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) July 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 July 25, 2002, CenturyTel, Inc. issued a press release announcing its
second quarter 2002 consolidated operating results. The entire text of the
release is reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
July 25, 2002 Media: Annmarie Sartor 318.388.9671
annmarie.sartor@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Reports Strong Second Quarter Results
Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating
results for second quarter 2002.
o Revenues from continuing operations increased 7.2% to $438.7 million.
o Earnings from continuing operations before interest, taxes, depreciation and
amortization (EBITDA), excluding nonrecurring items, rose 9.6% to $221.0
million.
o Income from continuing operations, excluding nonrecurring items, climbed
20.2% to $47.5 million. o Diluted earnings per share from continuing
operations, excluding nonrecurring items, climbed 17.9% to $.33.
o Free cash flow generated in second quarter 2002 was $53.0 million.
SECOND QUARTER HIGHLIGHTS
(Excluding nonrecurring items)
(In thousands, except per share Quarter Ended Quarter Ended % Change
and customer amounts) 06/30/02 06/30/01
--------------------------------------------------------------------------------------------
Revenues from continuing operations $ 438,702 $ 409,250 7.2%
EBITDA from continuing operations (1) $ 221,020 $ 201,582 9.6%
Income from continuing operations (1) $ 47,547 $ 39,543 (2) 20.2%
Net Income $ 86,102 $ 67,673 (2) 27.2%
Diluted Earnings Per Share from
continuing operations (1) $ .33 $ .28 (2) 17.9%
Diluted Earnings Per Share $ .60 $ .48 (2) 25.0%
Average Diluted Shares Outstanding 142,705 142,059 0.5%
Telephone Revenues $ 380,499 $ 367,884 3.4%
Other Operations Revenues $ 58,203 $ 41,366 40.7%
--------------------------------------------------------------------------------
Telephone Access Lines 1,795,180 1,807,950 (0.7)%
Long Distance Customers 536,394 414,486 29.4%
--------------------------------------------------------------------------------
(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.
"We are pleased with the strong increase in CenturyTel's revenue and cash flow
from continuing operations, excluding nonrecurring items," Glen F. Post, III,
president and chief executive officer, said. "We continue to experience strong
demand for our long distance and DSL services, adding more than 120,000 long
distance customers and more than doubling our DSL subscribers since second
quarter 2001."
Consolidated revenues from continuing operations for the second quarter
rose 7.2% to $438.7 million from $409.3 million. EBITDA from continuing
operations, excluding nonrecurring items, grew to $221.0 million from $201.6
million. The Company achieved a consolidated EBITDA margin of 50.4% during the
quarter. Income from continuing operations for the quarter, excluding
nonrecurring items, increased 20.2% to $47.5 million from $39.5 million in
second quarter 2001(as adjusted). Diluted earnings per share from continuing
operations, excluding nonrecurring items, increased 17.9% to $.33 from $.28 (as
adjusted). Diluted earnings per share, excluding nonrecurring items, increased
25.0% to $.60 from $.48 (as adjusted).
Telephone revenues grew 3.4% to $380.5 million during the quarter, compared
with $367.9 million in second quarter 2001. Revenues for the quarter were driven
by an increase in Universal Service Fund payments and internal revenue growth of
2.3%, which was negatively impacted by a decline in intrastate revenue.
Telephone operating expenses increased due to acquisition integration,
employee-related, network, and depreciation expenses partially offset by a
decrease in retail bad debt and access charge expenses. Telephone operating
income, excluding nonrecurring items, increased 4.1% to $118.7 million from
$114.1 million (as adjusted), and telephone EBITDA, excluding nonrecurring
items, rose 5.3% to $208.9 million from $198.3 million a year ago. CenturyTel's
second quarter telephone EBITDA margin was 54.9% while the operating income
margin was 31.2%.
