Consolidated Communications Holdings
Aug 2, 2012

Consolidated Communications Reports Second Quarter 2012 Results

MATTOON, Ill., Aug. 2, 2012 (GLOBE NEWSWIRE) -- Consolidated Communications Holdings, Inc. (Nasdaq:CNSL) reported results for the second quarter 2012 and updated its guidance for the acquisition of SureWest Communications.

Second quarter financial summary:

These results do not reflect the operations of SureWest since the acquisition closed after the end of the quarter.

"I am pleased with the financial results for the quarter and the continued improvement to our revenue trends," said Bob Currey, President and Chief Executive Officer. "Our broadband growth was solid in what is historically a very slow quarter, and we had another strong access line performance. During the quarter, we continued to expand our network capitalizing on the increasing demand in commercial and wholesale opportunities. We have assembled a strong portfolio of products and services that generate consistent cash flows to support our dividend."

"On July 2nd, we closed on the acquisition of SureWest. Together, we became a much stronger company with an improved balance sheet and expanded cash flows. The combined markets and services provide the company with diversified revenues and greater scale over one of the highest quality networks in the industry. Integration efforts are off to a fast start and we are well on our way to meeting our synergy projections. At the close, we realized approximately $10.0 million in annualized operating synergies and we remain committed to the $25.0 million we previously guided," Currey concluded.

Operating Statistics at June 30, 2012, Compared to June 30, 2011.

  Period Ended June 30,    
  2012 2011 Increase/(decrease) %
         
Total connections 479,321 462,704 16,617 3.6%
ILEC access lines 225,025 232,360 (7,335) (3.2)%
High-speed Internet subscribers 113,856 108,581 5,275 4.9%
IPTV subscribers 35,834 31,218 4,616 14.8%
ILEC VOIP lines 9,891 8,799 1,092 12.4%
CLEC access line equivalents 94,715 81,746 12,969 15.9%

Cash Available to Pay Dividends

For the quarter, cash available to pay dividends, or CAPD, was $19.5 million, and the dividend payout ratio was 59.6%. Excluding the $298.0 million of net proceeds from the senior notes offering, at June 30, 2012, cash and cash equivalents and restricted cash totaled $102.0 million. The Company made capital expenditures of $10.9 million.  

Financial Highlights for the Second Quarter Ended June 30, 2012

Financial Highlights for the Six Months Ended June 30, 2012

SureWest 

The Company closed on its acquisition of SureWest on July 2nd and will report combined financial results starting with the third quarter. For the second quarter, SureWest had revenues of $64.8 million, adjusted EBITDA of $19.8 million and capital expenditures of $21.5 million. Also during the quarter, SureWest built fiber to an additional 3,600 marketable homes and passed an additional 2,400 homes with video service in its ILEC footprint.    

Financial Guidance

The Company is updating its guidance for the acquisition of SureWest. The table below reflects pro forma guidance for 2012, which includes a full year of SureWest for both periods presented.

   
   2011 Pro Forma Results  2012 Pro Forma Guidance 
     
Cash Interest Expense $59.7 million $63.0 million to $67.0 million
Cash Income Taxes $7.8 million $5.0 million to $6.0 million
Capital Expenditures $115.1 million $110.0 million to $115.0 million

Dividend Payments

On July 30, 2012, the Company's board of directors declared its next quarterly dividend of $0.38738 per common share, which is payable on November 1, 2012 to stockholders of record at the close of business on October 15, 2012. 

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 first quarter earnings and developments with respect to the Company. The call is being webcast and archived on the "Investor Relations" section of the Company's website at http://www.consolidated.com. If you do not have internet access, the conference call dial-in number is 1-877-374-3981 with pass code 99834344. International parties can access the call by dialing 1-253-237-1158. A telephonic replay of the conference call will also be available starting three hours after completion of the call until August 9, 2012 at midnight Eastern Time. To hear the replay, parties in the United States and Canada should call 1-855-859-2056 and international parties should call 1-404-537-3406. 

