MONROE, La.--(BUSINESS WIRE)--April 27, 2006--CenturyTel, Inc.
(NYSE: CTL) announces operating results for first quarter 2006.
-- Operating revenues, excluding nonrecurring items, rose to
$610.3 million from $595.3 million in first quarter 2005.
Reported under GAAP, first quarter 2006 operating revenues
were $611.6 million.
-- Net income, excluding nonrecurring items, was $72.4 million
compared to $80.0 million in first quarter 2005. Reported
under GAAP, first quarter 2006 net income was $69.4 million
compared to $79.6 million in first quarter 2005.
-- Diluted earnings per share, excluding nonrecurring items, was
$.58 in first quarter 2006 and $.59 in first quarter 2005.
Reported under GAAP, diluted earnings per share was $.55 in
first quarter 2006.
-- Free cash flow (as defined in the attached financial
schedules), excluding nonrecurring items, was $146.9 million
in first quarter 2006 compared to $137.3 million in first
quarter 2005.
-- High-speed Internet customers increased by more than 37,000 in
the first quarter of 2006, with nearly 286,000 high-speed
Internet connections in service at the end of the quarter.
----------------------------------------------------------------------
First Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per share Quarter Ended Quarter Ended
amounts and customer data) 3/31/06 3/31/05 % Change
-------------------------------- ------------- ------------- --------
Operating Revenues $ 610,337 $ 595,282 2.5 %
Operating Cash Flow (1) $ 297,620 $ 309,035 (3.7)%
Net Income $ 72,421 $ 79,991 (9.5)%
Diluted Earnings Per Share $ .58 $ .59 (1.7)%
Average Diluted Shares
Outstanding 127,959 137,169 (6.7)%
Capital Expenditures $ 60,088 $ 74,903 (19.8)%
-------------------------------- ------------- ------------- --------
Telephone Access Lines 2,191,747 2,298,491 (4.6)%
High-speed Internet Customers 285,791 173,768 64.5%
----------------------------------------------------------------------
(1) Operating Cash Flow is a non-GAAP financial measure. A
reconciliation of this item to comparable GAAP measures is
included in the attached financial schedules.
"Penetration of broadband services into our customer base
continued to climb during the first quarter as we added more than
37,000 high-speed Internet subscribers, a new quarterly growth record
for CenturyTel," Glen F. Post, III, chairman and chief executive
officer, said. "Year-over-year high-speed Internet connections and
related revenues grew more than 64% and 53%, respectively, advancing
our objective of being the broadband provider of choice in our
markets."
Operating revenues, excluding nonrecurring items, rose to $610.3
million in first quarter 2006 from $595.3 million in first quarter
2005. Revenue growth, driven primarily by growth in high-speed
Internet connections and revenue from metro fiber assets acquired in
mid-2005, more than offset anticipated revenue declines primarily
attributable to lower access revenues and universal service funding,
and the decline in access lines.
Operating expenses, excluding nonrecurring items, for first
quarter 2006 were $447.3 million compared to $418.4 million in first
quarter 2005. This increase was primarily due to growth in high-speed
Internet connections and our video offerings, along with expenses
related to the metro fiber assets acquired in mid-2005.
Operating cash flow, excluding nonrecurring items, decreased to
$297.6 million from $309.0 million. CenturyTel achieved an operating
cash flow margin of 48.8% during the quarter versus 51.9% in first
quarter 2005. This margin decline was principally driven by the growth
in revenues with lower margins, such as high-speed Internet, fiber
transport and CLEC services, and the decline in higher margin revenues
associated with lower USF and access line losses.
Net income, excluding nonrecurring items, was $72.4 million
compared to $80.0 million in first quarter 2005. Diluted earnings per
share, excluding nonrecurring items, was $.58 compared to $.59 in
first quarter 2005. First quarter 2006 diluted earnings per share was
favorably impacted by repurchases under the Company's $200 million and
$1 billion share repurchase programs.
"Customer demand for bundled services was strong during the
quarter as we added more than 47,000 bundle customers. We also
continue to experience customer migration from our basic bundle to
enhanced bundles which include services such as long distance and
high-speed Internet, which we believe strengthens our customer
relationships," Post said.
