MONROE, La., Nov. 1 /PRNewswire-FirstCall/ -- CenturyTel, Inc. (NYSE: CTL)
announces operating results for third quarter 2007.
-- Operating revenues, excluding nonrecurring items, were $708.3 million
compared to $619.2 million for third quarter 2006. Reported under GAAP,
third quarter 2007 operating revenues were $708.8 million.
-- Net income, excluding nonrecurring items, was $108.1 million compared
to $77.9 million in third quarter 2006. Reported under GAAP, third
quarter 2007 net income was $113.2 million.
-- Diluted earnings per share, excluding nonrecurring items, was $.97
compared to $.66 in third quarter 2006. Reported under GAAP, third
quarter 2007 diluted earnings per share was $1.01.
-- Free cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, was $167.3 million in third quarter 2007
compared to $125.5 million in third quarter 2006.
-- Under the recently approved $750 million share repurchase program,
786,000 shares were repurchased and retired for $36.4 million during
the quarter.
Third Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per share amounts and customer units)
Quarter Ended Quarter Ended % Change
9/30/07 9/30/06
Operating Revenues $708,306 $619,186 14.4%
Operating Cash Flow (1) $363,005 $301,693 20.3%
Net Income $108,137 $77,928 38.8%
Diluted Earnings Per Share $.97 $.66 47.0%
Average Diluted Shares Outstanding $112,229 $120,448 (6.8)%
Capital Expenditures $77,445 $82,579 (6.2)%
Access Lines (2) 2,171,000 2,124,000 2.2%
High-speed Internet Customers 530,000 340,000 55.9%
(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 9/30/2007 access lines and high-speed Internet customers
include the effects of our April 2007 Madison River acquisition.
Excluding the effects of this acquisition, access lines decreased 5.4%
and high-speed Internet customers increased 38.8%.
"CenturyTel achieved over $167 million in free cash flow during the third
quarter and we expect to generate record free cash flow for full year 2007,"
Glen F. Post, III, chairman and chief executive officer, said. "Nearly 40%
year-over-year growth in high-speed Internet customers, the acquisition of the
Madison River properties, and the recognition of access revenue settlements
drove solid financial results for the quarter."
Operating revenues, excluding nonrecurring items, for third quarter 2007
were $708.3 million compared to $619.2 million in third quarter 2006. Revenue
increases aggregating $106 million resulted primarily from $49 million in
revenue contribution from the Madison River properties, $42 million related to
adjustments to recognize prior period revenue settlements, and $15 million
from an increase in high-speed Internet customers in our legacy markets. These
increases more than offset revenue declines of $18 million attributable to
lower access revenues and access line losses.
Operating expenses, excluding nonrecurring items, increased 7.7% to
$481.9 million from $447.6 million in third quarter 2006, primarily due to
operating costs associated with the Madison River properties acquired earlier
this year. Excluding costs associated with the Madison River properties,
operating expenses decreased in third quarter 2007 compared to third quarter
2006, primarily due to lower depreciation expense associated with fully
depreciated assets, reduced personnel expenses and lower expenses under our
amended satellite television agreement. These decreases more than offset an
increase associated with growth in high-speed Internet customers.
Operating cash flow, excluding nonrecurring items, increased to
$363.0 million from $301.7 million in third quarter 2006, primarily due to the
recognition of prior period revenue settlements during third quarter 2007 and
the contribution of the Madison River properties. For third quarter 2007,
CenturyTel achieved an operating cash flow margin of 51.2% versus 48.7% in
third quarter 2006.
"We remain focused on being the leading provider of broadband products and
services to customers in our markets," Post said. "We added more than 29,000
broadband customers during the third quarter and ended the quarter with more
than 29% penetration of broadband-enabled lines."
Net income, excluding nonrecurring items, was $108.1 million in third
quarter 2007 compared to $77.9 million in third quarter 2006. This increase
was primarily driven by the after-tax impact of the prior period revenue
settlements discussed above. Diluted earnings per share, excluding
nonrecurring items, was $.97 for third quarter 2007, a 47.0% increase from the
$.66 reported in third quarter 2006. This increase was driven by the higher
net income and a 6.8% decline in average diluted shares outstanding as a
result of share repurchases since third quarter 2006.
