MONROE, La., Feb. 14 /PRNewswire-FirstCall/ -- CenturyTel, Inc.
(NYSE: CTL) announces operating results for fourth quarter 2007.
-- Operating revenues, excluding nonrecurring items, increased 8.3% to
$657.8 million from $607.7 million in fourth quarter 2006. Operating
revenues, reported under GAAP, were $656.6 million.
-- Operating cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, grew 7.1% to $321.5 million from $300.0
million in fourth quarter 2006.
-- Net income, excluding nonrecurring items, increased 13.1% to
$89.8 million from $79.4 million in fourth quarter 2006. Net income,
reported under GAAP, was $115.0 million compared to $72.2 million in
fourth quarter 2006.
-- Diluted earnings per share, excluding nonrecurring items, grew 20.6%
to $.82 from $.68 in fourth quarter 2006, while GAAP diluted earnings
per share was $1.04 in fourth quarter 2007 and $.62 in fourth quarter
2006.
-- Free cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, was $85.6 million in fourth quarter 2007
and a record $564.5 million for full year 2007.
-- Over 2.8 million shares were repurchased and retired for $122.1
million during the quarter.
Fourth Quarter Highlights
(Excluding nonrecurring
items reflected in the
attached financial
schedules)
(In thousands, except
per share amounts and Quarter Ended Quarter Ended % Change
subscriber data) 12/31/07 12/31/06
Operating Revenues $657,846 $607,695 8.3%
Operating Cash Flow (1) $321,472 $300,039 7.1%
Net Income $ 89,822 $ 79,449 13.1%
Diluted Earnings Per Share $ .82 $ .68 20.6%
Average Diluted Shares
Outstanding $110,119 $118,874 (7.4)%
Capital Expenditures $141,744 $101,037 40.3%
Access Lines (2) 2,135,000 2,094,000 2.0%
High-Speed Internet
Customers (2) 555,000 369,000 50.4%
(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 12/31/2007 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 5.7% and high-speed Internet customers increased 34.9%.
"CenturyTel achieved strong fourth quarter and full year 2007 results
driven by solid demand for broadband services, the acquisition of the Madison
River properties and our success in aligning our costs with the changing
landscape of our business," Glen F. Post, III, chairman and chief executive
officer, said. "We remain focused on our goal of being the premier broadband
company in our markets, as high-speed Internet customers and data revenues
increased 50% and 31%, respectively, during 2007."
Operating revenues, excluding nonrecurring items, increased 8.3% to $657.8
million in fourth quarter 2007 from $607.7 million in fourth quarter 2006.
Revenue increases during the quarter of approximately $73 million resulted
primarily from $49 million in revenue contribution from the Madison River
properties acquired in second quarter 2007, along with growth in high-speed
Internet customers and long distance minutes of use. These increases were
partially offset by revenue declines of approximately $23 million primarily
attributable to previously anticipated access line losses and lower access
revenues, along with lower revenues under the amended satellite television
agreement.
Operating expenses, excluding nonrecurring items, increased 9.2% to $473.9
million from $434.0 million in fourth quarter 2006, principally due to
expenses associated with the Madison River properties, growth in high-speed
Internet customers and marketing activities, which were partially offset by
lower personnel costs.
"We generated record free cash flow of $564 million this year while also
making strategic capital investments of $326 million," Post said.
"Additionally, we returned nearly $490 million to shareholders during 2007
through the repurchase of nearly 10.2 million common shares for approximately
$460 million and $29 million in cash dividends."
Operating cash flow, excluding nonrecurring items, for fourth quarter 2007
grew 7.1% to $321.5 million from $300.0 million in fourth quarter 2006.
CenturyTel achieved an operating cash flow margin, excluding nonrecurring
items, of 48.9% during the quarter versus 49.4% in fourth quarter 2006. This
margin decline was expected due to the growth in lower margin revenues and the
anticipated decline in higher margin revenues discussed above.
Other income and income tax expense were favorably impacted during fourth
quarter 2007 due, respectively, to higher income from the Company's equity
interest in a wireless partnership and a lower effective tax rate.
Net income, excluding nonrecurring items, was $89.8 million, a 13.1%
increase from $79.4 million in fourth quarter 2006. Diluted earnings per
share, excluding nonrecurring items, increased 20.6% to $.82 in fourth quarter
2007 compared to $.68 in fourth quarter 2006 due to the items discussed above
and the reduction in diluted shares outstanding as a result of share
repurchases during 2007.
