MONROE, La., Feb. 15 /PRNewswire-FirstCall/ -- CenturyTel, Inc.
(NYSE: CTL) announces operating results for fourth quarter 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060628/DAW039LOGO )
* Operating revenues were $607.7 million compared to $620.5 million in
fourth quarter 2005.
* Operating cash flow (as defined in the attached financial schedules) was
$300.0 million.
* Net income, excluding nonrecurring items, was $79.4 million compared to
$82.2 million in fourth quarter 2005. Net income, reported under GAAP,
was $72.2 million compared to $78.3 million in fourth quarter 2005.
* Diluted earnings per share, excluding nonrecurring items, was $.68 in
fourth quarter 2006 compared to $.61 in fourth quarter 2005, while GAAP
diluted earnings per share was $.62 in fourth quarter 2006 and $.59 in
fourth quarter 2005.
* Free cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, was $104.8 million in fourth quarter 2006.
* Nearly 3.2 million shares were repurchased and retired for $132.3
million during the quarter.
Fourth Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per
share amounts and Quarter Ended Quarter Ended % Change
operating data) 12/31/06 12/31/05
Operating Revenues $ 607,695 $ 620,472 (2.1)%
Operating Cash Flow (1) $ 300,039 $ 308,197 (2.6)%
Net Income $ 79,449 $ 82,184 (3.3)%
Diluted Earnings Per Share $ .68 $ .61 11.5 %
Average Diluted Shares
Outstanding 118,874 135,917 (12.5)%
Capital Expenditures $ 101,037 $ 132,914 (24.0)%
Telephone Access Lines (2) 2,094,000 2,214,000 (5.4)%
High-speed Internet Customers 369,000 249,000 48.2 %
(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) Excluding adjustments during 2006 to reflect the removal of test
lines, database conversion and clean-up, and the sale of our
Arizona properties, access line losses for 2006 were
approximately 107,000, a year-over-year line loss of 4.8%.
"CenturyTel generated a record $512 million of free cash flow during 2006,
reflecting our continued success in aligning our costs and capital deployment
with the changing landscape of our industry," Glen F. Post, III, chairman and
chief executive officer, said. "At the same time, we invested more than $300
million in our business and returned more than $800 million to shareholders
through the repurchase of more than 21 million common shares."
Operating revenues were $607.7 million in fourth quarter 2006 compared to
$620.5 million in fourth quarter 2005. Revenue increases during the quarter of
approximately $17 million resulted primarily from an increase in high-speed
Internet customers and growth in fiber transport revenues, as well as new
initiatives. These increases were more than offset by revenue declines of
approximately $30 million primarily attributable to previously anticipated
lower access revenues, reduced universal service funding, and access line
losses.
Operating expenses decreased 3.1% to $434 million from $448 million in
fourth quarter 2005, principally due to a $9.4 million decline in depreciation
expense primarily associated with fully depreciated assets. Additionally, cash
expenses were $4.6 million lower than in fourth quarter 2005 driven primarily
by lower marketing, personnel and contract labor costs that more than offset
increased expenses associated with new initiatives, long distance usage and
growth in high-speed Internet customers.
"CenturyTel remains focused on being the broadband provider of choice in
our markets. Customer demand for high-quality broadband service drove more
than 29,000 high-speed Internet additions during the quarter resulting in over
120,000 net additions for the full year, a 48.2% annual increase," Post said.
"We also expanded our addressable market for broadband services during the
quarter with the launch of CenturyTel's first mesh-WiFi network in Vail,
Colorado."
Operating cash flow for fourth quarter 2006 was $300.0 million. CenturyTel
achieved an operating cash flow margin of 49.4% during the quarter versus
49.7% in fourth quarter 2005. This margin decline was expected due to the
growth in lower margin revenues versus the anticipated decline in higher
margin revenues discussed above.
Net income, excluding nonrecurring items, was $79.4 million compared to
$82.2 million in fourth quarter 2005. Diluted earnings per share, excluding
nonrecurring items, increased to $.68 in fourth quarter 2006 compared to $.61
in fourth quarter 2005, primarily due to the reduction in diluted shares
outstanding as a result of share repurchases during 2006.
