Rye, NY – May 18, 2012 – LICT Corporation (Pink Sheets®: LICT) today announced its earnings for the first quarter of 2012 (see Exhibit A).
FIRST QUARTER 2012 RESULTS –During the first quarter of 2012, our revenues were $23.1 million as compared to $22.2 million in 2011, an increase of $0.9 million, or 4.2%. EBITDA, before corporate expenses, including cash received from our equity affiliates (that is, less than 50%, ownership in cellular and other partnership interests) generated during the first quarter of 2012 was $9.7 million, the same as the first quarter of 2011. The Company has restated the 2011 first quarter for a change in accounting that was recorded in the fourth quarter of 2011. The change relates to how the company records upfront payments by customers to cover non- recurring charges for its non-regulated business.
In addition, in May 2012, the General Partner in our Modoc Partnership, of which we own 25%, informed us that 2011 earnings they had previously reported to us, including the earnings reported in the First Quarter of 2011, were overstated. This overstatement was corrected in our Fourth Quarter 2011 reported results, but the first quarter results for 2011 were not restated to reflect this change. The Modoc Partnership provides cellular service in California RSA #2.
Non-regulated revenues increased by $1.0 million during the first quarter, from the prior year, due primarily to the sale of additional broadband circuits outside of our regulated service territory, additional video revenue (in part due a CATV acquisition in Utah), and increased DSL penetration. Regulated revenues were down slightly during the quarter due to lower access lines, minutes, and other variances in regulated revenues from our rate of return model. EBITDA from the company’s operations, including cash received from equity affiliates, was the same in both 2012 and 2011, due to increased non-regulated EBITDA of $0.5 million offset by lower regulated EBITDA, and lower distributions from the Modoc Partnership. Corporate office expenses were $0.9 million, an increase of $0.2 million compared to the 2011 quarter.
On February 16, 2012, the Company closed on the previously announced sale of its eight 700MHz licenses for $12.8 million. This resulted in a net gain of $7.7 million, or $324.15 per share.
Earnings from continuing operations were $83.45 per share in the first quarter of 2012, excluding unusual gains, as compared to $90.71 per share in the first quarter of 2011. Reported results of $421.62 per share in the first quarter of 2012 included the $324.15 from the gain on sale of spectrum, as discussed above, and a $0.3 million income tax benefit, or $14.02 per share, from the expiration of uncertain income tax positions.
Lenny Higgins, Chief Operating Officer, said “I am very pleased with growth of non- regulated revenues in the First Quarter. The efforts of our local management teams are paying off with in-roads into out-of-territory markets. We have a number of initiatives underway that represent attractive opportunities for growth in the broadband, CLEC, fixed wireless and video business segments.”
FULL YEAR FORECAST – The Company currently expects 2012 revenues to be $94.7 million, up from the 2011 full year revenues of $92.6 million, and EBITDA, before corporate expenses, including cash received from our equity affiliates, to be $39.3 million, an increase of $0.2 million compared to 2011 as expansion costs in new markets hampered EBITDA from operating companies. This forecast represents a $0.7 million increase in revenues from our previous forecast due to additional sales of circuits, and a $0.3 million decrease in EBITDA, due predominantly to lower than expected distributions from our Modoc Partnership, offset by the increased EBITDA from the higher revenues.
CAPITAL EXPENDITURES – Capital expenditures were $2.3 million for 2012 versus
$3.4 million in 2011. The company is currently reevaluating its overall capital expenditure program in light of the potential changes in Broadband Regulation discussed below.
BROADBAND REGULATION – In November 2011, the Federal Communications Commission (“FCC”) ordered significant modifications to Intercarrier Compensation (‘ICC’) and the Universal Service Fund (“USF”), and issued a Further Notice of Proposed Rulemaking (“FNPRM”). 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. However, 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 rural communities.
OPERATING STATISTICS – As of March 31, 2012, the company’s in-territory DSL penetration, based on total RLEC voice lines, was 59.9%, compared to 58.6% as of December 31, 2011. Our summary operating statistics are as follows:
| Mar. 31, 2012 | Dec. 31, 2011 | Increase (Decrease) | Percent Increase (Decrease) | |
| ILEC voice lines | 38,173 | 38,420 | (247) | (0.6%) |
| CLEC voice lines | 6,620 | 6,535 | 85 | 1.3% |
| Total voice lines | 44,793 | 44,955 | (162) | (0.4%) |
| Broadband lines | 26,213 | 25,623 | 590 | 2.3% |
| LD Resale lines | 22,860 | 22,750 | 110 | 0.5% |
| Video Subscribers | 7,518 | 7,594 | (76) | (1.0%) |
BALANCE SHEET – As of March 31, 2012, the company had approximately $8.6 million in cash and $80.6 million in total debt, resulting in net debt of $72.0 million and compared to net debt of $88.6 million as of December 31, 2011. In February 2012, LICT sold eight 700 MHz 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 $72.0 million or 2.2 times 2011 total EBITDA. Note, our taxes payable were $3.4 million at March 31, 2012.
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 46 shares for $97,203 in the first quarter of 2012. As of March 31, 2012 and December 31, 2011, shares outstanding were 23,492 and 23,538.
STRATEGIC INITIATIVES – Our operating subsidiaries are in the process of developing and launching several wireless and wireline broadband initiatives. We anticipate that 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.
* * * *
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: 12-5