MONROE, La., April 30 /PRNewswire-FirstCall/ -- CenturyTel, Inc. (NYSE: CTL) announces operating results for first quarter 2009.
- Operating revenues, excluding nonrecurring items, decreased 2.0% to $635.4 million from $648.6 million in first quarter 2008. Reported under GAAP (generally accepted accounting principles), operating revenues for first quarter 2009 were $636.4 million.
- Operating cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $305.5 million in first quarter 2009 compared to $319.2 million in first quarter 2008.
- Net income attributable to CenturyTel, excluding nonrecurring items, for first quarter 2009 was $81.9 million versus $86.2 million in first quarter 2008. Reported under GAAP, net income attributable to CenturyTel was $67.2 million in first quarter 2009 and $88.8 million in first quarter 2008.
- Diluted earnings per share, excluding nonrecurring items, increased 2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008. Reported under GAAP, diluted earnings per share was $.67 in first quarter 2009 and $.82 in first quarter 2008.
- Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items and $6.4 million of capital expenditures related to the EMBARQ integration, was $170.4 million in first quarter 2009 compared to $167.1 million in first quarter 2008.
- High-speed Internet customers increased by more than 24,000 in first quarter 2009, resulting in more than 665,000 high-speed Internet customers in service at the end of the quarter, or nearly 34% of total access lines.
First Quarter Highlights
(Excluding
nonrecurring items
reflected in the
attached financial
schedules)
Quarter Ended Quarter Ended
(In thousands, except 3/31/09 3/31/08 % Change
per share amounts
and subscriber data)
Operating Revenues $635,357 $648,614 (2.0)%
Operating Cash Flow(1) $305,521 $319,177 (4.3)%
Net Income
Attributable to
CenturyTel $81,898 $86,171 (5.0)%
Diluted Earnings Per
Share $.82 $.80 2.5%
Average Diluted
Shares Outstanding 99,144 106,675 (7.1)%
Capital Expenditures $45,496 (2) $54,739 (16.9)%
Access Lines 1,967,000 2,108,000 (6.7)%
High-Speed Internet
Customers 665,000 586,000 13.5%
(1) Operating Cash Flow is a non-GAAP financial measure. A reconciliation
of this item to comparable GAAP measures is included in the attached
financial schedules.
(2) Includes $6.4 million of capital expenditures related to the
integration of EMBARQ.
"CenturyTel achieved solid operating results and generated free cash flow of $170 million during the first quarter," Glen F. Post, III, chairman and chief executive officer, said. "Broadband demand was strong as we added 24,000 high-speed Internet customers during the quarter, an 81% improvement over fourth quarter 2008."
Operating revenues, excluding nonrecurring items, decreased 2.0% to $635.4 million in first quarter 2009 from $648.6 million in first quarter 2008. Revenue increases during the quarter of approximately $23 million resulted primarily from growth in high-speed Internet customers and growth in fiber transport revenues. These increases were more than offset by revenue declines of approximately $36 million, primarily attributable to access line declines and lower access revenues.
Operating expenses, excluding nonrecurring items, decreased 1.7% to $457.4 million in first quarter 2009 from $465.1 million in first quarter 2008 primarily due to lower depreciation expense associated with fully depreciated assets which was partially offset by increased expenses due to growth in high-speed Internet customers, higher bad debt expense and higher personnel-related costs.
Operating cash flow, excluding nonrecurring items, decreased 4.3% to $305.5 million in first quarter 2009 from $319.2 million in first quarter 2008. CenturyTel achieved an operating cash flow margin of 48.1% during the quarter.
"We have made solid progress toward completing the EMBARQ merger as both companies' shareholders overwhelmingly approved the merger in late January and to date, we have received approval from 10 of the 15 states which require formal approval," said Post. "We continue to expect to receive all necessary state and federal regulatory approvals and to complete the merger during the second quarter. This strategic combination of CenturyTel and EMBARQ creates a larger and financially stronger company, and I am confident we will be well positioned to drive long-term shareholder value and deliver the reliable, high-quality communications services our customers and communities want and need."
Net income attributable to CenturyTel, excluding nonrecurring items, decreased 5.0% to $81.9 million in first quarter 2009 from $86.2 million in first quarter 2008. Diluted earnings per share, excluding nonrecurring items, increased 2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008. First quarter 2009 diluted earnings per share was favorably impacted by the 7.1% fewer average diluted shares outstanding due to share repurchases during the twelve months ended March 31, 2009.