Other Operations revenues grew 40.7% to $58.2 million during second quarter
2002, compared with $41.4 million in second quarter 2001. CenturyTel's long
distance revenues increased $5.9 million, or 20.9%, to $34.5 million. CenturyTel
now serves more than 536,000 long distance customers, adding more than 21,000
during the quarter. Internet revenues increased 68.7% to $14.7 million in second
quarter 2002 from $8.7 million in second quarter 2001. The Internet business
generated positive operating cash flow of $55,000 for the quarter compared to
negative operating cash flow of $2.7 million for the second quarter 2001.
CenturyTel CLEC revenues increased by $4.7 million, of which $4.0 million
resulted from the acquisition of CLEC assets in Monroe and Shreveport,
Louisiana, at the end of February, 2002.
"Revenue from Other Operations, which includes long distance, Internet and CLEC
operations, rose 40.7 percent to more than $58 million during the quarter,
reflecting solid revenue growth in all three areas. We believe CenturyTel's
strong financial performance this quarter is a good indicator that rural
telephony is one of the industry's brightest segments," Post said.
For second quarter 2002, in accordance with generally accepted accounting
principles (GAAP), the Company reported net income of $78.8 million, or $.55 per
diluted share, compared to net income of $168.4 million (as adjusted), or $1.19
per diluted share in second quarter 2001. Nonrecurring items in second quarter
2002 include a $15 million pre-tax charge ($9.8 million after-tax) related to a
reserve for uncollectible revenues primarily from WorldCom and a nonrecurring
$2.4 million after-tax gain on the sale of a PCS license. Net income in second
quarter 2001 includes a net favorable $100.7 million impact from nonrecurring
items which consisted of the gain on sale of PCS licenses to Leap Wireless
($107.5 million after-tax) and the write down of certain non-operating
investments ($6.8 million after-tax).
For the first six months of 2002, income from continuing operations,
excluding nonrecurring items, increased 16.6% to $92.4 million from $79.2
million in 2001 (as adjusted) and diluted earnings per share increased 22.0% to
$1.11 from $.91 (as adjusted). Consolidated revenues increased 5.0% to $861.6
million from $820.9 million while EBITDA was $433.0 million compared to $409.2
million a year ago, a 5.8% increase.
The Company continues to reflect its wireless business as discontinued
operations due to its pending divestiture. As a result of this treatment,
depreciation expense for the wireless operations was discontinued effective
March 19, 2002, the date of the definitive agreement. This reduction in wireless
depreciation contributed approximately $.05 to earnings per share for second
quarter 2002. Income from continuing operations includes total interest expense
and $5.1 million of corporate overheads previously absorbed by the Company's
wireless operations.
For the third quarter 2002, the Company expects revenue from continuing
operations to be $515 to $530 million. Operating cash flow from continuing
operations is expected to be $260 to $270 million. Diluted earnings per share
from continuing operations is anticipated to be $.40 to $.44, while total
diluted earnings per share is expected to be $.49 to $.54 for third quarter
2002. These estimates exclude nonrecurring items and one-time integration costs
of $4.0 to $6.0 million related to the pending Verizon Missouri acquisition.
These estimates also include Alabama telephone properties acquired July 1, 2002,
and assume that the sale of the Company's wireless business and the acquisition
of Missouri telephone properties occur as scheduled on August 1, 2002, and
August 31, 2002, respectively.
For the full year 2002, the Company expects its total diluted earnings per
share, excluding nonrecurring items and one-time acquisition integration costs
of $8 - $10 million, to be $2.08 to $2.20, an increase from prior full year 2002
earnings per share guidance of $2.06 to $2.18. This guidance is based upon
several financing, operational and other assumptions, including the timely close
of our pending wireless divestiture and Verizon acquisition in Missouri
discussed above.
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 now substantially complete. We
successfully completed a $500 million equity units offering in May and recently
completed a new $800 million credit facility. We anticipate using a portion of
the proceeds from the divestiture of the Company's wireless business to complete
the Missouri acquisition. We believe the Company's existing facilities, together
with internally generated cash, may be sufficient to fund the December 2002 tax
payment related to the wireless sale. The Company also has $400 million in
remarketable debt securities coming due in October 2002. We believe a number of
financing options are available to fund these requirements if necessary.
