CenturyTel Reports First Quarter Earnings.MONROE Monroe. 1 Industrial city (1990 pop. 54,909), seat of Ouachita parish, SE La., on the Ouachita River; founded c.1785, inc. as a city 1900. The center of the great Monroe Natural Gas Field (discovered 1915), it has important chemical plants, as well as , La. -- CenturyTel CenturyTel, Inc. (NYSE: CTL) formerly named Century Telephone Enterprises, Inc. is a United States telecommunications firm, headquartered in Monroe, Louisiana. , Inc. (NYSE NYSE See: New York Stock Exchange : CTL See control key. 1. CTL - Checkout Test language. 2. CTL - Compiler Target Language. 3. CTL - Computational Tree Logic ) announces operating results for first quarter 2006. --Operating revenues, excluding nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items, rose to $610.3 million from $595.3 million in first quarter 2005. Reported under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , first quarter 2006 operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. were $611.6 million. --Net income, excluding nonrecurring items, was $72.4 million compared to $80.0 million in first quarter 2005. Reported under GAAP, first quarter 2006 net income was $69.4 million compared to $79.6 million in first quarter 2005. --Diluted earnings per share, excluding nonrecurring items, was $.58 in first quarter 2006 and $.59 in first quarter 2005. Reported under GAAP, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of was $.55 in first quarter 2006. --Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $146.9 million in first quarter 2006 compared to $137.3 million in first quarter 2005. --High-speed Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the customers increased by more than 37,000 in the first quarter of 2006, with nearly 286,000 high-speed Internet See broadband. connections in service at the end of the quarter.
----------------------------------------------------------------------
First Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per share Quarter Ended Quarter Ended
amounts and customer data) 3/31/06 3/31/05 % Change
-------------------------------- ------------- ------------- --------
Operating Revenues $ 610,337 $ 595,282 2.5 %
Operating Cash Flow (1) $ 297,620 $ 309,035 (3.7)%
Net Income $ 72,421 $ 79,991 (9.5)%
Diluted Earnings Per Share $ .58 $ .59 (1.7)%
Average Diluted Shares
Outstanding 127,959 137,169 (6.7)%
Capital Expenditures $ 60,088 $ 74,903 (19.8)%
-------------------------------- ------------- ------------- --------
Telephone Access Lines 2,191,747 2,298,491 (4.6)%
High-speed Internet Customers 285,791 173,768 64.5%
----------------------------------------------------------------------
(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.
"Penetration The successful unauthorized breach of a security perimeter. See penetration test. of broadband services See broadband and broadband service provider. into our customer base continued to climb during the first quarter as we added more than 37,000 high-speed Internet subscribers, a new quarterly growth record for CenturyTel," Glen F. Post, III, chairman and chief executive officer, said. "Year-over-year high-speed Internet connections and related revenues grew more than 64% and 53%, respectively, advancing our objective of being the broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). provider of choice in our markets." Operating revenues, excluding nonrecurring items, rose to $610.3 million in first quarter 2006 from $595.3 million in first quarter 2005. Revenue growth, driven primarily by growth in high-speed Internet connections and revenue from metro fiber assets acquired in mid- mid- pref. Middle: midbrain. 2005, more than offset anticipated revenue declines primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower access revenues and universal service funding, and the decline in access lines. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , excluding nonrecurring items, for first quarter 2006 were $447.3 million compared to $418.4 million in first quarter 2005. This increase was primarily due to growth in high-speed Internet connections and our video offerings, along with expenses related to the metro fiber assets acquired in mid-2005. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , excluding nonrecurring items, decreased to $297.6 million from $309.0 million. CenturyTel achieved an operating cash flow margin of 48.8% during the quarter versus 51.9% in first quarter 2005. This margin decline was principally driven by the growth in revenues with lower margins, such as high-speed Internet, fiber transport and CLEC (Competitive Local Exchange Carrier) An organization offering local telephone service that is not one of the traditional telephone companies. The Telecommunications Act of 1996 allowed competition to the incumbent telcos (ILECs), enabling new companies (CLECs) services, and the decline in higher margin revenues associated with lower USF USF University of South Florida USF Universal Service Fund (often part of phone bill in US) USF University of San Francisco USF University of Sioux Falls USF University of St. and access line losses. Net income, excluding nonrecurring items, was $72.4 million compared to $80.0 million in first quarter 2005. Diluted earnings per share, excluding nonrecurring items, was $.58 compared to $.59 in first quarter 2005. First quarter 2006 diluted earnings per share was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by repurchases under the Company's $200 million and $1 billion share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. programs. "Customer demand for bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. services was strong during the quarter as we added more than 47,000 bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. customers. We also continue to experience customer migration from our basic bundle to enhanced bundles which include services such as long distance and high-speed Internet, which we believe strengthens our customer relationships," Post said. Under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), CenturyTel reported operating revenues of $611.6 million in first quarter 2006 compared to $595.3 million in first quarter 2005. In first quarter 2006, the Company reported net income of $69.4 million and diluted earnings per share of $.55, compared to $79.6 million and $.59 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, respectively, in first quarter 2005. Net income in first quarter 2006 includes $3.0 million net after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. expense related to a reduction in workforce. Net income in first quarter 2005 includes $3.7 million after-tax expense related to CenturyTel's purchase and retirement of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $400 million of Series J Notes and $3.3 million net benefit related to the settlement of various income tax audits. For second quarter 2006, CenturyTel expects total revenues of $605 to $615 million and diluted earnings per share of $.54 to $.58. The decline in diluted earnings per share from first quarter to second quarter 2006 is primarily due to increased operating costs operating costs npl → gastos mpl operacionales related to high-speed Internet, long distance and video customer growth, annual wage adjustments effective in the second quarter and the seasonal impact of maintenance activities for our outside plant. For the full year 2006, diluted earnings per share is expected to be in the range of $2.30 to $2.40 versus the previous guidance of $2.20 to $2.35, primarily due to fewer fully diluted shares outstanding as a result of retiring approximately 14.4 million shares in connection with the $500 million accelerated share repurchase program announced in February February: see month. , partially offset by lower than anticipated USF receipts and costs associated with the continued transition of the metro fiber assets acquired in mid-2005. These outlook figures for the second quarter and full year 2006 exclude nonrecurring items, future share repurchases, 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 metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. for management to evaluate the Company's performance, we believe these measurements assist readers in their understanding of period-to-period operating performance and in identifying historical and prospective trends. Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the attached financial statements. Reconciliation of additional non-GAAP financial measures that may be discussed during the earnings call described below will be available on the Company's Web site at www.centurytel.com. Investors are urged to consider these non-GAAP measures in addition to, and not in substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. for, measures prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. 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 866.206.6154. The call will be accessible for replay through May 3, 2006, by calling 888.266.2081 and entering the conference ID number 886448. Investors can also listen to CenturyTel's earnings conference call and replay by accessing the Investor Relations Investor relations The process by which the corporation communicates with its investors. portion of the Company's Web site at www.centurytel.com through May 17, 2006. In addition to historical information, this release includes certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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 ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or if underlying assumptions prove incorrect Incorrect means to not be correct and may also refer to:
