EXHIBIT 99
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
July 28, 2005 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Reports Second Quarter Earnings
- ------------------------------------------
MONROE, La. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results
for second quarter 2005.
o Operating revenues increased to $606.4 million from $603.6 million in
second quarter 2004.
o Net income rose 2.2% to $85.1 million compared to $83.3 million in
second quarter 2004.
o Diluted earnings per share increased 8.5% to $.64 from $.59 in
second quarter 2004.
o Free cash flow (as defined in the attached financial schedules) was
$113.6 million in second quarter 2005.
o Through the second quarter, the Company had invested $114 million
to repurchase 3.5 million shares of common stock under its $200
million share repurchase program.
SECOND QUARTER HIGHLIGHTS
(In thousands, except per share Quarter Ended Quarter Ended % Change
amounts and customer units) 6/30/05 6/30/04
- ----------------------------------------------------------------------------------------
Operating Revenues $ 606,413 $ 603,555 0.5%
Operating Cash Flow (1) $ 316,334 $ 320,662 (1.3)%
Net Income $ 85,118 $ 83,284 2.2%
Diluted Earnings Per Share $ .64 $ .59 8.5%
Average Diluted Shares Outstanding 135,345 142,968 (5.3)%
Capital Expenditures $ 102,011 $ 94,269 8.2%
- ----------------------------------------------------------------------------------------
Telephone Access Lines 2,273,279 2,350,505 (3.3)%
Long Distance Lines 1,122,343 1,003,328 11.9%
DSL Connections 194,847 108,820 79.1%
- ----------------------------------------------------------------------------------------
(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 continued to diversify its revenue mix in the second quarter
with solid year over year revenue growth in data and fiber transport services of
11.6% and 18.1%, respectively," Glen F. Post, III, chairman and chief executive
officer, said. "Further executing on this strategy, we acquired metropolitan
fiber networks in 16 markets expanding the opportunity for our enterprise
business and positioning us as a leading fiber transport provider near our
existing markets."
OPERATING REVENUES rose 0.5% to $606.4 million in second quarter 2005 from
$603.6 million in second quarter 2004. This increase primarily resulted from
revenue generated by data revenue growth from DSL subscribers, growth in our
fiber transport business and increased enhanced calling feature penetration.
These increases more than offset revenue declines attributable to access line
losses and lower access and long distance revenues.
OPERATING EXPENSES increased 1.7% to $420.5 million from $413.6 million in
second quarter 2004 primarily due to growth in our DSL subscriber base and
increases in access expense and employee related expenses that were partially
offset by lower operating taxes.
OPERATING CASH FLOW decreased to $316.3 million from $320.7 million.
CenturyTel achieved an operating cash flow margin of 52.2% during the quarter
versus 53.1% in second quarter 2004.
"We generated over $113 million of free cash flow and returned more than
$60 million to shareholders through share repurchases and cash dividends during
the second quarter," Post said.
NET INCOME increased 2.2% to $85.1 million from $83.3 million in second
quarter 2004. The increase was primarily driven by lower interest expense and a
$4.6 million pre-tax charge in second quarter 2004 associated with the
prepayment of the Company's $100 million Series B Senior Notes. Diluted earnings
per share was $.64 for second quarter 2005, an 8.5% increase from the $.59
reported in second quarter 2004, driven by higher net income and the decline in
fully diluted shares outstanding as a result of share repurchases since second
quarter 2004.
As of July 27, 2005, the investment banks that sold approximately 12.9
million shares to the Company in late May 2005 under accelerated share
repurchase agreements had repurchased approximately 32% of these 12.9 million
shares at a weighted average price per share of approximately $33.94.
The results for second quarter 2005 and second quarter 2004 discussed
above reflect results reported in accordance with generally accepted accounting
principles (GAAP).
For the first six months of 2005, operating revenues increased to
$1.202 billion from $1.197 billion for the same period in 2004. Operating cash
flow was $625.4 million for the first half of 2005 compared to $631.2 million a
year ago. Net income, excluding nonrecurring items, was $165.1 million in the
first six months of 2005 compared to $166.6 million during the same period in
2004. Diluted earnings per share, excluding nonrecurring items, increased 6.0%
to $1.23 during the first half of 2005 compared to $1.16 in the first half of
2004.
For the first six months of 2005, under generally accepted accounting
principles (GAAP), net income was $164.7 compared to $166.6 million for the
first six months of 2004. The $164.7 million of net income for the first half of
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 the third quarter 2005, CenturyTel expects total revenues of $635 to
$650 million and diluted earnings per share of $.65 to $.70. For the full year
2005, diluted earnings per share is expected to be in the range of $2.40 to
$2.50, an increase over the $2.25 to $2.35 range previously provided. This
increase in 2005 diluted earnings per share guidance is primarily due to the
better than anticipated results during second quarter 2005, continuation of our
successful cost containment efforts and fewer fully diluted shares outstanding
as a result of share repurchases during the second quarter. Third quarter and
full year 2005 guidance also include the anticipated results of operations
attributable to the metro fiber assets acquired from KMC at the end of the
second quarter.
