EX-99.1 2 pressrls.htm PRESS RELEASE 7/31/2008 pressrls.htm
Exhibit 99.1
 
News Release
 
 
FOR IMMEDIATE RELEASE:
FOR MORE INFORMATION CONTACT:
July 31, 2008
Tony Davis 318.388.9525
tony.davis@centurytel.com

CenturyTel Reports Second Quarter 2008 Earnings

MONROE, La... CenturyTel, Inc. (NYSE: CTL) announces operating results for second quarter 2008.

·
Operating revenues, excluding nonrecurring items, increased 2.8% to $657.1 million compared to $639.1 million in second quarter 2007. Reported under GAAP, operating revenues decreased 4.6% to $658.1 million, primarily due to a nonrecurring $49 million favorable access dispute settlement in second quarter 2007.

·
Operating cash flow (as defined in the attached financial schedules), excluding nonrecurring items, rose 2.3% to $318.3 million from $311.2 million in second quarter 2007.

·
Net income, excluding nonrecurring items, increased 16.2% to $91.2 million from $78.4 million in second quarter 2007. Net income, reported under GAAP, was $92.2 million compared to $112.3 million in second quarter 2007.

·
Diluted earnings per share, excluding nonrecurring items, rose 24.3% to $.87 in second quarter 2008 compared to $.70 in second quarter 2007, while GAAP diluted earnings per share was $.88 in second quarter 2008 compared to $1.00 in second quarter 2007.

·
Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, rose to $162.5 million in second quarter 2008 compared to $154.8 million in second quarter 2007.
 
 
Second Quarter Highlights
(Excluding nonrecurring items reflected in the attached financial schedules)
(In thousands, except per share amounts and subscriber data)
 
Quarter Ended
6/30/08
 
Quarter Ended
6/30/07
 
% Change
 
Operating Revenues
Operating Cash Flow (1)
Net Income
Diluted Earnings Per Share
Average Diluted Shares Outstanding
Capital Expenditures
 
 
$
$
$
$
 
$
 
657,073
318,266
91,162
.87
104,273
59,659
  
 
$
$
$
$
 
$
 
639,122
311,226
78,434
.70
113,721
57,976
  
 
2.8
2.3
16.2
24.3
(8.3)
2.9
 
%
%
%
%
%
%
 
Access Lines
High-Speed Internet Customers
 
  
 
2,077,000
607,000
    
 
2,205,000
500,000
  
 
(5.8)
21.4
 
%
%
 
(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.
 
“CenturyTel achieved solid second quarter results as operating revenues and diluted earnings per share exceeded our expectations for the quarter,” Glen F. Post, III, chairman and chief executive officer, said. “We generated free cash flow of more than $162 million for the quarter, a nearly 5% increase over second quarter 2007. Our strong cash flows enable us to return significant cash to shareholders through our recently announced dividend increase and the acceleration of our current share repurchase program.”
 
 Operating revenues, excluding nonrecurring items, increased 2.8% to $657.1 million in second quarter 2008 compared to $639.1 million in second quarter 2007. Revenue increases of approximately $41 million were driven primarily by revenues contributed by the Madison River properties acquired April 30, 2007 and growth in high-speed Internet customers, along with selected price increases and favorable network access dispute settlements. These increases more than offset revenue declines of approximately $23 million primarily attributable to lower access revenues, lower universal service fund receipts and access line losses.
 
Operating expenses, excluding nonrecurring items, increased 1.6% to $469.8 million from $462.2 million in second quarter 2007, primarily due to operating costs associated with the Madison River properties, growth in high-speed Internet customers and increased marketing expenses. These increases were partially offset by reduced personnel related costs and lower depreciation expense.

“We completed the integration of the Madison River properties in late June and expect to reach our $17 million annual synergy run rate target by the end of the third quarter,” Post said. “We expect these synergies, along with continued broadband growth and cost containment efforts, to enable CenturyTel to continue to generate solid cash flows in the months ahead.”
 
Operating cash flow, excluding nonrecurring items, for second quarter 2008 increased 2.3% to $318.3 million from $311.2 million in second quarter 2007. CenturyTel achieved an operating cash flow margin
of 48.4% during the quarter versus 48.7% in second quarter 2007.
 
