evaluate our ability to incur additional indebtedness in the future and, together with adjusted net income per share, assist investors, securities analysts and other interested parties in evaluating both our company over time and the relative performance of the companies in our industry.

About Consolidated

Consolidated Communications Holdings, Inc. is an established rural local exchange company (RLEC) providing voice, data and video services to residential and business customers in Illinois and Texas. Each of the operating companies has been operating in its local market for over 100 years. With approximately 227,200 local access lines, 62,500 DSL subscribers, and 11,100 IPTV subscribers, Consolidated Communications offers a wide range of telecommunications services, including local and long distance service, custom calling features, private line services, dial-up and high-speed Internet access, digital TV, carrier access services, and directory publishing. Consolidated Communications is the 14th largest local telephone company in the United States.

Safe Harbor

Any statements contained in this press release other than statements of historical fact, including statements about management's beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of management's views and assumptions regarding future events and business performance. Words such as "estimate," "believe," "anticipate," "expect," "intend," "plan," "target," "project," "should," "may," "will" and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include our ability to complete the acquisition of North Pittsburgh, successfully integrate North Pittsburgh's operations and realize the synergies from the acquisition, as well as a number of other factors related to our business and the business of North Pittsburgh, including various risks to shareholders of not receiving dividends and risks to Consolidated's ability to pursue growth opportunities if Consolidated continues to pay dividends according to the current dividend policy; various risks to the price and volatility of Consolidated's common stock; the substantial amount of debt and Consolidated's ability to incur additional debt in the future; Consolidated's need for a significant amount of cash to service and repay the debt and to pay dividends on the common stock; restrictions contained in the debt agreements that limit the discretion of management in operating the business; the ability to refinance the existing debt as necessary; regulatory changes, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with Consolidated's possible pursuit of acquisitions; economic conditions in the Consolidated and North Pittsburgh service areas in Illinois, Texas and Pennsylvania; system failures; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of Consolidated's network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; and liability and compliance costs regarding environmental regulations. These and other risks and uncertainties are discussed in more detail in Consolidated's filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q.

Many of these risks are beyond management's ability to control or predict. All forward-looking statements attributable to Consolidated or persons acting on behalf of us are expressly qualified in their entirety by the cautionary statements and risk factors contained in this press release and Consolidated's filings with the Securities and Exchange Commission. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, Consolidated does not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Prospectus/Proxy Statement

This material is not a substitute for the prospectus/proxy statement Consolidated Communications Holdings, Inc. and North Pittsburgh Systems, Inc. have filed with the Securities and Exchange Commission. Investors are urged to read the prospectus/proxy statement, which contains important information, including detailed risk factors. The prospectus/proxy statement and other documents which will be filed by Consolidated Communications Holdings, Inc. and North Pittsburgh Systems, Inc. with the Securities and Exchange Commission are available free of charge at the SEC's website, http://www.sec.gov, or by directing a request when such a filing is made to Consolidated Communications, 121 South 17th Street, Mattoon, IL 61938, Attention: Investor Relations; or to North Pittsburgh Systems, Inc., 4008 Gibsonia Road, Gibsonia, Pennsylvania 15044, Attention: Investor Relations. The final prospectus/proxy statement was mailed to shareholders of North Pittsburgh Systems, Inc. on October 12, 2007.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Proxy Solicitation

Consolidated Communications Holdings, Inc and North Pittsburgh Systems, Inc., and certain of their respective directors, executive officers and other members of management and employees are participants in the solicitation of proxies in connection with the proposed transactions. Information about the directors and executive officers of Consolidated Communications Holdings, Inc. is set forth in the proxy statement for Consolidated Communications Holdings, Inc.'s 2007 annual meeting of shareholders. Information about the directors and executive officers of North Pittsburgh Systems, Inc. is set forth in the prospectus/proxy statement and the company's Annual Report on Form 10-K for the year ended December 31, 2006, as amended. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the prospectus/proxy statement for such proposed transactions.