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 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 July 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: 12475. 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 more than three
million customers in 22 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 JUNE 30, 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 $ 125,357 123,293 1.7% 125,357 123,293 1.7%
Network access 220,702 212,570 3.8% 220,702 212,570 3.8%
Other 34,440 32,021 7.6% 34,440 32,021 7.6%
-------------------- --------------------
380,499 367,884 3.4% 380,499 367,884 3.4%
-------------------- --------------------
Operating expenses
Plant operations 96,147 93,490 2.8% 96,147 93,490 2.8%
Customer operations 32,385 28,814 12.4% 32,385 28,814 12.4%
Corporate and other 58,099 47,271 22.9% 43,099 47,271 (8.8%)
Depreciation and amortization 90,159 98,927 (8.9%) 90,159 98,927 (8.9%)
-------------------- --------------------
276,790 268,502 3.1% 261,790 268,502 (2.5%)
-------------------- --------------------
Telephone operating income 103,709 99,382 4.4% 118,709 99,382 19.4%
-------------------- --------------------
OTHER OPERATIONS
Operating revenues
Long distance 34,462 28,514 20.9% 34,462 28,514 20.9%
Internet 14,706 8,718 68.7% 14,706 8,718 68.7%
Other 9,035 4,134 118.6% 9,035 4,134 118.6%
-------------------- --------------------
58,203 41,366 40.7% 58,203 41,366 40.7%
-------------------- --------------------
Operating expenses
Cost of sales and other 43,402 34,897 24.4% 43,402 34,897 24.4%
Depreciation and amortization 3,845 1,663 131.2% 3,845 1,663 131.2%
-------------------- --------------------
47,247 36,560 29.2% 47,247 36,560 29.2%
-------------------- --------------------
Other operating income 10,956 4,806 128.0% 10,956 4,806 128.0%
-------------------- --------------------
Corporate overhead costs allocable to
discontinued operations (5,134) (4,979) 3.1% (5,134) (4,979) 3.1%
-------------------- --------------------
TOTAL OPERATING INCOME 109,531 99,209 10.4% 124,531 99,209 25.5%
OTHER INCOME (EXPENSE)
Nonrecurring gains and losses 3,709 (10,500) (135.3%) - - -
Interest expense (54,157) (57,358) (5.6%) (54,157) (57,358) (5.6%)
Other income and expense 2,485 1,783 39.4% 2,485 1,783 39.4%
Income tax expense (21,360) (12,066) 77.0% (25,312) (15,741) 60.8%
-------------------- --------------------
INCOME FROM CONTINUING OPERATIONS 40,208 21,068 90.8% 47,547 27,893 70.5%
DISCONTINUED OPERATIONS, NET OF TAX 38,555 133,173 (71.0%) 38,555 25,645 50.3%
-------------------- --------------------
NET INCOME $ 78,763 154,241 (48.9%) 86,102 53,538 60.8%
Add: After tax effect of goodwill
amortization - 14,135 - - 14,135 -
-------------------- --------------------
NET INCOME, AS ADJUSTED $ 78,763 168,376 (53.2%) 86,102 67,673 27.2%
==================== ====================
BASIC EARNINGS PER SHARE
From continuing operations $ 0.28 0.15 86.7% 0.34 0.20 70.0%
From continuing operations, as
adjusted (1) $ 0.28 0.23 21.7% 0.34 0.28 21.4%
From discontinued operations $ 0.27 0.95 (71.6%) 0.27 0.18 50.0%
From discontinued operations, as
adjusted (1) $ 0.27 0.96 (71.9%) 0.27 0.20 35.0%
Basic earnings per share $ 0.56 1.10 (49.1%) 0.61 0.38 60.5%
Basic earnings per share, as
adjusted (1) $ 0.56 1.20 (53.3%) 0.61 0.48 27.1%
DILUTED EARNINGS PER SHARE
From continuing operations $ 0.28 0.15 86.7% 0.33 0.20 65.0%
From continuing operations, as
adjusted (1) $ 0.28 0.23 21.7% 0.33 0.28 17.9%
From discontinued operations $ 0.27 0.94 (71.3%) 0.27 0.18 50.0%
From discontinued operations, as
adjusted (1) $ 0.27 0.95 (71.6%) 0.27 0.20 35.0%