For the first nine months of 2007, operating revenues, excluding
nonrecurring items, increased to $1.948 billion from $1.838 billion for the
same period in 2006. Operating cash flow, excluding nonrecurring items, was
$970.1 million for the first nine months of 2007 compared to $896.5 million a
year ago. Net income, excluding nonrecurring items, was $264.4 million in the
first nine months of 2007 compared to $223.6 million during the same period in
2006. Diluted earnings per share, excluding nonrecurring items, was $2.34
during the first nine months of 2007 compared to $1.84 in the first nine
months of 2006.
Under generally accepted accounting principles (GAAP), net income for
third quarter 2007 was $113.2 million compared to $76.3 million for third
quarter 2006 and diluted earnings per share for third quarter 2007 was $1.01
compared to $.64 for third quarter 2006. Third quarter 2007 net income and
diluted earnings per share reflect a net after-tax charge of $1.4 million
($.01 per share) related to a reduction in workforce during the quarter and a
net after-tax gain of $6.4 million ($.06 per share) from the sale of a non-
core asset. 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.
Net income under GAAP for the first nine months of 2007 was $303.3 million
compared to $297.8 million for the first nine months of 2006 and diluted
earnings per share for the first nine months of 2007 was $2.68 compared to
$2.44 for the first nine months of 2006. See the accompanying financial
schedules for detail of the Company's nonrecurring items for the nine months
ended September 30, 2007 and 2006.
Outlook. For fourth quarter 2007, CenturyTel expects total revenues of
$645 to $655 million and diluted earnings per share of $.66 to $.71. As a
result of better than anticipated third quarter performance, the Company has
increased and narrowed the range of anticipated full year 2007 diluted
earnings per share guidance from $2.90 to $3.00 to $3.00 to $3.05.
CenturyTel expects to provide full year 2008 earnings per share guidance
in February 2008. However, there are a couple of items that can be expected to
affect 2008 results when compared to 2007. First, revenue settlements related
to prior periods are anticipated to decline and negatively impact 2008 diluted
earnings per share by $.22 to $.24. Additionally, lower Universal Service Fund
receipts are expected to negatively impact 2008 diluted earnings by $.08 to
$.10 per share. These and other items that may affect 2008 results will be
further discussed during the Company's fourth quarter 2007 earnings call in
February 2008.
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, or other nonrecurring events.
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. Third quarter 2006 and nine months
ended September 30, 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 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 schedules. 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
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 866.219.5631. The call will be accessible for
replay through November 7, 2007, by calling 888.258.7854 and entering the
access code: 1147641. 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 through November 21, 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
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 continued
access to credit markets on favorable terms; 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 November
1, 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 SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)
Three months ended September 30, 2007
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $229,862 229,862
Network access 248,490 527 (1) 247,963
Data 134,630 134,630
Fiber transport and CLEC 41,811 41,811
Other* 54,040 54,040
708,833 527 708,306
OPERATING EXPENSES
Cost of services and products 246,430 1,967 (1) 244,463
Selling, general and administrative 101,612 774 (1) 100,838
Depreciation and amortization 136,606 136,606
484,648 2,741 481,907
OPERATING INCOME 224,185 (2,214) 226,399
OTHER INCOME (EXPENSE)
Interest expense (55,176) (55,176)
Other income (expense) 14,761 10,437 (2) 4,324
Income tax expense (70,568) (3,158)(3) (67,410)
NET INCOME $113,202 5,065 108,137
BASIC EARNINGS PER SHARE $1.04 0.05 0.99
DILUTED EARNINGS PER SHARE $1.01 0.05 0.97
AVERAGE SHARES OUTSTANDING
Basic 108,996 108,996
Diluted 112,229 112,229
DIVIDENDS PER COMMON SHARE $0.0650 0.0650
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* 218,665 218,665
Network access 219,897 560 (1) 219,337
