MONROE, La.--(BUSINESS WIRE)--
CenturyTel, Inc. (NYSE: CTL) announces operating results for third
quarter 2006.
-- Operating revenues, excluding nonrecurring items, were $619.4
million compared to $657.1 million for third quarter 2005.
(Third quarter 2005 revenues included the recognition of $35.9
million of prior period revenue settlements.) Reported under
GAAP, third quarter 2006 operating revenues were $620.1
million.
-- Net income, excluding nonrecurring items, was $78.1 million
compared to $99.0 million in third quarter 2005. Reported
under GAAP, third quarter 2006 net income was $76.5 million.
-- Diluted earnings per share, excluding nonrecurring items, was
$.66 compared to $.74 in third quarter 2005. Reported under
GAAP, third quarter 2006 diluted earnings per share was $.65.
-- Free cash flow (as defined in the attached financial
schedules), excluding nonrecurring items, was $125.3 million
in third quarter 2006 compared to $127.5 million in third
quarter 2005.
-- Over 1.7 million shares were repurchased and retired for $67.6
million during the quarter.
Third Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per
share amounts and customer Quarter Ended Quarter Ended
units) 9/30/06 9/30/05 % Change
------------------------------ ------------- ------------- ----------
Operating Revenues $619,432 $657,085 (5.7)%
Operating Cash Flow (1) $301,644 $340,621 (11.4)%
Net Income $78,087 $98,977 (21.1)%
Diluted Earnings Per Share $.66 $.74 (10.8)%
Average Diluted Shares
Outstanding 120,448 135,916 (11.4)%
Capital Expenditures $82,579 $105,044 (21.4)%
------------------------------ ------------- ------------- ----------
Telephone Access Lines 2,124,000 2,250,000 (5.6)%
High-speed Internet Customers 340,000 (2) 220,000 54.5%(2)
------------------------------ ------------- ------------- ----------
(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.
(2) Telephone Access Lines at 9/30/2006 reflect the removal of
approximately 24,000 test lines and a positive adjustment of
approximately 9,000 lines related to database conversion and
clean-up. Excluding the impact of these two one-time adjustments,
access line losses for third quarter 2006 were approximately
29,000 and year-over-year line loss was 5.0%.
"CenturyTel's revenue and diluted earnings per share during the
third quarter exceeded our expectations," Glen F. Post, III, chairman
and chief executive officer, said. "These solid results were driven by
continued growth in data revenues and bundled services along with
effective cost containment by our employees."
Operating revenues, excluding nonrecurring items, for third
quarter 2006 were $619.4 million compared to $657.1 million in third
quarter 2005. This $37.7 million decrease was primarily due to $32.2
million lower prior period revenue settlements in third quarter 2006
than in third quarter 2005. The remaining $5.5 million decline
primarily reflects the revenue impact of access line losses and lower
access revenues which more than offset revenue growth related to an
increase in the number of high-speed Internet subscribers and growth
in data revenues.
Operating cash flow, excluding nonrecurring items, decreased to
$301.6 million from $340.6 million primarily due to the lower prior
period revenue settlements and other revenue impacts discussed above.
For third quarter 2006, CenturyTel achieved an operating cash flow
margin of 48.7% versus 51.8% in third quarter 2005.
Net income, excluding nonrecurring items, was $78.1 million in
third quarter 2006 compared to $99.0 million in third quarter 2005.
The decrease was primarily driven by the after-tax impact of the
decline in prior period revenue settlements discussed above. Diluted
earnings per share, excluding nonrecurring items, was $.66 for third
quarter 2006, a 10.8% decrease from the $.74 reported in third quarter
2005. This decrease was driven by lower net income, which was
partially offset by the 11.4% decline in average diluted shares
outstanding that was a result of share repurchases since third quarter
2005.
"We generated more than $125 million of free cash flow during the
quarter and returned more than $100 million of cash to shareholders
through the settlement of accelerated share repurchase agreements,
cash dividends and the repurchase and retirement of more than 1.7
million shares of common stock," Post said.