Use of Non-GAAP Financial Measures

This press release, as well as the conference call, includes disclosures regarding "EBITDA", "adjusted EBITDA", "cash available to pay dividends" and the related "dividend payout ratio", "total net debt to last twelve month adjusted EBITDA coverage ratio", adjusted diluted net income per share" and "adjusted net income attributable to common stockholders", 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 or net income 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 before interest expense, income taxes, depreciation and amortization on a historical basis. We believe net cash provided by operating activities is the GAAP financial measure most directly comparable to EBITDA.

Cash available to pay dividends represents adjusted EBITDA plus cash interest income less (1) cash interest expense, (2) capital expenditures and (3) cash income taxes; this calculation differs in certain respects from the similar calculation used in the credit agreement. 

We present adjusted EBITDA, cash available to pay dividends and the related dividend payout ratio for several reasons. Management believes adjusted EBITDA, cash available to pay dividends and the dividend payout ratio 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, cash available to pay dividends and the dividend payout ratio 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. In addition, adjusted EBITDA, cash available to pay dividends and the dividend payout ratio 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.  We present the related "total net debt to last twelve month adjusted EBITDA coverage ratio" principally to put other non-GAAP measures in context and facilitate comparisons by investors, security analysts and others; this ratio differs in certain respects from the similar ratio used in our credit agreement. 

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. 

We present the non-GAAP measures adjusted diluted net income per share and adjusted diluted net income attributable to common stockholders because our net income and net income per share are regularly affected by items that occur at irregular intervals or are non-cash items. We believe that disclosing these measures assists 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 a leading communications provider within its six state operations of California, Illinois, Kansas, Missouri, Pennsylvania and Texas. Headquartered in Mattoon, IL, the Company has been providing services in many of its markets for over a century. With one of the highest quality networks in the industry, the Company offers a wide range of communications services, including IP-based digital and high definition television, high speed internet, Voice over IP, carrier access, directory publishing and local and long distance service.

Safe Harbor 

Any statements other than statements of historical facts, 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 the ability of Consolidated Communications Holdings, Inc. (the "Company") to successfully integrate the operations of  of SureWest Communications ("SureWest") and realize the synergies from the acquisition, as well as a number of other factors related to the businesses of the Company, including various risks to stockholders of not receiving dividends and risks to the Company's ability to pursue growth opportunities if the Company continues to pay dividends according to the current dividend policy; various risks to the price and volatility of the Company's common stock; the substantial amount of debt and the Company's ability to repay or refinance it or incur additional debt in the future; the Company's need for a significant amount of cash to service and repay the debt and to pay dividends on the Company's common stock; changes in the valuation of pension plan assets; restrictions contained in the Company's debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; content costs are substantial and continue to increase; risks associated with the Company's possible pursuit of acquisitions; economic conditions in the Company's service areas; 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 the Company's network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes on the telecommunications industry; and liability and compliance costs regarding environmental regulations. These and other risks and uncertainties are discussed in more detail in the Company's and SureWest's filings with the Securities and Exchange Commission, including our respective 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 the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements and risk factors contained in this communication and the Company'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, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

- Tables Follow —

 
     
Consolidated Communications Holdings, Inc.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except par value)
      
   June 30,  December 31, 
  2012  2011 
 (Unaudited)  
 ASSETS    
 Current assets:     
 Cash and cash equivalents   $ 84,984  $ 105,704
 Restricted Cash   315,082  -- 
 Accounts receivable, net   35,165  35,492
 Prepaid expenses and other current assets   31,103  27,134
 Total current assets   466,334  168,330
 Property, plant and equipment, net   321,047  332,046
 Intangibles, net and other assets   692,055  693,693
 Total assets   $ 1,479,436  $ 1,194,069
     
 LIABILITIES AND STOCKHOLDERS' EQUITY    
 Current liabilities:     
 Current portion of long-term debt   $ 8,800  $ 8,800
 Current portion of capital lease obligation   216  192
 Accounts payable   15,128  13,673
 Accrued expenses and other current liabilities   78,136  62,625
 Total current liabilities   102,280  85,290
 Capital lease obligation less current portion   4,403  4,519
 Long-term debt   1,164,855  871,200
 Other long-term liabilities   175,244  185,248
 Total liabilities   1,446,782  1,146,257
 Stockholders' equity:     
 Common stock, $0.01 par value   299  299
 Paid in capital   61,968  79,852
 Accumulated other comprehensive loss   (35,352)  (37,833)
Total Consolidated Communications Holdings, Inc. stockholders' equity  26,915  42,318
Noncontrolling interest  5,739  5,494
Total stockholders' equity  32,654  47,812
Total liabilities and stockholders' equity  $ 1,479,436  $ 1,194,069
         
