MONROE, La., Oct. 27 /PRNewswire-FirstCall/ -- CenturyTel, Inc.
(NYSE: CTL) announces operating results for third quarter 2008.
-- Operating revenues, excluding nonrecurring items, were $650.1 million
compared to $708.3 million for third quarter 2007. (Third quarter 2007
revenues included the recognition of $42.2 million of prior period
revenue settlements.) Reported under GAAP, third quarter 2008 operating
revenues were $650.1 million.
-- Net income, excluding nonrecurring items, was $82.8 million compared to
$108.1 million in third quarter 2007. Reported under GAAP, third
quarter 2008 net income was $84.7 million.
-- Diluted earnings per share, excluding nonrecurring items, was $.82
compared to $.97 in third quarter 2007. Reported under GAAP, third
quarter 2008 diluted earnings per share was $.84.
-- Free cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, was $140.5 million in third quarter 2008
compared to $167.3 million in third quarter 2007.
-- Under the $750 million share repurchase program, 3.7 million shares
were repurchased and retired for $137.5 million during the quarter.
Third Quarter Highlights
(Excluding nonrecurring items Quarter Ended Quarter Ended %Change
reflected in the attached 9/30/08 9/30/07
financial schedules)
(In thousands, except per share
amounts and subscriber data)
Operating Revenues $650,073 $708,306 (8.2)%
Operating Cash Flow (1) $309,079 $363,005 (14.9)%
Net Income $82,760 $108,137 (23.5)%
Diluted Earnings Per Share $.82 $.97 (15.5)%
Average Diluted Shares Outstanding $100,988 $112,229 (10.0)%
Capital Expenditures $70,606 $77,445 (8.8)%
Access Lines 2,041,000 (2) 2,171,000 (6.0)%
High-Speed Internet Customers 628,000 530,000 18.5%
(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) Reflects the disconnect of approximately 1,400 Madison River internal
company lines.
"CenturyTel continued to experience solid demand for broadband services as
we added nearly 20,600 high-speed Internet customers during the third
quarter," Glen F. Post, III, chairman and chief executive officer, said.
"High-speed Internet revenues increased 21% over the same period a year ago,
primarily due to our 18.5% growth in high-speed Internet customers since third
quarter 2007."
Operating revenues, excluding nonrecurring items, for third quarter 2008
were $650.1 million compared to $708.3 million in third quarter 2007. This
$58.2 million decrease was primarily due to $42.2 million of prior period
revenue settlements recognized in third quarter 2007 upon the expiration of a
regulatory monitoring period. The remaining $16.0 million decline primarily
reflects the impact of access line losses and lower access revenues which more
than offset revenue growth related to an increase in high-speed Internet
subscribers.
Operating expenses, excluding nonrecurring items, decreased 2.6% to $469.3
million from $481.9 million in third quarter 2007, primarily due to lower
depreciation expense associated with fully depreciated assets and reduced
personnel expenses. These decreases more than offset an increase associated
with growth in high-speed Internet customers.
Operating cash flow, excluding nonrecurring items, decreased to $309.1
million from $363.0 million in third quarter 2007, primarily due to the lower
prior period revenue settlements and other revenue declines discussed above.
For third quarter 2008, CenturyTel achieved an operating cash flow margin of
47.5% versus 51.2% in third quarter 2007.
"CenturyTel remains focused on providing high-quality, advanced
communication services to our customers, including high bandwidth solutions
that are critical to economic development and job growth," Post said. "Our
strong cash flows enable us to continue to invest in fiber networks, broadband
services and emerging technologies that support the communities we serve and
provide a foundation for future revenue growth."
Net income, excluding nonrecurring items, was $82.8 million in third
quarter 2008 compared to $108.1 million in third quarter 2007. The decrease
was primarily driven by the after-tax impact of the decline in prior period
revenue settlements discussed above, the revenue impact of access line losses
and lower access revenues, along with lower earnings from CenturyTel's
interest in an unconsolidated wireless partnership due to 2007 audit
adjustments recorded by the general partner in third quarter 2008. Diluted
earnings per share, excluding nonrecurring items, was $.82 for third quarter
2008, a 15.5% decrease from the $.97 reported in third quarter 2007. This
decrease was primarily due to the lower net income as discussed above,
partially offset by the 10.0% decline in average diluted shares outstanding as
a result of share repurchases since third quarter 2007.
The Company suspended its share repurchase program on September 15, 2008
due to deterioration in the financial markets.