Net income, excluding nonrecurring items, was $91.2 million, a 16.2% increase over the $78.4 million in second quarter 2007. Diluted earnings per share, excluding nonrecurring items, increased 24.3% to $.87 in second quarter 2008 compared to $.70 in second quarter 2007, primarily due to increased operating income, lower interest expense, a lower effective tax rate for 2008 and the reduction in diluted shares outstanding as a result of share repurchases.
 
For the first six months of 2008, operating revenues, excluding nonrecurring items, were $1.31 billion compared to $1.24 billion in 2007, a 5.3% increase. Operating cash flow, excluding nonrecurring items,
was $637.4 million for 2008, a 5.0% increase over the $607.1 million a year ago. Net income, excluding nonrecurring items, increased 13.5% to $177.3 million from $156.3 million in 2007, while diluted earnings per share, excluding nonrecurring items, increased 21.7% to $1.68 from $1.38 in 2007.

 Under generally accepted accounting principles (GAAP), net income for second quarter 2008 was $92.2 million compared to $112.3 million for second quarter 2007. Diluted earnings per share was $.88 in second quarter 2008 compared to $1.00 in second quarter 2007. Second quarter 2008 results include a net $1.3 million after-tax charge related to the freeze of our supplemental executive pension plan and a net $2.3 million benefit related to the resolution of certain income tax audit issues. Second quarter 2007 results include a $30.2 million after-tax positive revenue settlement related to the resolution of network access disputes and a $3.6 million after-tax benefit related to the amended satellite television agreement with EchoStar.

For the first six months of 2008, under GAAP, the Company reported net income of $180.9 million, or $1.71 per diluted share, compared to net income of $190.1 million, or $1.67 per diluted share, for the six months ended June 30, 2007. See the accompanying financial schedules for detail of the Company’s nonrecurring items for the years 2008 and 2007.

For third quarter 2008, CenturyTel expects total revenues of $640 to $650 million and diluted earnings per share of $.79 to $.83.  This decrease in revenues and diluted earnings per share compared to second quarter 2008 is primarily due to approximately $6 million in favorable revenue adjustments recognized in the second quarter, including the network access dispute settlements management discussed during the Company’s first quarter earnings call, that are not expected to reoccur in the third quarter.

 For the full year 2008, diluted earnings per share is expected to be in the range of $3.20 to $3.30, an increase over the $3.05 to $3.20 range previously provided. This increase in 2008 diluted earnings per share guidance is primarily due to the better than anticipated results during second quarter 2008 and share repurchases since April 30.

These outlook figures for second quarter and full year 2008 exclude nonrecurring items, any share repurchases settled after July 31, 2008, and any future mergers, acquisitions, divestitures, or other similar business transactions.
 
“We are pleased with the operational performance and continued share buybacks that are driving an increase in our full year 2008 outlook,” said Post. “We continue to evaluate deployment and technology alternatives for our 700 MHz spectrum and are currently leaning toward the same type of LTE-based deployment that has been discussed by the larger carriers.  We do not foresee material 700 MHz related effects on our capital or operating budgets in either 2008 or 2009 since LTE-based network elements and end-user devices are not expected to be commercially available until early 2010 or later.”

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 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 866.206.5917.  The call will be accessible for replay through August 6, 2008, by calling 888.258.7854 and entering the conference ID number 1253493. 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 August 20, 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 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 July 31, 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 JUNE 30, 2008 AND 2007  
 (UNAUDITED)  
                                                             
   
Three months ended June 30, 2008
    
Three months ended June 30, 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   $ 219,901                   219,901       222,677                   222,677       (1.2 %)     (1.2 %)
     Network access     207,904       1,012       (1 )     206,892       266,202       48,987       (4 )     217,215       (21.9 %)     (4.8 %)
     Data     131,060       21       (1 )     131,039       108,206                       108,206       21.1 %     21.1 %
     Fiber transport and CLEC     43,166                       43,166       40,714       13       (4 )     40,701       6.0 %     6.1 %
     Other     56,075                       56,075       52,192       1,869       (5 )     50,323       7.4 %     11.4 %
      658,106       1,033               657,073       689,991       50,869               639,122       (4.6 %)     2.8 %
                                                                                 