Data 91,473 91 (1) 91,382
Fiber transport and CLEC 37,487 37,487
Other* 52,315 52,315
619,837 651 619,186
OPERATING EXPENSES
Cost of services and products 226,536 3,092 (1) 223,444
Selling, general and
administrative 94,212 163 (1) 94,049
Depreciation and amortization 130,147 130,147
450,895 3,255 447,640
OPERATING INCOME 168,942 (2,604) 171,546
OTHER INCOME (EXPENSE)
Interest expense (47,857) (47,857)
Other income (expense) 2,818 2,818
Income tax expense (47,579) 1,000 (3) (48,579)
NET INCOME 76,324 (1,604) 77,928
BASIC EARNINGS PER SHARE 0.66 (0.01) 0.68
DILUTED EARNINGS PER SHARE 0.64 (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
Increase
(decrease)
Increase excluding
In thousands, except per share (decrease) nonrecurring
amounts as reported items
OPERATING REVENUES
Voice* 5.1% 5.1%
Network access 13.0% 13.1%
Data 47.2% 47.3%
Fiber transport and CLEC 11.5% 11.5%
Other* 3.3% 3.3%
14.4% 14.4%
OPERATING EXPENSES
Cost of services and products 8.8% 9.4%
Selling, general and administrative 7.9% 7.2%
Depreciation and amortization 5.0% 5.0%
7.5% 7.7%
OPERATING INCOME 32.7% 32.0%
OTHER INCOME (EXPENSE)
Interest expense 15.3% 15.3%
Other income (expense) 423.8% 53.4%
Income tax expense 48.3% 38.8%
NET INCOME 48.3% 38.8%
BASIC EARNINGS PER SHARE 57.6% 45.6%
DILUTED EARNINGS PER SHARE 57.8% 47.0%
AVERAGE SHARES OUTSTANDING
Basic (5.4%) (5.4%)
Diluted (6.8%) (6.8%)
DIVIDENDS PER COMMON SHARE 4.0% 4.0%
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reductions in
third quarters of 2007 and 2006, including revenue impact.
(2) - Gain on sale of non-core asset.
(3) - Tax effect of above items.
* Revenues from voice mail services previously reflected in "Other"
revenues have been reclassified to "Voice" revenues for all periods.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
(UNAUDITED)
Nine months ended September 30, 2007
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $664,435 664,435
Network access 726,091 49,514 (1) 676,577
Data 338,700 338,700
Fiber transport and CLEC 120,851 13 (1) 120,838
Other* 149,602 1,869 (2) 147,733
1,999,679 51,396 1,948,283
OPERATING EXPENSES
Cost of services and products 686,349 (2,085)(3) 688,434
Selling, general and
administrative 290,525 774 (3) 289,751
Depreciation and amortization 398,701 398,701
1,375,575 (1,311) 1,376,886
OPERATING INCOME 624,104 52,707 571,397
OTHER INCOME (EXPENSE)
Interest expense (159,804) (159,804)
Other income (expense) 28,131 10,437 (4) 17,694
Income tax expense (189,094) (24,248)(5) (164,846)
NET INCOME $303,337 38,896 264,441
BASIC EARNINGS PER SHARE $2.77 0.36 2.41
DILUTED EARNINGS PER SHARE $2.68 0.34 2.34
AVERAGE SHARES OUTSTANDING
Basic 109,478 109,478
Diluted 114,086 114,086
DIVIDENDS PER COMMON SHARE $0.1950 0.1950
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* 657,559 657,559
Network access 666,883 1,688 (6) 665,195
Data 259,158 275 (6) 258,883
Fiber transport and CLEC 109,318 109,318
Other* 147,117 147,117
1,840,035 1,963 1,838,072
OPERATING EXPENSES
Cost of services and products 665,282 8,585 (6) 656,697
Selling, general and administrative 285,748 845 (6) 284,903
Depreciation and amortization 397,146 397,146
1,348,176 9,430 1,338,746
OPERATING INCOME 491,859 (7,467) 499,326
OTHER INCOME (EXPENSE)
Interest expense (148,582) (148,582)
Other income (expense) 130,874 118,649 (7) 12,225
Income tax expense (176,357) (36,976)(8) (139,381)
NET INCOME 297,794 74,206 223,588
BASIC EARNINGS PER SHARE 2.53 0.63 1.90
DILUTED EARNINGS PER SHARE 2.44 0.60 1.84
AVERAGE SHARES OUTSTANDING
Basic 117,685 117,685
Diluted 123,348 123,348
DIVIDENDS PER COMMON SHARE 0.1875 0.1875
Increase
(decrease)
Increase excluding
In thousands, except per share (decrease) nonrecurring
amounts as reported items
OPERATING REVENUES
Voice* 1.0% 1.0%
Network access 8.9% 1.7%
Data 30.7% 30.8%
Fiber transport and CLEC 10.5% 10.5%
Other* 1.7% 0.4%
8.7% 6.0%
OPERATING EXPENSES
Cost of services and products 3.2% 4.8%
Selling, general and administrative 1.7% 1.7%
Depreciation and amortization 0.4% 0.4%
2.0% 2.8%
OPERATING INCOME 26.9% 14.4%
OTHER INCOME (EXPENSE)
Interest expense 7.6% 7.6%
Other income (expense) (78.5%) 44.7%
Income tax expense 7.2% 18.3%
NET INCOME 1.9% 18.3%
BASIC EARNINGS PER SHARE 9.5% 26.8%
DILUTED EARNINGS PER SHARE 9.8% 27.2%
AVERAGE SHARES OUTSTANDING
Basic (7.0%) (7.0%)
Diluted (7.5%) (7.5%)
DIVIDENDS PER COMMON SHARE 4.0% 4.0%
NONRECURRING ITEMS
(1) - Revenue recorded upon settlement of a dispute with a carrier
($49.0 million) and revenue impact of severance and related
costs due to workforce reductions ($.5 million).