These outlook figures are presented on a GAAP basis, excluding nonrecurring
items and the potential impact of any future mergers, acquisitions,
divestitures, share repurchases 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 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 888.423.4863. The call will be accessible for replay through
August 3, 2005, by calling 888.266.2081 and entering the access code: 736032.
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 August 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 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 July 28, 2005. The Company undertakes no
obligation to update any of its forward-looking statements.
Included in the S&P 500 Index, CenturyTel (NYSE: CTL) is a leading provider
of a full array of communications services primarily to rural areas and small to
mid-size cities in 26 states. Visit CenturyTel at www.centurytel.com.
* * * * * * * * * *
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
In thousands, except Three months ended Three months ended Increase
per share amounts June 30, 2005 June 30, 2004 (decrease)
------------------ ------------------ ----------
OPERATING REVENUES
Local service $ 177,265 180,142 (1.6%)
Network access 239,404 245,515 (2.5%)
Long distance 44,443 45,727 (2.8%)
Data 76,049 68,169 11.6%
Fiber transport and CLEC 21,636 18,321 18.1%
Other 47,616 45,681 4.2%
------------ ------------
606,413 603,555 0.5%
------------ ------------
OPERATING EXPENSES
Cost of services and products 194,873 190,226 2.4%
Selling, general and administrative 95,206 92,667 2.7%
Depreciation and amortization 130,452 130,751 (0.2%)
------------ ------------
420,531 413,644 1.7%
------------ ------------
OPERATING INCOME 185,882 189,911 (2.1%)
OTHER INCOME (EXPENSE)
Interest expense (49,647) (53,089) (6.5%)
Income from unconsolidated
cellular entity 724 2,126 (65.9%)
Other income (expense) 1,220 (3,811) (132.0%)
Income tax expense (53,061) (51,853) 2.3%
------------ ------------
NET INCOME $ 85,118 83,284 2.2%
============ ============
BASIC EARNINGS PER SHARE $ 0.65 0.60 8.3%
DILUTED EARNINGS PER SHARE $ 0.64 0.59 8.5%
SHARES OUTSTANDING
Basic 130,299 138,066 (5.6%)
Diluted 135,345 142,968 (5.3%)
DIVIDENDS PER COMMON
SHARE $ 0.06 0.0575 4.3%
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(UNAUDITED)
Six months ended June 30, 2005 Six months ended June 30, 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 $ 354,250 354,250 358,200 358,200 (1.1%) (1.1%)
Network access 469,682 469,682 486,472 486,472 (3.5%) (3.5%)
Long distance 91,958 91,958 90,316 90,316 1.8% 1.8%
Data 148,955 148,955 133,797 133,797 11.3% 11.3%
Fiber transport and CLEC 41,879 41,879 35,753 35,753 17.1% 17.1%
Other 94,971 94,971 92,721 92,721 2.4% 2.4%
------------ --------- ------------ ---------- ----------- -------------
1,201,695 - 1,201,695 1,197,259 - 1,197,259 0.4% 0.4%
------------ --------- ------------ ---------- ----------- -------------
OPERATING EXPENSES
Cost of services
and products 386,866 386,866 371,775 371,775 4.1% 4.1%
Selling, general
and administrative 189,460 189,460 194,273 194,273 (2.5%) (2.5%)
Depreciation and
amortization 262,627 262,627 257,743 257,743 1.9% 1.9%
------------ --------- ------------ ---------- ----------- -------------
838,953 - 838,953 823,791 - 823,791 1.8% 1.8%
------------ --------- ------------ ---------- ----------- -------------
OPERATING INCOME 362,742 - 362,742 373,468 - 373,468 (2.9%) (2.9%)
OTHER INCOME (EXPENSE)
Interest expense (102,272) (1,196)(1) (101,076) (105,632) (105,632) (3.2%) (4.3%)
Income from
unconsolidated
cellular entity 2,037 2,037 4,185 4,185 (51.3%) (51.3%)
Other income (expense) 2,755 (1,574)(2) 4,329 (1,507) (1,507) (282.8%) (387.3%)
Income tax expense (100,528) 2,395 (3) (102,923) (103,951) (103,951) (3.3%) (1.0%)
------------ --------- ------------ ---------- ----------- -------------
NET INCOME $ 164,734 (375) 165,109 166,563 - 166,563 (1.1%) (0.9%)
============ ========= ============ ========== =========== =============
BASIC EARNINGS PER SHARE $ 1.25 1.26 1.19 1.19 5.0% 5.9%
DILUTED EARNINGS PER SHARE $ 1.23 1.23 1.16 1.16 6.0% 6.0%
SHARES OUTSTANDING
Basic 131,241 131,241 140,325 140,325 (6.5%) (6.5%)
Diluted 136,257 136,257 145,197 145,197 (6.2%) (6.2%)
DIVIDENDS PER COMMON
SHARE $ 0.12 0.12 0.115 0.115 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
JUNE 30, 2005 AND DECEMBER 31, 2004
(UNAUDITED)
June 30, Dec. 31,
2005 2004
