UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 2003
CenturyTel, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 1-7784 72-0651161
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
100 CenturyTel Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 388-9000
---------------------------
ITEM 9. Information Furnished Under Item 12
In accordance with Securities and Exchange Commission Release No.
34-47583, the following information, which is intended to be furnished under
Item 12, is instead being furnished under Item 9. All of this information,
except for our forecasts for the upcoming quarter and for 2003 and except for
our references to non-GAAP financial measures (as defined in Regulation G
promulgated by the Securities and Exchange Commission), shall be deemed
incorporated by reference into any registration statement heretofore or
hereafter filed by us under the Securities Act of 1933, as amended, except to
the extent that such incorporated information is superceded by information as of
a subsequent date that is included in or incorporated by reference into any such
registration statement. None of the following information shall be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended.
On May 1, 2003, we issued a press release announcing our first quarter
2003 consolidated operating results. More complete information on our operating
results will be included in our Quarterly Report on Form 10-Q for the three
months ended March 31, 2003, which we expect to file shortly with the Securities
and Exchange Commission. The entire text of our May 1, 2003 press release is
reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
May 1, 2003 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Reports Solid First Quarter Earnings; Raises 2003 EPS Guidance
-------------------------------------------------------------------------
Monroe, LA. . . CenturyTel, Inc.(NYSE Symbol: CTL) announces operating results
for first quarter 2003.
o Revenues from continuing operations increased 37.3% from first quarter 2002
to $580.5 million, reported under generally accepted accounting principles
(GAAP).
o Earnings from continuing operations before interest, taxes, depreciation and
amortization (EBITDA), excluding nonrecurring items, rose to $297.8 million,
an increase of 41.0%.
o Net income, excluding nonrecurring items, grew 11.0% to $80.7 million.
Reported under GAAP, net income grew 18.6% to $83.9 million.
o Diluted earnings per share, excluding nonrecurring items, rose 9.8% to $.56,
while GAAP diluted earnings per share increased 16.0% to $.58.
o Free cash flow, excluding nonrecurring items, climbed to $139.0 million
from $98.2 million.
------------------------------------------------------------------------------------------------
First Quarter Highlights (1)
(In thousands, except per share Quarter Ended Quarter Ended % Change
and customer amounts) 03/31/03 (2) 03/31/02
------------------------------------------------------------------------------------------------
Revenues from continuing operations $ 580,530 $ 422,918 37.3%
EBITDA from continuing operations $ 297,812 $ 211,276 (3) 41.0%
Income from continuing operations $ 80,696 $ 45,067 (3) 79.1%
Net Income $ 80,696 $ 72,717 11.0%
Diluted Earnings Per Share from continuing
operations $ .56 $ .32 75.0%
Diluted Earnings Per Share $ .56 $ .51 9.8%
Average Diluted Shares Outstanding 143,797 142,654 0.8%
Telephone Revenues $ 511,378 $ 372,731 37.2%
Other Operations Revenues $ 69,152 $ 50,187 37.8%
------------------------------------------------------------------------------------------------
Telephone Access Lines 2,407,152 1,795,769 34.0%
Long Distance Customers 689,499 515,376 33.8%
------------------------------------------------------------------------------------------------
(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.
(2) Reflects the acquisition of access lines in third quarter 2002 that
generated approximately $126 million of telephone revenues during first
quarter 2003.
(3) Includes corporate overheads previously allocated to discontinued
operations.
"The execution of our pure-play wireline strategy continues to produce
solid results as reflected in the 11% growth in net income, excluding
nonrecurring items, over the first quarter of 2002," Glen F. Post, III,
chairman and chief executive officer, said. "These results affirm the steady
demand for communications services and growth opportunities that exist in our
rural and small-to-mid-size market areas."