Under generally accepted accounting principles (GAAP), CenturyTel
reported operating revenues of $611.6 million in first quarter 2006
compared to $595.3 million in first quarter 2005. In first quarter
2006, the Company reported net income of $69.4 million and diluted
earnings per share of $.55, compared to $79.6 million and $.59 per
diluted share, respectively, in first quarter 2005. Net income in
first quarter 2006 includes $3.0 million net after-tax expense related
to a reduction in workforce. Net income in first quarter 2005 includes
$3.7 million after-tax expense related to CenturyTel's purchase and
retirement of approximately $400 million of Series J Notes and $3.3
million net benefit related to the settlement of various income tax
audits.
For second quarter 2006, CenturyTel expects total revenues of $605
to $615 million and diluted earnings per share of $.54 to $.58. The
decline in diluted earnings per share from first quarter to second
quarter 2006 is primarily due to increased operating costs related to
high-speed Internet, long distance and video customer growth, annual
wage adjustments effective in the second quarter and the seasonal
impact of maintenance activities for our outside plant.
For the full year 2006, diluted earnings per share is expected to
be in the range of $2.30 to $2.40 versus the previous guidance of
$2.20 to $2.35, primarily due to fewer fully diluted shares
outstanding as a result of retiring approximately 14.4 million shares
in connection with the $500 million accelerated share repurchase
program announced in February, partially offset by lower than
anticipated USF receipts and costs associated with the continued
transition of the metro fiber assets acquired in mid-2005.
These outlook figures for the second quarter and full year 2006
exclude nonrecurring items, future share repurchases, mergers,
acquisitions, divestitures or other similar business transactions.
Reconciliation to GAAP. This release includes certain non-GAAP
financial measures, including but not limited to operating cash flow,
free cash flow and adjustments to GAAP measures to exclude the effect
of nonrecurring items. In addition to providing key metrics for
management to evaluate the Company's performance, we believe these
measurements assist readers in their understanding of period-to-period
operating performance and in identifying historical and prospective
trends. Reconciliations of non-GAAP financial measures to the most
comparable GAAP measures are included in the attached financial
statements. Reconciliation of additional non-GAAP financial measures
that may be discussed during the earnings call described below will be
available on the Company's Web site at www.centurytel.com. Investors
are urged to consider these non-GAAP measures in addition to, and not
in substitution for, measures prepared in accordance with GAAP.
Investor Call. As previously announced, CenturyTel's management
will host a conference call at 10:30 a.m. Central Time today.
Interested parties can access the call by dialing 866.206.6154. The
call will be accessible for replay through May 3, 2006, by calling
888.266.2081 and entering the conference ID number 886448. Investors
can also listen to CenturyTel's earnings conference call and replay by
accessing the Investor Relations portion of the Company's Web site at
www.centurytel.com through May 17, 2006.
In addition to historical information, this release includes
certain forward-looking statements, estimates and projections that are
based on current expectations only, and are subject to a number of
risks, uncertainties and assumptions, many of which are beyond the
control of the Company. Actual events and results may differ
materially from those anticipated, estimated or projected if one or
more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect. Factors that could affect actual results
include but are not limited to: the timing, success and overall
effects of competition from a wide variety of competitive providers;
the risks inherent in rapid technological change; the effects of
ongoing changes in the regulation of the communications industry; the
Company's ability to effectively manage its growth, including
integrating newly-acquired businesses into the Company's operations
and hiring adequate numbers of qualified staff; possible changes in
the demand for, or pricing of, the Company's products and services;
the Company's ability to successfully introduce new product or service
offerings on a timely and cost-effective basis; the Company's ability
to collect its receivables from financially troubled communications
companies; the Company's ability to successfully negotiate collective
bargaining agreements on reasonable terms without work stoppages; the
effect of adverse weather; other risks referenced from time to time in
the Company's filings with the Securities and Exchange Commission; and
the effects of more general factors such as changes in interest rates,
in tax rates, in accounting policies or practices, in operating,
medical or administrative costs, in general market, labor or economic
conditions, or in legislation, regulation or public policy. These and
other uncertainties related to the Company's business are described in
greater detail in the Company's Annual Report on Form 10-K for the
year ended December 31, 2005. You should be aware that new factors may
emerge from time to time and it is not possible for management to
identify all such factors, nor can it predict the impact of each such
factor on the business or the extent to which any one or more factors
may cause actual results to differ from those reflected in any
forward-looking statements. You are further cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date of this release. The information contained in this
release is as of April 27, 2006. The Company undertakes no obligation
to update any of its forward-looking statements for any reason.