For the year 2006, operating revenues, excluding nonrecurring items, were
$2.446 billion compared to $2.479 billion in 2005, a 1.4% decrease. Operating
cash flow, excluding nonrecurring items, was $1.197 billion for 2006 compared
to $1.274 billion a year ago. Net income, excluding nonrecurring items, was
$303.0 million compared to $346.3 million in 2005, while diluted earnings per
share was $2.52 compared to $2.58 in 2005.
Under generally accepted accounting principles (GAAP), net income for
fourth quarter 2006 was $72.2 million compared to $78.3 million for fourth
quarter 2005. Diluted earnings per share was $.62 in fourth quarter 2006
compared to $.59 in fourth quarter 2005. Fourth quarter 2006 and fourth
quarter 2005 results reflect after-tax charges of $7.2 million and $3.9
million, respectively, related to impairment charges associated with certain
non-operating investments.
For the year 2006, prepared in accordance with GAAP, the Company reported
net income of $370.0 million, or $3.07 per diluted share, compared to net
income of $334.5 million, or $2.49 per diluted share, for the year 2005. See
the accompanying financial schedules for detail of the Company's nonrecurring
items for the years 2006 and 2005.
Outlook for 2007. For full year 2007, CenturyTel expects 2007 diluted
earnings per share to be in the range of $2.60 to $2.70. As previously
communicated, the Company expects revenue settlements related to prior periods
to positively impact 2007 diluted earnings per share by $.17 to $.22.
CenturyTel also expects share repurchases made during 2006 and January 2007
along with modestly lower interest expense to positively impact 2007 diluted
earnings per share by $.10 to $.15. Additionally, CenturyTel believes it will
continue to drive growth from the further penetration of its broadband service
offerings and continued expansion in its fiber business that is anticipated to
positively impact 2007 diluted earnings per share by $.08 to $.12, excluding
depreciation expense. Also, lower depreciation expense, primarily due to
certain telephone assets becoming fully depreciated that more than offsets
higher depreciation related to broadband investments and new initiatives, is
anticipated to positively impact 2007 diluted earnings per share by $.03 to
$.05. These increases are expected to more than offset the negative impact on
2007 diluted earnings per share of $.30 to $.35 related to anticipated access
line losses of 4.5% to 6.0% and continued pressure on access revenues.
For first quarter 2007, CenturyTel expects total revenues of $600 to $610
million and diluted earnings per share of $.60 to $.65.
Finally, the Company expects its capital expenditures in 2007 to be
approximately $325 million, a slight increase over the $314 million expended
in 2006.
These 2007 outlook figures exclude nonrecurring items, any share
repurchases made after January 31, 2007, the pending acquisition of Madison
River Communications Corp. and any future mergers, acquisitions, divestitures
or other similar business transactions.
Other. During the fourth quarter of 2006, CenturyTel adopted the
requirements of Staff Accounting Bulletin No. 108 (SAB 108), which required
the results of operations previously reported in the first, second and third
quarters of 2006 to be adjusted. The attached schedules reflect the nature of
the adjustments and reconcile amounts previously reported to those amounts as
adjusted for the application of SAB 108, both on a GAAP and non-GAAP basis.
In addition, the Company's stockholders' equity was reduced approximately
$98 million during fourth quarter 2006 upon the adoption of SFAS 158, which
requires companies to reflect the unrecognized actuarial loss related to
pension and post-retirement plans as a reduction in stockholders' equity.