Diluted earnings per share $ 0.55 1.09 (49.5%) 0.60 0.38 57.9%
Diluted earnings per share, as
adjusted (1) $ 0.55 1.19 (53.8%) 0.60 0.48 25.0%
SHARES OUTSTANDING
Basic 141,243 140,720 0.4% 141,243 140,720 0.4%
Diluted 142,705 142,059 0.5% 142,705 142,059 0.5%
DIVIDENDS PER COMMON SHARE $ 0.0525 0.0500 5.0% 0.0525 0.0500 5.0%
(1) As adjusted to reflect the after-tax effect of eliminating goodwill
amortization in accordance with SFAS 142.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 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 $ 249,234 244,454 2.0% 249,234 244,454 2.0%
Network access 437,278 426,437 2.5% 437,278 426,437 2.5%
Other 66,718 68,242 (2.2%) 66,718 68,242 (2.2%)
-------------------- --------------------
753,230 739,133 1.9% 753,230 739,133 1.9%
-------------------- --------------------
Operating expenses
Plant operations 187,233 187,375 (0.1%) 187,233 185,375 1.0%
Customer operations 62,323 58,071 7.3% 62,323 58,071 7.3%
Corporate and other 102,495 94,036 9.0% 87,495 94,036 (7.0%)
Depreciation and amortization 179,502 196,288 (8.6%) 179,502 196,288 (8.6%)
-------------------- --------------------
531,553 535,770 (0.8%) 516,553 533,770 (3.2%)
-------------------- --------------------
Telephone operating income 221,677 203,363 9.0% 236,677 205,363 15.2%
-------------------- --------------------
OTHER OPERATIONS
Operating revenues
Long distance 66,279 56,114 18.1% 66,279 56,114 18.1%
Internet 27,267 17,117 59.3% 27,267 17,117 59.3%
Other 14,844 8,488 74.9% 14,844 8,488 74.9%
-------------------- --------------------
108,390 81,719 32.6% 108,390 81,719 32.6%
-------------------- --------------------
Operating expenses
Cost of sales and other 84,826 68,486 23.9% 84,826 68,486 23.9%
Depreciation and amortization 6,729 3,120 115.7% 6,729 3,120 115.7%
-------------------- --------------------
91,555 71,606 27.9% 91,555 71,606 27.9%
-------------------- --------------------
Other operating income 16,835 10,113 66.5% 16,835 10,113 66.5%
-------------------- --------------------
Corporate overhead costs allocable to
discontinued operations (9,932) (9,958) (0.3%) (9,932) (9,958) (0.3%)
-------------------- --------------------
TOTAL OPERATING INCOME 228,580 203,518 12.3% 243,580 205,518 18.5%
OTHER INCOME (EXPENSE)
Nonrecurring gains and losses 3,709 (10,500) (135.3%) - - -
Interest expense (104,805) (119,061) (12.0%) (104,805) (119,061) (12.0%)
Other income and expense 217 4,250 (94.9%) 3,217 4,250 (24.3%)
Income tax expense (44,636) (30,288) 47.4% (49,638) (34,763) 42.8%
-------------------- --------------------
INCOME FROM CONTINUING OPERATIONS 83,065 47,919 73.3% 92,354 55,944 65.1%
DISCONTINUED OPERATIONS, NET OF TAX 66,465 153,044 (56.6%) 66,465 45,516 46.0%
-------------------- --------------------
NET INCOME $ 149,530 200,963 (25.6%) 158,819 101,460 56.5%
Add: After tax effect of goodwill
amortization - 28,218 - - 28,218 -
-------------------- --------------------
NET INCOME, AS ADJUSTED $ 149,530 229,181 (34.8%) 158,819 129,678 22.5%
==================== ====================
BASIC EAR NINGS PER SHARE
From continuing operations $ 0.59 0.34 73.5% 0.65 0.40 62.5%
From continuing operations, as
adjusted (1) $ 0.59 0.51 15.7% 0.65 0.56 16.1%
From discontinued operations $ 0.47 1.09 (56.9%) 0.47 0.32 46.9%
From discontinued operations, as
adjusted (1) $ 0.47 1.12 (58.0%) 0.47 0.36 30.6%
Basic earnings per share $ 1.06 1.43 (25.9%) 1.12 0.72 55.6%
Basic earnings per share, as
adjusted (1) $ 1.06 1.63 (35.0%) 1.12 0.92 21.7%
DILUTED EARNINGS PER SHARE
From continuing operations $ 0.58 0.34 70.6% 0.65 0.39 66.7%
