Mar 15, 2006

Consolidated Communications Holdings Reports Fourth Quarter and Year-end 2005 Results

Consolidated Communications Holdings Reports Fourth Quarter and Year-end 2005 Results

  • Adjusted EBITDA of $35.6 Million and Net Cash Provided from Operations of $25.4 Million
  • DSL Subscribers Top 39,000 Posting 43% Year-over-Year Growth
  • IPTV Subscribers in Illinois Up over 100% from Third Quarter

MATTOON, Ill., March 15 /PRNewswire-FirstCall/ -- Consolidated Communications Holdings, Inc. (Nasdaq: CNSL) today announced results for the fourth quarter and year ended December 31, 2005. The company reported revenues of $81.2 million for the fourth quarter and $321.4 million for the year. Adjusted EBITDA and net cash provided by operating activities for the quarter were $35.6 million and $25.4 million, respectively, and for the year were $136.8 million and $72.5 million, respectively.

"We had a terrific quarter from an operational and financial perspective and we took advantage of favorable market conditions to continue to optimize our capital structure," said Bob Currey, Consolidated's president and chief executive officer. "Cash available to pay dividends (CAPD) for the quarter was $16.7 million, with a payout ratio of 69 percent. The board of directors has indicated its intention to continue paying the quarterly dividend at the current level for 2006."

"The consolidation of our retail billing system continues on track and we continue to execute on our long-term strategy of providing high-quality broadband and voice services to our customers by leading the market with advanced products and attractively bundled services."

"Our Internet-protocol television (IPTV) product, which we call Digital Video Service, or DVS, rapidly gained momentum during the fourth quarter, as subscribers more than doubled to over 2,100 in the Illinois markets where DVS is available. DVS offers a competitive alternative to cable with up to 195 channels, all the major networks and premium programming including HBO, Cinemax and Showtime, to name a few. As of December 31st, the service was available to approximately 19,500 homes, reaching over 50 percent of our mid- 2006 objective to serve 36,000 homes in select Illinois markets. We are very pleased with the customer response and the growth of DVS in Illinois."

"We continue to execute on our strategy to increase average revenue per user (ARPU) with high-value service offerings such as digital subscriber lines (DSL), competitive bundled offerings and innovative products such as DVS. Our fourth quarter Telephone Operations ARPU was $96.66. DSL subscribers increased 43 percent versus a year ago to over 39,000 subscribers, and is available to approximately 92 percent of our local access lines, with speeds of up to 6 megabits per second (Mbps). Over this same network, we are delivering DVS to customers in select Illinois markets. In addition, total connections (reflecting access lines, DSL and DVS) would have increased year- over-year by over 5,900, were it not for the 5,332 lines lost with the MCI Metro network regroom, to over 283,360, and service bundles were up over 20 percent year-over-year to almost 36,630."

Currey added, "We are particularly excited about the prospects for DVS, as we believe it furthers customer loyalty. To date, 87 percent of the customers who have signed up for DVS have taken our triple play offering, which includes voice, video and data services. Customers recognize both the overall value of the bundle and proven services of Consolidated, while we benefit from efficiencies from multiple product delivery, higher overall ARPU and stronger customer relationships."

Steve Childers, Consolidated's chief financial officer, said, "While driving sales and ARPU, we remain focused on improving operating efficiencies and expanding margins. For the fourth quarter, our total company Adjusted EBITDA margin (the ratio of Adjusted EBITDA to total revenue) was 43.8 percent, up from 40.2 percent in the third quarter of 2005. As previously mentioned, last quarter had approximately $1.5 million in prior period subsidy revenue and a $2.7 million litigation settlement impacting our results. Excluding the effect of these two items, our third quarter Adjusted EBITDA margin would have been 42.5 percent."

    Operating Statistics at December 31, 2005
    -- Total connections were 283,362.
    -- Total local access lines were 242,024.
    -- DSL subscribers were 39,192.
    -- DVS subscribers were 2,146.
    -- Long distance lines were 143,882.
    -- Total service bundles were 36,627.
    -- Total Telephone Operations ARPU was $96.66 for the three-month period
       ended December 31st.

DSL continues to perform well, contributing to ARPU growth and increasing Consolidated's strategic product penetration. During the fourth quarter, DSL grew 9 percent sequentially, which brings the year-over-year increase to 43 percent. DSL penetration increased to approximately 16.2 percent of our total local access lines and 22.1 percent of primary residential lines, up from 14.7 percent and 20.1 percent, respectively, in the third quarter.