Under generally accepted accounting principles (GAAP), the Company reported net income attributable to CenturyTel of $67.2 million and diluted earnings per share of $.67 in first quarter 2009 compared to $88.8 million and $.82, respectively, in first quarter 2008. Net income and diluted earnings per share in first quarter 2009 include an aggregate after-tax charge of $10.9 million associated with the discontinuance of our supplemental executive retirement plan; a $5.0 million after-tax cost associated with our October 2008 bridge credit facility related to the EMBARQ acquisition; and a $4.7 million after-tax charge related to integration costs associated with our pending acquisition of EMBARQ. Such factors were partially offset by a $5.8 million tax benefit associated with the reduction of a deferred tax asset valuation allowance.
New accounting pronouncements effective first quarter 2009. First quarter 2009 results include the effects of two new accounting pronouncements, SFAS 160 and FSP EITF 03-6-1. SFAS 160 requires that noncontrolling interests be recognized as equity on the balance sheet and net income attributable to noncontrolling interests be included in consolidated net income. FSP EITF 03-6-1 requires that outstanding non-vested restricted stock be considered a participating security and therefore included in the earnings allocation in computing earnings per share under the two-class method. Both pronouncements require prior periods to be recast using the current applicable guidance; therefore, our first quarter 2008 results of operations included in this press release reflect the retroactive application of these new accounting pronouncements.
For second quarter 2009, CenturyTel expects total revenues of $628 to $638 million and diluted earnings per share of $.77 to $.81. The seasonal impact of outside plant maintenance activities, along with annual wage adjustments effective in the second quarter, will result in higher cash expenses compared to the first quarter of 2009.
These outlook figures, along with previously announced guidance for full year 2009, exclude the effects of nonrecurring items, the pending EMBARQ acquisition and any changes in operating or capital plans related thereto, the pending conversion to price cap regulation recently approved by the Federal Communications Commission, and any future mergers, acquisitions, divestitures or other similar business transactions.
We expect to update our outlook after completing the EMBARQ acquisition. We currently expect to close the transaction during second quarter 2009, subject to the receipt of regulatory approvals and satisfaction of other conditions.
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 schedules. 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 866.206.6509. The call will be accessible for replay through May 6, 2009, by calling 888.266.2081 and entering the conference ID number 1346640. 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 20, 2009.
Certain non-historical statements made in this release and future oral or written statements or press releases by us or our management, in each case as they relate to CenturyTel or EMBARQ, the operations of either such company or our pending merger with EMBARQ, are intended to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond our control. Actual results or performance by CenturyTel or EMBARQ, and issues relating to our pending merger with EMBARQ, 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 impact actual results of CenturyTel or EMBARQ, the combined company or the pending merger 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 (including the Federal Communication Commission's proposed rules regarding inter-carrier compensation and the Universal Service Fund described in our recent SEC reports); our ability to effectively adjust to changes in the communications industry; our ability to successfully complete our pending merger with EMBARQ, including timely receiving all regulatory approvals; the possibility that the anticipated benefits from the merger cannot be fully realized in a timely manner or at all, or that integrating EMBARQ's operations into ours will be more difficult, disruptive or costly than anticipated; our ability to effectively manage our expansion opportunities, including successfully integrating newly-acquired or newly-developed businesses into our operations and retaining and hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to pay a $2.80 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this prospectus or other of our filings with 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 business and our plans are described in greater detail in Item 1A to our Form 10-K for the year ended December 31, 2008, as updated and supplemented by our subsequent SEC reports. You should be aware that new factors may emerge from time to time and it is not possible for us to identify all such factors nor can we 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 hereof. We undertake no obligation to update any of our forward-looking statements for any reason, whether as a result of new information, future events or otherwise.