For the first nine months of 2006, operating revenues, excluding
nonrecurring items, decreased to $1.839 billion from $1.859 billion
for the same period in 2005. Operating cash flow, excluding
nonrecurring items, was $896.3 million for the first nine months of
2006 compared to $966.0 million a year ago. Net income, excluding
nonrecurring items, was $224.1 million in the first nine months of
2006 compared to $264.1 million during the same period in 2005.
Diluted earnings per share, excluding nonrecurring items, was $1.85
during the first nine months of 2006 compared to $1.97 in the first
nine months of 2005.
Under generally accepted accounting principles (GAAP), net income
for third quarter 2006 was $76.5 million compared to $91.4 million for
third quarter 2005 and diluted earnings per share for third quarter
2006 was $.65 compared to $.68 for third quarter 2005. Third quarter
2006 net income and diluted earnings per share reflect a net after-tax
charge of $1.6 million ($.01 per share) related to a reduction in
workforce during the quarter. Third quarter 2005 net income and
diluted earnings per share reflect a net after-tax charge of $7.6
million ($.06 per share) from expenses associated with Hurricanes
Katrina and Rita and transactions related to certain non-operating
investments.
Net income under GAAP for the first nine months of 2006 was $298.3
million compared to $256.1 million for the first nine months of 2005
and diluted earnings per share for the first nine months of 2006 was
$2.45 compared to $1.91 for the first nine months of 2005. See the
accompanying financial schedules for detail of the Company's
nonrecurring items for the nine months ended September 30, 2006 and
2005.
Outlook. For fourth quarter 2006, CenturyTel expects total
revenues of $605 to $615 million and diluted earnings per share of
$.60 to $.65. As a result of better than anticipated third quarter
performance, the Company has increased and narrowed the range of
anticipated full year 2006 diluted earnings per share guidance from
$2.35 to $2.45 to $2.45 to $2.50.
CenturyTel expects to provide full year 2007 earnings per share
guidance in February 2007. The Company has, however, identified
several items that can be expected to affect 2007 results when
compared to 2006. First, revenue settlements related to prior periods
are anticipated to increase and positively impact 2007 diluted
earnings per share by $.17 to $.22. This increase will partially
offset the impact of anticipated access line losses and continued
pressures on access revenues. Additionally, depreciation expense is
expected to decline in 2007 due to certain telephone assets becoming
fully depreciated. These and other items that may affect 2007 results
will be discussed during the Company's fourth quarter 2006 earnings
call.
All outlook figures provided under this section are presented
excluding the potential impact of any future mergers, acquisitions or
divestitures, any share repurchases after October 31, 2006, or other
nonrecurring events.
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 investors 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 in the Investor Relations portion of 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 866.261.3330. The
call will be accessible for replay through November 8, 2006, by
calling 888.266.2081 and entering the access code: 978143. 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 prior to November 23, 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 expansion opportunities,
including retaining and hiring key personnel; 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 (the
"SEC"); 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, as updated
by the Company's subsequent SEC reports. 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 November 2, 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 communications,
