Exhibit 99
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
April 28, 2005 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Reports First Quarter Earnings
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Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating
results for first quarter 2005.
o Operating revenues rose to $595.3 million from $593.7 million in
first quarter 2004.
o Net income, excluding nonrecurring items, was $80.0 million compared to
$83.3 million in first quarter 2004. Reported under GAAP, first quarter
2005 net income was $79.6 million compared to $83.3 million in first
quarter 2004.
o Diluted earnings per share increased 3.5% to $.59 from $.57 in first
quarter 2004 due to share repurchases during 2004.
o Free cash flow (as defined in the attached financial schedules) was
$137.3 million in first quarter 2005.
o During the first quarter, the Company repurchased 1.78 million shares
of common stock for approximately $60 million under its $200 million
share repurchase program.
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First Quarter Highlights (1) Quarter Ended Quarter Ended % Change
(In thousands, except per share 3/31/05 3/31/04
amounts and customer units)
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Operating Revenues $ 595,282 $ 593,704 0.3 %
Operating Cash Flow $ 309,035 $ 310,549 (0.5)%
Net Income $ 79,991 $ 83,279 (3.9)%
Diluted Earnings Per Share $ .59 $ .57 3.5 %
Average Diluted Shares Outstanding 137,169 147,426 (7.0)%
Capital Expenditures $ 74,903 $ 61,745 21.3 %
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Telephone Access Lines 2,298,491 2,366,420 (2.9)%
Long Distance Lines 1,097,209 961,832 14.1 %
DSL Connections 173,768 97,092 79.0 %
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(1) These results include adjustments for nonrecurring items and other
non-GAAP financial measures. A reconciliation of these items to
comparable GAAP measures is included in the attached financial
schedules.
"CenturyTel achieved solid financial results during the first quarter with
increased revenues from DSL, long distance and fiber operations," Glen F. Post,
III, chairman and chief executive officer, said. "Our revenue from enhanced
calling features also continues to grow as customer demand for our bundle
offerings remains strong. More than 17% of our residential access lines were
served through a bundle at the end of the first quarter with more than 60% of
those bundles also including Internet or long distance service."
Operating revenues rose to $595.3 million in first quarter 2005 from
$593.7 million in first quarter 2004. Revenue growth of approximately $15.0
million was driven primarily by growth in DSL connections, data circuits, long
distance lines and our fiber transport business and the continued penetration of
enhanced calling features. These increases more than offset revenue declines of
approximately $14.0 million primarily attributable to lower access revenues,
universal service funding and intrastate toll revenues, along with access line
losses.
Operating expenses increased 2.0% to $418.4 million compared to $410.1
million in first quarter 2004. Cost of services and products increased $10.4
million primarily due to growth in DSL connections, data circuits, long distance
lines and the fiber transport business. Selling, general and administrative
expenses decreased $7.4 million primarily due to lower bad debt expense and
employee costs. Depreciation and amortization increased $5.2 million primarily
due to higher levels of plant in service and increased amortization associated
with the Company's new billing system.
Operating cash flow decreased to $309.0 million from $310.5 million.
CenturyTel achieved an operating cash flow margin of 51.9% during the quarter
versus 52.3% in first quarter 2004.
Net income, excluding nonrecurring items, was $80.0 million compared to
$83.3 million in first quarter 2004, reflecting the decrease in operating
income, which was partially offset by lower interest and income tax expense.
Diluted earnings per share, excluding nonrecurring items, increased 3.5% to $.59
from $.57, due to a 7.0% reduction in diluted shares outstanding.
"CenturyTel experienced stronger than expected broadband demand during the
quarter, adding more than 31,000 DSL connections and ending the quarter with a
penetration rate of nearly 10.5% of DSL-enabled lines. These results reflect the
success of our strategic focus of owning the broadband connection to customers
in our markets," Post said.
Under generally accepted accounting principles (GAAP), CenturyTel reported
operating revenues of $595.3 million in first quarter 2005 compared to $593.7
million in first quarter 2004. In first quarter 2005, the Company reported net
income of $79.6 million and diluted earnings per share of $.59, compared to
$83.3 million and $.57 per diluted share, respectively, in first quarter 2004.
Net income in first quarter 2005 includes $3.7 million after-tax expense related
to CenturyTel's purchase and retirement of approximately $400 million of Series
J Notes and $3.3 million net benefit related to the settlement of various income
tax audits.
