EX-99.1 2 er.htm PRESS RELEASE er.htm
Exhibit 99.1
 
 
FOR IMMEDIATE RELEASE:
FOR MORE INFORMATION CONTACT:
May 1, 2008
Tony Davis 318.388.9525
tony.davis@centurytel.com
 
 
CenturyTel Reports First Quarter Earnings

MONROE, La… CenturyTel, Inc. (NYSE: CTL) announces operating results for first quarter 2008.
 
· 
Operating revenues increased 7.9% to $648.6 million from $600.9 million in first quarter 2007.
   
· 
Operating cash flow (as defined in the attached financial schedules) grew 7.9% to $319.2 million from $295.9 million in first quarter 2007.
   
· 
Net income, excluding nonrecurring items, rose 10.7% to $86.2 million from $77.9 million in first quarter 2007. Reported under GAAP, net income was $88.8 million in first quarter 2008.
   
· 
Diluted earnings per share, excluding nonrecurring items, increased 19.1% to $.81 in first quarter 2008 from $.68 in first quarter 2007. Reported under GAAP, diluted earnings per share was $.83 in first quarter 2008.
   
· 
Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $167.1 million in first quarter 2008 compared to $156.8 million in first quarter 2007.
   
· 
High-speed Internet customers increased by more than 30,000 in first quarter 2008, resulting in more than 586,000 high-speed Internet customers in service at the end of the quarter, or nearly 28% of total access lines.
 
First Quarter Highlights
                 
(Excluding nonrecurring items reflected in the financial schedules)
 
Quarter Ended
   
Quarter Ended
   
% Change
 
(In thousands, except per share amounts and subscriber data)
 
3/31/08
   
3/31/07
       
                   
Operating Revenues
  $ 648,614     $ 600,855       7.9 %
Operating Cash Flow (1)
  $ 319,177     $ 295,867       7.9 %
Net Income
  $ 86,171     $ 77,870       10.7 %
Diluted Earnings Per Share
  $ .81     $ .68       19.1 %
Average Diluted Shares Outstanding
    106,997       116,308       (8.0 )%
Capital Expenditures
  $ 54,739     $ 48,880       12.0 %
                         
                         
Access Lines (2)
    2,108,000       2,070,000       1.8 %
High-Speed Internet Customers (2)
    586,000       413,000       41.9 %
 
(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 3/31/2008 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 5.8% and high-speed Internet customers increased 27.8%.
 
“CenturyTel’s first quarter net income and earnings per share grew nearly 11% and more than 19% year-over-year, respectively,” Glen F. Post, III, chairman and chief executive officer, said.  “We are pleased with the integration and performance of the Madison River properties acquired last year, our broadband customer growth, and our ability to continue to repurchase CenturyTel stock, all of which contributed to the first quarter earnings per share growth.”
 
Operating revenues increased 7.9% to $648.6 million in first quarter 2008 from $600.9 million in first quarter 2007. Revenue increases during the quarter of approximately $71 million resulted primarily from nearly $48 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 revenues. These increases were partially offset by revenue declines of approximately $23 million, primarily attributable to access line declines and lower access revenues.

Operating expenses for first quarter 2008 were $465.1 million compared to $432.8 million in first quarter 2007. This increase was principally due to expenses associated with the Madison River properties, growth in high-speed Internet customers and increased marketing expenses, which were partially offset by lower depreciation expense associated with fully depreciated assets and lower bad debt expense and personnel costs.

Operating cash flow increased 7.9% to $319.2 million in first quarter 2008 from $295.9 million in first quarter 2007. CenturyTel achieved an operating cash flow margin of 49.2% during the quarter, the same as in first quarter 2007.
 
“CenturyTel generated strong free cash flow of more than $167 million during the quarter,” said Post. “We also returned more than $100 million to shareholders through the repurchase of 2.5 million shares for approximately $94 million, along with more than $7 million in cash dividends. Our solid balance sheet and strong cash flows afford us the flexibility to continue to invest in our networks, acquire valuable 700 MHz spectrum and remain committed to completing our current $750 million share repurchase program.”
 
Net income, excluding nonrecurring items, grew 10.7% to $86.2 million in first quarter 2008 from $77.9 million in first quarter 2007. Diluted earnings per share, excluding nonrecurring items, increased 19.1% to $.81 in first quarter 2008 from $.68 in first quarter 2007. First quarter 2008 diluted earnings per share was favorably impacted by the increase in net income and 8.0% fewer average diluted shares outstanding due to share repurchases during the twelve months ended March 31, 2008.