                         Consolidated Communications
                    Condensed Consolidated Balance Sheets
                (Dollars in thousands, except per share data)

                                           September 30,    December 31,
                                               2007             2006
                                            (unaudited)

    ASSETS
     Current assets:
       Cash and cash equivalents             $24,355           $26,672
       Accounts receivable, net               37,067            34,396
       Prepaid expenses and other current
        assets                                14,850            13,149
     Total current assets                     76,272            74,217

     Property, plant and equipment, net      298,923           314,381
     Intangibles and other assets            486,872           500,981
     Total assets                           $862,067          $889,579

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                       $7,130           $11,004
       Accrued expenses and other current
        liabilities                           54,809            54,742
     Total current liabilities                61,939            65,746

     Long-term debt                          594,000           594,000
     Other long-term liabilities             105,197           111,180
     Total liabilities                       761,136           770,926

     Minority interests                        4,236             3,695
     Stockholders' equity:
       Common stock, $0.01 par value             261               260
       Paid in capital                       202,811           199,858
       Accumulated deficit                  (105,060)          (87,362)
       Accumulated other comprehensive
        income (loss)                         (1,317)            2,202
    Total stockholders' equity                96,695           114,958
    Total liabilities and stockholders'
     equity                                 $862,067          $889,579


                         Consolidated Communications
               Condensed Consolidated Statements of Operations
               (Dollars in thousands, except per share amounts)
                                 (Unaudited)

                                        Three Months Ended   Nine Months Ended
                                          September  30,       September  30,
                                          2007      2006      2007      2006

     Revenues                            $80,320  $80,323  $244,244  $239,089
     Operating expenses:
       Cost of services and products      27,698   24,140    79,115    72,764
       Selling, general and
        administrative expenses           21,800   23,764    66,395    70,947
       Depreciation and amortization      16,350   16,961    49,585    50,876
     Income from operations               14,472   15,458    49,149    44,502
     Other income (expense):
       Interest expense, net             (11,865) (11,175)  (34,726)  (31,341)
       Other income, net                   1,746    1,645     4,786     4,379
     Income before income taxes            4,353    5,928    19,209    17,540
     Income tax expense                    2,012    3,913     6,756     3,752

     Net income                            2,341    2,015    12,453    13,788

     Net income per common share           $0.09    $0.07     $0.48     $0.48


                         Consolidated Communications
               Condensed Consolidated Statements of Cash Flows
                            (Dollars in thousands)
                                 (Unaudited)

                                         Three Months Ended  Nine Months Ended
                                            September 30,      September 30,
                                            2007     2006      2007     2006

    OPERATING ACTIVITIES
    Net Income                             $2,341   $2,015   $12,453  $13,788
    Adjustments to reconcile net income to
     cash provided by operating activities:
      Depreciation and amortization        16,350   16,961    49,585   50,876
      Non-cash stock compensation           1,236      625     2,942    1,875
      Other adjustments, net               (3,576)   1,651       461    1,550
    Changes in operating assets and
     liabilities, net                        (681)   4,932   (12,662)  (8,526)
        Net cash provided by operating
         activities                        15,670   26,184    52,779   59,563
    INVESTING ACTIVITIES
      Securities purchased                    --       --    (10,625)     --
      Proceeds from sale of investments
       and securities                      10,625      590    10,625    6,511
      Capital expenditures                 (7,975)  (7,816)  (24,648) (25,037)
        Net cash provided by (used in)
         investing activities               2,650   (7,226)  (24,648) (18,526)
    FINANCING ACTIVITIES
      Proceeds from issuance of stock         --       --         12      --
      Proceeds from issuance of long-term
       obligations                            --    39,000        --   39,000
      Payment of deferred financing costs     --      (262)     (320)    (262)
      Purchase of treasury shares             --   (56,736)       --  (56,736)
      Dividends on common stock           (10,047) (11,504)  (30,140) (34,550)
        Net cash used in financing
         activities                       (10,047) (29,502)  (30,448) (52,548)
    Net increase (decrease) in cash and
     cash equivalents                       8,273  (10,544)   (2,317) (11,511)
    Cash and cash equivalents at beginning
     of period                             16,082   30,442    26,672   31,409
    Cash and cash equivalents at end of
     period                               $24,355  $19,898   $24,355  $19,898


