Consolidated Communications Holdings
Mar 12, 2009

Consolidated Communications Holdings Reports Fourth Quarter and Full Year 2008 Results

MATTOON, Ill., March 12 /PRNewswire-FirstCall/ -- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) reported results for the fourth quarter and year ended December 31, 2008.

    Fourth quarter and full year 2008 summary:

    --  Revenue was $102.7 million for the quarter and $418.4 million for the
        year.
    --  Net cash provided by operations was $25.8 million for the quarter and
        $92.4 million for the year.
    --  Adjusted EBITDA was $46.1 million for the quarter and $189.8 million

        for the year, which includes $0.3 million and $1.5 million,
        respectively, in recovery expenses from Hurricane Ike.
    --  Dividend payout ratio was 74.2% for the quarter and 71.6% for the
        year.

"I am pleased to report another solid quarter, despite a macro economic environment full of challenges and the second complete quarter of fully launched cable voice competition. We have proven once again the resiliency of our business and strategy," said Bob Currey, president and CEO.

"We delivered another strong broadband performance with growth of almost 4% for the quarter and 16% for the year. Our DSL service continues to show strength with a 3% increase in the quarter, while raising our industry leading penetration rate of 35% on total ILEC access lines. As a result of our HD and DVR growth, our ARPU on IPTV subscribers has reached its highest point ever."

"Financially, we produced solid results for the quarter with $102.7 million in revenue and $46.4 million in adjusted EBITDA. For the year, we produced $63.5 million in cash available for dividends and improved our full year payout ratio of 71.6% by 430 basis points over 2007. Revenue and adjusted EBITDA for the full year 2008 were in line with our expectations at $418.4 million and $191.3 million, excluding $1.5 million in Hurricane Ike expenses."

"The North Pittsburgh acquisition was a great success in 2008 and I am excited about the opportunities for the second year. The integration is nearing completion with the final system conversion occurring within the next couple of months. Our synergy forecast of $7 million for the first year was surpassed by 10% or $0.7 million. With the run rate ahead of plan, we are confident in meeting our synergy target for year two of $11 million," Currey concluded.

    Operating Statistics at December 31, 2008, Compared to December 31, 2007.
    --  Total connections were 454,003, an increase of 1,682, or 0.4%.
    --  Total local access lines were 264,323, a decrease of 21,863, or 7.6%.
        --  Our existing Illinois and Texas operations had a decrease of
            18,324, or 8.2%.
        --  Our Pennsylvania operations had a decrease of 3,539, or 5.7%.
    --  ILEC Broadband connections were 108,483, an increase of 14,905, or
        15.9%.
    --  DSL subscribers were 91,817, an increase of 10,480, or 12.9%.
    --  IPTV subscribers were 16,666, an increase of 4,425, or 36.1%.
    --  ILEC VOIP lines were 6,510, an increase of 4,016, or 161.0%.
    --  CLEC access line equivalents were 74,687, an increase of 4,624, or
        6.6%.

Steve Childers, Consolidated's Chief Financial Officer, stated, "Given current market conditions, I think it is an important reminder that we do not have any anticipated financing needs in the near-term. Our credit facility has no debt maturities until December 31, 2014. From a liquidity standpoint, in addition to our current cash of $15.5 million, our $50 million revolver remains undrawn and fully available."

Cash Available to Pay Dividends

For the quarter and full year 2008, cash available to pay dividends, or CAPD, was $15.3 million and $63.5 million, respectively. The dividend payout ratios for the quarter and full year 2008 were 74.2% and 71.6%, respectively. At December 31, 2008, cash and cash equivalents were $15.5 million. The Company made capital expenditures of $10.9 million during the fourth quarter and $48.0 million for the full year.



