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) April 25, 2002
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 5. Other Events.
On April 25, 2002, CenturyTel, Inc. issued a press release announcing its
first quarter 2002 consolidated operating results, and discussing its outlook
for 2002. The entire text of the release is reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
April 25, 2002 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CENTURYTEL REPORTS STRONG FIRST QUARTER EARNINGS GROWTH
-------------------------------------------------------
Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating
results for first quarter 2002.
o Revenues from continuing operations increased 2.7% to $422.9 million.
o Earnings from continuing operations before interest, taxes, depreciation and
amortization, excluding nonrecurring items, rose to $212.0 million.
o Income from continuing operations, excluding nonrecurring items, climbed
13.0% to $44.8 million.
o Diluted earnings per share from continuing operations, excluding nonrecurring
items, increased 10.7% to $.31.
o Free cash flow climbed to $88.6 million.
First Quarter Highlights
(Excluding nonrecurring items)
(In thousands, except per share and Quarter Ended Quarter Ended % Change
customer amounts) 03/31/02 03/31/01
-------------------------------------------------------------------------------------------------
Revenues from continuing operations $ 422,918 $ 411,602 2.7%
EBITDA from continuing operations (1) $ 212,008 $ 207,594 2.1%
Income from continuing operations (1) $ 44,807 $ 39,649 (2) 13.0%
Net Income (1) $ 72,717 $ 62,005 (2) 17.3%
Diluted Earnings Per Share from continuing
operations (1) $ .31 $ .28 (2) 10.7%
Diluted Earnings Per Share (1) $ .51 $ .44 (2) 15.9%
Average Diluted Shares Outstanding $ 142,654 142,482 0.1%
Telephone Revenues $ 372,731 $ 371,249 0.4%
Other Operations Revenues $ 50,187 $ 40,353 24.4%
-----------------------------------------------------------------------------------------------
Telephone Access Lines 1,795,769 1,803,062 (0.4)%
Long Distance Customers 515,376 392,931 31.2%
-----------------------------------------------------------------------------------------------
(1) Includes corporate overheads previously allocated to discontinued
operations.
(2) As adjusted to reflect the after-tax effect of eliminating goodwill
amortization in accordance with SFAS 142.
"CenturyTel's earnings per share from continuing operations grew a strong
10.7% reflecting cost containment during the first quarter and the benefits of
debt reduction during 2001," Glen F. Post, III, President and Chief Executive
Officer, said. "We achieved a solid 55.6% EBITDA margin in our telephone
operations, an 80 basis point improvement over the first quarter 2001."
THE COMPANY has reflected its wireless business as discontinued operations
in this release due to its pending divestiture. As a result of this treatment,
depreciation expense for the wireless operations was ceased effective March 19,
2002, the date of the definitive agreement, which contributed approximately $.01
to earnings per share for the quarter. Income from continuing operations
includes corporate overheads previously absorbed by its wireless operations and
total interest expense.
CONSOLIDATED revenues from continuing operations rose 2.7% to $422.9
million from $411.6 million. EBITDA from continuing operations, excluding
nonrecurring items, grew to $212.0 million from $207.6 million. CenturyTel
achieved a consolidated EBITDA margin of 50.1% during the quarter. Net income
from continuing operations for the quarter, excluding nonrecurring items,
increased 13.0% to $44.8 million from $39.6 million in first quarter 2001 (as
adjusted), primarily due to telephone operating expense containment and lower
interest expense. Diluted earnings per share from continuing operations,
excluding nonrecurring items, increased 10.7% to $.31 from $.28 (as adjusted).
TELEPHONE operating income, excluding nonrecurring items, increased 11.3%
to $118.0 million from $106.0 million, and EBITDA rose 2.0% to $207.3 million
from $203.3 million a year ago. CenturyTel's first quarter telephone EBITDA
margin was 55.6% while the operating income margin was 31.6%, which includes a
$3.7 million charge related to reserves for uncollectible accounts due to the
bankruptcy of an interexchange carrier.