                         Consolidated Communications
                       Consolidated Revenue by Category
                            (Dollars in thousands)
                                 (Unaudited)

                                       Three months ended    Nine Months Ended
                                          September 30,        September 30,
                                          2007     2006       2007      2006

    Telephone Operations
     Local calling services              $20,536  $21,335    $62,788   $64,184
     Network access services              17,094   17,326     52,893    51,276
     Subsidies                            10,055   11,015     32,752    34,965
     Long distance services                3,577    4,102     10,788    11,626
     Data and Internet services            9,896    7,894     27,630    22,532
     Other services                        8,894    8,458     26,719    24,577
    Total Telephone Operations            70,052   70,130    213,570   209,160
    Other Operations                      10,268   10,193     30,674    29,929
    Total operating revenues             $80,320  $80,323   $244,244  $239,089


                         Consolidated Communications
                        Schedule of ARPU Calculations
                            (Dollars in thousands)
                                 (Unaudited)

                                        Three Months Ended  Nine Months Ended
                                           September 30,      September 30,
                                          2007     2006      2007      2006

    Ending Access Lines                  227,186  235,983   227,186   235,983
    Average Access Lines                 228,070  237,630   230,342   239,605


    Telephone Operations Revenue         $70,052  $70,130  $213,570  $209,160
    Prior period subsidy settlements     $(2,131) $(1,213)  $(2,994)  $(1,793)
    Telephone Operations, excluding
     prior period subsidy settlements    $72,183  $71,343  $216,564  $210,953

    Monthly Telephone Operations ARPU    $102.38   $98.37   $103.02    $96.99
    Monthly Telephone Operations ARPU,
     excluding prior period subsidy
     settlements                         $105.50  $100.08   $104.46    $97.82


                         Consolidated Communications
                   Schedule of Adjusted EBITDA Calculation
                            (Dollars in thousands)
                                 (Unaudited)


                                                                   Last Twelve
                                                                  Months Ended
                              Three Months Ended Nine Months Ended  September
                                 September 30,      September 30,       30,
                                 2007     2006      2007      2006     2007

    Historical EBITDA:
    Net cash provided by
     operating activities      $15,670  $26,184   $52,779   $59,563  $77,809
    Adjustments:
    Compensation from
     restricted share plan      (1,236)    (625)   (2,942)   (1,875)  (3,549)
    Other adjustments, net       3,576   (1,651)     (461)   (1,550)  (6,994)
    Changes in operating
     assets and liabilities        681   (4,932)   12,662     8,526   10,805
    Interest expense, net       11,865   11,175    34,726    31,341   46,284
    Income taxes                 2,012    3,913     6,756     3,752    3,409
    Historical EBITDA (1)       32,568   34,064   103,520    99,757  127,764

    Adjustments to EBITDA:
    Integration, restructuring
     and Sarbanes-Oxley (2)        181      394       654     3,083    1,255
    Other, net (3)               1,997    1,528    (5,027)   (4,262)  (7,908)
    Investment distributions (4) 1,498    1,263     4,651     3,667    6,500
    Intangible assets
     impairment (5)                --       --        --        --    11,240
    Non-cash compensation (6)    1,236      625     2,942     1,875    3,549