For second quarter 2005, CenturyTel expects total revenues of $590 to $605
million and diluted earnings per share of $.53 to $.57. The decline in diluted
earnings per share from first quarter to second quarter 2005 is primarily due to
increased operating costs related to expected growth in our DSL, long distance
and fiber operations, annual wage adjustments effective in the second quarter
and the seasonal impact of maintenance activities for our outside plant.
For the full year 2005, diluted earnings per share is expected to be in the
range of $2.25 to $2.35 versus the previous guidance of $2.20 to $2.35,
reflecting the higher than anticipated first quarter diluted earnings per share,
fewer fully diluted shares outstanding as a result of share repurchases during
the first quarter and postponement of the effective date for the change in
accounting for stock options.
These outlook figures for the second quarter and full year 2005 assume the
successful mitigation of the dilutive effect of the Equity Units currently
scheduled to settle in May 2005, and exclude any costs associated with
transactions related to the Equity Units, future share repurchases, mergers,
acquisitions, divestitures or other nonrecurring items.
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 866.802.4324. The call will be accessible for replay through
May 4, 2005, by calling 888.266.2081 and entering the conference ID number
680045. 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 to May 18, 2005.
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 manage its growth,
including integrating newly-acquired businesses into the Company's operations
and hiring adequate numbers of qualified staff; possible changes in the demand
for, or pricing of, the Company's products and services; the Company's ability
to successfully introduce new product or service offerings on a timely and
cost-effective basis; the Company's ability to successfully take steps to
mitigate the dilutive effect of the Equity Units currently scheduled to settle
in May 2005; 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; other risks
referenced from time to time in the Company's filings with the Securities and
Exchange Commission; and the effects of more general factors such as changes in
interest 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, 2004. You are
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 April 28, 2005. The Company undertakes no obligation to update
any of its forward-looking statements.
CenturyTel, Inc. (NYSE: CTL) provides a full range of local, long
distance, Internet and broadband services to consumers in 22 states. Included in
the S&P 500 Index, CenturyTel is a leading provider of integrated communications
services to rural areas and small to mid-size cities in the United States. Visit
CenturyTel at www.centurytel.com.
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CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(UNAUDITED)
Three months ended March 31, 2005 Three months ended March 31, 2004
--------------------------------- ---------------------------------
As adjusted As adjusted Increase
Less excluding Less excluding (decrease)
non- non- non- non- Increase excluding
In thousands, except As recurring recurring As recurring recurring (decrease) nonrecurring
per share amounts reported items items reported items items as reported items
--------------------------------- --------------------------------- ----------- ------------
OPERATING REVENUES
Local service $ 176,985 176,985 178,058 178,058 (0.6%) (0.6%)
Network access 230,278 230,278 240,957 240,957 (4.4%) (4.4%)
Long distance 47,515 47,515 44,589 44,589 6.6% 6.6%
Data 72,906 72,906 65,628 65,628 11.1% 11.1%
Fiber transport and CLEC 20,243 20,243 17,432 17,432 16.1% 16.1%
Other 47,355 47,355 47,040 47,040 0.7% 0.7%
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595,282 - 595,282 593,704 - 593,704 0.3% 0.3%
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OPERATING EXPENSES
Cost of services
and products 191,993 191,993 181,549 181,549 5.8% 5.8%
Selling, general
and administrative 94,254 94,254 101,606 101,606 (7.2%) (7.2%)
Depreciation and
amortization 132,175 132,175 126,992 126,992 4.1% 4.1%
--------------------------------- ---------------------------------
418,422 - 418,422 410,147 - 410,147 2.0% 2.0%
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OPERATING INCOME 176,860 - 176,860 183,557 - 183,557 (3.6%) (3.6%)
OTHER INCOME (EXPENSE)
Interest expense (52,625) (1,196)(1) (51,429) (52,543) (52,543) 0.2% (2.1%)
Income from unconsolidated
cellular entity 1,313 1,313 2,059 2,059 (36.2%) (36.2%)
Other income (expense) 1,535 (1,574)(2) 3,109 2,304 2,304 (33.4%) 34.9%
Income tax expense (47,467) 2,395 (3) (49,862) (52,098) (52,098) (8.9%) (4.3%)
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NET INCOME $ 79,616 (375) 79,991 83,279 - 83,279 (4.4%) (3.9%)
================================= =================================
BASIC EARNINGS PER SHARE $ 0.60 0.00 0.60 0.58 0.58 3.4% 3.4%
DILUTED EARNINGS PER SHARE $ 0.59 0.00 0.59 0.57 0.57 3.5% 3.5%
SHARES OUTSTANDING
Basic 132,183 132,183 142,585 142,585 (7.3%) (7.3%)
Diluted 137,169 137,169 147,426 147,426 (7.0%) (7.0%)
DIVIDENDS PER COMMON SHARE $ 0.06 0.06 0.0575 0.0575 4.3% 4.3%
NONRECURRING ITEMS
(1) - Write-off of unamortized deferred debt costs associated with
purchasing and retiring approximately $400 million of Series J notes.