For the first nine months of 2008, operating revenues, excluding
nonrecurring items, increased to $1.956 billion from $1.948 billion for the
same period in 2007. Operating cash flow, excluding nonrecurring items, was
$946.5 million for the first nine months of 2008 compared to $970.1 million a
year ago. Net income, excluding nonrecurring items, was $260.1 million in the
first nine months of 2008 compared to $264.4 million during the same period in
2007. Diluted earnings per share, excluding nonrecurring items, was $2.50
during the first nine months of 2008 compared to $2.34 in the first nine
months of 2007.
Under generally accepted accounting principles (GAAP), net income for
third quarter 2008 was $84.7 million compared to $113.2 million for third
quarter 2007 and diluted earnings per share for third quarter 2008 was $.84
compared to $1.01 for third quarter 2007. Third quarter 2008 net income and
diluted earnings per share reflect a net after-tax benefit of $2.0 million
($.02 per share) from the sale of a non-core asset. 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 and a net after-
tax gain of $6.4 million ($.06 per share) from the sale of a non-core asset.
Net income under GAAP for the first nine months of 2008 was $265.7 million
compared to $303.3 million for the first nine months of 2007 and diluted
earnings per share for the first nine months of 2008 was $2.55 compared to
$2.68 for the first nine months of 2007. See the accompanying financial
schedules for detail of the Company's nonrecurring items for the nine months
ended September 30, 2008 and 2007.
Outlook. For fourth quarter 2008, CenturyTel expects total revenues of
$635 to $645 million and diluted earnings per share of $.78 to $.83. The
Company has also increased and narrowed the range of anticipated full year
2008 diluted earnings per share guidance from $3.20 to $3.30 to $3.28 to
$3.33, which reflects actual year-to-date results and the fourth quarter
outlook.
All outlook figures provided under this section are presented excluding
the potential impact of any future mergers, acquisitions or divestitures, or
other nonrecurring events.
Reconciliation to GAAP. This release includes certain non-GAAP financial
measures, including but not limited to operating cash flow, free cash flow and
adjustments to GAAP measures to exclude the effect of nonrecurring items. In
addition to providing key metrics for management to evaluate the Company's
performance, we believe these measurements assist investors in their
understanding of period-to-period operating performance and in identifying
historical and prospective trends. Reconciliations of non-GAAP financial
measures to the most comparable GAAP measures are included in the attached
financial 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.
Other. Earlier this morning, CenturyTel and EMBARQ Corporation announced
they had reached a definitive agreement under which CenturyTel will acquire
EMBARQ in a tax-free, stock-for-stock transaction creating one of the leading
communications companies in the United States. Information about the proposed
merger between CenturyTel and EMBARQ can be found in a separate news release
issued today.
Investor Call. CenturyTel and EMBARQ will co-host a conference call with
the financial community today, October 27, 2008, at 10:00 am Eastern Time /
9:00 am Central Time to discuss the transaction announced this morning as well
as CenturyTel's and EMBARQ's third quarter financial results. The conference
call will be streamed live over CenturyTel's Web site at
http://www.centurytel.com and over EMBARQ's Web site at http://www.embarq.com.
Interested parties can also access the call by dialing (866) 610-1072
(international: (973) 935-2840), and referencing code 70807213, ten minutes
prior to the start of the call.
A digital recording of the call will be available as promptly as
practicable and ending November 10, 2008 at 11:59 pm Eastern Time / 10:59 pm
Central Time. The replay can be accessed by dialing
(800) 642-1687 (international: (706) 645-9291) and referencing code 70807213.
A replay of the call will also be available on the investor relations sections
of both companies' web sites.
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 pay a
$2.80 per share common dividend annually, which may be affected by changes in
its cash requirements, capital spending plans, cash flow or financial
position; 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 and plans are described in greater detail in
the Company's Annual Report on Form 10-K for the year ended December 31, 2007,
as updated and supplemented 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 October
27, 2008. The Company undertakes no obligation to update any of its forward-
looking statements for any reason.