high-speed Internet and entertainment services in small-to-mid-size
cities through our broadband and fiber transport networks. Included in
the S&P 500 Index, CenturyTel delivers advanced communications with a
personal touch to customers in 25 states. Visit us at
www.centurytel.com.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED)
Three months ended September 30, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
------------ ------------ -----------
OPERATING REVENUES
Voice (a) $216,180 216,180
Network access 219,820 560 (1) 219,260
Data 91,473 91 (1) 91,382
Fiber transport and CLEC 37,487 37,487
Other 55,123 55,123
------------ --------- -----------
620,083 651 619,432
------------ --------- -----------
OPERATING EXPENSES
Cost of services and products 226,831 3,092 (1) 223,739
Selling, general and
administrative 94,212 163 (1) 94,049
Depreciation and amortization 129,840 129,840
------------ --------- -----------
450,883 3,255 447,628
------------ --------- -----------
OPERATING INCOME 169,200 (2,604) 171,804
OTHER INCOME (EXPENSE)
Interest expense (47,857) (47,857)
Income from unconsolidated
cellular entity 891 891
Other income (expense) 1,927 1,927
Income tax expense (47,678) 1,000 (2) (48,678)
------------ --------- -----------
NET INCOME $76,483 (1,604) 78,087
============ ========= ===========
BASIC EARNINGS PER SHARE $0.66 (0.01) 0.68
DILUTED EARNINGS PER SHARE $0.65 (0.01) 0.66
AVERAGE SHARES OUTSTANDING
Basic 115,221 115,221
Diluted 120,448 120,448
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
Three months ended September 30, 2005
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
------------ ------------ -----------
OPERATING REVENUES
Voice (a) 225,857 225,857
Network access 257,586 257,586
Data 88,911 88,911
Fiber transport and CLEC 36,361 36,361
Other 48,370 48,370
------------ --------- -----------
657,085 - 657,085
------------ --------- -----------
OPERATING EXPENSES
Cost of services and products 222,724 5,853 (3) 216,871
Selling, general and
administrative 99,593 99,593
Depreciation and amortization 133,526 133,526
------------ --------- -----------
455,843 5,853 449,990
------------ --------- -----------
OPERATING INCOME 201,242 (5,853) 207,095
OTHER INCOME (EXPENSE)
Interest expense (49,904) (49,904)
Income from unconsolidated
cellular entity 1,270 1,270
Other income (expense) (4,214) (6,429)(4) 2,215
Income tax expense (56,983) 4,716 (5) (61,699)
------------ --------- -----------
NET INCOME 91,411 (7,566) 98,977
============ ========= ===========
BASIC EARNINGS PER SHARE 0.70 (0.06) 0.76
DILUTED EARNINGS PER SHARE 0.68 (0.06) 0.74
AVERAGE SHARES OUTSTANDING
Basic 130,150 130,150
Diluted 135,916 135,916
DIVIDENDS PER COMMON SHARE 0.0600 0.0600
Increase
(decrease)
Increase excluding
(decrease) nonrecurring
In thousands, except per share amounts as reported items
------------ ------------
OPERATING REVENUES
Voice (a) (4.3%) (4.3%)
Network access (14.7%) (14.9%)
Data 2.9% 2.8%
Fiber transport and CLEC 3.1% 3.1%
Other 14.0% 14.0%
(5.6%) (5.7%)
OPERATING EXPENSES
Cost of services and products 1.8% 3.2%
Selling, general and administrative (5.4%) (5.6%)
Depreciation and amortization (2.8%) (2.8%)
(1.1%) (0.5%)
OPERATING INCOME (15.9%) (17.0%)
OTHER INCOME (EXPENSE)
Interest expense (4.1%) (4.1%)
Income from unconsolidated cellular entity (29.8%) (29.8%)
Other income (expense) (145.7%) (13.0%)
Income tax expense (16.3%) (21.1%)
NET INCOME (16.3%) (21.1%)
BASIC EARNINGS PER SHARE (5.7%) (10.5%)
DILUTED EARNINGS PER SHARE (4.4%) (10.8%)
AVERAGE SHARES OUTSTANDING
Basic (11.5%) (11.5%)
Diluted (11.4%) (11.4%)
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) - Expenses associated with Hurricanes Katrina and Rita.
(4) - Includes (i) $9.9 million impairment of nonoperating investment,
net of (ii) $3.5 million gain on sale of a separate nonoperating
investment.
(5) - Tax effect of Items (3) and (4).