Consolidated revenues from continuing operations rose 37.3% to $580.5
million from $422.9 million. EBITDA from continuing operations, excluding
nonrecurring items, grew 41.0% to $297.8 million from $211.3 million. CenturyTel
achieved a consolidated EBITDA margin, excluding nonrecurring items, of 51.3%
during the quarter versus 50.0% in first quarter 2002. Net income from
continuing operations for the quarter, excluding nonrecurring items, increased
79.1% to $80.7 million from $45.1 million in first quarter 2002, primarily due
to contributions from the properties acquired from Verizon in third quarter
2002. Diluted earnings per share from continuing operations, excluding
nonrecurring items, increased 75.0% to $.56 from $.32.
Telephone revenues for first quarter reached $511.4 million, a 37.2%
increase over the $372.7 million in first quarter 2002. Increases in telephone
revenues and telephone operating expenses were primarily due to the Verizon
acquisitions in third quarter 2002. In our legacy markets, growth in vertical
services and interstate revenues more than offset declines in intrastate access
and toll revenues. Telephone operating income, excluding nonrecurring items,
increased 41.9% to $167.4 million from $118.0 million, and telephone EBITDA,
excluding nonrecurring items, rose 35.4% to $280.7 million from $207.3 million a
year ago. CenturyTel's first quarter telephone EBITDA margin, excluding
nonrecurring items, was 54.9% while the operating income margin, excluding
nonrecurring items, was 32.7%.
Other operations revenues grew 37.8% to $69.2 million during first quarter
2003, compared with $50.2 million in first quarter 2002. CenturyTel's long
distance revenues increased 33.8% to $42.6 million. CenturyTel now serves more
than 689,000 long distance customers and more than 60,000 DSL customers, adding
more than 40,700 and more than 7,700 customers, respectively, during the
quarter. Internet revenues increased 43.5% to $18.0 million in first quarter
2003 from $12.6 million in first quarter 2002. Internet operating income was
$353,000 for the quarter compared to $1.4 million in operating losses for the
first quarter 2002. CenturyTel CLEC revenues were $4.5 million, an increase of
127.2% over first quarter 2002, primarily due to the acquisition of CLEC
operations in February 2002.
"Continued solid growth in long distance customers, record DSL customer
additions and continued growth in enhanced calling features penetration this
quarter reflect good customer response to our advanced product and service
offerings," Post said.
For first quarter 2003, CenturyTel reported, under generally accepted
accounting principles (GAAP), consolidated revenues of $580.5 million, a 37.3%
increase from $422.9 million in first quarter 2002. The Company reported an
18.6% increase in net income to $83.9 million and a 16.0% increase in diluted
earnings per share reaching $.58, compared to $70.8 million and $.50 per diluted
share, respectively, in first quarter 2002. Net income in first quarter 2003
includes a nonrecurring $5.0 million pre-tax favorable adjustment related to the
partial recovery of amounts previously written off in connection with the
WorldCom bankruptcy. Net income in first quarter 2002 includes a nonrecurring
$3.0 million pre-tax unfavorable charge related to advisory and consulting fees.
For the second quarter 2003, CenturyTel expects total revenues of $575 to
$590 million and diluted earnings per share of $.51 to $.56. For the full year
2003, diluted earnings per share is expected to be in the range of $2.14 to
$2.22. This increase in full year 2003 EPS guidance is driven by higher
revenues, successful cost and resource management and lower depreciation expense
in acquired properties than previously anticipated.
These outlook figures are presented on a GAAP basis, excluding
non-recurring items and the potential impact of 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 EBITDA, 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. 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.
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 Company's ability to effectively manage its growth,
including integrating newly-acquired businesses into the Company's operations,
hiring adequate numbers of qualified staff and successfully upgrading its
billing and other information systems; the risks inherent in rapid technological
change; the effects of ongoing changes in the regulation of the communications
industry; the effects of greater than anticipated competition in the Company's
markets; 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; and the effects of more general factors such as changes in interest
rates, in general market 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, 2002. The information contained in this release is
as of May 1, 2003. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this release. The
Company undertakes no obligation to update any of its forward-looking statements
for any reason.