CenturyTel (NYSE: CTL) is a leading provider of consumer and
business communications solutions in rural areas and small to mid-size
cities in 26 states and is included in the S&P 500 Index. The company
delivers advanced communications with a personal touch. Visit
CenturyTel at www.centurytel.com.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)
Three months ended March 31, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
----------- ----------- -----------
OPERATING REVENUES
Voice (a) $ 217,449 217,449
Network access 225,246 1,128 (1) 224,118
Data 83,238 184 (1) 83,054
Fiber transport and CLEC 35,780 35,780
Other 49,936 49,936
----------- ----------- -----------
611,649 1,312 610,337
----------- ----------- -----------
OPERATING EXPENSES
Cost of services and products 222,952 5,493 (1) 217,459
Selling, general and
administrative 95,940 682 (1) 95,258
Depreciation and amortization 134,565 134,565
----------- ----------- -----------
453,457 6,175 447,282
----------- ----------- -----------
OPERATING INCOME 158,192 (4,863) 163,055
OTHER INCOME (EXPENSE)
Interest expense (50,086) (50,086)
Income from unconsolidated
cellular entity 2,073 2,073
Other income (expense) 2,524 2,524
Income tax expense (43,278) 1,867 (2) (45,145)
----------- ----------- -----------
NET INCOME $ 69,425 (2,996) 72,421
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 0.57 (0.02) 0.59
DILUTED EARNINGS PER SHARE $ 0.55 (0.02) 0.58
AVERAGE SHARES OUTSTANDING
Basic 122,394 122,394
Diluted 127,959 127,959
DIVIDENDS PER COMMON SHARE $ 0.0625 0.0625
Three months ended March 31, 2005
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
----------- ----------- -----------
OPERATING REVENUES
Voice (a) $ 224,500 224,500
Network access 230,278 230,278
Data 72,906 72,906
Fiber transport and CLEC 20,243 20,243
Other 47,355 47,355
----------- ----------- -----------
595,282 - 595,282
----------- ----------- -----------
OPERATING EXPENSES
Cost of services and products 191,993 191,993
Selling, general and
administrative 94,254 94,254
Depreciation and amortization 132,175 132,175
----------- ----------- -----------
418,422 - 418,422
----------- ----------- -----------
OPERATING INCOME 176,860 - 176,860
OTHER INCOME (EXPENSE)
Interest expense (52,625) (1,196)(3) (51,429)
Income from unconsolidated
cellular entity 1,313 1,313
Other income (expense) 1,535 (1,574)(4) 3,109
Income tax expense (47,467) 2,395 (5) (49,862)
----------- ----------- -----------
NET INCOME $ 79,616 (375) 79,991
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 0.60 0.00 0.60
DILUTED EARNINGS PER SHARE $ 0.59 0.00 0.59
AVERAGE SHARES OUTSTANDING
Basic 132,183 132,183
Diluted 137,169 137,169
DIVIDENDS PER COMMON SHARE $ 0.06 0.06
Increase
(decrease)
excluding
Increase non-
(decrease) recurring
In thousands, except per share amounts as reported items
----------- -----------
OPERATING REVENUES
Voice (a) (3.1%) (3.1%)
Network access (2.2%) (2.7%)
Data 14.2% 13.9%
Fiber transport and CLEC 76.8% 76.8%
Other 5.5% 5.5%
2.7% 2.5%
OPERATING EXPENSES
Cost of services and products 16.1% 13.3%
Selling, general and administrative 1.8% 1.1%
Depreciation and amortization 1.8% 1.8%
8.4% 6.9%
OPERATING INCOME (10.6%) (7.8%)
OTHER INCOME (EXPENSE)
Interest expense (4.8%) (2.6%)
Income from unconsolidated cellular entity 57.9% 57.9%
Other income (expense) 64.4% (18.8%)
Income tax expense (8.8%) (9.5%)
NET INCOME (12.8%) (9.5%)
BASIC EARNINGS PER SHARE (5.0%) (1.7%)
DILUTED EARNINGS PER SHARE (6.8%) (1.7%)
AVERAGE SHARES OUTSTANDING
Basic (7.4%) (7.4%)
Diluted (6.7%) (6.7%)
DIVIDENDS PER COMMON SHARE 4.2% 4.2%
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact.
(2) - Tax effect of item (1).
(3) - Write-off of unamortized deferred debt costs associated with
purchasing and retiring approximately $400 million of Series
J notes.
(4) - Includes (i) $4.8 million debt extinguishment charge related to
purchasing and retiring approximately $400 million of Series J
notes, net of (ii) $3.2 million of interest income related to
the settlement of various income tax audits.