    Financial Highlights for the Fourth Quarter Ended December 31, 2008
    --  Revenues were $102.7 million, compared to $85.0 million in the fourth
        quarter of 2007.  Revenues excluding the impact from the North
        Pittsburgh acquisition were $79.7 million, a decrease of $5.3 million.
        Declines in Local Calling Services, Network Access and Other
        Operations were partially offset by increases in Data and Internet
        Services.  Approximately half of the decline was the result of lower
        revenue from our non-core businesses/Other Operations, which generally
        produce low single digit margins.
    --  Depreciation and amortization was $23.6 million, compared to $16.1
        million in the fourth quarter of 2007. The $7.5 million increase was
        attributable to 2008 capital additions as well as the increased
        depreciation associated with the fixed assets acquired and the
        amortization of intangible assets recognized in conjunction with the
        acquisition of North Pittsburgh.
    --  Income from operations was $9.7 million, compared to $17.5 million in
        the fourth quarter of 2007.  The decrease is mainly due to a non-cash
        goodwill impairment charge of $6.1 million for our non-core
        telemarketing enterprise business unit.
    --  Interest expense, net was $18.7 million, compared to $11.7 million in
        the same quarter last year.  For the fourth quarter 2008, the
        resulting $7.0 million increase in net interest expense is primarily
        attributable to the incremental debt and terms of our new credit
        facility.  In addition, the quarter included a $2.8 million non-cash
        interest expense as the result of the accounting for our interest rate
        swaps.
    --  Other income, net was $4.6 million, compared to $1.5 million for same
        period in 2007.  As part of the acquisition of North Pittsburgh, the
        company acquired interests in three additional cellular partnerships,
        which accounted for approximately $3.5 million of income during the
        period.
    --  The Company has elected to discontinue the application of SFAS No. 71,
        "Accounting for the Effects of Certain Types of Regulation," which
        resulted in a fourth quarter 2008 non-cash extraordinary gain, net of
        tax, in the amount of $7.2 million.
    --  Net income was $3.6 million, compared to a net loss of $1.0 million in
        the fourth quarter of 2007.  "Adjusted net income" excludes certain
        items in the manner described in the table provided in this release.
        On that basis, "adjusted net income" was $5.1 million for the fourth
        quarter ended December 31, 2008, compared to $5.3 million in the same
        quarter of 2007.
    --  Diluted net income per common share was $0.11, compared to a diluted
        net loss per common share of $0.04 in the same quarter of 2007.
        "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 fourth quarter ended December
        31, 2008 was $0.17 compared to $0.20 in the fourth quarter of 2007.
    --  Adjusted EBITDA was $46.1 million, including $0.3 million in
        additional overtime, contractor, and vendor costs related to recovery
        efforts for Hurricane Ike, compared to $37.0 million for the same
        period in 2007.  The increase was primarily driven by the impact of
        the North Pittsburgh acquisition.  Net cash provided from operating
        activities was $25.8 million, compared to $29.3 million for the fourth
        quarter in 2007.
    --  The total net debt to last twelve month Adjusted EBITDA coverage ratio
        is 4.6 times to one.

    Financial Highlights for the Year Ended December 31, 2008

    --  Revenues were $418.4 million, compared to $329.2 million for the prior
        year period.  Revenues excluding the impact from the North Pittsburgh
        acquisition were $323.6 million for the full year of 2008.  Increases
        in Data and Internet revenue from DSL, IPTV and VOIP growth were
        offset by declines in Local Calling Services, Network Access and Other
        Operations.  In addition, 2007 included non-recurring carrier
        settlements resulting in approximately $1.5 million of revenue.
    --  Net income was $12.5 million, compared to $11.4 million for the same
        period of 2007.  This increase was driven by the benefits created from
        the North Pittsburgh acquisition, partially offset by an incremental
        $1.5 million in recovery expenses related to Hurricane Ike.
    --  Diluted net income per common share was $0.42, compared to $0.44 for
        the full year 2007.  "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 twelve months
        ended December 31, 2008 was $0.71, compared to $0.74 for the prior
        year period.  Additionally, operating expenses associated with
        Hurricane Ike, reduced net income per common share by $.02 per share.
    --  Adjusted EBITDA was $189.8 million including the $1.5 million in
        charges related to Hurricane Ike, compared to $143.8 million for the
        same period in 2007.  The increase was primarily driven by the impact
        of the North Pittsburgh acquisition.
    --  Net cash provided from operating activities was $92.4 million,
        compared to $82.1 million for the twelve month period in 2007.
    --  All coverage ratios were in compliance with our credit agreement.