Summary of Capital Structure Improvements

Total net debt to last twelve-month Adjusted EBITDA coverage ratio again remained steady with last quarter at 3.8 times. In summary, Consolidated completed the following capital structure improvements in the fourth quarter:

    -- On October 12, 2005, Consolidated executed a $100 million notional
       amount floating to fixed interest rate swap arrangement relating to a
       portion of its $425 million term loan facility. The 6-year interest
       rate swap became effective on January 3, 2006. Combined with the $100
       million notional amount of swap agreements executed in August 2005,
       interest rates on approximately 85 percent of our term debt are now
       fixed and our weighted average interest rate on term debt is
       approximately 5.82 percent.
    -- On November 29, 2005, Consolidated announced the execution of an
       amendment to its $425 million term loan facility. Under the new terms
       effective on November 25, 2005, the term loan facility is now priced at
       LIBOR plus 175 basis points, a reduction of 50 basis points from the
       previous terms. On an annualized basis, the full year cash interest
       savings are expected to be approximately $2.1 million.
    -- On December 8, 2005, Consolidated redeemed $5 million aggregate
       principal amount of its 9 3/4 percent Senior Notes due 2012 at a price
       of $5,487,500 plus accrued but unpaid interest. This redemption is
       expected to result in cash interest savings of approximately $487,500
       annually.

    Cash Available to Pay Dividends

For the fourth quarter 2005, total CAPD was $16.7 million, representing a 68.9 percent payout ratio based on a full quarter's dividend of $11.5 million. On a pro forma basis, as if the initial public offering (IPO) had occurred on July 1, 2005, the payout ratio would have been 69.0 percent for the second half of 2005. At December 31, 2005, Consolidated had $31.4 million in cash and cash equivalents. Consolidated made capital expenditures of $9.5 million during the fourth quarter, resulting in $31.1 million of capital expenditures for the year.

Dividend Payments

The company paid its initial dividend of $0.4089 per share on November 1, 2005 to stockholders of record at the close of business on October 15, 2005. The dividend represented a pro rata portion (for the period from July 27, 2005, the closing date of our IPO, to and including October 31, 2005) of the indicated annual dividend of $1.5495 per share, as more fully described in the company's prospectus dated July 21, 2005. The company paid its latest quarterly dividend of $0.38738 per common share on February 1, 2006 to stockholders of record on January 15, 2006.

The company expects to pay its next dividend of $0.38738 on May 1, 2006 to stockholders of record on April 15, 2006.

    Financial Highlights for the Fourth Quarter Ended December 31, 2005
    -- Revenues were $81.2 million, compared to fourth quarter 2004 revenues
       of $78.6 million. This increase was primarily driven by increases in
       Subsidies, Other Services and Other Operations revenues.  These were
       partially offset by reductions in Local Calling Services and Network
       Access Services. The decrease in Local Calling Services was driven by
       the reduction in local access lines, with the decrease in Network
       Access Services being primarily driven by the recognition of $3.1
       million of additional one-time revenue in the fourth quarter of 2004.
    -- Income from operations was $15.0 million, compared to the fourth
       quarter 2004 income from operations of $251,000.  In addition to the
       revenue increase mentioned above, income from operations was impacted
       by an impairment charge of $11.6 million in the fourth quarter of 2004.
    -- Income tax expense was $7.2 million, compared to a tax benefit of $3.4
       million in the fourth quarter of 2004.  In the fourth quarter of 2005,
       the company recognized an additional $4.6 million in non-cash deferred
       state income tax expense associated with the company's tax-free
       reorganization plan effected in connection with the IPO. Under the
       plan, our Texas and Illinois subsidiaries will now file as a single
       consolidated tax group for federal and certain state purposes.   This
       will allow the company to maximize the near-term use of federal NOL's,
       thereby reducing cash taxes.  As a result of reorganization, the
       company recognized an increase in its deferred income tax rate on its
       previously recorded deferred income tax liabilities resulting in the
       adjustment.
    -- Net loss was $2.1 million, compared to a net loss of $6.3 million for
       the fourth quarter of 2004.  In addition to the items mentioned above,
       net interest expense decreased by $828,000.  The decrease in interest
       was attributable to the changes made to our capital structure
       associated with the IPO and the subsequent debt related transactions
       mentioned above.
    -- Net loss applicable to common stockholders decreased to $2.1 million
       from a loss of $10.6 million for the fourth quarter of 2004.  In the
       fourth quarter of 2004, net loss applicable to common stockholders
       represents the loss after provision for dividends on redeemable
       preferred shares of $4.3 million.
    -- Loss per common share was $0.07, compared to a loss per common share of
       $1.18 in the fourth quarter of 2004. For the fourth quarter 2005
       excluding the effect of the non-cash tax and compensation charges
       incurred in connection with the IPO, earnings per share would have been
       $0.13.  The loss per common share in the fourth quarter of 2004 was
       after provision for dividends on redeemable preferred shares of $4.3
       million.  The company converted all redeemable preferred shares to
       common shares in conjunction with its IPO in July 2005, and thus had no
       redeemable preferred shares in the fourth quarter 2005.
    -- Adjusted EBITDA was $35.6 million and net cash provided by operating
       activities was $25.4 million, compared to $35.3 million and $14.1
       million, respectively, for the fourth quarter of 2004.