    Adjusted EBITDA            $33,486  $34,818  $106,740  $104,120 $142,400


    Footnotes for Adjusted EBITDA:
    (1)  Historical EBITDA is defined as net earnings (loss) before interest
         expense, income taxes, depreciation and amortization on a historical
         basis.
    (2)  Represents certain expenses associated with integrating and
         restructuring the Texas and Illinois businesses and Sarbanes-Oxley
         start-up costs. For the three and nine months ended September 30,
         2007, this is comprised of $0.1 M and $0.5 M, respectively in billing
         integration costs and $0.1M and $0.2M, respectively in severance
         costs.  For the three and nine months ended September 30, 2006, this
         is comprised of $0.3 M and $0.8 M, respectively, of billing
         integration costs, $0.0 M and $1.5 M, respectively, in severance
         costs and $0.1 M and $0.8 M, respectively in Sarbanes-Oxley start-up
         costs. For the twelve months ended September 30, 2007, this is
         comprised of $0.6 M of billing integration costs, $0.6 M of severance
         costs and $0.0 M of Sarbanes-Oxley start-up costs.
    (3)  Other, net includes the equity earnings from our investments,
         dividend income and certain other miscellaneous non-operating items.
         Life insurance proceeds of $0.3 M received in the second quarter of
         2007 are not deducted in arriving at Adjusted EBITDA.
    (4)  For purposes of calculating Adjusted EBITDA, we include all cash
         dividends and other cash distributions received from our investments.
    (5)  Upon completion of our annual impairment review and as a result of a
         decline in estimated future cash flows in the telemarketing and
         operator services business, we determined that the value of the
         customer lists associated with these businesses was impaired.
    (6)  Represents compensation expenses in connection with our Restricted
         Share Plan, which because of the non-cash nature of the expenses are
         being excluded from Adjusted EBITDA.


                         Consolidated Communications
          Schedule of Adjusted EBITDA Excluding Subsidy Settlements
                            (Dollars in thousands)
                                   (Unaudited)

                                        Three Months Ended   Nine Months Ended
                                        September 30, 2007  September 30, 2007

    Revenue                                  $80,320             $244,244
    2006 subsidy (ICLS) settlement (1)         2,388                2,388
    2007 subsidy (ICLS) adjustment (2)          (265)                   -
    Net Total                                $82,443             $246,632

    Adjusted EBITDA                          $33,486             $106,740
    2006 subsidy (ICLS) settlement (1)        $2,388               $2,388
    2007 subsidy (ICLS) adjustment (2)         $(265)                  $-
    Net Total                                $35,609             $109,128


    (1) Reflects 2006 subsidy settlement recognized in the third quarter 2007.
    (2) Reflects impact of the 2007 ICLS cost study adjustment. The $265
        thousand relates to the January-June 2007 time period.


                         Consolidated Communications
                       Cash Available to Pay Dividends
                            (Dollars in thousands)
                                 (Unaudited)

                                        Three Months Ended   Nine Months Ended
                                        September 30, 2007  September 30, 2007

    Adjusted EBITDA                          $33,486            $106,740

     - Cash interest expense                 (11,304)            (32,998)
     - Capital Expenditures                   (7,975)            (24,648)
     + Proceeds from asset sales (1)
     - Cash income taxes                      (3,608)            (10,996)
     + Cash interest income                      253                 694
     - Repurchases of stock (2)                    -                  12

    Cash available to pay dividends          $10,852             $38,804

    Quarterly Dividend                       $10,047             $30,140
    Payout Ratio                               92.6%               77.7%
    Adjusted Payout ratio (3)                  92.6%               77.7%


    (1) Represents $673 of proceeds from the sale of idle property during the
        third quarter of 2006 and $5,921 of proceeds from the redemption of
        class C shares of RTB stock.
    (2) Represents the cancellation of stock by employees to pay withholding
        tax on shares vesting under the Company's Long Term Incentive Plan.
    (3) Represents the payout ratio excluding the effect of asset sales.



