Rye, NY – March 13, 2012 – LICT Corporation (Pink Sheets®: LICT) today announced its preliminary earnings for the fourth quarter of 2011 (see Exhibit A). All data are subject to final closing adjustments, including completion of the Company’s internal goodwill valuation. Audited Financial Statements are expected to be available by April 30, 2012.
FOURTH QUARTER RESULTS –During the fourth quarter of 2011, our revenues were $24.4 million as compared to $22.9 million in 2010, an increase of $1.5 million, or 6.7%. EBITDA, before corporate expenses, including cash received from our equity positions, that is, less than 50%, ownership in cellular and other partnership interests (“Modified EBITDA”), generated during the fourth quarter of 2011 was $11.0 million, as compared to $9.3 million in 2010.
Revenues were bolstered by growth in our non-regulated and interstate revenue segments. Non-regulated revenues increased by $1,001 thousand during the fourth quarter, due primarily to increased broadband and competitive local exchange carrier (“CLEC”) penetration. Interstate network access revenue increased by $741 thousand. Traditionally during the fourth quarter, true-ups resulting from year end mini cost studies, and out-of period adjustments resulting from the finalization of the prior year’s interstate revenues, are recorded. During the fourth quarter of 2011, the out of period adjustments increased revenues by $103 thousand, and in 2010, these adjustments decreased revenues by $316 thousand, a $419 thousand positive swing. Positive adjustments from the mini cost studies resulted in the remainder of the increase. Intrastate revenues, which relate to in-state calling, increased $43 thousand. Local revenue slipped $185 thousand primarily due to a continued erosion in “voice lines”. Operating costs increased by $46 thousand. Corporate office expenses were $890 thousand, a decrease of $150 thousand compared to the 2010 quarter.
Earnings from continuing operations were $89.21 per share in the fourth quarter of 2011 as compared to $58.68 per share in the fourth quarter of 2010, excluding an unusual income tax benefit in 2010. Reported results of $160.38 per share in the fourth quarter of 2010 included a $2.4 million income tax benefit, or $101.70 per share, from the expiration of uncertain income tax positions.
FULL YEAR RESULTS – For the year ending December 31, 2011, LICT recorded $92.6 million in revenue and $40.6 million in Modified EBITDA before corporate expenses versus $92.2 million in revenues in 2010 and $40.3 million in Modified
EBITDA, respectively. Earnings from continuing operations were $342 per share, virtually the same as the $344 per share in 2010, excluding the previously mentioned $102 per share due to the expiration of uncertain income tax positions.
Lenny Higgins, Chief Operating Officer, said “2011 was a challenging year but we finished strong and I’m very excited about our opportunities for growth moving into 2012. We have a number of initiatives underway that represent attractive opportunities for growth in the broadband, CLEC, fixed wireless and video business segments. We plan to continue to expand through internal growth and acquisitions where we have the opportunity to leverage our existing management teams and carrier class back office infrastructure. “
The Company currently expects 2012 revenue and modified EBITDA of $94.0 million and $39.6 million, respectively, as expansion costs in new markets are slightly hampering modified EBITDA. In February 2012, as previously announced, LICT sold certain assets for $12.8 million, which will benefit first quarter results by approximately $7.7 million, or $325 per share.
CAPITAL EXPENDITURES AND DEPRECIATION EXPENSE – Capital expenditures were $16.6 million for 2011, approximately equal to depreciation expense, versus $15.9 million in 2010. During 2011, we expanded our abilities to serve our communities, as we invested in soft switches, which are capable of providing VOIP (Voice over Internet Protocol) and other enhanced capabilities, and increased the fiber outreach of our network to provide higher bandwidth speeds. We currently expect that 2012 capital expenditures will be in the range of $12 to $17 million.
BROADBAND REGULATION – In November 2011, the Federal Communications Commission (“FCC”) ordered significant modifications to Intercarrier Compensation (‘ICC’) and the Universal Service Fund (“USF”), and deferred further potential reforms to a Further Notice of Proposed Rulemaking (“FNPRM”), on which comments are still being received. Due to the numerous items in the FNPRM impacting rate-of-return carriers, such as our companies, it is not possible to fully predict the impact the FCC’s ICC and USF reforms will have on LICT’s future revenues at this time, but such modifications may have a negative impact on already declining regulated revenues. ICC and USF programs generate, on a combined basis, approximately 40% of our revenues, in part due to our cost structure necessary to serve our communities.
OPERATING STATISTICS – As of December 31, 2011, the company’s in-territory DSL penetration, based on total ILEC voice lines, was 58.6%, compared to 54.7% as of December 31, 2010. Our summary operating statistics are as follows:
| Dec. 31,2011 | Dec. 31,2010 | Increase (Decrease) | Percent Increase (Decrease) | |
| ILEC voice lines | 38,420 | 39,584 | (1,164) | (2.9%) |
| CLEC voice lines | 6,535 | 6,096 | 439 | 7.2% |
| Total voice lines | 44,955 | 45,680 | (725) | (1.6%) |
| Broadband lines | 25,623 | 23,851 | 1,772 | 7.4% |
| LD Resale lines | 22,750 | 22,537 | 213 | 0.9% |
| Video Subscribers | 7,594 | 7,343 | 251 | 3.4% |
BALANCE SHEET – As of December 31, 2011, the company had approximately $11.7 million in cash and $100.3 million in total debt, resulting in net debt of $88.6 million and compared to net debt of $96.6 million as of December 31, 2010. In February 2012, LICT sold eight spectrum licenses and paid off $7.6 million of debt at a subsidiary and $0.8 million from the line of credit, resulting in net debt of $80.2 million or 2.2 times 2011 Modified EBITDA.
REFINANCING THE COMPANY – As a result of our acquisitions, LICT’s debt structure currently consists of a maze of loans from federally-backed institutions, commercial banks, and seller notes. This structure is cumbersome and costly in terms of maintenance of facilities and flexibility with regard to terms of potential mergers, acquisitions, dispositions and other shareholder initiatives. As such, the company is considering various refinancing initiatives which will enhance our ability to take the operational steps necessary to position the organization for future success.
SHARE REPURCHASES – LICT repurchased 441 shares for $989,615 in 2011, of which 35 shares at $74,925 were purchased in the fourth quarter. As of December 31, 2011 and December 31, 2010, shares outstanding were 23,538 and 23,979.
STRATEGIC INITIATIVES – Our operating subsidiaries are in the process of developing and launching several wireless and wireline broadband initiatives. These initiatives will provide an excellent complement to our strong RLEC base, and provide the communities that we serve with the telephony and broadband tools necessary to compete in today’s economy.
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This release contains certain forward-looking information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation future financial results, anticipated financing, capital expenditures and corporate transactions. It should be recognized that such information is based upon certain assumptions, projections and forecasts, including without limitation business conditions and financial markets, regulatory and other approvals, and the cautionary statements set forth in documents filed by LICT on its website, www.lictcorp.com. As a result, there can be no assurance that any possible transactions will be accomplished or be successful or that financial targets will be met, and such information is subject to uncertainties, risks and inaccuracies, which could be material.
LICT Corporation is a holding company with subsidiaries in broadband and other telecommunications services that actively seeks acquisitions, principally in its existing business areas.
LICT Corporation is listed on the Pink Sheets® under the symbol LICT. Its World Wide Web address is: http://www.lictcorp.com.
Contact: Robert E. Dolan
Executive Vice President and Chief Financial Officer
914/921-8821
Release: 12-3