Financial Guidance

For 2009, the Company is providing the following full year guidance: Capital expenditures for 2008 were $48.0 million and for 2009 are expected to be in the range of $42.0 million to $43.0 million. The lower spend is due to the $2.0 million in integration expenditures that will not be needed in 2009 as well as an additional $3.0 million in synergies we estimated as part of the North Pittsburgh transaction. Cash interest expense for 2008 was $65.0 million and for 2009 is expected to be in the range of $58.0 million to $61.0 million and when including the expected bonus depreciation from the stimulus plan, cash income taxes are expected to be in the range of $11.0 million to $13.0 million compared to $13.5 million in 2008. During 2009 and based on preliminary plan valuations, we currently expect to make cash contributions in the range of $9.0 million to $11.0 million to our pension funds. This compares to cash contributions made in 2008 totaling $6.1 million. Also, based on preliminary estimates, we currently expect to recognize an additional non-cash GAAP pension expense of between $4.0 million to $5.0 million compared to $0.7 million for 2008.

Dividend Payments

On March 9, 2009, the company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on May 1, 2009 to stockholders of record at the close of business on April 15, 2009.

Conference Call Information

The Company will host a conference call today at 11:00 a.m. Eastern Time / 10:00 a.m. Central Time to discuss fourth quarter earnings and developments in the business. 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 1-866-395-2185. International parties can access the call by dialing 1-706-758-1344. A telephonic replay of the conference call will also be available starting two hours after completion of the call until March 26, 2009 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 82734883.

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", "total net debt to last twelve month Adjusted EBITDA coverage ratio", "adjusted net income," 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, net income (loss) or net income (loss) per share 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 the 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 is comprised of EBITDA, adjusted for certain items as permitted or required by the lenders under the credit facility in place at the end of each quarter in the periods presented. The tables that follow include an explanation of how Adjusted EBITDA is calculated for each of the periods presented.

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, 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 and cash available to pay dividends after giving effect to specified charges. Other information related to the non-GAAP financial measures, specifically "total net debt to last twelve month Adjusted EBITDA coverage ratio," which is similar, though not identical too, the ratio required by our credit agreement; help put these measures in context. As a result, management believes the presentation of Adjusted EBITDA and cash available to pay dividends, as supplemented by "total net debt to last twelve months Adjusted EBITDA coverage ratio," 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.

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.

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 and 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 providing voice, data and video services to residential and business customers in Illinois, Texas and Pennsylvania. Each of the operating companies has been operating in its local market for over 100 years. With approximately 264,323 ILEC access lines, 74,687 Competitive Local Exchange Carrier (CLEC) access line equivalents, 91,817 DSL subscribers, and 16,666 IPTV subscribers, Consolidated Communications offers a wide range of telecommunications services, including local and long distance service, custom calling features, private line services, high-speed Internet access, digital TV, carrier access services, and directory publishing. Consolidated Communications is the 12th 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 economic and financial market conditions generally and economic conditions in Consolidated's service areas; changes in the valuation of pension plan assets; our ability to 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, 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, including changes to subsidies, 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 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.

    Company Contact:
    Matt Smith
    Director - Investor Relations
    217-258-2959
    matthew.smith@consolidated.com

                                    - Tables Follow -

                            Consolidated Communications
                        Condensed Consolidated Balance Sheets
                                (Dollars in thousands)
                                     (Unaudited)

                                              December 31,      December 31,
                                                  2008              2007
                                                  ----              ----
     ASSETS
     Current assets:
       Cash and cash equivalents                 $15,471           $34,341
       Accounts receivable, net                   45,092            44,001
       Prepaid expenses and other
        current assets                            18,013            21,273
                                                  ------            ------
     Total current assets                         78,576            99,615

     Property, plant and equipment, net          400,286           411,647
     Intangibles, net and other assets           762,764           793,329
                                                 -------           -------
     Total assets                             $1,241,626        $1,304,591
                                              ==========        ==========

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Current portion of capital lease
        obligation                                  $922            $1,010
       Accounts payable                           12,336            17,386
       Accrued expenses and other
        current liabilities                       58,034            66,547
                                                  ------            ------
     Total current liabilities                    71,292            84,943

     Capital lease obligation less
      current portion                                344             1,636
     Long-term debt                              880,000           890,000
     Other long-term liabilities                 214,705           168,324
                                                 -------           -------
     Total liabilities                         1,166,341         1,144,903
                                               ---------         ---------

     Minority interests                            5,185             4,322
                                                   -----             -----
     Stockholders' equity:
       Common stock, $0.01 par value                 295               294
       Paid in capital                           129,284           160,723
       Retained Earnings                               -                 -
       Accumulated other comprehensive loss      (59,479)           (5,651)
                                                 -------            ------
    Total stockholders' equity                    70,100           155,366
                                                  ------           -------
    Total liabilities and
     stockholders' equity                     $1,241,626        $1,304,591
                                              ==========        ==========