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
 (Unaudited) 
     
  Three Months Ended 
June 30,
 Six Months Ended
June 30,  
  2012  2011  2012  2011 
     
Revenues   $ 93,005  $ 92,623  $ 186,369  $ 188,064
Operating expenses:         
 Cost of services and products   36,526  34,267  72,390  69,951
 Selling, general and administrative expenses   19,996  19,147  39,524  39,846
 Financing and other transaction costs   562  2,540  5,384  2,540
 Depreciation and amortization   21,869  21,987  44,006  44,145
Income from operations   14,052  14,682  25,065  31,582
Other income (expense):         
 Interest expense, net   (16,893)  (12,397)  (31,493)  (24,336)
 Other income, net   6,947  6,307  13,427  13,451
Income before income taxes   4,106  8,592  6,999  20,697
Income tax expense   1,200  3,079  2,209  7,687
Net income   2,906  5,513  4,790  13,010
 Less: Net income attributable to noncontrolling interest   120  162  245  294
Net income attributable to Consolidated Communications Holdings, Inc.   $ 2,786  $ 5,351  $ 4,545  $ 12,716
         
Diluted net income attributable to Consolidated Communications Holdings, Inc. per common share   $ 0.09  $ 0.18  $ 0.15  $ 0.42
         
Consolidated Communications Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
 (Unaudited) 
 
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2012  2011  2012  2011 
     
OPERATING ACTIVITIES      
Net income  $ 2,906  $ 5,513  $ 4,790  $ 13,010
Adjustments to reconcile net income to cash provided by operating activities:        
Depreciation and amortization  21,869  21,987  44,006  44,145
Stock-based compensation expense  589  579  1,090  1,090
Transaction costs  (699)  --   (699)  -- 
Loss on disposal of assets  146  --   206  4
Amortization of deferred financing  1,557  338  5,020  662
Other adjustments, net  (778)  (302)  (1,152)  (2)
Changes in operating assets and liabilities, net  3,089  2,009  (1,782)  2,294
Net cash provided by operating activities  28,679  30,124  51,479  61,203
INVESTING ACTIVITIES        
Return of capital in excess of earnings  (92)  56  --   56
Proceeds from sale of investments  --   --   --   -- 
Proceeds from sale of assets  8  281  28  396
Restricted cash related to the acquisition of SureWest  (298,035)  --   (298,035)  -- 
S-4 Related Costs  (314)  --   (314)  -- 
Capital expenditures  (10,927)  (10,653)  (22,151)  (20,704)
Net cash used in investing activities  (309,360)  (10,316)  (320,472)  (20,252)
FINANCING ACTIVITIES        
Payments made on long-term obligations  (2,247)  (37)  (4,492)  (71)
Refinancing fees  --   (3,399)  --   (3,399)
Cash payments from refinancing  13  --   (5,070)  -- 
Discount on bond offering  (1,945)  --   (1,945)  -- 
Proceeds from bond offering  300,000  --   300,000  -- 
Restricted cash for bond offering  (17,047)  --   (17,047)  -- 
Dividends on common stock   (11,602)  (11,598)  (23,173)  (23,128)
Net cash used in financing activities  267,172  (15,034)  248,273  (26,598)
Net change in cash and cash equivalents  (13,509)  4,774  (20,720)  14,353
Cash and cash equivalents at beginning of period  98,493  77,233  105,704  67,654
Cash and cash equivalents at end of period     $ 84,984  $82,007  $ 84,984  $ 82,007
         
Consolidated Communications Holdings, Inc.
Consolidated Revenue by Category
(Dollars in thousands)
 (Unaudited) 
     
