Talk America (Now Cavalier Telephone) News

Talk America Completes Acquisition of Network Telephone
Wednesday January 4, 7:00 am ET

NEW HOPE, Pa. & PENSACOLA, Fla.--(BUSINESS WIRE)--Jan. 4, 2006--Talk America (NASDAQ:TALK - News) announced today that it has closed the previously announced acquisition of Network Telephone Corporation, a leading facilities-based communications provider serving business customers in the southeast region.

Ed Meyercord, Chief Executive Officer and President of Talk America, said, "This is a great start to 2006. With this new acquisition we will continue to realize growth and immediately strengthen our market share by expanding the combined companies' product portfolio in the Southeast." Talk America has already begun the build out of five additional end offices to complement the 21 end offices Network Telephone currently has in the Atlanta market.

Meyercord continued, "The acquisitions of LDMI in July 2005 and Network Telephone open up tremendous opportunities for us to execute our strategic plan as we are now positioned to be the leading alternative to regional incumbent providers in these expanded markets."

Pursuant to NASDAQ Marketplace Rule 4350(i)(1)(A)(iv), Talk America also announced that stock options to purchase an aggregate of 250,000 shares of Talk America common stock were granted today to 21 new employees as an inducement to entering into employment with the company. All such grants were made to non-executive officer employees, 20 of whom were employees of Network Telephone and the other is a new controller for the company, were not made under Talk America's stockholder-approved plans, are classified as non-qualified stock options, have terms of 10 years from date of grant, vest in three equal installments on each of the first three anniversaries of the date of grant and have an exercise price equal to the closing sale price of Talk America's common stock on January 3, 2006, the date of grant.

Talk America Announces Network Expansion into Illinois and Georgia
Wednesday June 1, 9:14 am ET

SOUTHFIELD, Mich & NEW HOPE, Pa.--(BUSINESS WIRE)--June 1, 2005--Talk America (NASDAQ:TALK - News), a leading integrated communications provider, announced today that it will be deploying its network in Chicago and Atlanta by the end of 2005. This network expansion adds over 1.3 million new addressable households, 700,000 new addressable businesses and will add approximately 30,000 lines to our networked footprint at year-end. Capital expenditures for the buildout are expected to be approximately $5 to $6 million. As such, we are increasing our capital expenditure guidance for 2005 to $53 to $58 million, including capitalized software and capital expenditures of LDMI from the expected closing date.
The 12 end offices in Chicago and 22 end offices in Atlanta will use soft-switching IP technology to cost-effectively reach existing and new customers. IP technology enables voice and data services to be carried using common transport elements, reducing the cost of providing services compared to traditional circuit switched technology.

As previously discussed, Talk America also has expanded its network deployment in Michigan to include 21 additional end offices in the Grand Rapids, Saginaw and Lansing markets.

"Talk America is committed to delivering the highest quality communication services to our customers," said Ed Meyercord, President and CEO of Talk America. "With the continued success of our network buildout, UNE-P to UNE-L migrations and our soft-switch tests in the Grand Rapids area, we are excited to reopen markets where Talk America has had historical marketing success and we have the opportunity to serve business customers."


Talk America Announces $50 Million Share Buyback Program

RESTON, VA-June 1, 2004-- Talk America (NASDAQ: TALK), a provider of bundled local and long distance phone service, said today that its Board of Directors has authorized a share buyback program for the company to purchase up to $50 million of its outstanding shares. The shares may be purchased from time to time, in the open market and/or private transactions. As of May 31, 2004 the company's cash balance was approximately $22 million.



Talk America Supports AT&T's Compromise Offer

RESTON, VA-May 6, 2004-- Talk America (NASDAQ: TALK), a provider of bundled local and long distance phone service, today announced that it supports the reasonable compromise offer recently announced by AT&T. Consistent with the Telecommunications Act of 1996 and the stated goals of the Chairman of the FCC, the AT&T roadmap encourages the orderly transition of customers from the Bell's UNE platform to facilities-based competition.