----------- ----------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 100,462 167,215
Other current assets 250,895 252,632
----------- ----------
Total current assets 351,357 419,847
----------- ----------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,633,844 7,431,017
Accumulated depreciation (4,313,990) (4,089,616)
----------- ----------
Net property, plant and equipment 3,319,854 3,341,401
----------- ----------
GOODWILL AND OTHER ASSETS
Goodwill 3,444,198 3,433,864
Other 594,629 601,841
----------- ----------
Total goodwill and other assets 4,038,827 4,035,705
----------- ----------
TOTAL ASSETS $ 7,710,038 7,796,953
=========== ==========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 144,135 249,617
Other current liabilities 457,163 442,001
----------- ----------
Total current liabilities 601,298 691,618
LONG-TERM DEBT 2,709,399 2,762,019
DEFERRED CREDITS AND OTHER LIABILITIES 956,234 933,551
STOCKHOLDERS' EQUITY 3,443,107 3,409,765
----------- ----------
TOTAL LIABILITIES AND EQUITY $ 7,710,038 7,796,953
=========== ==========
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended Three months ended
In thousands June 30, 2005 June 30, 2004
------------------ ------------------
Operating cash flow and cash flow margin
Operating income $ 185,882 189,911
Add: Depreciation and amortization 130,452 130,751
------------- -------------
Operating cash flow $ 316,334 320,662
============= =============
Revenues $ 606,413 603,555
============= =============
Operating income margin (operating
income divided by revenues) 30.7% 31.5%
============= =============
Operating cash flow margin (operating
cash flow divided by revenues) 52.2% 53.1%
============= =============
Free cash flow (prior to debt service
requirements and dividends)
Net income $ 85,118 83,284
Add: Depreciation and amortization 130,452 130,751
Less: Capital expenditures (102,011) (94,269)
------------- -------------
Free cash flow $ 113,559 119,766
============= =============
Free cash flow $ 113,559 119,766
Income from unconsolidated cellular entity (724) (2,126)
Deferred income taxes 3,806 30,365
Changes in current assets and
current liabilities (8,669) (25,425)
Increase in other noncurrent assets (119) (6,877)
Increase in other noncurrent liabilities 145 405
Retirement benefits 6,513 7,033
Other, net 5,572 2,508
Add: Capital expenditures 102,011 94,269
------------- -------------
Net cash provided by operating activities $ 222,094 219,918
============= =============
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Six months ended June 30, 2005 Six months ended June 30, 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 $ 362,742 362,742 373,468 373,468
Add: Depreciation and amortization 262,627 262,627 257,743 257,743
------------- ----------- ------------- -------------- ----------- -------------
Operating cash flow $ 625,369 625,369 631,211 631,211
============= =========== ============= ============== =========== =============
Revenues $ 1,201,695 1,201,695 1,197,259 1,197,259
============= =========== ============= ============== =========== =============
Operating income margin (operating
income divided by revenues) 30.2% 30.2% 31.2% 31.2%
============= ============= ============== =============
Operating cash flow margin (operating
cash flow divided by revenues) 52.0% 52.0% 52.7% 52.7%
============= ============= ============== =============
Free cash flow (prior to debt service
requirements and dividends)
Net income $ 164,734 (375)(1) 165,109 166,563 166,563
Add: Depreciation and amortization 262,627 262,627 257,743 257,743
Less: Capital expenditures (176,914) (176,914) (156,014) (156,014)
------------- ----------- ------------- ------------- ----------- -------------
Free cash flow $ 250,447 (375) 250,822 268,292 268,292
============= =========== ============= ============= =========== =============
Free cash flow $ 250,447 268,292
Income from unconsolidated
cellular entity (2,037) (4,185)
Deferred income taxes 25,947 57,038
Changes in current assets and
current liabilities 18,954 32,270
Increase in other noncurrent assets (1,477) (17,909)
Decrease in other noncurrent
liabilities (584) (3,544)
Retirement benefits 12,517 17,863
Other, net (1,768) (2,481)
Add: Capital expenditures 176,914 156,014
------------- --------------
Net cash provided by
operating activities $ 478,913 503,358
============= ==============
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.