(2) - Reimbursement of amounts upon a change in our satellite
television arrangement.
(3) - Severance and related costs due to workforce reductions
($2.7 million), net of reimbursement of amounts upon a change in
our satellite television arrangement ($4.1 million).
(4) - Gain on sale of non-core asset.
(5) - Tax effects of items (1) through (4).
(6) - Severance and related costs due to workforce reduction,
including revenue impact.
(7) - Includes gain recorded upon redemption of Rural Telephone
Bank stock ($117.8 million) and gain recorded upon sale of
Arizona properties ($.9 million).
(8) - Includes $43.4 million net tax expense related to Items (6)
and (7), net of $6.4 million net tax benefit due to the
resolution of various income tax audit issues.
* Revenues from voice mail services previously reflected in "Other"
revenues have been reclassified to "Voice" revenues for all periods.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2007 AND DECEMBER 31, 2006
(UNAUDITED)
September 30, December 31,
2007 2006
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $58,714 25,668
Other current assets 269,166 264,449
Total current assets 327,880 290,117
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 8,598,777 7,893,760
Accumulated depreciation (5,453,958) (4,784,483)
Net property, plant and equipment 3,144,819 3,109,277
GOODWILL AND OTHER ASSETS
Goodwill 3,997,028 3,431,136
Other 762,923 610,477
Total goodwill and other assets 4,759,951 4,041,613
TOTAL ASSETS $8,232,650 7,441,007
LIABILITIES AND EQUITY CURRENT LIABILITIES
Short-term debt and current
maturities of long-term debt $254,895 178,012
Other current liabilities 425,021 439,553
Total current liabilities 679,916 617,565
LONG-TERM DEBT 2,747,576 2,412,852
DEFERRED CREDITS AND OTHER
LIABILITIES 1,440,737 1,219,639
STOCKHOLDERS' EQUITY 3,364,421 3,190,951
TOTAL LIABILITIES AND EQUITY $8,232,650 7,441,007
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended September 30, 2007
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $224,185 (2,214)(1) 226,399
Add: Depreciation and amortization 136,606 - 136,606
Operating cash flow $360,791 (2,214) 363,005
Revenues $708,833 527 (1) 708,306
Operating income margin (operating
income divided by revenues) 31.6% 32.0%
Operating cash flow margin
(operating cash flow divided by
revenues) 50.9% 51.2%
Free cash flow (prior to debt
service requirements and dividends)
Net income $113,202 5,065 (2) 108,137
Add: Depreciation and amortization 136,606 - 136,606
Less: Capital expenditures (77,445) - (77,445)
Free cash flow $172,363 5,065 167,298
Free cash flow $172,363
Gain on asset dispositions (10,436)
Deferred income taxes 13,106
Changes in current assets and
current liabilities (42,321)
Increase in other noncurrent
assets 4,400
Decrease in other noncurrent
liabilities (2,542)
Retirement benefits 6,745
Excess tax benefits from share-
based compensation (122)
Other, net 12,770
Add: Capital expenditures 77,445
Net cash provided by operating
activities $231,408
Three months ended September 30, 2006
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income 168,942 (2,604)(1) 171,546
Add: Depreciation and amortization 130,147 130,147
Operating cash flow 299,089 (2,604) 301,693
Revenues 619,837 651 (1) 619,186
Operating income margin (operating
income divided by revenues) 27.3% 27.7%
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 76,324 (1,604)(3) 77,928
Add: Depreciation and amortization 130,147 - 130,147
Less: Capital expenditures (82,579) - (82,579)
Free cash flow 123,892 (1,604) 125,496
Free cash flow 123,892
Gain on asset dispositions -
Deferred income taxes 11,262
Changes in current assets and
current liabilities (14,012)
Increase in other noncurrent
assets 4,132
Decrease in other noncurrent
liabilities (1,729)
Retirement benefits 10,406
Excess tax benefits from share-
based compensation (2,913)
Other, net 2,574
Add: Capital expenditures 82,579
Net cash provided by operating
activities 216,191
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact (presented on a pre-tax basis).
