MONROE, La., May 3 /PRNewswire-FirstCall/ -- CenturyTel, Inc. (NYSE: CTL)
announces operating results for first quarter 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060628/DAW039LOGO)
-- Operating revenues, excluding nonrecurring items, were $600.9 million
compared to $610.0 million in first quarter 2006. Reported under GAAP,
first quarter 2006 operating revenues were $611.3 million.
-- Net income, excluding nonrecurring items, rose 7.8% to $77.9 million
from $72.3 million in first quarter 2006. Reported under GAAP, first
quarter 2006 net income was $69.3 million.
-- Diluted earnings per share, excluding nonrecurring items, was $.68 in
first quarter 2007 compared to $.57 in first quarter 2006. 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 $156.8 million in first quarter 2007
compared to $147.0 million in first quarter 2006.
-- High-speed Internet customers increased by more than 43,900 in first
quarter 2007, ending the quarter with nearly 413,000 high-speed
Internet customers in service.
First Quarter Highlights
(Excluding nonrecurring Quarter Ended Quarter Ended
items) 3/31/07 3/31/06 % Change
(In thousands, except per
share amounts and customer
data)
Operating Revenues $ 600,855 $ 609,979 (1.5)%
Operating Cash Flow(1) $ 295,867 $ 297,659 (0.6)%
Net Income $ 77,870 $ 72,256 7.8 %
Diluted Earnings Per Share $ .68 $ .57 19.3 %
Average Diluted Shares 116,308 127,959 (9.1)%
Outstanding $ 48,880 $ 60,088 (18.7)%
Capital Expenditures
Access Lines(2) 2,070,000 2,177,000 (4.9)%
High-speed Internet
Customers 413,000 286,000 44.4 %
(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) Quarter ended 3/31/2006 access lines include adjustments made during
2006 to reflect the removal of test lines, database conversion and
clean-up, and the sale of our Arizona properties.
"CenturyTel achieved a record 43,900 high-speed Internet customer
additions during the quarter, reflecting strong demand for our broadband
services," Glen F. Post, III, chairman and chief executive officer, said. "We
continue to focus on bringing a full array of high-quality, reliable
communications services and enhanced broadband content to our markets."
Operating revenues, excluding nonrecurring items, were $600.9 million in
first quarter 2007 compared to $610.0 million in first quarter 2006. Revenue
increases, driven primarily by growth in high-speed Internet customers and
demand for fiber transport services, were more than offset by anticipated
revenue declines primarily attributable to access line declines and lower
access revenues along with lower revenues due to changes in the terms of the
Company's DBS agreement effective January 1, 2007.
Operating expenses, excluding nonrecurring items, for first quarter 2007
were $432.8 million compared to $447.2 million in first quarter 2006. This
decrease primarily resulted from lower personnel related costs due to
workforce reductions in 2006, lower marketing, information technology and bad
debt expenses, lower depreciation and amortization primarily due to fully
depreciated assets and lower expenses under the amended DBS agreement. Such
decreases more than offset increased expenses driven by growth in high-speed
Internet customers and fiber transport services.
Operating cash flow, excluding nonrecurring items, was $295.9 million in
first quarter 2007 compared to $297.7 million in first quarter 2006.
CenturyTel achieved an operating cash flow margin of 49.2% during the quarter
versus 48.8% in first quarter 2006.
"CenturyTel generated quarterly free cash flow of nearly $157 million
during the first quarter, reflecting our continued success in aligning our
operating costs with revenues and our disciplined approach to making capital
investments in our networks," Post said. "We also returned $171 million to
shareholders through dividends and the repurchase of 3.7 million shares of
common stock during the quarter."
Net income, excluding nonrecurring items, grew 7.8% to $77.9 million in
first quarter 2007 from $72.3 million in first quarter 2006. Diluted earnings
per share, excluding nonrecurring items, increased 19.3% to $.68 in first
quarter 2007 from $.57 in first quarter 2006. First quarter 2007 diluted
earnings per share was favorably impacted by the increase in net income and
9.1% fewer average diluted shares outstanding due to share repurchases.
Under generally accepted accounting principles (GAAP), CenturyTel reported
operating revenues of $600.9 million in first quarter 2007 compared to $611.3
million in first quarter 2006. In first quarter 2007, the Company reported net
income of $77.9 million and diluted earnings per share of $.68, compared to
$69.3 million and $.55, respectively, in first quarter 2006. Net income and
diluted earnings per share in first quarter 2006 include a $3.0 million net
after-tax expense related to a reduction in workforce.
