MONROE, La., May 1 /PRNewswire-FirstCall/ -- 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 Quarter Ended Quarter Ended % Change reflected in the attached 3/31/08 3/31/07 financial schedules) (In thousands, except per share amounts and subscriber data) 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 http://www.centurytel.com. Investors are urged to consider these non-GAAP measures in addition to, and not in substitution for, measures prepared in accordance with GAAP.
Investor Call. As previously announced, CenturyTel's management will host a conference call at 10:30 a.m. Central Time today. Interested parties can access the call by dialing 866.837.9789. 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 http://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 http://www.centurytel.com.
CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2008 AND 2007 (UNAUDITED) Three months ended March 31, 2008 Less As adjusted non- excluding In thousands, except per share As recurring nonrecurring amounts reported items items OPERATING REVENUES Voice $220,480 220,480 Network access 208,698 208,698 Data 126,772 126,772 Fiber transport and CLEC 39,633 39,633 Other 53,031 53,031 648,614 - 648,614 OPERATING EXPENSES Cost of services and products 237,812 237,812 Selling, general and administrative 91,625 91,625 Depreciation and amortization 135,684 135,684 465,121 - 465,121 OPERATING INCOME 183,493 - 183,493 OTHER INCOME (EXPENSE) Interest expense (50,122) (50,122) Other income (expense) 8,417 4,136 (1) 4,281 Income tax expense (53,028) (1,547)(2) (51,481) NET INCOME $88,760 2,589 86,171 BASIC EARNINGS PER SHARE $0.84 0.02 0.81 DILUTED EARNINGS PER SHARE $0.83 0.02 0.81 AVERAGE SHARES OUTSTANDING Basic 106,142 106,142 Diluted 106,997 106,997 DIVIDENDS PER COMMON SHARE $0.0675 0.0675 Three months ended March 31, 2007 As Less adjusted non- excluding In thousands, except per share As recurring nonrecurring amounts reported items items OPERATING REVENUES Voice 211,896 211,896 Network access 211,399 211,399 Data 95,864 95,864 Fiber transport and CLEC 38,326 38,326 Other 43,370 43,370 600,855 - 600,855 OPERATING EXPENSES Cost of services and products 213,531 213,531 Selling, general and administrative 91,457 91,457 Depreciation and amortization 127,784 127,784 432,772 - 432,772 OPERATING INCOME 168,083 - 168,083 OTHER INCOME (EXPENSE) Interest expense (46,961) (46,961) Other income (expense) 5,290 5,290 Income tax expense (48,542) (48,542) NET INCOME 77,870 - 77,870 BASIC EARNINGS PER SHARE 0.70 - 0.70 DILUTED EARNINGS PER SHARE 0.68 - 0.68 AVERAGE SHARES OUTSTANDING Basic 111,031 111,031 Diluted 116,308 116,308 DIVIDENDS PER COMMON SHARE 0.065 0.065 Increase (decrease) Increase excluding In thousands, except per share (decrease) nonrecurring amounts as reported items OPERATING REVENUES Voice 4.1% 4.1% Network access (1.3%) (1.3%) Data 32.2% 32.2% Fiber transport and CLEC 3.4% 3.4% Other 22.3% 22.3% 7.9% 7.9% OPERATING EXPENSES Cost of services and products 11.4% 11.4% Selling, general and administrative 0.2% 0.2% Depreciation and amortization 6.2% 6.2% 7.5% 7.5% OPERATING INCOME 9.2% 9.2% OTHER INCOME (EXPENSE) Interest expense 6.7% 6.7% Other income (expense) 59.1% (19.1%) Income tax expense 9.2% 6.1% NET INCOME 14.0% 10.7% BASIC EARNINGS PER SHARE 20.0% 15.7% DILUTED EARNINGS PER SHARE 22.1% 19.1% AVERAGE SHARES OUTSTANDING Basic (4.4%) (4.4%) Diluted (8.0%) (8.0%) DIVIDENDS PER COMMON SHARE 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 As adjusted Less excluding In thousands As nonrecurring nonrecurring reported items items Operating cash flow and cash flow margin Operating income $183,493 - 183,493 Add: Depreciation and amortization 135,684 135,684 Operating cash flow $319,177 - 319,177 Revenues $648,614 - 648,614 Operating income margin (operating income divided by revenues) 28.3% 28.3% Operating cash flow margin (operating cash flow divided by revenues) 49.2% 49.2% Free cash flow (prior to debt service requirements and dividends) Net income $88,760 2,589 (1) 86,171 Add: Depreciation and amortization 135,684 - 135,684 Less: Capital expenditures (54,739) - (54,739) Free cash flow $169,705 2,589 167,116 Free cash flow $169,705 Gain on asset disposition (4,135) Deferred income taxes 8,357 Changes in current assets and current liabilities (12,277) (Increase) decrease in other noncurrent assets (789) Decrease in other noncurrent liabilities (2,790) Retirement benefits 5,474 Excess tax benefits from share-based compensation 136 Other, net 11,790 Add: Capital expenditures 54,739 Net cash provided by operating activities $230,210 Three months ended March 31, 2007 As adjusted Less excluding In thousands As nonrecurring nonrecurring reported items items Operating cash flow and cash flow margin Operating income 168,083 - 168,083 Add: Depreciation and amortization 127,784 127,784 Operating cash flow 295,867 - 295,867 Revenues 600,855 - 600,855 Operating income margin (operating income divided by revenues) 28.0% 28.0% Operating cash flow margin (operating cash flow divided by revenues) 49.2% 49.2% Free cash flow (prior to debt service requirements and dividends) Net income 77,870 - 77,870 Add: Depreciation and amortization 127,784 - 127,784 Less: Capital expenditures (48,880) - (48,880) Free cash flow 156,774 - 156,774 Free cash flow 156,774 Gain on asset disposition - Deferred income taxes 13,371 Changes in current assets and current liabilities 33,892 (Increase) decrease in other noncurrent assets 1,032 Decrease in other noncurrent liabilities (401) Retirement benefits 5,636 Excess tax benefits from share-based compensation (3,032) Other, net 2,558 Add: Capital expenditures 48,880 Net cash provided by operating activities 258,710 NONRECURRING ITEMS (1) - Gain on the sale of a nonoperating investment, net of tax. 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SOURCE CenturyTel, Inc.