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

                                      Three Months Ended  Twelve Months Ended
                                          December 31,        December 31,
                                        2008       2007      2008     2007
                                        ----       ----      ----     ----
    Revenues                          $102,742   $85,004  $418,424  $329,248
     Operating expenses:
       Cost of services and products    35,814    28,175   143,563   107,290
       Selling, general and
        Administrative expenses         27,552    23,267   108,769    89,662
       Intangible assets impairment      6,050         -     6,050         -
       Depreciation and amortization    23,616    16,074    91,678    65,659
                                        ------    ------    ------    ------
     Income from operations              9,710    17,488    68,364    66,637
     Other income (expense):
       Interest expense, net           (18,658)  (11,731)  (66,292)  (46,457)
       Loss on extinguishment of debt        -   (10,323)   (9,224)  (10,323)
       Other income, net                 4,581     1,454    19,055     6,240
                                         -----     -----    ------     -----
     Income (loss) before income
      taxes                             (4,367)   (3,112)   11,903    16,097
     Income tax expense (benefit)         (771)   (2,082)    6,639     4,674
                                          ----   -------     -----     -----

     Income (loss) before
      extraordinary item                (3,596)   (1,030)    5,264    11,423
                                        ------    ------     -----    ------
     Extraordinary item, net of tax      7,240         -     7,240         -
                                         -----       ---     -----       ---
     Net income (loss) applicable
      to common stockholders            $3,644   $(1,030)  $12,504   $11,423
                                        ======   =======   =======   =======
     Diluted net income (loss) per
      common share                       $0.11    $(0.04)    $0.42     $0.44
                                         =====   =======     =====     =====

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

                                    Three Months Ended   Twelve Months Ended
                                         December 31         December 31
                                       2008      2007      2008      2007
    OPERATING ACTIVITIES               ----      ----      ----      ----
      Net income (loss)               $3,644   $(1,030)  $12,504   $11,423
      Adjustments to reconcile net
       income (loss) to cash provided
       by operating activities:
        Depreciation and amortization 23,616    16,074    91,678    65,659
        Non-cash stock compensation      499     1,092     1,901     4,034
        Loss on extinguishment of debt     -    10,323     9,224    10,323
        Intangible asset impairment    6,050         -     6,050         -
        Extraordinary item            (7,240)        -    (7,240)        -
        Other adjustments, net       (40,461)   (3,182)  (46,053)   (2,721)
      Changes in operating assets
       and liabilities, net           39,657     6,013    24,347    (6,649)
          Net cash provided by        ------     -----    ------    ------
           operating activities       25,765    29,290    92,411    82,069
    INVESTING ACTIVITIES              ------    ------    ------    ------
        Securities purchased               -         -         -   (10,625)
        Proceeds from sale of
         investments and securities        -         -         -    10,625
        Acquisitions, net of cash
         acquired                          -  (271,780)        -  (271,780)
        Capital expenditures         (10,896)   (8,847)  (48,027)  (33,495)
          Net cash used for          --------   -------  --------  --------
           investing activities      (10,896) (280,627)  (48,027) (305,275)
    FINANCING ACTIVITIES             -------- ---------  -------- ---------
        Proceeds from issuance of
         stock                             -         -         -        12
        Proceeds from issuance of
         long-term obligations             -   760,000   120,000   760,000
        Payments made on long-term
         obligations                    (221) (479,426) (137,308) (479,426)
        Costs paid to issue common
         stock                             -      (400)        -      (400)
        Payment of deferred
         financing costs                   -    (8,668)     (240)   (8,988)
        Purchase and retirement of
         common stock                   (249)     (131)     (257)     (131)
        Dividends on common stock    (11,363)  (10,052)  (45,449)  (40,192)
          Net cash provided by       --------  --------  --------  --------
           (used) in financing
           activities                (11,833)  261,323   (63,254)  230,875
    Net increase (decrease) in cash  --------  -------   --------  -------
     and cash equivalents              3,036     9,986   (18,870)    7,669
    Cash and cash equivalents at
     beginning of period              12,435    24,355    34,341    26,672
    Cash and cash equivalents at      ------    ------    ------    ------
     end of period                   $15,471   $34,341   $15,471   $34,341
                                     =======   =======   =======   =======