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 866.814.8448. The call will be accessible for
replay through February 21, 2007, by calling 888.266.2081 and entering the
conference ID number 1023612. 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 March 8,
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 successfully
financing and timely consummating pending acquisitions, 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, 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 February
15, 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 www.centurytel.com.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(UNAUDITED)
Three months ended December 31, 2006
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $211,385 211,385
Network access 211,819 211,819
Data 92,337 92,337
Fiber transport and CLEC 39,770 39,770
Other 52,384 52,384
607,695 - 607,695
OPERATING EXPENSES
Cost of services and products 223,132 223,132
Selling, general and
administrative 84,524 84,524
Depreciation and amortization 126,360 126,360
434,016 - 434,016
OPERATING INCOME 173,679 - 173,679
OTHER INCOME (EXPENSE)
Interest expense (47,375) (47,375)
Other income (expense) (9,306) (11,715)(1) 2,409
Income tax expense (44,765) 4,499 (2) (49,264)
NET INCOME $72,233 (7,216) 79,449
BASIC EARNINGS PER SHARE $0.63 (0.06) 0.70
DILUTED EARNINGS PER SHARE $0.62 (0.06) 0.68
AVERAGE SHARES OUTSTANDING
Basic 113,629 113,629
Diluted 118,874 118,874
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
NONRECURRING ITEMS
(1) - Impairment of nonoperating investments.
(2) - Tax effect of Item (1).
(3) - Impairment of nonoperating investment.
(4) - Tax effect of Item (3).
* Revenues previously reported as "Local service" and "Long distance"
have been combined into this "Voice" category for all periods
presented.
Three months ended December 31,
2005
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $220,207 220,207
Network access 232,570 232,570
Data 80,904 80,904
Fiber transport and CLEC 37,214 37,214
Other 49,577 49,577
620,472 - 620,472
OPERATING EXPENSES
Cost of services and products 212,339 212,339
Selling, general and
administrative 99,936 99,936
Depreciation and amortization 135,778 135,778
448,053 - 448,053
OPERATING INCOME 172,419 - 172,419
OTHER INCOME (EXPENSE)
Interest expense (49,625) (49,625)
Other income (expense) 1,320 (6,250)(3) 7,570
Income tax expense (45,780) 2,400 (4) (48,180)
NET INCOME $78,334 (3,850) 82,184
BASIC EARNINGS PER SHARE $0.60 (0.03) 0.63
DILUTED EARNINGS PER SHARE $0.59 (0.03) 0.61
AVERAGE SHARES OUTSTANDING
Basic 130,730 130,730
Diluted 135,917 135,917
DIVIDENDS PER COMMON SHARE $0.0600 0.0600
NONRECURRING ITEMS
(1) - Impairment of nonoperating investments.
(2) - Tax effect of Item (1).
(3) - Impairment of nonoperating investment.
(4) - Tax effect of Item (3).
* Revenues previously reported as "Local service" and "Long distance"
have been combined into this "Voice" category for all periods
presented.
Increase
(decrease)
Increase excluding
In thousands, except per share (decrease) nonrecurring
amounts as reported items
OPERATING REVENUES
Voice* (4.0%) (4.0%)
Network access (8.9%) (8.9%)
Data 14.1% 14.1%
Fiber transport and CLEC 6.9% 6.9%
Other 5.7% 5.7%
(2.1%) (2.1%)
OPERATING EXPENSES
Cost of services and products 5.1% 5.1%
Selling, general and
administrative (15.4%) (15.4%)
Depreciation and amortization (6.9%) (6.9%)
(3.1%) (3.1%)
OPERATING INCOME 0.7% 0.7%
OTHER INCOME (EXPENSE)
Interest expense (4.5%) (4.5%)
Other income (expense) (805.0%) (68.2%)
Income tax expense (2.2%) 2.2%
NET INCOME (7.8%) (3.3%)
BASIC EARNINGS PER SHARE 5.0% 11.1%
DILUTED EARNINGS PER SHARE 5.1% 11.5%
AVERAGE SHARES OUTSTANDING
Basic (13.1%) (13.1%)
Diluted (12.5%) (12.5%)
DIVIDENDS PER COMMON SHARE 4.2% 4.2%
NONRECURRING ITEMS
(1) - Impairment of nonoperating investments.
(2) - Tax effect of Item (1).
(3) - Impairment of nonoperating investment.
(4) - Tax effect of Item (3).