(2) - After-tax effect of gain on sale of non-core asset and
severance and related costs due to workforce reduction.
(3) - After-tax effect of severance and related costs due to
workforce reduction.
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Nine months ended September 30, 2007
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $624,104 52,707 (1) 571,397
Add: Depreciation and amortization 398,701 - 398,701
Operating cash flow $1,022,805 52,707 970,098
Revenues $1,999,679 51,396 (2) 1,948,283
Operating income margin (operating
income divided by revenues) 31.2% 29.3%
Operating cash flow margin
(operating cash flow divided by
revenues) 51.1% 49.8%
Free cash flow (prior to debt
service requirements and dividends)
Net income $303,337 38,896 (3) 264,441
Add: Depreciation and amortization 398,701 - 398,701
Less: Capital expenditures (184,301) - (184,301)
Free cash flow $517,737 38,896 478,841
Free cash flow $517,737
Gain on asset dispositions (10,436)
Deferred income taxes 43,111
Changes in current assets and
current liabilities 28,514
Decrease in other noncurrent
assets 8,053
Increase (decrease) in other
noncurrent liabilities (14,209)
Retirement benefits 21,392
Excess tax benefits from share-
based compensation (6,434)
Other, net 17,404
Add: Capital expenditures 184,301
Net cash provided by operating
activities $789,433
Nine months ended September 30, 2006
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income 491,859 (7,467)(4) 499,326
Add: Depreciation and amortization 397,146 397,146
Operating cash flow 889,005 (7,467) 896,472
Revenues 1,840,035 1,963 (4) 1,838,072
Operating income margin (operating
income divided by revenues) 26.7% 27.2%
Operating cash flow margin
(operating cash flow divided by
revenues) 48.3% 48.8%
Free cash flow (prior to debt service
requirements and dividends)
Net income 297,794 74,206 (5) 223,588
Add: Depreciation and amortization 397,146 397,146
Less: Capital expenditures (213,034) (213,034)
Free cash flow 481,906 74,206 407,700
Free cash flow 481,906
Gain on asset dispositions (118,649)
Deferred income taxes 33,413
Changes in current assets and
current liabilities (14,472)
Decrease in other noncurrent assets 4,429
Increase (decrease) in other
noncurrent liabilities 557
Retirement benefits 25,332
Excess tax benefits from share-
based compensation (7,860)
Other, net 4,818
Add: Capital expenditures 213,034
Net cash provided by operating
activities 622,508
NONRECURRING ITEMS
(1) - Includes (i) $49.0 million revenue recorded upon settlement of
a dispute with a carrier; (ii) $5.9 million reimbursement of
amounts upon a change in our satellite television arrangement,
net of (iii) impact of severance and related costs due to
workforce reduction ($2.2 million).
(2) - Includes (i) $49.0 million revenue recorded upon settlement of
a dispute with a carrier; (ii) $1.9 million reimbursement of
amounts upon a change in our satellite television arrangement
and (iii) revenue impact of severance and related costs due
to workforce reduction ($.5 million).
(3) - Includes after-tax gain on sale of non-core asset and the
after-tax effect of Item (1).
(4) - Severance and related costs due to workforce reduction,
including related revenue impact.
(5) - Includes (i) the after-tax effect of gains on sales of assets
(primarily gain on Rural Telephone Bank stock redemption),
(ii) the after-tax effect of Item (4) and (iii) a $6.4 million
net tax benefit due to the resolution of various income tax
audit issues.
SOURCE CenturyTel, Inc.
Contact: Tony Davis of CenturyTel, Inc., +1-318-388-9525, tony.davis@centurytel.com