"Our long distance operations achieved record net additions of more than
49,000 customers during the quarter, a 10.6% sequential increase in total long
distance customers. In addition, CenturyTel added more than 12,000 Internet
customers during the quarter, of which 6,900 were DSL connections," Post said.
OTHER OPERATIONS revenues grew 24.4% to $50.2 million during first quarter
2002, compared with $40.4 million in first quarter 2001. CenturyTel's long
distance revenues increased 15.3% to $31.8 million. CenturyTel now serves more
than 515,000 long distance customers, adding more than 49,000 during the
quarter. Internet revenues increased 49.6% to $12.6 million in first quarter
2002 from $8.4 million in first quarter 2001. Internet operating losses were
$1.4 million for the quarter compared to $2.8 million in operating losses for
the first quarter 2001. CenturyTel CLEC revenues increased by $1.9 million, of
which $1.3 million resulted from the acquisition of CLEC assets in Monroe and
Shreveport, Louisiana, at the end of February 2002.
FOR FIRST QUARTER 2002, prepared in accordance with generally accepted
accounting principles (GAAP), the Company reported net income of $70.8 million,
or $.50 per diluted share, compared to net income of $60.8 million (as
adjusted), or $.43 per diluted share in first quarter 2001. Net income in first
quarter 2002 includes a nonrecurring $3 million pre-tax charge for advisory and
consulting fees.
FOR THE SECOND QUARTER 2002, the Company expects revenue from continuing
operations to be $420 to $435 million, approximately a 3.0% to 6.0% increase
over second quarter 2001. Operating cash flow from continuing operations is
expected to be $209 to $219 million. Diluted earnings per share from continuing
operations is anticipated to be $.28 to $.32, while total diluted earnings per
share is expected to be $.51 to $.55 for second quarter 2002. These estimates
exclude nonrecurring items and one-time integration costs of $5 - $7 million
related to the pending Verizon acquisitions.
FOR THE FULL YEAR 2002, total diluted earnings per share, excluding
nonrecurring items and one-time acquisition integration costs of $8 - $10
million, is expected to be $2.06 to $2.18. This is based upon several financing,
operational and other assumptions, including the anticipated close of our
wireless divestiture in mid-year 2002; the expected completion of the pending
Verizon acquisitions in Alabama and Missouri at the end of June and August,
respectively, and the successful implementation of the Company's financing plans
discussed below. Consummation of the Verizon acquisitions and wireless
divestiture are subject to the receipt of all necessary regulatory approvals and
satisfaction of other closing conditions.
THE COMPANY continues to believe the net effect of its wireless divestiture
and its Verizon acquisitions will be breakeven to $.03 accretive to earnings per
share during the first full year of operations, based upon current financing,
operational and other assumptions.
THE COMPANY'S FINANCING PLANS are not yet complete and will be dependent
upon market conditions and other factors. The Company currently anticipates it
will finance its pending Verizon acquisitions and refinance its 1997 credit
facility with (i) proceeds from the pending divestiture of its wireless
business, (ii) net proceeds from the possible sale of equity-linked and debt
securities later this year and (iii) additional proceeds from new credit
facilities that the Company anticipates entering into the second quarter of
2002.
In addition to historical information, this release includes 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 CenturyTel. 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 our operations, successfully
financing and timely consummating pending acquisitions, hiring adequate numbers
of qualified staff and successfully upgrading our billing and other information
systems; successfully obtaining all governmental and other approvals, consents
and waivers necessary to complete the Company's pending acquisitions and
wireless divestiture; the terms upon which the Company finances its pending
acquisitions; the inherent risk of rapid technological change; the effects of
on-going changes in the regulation of the Company or the communications industry
generally; 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
offerings on a timely and cost-effective basis; higher than anticipated interest
rates; and the effects of more general factors such as changes in overall 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, 2001. The information contained in this release is as of April 25, 2002. The
Company undertakes no obligation to update or revise any of this information
whether as a result of new information, future events or developments, or
otherwise.