Additional Information
CenturyTel and EMBARQ plan to file a joint proxy statement/prospectus with
the SEC. INVESTORS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN
IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. You will
be able to obtain the joint proxy statement/prospectus, as well as other
filings containing information about CenturyTel and EMBARQ, free of charge, at
the website maintained by the SEC at www.sec.gov. Copies of the joint proxy
statement/prospectus and the filings with the SEC that will be incorporated by
reference in the joint proxy statement/prospectus can also be obtained, free
of charge, by directing a request to CenturyTel, 100 CenturyTel Drive, Monroe,
Louisiana, 71203 Attention: Corporate Secretary, or to EMBARQ, 5454 W. 100th
Street, Overland Park, Kansas, 66211, Attention: Shareholder Relations. The
respective directors and executive officers of CenturyTel and EMBARQ and other
persons may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information regarding CenturyTel's
directors and executive officers is available in its proxy statement filed
with the SEC by CenturyTel on March 27, 2008, and information regarding EMBARQ
directors and executive officers is available in its proxy statement filed
with the SEC by EMBARQ on March 17, 2008. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained the
joint proxy statement/prospectus and other relevant materials to be filed with
the SEC when they become available. This communication shall not constitute an
offer to sell or the solicitation of an offer to sell or the solicitation of
an offer to buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of
1933, as amended.
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, 2008 AND 2007
(UNAUDITED)
Three months ended September 30, 2008
As adjusted
Less excluding
non- non-
In thousands, except per As recurring recurring
share amounts reported items items
OPERATING REVENUES
Voice $218,253 218,253
Network access 205,385 205,385
Data 132,631 132,631
Fiber transport and CLEC 38,006 38,006
Other 55,798 55,798
650,073 - 650,073
OPERATING EXPENSES
Cost of services and products 242,243 242,243
Selling, general and
administrative 98,751 98,751
Depreciation and amortization 128,352 128,352
469,346 - 469,346
OPERATING INCOME 180,727 - 180,727
OTHER INCOME (EXPENSE)
Interest expense (49,483) (49,483)
Other income (expense) 4,113 3,152 (1) 961
Income tax expense (50,624) (1,179)(2) (49,445)
NET INCOME $84,733 1,973 82,760
BASIC EARNINGS PER SHARE $0.84 0.02 0.82
DILUTED EARNINGS PER SHARE $0.84 0.02 0.82
AVERAGE SHARES OUTSTANDING
Basic 100,402 100,402
Diluted 100,988 100,988
DIVIDENDS PER COMMON SHARE $1.3325 1.3325
Three months ended September 30, 2007
As adjusted Increase
Less excluding (decrease)
In thousands, non- non- Increase excluding
except per As recurring recurring (decrease) nonrecurring
share amounts reported items items as reported items
OPERATING REVENUES
Voice 229,862 229,862 (5.1%) (5.1%)
Network access 248,490 527(3) 247,963 (17.3%) (17.2%)
Data 134,630 134,630 (1.5%) (1.5%)
Fiber transport
and CLEC 41,811 41,811 (9.1%) (9.1%)
Other 54,040 54,040 3.3% 3.3%
708,833 527 708,306 (8.3%) (8.2%)
OPERATING EXPENSES
Cost of services
and products 246,430 1,967(3) 244,463 (1.7%) (0.9%)
Selling, general
and
administrative 101,612 774(3) 100,838 (2.8%) (2.1%)
Depreciation and
amortization 136,606 136,606 (6.0%) (6.0%)
484,648 2,741 481,907 (3.2%) (2.6%)
OPERATING INCOME 224,185 (2,214) 226,399 (19.4%) (20.2%)
OTHER INCOME
(EXPENSE)
Interest expense (55,176) (55,176) (10.3%) (10.3%)
Other income
(expense) 14,761 10,437(4) 4,324 (72.1%) (77.8%)
Income tax
expense (70,568) (3,158)(5) (67,410) (28.3%) (26.7%)
NET INCOME 113,202 5,065 108,137 (25.1%) (23.5%)
BASIC EARNINGS
PER SHARE 1.04 0.05 0.99 (19.2%) (17.2%)
DILUTED EARNINGS
PER SHARE 1.01 0.05 0.97 (16.8%) (15.5%)
AVERAGE SHARES
OUTSTANDING
Basic 108,996 108,996 (7.9%) (7.9%)
Diluted 112,229 112,229 (10.0%) (10.0%)
DIVIDENDS PER
COMMON SHARE 0.0650 0.0650 1,950.0% 1,950.0%
NONRECURRING ITEMS
(1) - Gain on the sale of a non-core asset.
(2) - Tax effect of item (1).
(3) - Severance and related costs due to workforce reduction,
including revenue impact.
(4) - Gain on the sale of a non-core asset.
(5) - Tax effect of items (3) and (4).