* 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
TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(UNAUDITED)
Twelve months ended December 31, 2006
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands, except per share
amounts reported items items
OPERATING REVENUES
Voice* $860,741 860,741
Network access 878,702 1,688 (1) 877,014
Data 351,495 275 (1) 351,220
Fiber transport and CLEC 149,088 149,088
Other 207,704 207,704
2,447,730 1,963 2,445,767
OPERATING EXPENSES
Cost of services and products 888,414 8,585 (1) 879,829
Selling, general and
administrative 370,272 845 (1) 369,427
Depreciation and amortization 523,506 523,506
1,782,192 9,430 1,772,762
OPERATING INCOME 665,538 (7,467) 673,005
OTHER INCOME (EXPENSE)
Interest expense (195,957) (195,957)
Other income (expense) 121,568 106,934 (2) 14,634
Income tax expense (221,122) (32,477)(3) (188,645)
NET INCOME $370,027 66,990 303,037
BASIC EARNINGS PER SHARE $3.17 0.57 2.59
DILUTED EARNINGS PER SHARE $3.07 0.55 2.52
AVERAGE SHARES OUTSTANDING
Basic 116,671 116,671
Diluted 122,229 122,229
DIVIDENDS PER COMMON SHARE $0.25 0.25
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue effect.
(2) - Includes (i) gains of $117.8 million recorded upon redemption
of Rural Telephone Bank stock and $.9 million recorded upon
sale of Arizona properties, net of (ii) $11.7 million
impairment of nonoperating investments.
(3) - Includes $38.9 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 $16.2 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
nonoperating investment and $3.2 million of interest income
related to the settlement of various income tax audits.
(7) - Includes (i) $1.3 million tax benefit related to the settlement
of various income tax audits and (ii) $8.2 million net tax
benefit of items (4) through (6).
* 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
TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(UNAUDITED)
Twelve months ended December 31, 2005
As adjusted
Less excluding
non- non-
As recurring recurring
In thousands, except per share
amounts reported items items
OPERATING REVENUES
Voice* $892,272 892,272
Network access 959,838 959,838
Data 318,770 318,770
Fiber transport and CLEC 115,454 115,454
Other 192,918 192,918
2,479,252 - 2,479,252
OPERATING EXPENSES
Cost of services and products 821,929 5,853 (4) 816,076
Selling, general and
administrative 388,989 388,989
Depreciation and amortization 531,931 531,931
1,742,849 5,853 1,736,996
OPERATING INCOME 736,403 (5,853) 742,256
OTHER INCOME (EXPENSE)
Interest expense (201,801) (1,196)(5) (200,605)
Other income (expense) 3,168 (14,253)(6) 17,421
Income tax expense (203,291) 9,511 (7) (212,802)
NET INCOME $334,479 (11,791) 346,270
BASIC EARNINGS PER SHARE $2.55 (0.09) 2.64
DILUTED EARNINGS PER SHARE $2.49 (0.09) 2.58
AVERAGE SHARES OUTSTANDING
Basic 130,841 130,841
Diluted 136,087 136,087
DIVIDENDS PER COMMON SHARE $0.24 0.24
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue effect.
(2) - Includes (i) gains of $117.8 million recorded upon redemption
of Rural Telephone Bank stock and $.9 million recorded upon
sale of Arizona properties, net of (ii) $11.7 million
impairment of nonoperating investments.
(3) - Includes $38.9 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 $16.2 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
nonoperating investment and $3.2 million of interest income
related to the settlement of various income tax audits.
(7) - Includes (i) $1.3 million tax benefit related to the settlement
of various income tax audits and (ii) $8.2 million net tax
benefit of items (4) through (6).
