Exhibit 99.1
| FOR IMMEDIATE RELEASE: | FOR MORE INFORMATION CONTACT: |
| February 14, 2008 | Tony Davis 318.388.9525 tony.davis@centurytel.com |
CenturyTel Reports Fourth Quarter 2007 Earnings
Monroe, La... CenturyTel, Inc. (NYSE: CTL) announces operating results for fourth quarter 2007.
• Operating revenues, excluding nonrecurring items, increased 8.3% to $657.8 million from $607.7 million in fourth quarter 2006. Operating revenues, reported under GAAP, were $656.6 million.
• Operating cash flow (as defined in the attached financial schedules), excluding nonrecurring items, grew 7.1% to $321.5 million from $300.0 million in fourth quarter 2006.
• Net income, excluding nonrecurring items, increased 13.1% to $89.8 million from $79.4 million in fourth quarter 2006. Net income, reported under GAAP, was $115.0 million compared to
$72.2 million in fourth quarter 2006.
• Diluted earnings per share, excluding nonrecurring items, grew 20.6% to $.82 from $.68 in fourth quarter 2006, while GAAP diluted earnings per share was $1.04 in fourth quarter 2007 and
$.62 in fourth quarter 2006.
• Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $85.6 million in fourth quarter 2007 and a record $564.5 million for full year 2007.
• Over 2.8 million shares were repurchased and retired for $122.1 million during the quarter.
| Fourth Quarter Highlights | | | | | | | | | |
| (excluding nonrecurring items reflected in the attached financial schedules) | | Quarter ended | | | Quarter ended | | | % Change | |
| (In thousands, except per share amounts and subscriber data) | | 12/31/2007 | | | 12/31/2006 | | | | |
| | | | | | | | | | |
| Operating Revenues | | $ | 657,846 | | | $ | 607,695 | | | | 8.3 | % |
| Operating Cash Flow (1) | | $ | 321,472 | | | $ | 300,039 | | | | 7.1 | % |
| Net Income | | $ | 89,822 | | | $ | 79,449 | | | | 13.1 | % |
| Diluted Earnings Per Share | | $ | .82 | | | $ | .68 | | | | 20.6 | % |
| Average Diluted Shares Outstanding | | | 110,119 | | | | 118,874 | | | | (7.4) | % |
| Capital Expenditures | | $ | 141,744 | | | $ | 101,037 | | | | 40.3 | % |
| | | | | | | | | | | | | |
| Access Lines (2) | | | 2,135,000 | | | | 2,094,000 | | | | 2.0 | % |
| High-Speed Internet Customers (2) | | | 555,000 | | | | 369,000 | | | | 50.4 | % |
| (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. |
| (2) | Quarter ended 12/31/2007 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 5.7% and high-speed Internet customers increased 34.9%. |
“CenturyTel achieved strong fourth quarter and full year 2007 results driven by solid demand for broadband services, the acquisition of the Madison River properties and our success in aligning our costs with the changing landscape of our business,” Glen F. Post, III, chairman and chief executive officer, said. “We remain focused on our goal of being the premier broadband company in our markets, as high-speed Internet customers and data revenues increased 50% and 31%, respectively, during 2007.”
Operating revenues, excluding nonrecurring items, increased 8.3% to $657.8 million in fourth quarter 2007 from $607.7 million in fourth quarter 2006. Revenue increases during the quarter of approximately $73 million resulted primarily from $49 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 minutes of use. These increases were partially offset by revenue declines of approximately $23 million primarily attributable to previously anticipated access line losses and lower access revenues, along with lower revenues under the amended satellite television agreement.
Operating expenses, excluding nonrecurring items, increased 9.2% to $473.9 million from $434.0 million in fourth quarter 2006, principally due to expenses associated with the Madison River properties, growth in high-speed Internet customers and marketing activities, which were partially offset by lower personnel costs.
“We generated record free cash flow of $564 million this year while also making strategic capital investments of $326 million,” Post said. “Additionally, we returned nearly $490 million to shareholders during 2007 through the repurchase of nearly 10.2 million common shares for approximately $460 million and $29 million in cash dividends.”