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, 2009 AND 2008
(UNAUDITED)
Three months ended March 31, 2009
--------------------------------------------
As adjusted
excluding
Less non- non-
In thousands, except As recurring recurring
per share amounts reported items items
------------ ----------- -----------
OPERATING REVENUES
Voice $209,918 209,918
Network access 192,844 1,028 (1) 191,816
Data 139,937 139,937
Fiber
transport
and CLEC 41,498 41,498
Other 52,188 52,188
------ ----- ------
636,385 1,028 635,357
------- ----- -------
OPERATING EXPENSES
Cost of services
and products 234,631 234,631
Selling, general
and administrative 109,845 14,640 (2) 95,205
Depreciation and
amortization 127,572 127,572
------- ------ -------
472,048 14,640 457,408
------- ------ -------
OPERATING INCOME 164,337 (13,612) 177,949
OTHER INCOME (EXPENSE)
Interest expense (52,032) (52,032)
Other income
(expense) (1,818) (8,000) (3) 6,182
Income tax
expense (43,107) 6,868 (4) (49,975)
------ ------- ------
NET INCOME 67,380 (14,744) 82,124
Less: Net income
attributable
to noncontrolling
interests (226) (226)
---- ------- ----
NET INCOME
ATTRIBUTABLE
TO CENTURYTEL, INC. $67,154 (14,744) 81,898
======= ======= ======
BASIC EARNINGS PER
SHARE $0.67 (0.15) 0.82
DILUTED EARNINGS PER
SHARE $0.67 (0.15) 0.82
AVERAGE SHARES OUTSTANDING
Basic 99,126 99,126
Diluted 99,144 99,144
DIVIDENDS PER COMMON
SHARE $0.7000 0.7000
Three months ended March 31, 2008
----------------------------------------
As adjusted
excluding
Less non- non-
In thousands, except As recurring recurring
per share 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) 8,663 4,136 (5) 4,527
Income tax expense (53,028) (1,547) (6) (51,481)
------ ----- ------
NET INCOME 89,006 2,589 86,417
Less: Net income
attributable
to noncontrolling
interests (246) (246)
---- ----- ----
NET INCOME
ATTRIBUTABLE
TO CENTURYTEL, INC. 88,760 2,589 86,171
====== ===== ======
BASIC EARNINGS PER
SHARE 0.83 0.02 0.80
DILUTED EARNINGS PER
SHARE 0.82 0.02 0.80
AVERAGE SHARES OUTSTANDING
Basic 106,142 106,142
Diluted 106,675 106,675
DIVIDENDS PER COMMON
SHARE 0.0675 0.0675
Increase
(decrease)
Increase excluding
In thousands, except (decrease) nonrecurring
per share amounts as reported items
----------- -----------
OPERATING REVENUES
Voice (4.8%) (4.8%)
Network access (7.6%) (8.1%)
Data 10.4% 10.4%
Fiber
transport
and CLEC 4.7% 4.7%
Other (1.6%) (1.6%)
(1.9%) (2.0%)
OPERATING EXPENSES
Cost of services
and products (1.3%) (1.3%)
Selling, general
and administrative 19.9% 3.9%
Depreciation and
amortization (6.0%) (6.0%)
1.5% (1.7%)
OPERATING INCOME (10.4%) (3.0%)
OTHER INCOME (EXPENSE)
Interest expense 3.8% 3.8%
Other income
(expense) (121.0%) 36.6%
Income tax
expense (18.7%) (2.9%)
NET INCOME (24.3%) (5.0%)
Less: Net income
attributable
to noncontrolling
interests (8.1%) (8.1%)
NET INCOME
ATTRIBUTABLE
TO CENTURYTEL, INC. (24.3%) (5.0%)
BASIC EARNINGS PER
SHARE (19.3%) 2.5%
DILUTED EARNINGS PER
SHARE (18.3%) 2.5%
AVERAGE SHARES OUTSTANDING
Basic (6.6%) (6.6%)
Diluted (7.1%) (7.1%)
DIVIDENDS PER COMMON
SHARE 937.0% 937.0%
NONRECURRING ITEMS
(1) - Revenue impact of settlement loss related to Supplemental Executive
Retirement Plan.
(2) - Includes settlement loss related to Supplemental Executive
Retirement Plan ($7.7 million) and integration costs associated with
pending acquisition of EMBARQ ($6.9 million).
(3) - Costs associated with our October 2008 $800 million bridge credit
facility related to the EMBARQ acquisition.
(4) - Includes $5.8 million income tax benefit caused by a reduction to
our deferred tax asset valuation allowance and $7.8 million income
tax benefit related to items (1) through (3); net of $6.7 million
income tax expense due to the nondeductible portion of settlement
payments related to the Supplemental Executive Retirement Plan.
(5) - Gain on the sale of a nonoperating investment.
(6) - Tax effect of item (5).