OPERATING EXPENSES
                                                                                
     Cost of services and products     239,626                       239,626       226,388       (4,052 )     (5 )     230,440       5.8 %     4.0 %
     Selling, general and administrative     106,836       7,655       (1 )     99,181       97,456                       97,456       9.6 %     1.8 %
     Depreciation and amortization     130,954                       130,954       134,311                       134,311       (2.5 %)     (2.5 %)
      477,416       7,655               469,761       458,155       (4,052 )             462,207       4.2 %     1.6 %
                                                                                 
OPERATING INCOME
     180,690       (6,622 )             187,312       231,836       54,921               176,915       (22.1 %)     5.9 %
                                                                                 
OTHER INCOME (EXPENSE)
                                                                                
     Interest expense     (49,166 )                     (49,166 )     (57,667 )                     (57,667 )     (14.7 %)     (14.7 %)
     Other income (expense)     12,907       5,425       (2 )     7,482       8,080                       8,080       59.7 %     (7.4 %)
     Income tax expense     (52,264 )     2,202       (3 )     (54,466 )     (69,984 )     (21,090 )     (6 )     (48,894 )     (25.3 %)     11.4 %
                                                                                 
 NET INCOME
   $ 92,167       1,005               91,162       112,265       33,831               78,434       (17.9 %)     16.2 %
                                                                                 
BASIC EARNINGS PER SHARE
   $ 0.89       0.01               0.88       1.03       0.31               0.72       (13.6 %)     22.2 %
DILUTED EARNINGS PER SHARE
   $ 0.88       0.01               0.87       1.00       0.30               0.70       (12.0 %)     24.3 %
                                                                                 
AVERAGE SHARES OUTSTANDING
                                                                          
     Basic     103,644                       103,644       108,405                       108,405       (4.4 %)     (4.4 %)
     Diluted     104,273                       104,273       113,721                       113,721       (8.3 %)     (8.3 %)
                                                                                 
DIVIDENDS PER COMMON SHARE
   $ 0.0675                       0.0675       0.0650                       0.0650       3.8 %     3.8 %
                                                                                 
NONRECURRING ITEMS
                                                                                
   (1) - Curtailment loss related to freezing Supplemental Executive Retirement Plan, including revenue impact.                                  
   (2) - 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 $448,000 net income tax benefit 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.                                                  
           (5) - Reimbursement of amounts upon a change in our satellite television arrangement.                                          
   (6) - Tax effects of items (4) and (5).                                                                          
 
 
 
 CenturyTel, Inc.  
 CONSOLIDATED STATEMENTS OF INCOME  
 SIX MONTHS ENDED JUNE 30, 2008 AND 2007  
 (UNAUDITED)  
                                                             
   
Six months ended June 30, 2008
    
Six months ended June 30, 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
   $ 440,381                   440,381       434,573                   434,573       1.3 %     1.3 %
   Network access
     416,602       1,012       (1 )     415,590       477,601       48,987       (4 )     428,614       (12.8 %)     (3.0 %)
   Data
     257,832       21       (1 )     257,811       204,070                       204,070       26.3 %     26.3 %
   Fiber transport and CLEC
     82,799                       82,799       79,040       13       (4 )     79,027       4.8 %     4.8 %
   Other
     109,106                       109,106       95,562       1,869       (5 )     93,693       14.2 %     16.5 %
      1,306,720       1,033               1,305,687       1,290,846       50,869               1,239,977       1.2 %     5.3 %
                                                                                 
 OPERATING EXPENSES
                                                                                
   Cost of services and products
     477,438                       477,438       439,919       (4,052 )     (5 )     443,971       8.5 %     7.5 %
   Selling, general and administrative
     198,461       7,655       (1 )     190,806       188,913                       188,913       5.1 %     1.0 %
   Depreciation and amortization
     266,638                       266,638       262,095                       262,095       1.7 %     1.7 %
      942,537       7,655               934,882       890,927       (4,052 )             894,979       5.8 %     4.5 %
                                                                                 
 OPERATING INCOME
     364,183       (6,622 )             370,805       399,919       54,921               344,998       (8.9 %)     7.5 %
                                                                                 
 OTHER INCOME (EXPENSE)
                                                                                
   Interest expense
     (99,288 )                     (99,288 )     (104,628 )                     (104,628 )     (5.1 %)     (5.1 %)
   Other income (expense)
     21,324       9,561       (2 )     11,763       13,370                       13,370       59.5 %     (12.0 %)
   Income tax expense
     (105,292 )     655       (3 )     (105,947 )     (118,526 )     (21,090 )     (6 )     (97,436 )     (11.2 %)     8.7 %
                                                                                 