For second quarter 2007, CenturyTel expects total revenues of $600 to $610
million and diluted earnings per share of $.62 to $.67. The anticipated
decline in diluted earnings per share from first quarter to second quarter
2007 is primarily due to annual wage adjustments effective in the second
quarter, anticipated higher marketing expenses and the seasonal impact of
outside plant maintenance activities.
For the full year 2007, diluted earnings per share is expected to be in
the range of $2.75 to $2.85 versus the previous guidance of $2.60 to $2.70,
primarily due to first quarter results exceeding expectations, share
repurchases completed through April 30, and the expectation that expenses for
the remainder of 2007 will be lower than originally anticipated when 2007
guidance was provided earlier this year.
These outlook figures for the second quarter and full year 2007 exclude
nonrecurring items, any share repurchases made after April 30, 2007, and any
future mergers, acquisitions, divestitures or other similar business
transactions. These outlook figures also exclude any impact of our April 30,
2007 acquisition of Madison River Communications Corp. and a one-time $49
million positive pre-tax settlement related to network access disputes which
were finalized during the second quarter.
Other. As previously reported, CenturyTel adopted the requirements of
Staff Accounting Bulletin No. 108 (SAB 108) in fourth quarter 2006, which
required the results of operations previously reported in the first, second
and third quarters of 2006 to be adjusted. First quarter 2006 amounts
included in this press release reflect amounts adjusted for the application of
SAB 108.
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 http://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 866.259.7123. The call will be accessible for
replay through May 9, 2007, by calling 888.266.2081 and entering the
conference ID number 1067862. 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 http://www.centurytel.com prior to
May 24, 2007.
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 continued access to
capital markets on favorable terms, successfully integrating newly-acquired
properties into the Company's operations, and 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, 2006, 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 May 3, 2007. 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 http://www.centurytel.com.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(UNAUDITED)
Three months ended March 31, 2007
As
adjusted
Less excluding
non- non-
As recurring recurring
In thousands, except per share reported items items
amounts
OPERATING REVENUES
Voice $209,075 209,075
Network access 211,399 211,399
Data 95,864 95,864
Fiber transport and CLEC 38,326 38,326
Other 46,191 46,191
600,855 - 600,855
OPERATING EXPENSES
Cost of services and products 213,531 213,531
Selling, general and
administrative 91,457 91,457
Depreciation and amortization 127,784 127,784
432,772 - 432,772
OPERATING INCOME 168,083 - 168,083
OTHER INCOME (EXPENSE)
Interest expense (46,961) (46,961)
Other income (expense) 5,290 5,290
Income tax expense (48,542) (48,542)
NET INCOME $77,870 - 77,870
BASIC EARNINGS PER SHARE $0.70 0.00 0.70
DILUTED EARNINGS PER SHARE $0.68 0.00 0.68
AVERAGE SHARES OUTSTANDING
Basic 111,031 111,031
Diluted 116,308 116,308
DIVIDENDS PER COMMON SHARE $0.065 0.065
Three months ended March 31, 2006
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands, except reported items items
per share amounts
OPERATING REVENUES
Voice 217,014 217,014
Network access 225,323 1,128(1) 224,195
Data 83,238 184(1) 83,054
Fiber transport
and CLEC 35,780 35,780
Other 49,936 49,936
611,291 1,312 609,979
OPERATING EXPENSES
Cost of services
and products 222,555 5,493(1) 217,062
Selling, general and
administrative 95,940 682(1) 95,258
Depreciation and
amortization 134,872 134,872
453,367 6,175 447,192
OPERATING INCOME 157,924 (4,863) 162,787
OTHER INCOME (EXPENSE)
Interest expense (50,086) (50,086)
Other income (expense) 4,597 4,597
Income tax expense (43,175) 1,867(2) (45,042)
NET INCOME 69,260 (2,996) 72,256
BASIC EARNINGS PER SHARE 0.57 (0.02) 0.59
DILUTED EARNINGS PER SHARE 0.55 (0.02) 0.57
AVERAGE SHARES OUTSTANDING
Basic 122,394 122,394
Diluted 127,959 127,959
DIVIDENDS PER COMMON SHARE 0.0625 0.0625
Increase
(decrease)
Increase excluding
(decrease) nonrecurring
In thousands, except per share as reported items
amounts
OPERATING REVENUES
Voice (3.7%) (3.7%)
Network access (6.2%) (5.7%)
Data 15.2% 15.4%
Fiber transport and CLEC 7.1% 7.1%
Other (7.5%) (7.5%)
(1.7%) (1.5%)
OPERATING EXPENSES
Cost of services and products (4.1%) (1.6%)
Selling, general and
administrative (4.7%) (4.0%)
Depreciation and amortization (5.3%) (5.3%)
(4.5%) (3.2%)
OPERATING INCOME 6.4% 3.3%
OTHER INCOME (EXPENSE)
Interest expense (6.2%) (6.2%)
Other income (expense) 15.1% 15.1%
Income tax expense 12.4% 7.8%
NET INCOME 12.4% 7.8%
BASIC EARNINGS PER SHARE 22.8% 18.6%
DILUTED EARNINGS PER SHARE 23.6% 19.3%
AVERAGE SHARES OUTSTANDING
Basic (9.3%) (9.3%)
Diluted (9.1%) (9.1%)
DIVIDENDS PER COMMON SHARE 4.0% 4.0%
NONRECURRING ITEMS
(1) -- Severance and related costs due to workforce reduction,
including revenue impact.