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 800.346.2923. The call will be accessible for replay by calling
800.332.6854 and entering the conference-id number: 3383. Investors can also
listen to CenturyTel's earnings conference call and replay by accessing the
Company's Web site at www.centurytel.com.
CenturyTel, Inc. provides communications services including local, long
distance, Internet access and data services to more than 3 million customers in
22 states. The company, headquartered in Monroe, Louisiana, is publicly traded
on the New York Stock Exchange under the symbol CTL, and is included in the S&P
500 Index. CenturyTel is the 8th largest local exchange telephone company, based
on access lines, in the United States. Visit CenturyTel's corporate Web site at
www.centurytel.com.
------------------------------
CENTURYTEL, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
Three months ended March 31, 2003 Three months ended March 31, 2002
------------------------------------ ------------------------------------
Increase
As adjusted As adjusted (decrease)
Less excluding Less excluding excluding
non- non- non- non- Increase non-
In thousands, except As recurring recurring As recurring recurring (decrease) recurring
per share amounts reported items items reported items items as reported items
---------- ---------- ----------- ---------- ---------- ----------- ---------- ----------
TELEPHONE OPERATIONS
Operating revenues
Local service $ 187,384 - 187,384 123,877 - 123,877 51.3% 51.3%
Network access 277,981 - 277,981 216,576 - 216,576 28.4% 28.4%
Other 46,013 - 46,013 32,278 - 32,278 42.6% 42.6%
---------------------- ----------- ---------------------- -----------
511,378 - 511,378 372,731 - 372,731 37.2% 37.2%
---------------------- ----------- ---------------------- -----------
Operating expenses
Plant operations 122,538 - 122,538 91,086 - 91,086 34.5% 34.5%
Customer operations 40,724 - 40,724 29,938 - 29,938 36.0% 36.0%
Corporate and other 62,454 (4,959) (1) 67,413 44,396 44,396 40.7% 51.8%
Depreciation and amortization 113,287 - 113,287 89,343 - 89,343 26.8% 26.8%
---------------------- ----------- ---------------------- -----------
339,003 (4,959) 343,962 254,763 - 254,763 33.1% 35.0%
---------------------- ----------- ---------------------- -----------
Telephone operating income 172,375 4,959 167,416 117,968 - 117,968 46.1% 41.9%
---------------------- ----------- ---------------------- -----------
OTHER OPERATIONS
Operating revenues
Long distance 42,560 - 42,560 31,817 - 31,817 33.8% 33.8%
Internet 18,026 - 18,026 12,561 - 12,561 43.5% 43.5%
Other 8,566 - 8,566 5,809 - 5,809 47.5% 47.5%
---------------------- ----------- ---------------------- -----------
69,152 - 69,152 50,187 - 50,187 37.8% 37.8%
---------------------- ----------- ---------------------- -----------
Operating expenses
Cost of sales and other 52,043 - 52,043 41,424 - 41,424 25.6% 25.6%
Depreciation and amortization 4,711 - 4,711 2,884 - 2,884 63.3% 63.3%
---------------------- ----------- ---------------------- -----------
56,754 - 56,754 44,308 - 44,308 28.1% 28.1%
---------------------- ----------- ---------------------- -----------
Other operating income 12,398 - 12,398 5,879 - 5,879 110.9% 110.9%
---------------------- ----------- ---------------------- -----------
Corporate overhead costs
allocable to discontinued
operations - - - (4,798) - (4,798) (100.0%) (100.0%)
---------------------- ----------- ---------------------- -----------
TOTAL OPERATING INCOME 184,773 4,959 179,814 119,049 - 119,049 55.2% 51.0%
OTHER INCOME (EXPENSE)
Interest expense (55,592) - (55,592) (50,648) - (50,648) 9.8% 9.8%
Income from unconsolidated
cellular entity 1,569 - 1,569 400 - 400 292.3% 292.3%