For the year 2007, operating revenues, excluding nonrecurring items, were
$2.606 billion compared to $2.446 billion in 2006, a 6.6% increase. Operating
cash flow, excluding nonrecurring items, was $1.292 billion for 2007 compared
to $1.197 billion a year ago. Net income, excluding nonrecurring items, was
$354.3 million compared to $303.0 million in 2006, while diluted earnings per
share was $3.16 compared to $2.52 in 2006.
Under generally accepted accounting principles (GAAP), net income for
fourth quarter 2007 was $115.0 million compared to $72.2 million for fourth
quarter 2006. Diluted earnings per share was $1.04 in fourth quarter 2007
compared to $.62 in fourth quarter 2006. Fourth quarter 2007 results reflect
an after-tax benefit of $1.8 million related to hurricane-related insurance
reimbursements, an after-tax benefit of $2.4 million related to the
liquidation of Rural Telephone Bank stock, and a $32.7 million tax benefit
related to the adjustment of income tax reserves, which were partially offset
by $12.2 million of after-tax impairment charges associated with certain
operating and non-operating investments described further in the attached
financial schedules. Fourth quarter 2006 results reflect after-tax impairment
charges of $7.2 million associated with certain non-operating investments.
Under GAAP, for the year 2007, the Company reported net income of $418.4
million, or $3.72 per diluted share, compared to net income of $370.0 million,
or $3.07 per diluted share, for the year 2006. See the accompanying financial
schedules for detail of the Company's nonrecurring items for the years 2007
and 2006.
Outlook for 2008. For full year 2008, CenturyTel anticipates operating
revenues to be flat to modestly higher than 2007 operating revenues. The
Company expects revenue increases associated with the full year contribution
of the Madison River acquisition versus the eight months recognized in 2007
and growth in high-speed Internet and data revenues. These increases are
expected to offset revenue declines associated with the $42 million of revenue
settlements recorded in third quarter 2007 that will not reoccur in 2008,
lower access revenues, reduced universal service funding and access line
losses.
For full year 2008, CenturyTel anticipates diluted earnings per share to
be in the range of $2.90 to $3.00. The following items are expected to have a
positive impact on 2008 diluted earnings per share:
-- anticipated further penetration of broadband service offerings and
expected cost efficiencies (including incremental synergies associated
with the Madison River properties) - $.16 to $.20; and
-- share repurchases made during 2007 and January 2008 along with
anticipated lower interest expense - $.22 to $.24.
The following items are expected to negatively impact 2008 diluted
earnings per share:
-- lower revenue settlements mentioned above -- ($.23) to ($.25);
-- reduced interstate universal service funding -- ($.08) to ($.10); and
-- anticipated access line losses of 4.5% to 6.0%, continued pressure on
access revenues and expected lower income in 2008 from the Company's
equity interest in a wireless partnership -- ($.28) to ($.30).
For first quarter 2008, CenturyTel expects total revenues of $646 to $656
million and diluted earnings per share of $.69 to $.73.
Finally, the Company expects its capital expenditures in 2008 to be
approximately $300 million, an 8% reduction from 2007 capital expenditures of
$326 million.
These 2008 outlook figures exclude the effects of nonrecurring items, any
share repurchases made after January 31, 2008, and any future mergers,
acquisitions, divestitures or other similar business transactions.
Reconciliation to GAAP. This release includes certain non-GAAP financial
measures, including but not limited to operating cash flow, free cash flow and
adjustments to GAAP measures to exclude the effect of nonrecurring items. In
addition to providing key metrics for management to evaluate the Company's
performance, we believe these measurements assist 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 866.244.4635. The call will be accessible for
replay through February 20, 2008, by calling 888.266.2081 and entering the
conference ID number 1185533. 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
March 5, 2008.