 NET INCOME
   $ 180,927       3,594               177,333       190,135       33,831               156,304       (4.8 %)     13.5 %
                                                                                 
 BASIC EARNINGS PER SHARE
   $ 1.72       0.03               1.69       1.73       0.31               1.42       (0.6 %)     19.0 %
 DILUTED EARNINGS PER SHARE
   $ 1.71       0.03               1.68       1.67       0.29               1.38       2.4 %     21.7 %
                                                                                 
AVERAGE SHARES OUTSTANDING
                                                                          
   Basic
     104,893                       104,893       109,718                       109,718       (4.4 %)     (4.4 %)
   Diluted
     105,635                       105,635       115,015                       115,015       (8.2 %)     (8.2 %)
                                                                                 
DIVIDENDS PER COMMON SHARE
   $ 0.1350                       0.1350       0.130                       0.130       3.8 %     3.8 %
                                                                                 
 NONRECURRING ITEMS
                                                                                
  (1) - Curtailment loss related to freezing Supplemental Executive Retirement Plan, including revenue impact.
                                  
      (2) - Gain on the sale of a nonoperating investment ($4.1 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 $1.1 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.
                                                  
      (5) - Reimbursement of amounts upon a change in our satellite television arrangement.
                                          
      (6) - Tax effects of items (4) and (5).
                                                                          
 
 
 
CenturyTel, Inc.
  
CONSOLIDATED BALANCE SHEETS
  
JUNE 30, 2008 AND DECEMBER 31, 2007
  
(UNAUDITED)
  
             
   
June 30,
    
Dec. 31,
  
   
2008
    
2007
  
      (in thousands)  
ASSETS
            
CURRENT ASSETS
            
Cash and cash equivalents
   $ 63,900       34,402  
Other current assets
     267,416       257,997  
     Total current assets
     331,316       292,399  
                 
NET PROPERTY, PLANT AND EQUIPMENT
                
Property, plant and equipment
     8,751,414       8,666,106  
Accumulated depreciation
     (5,783,574 )     (5,557,730 )
     Net property, plant and equipment
     2,967,840       3,108,376  
                 
GOODWILL AND OTHER ASSETS
                
Goodwill
     4,010,027       4,010,916  
Other
     858,881       772,862  
      Total goodwill and other assets
     4,868,908       4,783,778  
                 
                 
TOTAL ASSETS
   $ 8,168,064       8,184,553  
                 
                 
LIABILITIES AND EQUITY
                
CURRENT LIABILITIES
                
Current maturities of long-term debt
   $ 45,344       279,898  
Other current liabilities
     444,774       456,637  
      Total current liabilities
     490,118       736,535  
                 
LONG-TERM DEBT
     3,016,243       2,734,357  
DEFERRED CREDITS AND OTHER LIABILITIES
     1,286,666       1,304,456  
STOCKHOLDERS' EQUITY
     3,375,037       3,409,205  
                 
TOTAL LIABILITIES AND EQUITY
   $ 8,168,064       8,184,553  
 
 
 
 
CenturyTel, Inc.
  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(UNAUDITED)
  
                                                 
                                                 
   
Three months ended June 30, 2008
    
Three months ended June 30, 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
   $ 180,690       (6,622 )     (1 )     187,312       231,836       54,921       (3 )     176,915  
   Add:  Depreciation and amortization
     130,954                       130,954       134,311                       134,311  
   Operating cash flow
   $ 311,644       (6,622 )             318,266       366,147       54,921               311,226  
                                                                 
   Revenues
   $ 658,106       1,033       (1 )     657,073       689,991       50,869       (3 )     639,122  
                                                                 
   Operating income margin (operating income divided by revenues)
     27.5 %                     28.5 %     33.6 %                     27.7 %
                                                                 
   Operating cash flow margin (operating cash flow divided by revenues)
     47.4 %                     48.4 %     53.1 %                     48.7 %
                                                                 
                                                                 
 Free cash flow (prior to debt service requirements and dividends)
                                                                