* 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
TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(UNAUDITED)
Increase
(decrease)
Increase excluding
(decrease) nonrecurring
In thousands, except per share
amounts as reported items
OPERATING REVENUES
Voice* (3.5%) (3.5%)
Network access (8.5%) (8.6%)
Data 10.3% 10.2%
Fiber transport and CLEC 29.1% 29.1%
Other 7.7% 7.7%
(1.3%) (1.4%)
OPERATING EXPENSES
Cost of services and products 8.1% 7.8%
Selling, general and
administrative (4.8%) (5.0%)
Depreciation and amortization (1.6%) (1.6%)
2.3% 2.1%
OPERATING INCOME (9.6%) (9.3%)
OTHER INCOME (EXPENSE)
Interest expense (2.9%) (2.3%)
Other income (expense) 3737.4% (16.0%)
Income tax expense 8.8% (11.4%)
NET INCOME 10.6% (12.5%)
BASIC EARNINGS PER SHARE 24.3% (1.9%)
DILUTED EARNINGS PER SHARE 23.3% (2.3%)
AVERAGE SHARES OUTSTANDING
Basic (10.8%) (10.8%)
Diluted (10.2%) (10.2%)
DIVIDENDS PER COMMON SHARE 4.2% 4.2%
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue effect.
(2) - Includes (i) gains of $117.8 million recorded upon redemption
of Rural Telephone Bank stock and $.9 million recorded upon
sale of Arizona properties, net of (ii) $11.7 million
impairment of nonoperating investments.
(3) - Includes $38.9 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 $16.2 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
nonoperating investment and $3.2 million of interest income
related to the settlement of various income tax audits.
(7) - Includes (i) $1.3 million tax benefit related to the settlement
of various income tax audits and (ii) $8.2 million net tax
benefit of items (4) through (6).
* 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
DECEMBER 31, 2006 AND DECEMBER 31, 2005
(UNAUDITED)
December 31, December 31,
2006 2005
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $25,668 158,846
Other current assets 264,449 264,170
Total current assets 290,117 423,016
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,893,760 7,801,377
Accumulated depreciation (4,784,483) (4,496,891)
Net property, plant and
equipment 3,109,277 3,304,486
GOODWILL AND OTHER ASSETS
Goodwill 3,431,136 3,432,649
Other 610,477 602,556
Total goodwill and other
assets 4,041,613 4,035,205
TOTAL ASSETS $7,441,007 7,762,707
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current
maturities of long-term debt $178,012 276,736
Other current liabilities 439,553 469,494
Total current liabilities 617,565 746,230
LONG-TERM DEBT 2,412,852 2,376,070
DEFERRED CREDITS AND OTHER
LIABILITIES 1,219,639 1,023,134
STOCKHOLDERS' EQUITY 3,190,951 3,617,273
TOTAL LIABILITIES AND EQUITY $7,441,007 7,762,707
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended December 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 $173,679 - 173,679
Add: Depreciation and
amortization 126,360 - 126,360
Operating cash flow $300,039 - 300,039
Revenues $607,695 - 607,695
Operating income margin (operating
income divided by revenues) 28.6% 28.6%
Operating cash flow margin
(operating cash flow divided by
revenues) 49.4% 49.4%
Free cash flow (prior to debt
service requirements and dividends)
Net income $72,233 (7,216)(1) 79,449
Add: Depreciation and
amortization 126,360 - 126,360
Less: Capital expenditures (101,037) - (101,037)
Free cash flow $97,556 (7,216) 104,772
Free cash flow $97,556
Income from unconsolidated
cellular entity (821)
Deferred income taxes 16,272
Changes in current assets and
current liabilities 7,821
Decrease in other noncurrent
assets 4,649
Increase in other noncurrent
liabilities 152
Retirement benefits (19,369)
Excess tax benefits from share-
based compensation (4,174)
Other, net 15,088
Add: Capital expenditures 101,037
Net cash provided by operating
activities $218,211
NONRECURRING ITEMS
(1) - Impairment of nonoperating investments (presented on an after-
tax basis).