    Financial Highlights for the Year Ended December 31, 2005
    -- Revenues were $321.4 million, compared to $269.6 million for 2004.  If
       the acquisition of TXU Communications Ventures (TXUCV), which closed on
       April 14, 2004, had been included for the full period in 2004, revenues
       would have been $323.5 million.  After giving effect to the TXUCV
       acquisition, the year-over-year change reflects declining Local Calling
       Service revenue associated with reductions in local access lines, a
       reduction in Network Access Services due to the one-time adjustment in
       2004 mentioned above, and lower Long Distance revenue due to a
       reduction in the average rate per minute of use.  These reductions were
       partially offset by increases in Subsidies, Data and Internet and Other
       Services revenues.
    -- Net loss was $4.5 million compared, to net loss of $1.1 million for
       2004. If TXUCV's results had been included for the full period in 2004,
       net income would have been $640,000. The year-over-year decrease
       reflects the impact of the aforementioned revenue changes and tax
       adjustment, previously disclosed changes in the company's capital
       structure as a result of the Senior Notes redemption, the impact of the
       company's IPO and a litigation settlement in the third quarter of 2005.
    -- Net loss applicable to common stockholders for the year ended December
       31, 2005 was $14.7 million, versus a loss of $16.1 million for the year
       2004.  Net loss applicable to common stockholders represents the loss
       after provision for dividends on redeemable preferred shares of $10.3
       million and $15.0 million for 2005 and 2004, respectively.
    -- Adjusted EBITDA was $136.8 million and net cash provided by operating
       activities was $72.5 million, compared to $139.0 million and $79.8
       million, respectively, for the year 2004.

    Financial Guidance

For full year 2006, capital expenditures are expected to be between $31 million and $34 million and cash interest expense is expected to be between $37 million and $38 million.

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 be available for a period of 90 days after the conference call. 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 March 17, 2006 at midnight ET. To hear the replay, parties in the United States and Canada should call 1-800-642-1687 and enter pass code 4651794. International parties should call 1-706-645-9291 and enter pass code 4651794.

Use of Non-GAAP Financial Measures

This press release includes disclosures regarding "Adjusted EBITDA", "Adjusted EBITDA margin", "cash available to pay dividends", "total net debt to last 12-month Adjusted EBITDA ratio", and "adjusted earnings 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 flows from operations or net income (loss) as defined by GAAP and are not, on their own, necessarily indicative of cash available to fund our 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 pro forma Bank EBITDA as used and defined in the prospectus dated July 21, 2005 filed in connection with the IPO, is comprised of historical EBITDA, as adjusted to give effect to the TXUCV acquisition and certain other adjustments permitted and contemplated by our credit facility.

EBITDA is defined as net earnings (loss) before interest expenses, income taxes, depreciation and amortization on an historical basis, without giving effect to the TXUCV acquisition, the IPO and the related transactions. 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.