(a) Revenues previously reported as "Local service" and "Long
distance" have been combined into this "Voice" category for all
periods presented.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED)
Nine months ended September 30, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
------------ ------------ -----------
OPERATING REVENUES
Voice (a) $650,415 650,415
Network access 666,652 1,688 (1) 664,964
Data 259,158 275 (1) 258,883
Fiber transport and CLEC 109,318 109,318
Other 155,320 155,320
------------ --------- -----------
1,840,863 1,963 1,838,900
------------ --------- -----------
OPERATING EXPENSES
Cost of services and products 666,249 8,585 (1) 657,664
Selling, general and
administrative 285,748 845 (1) 284,903
Depreciation and amortization 396,225 396,225
------------ --------- -----------
1,348,222 9,430 1,338,792
------------ --------- -----------
OPERATING INCOME 492,641 (7,467) 500,108
OTHER INCOME (EXPENSE)
Interest expense (148,582) (148,582)
Income from unconsolidated
cellular entity 5,040 5,040
Other income (expense) 125,834 118,649 (2) 7,185
Income tax expense (176,657) (36,976)(3) (139,681)
------------ --------- -----------
NET INCOME $298,276 74,206 224,070
============ ========= ===========
BASIC EARNINGS PER SHARE $2.53 0.63 1.90
DILUTED EARNINGS PER SHARE $2.45 0.60 1.85
AVERAGE SHARES OUTSTANDING
Basic 117,685 117,685
Diluted 123,348 123,348
DIVIDENDS PER COMMON SHARE $0.1875 0.1875
Nine months ended September 30, 2005
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
------------ ------------ -----------
OPERATING REVENUES
Voice (a) 672,065 672,065
Network access 727,268 727,268
Data 237,866 237,866
Fiber transport and CLEC 78,240 78,240
Other 143,341 143,341
------------ --------- -----------
1,858,780 - 1,858,780
------------ --------- -----------
OPERATING EXPENSES
Cost of services and products 609,590 5,853 (4) 603,737
Selling, general and
administrative 289,053 289,053
Depreciation and amortization 396,153 396,153
------------ --------- -----------
1,294,796 5,853 1,288,943
------------ --------- -----------
OPERATING INCOME 563,984 (5,853) 569,837
OTHER INCOME (EXPENSE)
Interest expense (152,176) (1,196)(5) (150,980)
Income from unconsolidated
cellular entity 3,307 3,307
Other income (expense) (1,459) (8,003)(6) 6,544
Income tax expense (157,511) 7,111 (7) (164,622)
------------ --------- -----------
NET INCOME 256,145 (7,941) 264,086
============ ========= ===========
BASIC EARNINGS PER SHARE 1.95 (0.06) 2.02
DILUTED EARNINGS PER SHARE 1.91 (0.06) 1.97
AVERAGE SHARES OUTSTANDING
Basic 130,877 130,877
Diluted 136,143 136,143
DIVIDENDS PER COMMON SHARE 0.1800 0.1800
Increase
(decrease)
Increase excluding
(decrease) nonrecurring
In thousands, except per share amounts as reported items
------------ ------------
OPERATING REVENUES
Voice (a) (3.2%) (3.2%)
Network access (8.3%) (8.6%)
Data 9.0% 8.8%
Fiber transport and CLEC 39.7% 39.7%
Other 8.4% 8.4%
(1.0%) (1.1%)
OPERATING EXPENSES
Cost of services and products 9.3% 8.9%
Selling, general and administrative (1.1%) (1.4%)
Depreciation and amortization 0.0% 0.0%
4.1% 3.9%
OPERATING INCOME (12.6%) (12.2%)
OTHER INCOME (EXPENSE)
Interest expense (2.4%) (1.6%)
Income from unconsolidated cellular entity 52.4% 52.4%
Other income (expense) (8724.7%) 9.8%
Income tax expense 12.2% (15.2%)
NET INCOME 16.4% (15.2%)
BASIC EARNINGS PER SHARE 29.7% (5.9%)
DILUTED EARNINGS PER SHARE 28.3% (6.1%)
AVERAGE SHARES OUTSTANDING
Basic (10.1%) (10.1%)
Diluted (9.4%) (9.4%)
DIVIDENDS PER COMMON SHARE 4.2% 4.2%
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact.
(2) - Includes gain recorded upon redemption of Rural Telephone Bank
stock ($117.8 million) and gain recorded upon sale of Arizona
properties ($.9 million).
(3) - Includes $43.4 million net tax expense related to Items (1) and
(2), net of $6.4 million net tax benefit due to the resolution of
various income tax audit issues.
(4) - Expenses associated with Hurricanes Katrina and Rita.
(5) - Write-off of unamortized deferred debt costs associated with
purchasing and retiring approximately $400 million of Series J notes.
(6) - Includes (i) a $9.9 million impairment of nonoperating
investment and a $4.8 million debt extinguishment charge related to
purchasing and retiring approximately $400 million of Series J notes,
net of (ii) a $3.5 million gain on sale of a separate nonoperating
investment and $3.2 million of interest income related to the
settlement of various income tax audits.