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
(UNAUDITED)
Nine months ended September 30, 2008
As adjusted
Less excluding
non- non-
In thousands, except per As recurring recurring
share amounts reported items items
OPERATING REVENUES
Voice $658,634 658,634
Network access 621,987 1,012(1) 620,975
Data 390,463 21(1) 390,442
Fiber transport and CLEC 120,805 120,805
Other 164,904 164,904
1,956,793 1,033 1,955,760
OPERATING EXPENSES
Cost of services and products 719,681 719,681
Selling, general and
administrative 297,212 7,655(1) 289,557
Depreciation and amortization 394,990 394,990
1,411,883 7,655 1,404,228
OPERATING INCOME 544,910 (6,622) 551,532
OTHER INCOME (EXPENSE)
Interest expense (148,771) (148,771)
Other income (expense) 25,437 12,713(2) 12,724
Income tax expense (155,916) (524)(3) (155,392)
NET INCOME $265,660 5,567 260,093
BASIC EARNINGS PER SHARE $2.57 0.05 2.51
DILUTED EARNINGS PER SHARE $2.55 0.05 2.50
AVERAGE SHARES OUTSTANDING
Basic 103,396 103,396
Diluted 104,086 104,086
DIVIDENDS PER COMMON SHARE $1.4675 1.4675
Nine months ended September 30, 2007
As adjusted Increase
Less excluding (decrease)
In thousands, non- non- Increase excluding
except per As recurring recurring (decrease) nonrecurring
share amounts reported items items as reported items
OPERATING REVENUES
Voice 664,435 664,435 (0.9%) (0.9%)
Network access 726,091 49,514(4) 676,577 (14.3%) (8.2%)
Data 338,700 338,700 15.3% 15.3%
Fiber transport
and CLEC 120,851 13(4) 120,838 (0.0%) (0.0%)
Other 149,602 1,869(5) 147,733 10.2% 11.6%
1,999,679 51,396 1,948,283 (2.1%) 0.4%
OPERATING EXPENSES
Cost of services
and products 686,349 (2,085)(6) 688,434 4.9% 4.5%
Selling, general
and
administrative 290,525 774(6) 289,751 2.3% (0.1%)
Depreciation and
amortization 398,701 398,701 (0.9%) (0.9%)
1,375,575 (1,311) 1,376,886 2.6% 2.0%
OPERATING INCOME 624,104 52,707 571,397 (12.7%) (3.5%)
OTHER INCOME
(EXPENSE)
Interest expense (159,804) (159,804) (6.9%) (6.9%)
Other income
(expense) 28,131 10,437(7) 17,694 (9.6%) (28.1%)
Income tax
expense (189,094) (24,248)(8) (164,846) (17.5%) (5.7%)
NET INCOME 303,337 38,896 264,441 (12.4%) (1.6%)
BASIC EARNINGS
PER SHARE 2.77 0.36 2.41 (7.2%) 4.1%
DILUTED EARNINGS
PER SHARE 2.68 0.34 2.34 (4.9%) 6.8%
AVERAGE SHARES
OUTSTANDING
Basic 109,478 109,478 (5.6%) (5.6%)
Diluted 114,086 114,086 (8.8%) (8.8%)
DIVIDENDS PER
COMMON SHARE 0.1950 0.1950 652.6% 652.6%
NONRECURRING ITEMS
(1) - Curtailment loss related to Supplemental Executive Retirement
Plan, including revenue impact.
(2) - Gain on the sales of non-core assets ($7.3 million), gain upon
liquidation of Supplemental Executive Retirement Plan trust
assets ($4.5 million), and interest income recorded upon the
resolution of certain income tax audit issues ($919,000).
(3) - Includes $2.3 million net income tax expense related to items
(1) and (2) and $1.8 million income tax benefit recorded upon
resolution of certain income tax audit issues.
(4) - 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).
(5) - Reimbursement of amounts upon a change in our satellite
television arrangement.
(6) - 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).
(7) - Gain on sale of non-core asset.
(8) - Tax effects of items (4) through (7).