To give pro forma effect to the TXUCV acquisition as if it had occurred on the first day of the periods presented, we have made two sets of adjustments. First, because the operating results of TXUCV are not reflected in our historical EBITDA and financial results for the period prior to the date of its acquisition (January 1, 2004 through April 13, 2004), TXUCV's historical EBITDA for this period has been added to our historical EBITDA. Second, we made pro forma adjustments to the selling, general and administrative expenses to reflect (1) a reduction in costs due to the termination of certain TXUCV employees upon the closing of the acquisition and (2) incremental professional service fees paid to certain equity investors pursuant to a new professional services agreement entered into in connection with the TXUCV acquisition. Finally, when calculating EBITDA in accordance with our credit agreement, the credit agreement permits us to exclude the effect of certain items. Each of these adjustments is described in the footnotes to the attached reconciliations.

Cash available to pay dividends represents Adjusted EBITDA plus cash interest income less (1) cash interest expense (after giving pro forma effect to the IPO as if it had been completed on July 1, 2005), (2) capital expenditures and (3) cash taxes.

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. 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.

While we use Adjusted EBITDA and cash available to pay dividends in managing and analyzing our business and financial condition and believe they are useful to our management and investors for the reasons described above, 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 EBITDA Margin and the ratio of total net debt to last 12-month Adjusted EBITDA, they are subject to the material limitations discussed above, and 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 earnings per share, assist investors, securities analysts and other interested parties in evaluating the companies in our industry.

For a more detailed discussion of these and other limitations on the use of these non-GAAP financial measures, please see the section entitled "Dividend Policy and Restrictions" in our prospectus dated July 21, 2005. The prospectus is not incorporated by reference in this release.

About Consolidated

Consolidated Communications Holdings, Inc. is an established rural local exchange company (RLEC) providing communications services to residential and business customers in Illinois and Texas. Each of the operating companies has been operating in their local markets for over 100 years. With approximately 242,000 local access lines and over 39,000 digital subscriber lines (DSL), Consolidated Communications offers a wide range of telecommunications services, including local dial tone, custom calling features, private line services, long distance, dial-up and high-speed Internet access, carrier access and billing and collection services. Consolidated Communications is the 17th largest local telephone company in the United States.

Safe Harbor

Any statements contained in this press release that are not statements of historical fact, including statements about management's beliefs and expectations, are forward-looking statements and should be evaluated as such. The words "anticipates", "believes", "expects", "intends", "plans", "estimates", "targets", "projects", "should", "may", "will" and similar words and expressions are intended to identify forward-looking statements. Such forward-looking statements reflect, among other things, the company's current expectations, plans, strategies and anticipated financial results and involve a number of known and unknown risks, uncertainties and factors that may cause the actual results to differ materially from those expressed or implied by these forward-looking statements. These risks include, but are not limited to the following: 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 common stock; the substantial amount of debt and the company's ability to 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 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 the integration of TXUCV; risks associated with the company's possible pursuit of acquisitions; economic conditions in the service areas in Illinois and Texas; system failures; loss of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; loss 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 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.

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 the company's behalf are expressly qualified in their entirety by the cautionary statements and risk factors contained in this press release 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 SEC, the company does not undertake any obligation to update or review any forward- looking information, whether as a result of new information, future events or otherwise.


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

                                                         December 31,
                                                    2005              2004
     ASSETS
     Current assets:
       Cash and cash equivalents                  $31,409            $52,084
       Accounts receivable, net                    35,503             33,817
       Prepaid expenses and other current
        assets                                     12,123             12,986
     Total current assets                          79,035             98,887

     Property, plant and equipment, net           335,088            360,760
     Intangibles and other assets                 531,827            546,452
     Total assets                                $945,950         $1,006,099

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Current portion of long-term debt             $-              $41,079
       Accounts payable                            11,743             11,176
       Accrued expenses and other current
        liabilities                                56,116             45,312
     Total current liabilities                     67,859             97,567

     Long-term debt less current
      maturities                                  555,000            588,342
     Other long-term liabilities                  120,889            131,225
     Total liabilities                            743,748            817,134

     Minority interests                             2,974              2,291
     Redeemable preferred shares                      -              205,469
     Stockholders' equity:
       Common stock, $0.01 par value                  297                -
       Paid in capital                            254,162                 58
       Accumulated deficit                        (57,533)           (19,111)
       Accumulated other comprehensive
        income                                      2,302                258
    Total stockholders' equity (deficit)          199,228            (18,795)
    Total liabilities and stockholders'
     equity                                      $945,950         $1,006,099