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended December 31, 2005
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $172,419 - 172,419
Add: Depreciation and
amortization 135,778 - 135,778
Operating cash flow $308,197 - 308,197
Revenues $620,472 - 620,472
Operating income margin (operating
income divided by revenues) 27.8% 27.8%
Operating cash flow margin
(operating cash flow divided by
revenues) 49.7% 49.7%
Free cash flow (prior to debt
service requirements and dividends)
Net income $78,334 (3,850)(1) 82,184
Add: Depreciation and
amortization 135,778 - 135,778
Less: Capital expenditures (132,914) - (132,914)
Free cash flow $81,198 (3,850) 85,048
Free cash flow $81,198
Income from unconsolidated
cellular entity (1,603)
Deferred income taxes 36,112
Changes in current assets and
current liabilities (2,366)
Decrease in other noncurrent
assets 6,180
Increase in other noncurrent
liabilities 142
Retirement benefits (30,804)
Excess tax benefits from share-
based compensation -
Other, net 9,597
Add: Capital expenditures 132,914
Net cash provided by operating
activities $231,370
NONRECURRING ITEMS
(1) - Impairment of nonoperating investments (presented on an after-
tax basis).
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Twelve months ended December 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 $665,538 (7,467)(1) 673,005
Add: Depreciation and
amortization 523,506 - 523,506
Operating cash flow $1,189,044 (7,467) 1,196,511
Revenues $2,447,730 1,963 (1) 2,445,767
Operating income margin (operating
income divided by revenues) 27.2% 27.5%
Operating cash flow margin
(operating cash flow divided by
revenues) 48.6% 48.9%
Free cash flow (prior to debt
service requirements and dividends)
Net income $370,027 66,990 (2) 303,037
Add: Depreciation and
amortization 523,506 - 523,506
Less: Capital expenditures (314,071) - (314,071)
$579,462 66,990 512,472
Free cash flow $579,462
Gain on asset dispositions (118,649)
Income from unconsolidated
cellular entity (5,861)
Deferred income taxes 49,685
Changes in current assets and
current liabilities (6,651)
Decrease in other noncurrent
assets 9,078
Increase in other noncurrent
liabilities 709
Retirement benefits 5,963
Excess tax benefits from share-
based compensation (12,034)
Other, net 24,946
Add: Capital expenditures 314,071
Net cash provided by operating
activities $840,719
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction
(including revenue effect).
(2) - Includes (i) $72.4 million after-tax gains recorded upon
redemption of Rural Telephone Bank stock and sale of Arizona
properties, (ii) $7.2 million after-tax impairment of
nonoperating investments, (iii) $4.6 million severance and
related costs due to workforce reduction (including revenue
effect), net of tax, and (iv) $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 $10.0 million after-tax impairment of
nonoperating 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 nonoperating investment.
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Twelve months ended December 31, 2005
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $736,403 (5,853)(3) 742,256
Add: Depreciation and
amortization 531,931 - 531,931
Operating cash flow $1,268,334 (5,853) 1,274,187
Revenues $2,479,252 - 2,479,252
Operating income margin (operating
income divided by revenues) 29.7% 29.9%
Operating cash flow margin
(operating cash flow divided by
revenues) 51.2% 51.4%
Free cash flow (prior to debt
service requirements and dividends)
Net income $334,479 (11,791)(4) 346,270
Add: Depreciation and
amortization 531,931 - 531,931
Less: Capital expenditures (414,872) - (414,872)
$451,538 (11,791) 463,329
Free cash flow $451,538
Gain on asset dispositions (3,500)
Income from unconsolidated
cellular entity (4,910)
Deferred income taxes 69,530
Changes in current assets and
current liabilities 27,001
Decrease in other noncurrent
assets 1,973
Increase in other noncurrent
liabilities 2,638
Retirement benefits (16,815)
Excess tax benefits from share-
based compensation -
Other, net 22,412
Add: Capital expenditures 414,872
Net cash provided by operating
activities $964,739
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction
(including revenue effect).