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 adjust to changes in 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
February 14, 2008. 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 DECEMBER 31, 2007 AND 2006
(UNAUDITED)
Three months ended December 31, 2007
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $225,525 225,525
Network access 215,415 (1,216)(1) 216,631
Data 122,055 (68)(1) 122,123
Fiber transport and CLEC 38,466 38,466
Other* 55,101 55,101
656,562 (1,284) 657,846
OPERATING EXPENSES
Cost of services and products 251,026 13,740 (2) 237,286
Selling, general and
administrative 99,008 (80)(2) 99,088
Depreciation and amortization 137,554 137,554
487,588 13,660 473,928
OPERATING INCOME 168,974 (14,944) 183,918
OTHER INCOME (EXPENSE)
Interest expense (53,102) (53,102)
Other income (expense) 10,639 2,206 (3) 8,433
Income tax expense (11,478) 37,949 (4) (49,427)
NET INCOME $115,033 25,211 89,822
BASIC EARNINGS PER SHARE $1.05 0.23 0.82
DILUTED EARNINGS PER SHARE $1.04 0.23 0.82
AVERAGE SHARES OUTSTANDING
Basic 109,008 109,008
Diluted 110,119 110,119
DIVIDENDS PER COMMON SHARE $0.0650 0.0650
Three months ended December 31, 2006
As Increase
adjusted (decrease)
Less excluding Increase excluding
non- non- (decrease) non-
In thousands, except As recurring recurring as recurring
per share amounts reported items items reported items
OPERATING REVENUES
Voice* 214,208 214,208 5.3% 5.3%
Network access 211,819 211,819 1.7% 2.3%
Data 92,337 92,337 32.2% 32.3%
Fiber transport
and CLEC 39,770 39,770 (3.3%) (3.3%)
Other* 49,561 49,561 11.2% 11.2%
607,695 - 607,695 8.0% 8.3%
OPERATING EXPENSES
Cost of services
and products 223,132 223,132 12.5% 6.3%
Selling, general
and administrative 84,524 84,524 17.1% 17.2%
Depreciation and
amortization 126,360 126,360 8.9% 8.9%
434,016 - 434,016 12.3% 9.2%
OPERATING INCOME 173,679 - 173,679 (2.7%) 5.9%
OTHER INCOME
(EXPENSE)
Interest expense (47,375) (47,375) 12.1% 12.1%
Other income
(expense) (9,306) (11,715)(5) 2,409 (214.3%) 250.1%
Income tax expense (44,765) 4,499 (6) (49,264) (74.4%) 0.3%
NET INCOME 72,233 (7,216) 79,449 59.3% 13.1%
BASIC EARNINGS
PER SHARE 0.63 (0.06) 0.70 66.7% 17.1%
DILUTED EARNINGS
PER SHARE 0.62 (0.06) 0.68 67.7% 20.6%
AVERAGE SHARES
OUTSTANDING
Basic 113,629 113,629 (4.1%) (4.1%)
Diluted 118,874 118,874 (7.4%) (7.4%)
DIVIDENDS PER
COMMON SHARE 0.0625 0.0625 4.0% 4.0%
NONRECURRING ITEMS
(1) - Revenue reduction associated with gain on liquidation of
Rural Telephone Bank.
(2) - Includes write-down due to impairment of CLEC assets
($16.6 million), net of insurance reimbursements associated
with previously recorded hurricane related expenses
($3.0 million).
(3) - Includes gain on liquidation of Rural Telephone Bank
($5.2 million), net of $3.0 million impairment of a
nonoperating investment.
(4) - Includes $32.7 million benefit due to the recognition of
previously unrecognized tax benefits in accordance with FIN 48,
plus the aggregate tax effect of Items (1) through (3).
(5) - Impairment of nonoperating investments.
(6) - Tax effect of Item (5).
* 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
TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(UNAUDITED)
Twelve months ended December 31, 2007
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
OPERATING REVENUES
Voice* $ 889,960 889,960
Network access 941,506 48,298 (1) 893,208
Data 460,755 (68) (1) 460,823