                           Consolidated Communications
                 Condensed Consolidated Statements of Operations
                              (Dollars in thousands)
                                   (Unaudited)

                                       Three Months Ended      Year Ended
                                          December 31,        December 31,
                                         2005      2004      2005      2004

     Revenues                           $81,225   $78,598  $321,429  $269,608
     Operating expenses:
       Cost of services and products     26,436    22,574   101,159    80,572
       Selling, general and
        administrative expenses          23,274    27,157    98,791    87,955
       Intangible assets impairment         -      11,578       -      11,578
       Depreciation and amortization     16,527    17,038    67,379    54,522
     Income from operations              14,988       251    54,100    34,981
     Other income (expense):
       Interest expense, net            (10,631)  (11,459)  (53,443)  (39,551)
       Other income, net                    780     1,491     5,816     3,659
     Income (loss) before income taxes    5,137    (9,717)    6,473      (911)
     Income tax (benefit) expense         7,234    (3,430)   10,935       232

     Net loss                            (2,097)   (6,287)   (4,462)   (1,143)
     Dividends on redeemable preferred
        shares                              -      (4,342)  (10,263)  (14,965)
     Net loss applicable to common
        stockholders                    $(2,097) $(10,629) $(14,725) $(16,108)

     Net loss per common share           $(0.07)   $(1.18)   $(0.83)   $(1.79)



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

                                          Three Months Ended    Year Ended
                                             December 31,      December 31,
                                            2005     2004     2005      2004
    OPERATING ACTIVITIES
     Net loss                             $(2,097) $(6,287) $(4,462)  $(1,143)
     Adjustments to reconcile net income
      to cash provided by operating
      activities:
        Depreciation and amortization      16,527   17,038   67,379    54,522
        Pension curtailment gain              -        -     (7,880)      -
        Asset impairment                      -     11,578      -      11,578
        Non-cash stock compensation         1,346      -      8,590       -
        Other adjustments, net              7,555    1,656   19,068    10,382
     Changes in operating assets and
      liabilities, net                      2,073   (9,882) (10,220)    4,427
          Net cash provided by operating
           activities                      25,404   14,103   72,475    79,766
    INVESTING ACTIVITIES
        Capital expenditures               (9,498) (12,738) (31,094)  (30,010)
        Acquisition, net of cash acquired     -        -        -    (524,090)
          Net cash used in investing
           activities                      (9,498) (12,738) (31,094) (554,100)
    FINANCING ACTIVITIES
        Proceeds from (cost of) issuance
         of stock                            (209)     -     67,589    89,058
        Proceeds from long-term
         obligations                          -        -      5,688   637,000
        Payments made on long-term
         obligations                       (5,000)  (4,510) (80,109) (190,826)
        Payment of deferred financing
         costs                               (815)     -     (5,552)  (18,956)
        Purchase and retirement of
         treasury shares                      -        -        (12)      -
        Dividends on common stock         (12,160)     -    (12,160)      -
        Distribution to preferred
         shareholders                         -        -    (37,500)      -
          Net cash provided by (used in)
           financing activities           (18,184)  (4,510) (62,056)  516,276
    Net increase (decrease) in cash and
     cash equivalents                      (2,278)  (3,145) (20,675)   41,942
    Cash and cash equivalents at
     beginning of period                   33,687   55,229   52,084    10,142
    Cash and cash equivalents at end of
     period                               $31,409  $52,084  $31,409   $52,084



                          Consolidated Communications
               2004 Condensed Combining Statements of Operations
                             (Dollars in thousands)
                                  (Unaudited)

                                            Year Ended December 31, 2004

                                        Predecessor
                                          to CCI-
                                        Texas 1/1 -   As Presented
                                           4/13       4/14 - 12/31   Combined

     Revenues                             $53,855       $269,608     $323,463
     Operating expenses:
       Cost of services and products       15,296         80,572       95,868
       Selling, general and
        administrative expenses            24,138         87,955      112,093
       Asset impairment                       (12)        11,578       11,566
       Depreciation and amortization        8,124         54,522       62,646
     Income from operations                 6,309         34,981       41,290
     Other income (expense):
       Interest expense, net               (3,158)       (39,551)     (42,709)
       Other income, net                    1,105          3,659        4,764
     Income (loss) before income taxes      4,256           (911)       3,345
     Income tax expense                     2,473            232        2,705