   Net income
   $ 92,167       1,005       (2 )     91,162       112,265       33,831       (3 )     78,434  
   Add:  Depreciation and amortization
     130,954                       130,954       134,311                       134,311  
   Less:  Capital expenditures
     (59,659 )                     (59,659 )     (57,976 )                     (57,976 )
   Free cash flow
   $ 163,462       1,005               162,457       188,600       33,831               154,769  
                                                                 
   Free cash flow
   $ 163,462                               188,600                          
   Gain on liquidation of marketable securities
     (4,506 )                             -                          
   Deferred income taxes
     5,068                               16,634                          
   Changes in current assets and current liabilities
     (44,749 )                             36,943                          
   Decrease in other noncurrent assets
     3,043                               2,621                          
   Decrease in other noncurrent liabilities
     (2,689 )                             (11,266 )                        
   Retirement benefits
     12,728                               9,011                          
   Excess tax benefits from share-based compensation
     (55 )                             (3,280 )                        
   Other, net
     4,816                               2,076                          
   Add:  Capital expenditures
     59,659                               57,976                          
   Net cash provided by operating activities
   $ 196,777                               299,315                          
                                                                 
                                                                 
 NONRECURRING ITEMS
                                                                
    (1) - Curtailment loss related to freezing Supplemental Executive Retirement Plan, including revenue impact.
                                          
    (2) - Includes after-tax impact of gain upon liquidation of Supplemental Executive Retirement Plan trust assets ($2.8 million) and net benefit due to the resolution of certain income
  
            tax audit issues ($2.3 million), net of the after-tax impact of Item (1) ($4.1 million).
                                                  
    (3) - Includes $49.0 million revenue recorded upon settlement of a dispute with a carrier and $5.9 million reimbursement of amounts (of which $1.9 million increased revenues)
 
           upon a change in our satellite television arrangement (presented on both a pre-tax and after-tax basis).
                                  
 
 
 
CenturyTel, Inc.
  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
  
(UNAUDITED)
  
                                                 
                                                 
   
Six months ended June 30, 2008
    
Six months ended June 30, 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
   $ 364,183       (6,622 )     (1 )     370,805       399,919       54,921       (3 )     344,998  
    Add:  Depreciation and amortization
     266,638                       266,638       262,095                       262,095  
    Operating cash flow
   $ 630,821       (6,622 )             637,443       662,014       54,921               607,093  
                                                                 
    Revenues
   $ 1,306,720       1,033       (1 )     1,305,687       1,290,846       50,869       (3 )     1,239,977  
                                                                 
    Operating income margin (operating income divided by revenues)
     27.9 %                     28.4 %     31.0 %                     27.8 %
                                                                 
    Operating cash flow margin (operating cash flow divided by revenues)
     48.3 %                     48.8 %     51.3 %                     49.0 %
                                                                 
                                                                 
 Free cash flow (prior to debt service requirements and dividends)
                                                                
    Net income
   $ 180,927       3,594       (2 )     177,333       190,135       33,831       (3 )     156,304  
    Add:  Depreciation and amortization
     266,638                       266,638       262,095                       262,095  
    Less:  Capital expenditures
     (114,398 )                     (114,398 )     (106,856 )                     (106,856 )
    Free cash flow
   $ 333,167       3,594               329,573       345,374       33,831               311,543  
                                                                 
    Free cash flow
   $ 333,167                               345,374                          
    Gain on asset dispositions and liquidation of marketable securities
     (8,641 )                             -                          
    Deferred income taxes
     13,425                               30,005                          
    Changes in current assets and current liabilities
     (57,026 )                             70,835                          
    Decrease in other noncurrent assets
     2,254                               3,653                          
    Decrease in other noncurrent liabilities
     (5,479 )                             (11,667 )                        
    Retirement benefits
     18,202                               14,647                          
    Excess tax benefits from share-based compensation
     (74 )                             (6,312 )                        
    Other, net
     16,761                               4,634                          
    Add:  Capital expenditures
     114,398                               106,856                          
    Net cash provided by operating activities
   $ 426,987                               558,025                          
                                                                 
                                                                 
                                                                 
 NONRECURRING ITEMS
                                                                
     (1) - Curtailment loss related to freezing 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 sale of nonoperating investment
 
             ($2.6 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 $49.0 million revenue recorded upon settlement of a dispute with a carrier and $5.9 million reimbursement of amounts (of which $1.9 million increased revenues) upon a change
  
            in our satellite television arrangement (presented on both a pre-tax and after-tax basis).