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

                                    Three Months Ended  Twelve Months Ended
                                        December 31,        December 31,
                                       2008      2007      2008      2007
    Telephone Operations               ----      ----      ----      ----
      Local calling services         $25,167   $20,041  $104,642   $82,830
      Network access services         22,138    17,276    94,603    70,169
      Subsidies                       14,246    13,229    55,197    45,981
      Long distance services           5,714     3,174    23,982    13,963
      Data and Internet services      16,524    10,386    62,664    38,017
      Other services                   9,245     9,099    36,879    35,814
                                       -----     -----    ------    ------
    Total Telephone Operations        93,034    73,205   377,967   286,774
    Other Operations                   9,709    11,799    40,457    42,474
                                       -----     -----    ------    ------
    Total operating revenues        $102,743   $85,004  $418,424  $329,248
                                    ========   =======  ========  ========

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

                                    Three Months Ended   Twelve Months Ended
                                        December 31,         December 31,
                                       2008      2007      2008      2007
    EBITDA:                            ----      ----      ----      ----
    Net cash provided by operating
     activities                      $25,765   $29,290   $92,411   $82,069
    Adjustments:
      Compensation from restricted
       share plan                       (499)   (1,092)   (1,901)   (4,034)
      Loss on extinguishment of debt       -   (10,323)   (9,224)  (10,323)
      Intangible asset impairment     (6,050)        -    (6,050)        -
      Extraordinary gain, net of tax   7,240         -     7,240         -
      Other adjustments, net          40,461     3,182    46,053     2,721
      Changes in operating assets and
       liabilities                   (39,657)   (6,013)  (24,347)    6,649
    Interest expense, net             18,658    11,731    66,292    46,457
    Income taxes                        (771)   (2,082)    6,639     4,674
                                        -----   -------    -----     -----
    EBITDA (1)                        45,147    24,693   177,113   128,213

    Adjustments to EBITDA (2):
      Integration and
       restructuring (3)               1,692       533     4,847     1,187
      Other, net (4)                  (4,894)   (1,540)  (19,918)   (6,567)
      Investment distributions (5)     4,860     1,935    17,778     6,586
      Non-cash compensation (6)          499     1,092     1,901     4,034
      Loss on extinguishment of
       debt (7)                            -    10,323     9,224    10,323
      Intangible asset impairment (8)  6,050         -     6,050         -
      Extraordinary gain, net of
       tax (9)                        (7,240)        -    (7,240)        -
                                      -------   ------    -------    -----
    Adjusted EBITDA                  $46,114   $37,036  $189,755  $143,776
                                     =======   =======  ========  ========

    Footnotes for Adjusted EBITDA:
    (1) EBITDA is defined as net earnings (loss) before interest expense,
     income taxes, depreciation and amortization on a historical basis.
    (2) These adjustments reflect those required or permitted by the lenders
     under the credit facility in place at the end of each of the quarters
     included in the periods presented.
    (3) Represents certain expenses associated with integrating and
     restructuring the Texas, Illinois and Pennsylvania businesses. For the
     fourth quarter of 2008, this is comprised of $1.4 million of integration
     costs and $0.3 million of severance costs.  For the fourth quarter of
     2007, this is comprised of $0.5 million of severance costs.
    (4) Other, net includes the equity earnings from our investments,
     dividend income and certain other miscellaneous non-operating items.
    (5) For purposes of calculating adjusted EBITDA, we include all cash
     dividends and other cash distributions received from our investments.
    (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.
    (7) This includes approximately $6.3 million as a call premium and $2.9
     million in write offs of deferred financing costs incurred with the
     redemption of the 9.75% senior notes on April 1, 2008.  In addition, in
     connection with the North Pittsburgh acquisition, we wrote off $10.3
     million of unamortized debt issuance costs upon entering into a new
     credit facility on December 31, 2007.
    (8) In connection with its annual impairment testing, the Company
     determined that the goodwill associated with the telemarketing and
     fulfillment business was impaired.  Because of the non-cash nature of
     the charge, it is excluded from adjusted EBITDA.
    (9) Represents the extraordinary gain associated with discontinuing the
     application of regulatory accounting.  The gain is non-cash and is
     therefore excluded from the calculation of adjusted EBITDA.