     Net income (loss)                     $1,783        $(1,143)        $640



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

                                           Three months ended December 31,
                                                2005              2004
    Illinois Revenues
    Telephone Operations
     Local calling services                    $7,709            $8,316
     Network access services                    6,579             9,662
     Subsidies                                  3,556             1,751
     Long distance services                     1,512             1,985
     Data and Internet services                 2,779             2,723
     Other services                             1,712               968
    Total Telephone Operations                 23,847            25,405
    Other Operations                           10,543             9,352
    Total operating revenues                  $34,390           $34,757

    Texas Revenues
    Telephone Operations
     Local calling services                   $13,406           $14,132
     Network access services                    9,832             9,006
     Subsidies                                  9,850             8,974
     Long distance services                     2,457             2,172
     Data and Internet services                 3,851             3,759
     Other services                             7,439             5,798
    Total Telephone Operations                 46,835            43,841
    Other Operations                                -                 -
    Total operating revenues                  $46,835           $43,841

    Total Revenues
    Telephone Operations
     Local calling services                   $21,115           $22,448
     Network access services                   16,411            18,668
     Subsidies                                 13,406            10,725
     Long distance services                     3,969             4,157
     Data and Internet services                 6,630             6,482
     Other services                             9,151             6,766
    Total Telephone Operations                 70,682            69,246
    Other Operations                           10,543             9,352
    Total operating revenues                  $81,225           $78,598



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

                                     Twelve months ended December 31,
                                 December
                                 31, 2004   January 1 -
                                    As       April 13,    Pro forma  December
                                 Presented     2004         2004     31, 2005
    Illinois Revenues
    Telephone Operations
     Local calling services       $33,921      $ -        $33,921    $32,221
     Network access services       30,353        -         30,353     26,550
     Subsidies                     10,633        -         10,633     15,385
     Long distance services         7,512        -          7,512      6,544
     Data and Internet services    10,652        -         10,652     10,693
     Other services                 4,255        -          4,255      5,105
    Total Telephone Operations     97,326        -         97,326     96,498
    Other Operations               39,207        -         39,207     39,143
    Total operating revenues     $136,533      $ -       $136,533   $135,641

    Texas Revenues
    Telephone Operations
     Local calling services       $40,983    $16,932      $57,915    $55,982
     Network access services       26,452     10,610       37,062     37,835
     Subsidies                     29,859     10,993       40,852     38,551
     Long distance services         7,042      3,402       10,444      9,739
     Data and Internet services    10,289      3,923       14,212     15,111
     Other services                18,450      7,995       26,445     28,570
    Total Telephone Operations    133,075     53,855      186,930    185,788
    Other Operations                  -          -            -          -
    Total operating revenues     $133,075    $53,855     $186,930   $185,788

    Total Revenues
    Telephone Operations
     Local calling services       $74,904    $16,932      $91,836    $88,203
     Network access services       56,805     10,610       67,415     64,385
     Subsidies                     40,492     10,993       51,485     53,936
     Long distance services        14,554      3,402       17,956     16,283
     Data and Internet services    20,941      3,923       24,864     25,804
     Other services                22,705      7,995       30,700     33,675
    Total Telephone Operations    230,401     53,855      284,256    282,286
    Other Operations               39,207        -         39,207     39,143
    Total operating revenues     $269,608    $53,855     $323,463   $321,429



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

                                      Three Months Ended  Twelve Months Ended
                                          December 31,        December 31,
                                        2005       2004     2005       2004

    Ending Access Lines                242,024   255,208   242,024    255,208
    Average Access Lines               243,756   256,514   248,214    259,442


    Telephone Operations Dollars       $70,682   $69,246  $282,286   $284,256
    Prior Period Subsidy Settlements       $83     $(992)   $1,704     $4,380
    Telephone Operations, excluding
     Prior Period Subsidy Settlements  $70,599   $70,238  $280,582   $279,876

    Telephone Operations ARPU           $96.66    $89.98    $94.77     $91.30
    Telephone Operations ARPU,
     excluding Prior Period Subsidy
     Settlements                        $96.54    $91.27    $94.20     $89.90


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

                                     Three Months   Three Months   Six Months
                                         Ended         Ended         Ended
                                       September    December 31,  December 31,
                                       30, 2005        2005         2005 (3)