Under generally accepted accounting principles (GAAP), the Company reported net income of $88.8 million and diluted earnings per share of $.83, in first quarter 2008 compared to $77.9 million and $.68, respectively, in first quarter 2007. Net income and diluted earnings per share in first quarter 2008 include a $2.6 million net after-tax gain on the sale of a non-operating investment during the quarter.

For second quarter 2008, CenturyTel expects total revenues of $647 to $657 million and diluted earnings per share of $.78 to $.82. An expected slight increase in revenues, driven primarily by revenue settlements, is anticipated to be offset primarily by annual wage adjustments effective in the second quarter, higher marketing expenses and the seasonal impact of outside plant maintenance activities.

For the full year 2008, diluted earnings per share is expected to be in the range of $3.05 to $3.20 versus the previous guidance of $2.90 to $3.00, primarily due to first quarter results exceeding expectations, share repurchases completed through April 30, 2008, and the expectation that expenses for the remainder of 2008 will be lower than originally anticipated when 2008 guidance was provided earlier this year.
 
These outlook figures for the second quarter and full year 2008 exclude nonrecurring items, any share repurchases made after April 30, 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 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 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 866.837.9789. The call will be accessible for replay through May 7, 2008, by calling 888.266.2081 and entering the conference ID number 1222754. Investors can also listen to CenturyTel’s earnings conference call and replay by accessing the Investor Relations portion of the Company’s Web site at www.centurytel.com through May 21, 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, 2007, 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 May 1, 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 www.centurytel.com.
 
 
CenturyTel, Inc.
 
CONSOLIDATED STATEMENTS OF INCOME
 
THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 
(UNAUDITED)
 
                                           
   
Three months ended March 31, 2008
   
Three months ended March 31, 2007
           
               
As adjusted
           
As adjusted
       
Increase
 
       
Less
     
excluding
       
Less
 
excluding
       
(decrease)
 
       
non-
     
non-
       
non-
 
non-
 
Increase
   
excluding
 
   
As
 
recurring
     
recurring
   
As
 
recurring
 
recurring
 
(decrease)
   
nonrecurring
 
 In thousands, except per share amounts
 
reported
 
items
     
items
   
reported
 
items
 
items
 
as reported
   
items
 
                                           
 OPERATING REVENUES
                                         
 Voice
  $ 220,480             220,480       211,896         211,896     4.1 %     4.1 %
 Network access
    208,698             208,698       211,399         211,399     (1.3 %)     (1.3 %)
 Data
    126,772             126,772       95,864         95,864     32.2 %     32.2 %
 Fiber transport and CLEC
    39,633             39,633       38,326         38,326     3.4 %     3.4 %
 Other
    53,031             53,031       43,370         43,370     22.3 %     22.3 %
      648,614     -         648,614       600,855     -     600,855     7.9 %     7.9 %
                                                           
 OPERATING EXPENSES
                                                         
 Cost of services and products
    237,812               237,812       213,531           213,531     11.4 %     11.4 %
 Selling, general and administrative
    91,625               91,625       91,457           91,457     0.2 %     0.2 %
 Depreciation and amortization
    135,684               135,684       127,784           127,784     6.2 %     6.2 %
      465,121     -         465,121       432,772     -     432,772     7.5 %     7.5 %
                                                           
 OPERATING INCOME
    183,493     -         183,493       168,083     -     168,083     9.2 %     9.2 %
                                                           
 OTHER INCOME (EXPENSE)
                                                         
 Interest expense
    (50,122 )             (50,122 )     (46,961 )         (46,961 )   6.7 %     6.7 %
 Other income (expense)
    8,417     4,136     (1 )   4,281       5,290           5,290     59.1 %     (19.1 %)
 Income tax expense
    (53,028 )   (1,547 )   (2 )   (51,481 )     (48,542 )         (48,542 )   9.2 %     6.1 %
                                                             
 NET INCOME
  $ 88,760     2,589           86,171       77,870     -     77,870     14.0 %     10.7 %
                                                             
 BASIC EARNINGS PER SHARE
  $ 0.84     0.02           0.81       0.70     -     0.70     20.0 %     15.7 %
 DILUTED EARNINGS PER SHARE
  $ 0.83     0.02           0.81       0.68     -     0.68     22.1 %     19.1 %
                                                             
AVERAGE SHARES OUTSTANDING
                                                     
 Basic
    106,142                 106,142       111,031           111,031     (4.4 %)     (4.4 %)
 Diluted
    106,997                 106,997       116,308           116,308     (8.0 %)     (8.0 %)
                                                             
DIVIDENDS PER COMMON SHARE
  $ 0.0675                 0.0675       0.065           0.065     3.8 %     3.8 %
                                                             
 NONRECURRING ITEMS
                                                           
    (1) -  Gain on the sale of a nonoperating investment.
                                               
 (2) -  Tax effect of item (1).
                                                       
 
 
 
 
CenturyTel, Inc.
 