n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. basis; the Company's ability to collect its receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed from financially troubled communications companies Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. ; the Company's ability to successfully negotiate collective bargaining agreements The contractual agreement between an employer and a Labor Union that governs wages, hours, and working conditions for employees and which can be enforced against both the employer and the union for failure to comply with its terms. 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; 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 administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2005. 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 April 27, 2006. The Company undertakes no obligation to update any of its forward-looking statements for any reason. CenturyTel (NYSE: CTL) is a leading provider of consumer and business communications solutions in rural areas and small to mid-size cities in 26 states and is included in the S&P 500 Index. The company delivers advanced communications with a personal touch. Visit CenturyTel at www.centurytel.com.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(UNAUDITED)
Three months ended March 31, 2006
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
----------- ----------- -----------
OPERATING REVENUES
Voice (a) $ 217,449 217,449
Network access 225,246 1,128 (1) 224,118
Data 83,238 184 (1) 83,054
Fiber transport and CLEC 35,780 35,780
Other 49,936 49,936
----------- ----------- -----------
611,649 1,312 610,337
----------- ----------- -----------
OPERATING EXPENSES
Cost of services and products 222,952 5,493 (1) 217,459
Selling, general and
administrative 95,940 682 (1) 95,258
Depreciation and amortization 134,565 134,565
----------- ----------- -----------
453,457 6,175 447,282
----------- ----------- -----------
OPERATING INCOME 158,192 (4,863) 163,055
OTHER INCOME (EXPENSE)
Interest expense (50,086) (50,086)
Income from unconsolidated
cellular entity 2,073 2,073
Other income (expense) 2,524 2,524
Income tax expense (43,278) 1,867 (2) (45,145)
----------- ----------- -----------
NET INCOME $ 69,425 (2,996) 72,421
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 0.57 (0.02) 0.59
DILUTED EARNINGS PER SHARE $ 0.55 (0.02) 0.58
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, 2005
-------------------------------------
As adjusted
Less excluding
non- non-
In thousands, except per share As recurring recurring
amounts reported items items
----------- ----------- -----------
OPERATING REVENUES
Voice (a) $ 224,500 224,500
Network access 230,278 230,278
Data 72,906 72,906
Fiber transport and CLEC 20,243 20,243
Other 47,355 47,355
----------- ----------- -----------
595,282 - 595,282
----------- ----------- -----------
OPERATING EXPENSES
Cost of services and products 191,993 191,993
Selling, general and
administrative 94,254 94,254
Depreciation and amortization 132,175 132,175
----------- ----------- -----------
418,422 - 418,422
----------- ----------- -----------
OPERATING INCOME 176,860 - 176,860
OTHER INCOME (EXPENSE)
Interest expense (52,625) (1,196)(3) (51,429)
Income from unconsolidated
cellular entity 1,313 1,313
Other income (expense) 1,535 (1,574)(4) 3,109
Income tax expense (47,467) 2,395 (5) (49,862)
----------- ----------- -----------
NET INCOME $ 79,616 (375) 79,991
=========== =========== ===========
BASIC EARNINGS PER SHARE $ 0.60 0.00 0.60
DILUTED EARNINGS PER SHARE $ 0.59 0.00 0.59
AVERAGE SHARES OUTSTANDING
Basic 132,183 132,183
Diluted 137,169 137,169
DIVIDENDS PER COMMON SHARE $ 0.06 0.06
Increase
(decrease)
excluding
Increase non-
(decrease) recurring
In thousands, except per share amounts as reported items
----------- -----------
OPERATING REVENUES
Voice (a) (3.1%) (3.1%)
Network access (2.2%) (2.7%)
Data 14.2% 13.9%
Fiber transport and CLEC 76.8% 76.8%
Other 5.5% 5.5%
2.7% 2.5%
OPERATING EXPENSES
Cost of services and products 16.1% 13.3%
Selling, general and administrative 1.8% 1.1%
Depreciation and amortization 1.8% 1.8%
8.4% 6.9%
OPERATING INCOME (10.6%) (7.8%)
OTHER INCOME (EXPENSE)
Interest expense (4.8%) (2.6%)
Income from unconsolidated cellular entity 57.9% 57.9%
Other income (expense) 64.4% (18.8%)
Income tax expense (8.8%) (9.5%)
NET INCOME (12.8%) (9.5%)
BASIC EARNINGS PER SHARE (5.0%) (1.7%)
DILUTED EARNINGS PER SHARE (6.8%) (1.7%)
AVERAGE SHARES OUTSTANDING
Basic (7.4%) (7.4%)
Diluted (6.7%) (6.7%)
DIVIDENDS PER COMMON SHARE 4.2% 4.2%
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact.
(2) - Tax effect of item (1).
(3) - Write-off of unamortized deferred debt costs associated with
purchasing and retiring approximately $400 million of Series
J notes.
(4) - Includes (i) $4.8 million debt extinguishment charge related to
purchasing and retiring approximately $400 million of Series J
notes, net of (ii) $3.2 million of interest income related to
the settlement of various income tax audits.
(5) - Includes (i) $1.1 million net tax benefit of Items (3) and (4)
and (ii) $1.3 million tax benefit related to the settlement of
various income tax audits.