(2) - Includes (i) $4.8 million debt extinguishment charge related to
purchasing and retiring approximately $400 million of Series J notes,
net of (ii) $3.2 million of interest income related to the settlement
of various income tax audits.
(3) - Includes (i) $1.1 million net tax benefit of Items (1) and (2) and
(ii) $1.3 million tax benefit related to the settlement of various
income tax audits.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2005 AND DECEMBER 31, 2004
(UNAUDITED)
March 31, December 31,
2005 2004
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(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 129,331 167,215
Other current assets 249,275 252,632
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Total current assets 378,606 419,847
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NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,496,363 7,431,017
Accumulated depreciation (4,208,514) (4,089,616)
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Net property, plant and equipment 3,287,849 3,341,401
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GOODWILL AND OTHER ASSETS
Goodwill 3,433,864 3,433,864
Other 609,512 601,841
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Total goodwill and other assets 4,043,376 4,035,705
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TOTAL ASSETS $ 7,709,831 7,796,953
=============== ===============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 144,811 249,617
Other current liabilities 466,267 442,001
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Total current liabilities 611,078 691,618
LONG-TERM DEBT 2,694,203 2,762,019
DEFERRED CREDITS AND OTHER LIABILITIES 970,865 933,551
STOCKHOLDERS' EQUITY 3,433,685 3,409,765
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TOTAL LIABILITIES AND EQUITY $ 7,709,831 7,796,953
=============== ===============
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2005 Three months ended March 31, 2004
--------------------------------- ---------------------------------
As adjusted As adjusted
Less excluding Less excluding
non- non- non- non-
As recurring recurring As recurring recurring
In thousands reported items items reported items items
--------------------------------- ---------------------------------
Operating cash flow and cash flow margin
Operating income $ 176,860 - 176,860 183,557 - 183,557
Add: Depreciation and amortization 132,175 132,175 126,992 126,992
--------------------------------- ---------------------------------
Operating cash flow $ 309,035 - 309,035 310,549 - 310,549
================================= ================================
Revenues $ 595,282 - 595,282 593,704 - 593,704
================================= =================================
Operating income margin (operating
income divided by revenues) 29.7% 29.7% 30.9% 30.9%
========== ============= ========== =============
Operating cash flow margin (operating
cash flow divided by revenues) 51.9% 51.9% 52.3% 52.3%
========== ============= ========== =============
Free cash flow (prior to debt service
requirements and dividends)
Net income $ 79,616 (375)(1) 79,991 83,279 - 83,279
Add: Depreciation and amortization 132,175 - 132,175 126,992 - 126,992
Less: Capital expenditures (74,903) - (74,903) (61,745) - (61,745)
--------------------------------- ---------------------------------
Free cash flow $ 136,888 (375) 137,263 148,526 - 148,526
================================= =================================
Free cash flow $ 136,888 148,526
Income from unconsolidated cellular entity (1,313) (2,059)
Deferred income taxes 22,141 26,673
Changes in current assets and
current liabilities 27,623 57,695
Increase in other noncurrent assets (1,358) (11,032)
Decrease in other noncurrent liabilities (729) (3,949)
Retirement benefits 6,004 10,830
Other, net (7,340) (4,989)
Add: Capital expenditures 74,903 61,745
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Net cash provided by operating activities $ 256,819 283,440
========== ==========
NONRECURRING ITEMS
(1) - Includes (i) $3.7 million after-tax expense related to purchasing and
retiring approximately $400 million of Series J notes, net of (ii) $3.3
million net benefit related to the settlement of various income tax
audits.