CONSOLIDATED BALANCE SHEETS
 
MARCH 31, 2008 AND DECEMBER 31, 2007
 
(UNAUDITED)
 
             
   
March 31,
   
December 31,
 
   
2008
   
2007
 
      (in thousands)  
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ 37,539       34,402  
Other current assets
    254,698       257,997  
    Total current assets
    292,237       292,399  
                 
NET PROPERTY, PLANT AND EQUIPMENT
               
Property, plant and equipment
    8,706,712       8,666,106  
Accumulated depreciation
    (5,673,578 )     (5,557,730 )
    Net property, plant and equipment
    3,033,134       3,108,376  
                 
GOODWILL AND OTHER ASSETS
               
Goodwill
    4,010,916       4,010,916  
Other
    781,840       772,862  
    Total goodwill and other assets
    4,792,756       4,783,778  
                 
                 
TOTAL ASSETS
  $ 8,118,127       8,184,553  
                 
                 
LIABILITIES AND EQUITY
               
CURRENT LIABILITIES
               
Short-term debt and current maturities of long-term debt
  $ 85,444       279,898  
Other current liabilities
    440,589       456,637  
    Total current liabilities
    526,033       736,535  
                 
LONG-TERM DEBT
    2,881,310       2,734,357  
DEFERRED CREDITS AND OTHER LIABILITIES
    1,310,800       1,304,456  
STOCKHOLDERS' EQUITY
    3,399,984       3,409,205  
                 
TOTAL LIABILITIES AND EQUITY
  $ 8,118,127       8,184,553  
 
 
 
 
CenturyTel, Inc.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
(UNAUDITED)
 
                                       
                                       
   
Three months ended March 31, 2008
   
Three months ended March 31, 2007
 
                 
As adjusted
               
As adjusted
 
         
Less
     
excluding
         
Less
   
excluding
 
         
non-
     
non-
         
non-
   
non-
 
 In thousands
 
As
   
recurring
     
recurring
   
As
   
recurring
   
recurring
 
   
reported
   
items
     
items
   
reported
   
items
   
items
 
 Operating cash flow and cash flow margin
                                     
   Operating income
  $ 183,493       -         183,493       168,083       -       168,083  
   Add:  Depreciation and amortization
    135,684                 135,684       127,784               127,784  
   Operating cash flow
  $ 319,177       -         319,177       295,867       -       295,867  
                                                   
   Revenues
  $ 648,614       -         648,614       600,855       -       600,855  
                                                   
   Operating income margin (operating income divided by revenues)
    28.3 %               28.3 %     28.0 %             28.0 %
                                                   
   Operating cash flow margin (operating cash flow divided by revenues)
    49.2 %               49.2 %     49.2 %             49.2 %
                                                   
                                                   
 Free cash flow (prior to debt service requirements and dividends)
                                                 
   Net income
  $ 88,760       2,589   (1 )     86,171       77,870       -       77,870  
   Add:  Depreciation and amortization
    135,684       -           135,684       127,784       -       127,784  
   Less:  Capital expenditures
    (54,739 )     -           (54,739 )     (48,880 )     -       (48,880 )
   Free cash flow
  $ 169,705       2,589           167,116       156,774       -       156,774  
                                                     
   Free cash flow
  $ 169,705                           156,774                  
   Gain on asset disposition
    (4,135 )                         -                  
   Deferred income taxes
    8,357                           13,371                  
   Changes in current assets and current liabilities
    (12,277 )                         33,892                  
   (Increase) decrease in other noncurrent assets
    (789 )                         1,032                  
   Decrease in other noncurrent liabilities
    (2,790 )                         (401 )                
   Retirement benefits
    5,474                           5,636                  
   Excess tax benefits from share-based compensation
    136                           (3,032 )                
   Other, net
    11,790                           2,558                  
   Add:  Capital expenditures
    54,739                           48,880                  
   Net cash provided by operating activities
  $ 230,210                           258,710                  
                                                     
                                                     
 NONRECURRING ITEMS
                                                   
   (1) -  Gain on the sale of a nonoperating investment, net of tax.