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2009 AND DECEMBER 31, 2008
(UNAUDITED)
March 31, December 31,
2009 2008
--------- ---------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $61,230 243,327
Other current assets 259,400 312,080
------- -------
Total current assets 320,630 555,407
------- -------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 8,900,683 8,868,451
Accumulated depreciation (6,079,113) (5,972,559)
---------- ----------
Net property, plant and equipment 2,821,570 2,895,892
---------- ----------
GOODWILL AND OTHER ASSETS
Goodwill 4,015,674 4,015,674
Other 775,939 787,222
------- -------
Total goodwill and other assets 4,791,613 4,802,896
--------- ---------
TOTAL ASSETS $7,933,813 8,254,195
========== =========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $20,148 20,407
Other current liabilities 394,714 437,983
------- -------
Total current liabilities 414,862 458,390
LONG-TERM DEBT 3,002,402 3,294,119
DEFERRED CREDITS AND OTHER LIABILITIES 1,341,340 1,333,878
STOCKHOLDERS' EQUITY 3,175,209 3,167,808
--------- ---------
TOTAL LIABILITIES AND EQUITY $7,933,813 8,254,195
========== =========
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2009
---------------------------------------
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
reported items items
---------- ---------- -------------
Operating cash flow
and cash flow margin
Operating income $164,337 (13,612) (1) 177,949
Add: Depreciation
and amortization 127,572 - 127,572
------- --- -------
Operating
cash flow $291,909 (13,612) 305,521
======== ======= =======
Revenues $636,385 1,028 (2) 635,357
======== ===== =======
Operating income
margin (operating
income divided by
revenues) 25.8% 28.0%
==== ====
Operating cash flow
margin (operating
cash flow divided by
revenues) 45.9% 48.1%
==== ====
Free cash flow (prior
to debt service
requirements and
dividends)
Net income
attributable
to CenturyTel, Inc. $67,154 (14,744) (3) 81,898
Add: Depreciation
and amortization 127,572 - 127,572
Less: Capital
expenditures (45,496) - (45,496) (5)
------- --- -------
Free cash flow $149,230 (14,744) 163,974
======== ======= =======
Free cash flow $149,230
Gain on asset
disposition -
Deferred
income taxes 17,249
Changes in
current assets
and current
liabilities 33,031
Increase in other
noncurrent assets (306)
Decrease in
other
noncurrent
liabilities (2,779)
Retirement benefits (23,497)
Excess tax
benefits from
share-based
compensation (335)
Other, net 12,078
Add: Capital
expenditures 45,496
------
Net cash
provided by
operating
activities $230,167
========
Three months ended March 31, 2008
-----------------------------------------
As adjusted
Less excluding
non- non-
In thousands As recurring recurring
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
attributable to
CenturyTel, Inc. 88,760 2,589 (4) 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 (4,136)
Deferred
income taxes 8,357
Changes in current
assets and current
liabilities (12,277)
Increase in other
noncurrent assets (789)
Decrease in other
noncurrent liabilities (2,790)
Retirement
benefits 5,474
Excess tax benefits
from share-based
compensation (19)
Other, net 11,946
Add: Capital
expenditures 54,739
------
Net cash provided
by operating
activities 230,210
=======
NONRECURRING ITEMS
(1) - Includes integration costs associated with pending acquisition of
EMBARQ ($6.9 million) and settlement loss related to Supplemental
Executive Retirement Plan, including revenue impact ($6.7
million).
(2) - Revenue impact of settlement loss related to Supplemental
Executive Retirement Plan.
(3) - Includes (i) $6.7 million income tax expense due to the
nondeductible portion of settlement payments related to the
Supplemental Executive Retirement Plan; (ii) $5.0 million after-
tax charge associated with our $800 million bridge credit
facility related to the EMBARQ acquisition; (iii) $4.7 million
after-tax impact of integration costs associated with pending
acquisition of EMBARQ and (iv) $4.1 million after-tax impact of
settlement loss related to Supplemental Executive Retirement
Plan, including revenue impact. These unfavorable items were
partially offset by $5.8 million income tax benefit caused by a
reduction to our deferred tax asset valuation allowance.
(4) - Gain on the sale of a nonoperating investment, net of tax.
(5) - Includes $6.4 million of capital expenditures related to the
integration of EMBARQ. Excluding these costs, free cash flow was
$170.4 million for the three months ended March 31, 2009.
SOURCE CenturyTel, Inc.