Other income and expense (932) - (932) (2,268) (3,000) (3) 732 (58.9%) (227.3%)
Income tax expense (45,899) (1,736) (2) (44,163) (23,416) 1,050 (4) (24,466) 96.0% 80.5%
---------------------- ----------- ---------------------- -----------
INCOME FROM CONTINUING
OPERATIONS 83,919 3,223 80,696 43,117 (1,950) 45,067 94.6% 79.1%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 27,650 - 27,650 (100.0%) (100.0%)
---------------------- ----------- ---------------------- -----------
NET INCOME $ 83,919 3,223 80,696 70,767 (1,950) 72,717 18.6% 11.0%
====================== =========== ====================== ===========
BASIC EARNINGS PER SHARE
From continuing operations $ 0.59 0.02 0.56 0.30 (0.01) 0.32 96.7% 75.0%
From discontinued operations $ - - - 0.20 - 0.20 (100.0%) (100.0%)
Basic earnings per share $ 0.59 0.02 0.56 0.50 (0.01) 0.51 18.0% 9.8%
DILUTED EARNINGS PER SHARE
From continuing operations $ 0.58 0.02 0.56 0.30 (0.01) 0.32 93.3% 75.0%
From discontinued operations $ - - - 0.19 - 0.19 (100.0%) (100.0%)
Diluted earnings per share $ 0.58 0.02 0.56 0.50 (0.01) 0.51 16.0% 9.8%
SHARES OUTSTANDING
Basic 142,901 142,901 141,051 141,051 1.3% 1.3%
Diluted 143,797 143,797 142,654 142,654 0.8% 0.8%
DIVIDENDS PER COMMON SHARE $ 0.0550 0.0550 0.0525 0.0525 4.8% 4.8%
NONRECURRING ITEMS
(1) - Partial recovery of amounts previously written off in connection
with WorldCom bankruptcy.
(2) - Tax effect of item (1).
(3) - Costs to defend unsolicited takeover proposal.
(4) - Tax effect of item (3).
CENTURYTEL, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
MAR. 31 DEC. 31,
2003 2002
---------------- ----------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 18,738 3,661
Other current assets 257,664 292,241
---------------- ----------------
Total current assets 276,402 295,902
---------------- ----------------
PROPERTY, PLANT AND EQUIPMENT
Telephone 6,413,936 6,347,900
Other 500,860 521,292
Accumulated depreciation (3,450,042) (3,337,547)
---------------- ----------------
Net property, plant and equipment 3,464,754 3,531,645
---------------- ----------------
INVESTMENTS AND OTHER ASSETS
Goodwill 3,429,663 3,427,281
Other 529,006 515,580
---------------- ----------------
Total investments and other assets 3,958,669 3,942,861
---------------- ----------------
TOTAL ASSETS $ 7,699,825 7,770,408
================ ================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 119,894 70,737
Other current liabilities 388,492 317,367
---------------- ----------------
Total current liabilities 508,386 388,104
LONG-TERM DEBT 3,291,591 3,578,132
DEFERRED CREDITS AND OTHER LIABILITIES 741,288 716,168
STOCKHOLDERS' EQUITY 3,158,560 3,088,004
---------------- ----------------
TOTAL LIABILITIES AND EQUITY $ 7,699,825 7,770,408
================ ================
CAPITAL EXPENDITURES
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
Three Months Ended March 31, Increase
2003 2002 (Decrease)
---------------- -------------------------------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 53,510 67,538 (20.8%)
Wireless (discontinued operations) - 6,137 (100.0%)
Other 6,159 5,994 2.8%
---------------- ----------------
Total capital expenditures $ 59,669 79,669 (25.1%)
================ ================
CENTURYTEL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended March 31, 2003 Three months ended March 31, 2002
-------------------------------------- ---------------------------------------
As adjusted As adjusted
Less excluding Less excluding
non- non- non- non-
As recurring recurring As recurring recurring
reported items items reported items items
----------- --------- ------------ ----------- --------- -------------
EBITDA (1) from continuing
operations and EBITDA margin
Operating income $ 184,773 4,959 (2) 179,814 119,049 - 119,049