(2) - Includes (i) $72.4 million after-tax gains recorded upon
redemption of Rural Telephone Bank stock and sale of Arizona
properties, (ii) $7.2 million after-tax impairment of
nonoperating investments, (iii) $4.6 million severance and
related costs due to workforce reduction (including revenue
effect), net of tax, and (iv) $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 $10.0 million after-tax impairment of
nonoperating 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 nonoperating investment.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
FIRST, SECOND AND THIRD QUARTERS OF 2006
ADJUSTED TO REFLECT THE APPLICATION OF SAB 108
PRESENTED ON A GAAP BASIS
(UNAUDITED)
Three months ended March 31, 2006
As adjusted
As SAB 108 for
In thousands, except reported Adjustments SAB 108
per share amounts
OPERATING REVENUES
Voice $217,449 (435) (1) 217,014
Network access 225,246 77 (2) 225,323
Data 83,238 83,238
Fiber transport and CLEC 35,780 35,780
Other 49,936 49,936
611,649 (358) 611,291
OPERATING EXPENSES
Cost of services and
products 222,952 (397) (1) 222,555
Selling, general and
administrative 95,940 95,940
Depreciation and
amortization 134,565 307 (2) 134,872
453,457 (90) 453,367
OPERATING INCOME 158,192 (268) 157,924
OTHER INCOME (EXPENSE)
Interest expense (50,086) (50,086)
Other income (expense) 4,597 4,597
Income tax expense (43,278) 103 (3) (43,175)
NET INCOME $69,425 (165) 69,260
BASIC EARNINGS PER SHARE $0.57 0.00 0.57
DILUTED EARNINGS PER SHARE $0.55 0.00 0.55
AVERAGE SHARES OUTSTANDING
Basic 122,394 122,394
Diluted 127,959 127,959
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
Three months ended June 30, 2006
As adjusted
As SAB 108 for
In thousands, except reported Adjustments SAB 108
per share amounts
OPERATING REVENUES
Voice $216,786 (301) (1) 216,485
Network access 221,586 77 (2) 221,663
Data 84,447 84,447
Fiber transport and CLEC 36,051 36,051
Other 50,261 50,261
609,131 (224) 608,907
OPERATING EXPENSES
Cost of services and products 216,466 (275) (1) 216,191
Selling, general and
administrative 95,596 95,596
Depreciation and amortization 131,820 307 (2) 132,127
443,882 32 443,914
OPERATING INCOME 165,249 (256) 164,993
OTHER INCOME (EXPENSE)
Interest expense (50,639) (50,639)
Other income (expense) 123,459 123,459
Income tax expense (85,701) 98 (3) (85,603)
NET INCOME $152,368 (158) 152,210
BASIC EARNINGS PER SHARE $1.32 0.00 1.32
DILUTED EARNINGS PER SHARE $1.26 0.00 1.26
AVERAGE SHARES OUTSTANDING
Basic 115,441 115,441
Diluted 121,636 121,636
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
Three months ended September 30, 2006
As adjusted
As SAB 108 for
In thousands, except reported Adjustments SAB 108
per share amounts
OPERATING REVENUES
Voice $216,180 (323) (1) 215,857
Network access 219,820 77 (2) 219,897
Data 91,473 91,473
Fiber transport and CLEC 37,487 37,487
Other 55,123 55,123
620,083 (246) 619,837
OPERATING EXPENSES
Cost of services and products 226,831 (295) (1) 226,536
Selling, general and
administrative 94,212 94,212
Depreciation and amortization 129,840 307 (2) 130,147
450,883 12 450,895
OPERATING INCOME 169,200 (258) 168,942
OTHER INCOME (EXPENSE)
Interest expense (47,857) (47,857)
Other income (expense) 2,818 2,818
Income tax expense (47,678) 99 (3) (47,579)
NET INCOME $76,483 (159) 76,324
BASIC EARNINGS PER SHARE 0.66 0.00 0.66
DILUTED EARNINGS PER SHARE 0.65 0.00 0.64
AVERAGE SHARES OUTSTANDING
Basic 115,221 115,221
Diluted 120,448 120,448
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
SAB 108 adjustments
(1) To record deferral of installation revenues and related costs.
(2) To record amortization of additional billing system costs related to
capitalized interest, including related revenue effect.
(3) Tax effect of Items (1) and (2).