(2) -- Tax effect of item (1).
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2007 AND DECEMBER 31, 2006
(UNAUDITED)
March 31, December 31,
2007 2006
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $763,749 25,668
Other current assets 249,114 264,449
Total current assets 1,012,863 290,117
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,919,996 7,893,760
Accumulated depreciation (4,885,439) (4,784,483)
Net property, plant and
equipment 3,034,557 3,109,277
GOODWILL AND OTHER ASSETS
Goodwill 3,431,136 3,431,136
Other 611,555 610,477
Total goodwill and other
assets 4,042,691 4,041,613
TOTAL ASSETS $8,090,111 7,441,007
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current
maturities of long-term debt $360,749 178,012
Other current liabilities 409,347 439,553
Total current liabilities 770,096 617,565
LONG-TERM DEBT 2,916,511 2,412,852
DEFERRED CREDITS AND OTHER
LIABILITIES 1,276,274 1,219,639
STOCKHOLDERS' EQUITY 3,127,230 3,190,951
TOTAL LIABILITIES AND EQUITY $8,090,111 7,441,007
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2007
As adjusted
As Less excluding
reported non- non-
recurring recurring
In thousands items items
Operating cash flow
and cash flow margin
Operating income $168,083 - 168,083
Add: Depreciation and
amortization 127,784 127,784
Operating cash flow $295,867 - 295,867
Revenues $600,855 - 600,855
Operating income margin
(operating income
divided by revenues) 28.0% 28.0%
Operating cash flow margin
(operating cash flow
divided by revenues) 49.2% 49.2%
Free cash flow
(prior to debt service
requirements and dividends)
Net income $77,870 - 77,870
Add: Depreciation and
amortization 127,784 - 127,784
Less: Capital expenditures (48,880) - (48,880)
Free cash flow $156,774 - 156,774
Free cash flow $156,774
Deferred income taxes 13,371
Changes in current assets and
current liabilities 33,892
(Increase) decrease in other
noncurrent assets 1,032
Increase (decrease) in other
noncurrent liabilities (401)
Retirement benefits 5,636
Excess tax benefits from
share-based compensation (3,032)
Other, net 2,558
Add: Capital expenditures 48,880
Net cash provided by operating
activities $258,710
Three months ended March 31, 2006
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow
and cash flow margin
Operating income $157,924 (4,863)(1) 162,787
Add: Depreciation and
amortization 134,872 134,872
Operating cash flow $292,796 (4,863) 297,659
Revenues $611,291 1,312 (1) 609,979
Operating income margin
(operating income
divided by revenues) 25.8% 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 $69,260 (2,996)(1) 72,256
Add: Depreciation and
amortization 134,872 - 134,872
Less: Capital expenditures (60,088) - (60,088)
Free cash flow $144,044 (2,996) 147,040
Free cash flow $144,044
Deferred income taxes 9,419
Changes in current assets and
current liabilities (32,057)
(Increase) decrease in other
noncurrent assets (2,590)
Increase (decrease) in other
noncurrent liabilities 1,392
Retirement benefits 7,378
Excess tax benefits from
share-based compensation (4,186)
Other, net 542
Add: Capital expenditures 60,088
Net cash provided by operating
activities $184,030
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).
SOURCE CenturyTel, Inc.
Contact: Tony Davis of CenturyTel, Inc., +1-318-388-9525, tony.davis@centurytel.com