(5) - Includes (i) $1.1 million net tax benefit of Items (3) and (4)
and (ii) $1.3 million tax benefit related to the settlement of
various income tax audits.
(a) Revenues previously reported as "Local service" and "Long
distance" have been combined into this "Voice" category for all
periods presented.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2006 AND DECEMBER 31, 2005
(UNAUDITED)
March 31, December 31,
2006 2005
------------ ------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 15,320 158,846
Other current assets 237,763 264,170
------------ ------------
Total current assets 253,083 423,016
------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,837,651 7,801,377
Accumulated depreciation (4,603,609) (4,496,891)
------------ ------------
Net property, plant and equipment 3,234,042 3,304,486
------------ ------------
GOODWILL AND OTHER ASSETS
Goodwill 3,432,649 3,432,649
Other 604,367 602,556
------------ ------------
Total goodwill and other assets 4,037,016 4,035,205
------------ ------------
TOTAL ASSETS $ 7,524,141 7,762,707
============ ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities
of long-term debt $ 571,456 276,736
Other current liabilities 406,921 469,494
------------ ------------
Total current liabilities 978,377 746,230
LONG-TERM DEBT 2,353,859 2,376,070
DEFERRED CREDITS AND OTHER LIABILITIES 1,049,124 1,023,134
STOCKHOLDERS' EQUITY 3,142,781 3,617,273
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 7,524,141 7,762,707
============ ============
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2006
-------------------------------------
As
adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
----------- ----------- -----------
Operating cash flow and cash
flow margin
Operating income $ 158,192 (4,863)(1) 163,055
Add: Depreciation and
amortization 134,565 134,565
----------- ----------- -----------
Operating cash flow $ 292,757 (4,863) 297,620
=========== =========== ===========
Revenues $ 611,649 1,312 610,337
=========== =========== ===========
Operating income margin
(operating income divided
by revenues) 25.9% 26.7%
=========== ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 47.9% 48.8%
=========== ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income $ 69,425 (2,996)(1) 72,421
Add: Depreciation and
amortization 134,565 - 134,565
Less: Capital expenditures (60,088) - (60,088)
----------- ----------- -----------
Free cash flow $ 143,902 (2,996) 146,898
=========== =========== ===========
Free cash flow $ 143,902
Income from unconsolidated
cellular entity (2,073)
Deferred income taxes 9,522
Changes in current assets and
current liabilities (31,980)
Increase in other noncurrent
assets (2,193)
Increase (decrease) in other
noncurrent liabilities 957
Retirement benefits 7,378
Excess tax benefits from
share-based compensation (4,186)
Other, net 2,615
Add: Capital expenditures 60,088
-----------
Net cash provided by
operating activities $ 184,030
===========
Three months ended March 31, 2005
-------------------------------------
As
adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
----------- ----------- -----------
Operating cash flow and cash
flow margin
Operating income 176,860 - 176,860
Add: Depreciation and
amortization 132,175 132,175
----------- ----------- -----------
Operating cash flow 309,035 - 309,035
=========== =========== ===========
Revenues 595,282 - 595,282
=========== =========== ===========
Operating income margin
(operating income divided
by revenues) 29.7% 29.7%
=========== ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 51.9% 51.9%
=========== ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income 79,616 (375)(2) 79,991
Add: Depreciation and
amortization 132,175 - 132,175
Less: Capital expenditures (74,903) - (74,903)
----------- ----------- -----------
Free cash flow 136,888 (375) 137,263
=========== =========== ===========
Free cash flow 136,888
Income from unconsolidated
cellular entity (1,313)
Deferred income taxes 22,141
Changes in current assets and
current liabilities 27,623
Increase in other noncurrent
assets (1,358)
Increase (decrease) in other
noncurrent liabilities (729)
Retirement benefits 6,004
Excess tax benefits from
share-based compensation -
Other, net (7,340)
Add: Capital expenditures 74,903
-----------
Net cash provided by
operating activities 256,819
===========
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact (presented on both a pre-tax and an
after-tax basis).
(2) - Includes (i) $3.7 million after-tax expense related to
purchasing and retiring approximately $400 million of Series J
notes, net of (ii) $3.3 million net benefit related to the
settlement of various income tax audits.
CONTACT: CenturyTel, Inc.
Media:
Patricia Cameron, 318-388-9674
patricia.cameron@centurytel.com
or
Investors:
Tony Davis, 318-388-9525
tony.davis@centurytel.com
www.centurytel.com
SOURCE: CenturyTel, Inc.