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2012  2011  2012  2011 
     
Telephone Operations        
Local calling services  $ 19,657  $ 21,424  $ 39,604  $ 43,051
Network access services  19,614  19,292  39,387  40,680
Subsidies  11,224  11,107  22,683  22,655
Long distance services  3,471  4,121  7,004  8,418
Data and Internet services  22,761  20,575  44,746  40,645
Other services  8,286  8,290  16,671  16,753
Total Telephone Operations  85,013  84,809  170,095  172,202
Other Operations  7,992  7,814  16,274  15,862
Total operating revenues  $ 93,005  $ 92,623  $ 186,369  $ 188,064
         
Consolidated Communications Holdings, Inc.
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
         
  Three Months Ended  Six Months Ended 
  June 30,  June 30, 
  2012  2011  2012  2011 
EBITDA:        
Net cash provided by operating activities  $ 28,679  $ 30,124  $ 51,479  $ 61,203
Adjustments:        
Compensation from restricted share plan   (589)  (579)  (1,090)  (1,090)
Other adjustments, net  (226)  (36)  (3,375)  (664)
Changes in operating assets and liabilities  (3,089)  (2,009)  1,782  (2,294)
Interest expense, net  16,893  12,397  31,493  24,336
Income taxes  1,200  3,079  2,209  7,687
EBITDA (1)  42,868  42,976  82,498  89,178
         
Adjustments to EBITDA (2):        
Other, net (3)  (4,552)  (2,976)  (4,599)  (8,143)
Investment distributions (4)  5,901  5,858  12,112  12,743
Non-cash compensation (5)  589  579  1,090  1,090
Adjusted EBITDA  $ 44,806  $ 46,437  $ 91,101  $ 94,868
         
Footnotes for Adjusted EBITDA:
(1) EBITDA is defined as net earnings 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) Other, net includes the equity earnings from our investments, dividend income, income attributable to noncontrolling interests in subsidiaries, transaction related costs and certain miscellaneous items.
(4) For purposes of calculating adjusted EBITDA, we include all cash dividends and other cash distributions received from our investments.
(5) 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 Holdings, Inc.
Cash Available to Pay Dividends
(Dollars in thousands)
(Unaudited)
   
 Three Months
Ended June 30,
2012
Six Months
Ended June 30,
2012
Adjusted EBITDA  $ 44,806  $ 91,101
     
 - Cash interest expense   (13,681)  (24,667)
 - Capital expenditures  (10,926)  (22,151)
 - Cash income taxes  (746)  (4,496)
     
Cash available to pay dividends  $ 19,453  $ 39,787
     
Dividends Paid  $ 11,602  $ 23,132
Payout Ratio 59.6% 58.1%
     
* The above calculation excludes the principal payments on the amortization of our debt.
     
Consolidated Communications Holdings, Inc.
Total Net Debt to LTM Adjusted EBITDA Ratio
(Dollars in thousands)
(Unaudited)
    
    
Summary of Outstanding Debt   
Term loan  $ 875,600  
Capital leases  4,619  
Total debt as of June 30, 2012  $ 880,219  
Less cash on hand and escrowed cash  (102,031)  
Total net debt as of June 30, 2012  $ 778,188  
     
Adjusted EBITDA for the last twelve months ended June 30, 2012  $ 185,689  
     
Total Net Debt to last twelve months    
Adjusted EBITDA  4.19 x
     
* This schedule excludes the net proceeds and debt associated with the senior notes.
         
Consolidated Communications Holdings, Inc.
 Adjusted Net Income and Per Share Attributable to Common Stockholders
(in thousands, except per share amounts)
 (Unaudited)
         
         
  Three Months Ended  Six Months Ended 
  June 30,  June 30,  June 30,  June 30, 
  2012  2011  2012  2011 
Reported net income attributable to common    $ 2,786  $ 5,351  $ 4,545  $ 12,716
Acquisition related costs, net of tax  2,242  --  7,552  --
Severance, net of tax   --  308  --  301
Refinancing charges, net of tax  --  1,631  --  1,598
Non-cash stock compensation, net of tax 417 372 746 686
Adjusted net income attributable to common stockholders  $ 5,445  $ 7,662  $ 12,843  $ 15,301
         
Weighted average number of shares outstanding  29,689  29,593  29,689  29,593
Adjusted diluted net income per share  $ 0.18  $ 0.26  $ 0.43  $ 0.52
         
Calculations above assume a 29.2 and 35.8 percent effective tax rate for the three months ended June 30, 2012 and 2011, respectively. The assumed effective tax rates for the six months ended June 30, 2012 and 2011 are 31.6 and 37.1 percent, respectively.
       