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


                                       Three Months           Twelve Months
                                       Ended December         Ended December
                                          31, 2008               31, 2008
                                          --------               --------
    Adjusted EBITDA                        $46,114               $189,755

     - Cash interest expense               (15,647)               (65,061)
     - Capital Expenditures                (10,896)               (48,027)
     - Cash income taxes                    (4,299)               (13,540)
     + Cash interest income                     38                    367
                                               ---                    ---

    Cash available to pay
     dividends                             $15,310                $63,494
                                           =======                =======

    Quarterly Dividend                     $11,363                $45,449
    Payout Ratio                              74.2%                  71.6%

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


    Summary of Outstanding Debt
    Term loan                                         $880,000
    Capital leases                                       1,266
                                                         -----
    Total debt as of December 31,
     2008                                             $881,266
    Less cash on hand                                  (15,471)
                                                       -------
    Total net debt as of December
     31, 2008                                         $865,795
                                                      ========

    Adjusted EBITDA for the last
     twelve months ended December 31, 2008            $189,755

    Total Net Debt to last twelve months
      Adjusted EBITDA                                      4.6  x

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

                          Three Months Ended       Twelve Months Ended
                      December 31, December 31, December 31, December 31,
                          2008         2007        2008          2007
    Net income (loss)     ----         ----        ----          ----
     applicable to
     common stockholders
     before
     extraordinary
     item               $(3,596)      $(1,030)     $5,264       $11,423
    Deferred tax and
     state audit
     adjustment            (402)         (862)       (402)       (2,593)
    Impairment, net
     of tax               4,981             -       4,981             -
    Deferred financing
     cost write-off,
     net of tax               -         5,781           -         5,781
    Bond Redemption
     charge,
     net of tax               -             -       5,193             -
    Non-cash interest
     on interest
     rate hedges, net
     of tax               2,305             -         916             -
    Severance, net
     of tax                 217           298         643           385
    Integration and
     restructuring
     charges, net
     of tax               1,076             -       2,411           280
    Non-cash
     compensation           499         1,092       1,901         4,034
    Adjusted net            ---         -----       -----         -----
     income              $5,080        $5,279     $20,907       $19,310
                         ======        ======     =======       =======
    Weighted average
     number of shares
     outstanding
     diluted         29,563,968    26,183,209  29,530,736    26,122,484
    Adjusted diluted ==========    ==========  ==========    ==========
     net income
     per share            $0.17         $0.20       $0.71         $0.74
                          =====         =====       =====         =====

    Calculations above assume a 17.7% and 55.8% effective tax rate for the
    respective three and twelve month periods ending December 31, 2008 and
    44.0% for both the three and twelve month periods of 2007.

                               Consolidated Communications
                                 Key Operating Statistics


                                      December 31, September 30, December 31,
                                            2008        2008        2007
    Local access lines in service           ----        ----        ----
      Residential                         162,067     167,581     183,070
      Business                            102,256     102,771     103,116
                                          -------     -------     -------
      Total local access lines            264,323     270,352     286,186

    Total IPTV subscribers                 16,666      15,454      12,241
    ILEC DSL subscribers (1)               91,817      89,129      81,337
                                           ------      ------      ------
    ILEC Broadband Connections            108,483     104,583      93,578
    ILEC VOIP subscribers                   6,510       5,739       2,494
    CLEC Access Line Equivalents (2)       74,687      74,762      70,063

    Total connections                     454,003     455,436     452,321
                                          =======     =======     =======
    Long distance lines (3)               165,953     166,652     166,599
    Dial-up subscribers                     3,957       5,442       5,578

    IPTV Homes passed                     142,809     134,925     107,631

    (1) Includes only ILEC DSL.  CLEC DSL is included in CLEC access line
     equivalents.

    (2) CLEC access line equivalents represent a combination of voice
     services and data circuits.  The calculations represent a conversion
     of data circuits to an access line basis.  Equivalents are calculated by
     converting data circuits (basic rate interface (BRI), primary rate
     interface (PRI), DSL, DS-1, DS-3, and Ethernet) and SONET-based
     (optical) services (OC-3 and OC-48) to the equivalent of an access line.

    (3) Excludes CLEC LD subscribers.

SOURCE
Consolidated Communications Holdings, Inc.

CONTACT:
Matt Smith, Director, Investor Relations of Consolidated Communications Holdings, Inc., +1-217-258-2959, matthew.smith@consolidated.com