(7) - Includes (i) $5.8 million net tax benefit of Items (4), (5) and
(6) 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
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
(UNAUDITED)
September 30, December 31,
2006 2005
------------- -------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $32,694 158,846
Other current assets 235,852 264,170
------------- -------------
Total current assets 268,546 423,016
------------- -------------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,866,852 7,801,377
Accumulated depreciation (4,736,812) (4,496,891)
------------- -------------
Net property, plant and equipment 3,130,040 3,304,486
------------- -------------
GOODWILL AND OTHER ASSETS
Goodwill 3,431,136 3,432,649
Other 575,904 602,556
------------- -------------
Total goodwill and other assets 4,007,040 4,035,205
------------- -------------
TOTAL ASSETS $7,405,626 7,762,707
============= =============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $194,117 276,736
Other current liabilities 420,093 469,494
------------- -------------
Total current liabilities 614,210 746,230
LONG-TERM DEBT 2,417,807 2,376,070
DEFERRED CREDITS AND OTHER LIABILITIES 1,068,570 1,023,134
STOCKHOLDERS' EQUITY 3,305,039 3,617,273
------------- -------------
TOTAL LIABILITIES AND EQUITY $7,405,626 7,762,707
============= =============
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended September 30, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
------------ ------------ -----------
Operating cash flow and cash
flow margin
Operating income $169,200 (2,604)(1) 171,804
Add: Depreciation and
amortization 129,840 - 129,840
------------ --------- -----------
Operating cash flow $299,040 (2,604) 301,644
============ ========= ===========
Revenues $620,083 651 (1) 619,432
============ ========= ===========
Operating income margin
(operating income divided by
revenues) 27.3% 27.7%
============ ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 48.2% 48.7%
============ ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income $76,483 (1,604)(1) 78,087
Add: Depreciation and
amortization 129,840 - 129,840
Less: Capital expenditures (82,579) - (82,579)
------------ --------- -----------
Free cash flow $123,744 (1,604) 125,348
============ ========= ===========
Free cash flow $123,744
Gain on asset dispositions -
Income from unconsolidated
cellular entity (891)
Deferred income taxes 11,361
Changes in current assets and
current liabilities (13,935)
(Increase) decrease in other
noncurrent assets 4,427
Increase (decrease) in other
noncurrent liabilities (2,052)
Retirement benefits 10,406
Excess tax benefits from
share-based compensation (2,913)
Other, net 3,465
Add: Capital expenditures 82,579
------------
Net cash provided by
operating activities $216,191
============
Three months ended September 30, 2005
--------------------------------------
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
------------ ------------ ------------
Operating cash flow and cash
flow margin
Operating income 201,242 (5,853)(2) 207,095
Add: Depreciation and
amortization 133,526 133,526
------------ --------- ------------
Operating cash flow 334,768 (5,853) 340,621
============ ========= ============
Revenues 657,085 - 657,085
============ ========= ============
Operating income margin
(operating income divided by
revenues) 30.6% 31.5%
============ ============
Operating cash flow margin
(operating cash flow divided
by revenues) 50.9% 51.8%
============ ============
Free cash flow (prior to debt
service requirements and
dividends)
Net income 91,411 (7,566)(3) 98,977
Add: Depreciation and
amortization 133,526 - 133,526
Less: Capital expenditures (105,044) - (105,044)
------------ --------- ------------
Free cash flow 119,893 (7,566) 127,459
============ ========= ============
Free cash flow 119,893
Gain on asset dispositions (3,500)
Income from unconsolidated
cellular entity (1,270)
Deferred income taxes 7,471
Changes in current assets and
current liabilities 10,413
(Increase) decrease in other
noncurrent assets (2,730)
Increase (decrease) in other
noncurrent liabilities 3,080
Retirement benefits 1,472
Excess tax benefits from
share-based compensation -
Other, net 14,583
Add: Capital expenditures 105,044
------------
Net cash provided by
operating activities 254,456
============
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) - Expenses associated with Hurricanes Katrina and Rita (presented
on a pre-tax basis).