Ed Meyercord, CEO and President of Talk America stated: "Clearly, any negotiated commercial agreement with the Bell companies will require reasonable compromises. We believe that the structure of the AT&T offer provides the basis of such a compromise for the Bell companies and the competitive providers in the industry while providing consumers with the savings, high quality, and new services envisioned by the Telecom Act."

Talk America Reports First Quarter Earnings Highlighted by Continued Bundled Customer Growth

RESTON, VIRGINIA - April 27, 2004 - Talk America (NASDAQ: TALK)

Revenue Growth Driven by Success of Direct Mail

FIRST QUARTER HIGHLIGHTS
• Billed bundled lines of 623,000, up 54.9% over Q1 2003
• Net bundled adds of 66,000
• Total revenue of $109.3 million, up 24.5% over Q1 2003
• Bundled revenue of $91.7 million, up 52.4% over Q1 2003
• Net income of $8.4 million or $0.29 per fully-diluted share
• Free cash flow of $9.8 million
• Net debt reduced to $3.4 million

Talk America today announced first quarter 2004 net income of $8.4 million or $0.29 per fully-diluted share, as compared to net income of $9.1 million or $0.32 per fully-diluted share for the first quarter 2003. Included in the first quarter 2003 results is a gain of $2.2 million related to debt repurchases. For the first quarter 2003, we had adjusted net income of $7.8 million or $0.28 per fully-diluted share. There were no adjustments for the first quarter 2004.

(Note: See the schedules accompanying this news release and www.talkamerica.com for reconciliation to generally accepted accounting principles (GAAP) for the non-GAAP financial measures mentioned in this announcement and to download a copy of the investor presentation to be reviewed on today's conference call.)

INCREASES IN BUNDLED CUSTOMER BASE DRIVES REVENUE GROWTH
Ed Meyercord, Chief Executive Officer and President, commented "our results for the quarter demonstrate our continued success in executing our 'customer first' strategy." The increase of 66,000 net lines to our bundled customer base drove higher revenue growth and exceeded the 62,000 net lines added in the fourth quarter 2003. During the first quarter 2004, bundled revenues accounted for $91.7 million or 84% of total revenues, up from $60.2 million or 68% of total revenues in the first quarter 2003.

CONTINUED EXPANSION INTO NEW STATES AND INCREASED DIRECT MAIL
Talk America continued its expansion into new states in the first quarter by increasing its penetration of New York and New Jersey and by adding Alabama, Pennsylvania and Maryland as productive states. In addition, we made significant progress diversifying our marketing channels to include direct mail and other inbound channels. In the first quarter 2004, direct mail accounted for over 25% of our gross adds, up from 1% in the first quarter 2003. Customers that are brought in through these "inbound" channels generally have lower churn and will remain a continued focus throughout 2004.

DETROIT NETWORK BUILDOUT ON SCHEDULE
We hit our target of provisioning 1,000 customers on our own switch in Southfield, Michigan by the end of the first quarter. We currently have provisioned over 1,500 customers to our switch. We're expanding our network test to include seven colocation facilities in the Detroit market and are formulating plans for an expanded network build-out in 2005 and 2006. Now, with an expanding base of over 623,000 bundled lines, we are pursuing networking opportunities to preserve and increase margins and expand our service offerings.

CASH FLOW DIRECTED TO DEBT REDUCTION
During the first quarter 2004, total debt was reduced from $48.6 million to $33.1 million, with a cash position at quarter end of $29.7 million. In addition, in April 2004 we redeemed an additional $15.0 million of debt. Cash flow from operations was $11.9 million, down from $14.6 million for the first quarter 2003. Capital expenditures (including capitalized software) for the first quarter 2004 were $2.0 million.

REGULATORY DEVELOPMENTS
As directed by the FCC in early April 2004, we have agreed to negotiate in good faith new commercial contracts for the receipt of wholesale phone services from the RBOCs. To date no agreements have been reached nor can any assurance be given that any agreements will be reached. We believe that consumer choice and competition will ultimately prevail.