(a) 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
MARCH 31, 2006 AND DECEMBER 31, 2005
(UNAUDITED)
March 31, December 31,
2006 2005
------------ ------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 15,320 158,846
Other current assets 237,763 264,170
------------ ------------
Total current assets 253,083 423,016
------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,837,651 7,801,377
Accumulated depreciation (4,603,609) (4,496,891)
------------ ------------
Net property, plant and equipment 3,234,042 3,304,486
------------ ------------
GOODWILL AND OTHER ASSETS
Goodwill 3,432,649 3,432,649
Other 604,367 602,556
------------ ------------
Total goodwill and other assets 4,037,016 4,035,205
------------ ------------
TOTAL ASSETS $ 7,524,141 7,762,707
============ ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities
of long-term debt $ 571,456 276,736
Other current liabilities 406,921 469,494
------------ ------------
Total current liabilities 978,377 746,230
LONG-TERM DEBT 2,353,859 2,376,070
DEFERRED CREDITS AND OTHER LIABILITIES 1,049,124 1,023,134
STOCKHOLDERS' EQUITY 3,142,781 3,617,273
------------ ------------
TOTAL LIABILITIES AND EQUITY $ 7,524,141 7,762,707
============ ============
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2006
-------------------------------------
As
adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
----------- ----------- -----------
Operating cash flow and cash
flow margin
Operating income $ 158,192 (4,863)(1) 163,055
Add: Depreciation and
amortization 134,565 134,565
----------- ----------- -----------
Operating cash flow $ 292,757 (4,863) 297,620
=========== =========== ===========
Revenues $ 611,649 1,312 610,337
=========== =========== ===========
Operating income margin
(operating income divided
by revenues) 25.9% 26.7%
=========== ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 47.9% 48.8%
=========== ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income $ 69,425 (2,996)(1) 72,421
Add: Depreciation and
amortization 134,565 - 134,565
Less: Capital expenditures (60,088) - (60,088)
----------- ----------- -----------
Free cash flow $ 143,902 (2,996) 146,898
=========== =========== ===========
Free cash flow $ 143,902
Income from unconsolidated
cellular entity (2,073)
Deferred income taxes 9,522
Changes in current assets and
current liabilities (31,980)
Increase in other noncurrent
assets (2,193)
Increase (decrease) in other
noncurrent liabilities 957
Retirement benefits 7,378
Excess tax benefits from
share-based compensation (4,186)
Other, net 2,615
Add: Capital expenditures 60,088
-----------
Net cash provided by
operating activities $ 184,030
===========
Three months ended March 31, 2005
-------------------------------------
As
adjusted
Less excluding
non- non-
As recurring recurring
In thousands reported items items
----------- ----------- -----------
Operating cash flow and cash
flow margin
Operating income 176,860 - 176,860
Add: Depreciation and
amortization 132,175 132,175
----------- ----------- -----------
Operating cash flow 309,035 - 309,035
=========== =========== ===========
Revenues 595,282 - 595,282
=========== =========== ===========
Operating income margin
(operating income divided
by revenues) 29.7% 29.7%
=========== ===========
Operating cash flow margin
(operating cash flow divided
by revenues) 51.9% 51.9%
=========== ===========
Free cash flow (prior to debt
service requirements and
dividends)
Net income 79,616 (375)(2) 79,991
Add: Depreciation and
amortization 132,175 - 132,175
Less: Capital expenditures (74,903) - (74,903)
----------- ----------- -----------
Free cash flow 136,888 (375) 137,263
=========== =========== ===========
Free cash flow 136,888
Income from unconsolidated
cellular entity (1,313)
Deferred income taxes 22,141
Changes in current assets and
current liabilities 27,623
Increase in other noncurrent
assets (1,358)
Increase (decrease) in other
noncurrent liabilities (729)
Retirement benefits 6,004
Excess tax benefits from
share-based compensation -
Other, net (7,340)
Add: Capital expenditures 74,903
-----------
Net cash provided by
operating activities 256,819
===========
NONRECURRING ITEMS
(1) - Severance and related costs due to workforce reduction,
including revenue impact (presented on both a pre-tax and an
after-tax basis).
(2) - Includes (i) $3.7 million after-tax expense related to
purchasing and retiring approximately $400 million of Series J
notes, net of (ii) $3.3 million net benefit related to the
settlement of various income tax audits.
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