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
FIRST, SECOND AND THIRD QUARTERS OF 2006
ADJUSTED TO REFLECT THE APPLICATION OF SAB 108
PRESENTED ON A NON-GAAP BASIS
(UNAUDITED)
Three months ended March 31, 2006
As reported As adjusted
excluding excluding
non- non-
recurring SAB 108 recurring
In thousands, except items Adjustments items
per share amounts
OPERATING REVENUES
Voice $217,449 (435) (1) 217,014
Network access 224,118 77 (2) 224,195
Data 83,054 83,054
Fiber transport and CLEC 35,780 35,780
Other 49,936 49,936
610,337 (358) 609,979
OPERATING EXPENSES
Cost of services and products 217,459 (397) (1) 217,062
Selling, general and
administrative 95,258 95,258
Depreciation and amortization 134,565 307 (2) 134,872
447,282 (90) 447,192
OPERATING INCOME 163,055 (268) 162,787
OTHER INCOME (EXPENSE)
Interest expense (50,086) (50,086)
Other income (expense) 4,597 4,597
Income tax expense (45,145) 103 (3) (45,042)
NET INCOME $72,421 (165) 72,256
BASIC EARNINGS PER SHARE $0.59 0.00 0.59
DILUTED EARNINGS PER SHARE $0.58 0.00 0.57
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, 2006
As reported As adjusted
excluding excluding
non- non-
recurring SAB 108 recurring
In thousands, except items Adjustments items
per share amounts
OPERATING REVENUES
Voice $216,786 (301) (1) 216,485
Network access 221,586 77 (2) 221,663
Data 84,447 84,447
Fiber transport and CLEC 36,051 36,051
Other 50,261 50,261
609,131 (224) 608,907
OPERATING EXPENSES
Cost of services and products 216,466 (275) (1) 216,191
Selling, general and 95,596 95,596
administrative
Depreciation and amortization 131,820 307 (2) 132,127
443,882 32 443,914
OPERATING INCOME 165,249 (256) 164,993
OTHER INCOME (EXPENSE)
Interest expense (50,639) (50,639)
Other income (expense) 4,810 4,810
Income tax expense (45,858) 98 (3) (45,760)
NET INCOME $73,562 (158) 73,404
BASIC EARNINGS PER SHARE $0.64 0.00 0.64
DILUTED EARNINGS PER SHARE $0.61 0.00 0.61
AVERAGE SHARES OUTSTANDING
Basic 115,441 115,441
Diluted 121,636 121,636
DIVIDENDS PER COMMON SHARE $0.0625 0.0625
Three months ended March 31, 2006
As reported As adjusted
excluding excluding
non- non-
recurring SAB 108 recurring
In thousands, except items Adjustments items
per share amounts
OPERATING REVENUES
Voice $216,180 (323) (1) 215,857
Network access 219,260 77 (2) 219,337
Data 91,382 91,382
Fiber transport and CLEC 37,487 37,487
Other 55,123 55,123
619,432 (246) 619,186
OPERATING EXPENSES
Cost of services and products 223,739 (295) (1) 223,444
Selling, general and
administrative 94,049 94,049
Depreciation and amortization 129,840 307 (2) 130,147
447,628 12 447,640
OPERATING INCOME 171,804 (258) 171,546
OTHER INCOME (EXPENSE)
Interest expense (47,857) (47,857)
Other income (expense) 2,818 2,818
Income tax expense (48,678) 99 (3) (48,579)
NET INCOME $78,087 (159) 77,928
BASIC EARNINGS PER SHARE $0.68 0.00 0.68
DILUTED EARNINGS PER SHARE $0.66 0.00 0.66
AVERAGE SHARES OUTSTANDING
Basic 115,221 115,221
Diluted 120,448 120,448
DIVIDENDS PER COMMON SHARE $ 0.0625 0.0625
SOURCE CenturyTel, Inc.
Contact: Media: Patricia Cameron, +1-318-388-9674, patricia.cameron@centurytel.com, or Investors: Tony Davis +1-318-388-9525, tony.davis@centurytel.com, both of CenturyTel, Inc.