Operating cash flow, excluding nonrecurring items, for fourth quarter 2007 grew 7.1% to $321.5 million from $300.0 million in fourth quarter 2006. CenturyTel achieved an operating cash flow margin, excluding nonrecurring items, of 48.9% during the quarter versus 49.4% in fourth quarter 2006. This margin decline was expected due to the growth in lower margin revenues and the anticipated decline in higher margin revenues discussed above.
Other income and income tax expense were favorably impacted during fourth quarter 2007 due, respectively, to higher income from the Company’s equity interest in a wireless partnership and a lower effective tax rate.
Net income, excluding nonrecurring items, was $89.8 million, a 13.1% increase from $79.4 million in fourth quarter 2006. Diluted earnings per share, excluding nonrecurring items, increased 20.6% to $.82 in fourth quarter 2007 compared to $.68 in fourth quarter 2006 due to the items discussed above and the reduction in diluted shares outstanding as a result of share repurchases during 2007.
For the year 2007, operating revenues, excluding nonrecurring items, were $2.606 billion compared to $2.446 billion in 2006, a 6.6% increase. Operating cash flow, excluding nonrecurring items, was $1.292 billion for 2007 compared to $1.197 billion a year ago. Net income, excluding nonrecurring items, was $354.3 million compared to $303.0 million in 2006, while diluted earnings per share was $3.16 compared to $2.52 in 2006.
Under generally accepted accounting principles (GAAP), net income for fourth quarter 2007 was $115.0 million compared to $72.2 million for fourth quarter 2006. Diluted earnings per share was $1.04 in fourth quarter 2007 compared to $.62 in fourth quarter 2006. Fourth quarter 2007 results reflect an after-tax benefit of $1.8 million related to hurricane-related insurance reimbursements, an after-tax benefit of $2.4 million related to the liquidation of Rural Telephone Bank stock, and a $32.7 million tax benefit related to the adjustment of income tax reserves, which were partially offset by $12.2 million of after-tax impairment charges associated with certain operating and non-operating investments described further in the attached financial schedules. Fourth quarter 2006 results reflect after-tax impairment charges of $7.2 million associated with certain non-operating investments.
Under GAAP, for the year 2007, the Company reported net income of $418.4 million, or $3.72 per diluted share, compared to net income of $370.0 million, or $3.07 per diluted share, for the year 2006. See the accompanying financial schedules for detail of the Company’s nonrecurring items for the years 2007 and 2006.
Outlook for 2008. For full year 2008, CenturyTel anticipates operating revenues to be flat to modestly higher than 2007 operating revenues. The Company expects revenue increases associated with the full year contribution of the Madison River acquisition versus the eight months recognized in 2007 and growth in high-speed Internet and data revenues. These increases are expected to offset revenue declines associated with the $42 million of revenue settlements recorded in third quarter 2007 that will not reoccur in 2008, lower access revenues, reduced universal service funding and access line losses.
For full year 2008, CenturyTel anticipates diluted earnings per share to be in the range of $2.90 to $3.00. The following items are expected to have a positive impact on 2008 diluted earnings per share:
· | anticipated further penetration of broadband service offerings and expected cost efficiencies (including incremental synergies associated with the Madison River properties) - $.16 to $.20; and |
· | share repurchases made during 2007 and January 2008 along with anticipated lower interest expense - $.22 to $.24. |
The following items are expected to negatively impact 2008 diluted earnings per share:
· | lower revenue settlements mentioned above - ($.23) to ($.25); |
· | reduced interstate universal service funding - ($.08) to ($.10); and |
· | anticipated access line losses of 4.5% to 6.0%, continued pressure on access revenues and expected lower income in 2008 from the Company’s equity interest in a wireless partnership - ($.28) to ($.30). |
For first quarter 2008, CenturyTel expects total revenues of $646 to $656 million and diluted earnings per share of $.69 to $.73.
Finally, the Company expects its capital expenditures in 2008 to be approximately $300 million, an 8% reduction from 2007 capital expenditures of $326 million.
These 2008 outlook figures exclude the effects of nonrecurring items, any share repurchases made after January 31, 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 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 866.244.4635. The call will be accessible for replay through February 20, 2008, by calling 888.266.2081 and entering the conference ID number 1185533. 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 prior to March 5, 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, 2006, 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 February 14, 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.
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