    Adjusted EBITDA                     $33,057       $35,626       $68,683

      - Cash interest expense (1)        (9,583)       (9,384)      (18,967)
      - Capital expenditures             (6,766)       (9,498)      (16,264)
      - Integration and restructuring
         costs (2)                            -             -             -
      - Cash taxes                            -          (172)         (172)
      + Cash interest income                  -           174           174

    Cash available to pay dividends     $16,708       $16,746       $33,454

    Quarterly Dividend                 $(11,537)     $(11,537)     $(23,074)
    Payout Ratio                           69.1%         68.9%         69.0%

    (1) Assumes IPO and related transactions occurred on July 1, 2005.
    (2) We incurred $1,994,000 of integration and restructuring charges during
        the three months ended December 31, 2005.  However, we have not listed
        any such expenses in the table because these expenses were pre-funded
        with cash on the balance sheet in connection with our initial public
        offering.
    (3) Shows reconciliation of cash available to pay dividends on a pro
        forma basis as if the IPO and related transactions had occurred on
        July 1, 2005.


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

                                                                       Three
                                                                       Months
                                                                       Ended
                              Three Months Ended     Year Ended      September
                                  December 31,       December 31,       30,
                                 2005     2004      2005      2004     2005
    Historical EBITDA
    Net cash provided by
     operating activities       $25,404  $14,103   $72,475   $79,766  $17,804
    Adjustments:
     Pension curtailment gain         -        -     7,880         -        -
     Compensation from
      restricted share plan      (1,346)       -    (8,590)        -   (7,244)
     Other adjustments, net      (7,555)  (1,656)  (19,068)  (10,382)  (2,999)
    Changes in operating assets
     and liabilities             (2,073)   9,882    10,220    (4,427)    (866)
    Interest expense, net        10,631   11,459    53,443    39,551   19,814
    Income taxes                  7,234   (3,430)   10,935       232   (1,270)
    Consolidated EBITDA (1)      32,295   30,358   127,295   104,740   25,239

    CCI Texas EBITDA (2)              -        -         -    15,538        -

    Pro Forma EBITDA (3)         32,295   30,358   127,295   120,278   25,239

    Adjustments to EBITDA
     Transaction costs
      associated with TXUCV
      acquisition (4)                 -        -         -     8,205        -
     Integration and
      restructuring (5)           1,994    4,748     7,400     7,009      831
     Professional service
      fees (6)                        -    1,250     2,867     4,135      367
     Other, net (7)                (780)  (1,491)   (3,036)   (4,764)  (1,443)
     Investment distributions (8)   771      419     1,590     4,135      819
     Affect of pension
      curtailment (9)                 -        -    (7,880)        -        -
     Non-cash compensation (10)   1,346        -     8,590         -    7,244

    Adjusted EBITDA             $35,626  $35,284  $136,826  $138,998  $33,057

    Footnotes for Adjusted EBITDA
    (1) Consolidated's EBITDA is defined as net earnings (loss) before
        interest expense, income taxes, depreciation and amortization on an
        historical basis, without giving effect to the TXUCV acquisition.
    (2) CCI Texas EBITDA represents the EBITDA of TXUCV for the period from
        January 1 through April 13, 2004 since the operating results of TXUCV
        are not reflected in our historical EBITDA for the periods prior to
        acquisition on April 13, 2004.
    (3) Pro forma EBITDA represents our historical EBITDA as adjusted for the
        TXUCV acquisition.
    (4) During 2004, TXUCV incurred costs, which, due to the unusual and non-
        recurring nature of these expenses, are excluded from Adjusted EBITDA.
        These expenses included retention bonuses to keep key employees to run
        its day-to-day operations while it was being prepared for sale;
        severance costs primarily associated with employee terminations
        associated with the TXUCV acquisition; and other costs associated with
        its sale.
    (5) In connection with the TXUCV acquisition, we have incurred certain
        one-time expenses associated with integrating and restructuring the
        Texas and Illinois businesses.  Because of the unusual and non-
        recurring nature of these expenses, they are excluded from Adjusted
        EBITDA.
    (6) Represents the aggregate professional service fees paid to certain
        large equity investors prior to our IPO.  Upon closing of the IPO,
        these agreements terminated in accordance with their terms.
    (7) Other, net includes the equity earnings from our investments, dividend
        income and certain other miscellaneous non-operating items.  Key man
        life insurance proceeds of $2,780 received in June 2005 are not
        deducted to arrive at Adjusted EBITDA.
    (8) For purposes of calculating Adjusted EBITDA, we include all cash
        dividends and other distributions received from our investments.
        Partnership distributions included in the calculation of adjusted
        EBITDA assumes that the TXUCV acquisition occurred on the first day of
        the periods presented.
    (9) Represents a one-time, non-cash $7.9 million curtailment gain
        associated with the amendment of our retirement plan.  The gain was
        recorded in general and administrative expenses.  However, because the
        gain is non-cash and non-recurring, it is excluded from Adjusted
        EBITDA.
    (10) 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.  In connection with the IPO and
         related transactions, the Plan was modified.