FINANCIAL GUIDANCE
Our operational and financial targets for the second quarter 2004 and the year ended 2004 are as follows:

Metrics Q2 2004 2004
-------------------- ---------------
Billed Bundled Lines 668k-678k 775k-800k
Bundled Revenue $95 - $100 mm $400 -$415 mm
Long Distance Revenue $14-$16 mm $50-$60 mm
Total Revenue $109 - $116 mm $450 -$475 mm
Net Income $7 - $9 mm $35-$37 mm
Fully Diluted EPS $0.24 - $0.31 $1.18-$1.25
CONFERENCE CALL
Talk America management will host a conference call to discuss the first quarter 2004 operating results at 5:00 p.m. ET on Tuesday, April 27, 2004. The call can be accessed by dialing the following: US 888-740-1975, International 303-957-1275. A replay of the call will be available through 7:00 p.m. ET on May 4, 2004 by dialing the following: US 800-633-8284, International 402-977-9140. The reservation number for the replay is 21192303.


Talk America Highest in J.D. Power and Associates' Customer Satisfaction Study for Local Residential Telephone Service
RESTON, Va.--(BUSINESS WIRE)--July 15, 2003--

Talk America Achieves Highest Score in the Study and Ranks Highest in the North Central Region

Talk America (NASDAQ:TALK), a provider of bundled local and long distance phone service, announced that it achieved the highest overall customer satisfaction score of any provider in the J.D. Power and Associates Local Residential Telephone Study. Talk America was evaluated in the North Central regional study, where it ranked highest in its first year in the study. The North Central region includes Illinois, Michigan, Ohio, Indiana and Wisconsin.

Within the study, Talk America ranked highest in both Customer Service and Cost of Service by a wide margin. Talk America customers typically pay up to 30% less than the Regional Bell Operating Companies. According to the study, its customers are also the least likely to experience a problem or question and require the fewest number of customer service contacts to resolve problems.

J.D. Power and Associates indicated that Talk America performed strongly in its first year in the study. And, Talk America's success is part of a changing tide in the industry, where customers are now demanding and expecting more value and better service from their providers.

Given these survey results, it is not surprising that Talk America is one of the fastest growing bundled local and long distance companies in the country. Over the past 18 months, Talk America has grown from 194,000 bundled customers to 443,000 by offering local and long distance phone service that is tailored to its customers' need for better service, simplicity and savings.

"The most important gauge of our success is the satisfaction of our customers," said Gabe Battista, Chairman and Chief Executive Officer of Talk America. "We have built our service to better meet their needs. Our customers use the same phone, the same phone lines, and even keep the same phone number. The difference is that they pay significantly less, receive bills that are clear and accurate, and don't get the runaround usually associated with customer service departments."

The majority of Talk America's bundled growth has come from the North Central region; however, the company is expanding its marketing efforts to several other states. "As we extend our marketing efforts out of our core North Central states," Mr. Battista continued, "our operations are designed to ensure that these customers receive the same level of quality as those customers in states for which we received this award."

The J.D. Power and Associates Local Residential Telephone Study is an annual survey of telephone customers nationwide. It ranks telephone providers by the following criteria: Billing, Cost of Service, Customer Service, Image, Offers/Promotions, and Performance/Reliability. The study was conducted in six regions across the country: North Central, North East, Mid-Atlantic, South East, South West, and West. More than 8,560 customers across the country participated in the study.

To learn more about Talk America's products and services call (888) 468-2551

About Talk America's Services

Talk America currently offers four simple residential calling plans: United 1000, United Unlimited, United Unlimited Plus and Talk Unlimited Nationwide. Talk America will review its customer's past usage and recommend the plan that can save them the most on their monthly phone bill. In a direct comparison, Talk America can save customers up to 30% off of a customer's phone service. With simplified service plans, one integrated and easy-to-read phone bill, and a single customer service line, Talk America offers more value at a lower price than its competitors.

About Talk America

Talk America offers a bundle of local and long distance phone services to residential and small business customers. The Company delivers value in the form of savings, simplicity and quality service to its customers. The Company operates its own nationwide long distance network and delivers local services through wholesale operating agreements with the Bell Operating Companies.