                         Consolidated Communications
            Schedule of Payout Ratio Excluding Subsidy Settlements
                            (Dollars in thousands)
                                 (Unaudited)

                                        Three Months Ended  Nine Months Ended
                                        September 30, 2007  September 30, 2007

    Cash available to pay dividends         $10,852              $38,804
    2006 subsidy (ICLS) settlement (1)        2,388                2,388
    2007 subsidy (ICLS) adjustment (2)         (265)                   -
    Normalized cash available to pay
     dividends                              $12,975              $41,192

    Quarterly Dividend                      $10,047              $30,140

    Normalized Payout                          77.4%                73.2%

    (1) Reflects 2006 subsidy settlement recognized in the third quarter 2007.
    (2) Reflects impact of the 2007 ICLS cost study adjustment. The $265
        thousand relates to the January-June 2007 time period.


                         Consolidated Communications
                 Total Net Debt to LTM Adjusted EBITDA Ratio
                            (Dollars in thousands)
                                 (Unaudited)


    Summary of Outstanding Debt
    Senior Notes                                                   $130,000
    Term loan D                                                     464,000
    Total debt as of September 30, 2007                            $594,000
    Less cash on hand                                               (24,355)
    Total net debt as of September 30, 2007                        $569,645

    Adjusted EBITDA for the last twelve
    months ended September 30, 2007                                $142,400

    Total Net Debt to last twelve months Adjusted EBITDA                4.0 x


                           Consolidated Communications
                          Adjusted Net Income Per Share
                              (Dollars in thousands)
                                   (Unaudited)

                                 Three Months Ended      Nine Months Ended
                               September   September   September   September
                               30, 2007    30, 2006    30, 2007    30, 2006

    Reported net income
     applicable to common
     stockholders                $2,341      $2,015     $12,453     $13,788
    Deferred tax adjustment           -          14      (1,731)     (5,168)
    Returns to provision tax
     true-up                          -         807           -         807
    Third quarter 2006
     litigation settlement,
     net of tax                       -         300           -         300
    Severance, net of tax            23          (4)         86         934
    Billing integration, net
     of tax                          77         164         280         466
    Sarbanes-Oxley start-up
     costs, net of tax                -          76           -         450
    Non-cash compensation         1,236         625       2,942       1,875
    Adjusted income applicable
     to common stockholders      $3,677      $3,997     $14,030     $13,452

    Weighted average number
     of shares outstanding   26,144,943  27,157,631  26,102,020  28,900,902
    Adjusted net income per
     share                        $0.14       $0.15       $0.54       $0.47

Calculations above assume a 45.0 percent and 40.0 percent effective tax rate for the three months ended September 30, 2007 and 2006, respectively, and 44.0 percent and 40.0 percent effective rate for the six months ended June 30, 2007 and 2006, respectively. More detail on actual and effective tax rates is provided in our filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q.


                         Consolidated Communications
                           Key Operating Statistics

                                         September 30,  June 30, September 30,
                                             2007         2007         2006
    Local access lines in service
        Residential                        149,735       151,645      157,609
        Business                            77,451        77,362       78,374
        Total local access lines           227,186       229,007      235,983

    Total IPTV subscribers                  11,063         9,577        5,638

    DSL subscribers                         62,546        58,225       49,360
    Broadband Connections                   73,609        67,802       54,998

    Total connections                      300,795       296,809      290,981

    Long distance lines (1)                151,320       150,863      148,167
    Dial-up subscribers                      8,858        10,223       11,740
    VoIP subscribers                         2,172         1,822          990

    IPTV Homes passed                      107,631       107,631       72,139

    (1) Reflects the inclusion of long distance service provided as part of
        the VoIP offering

SOURCE
Consolidated Communications Holdings, Inc.

CONTACT:
Stephen Jones, Vice President -- Investor Relations of Consolidated Communications Holdings, Inc., +1-217-258-9522, investor.relations@consolidated.com; or investors, Kirsten Chapman of Lippert | Heilshorn & Associates, +1-415-433-3777, kchapman@lhai.com, for Consolidated Communications Holdings, Inc.


Close window | Back to top

Copyright 2014 Consolidated Communications Holdings