Consolidated Communications Holdings, Inc.
Key Operating Statistics
 (Unaudited)
       
 June 30,
2012 
March 31,
2012 
June 30, 
2011
Local access lines in service      
Residential  136,047  136,607  138,538
Business  88,978  89,560  93,822
Total local access lines   225,025  226,167  232,360
Total IPTV subscribers  35,834  35,337  31,218
ILEC DSL subscribers (1)  113,856  112,368  108,581
ILEC Broadband Connections  149,690  147,705  139,799
ILEC VOIP subscribers  9,891  9,569  8,799
CLEC Access Line Equivalents (2)  94,715  89,672  81,746
Total connections  479,321  473,113  462,704
       
Long distance lines (3)  182,311  181,029  175,439
       
IPTV Homes passed  211,670  211,670  209,609
IPTV penetration of homes passed 17% 17% 15%
       
(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.
   
SureWest
Schedule of Adjusted EBITDA Calculation
(Dollars in thousands)
(Unaudited)
   
   
  Three Months Ended 
  June 30, 2012 
  
EBITDA:  
Net cash provided by operating activities  $ 14,415
Adjustments:  
Compensation from restricted share plan  (2,681)
Other adjustments, net  (10,483)
Changes in operating assets and liabilities  4,655
Interest expense, net  2,650
Income taxes  (1,883)
EBITDA (1)  6,673
   
Adjustments to EBITDA (2):  
Other, net (3)  10,488
Investment distributions (4)  -- 
Non-cash compensation (5)  2,681
Adjusted EBITDA  $ 19,842
   
Footnotes for Adjusted EBITDA:  
(1) EBITDA is defined as net earnings 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) Other, net includes the equity earnings from our investments, dividend income, income attributable to noncontrolling interests in subsidiaries, transaction related costs and certain miscellaneous items.
(4) For purposes of calculating adjusted EBITDA, we include all cash dividends and other cash distributions received from our investments.
(5) 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.
               
SureWest Communications
Key Operating Statistics
(Unaudited)
               
BROADBAND6/30/2012 [1]6/30/2011 [1]Change% Change3/31/2012 [1]Change% Change
Residential           
Video           
Marketable Homes [2] 306,000 281,200 24,800 9% 300,000 6,000 2%
RGUs 67,000 64,100 2,900 5% 66,700 300 0%
Penetration [2] 21.9% 22.8% -0.9% (4%) 22.2% -0.3% (2%)
ARPU $75 $71 $4 6% $73 $2 3%
Voice              
Marketable Homes 333,600 317,400 16,200 5% 330,000 3,600 1%
RGUs 74,300 75,900 (1,600) (2%) 75,600 (1,300) (2%)
Penetration 22.3% 23.9% -1.6% (7%) 22.9% -0.6% (3%)
ARPU $28 $28 $0 1% $28 $0 1%
Data              
Marketable Homes 333,600 317,400 16,200 5% 330,000 3,600 1%
RGUs 102,600 100,600 2,000 2% 102,700 (100) (0%)
Penetration 30.8% 31.7% -0.9% (3%) 31.1% -0.4% (1%)
ARPU $47 $41 $6 16% $44 $3 7%
Total              
RGUs 243,900 240,600 3,300 1% 245,000 (1,100) (0%)
               
Subscriber totals              
Subscribers [3] 106,700 105,100 1,600 2% 106,800 (100) (0%)
Penetration 32.0% 33.1% -1.1% (3%) 32.4% -0.4% (1%)
ARPU [4] $112 $102 $10 10% $108 $4 4%
Triple Play ARPU [5] $122 $114 $8 8% $118 $4 4%
Triple Play RGUs per Subscriber [5]  2.46  2.51  (0.05) (2%)  2.48  (0.02) (1%)
Churn 1.8% 1.5% 0.2% 15% 1.4% 0.3% 21%
               
Business [6]              
Customers 8,600 7,900 700 9% 8,400 200 2%
ARPU $589 $551 $38 7% $584 $5 1%
               