From continuing operations, as
adjusted (1) $ 0.58 0.50 16.0% 0.65 0.56 16.1%
From discontinued operations $ 0.47 1.08 (56.5%) 0.47 0.32 46.9%
From discontinued operations, as
adjusted (1) $ 0.47 1.11 (57.7%) 0.47 0.35 34.3%
Diluted earnings per share $ 1.05 1.41 (25.5%) 1.11 0.71 56.3%
Diluted earnings per share, as
adjusted (1) $ 1.05 1.61 (34.8%) 1.11 0.91 22.0%
SHARES OUTSTANDING
Basic 141,136 140,656 0.3% 141,136 140,656 0.3%
Diluted 142,679 142,271 0.3% 142,679 142,271 0.3%
DIVIDENDS PER COMMON SHARE $ 0.1050 0.1000 5.0% 0.1050 0.1000 5.0%
(1) As adjusted to reflect the after-tax effect of eliminating goodwill
amortization in accordance with SFAS 142.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
(UNAUDITED)
June 30, December 31,
2002 2001
------------------------------------------------------------------------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 302,070 3,496
Other current assets 193,748 226,417
------------------------------------------------------------------------------
Total current assets 495,818 229,913
------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Telephone 5,385,714 5,292,255
Other 488,999 446,920
Accumulated depreciation (3,149,617) (3,003,033)
------------------------------------------------------------------------------
Net property, plant and equipment 2,725,096 2,736,142
------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 2,115,313 2,087,158
Other 439,855 420,043
------------------------------------------------------------------------------
Total investments and other assets 2,555,168 2,507,201
------------------------------------------------------------------------------
ASSETS HELD FOR SALE 861,226 845,428
------------------------------------------------------------------------------
TOTAL ASSETS $ 6,637,308 6,318,684
==============================================================================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities $ 605,772 1,008,834
of long-term debt
Other current liabilities 264,157 230,048
------------------------------------------------------------------------------
Total current liabilities 869,929 1,238,882
LONG-TERM DEBT 2,576,813 2,087,500
DEFERRED CREDITS AND OTHER LIABILITIES 560,797 506,052
LIABILITIES RELATED TO ASSETS HELD FOR SALE 171,680 148,870
STOCKHOLDERS' EQUITY 2,458,089 2,337,380
------------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY $ 6,637,308 6,318,684
==============================================================================
CAPITAL EXPENDITURES
SIX MONTHS ENDED JUNE 30, 2002 AND 2001
INCREASE
2002 2001 (DECREASE)
--------------------------------------------------------------------------------
(in thousands)
Telephone $ 145,822 161,817 (9.9%)
Wireless (discontinued operations) 20,264 33,596 (39.7%)
Other 33,212 47,905 (30.7%)
-------------------------------------------------------------------
Total capital expenditures $ 199,298 243,318 (18.1%)
===================================================================
CAPITAL EXPENDITURES
THREE MONTHS ENDED JUNE 30, 2002 AND 2001
INCREASE
2002 2001 (DECREASE)
--------------------------------------------------------------------------------
(in thousands)
Telephone $ 78,284 89,137 (12.2%)
Wireless (discontinued operations) 14,127 15,264 (7.4%)
Other 27,218 18,332 48.5%
-------------------------------------------------------------------
Total capital expenditures $ 119,629 122,733 (2.5%)
===================================================================
---------------------------
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