(3) - Includes (i) a $6.1 million after-tax expense from impairment of
non-operating investment and a $3.6 million after-tax expense
associated with Hurricanes Katrina and Rita, net of (ii) a $2.2
million after-tax gain on sale of a separate non-operating
investment.
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Nine months ended September 30, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
------------ ------------ -----------
Operating cash flow and cash
flow margin
Operating income $492,641 (7,467)(1) 500,108
Add: Depreciation and
amortization 396,225 - 396,225
------------ --------- -----------
Operating cash flow $888,866 (7,467) 896,333
============ ========= ===========
Revenues $1,840,863 1,963 (1) 1,838,900
============ ========= ===========
Operating income margin
(operating income divided by
revenues) 26.8% 27.2%
============ ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 48.3% 48.7%
============ ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income $298,276 74,206 (2) 224,070
Add: Depreciation and
amortization 396,225 - 396,225
Less: Capital expenditures (213,034) - (213,034)
------------ --------- -----------
Free cash flow $481,467 74,206 407,261
============ ========= ===========
Free cash flow $481,467
Gain on asset dispositions (118,649)
Income from unconsolidated
cellular entity (5,040)
Deferred income taxes 33,713
Changes in current assets and
current liabilities (14,241)
(Increase) decrease in other
noncurrent assets 5,396
Increase (decrease) in other
noncurrent liabilities (502)
Retirement benefits 25,332
Excess tax benefits from
share-based compensation (7,860)
Other, net 9,858
Add: Capital expenditures 213,034
------------
Net cash provided by
operating activities $622,508
============
Nine months ended September 30, 2005
--------------------------------------
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
------------ ------------ ------------
Operating cash flow and cash
flow margin
Operating income 563,984 (5,853)(3) 569,837
Add: Depreciation and
amortization 396,153 396,153
------------ --------- ------------
Operating cash flow 960,137 (5,853) 965,990
============ ========= ============
Revenues 1,858,780 1,858,780
============ ========= ============
Operating income margin
(operating income divided by
revenues) 30.3% 30.7%
============ ============
Operating cash flow margin
(operating cash flow divided
by revenues) 51.7% 52.0%
============ ============
Free cash flow (prior to debt
service requirements and
dividends)
Net income 256,145 (7,941)(4) 264,086
Add: Depreciation and
amortization 396,153 396,153
Less: Capital expenditures (281,958) (281,958)
------------ --------- ------------
Free cash flow 370,340 (7,941) 378,281
============ ========= ============
Free cash flow 370,340
Gain on asset dispositions (3,500)
Income from unconsolidated
cellular entity (3,307)
Deferred income taxes 33,418
Changes in current assets and
current liabilities 29,367
(Increase) decrease in other
noncurrent assets (4,207)
Increase (decrease) in other
noncurrent liabilities 2,496
Retirement benefits 13,989
Excess tax benefits from
share-based compensation -
Other, net 12,815
Add: Capital expenditures 281,958
------------
Net cash provided by
operating activities 733,369
============
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact.
(2) - Includes (i) $72.4 million after-tax gains recorded upon
redemption of Rural Telephone Bank stock and sale of Arizona
properties, (ii) $4.6 million severance and related costs due to
workforce reduction, including revenue impact, net of tax, and (iii)
$6.4 million net tax benefit due to the resolution of various income
tax audit issues.
(3) - Expenses associated with Hurricanes Katrina and Rita (presented
on a pre-tax basis).
(4) - Includes (i) a $6.1 million after-tax expense from impairment of
non-operating investment, a $3.7 million after-tax expense related to
purchasing and retiring approximately $400 million of Series J notes
and a $3.6 million after-tax expense associated with Hurricanes
Katrina and Rita, net of (ii) a $3.3 million net benefit related to
the settlement of various income tax audits and a $2.2 million after-
tax gain on sale of non-operating investment.
Source: CenturyTel, Inc.
Contact: CenturyTel, Inc.
Media:
Patricia Cameron, 318-388-9674
patricia.cameron@centurytel.com
or
Investors:
Tony Davis, 318-388-9525
tony.davis@centurytel.com