Add: Depreciation and amortization 117,998 - 117,998 92,227 - 92,227
----------- --------- ------------ ----------- --------- -------------
EBITDA from continuing operations $ 302,771 4,959 297,812 211,276 - 211,276
=========== ========= ============ =========== ========= =============
Revenues from continuing operations $ 580,530 - 580,530 422,918 - 422,918
=========== ========= ============ =========== ========= =============
Consolidated EBITDA margin
(EBITDA divided by revenues) 52.2% 51.3% 50.0% 50.0%
=========== ============ =========== =============
Telephone EBITDA, operating income
margin and EBITDA margin
Telephone operating income $ 172,375 4,959 (2) 167,416 117,968 - 117,968
Add: Depreciation and amortization 113,287 - 113,287 89,343 - 89,343
----------- --------- ------------ ----------- --------- -------------
Telephone EBITDA $ 285,662 4,959 280,703 207,311 - 207,311
=========== ========= ============ =========== ========= =============
Telephone revenues $ 511,378 - 511,378 372,731 - 372,731
=========== ========= ============ =========== ========= =============
Telephone operating income margin
(operating income divided by revenues) 33.7% 32.7% 31.6% 31.6%
=========== ============ =========== =============
Telephone EBITDA margin
(EBITDA divided by revenues) 55.9% 54.9% 55.6% 55.6%
=========== ============ =========== =============
Other Operations EBITDA, operating
income margin and EBITDA margin
Other Operations operating income $ 12,398 - 12,398 5,879 - 5,879
Add: Depreciation and amortization 4,711 - 4,711 2,884 - 2,884
----------- --------- ------------ ----------- --------- -------------
Other Operations EBITDA $ 17,109 - 17,109 8,763 - 8,763
=========== ========= ============ =========== ========= =============
Other Operations revenues $ 69,152 - 69,152 50,187 - 50,187
=========== ========= ============ =========== ========= =============
Other Operations operating income margin
(operating income divided by revenues) 17.9% 17.9% 11.7% 11.7%
=========== ============ =========== =============
Other Operations EBITDA margin
(EBITDA divided by revenues) 24.7% 24.7% 17.5% 17.5%
=========== ============ =========== =============
Free cash flow
Net income $ 83,919 3,223 (2) 80,696 70,767 (1,950)(3) 72,717
Add: Depreciation and
amortization (4) 117,998 - 117,998 105,121 - 105,121
Less: Capital expenditures (4) (59,669) - (59,669) (79,669) - (79,669)
----------- --------- ------------ ----------- --------- -------------
Free cash flow $ 142,248 3,223 139,025 96,219 (1,950) 98,169
=========== ========= ============ =========== ========= =============
Free cash flow $ 142,248 96,219
Income from discontinued
operations, net of tax - (27,650)
Less: depreciation and amortization
of discontinued operations - (12,894)
Income from unconsolidated
cellular entity (1,569) (400)
Deferred income taxes 9,502 14,606
Changes in current assets and
current liabilities 104,926 66,899
Increase in other noncurrent assets (6,751) (5,103)
Increase in other noncurrent
liabilities 3,739 2,305
Other, net 7,537 4,253
Add: capital expenditures 59,669 79,669
----------- -----------
Net cash provided by operating
activities from continuing operations $ 319,301 217,904
=========== ===========
(1) Earnings before interest, taxes, depreciation and amortization
(2) Partial recovery of amounts previously written off in connection with
WorldCom bankruptcy (presented on both a pre-tax and after-tax basis)
(3) Costs to defend unsolicited takeover proposal, net of taxes
(4) Includes discontinued operations for 2002
---------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CenturyTel, Inc.
May 1, 2003 By: /s/ Neil A. Sweasy
----------------------
Neil A. Sweasy
Vice President and Controller