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
(UNAUDITED)
September 30, December 31,
2008 2007
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $258,957 34,402
Other current assets 249,826 257,997
Total current assets 508,783 292,399
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 8,793,320 8,666,106
Accumulated depreciation (5,877,970) (5,557,730)
Net property, plant and
equipment 2,915,350 3,108,376
GOODWILL AND OTHER ASSETS
Goodwill 4,010,027 4,010,916
Other 838,742 772,862
Total goodwill and other
assets 4,848,769 4,783,778
TOTAL ASSETS $8,272,902 8,184,553
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term
debt $45,357 279,898
Other current liabilities 429,356 456,637
Total current liabilities 474,713 736,535
LONG-TERM DEBT 3,299,266 2,734,357
DEFERRED CREDITS AND OTHER
LIABILITIES 1,302,683 1,304,456
STOCKHOLDERS' EQUITY 3,196,240 3,409,205
TOTAL LIABILITIES AND EQUITY $8,272,902 8,184,553
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended September 30, 2008
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $180,727 - 180,727
Add: Depreciation and
amortization 128,352 - 128,352
Operating cash flow $309,079 - 309,079
Revenues $650,073 - 650,073
Operating income margin (operating
income divided by revenues) 27.8% 27.8%
Operating cash flow margin
(operating cash flow divided by
revenues) 47.5% 47.5%
Free cash flow (prior to debt
service requirements and dividends)
Net income $84,733 1,973(1) 82,760
Add: Depreciation and
amortization 128,352 - 128,352
Less: Capital expenditures (70,606) - (70,606)
Free cash flow $142,479 1,973 140,506
Free cash flow $142,479
Gain on asset dispositions (3,811)
Deferred income taxes 10,532
Changes in current assets and
current liabilities 3,337
Decrease in other noncurrent
assets 3,854
Increase (decrease) in other
noncurrent liabilities 1,501
Retirement benefits 3,144
Excess tax benefits from share-
based compensation (713)
Other, net 9,317
Add: Capital expenditures 70,606
Net cash provided by operating
activities $240,246
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)(2) 226,399
Add: Depreciation and
amortization 136,606 - 136,606
Operating cash flow 360,791 (2,214) 363,005
Revenues 708,833 527(2) 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(3) 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)
Decrease in other noncurrent
assets 4,400
Increase (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
NONRECURRING ITEMS
(1) - Gain on the sale of a non-core asset, net of tax.
(2) - Severance and related costs due to workforce reduction, including
revenue impact (presented on a pre-tax basis).
(3) - After-tax effect of gain on sale of non-core asset and severance
and related costs due to workforce reduction.
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Nine months ended September 30, 2008
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
Operating cash flow and cash flow
margin
Operating income $544,910 (6,622)(1) 551,532
Add: Depreciation and
amortization 394,990 - 394,990
Operating cash flow $939,900 (6,622) 946,522
Revenues $1,956,793 1,033(1) 1,955,760
Operating income margin (operating
income divided by revenues) 27.8% 28.2%
Operating cash flow margin
(operating cash flow divided by
revenues) 48.0% 48.4%
Free cash flow (prior to debt
service requirements and dividends)
Net income $265,660 5,567(2) 260,093
Add: Depreciation and
amortization 394,990 - 394,990
Less: Capital expenditures (185,004) - (185,004)
Free cash flow $475,646 5,567 470,079
Free cash flow $475,646
Gain on asset dispositions and
liquidation of marketable
securities (12,452)
Deferred income taxes 23,957
Changes in current assets and
current liabilities (53,689)
Decrease in other noncurrent
assets 6,108
Decrease in other noncurrent
liabilities (3,978)
Retirement benefits 21,346
Excess tax benefits from share-
based compensation (787)
Other, net 26,078
Add: Capital expenditures 185,004
Net cash provided by operating
activities $667,233
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(3) 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(4) 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(5) 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 and
liquidation of marketable
securities (10,436)
Deferred income taxes 43,111
Changes in current assets and
current liabilities 28,514
Decrease in other noncurrent
assets 8,053
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
NONRECURRING ITEMS
(1) - Curtailment loss related to Supplemental Executive Retirement
Plan, including revenue impact.
(2) - Includes (i) after-tax impact of gain upon liquidation of
Supplemental Executive Retirement Plan trust assets ($2.8
million), (ii) after-tax impact of gain on sales of non-core
assets ($4.6 million), and (iii) net benefit due to the
resolution of certain income tax audit issues ($2.3 million), all
partially offset by the after-tax impact of Item (1) ($4.1
million).
(3) - 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).
(4) - 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).
(5) - Includes after-tax gain on sale of non-core asset and the
after-tax effect of Item (3).
SOURCE CenturyTel, Inc.
Contact: Tony Davis of CenturyTel, Inc., +1-318-388-9525, tony.davis@centurytel.com