TELECOM6/30/20126/30/2011Change% Change3/31/2012Change% Change
Residential              
Voice              
Marketable Homes 92,200 91,800 400 0% 92,100 100 0%
RGUs [7] 20,500 25,600 (5,100) (20%) 21,700 (1,200) (6%)
Cumulative Migration to Broadband Voice [8] 19,100 16,900 2,200 13% 18,600 500 3%
Penetration 22.2% 27.9% -5.7% (20%) 23.6% -1.3% (6%)
ARPU $42 $43 ($0) (1%) $42 $0 1%
Churn [9] 1.7% 1.8% 0.0% (2%) 1.7% 0.0% 3%
               
Business [6]              
Customers 7,400 7,700 (300) (4%) 7,500 (100) (1%)
ARPU $352 $357 ($5) (1%) $348 $4 1%
               
CONSOLIDATED RESIDENTIAL VOICE RGUs6/30/20126/30/2011Change% Change3/31/2012Change% Change
ILEC Voice RGUs              
Broadband 23,200 22,300 900 4% 23,100 100 0%
Telecom 20,500 25,600 (5,100) (20%) 21,700 (1,200) (6%)
Total ILEC Voice RGUs [10] 43,700 47,900 (4,200) (9%) 44,800 (1,100) (2%)
CLEC Residential Voice RGUs [11] 51,100 53,600 (2,500) (5%) 52,500 (1,400) (3%)
TOTAL Residential Voice RGUs [12] 94,800 101,500 (6,700) (7%) 97,300 (2,500) (3%)
               
NETWORK METRICS6/30/20126/30/2011Change% Change3/31/2012Change% Change
Marketable Homes - Fiber 170,100 154,300 15,800 10% 166,500 3,600 2%
Marketable Homes - HFC 94,300 93,900 400 0% 94,300 0 0%
Marketable Homes - Copper 2-Play 27,600 36,200 (8,600) (24%) 30,000 (2,400) (8%)
Marketable Homes - Copper 3-Play 41,600 33,000 8,600 26% 39,200 2,400 6%
Total 333,600 317,400 16,200 5% 330,000 3,600 1%
               
Note: The calculation of certain metrics have been revised over time to reflect the current view of our business. Where necessary prior period metric calculations have been revised to conform with current practice. All amounts rounded to the nearest 10
               
[1] During the first quarter of 2012, we reclassified approximately 400 small-office/home-office Broadband customers from Residential subscribers to Business customers. They had previously been counted as residential subscribers with primarily voice RGUs
[2] Marketable Homes - Prior to Q110, video marketable homes and penetration rate included serviceable homes in Sacramento and Kansas City fiber and hybrid fiber coax (HFC) networks only. With launch of ADTV in Q110, certain copper homes became video serv
[3] A residential subscriber is a customer who subscribes to one or more residential RGUs. 
[4] ARPU is the total residential revenue per average subscriber.
[5] Triple play ARPU includes the total residential revenue per average subscriber and Triple play RGUs per Subscriber includes ending RGUs per ending subscriber, for the triple play markets, excluding the ILEC market.
[6] A business customer is a customer who subscribes to business data, voice or video and represents a unique customer account. ARPU is the total business revenue per average customer.
[7] A voice RGU is a residential customer who subscribes to one or more voice access lines. 
[8] Telecom Voice RGU Migration to Broadband Voice are residential Telecom voice RGUs in Line [7] that have ported their Telecom primary access line service to Broadband VoIP.
[9] Telecom Churn excludes disconnects in Line [8] that have ported their Telecom primary access line service to Broadband VoIP.
[10] ILEC Voice RGUs are the total residential voice RGUs in the ILEC franchise market area that are either a Telecom primary access line or Broadband VoIP subscriber.
[11] CLEC Voice RGUs are the total residential voice RGUs in the Kansas City and Sacramento markets, excluding the ILEC market.
[12] Total Voice RGUs are the total of ILEC and CLEC residential voice RGUs, and represent the total company residential voice RGUs of both the Broadband and Telecom Segments.
               
CONTACT: Matt Smith

         Treasurer & Investor Relations

         217-258-2959

         matthew.smith@consolidated.com