CenturyTel's management will host a conference call at 10:30 A.M. Central
time today. Interested parties can access the call by dialing 800.729.6845 and
the call will be accessible for replay by calling 800.642.1687 and entering the
conference-id number: 3769540. 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 exchange,
wireless, long distance, Internet access and data services to nearly three
million customers in 21 states. The company, headquartered in Monroe, Louisiana,
is publicly traded on the New York Stock Exchange under the symbol CTL.
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, 2002 AND 2001
(UNAUDITED)
AS REPORTED EXCLUDING NONRECURRING ITEMS
--------------------------------- -------------------------------------
INCREASE INCREASE
In thousands, except per share amounts 2002 2001 (DECREASE) 2002 2001 (DECREASE)
--------------------------------- -------------------------------------
TELEPHONE OPERATIONS
Operating revenues
Local service $ 123,877 121,161 2.2% 123,877 121,161 2.2%
Network access 216,576 213,867 1.3% 216,576 213,867 1.3%
Other 32,278 36,221 (10.9%) 32,278 36,221 (10.9%)
--------- --------- --------- ---------
372,731 371,249 0.4% 372,731 371,249 0.4%
--------- --------- --------- ---------
Operating expenses
Plant operations 91,086 93,885 (3.0%) 91,086 91,885 (0.9%)
Customer operations 29,938 29,257 2.3% 29,938 29,257 2.3%
Corporate and other 44,396 46,765 (5.1%) 44,396 46,765 (5.1%)
Depreciation and amortization 89,343 97,361 (8.2%) 89,343 97,361 (8.2%)
--------- --------- --------- ---------
254,763 267,268 (4.7%) 254,763 265,268 (4.0%)
--------- --------- --------- ---------
Telephone operating income 117,968 103,981 13.5% 117,968 105,981 11.3%
--------- --------- --------- ---------
OTHER OPERATIONS
Operating revenues
Long distance 31,817 27,600 15.3% 31,817 27,600 15.3%
Internet 12,561 8,399 49.6% 12,561 8,399 49.6%
Other 5,809 4,354 33.4% 5,809 4,354 33.4%
--------- --------- --------- ---------
50,187 40,353 24.4% 50,187 40,353 24.4%
--------- --------- --------- ---------
Operating expenses
Cost of sales and other 41,424 33,589 23.3% 41,424 33,589 23.3%
Depreciation and amortization 2,884 1,457 97.9% 2,884 1,457 97.9%
--------- --------- --------- ---------
44,308 35,046 26.4% 44,308 35,046 26.4%
--------- --------- --------- ---------
Other operating income 5,879 5,307 10.8% 5,879 5,307 10.8%
--------- --------- --------- ---------
Corporate overhead costs allocable to
discontinued operations (4,798) (4,979) (3.6%) (4,798) (4,979) (3.6%)
--------- --------- --------- ---------
TOTAL OPERATING INCOME 119,049 104,309 14.1% 119,049 106,309 12.0%
OTHER INCOME (EXPENSE)
Interest expense (50,648) (61,703) (17.9%) (50,648) (61,703) (17.9%)
Other income and expense (2,268) 2,467 (191.9%) 732 2,467 (70.3%)
Income tax expense (23,276) (18,222) 27.7% (24,326) (19,022) 27.9%
--------- --------- --------- ---------
INCOME FROM CONTINUING OPERATIONS 42,857 26,851 59.6% 44,807 28,051 59.7%
DISCONTINUED OPERATIONS, NET OF TAX 27,910 19,871 40.5% 27,910 19,871 40.5%
--------- --------- --------- ---------
NET INCOME $ 70,767 46,722 51.5% 72,717 47,922 51.7%
Add: After tax effect of goodwill amortization - 14,083 - - 14,083 -
--------- --------- --------- ---------
NET INCOME, AS ADJUSTED $ 70,767 60,805 16.4% 72,717 62,005 17.3%
========= ========= ========= =========
BASIC EARNINGS PER SHARE
From continuing operations $ 0.30 0.19 a 57.9% 0.32 0.20 b 60.0%
From discontinued operations $ 0.20 0.14 a 42.9% 0.20 0.14 b 42.9%
Basic earnings per share $ 0.50 0.33 51.5% 0.51 0.34 50.0%
Basic earnings per share, as adjusted $ 0.50 0.43 16.3% 0.51 0.44 15.9%
DILUTED EARNINGS PER SHARE
From continuing operations $ 0.30 0.19 a 57.9% 0.31 0.20 b 55.0%
From discontinued operations $ 0.20 0.14 a 42.9% 0.20 0.14 b 42.9%
Diluted earnings per share $ 0.50 0.33 51.5% 0.51 0.34 50.0%
Diluted earnings per share, as adjusted $ 0.50 0.43 16.3% 0.51 0.44 15.9%
SHARES OUTSTANDING
Basic 141,051 140,572 0.3% 141,051 140,572 0.3%
Diluted 142,654 142,482 0.1% 142,654 142,482 0.1%
DIVIDENDS PER COMMON SHARE $ 0.0525 0.0500 5.0% 0.0525 0.0500 5.0%
a - Had goodwill not been subject to amortization in 2001, basic and diluted
earnings per share would have been $.27 from continuing operations and $.16 from
discontinued operations.