Fiber transport and CLEC 159,317 13 (1) 159,304
Other* 204,703 1,869 (2) 202,834
2,656,241 50,112 2,606,129
OPERATING EXPENSES
Cost of services and products 937,375 11,655 (3) 925,720
Selling, general and
administrative 389,533 694 (3) 388,839
Depreciation and amortization 536,255 536,255
1,863,163 12,349 1,850,814
OPERATING INCOME 793,078 37,763 755,315
OTHER INCOME (EXPENSE)
Interest expense (212,906) (212,906)
Other income (expense) 38,770 12,643 (4) 26,127
Income tax expense (200,572) 13,701 (5) (214,273)
NET INCOME $ 418,370 64,107 354,263
BASIC EARNINGS PER SHARE $ 3.82 0.59 3.24
DILUTED EARNINGS PER SHARE $ 3.72 0.57 3.16
AVERAGE SHARES OUTSTANDING
Basic 109,360 109,360
Diluted 113,094 113,094
DIVIDENDS PER COMMON SHARE $ 0.26 0.26
Twelve months ended December 31, 2006
As Increase
adjusted (decrease)
Less excluding Increase excluding
non- non- (decrease) non-
In thousands, except As recurring recurring as recurring
per share amounts reported items items reported items
OPERATING REVENUES
Voice* $ 871,767 871,767 2.1% 2.1%
Network access 878,702 1,688 (6) 877,014 7.1% 1.8%
Data 351,495 275 (6) 351,220 31.1% 31.2%
Fiber transport
and CLEC 149,088 149,088 6.9% 6.9%
Other* 196,678 196,678 4.1% 3.1%
2,447,730 1,963 2,445,767 8.5% 6.6%
OPERATING EXPENSES
Cost of services
and products 888,414 8,585 (6) 879,829 5.5% 5.2%
Selling, general
and administrative 370,272 845 (6) 369,427 5.2% 5.3%
Depreciation and
amortization 523,506 523,506 2.4% 2.4%
1,782,192 9,430 1,772,762 4.5% 4.4%
OPERATING INCOME 665,538 (7,467) 673,005 19.2% 12.2%
OTHER INCOME
(EXPENSE)
Interest expense (195,957) (195,957) 8.6% 8.6%
Other income
(expense) 121,568 106,934 (7) 14,634 (68.1%) 78.5%
Income tax expense (221,122) (32,477)(8) (188,645) (9.3%) 13.6%
NET INCOME $ 370,027 66,990 303,037 13.1% 16.9%
BASIC EARNINGS
PER SHARE $ 3.17 0.57 2.59 20.5% 25.1%
DILUTED EARNINGS
PER SHARE $ 3.07 0.55 2.52 21.2% 25.4%
AVERAGE SHARES
OUTSTANDING
Basic 116,671 116,671 (6.3%) (6.3%)
Diluted 122,229 122,229 (7.5%) (7.5%)
DIVIDENDS PER
COMMON SHARE $ 0.25 0.25 4.0% 4.0%
NONRECURRING ITEMS
(1) - Includes (i) revenue recorded upon settlement of a dispute
with a carrier ($49.0 million) and (ii) revenue impact of
severance and related costs due to workforce reductions
($.5 million), net of (iii) revenue reduction associated with
gain on liquidation of Rural Telephone Bank ($1.3 million).
(2) - Reimbursement of amounts upon a change in our satellite
television arrangement.
(3) - Includes (i) write-down due to impairment of CLEC assets
($16.6 million) and (ii) severance and related costs due to
workforce reductions ($2.7 million), net of (iii) reimbursement
of amounts upon a change in our satellite television arrangement
($4.1 million) and (iv) insurance reimbursements associated with
previously recorded hurricane related expenses ($3.0 million).
(4) - Includes (i) gain on sale of non-core asset ($10.4 million) and
(ii) gain on liquidation of Rural Telephone Bank ($5.2 million),
net of (iii) $3.0 million impairment of a nonoperating
investment.
(5) - Includes (i) $32.7 million benefit due to the recognition of
previously unrecognized tax benefits in accordance with FIN 48,
net of the aggregate tax effects of items (1) through (4)
($19.0 million).
(6) - Severance and related costs due to workforce reduction,
including revenue effect.
(7) - 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.