                           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                                                425,000
    Total Debt as of December 31, 2005                         555,000
    Less cash on hand                                          (31,409)
    Total net debt as of December 31, 2005                    $523,591

    Adjusted EBITDA for the year ended
     December 31, 2005                                        $136,826

    Total Net Debt to twelve months
     Adjusted EBITDA Ratio                                        3.83


                           Consolidated Communications
                           Adjusted Earnings Per Share
                              (Dollars in thousands)
                                   (Unaudited)

                                                   Three Months Ended
                                                      December 31,
                                                          2005
    Reported net loss applicable to
     common stockholders                                $(2,097)
    Non-cash compensation                                 1,346
    Deferred income tax adjustment                        4,616
    Adjusted loss applicable to common
     stockholders                                        $3,865

    Weighted average number of shares
     outstanding                                     29,185,906
    Adjusted earnings per share                           $0.13


                           Consolidated Communications
                            Key Operating Statistics

    Illinois                                December 31,      December 31,
                                                2005              2004
    Local access lines in service
         Residential                            52,469            55,627
         Business (1)                           29,728            31,255
         Total local access lines (1)           82,197            86,882
    DVS subscribers                              2,146               101
    DSL subscribers                             14,576            10,794
    Total connections (1)                       98,919            97,777

    Long distance lines                         56,097            54,345
    Dial-up subscribers                          6,533             7,851
    Service bundles                             10,827             9,175


    Texas                                   December 31,      December 31,
                                                2005              2004
    Local access lines in service
         Residential                           109,762           113,151
         Business (1)                           50,065            55,175
         Total local access lines (1)          159,827           168,326
    DVS subscribers                                  -                 -
    DSL subscribers                             24,616            16,651
    Total connections (1)                      184,443           184,977

    Long distance lines                         87,785            84,332
    Dial-up subscribers                          9,438            13,333
    Service bundles                             25,800            21,314


    Total Company                           December 31,      December 31,
                                                2005              2004
    Local access lines in service
         Residential                           162,231           168,778
         Business (1)                           79,793            86,430
         Total local access lines (1)          242,024           255,208
    DVS subscribers                              2,146               101
    DSL subscribers                             39,192            27,445
    Total connections (1)                      283,362           282,754

    Long distance lines                        143,882           138,677
    Dial-up subscribers                         15,971            21,184
    Service bundles                             36,627            30,489

    (1) The 2005 counts include the reduction of approximately 4,708 access
        lines in TX and 624 access lines in IL associated with MCI Metro's ISP
        regrooming.


                         Consolidated Communications
            Schedule of Adjusted Total Connections & Access Lines


                          December 31,   December 31,   Year/Year  Percentage
    Total Connections         2005           2004         Change     Change
    Total Company total
     connections            283,362         282,754         608       0.2%
    MCI Metro access lines                   (5,332)
    Adjusted total
     connections            283,362         277,422       5,940       2.1%



                          December 31,   December 31,   Year/Year  Percentage
    Access Lines              2005           2004         Change     Change
    Total company access
     lines                  242,024         255,208     (13,184)     -5.2%
    MCI Metro access lines                   (5,332)
    Adjusted access lines   242,024         249,876      (7,852)     -3.1%

SOURCE Consolidated Communications Holdings, Inc.
03/15/2006

CONTACT: Stephen Jones, Vice President - Investor Relations, Consolidated Communications, +1-217-258-9522, investor.relations@consolidated.com; or Investor Relations: Kirsten Chapman, or David Barnard, David@lhai-sf.com, both of Lippert / Heilshorn & Associates, +1-415-433-3777

3500 03/15/2006 07:00 EST http://www.prnewswire.com