b - Had goodwill not been subject to amortization in 2001, basic and diluted
earnings per share (excluding nonrecurring items) would have been $.28 from
continuing operations and $.16 from discontinued operations.
CenturyTel, Inc.
SUMMARIZED DISCONTINUED OPERATIONS INFORMATION
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
(UNAUDITED)
INCREASE
2002 2001 (DECREASE)
------------------------------------------------------------------------------
(in thousands)
Operating revenues $ 102,421 104,406 (1.9%)
Operating expenses, exclusive of corporate
overhead costs (1) $ 67,405 74,507 (9.5%)
Income from unconsolidated cellular entities $ 11,514 5,321 116.4%
Minority interest expense $ (2,871) (2,637) 8.9%
Income from discontinued operations $ 27,910 19,871 40.5%
(1) Depreciation expense was ceased upon
classification of wireless operations
as discontinued operations.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2002 AND DECEMBER 31, 2001
(UNAUDITED)
March 31, December 31,
2002 2001
-----------------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 52,138 3,496
Other current assets 224,559 226,417
---------- -----------
Total current assets 276,697 229,913
---------- -----------
PROPERTY, PLANT AND EQUIPMENT
Telephone 5,344,135 5,292,255
Other 470,154 446,920
Accumulated depreciation (3,085,990) (3,003,033)
---------- -----------
Net property, plant and equipment 2,728,299 2,736,142
---------- -----------
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 2,116,265 2,087,158
Other 425,636 420,043
---------- -----------
Total investments and other assets 2,541,901 2,507,201
---------- -----------
ASSETS HELD FOR SALE 832,543 845,428
---------- -----------
TOTAL ASSETS $ 6,379,440 6,318,684
========== ===========
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities of
long-term debt $ 921,966 1,008,834
Other current liabilities 307,492 230,048
---------- -----------
Total current liabilities 1,229,458 1,238,882
LONG-TERM DEBT 2,081,396 2,087,500
DEFERRED CREDITS AND OTHER LIABILITIES 508,502 506,052
LIABILITIES RELATED TO ASSETS HELD FOR SALE 155,679 148,870
STOCKHOLDERS' EQUITY 2,404,405 2,337,380
---------- -----------
TOTAL LIABILITIES AND EQUITY $ 6,379,440 6,318,684
========== ===========
CAPITAL EXPENDITURES
THREE MONTHS ENDED MARCH 31, 2002 AND 2001
INCREASE
2002 2001 (DECREASE)
---------- ----------- ---------
(in thousands)
Telephone $ 67,538 72,680 (7.1%)
Wireless (discontinued operations) 6,137 18,332 (66.5%)
Other 5,994 29,573 (79.7%)
---------- ----------
Total capital expenditures $ 79,669 120,585 (33.9%)
========== ==========
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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.
By: /s/ Neil A. Sweasy
----------------------
Neil A. Sweasy
Vice President and Controller