(8) - Includes $38.9 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
DECEMBER 31, 2007 AND DECEMBER 31, 2006
(UNAUDITED)
December 31, December 31,
2007 2006
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 34,402 25,668
Other current assets 257,997 264,449
Total current assets 292,399 290,117
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 8,677,141 7,893,760
Accumulated depreciation (5,557,730) (4,784,483)
Net property, plant and equipment 3,119,411 3,109,277
GOODWILL AND OTHER ASSETS
Goodwill 4,005,966 3,431,136
Other 769,862 610,477
Total goodwill and other assets 4,775,828 4,041,613
TOTAL ASSETS $ 8,187,638 7,441,007
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current
maturities of long-term debt $ 279,898 178,012
Other current liabilities 456,637 439,553
Total current liabilities 736,535 617,565
LONG-TERM DEBT 2,734,357 2,412,852
DEFERRED CREDITS AND OTHER LIABILITIES 1,307,541 1,219,639
STOCKHOLDERS' EQUITY 3,409,205 3,190,951
TOTAL LIABILITIES AND EQUITY $ 8,187,638 7,441,007
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended December 31, 2007
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and
cash flow margin
Operating income $ 168,974 (14,944)(1) 183,918
Add: Depreciation and
amortization 137,554 - 137,554
Operating cash flow $ 306,528 (14,944) 321,472
Revenues $ 656,562 (1,284)(2) 657,846
Operating income margin (operating
income divided by revenues) 25.7% 28.0%
Operating cash flow margin
(operating cash flow divided by
revenues) 46.7% 48.9%
Free cash flow (prior to debt
service requirements and dividends)
Net income $ 115,033 25,211 (3) 89,822
Add: Depreciation and
amortization 137,554 - 137,554
Less: Capital expenditures (141,744) - (141,744)
Free cash flow $ 110,843 25,211 85,632
Free cash flow $ 110,843
Gain on asset dispositions (5,207)
Deferred income taxes (42,093)
Changes in current assets and
current liabilities 9,094
Decrease in other noncurrent
assets 4,665
Increase in other noncurrent
liabilities (6,163)
Retirement benefits 5,549
Excess tax benefits from share-
based compensation 7
Other, net 22,114
Add: Capital expenditures 141,744
Net cash provided by operating
activities $ 240,553
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)(4) 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
Gain on asset dispositions -
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 14,267
Add: Capital expenditures 101,037
Net cash provided by operating
activities $ 218,211
NONRECURRING ITEMS
(1) - Includes write-down due to impairment of CLEC assets
($16.6 million) and revenue reduction associated with gain from
liquidation of Rural Telephone Bank ($1.3 million), net of
insurance reimbursements associated with previously recorded
hurricane related expenses ($3.0 million).
(2) - Revenue effect of gain from liquidation of Rural Telephone
Bank.
(3) - Includes (i) $32.7 million income tax benefit due to the
recognition of previously unrecognized tax benefits in
accordance with FIN 48, (ii) the after-tax effects of (a) the
gain from liquidation of the Rural Telephone Bank, including
revenue effect, and (b) insurance reimbursements associated
with previously recorded hurricane related expenses, net of
(iii) the after-tax effects of (a) the write-down due to
impairment of CLEC assets and (b) the impairment of a
nonoperating investment.
(4) - Impairment of nonoperating investments (presented on an
after-tax basis).
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Twelve months ended December 31, 2007
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and
cash flow margin
Operating income $ 793,078 37,763 (1) 755,315
Add: Depreciation and
amortization 536,255 - 536,255
Operating cash flow $1,329,333 37,763 1,291,570
Revenues $2,656,241 50,112 (2) 2,606,129
Operating income margin (operating
income divided by revenues) 29.9% 29.0%
Operating cash flow margin
(operating cash flow divided by
revenues) 50.0% 49.6%
Free cash flow (prior to debt
service requirements and dividends)
Net income $ 418,370 64,107 (3) 354,263
Add: Depreciation and
amortization 536,255 - 536,255
Less: Capital expenditures (326,045) - (326,045)
$ 628,580 64,107 564,473
Free cash flow $ 628,580
Gain on asset dispositions (15,643)
Deferred income taxes 1,018
Changes in current assets and
current liabilities 37,608
Decrease in other noncurrent
assets 12,718
Increase in other noncurrent
liabilities (20,372)
Retirement benefits 26,941
Excess tax benefits from share-
based compensation (6,427)
Other, net 39,518
Add: Capital expenditures 326,045
Net cash provided by operating
activities $1,029,986
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)(4) 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 (4) 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 (5) 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)
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 19,085
Add: Capital expenditures 314,071
Net cash provided by operating
activities $ 840,719
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
and (iii) $3.0 million insurance reimbursements associated with
previously recorded hurricane related expenses. These
favorable items were partially offset by (i) write-down due to
impairment of CLEC assets ($16.6 million), (ii) impact of
severance and related costs due to workforce reduction ($2.2
million), and (iii) revenue reduction associated with gain from
liquidation of Rural Telephone Bank ($1.3 million).
(2) - Includes the sum of (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), net
of revenue reduction associated with gain from liquidation of
Rural Telephone Bank ($1.3 million).
(3) - Includes the after-tax impact of Item (1), the after-tax gain
on the sale of a non-core asset, the after-tax gain from
liquidation of Rural Telephone Bank, the after-tax impairment
of a nonoperating investment, and $32.7 million income tax
benefit due to the recognition of previously unrecognized tax
benefits in accordance with FIN 48.
(4) - Severance and related costs due to workforce reduction
(including revenue effect).
(5) - 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.
SOURCE CenturyTel, Inc.
Contact: Tony Davis of CenturyTel, Inc., +1-318-388-9525, tony.davis@centurytel.com