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) October 30, 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 12. Results of Operations and Financial Condition
The following 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superceded by information as of a subsequent date that is included in or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 October 30, 2003, we issued a press release announcing our third
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
period ended September 30, 2003, which we expect to file shortly with the
Securities and Exchange Commission. The entire text of our October 30, 2003
press release is reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
October 30, 2003 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Announces Third Quarter Earnings
Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating
results for third quarter 2003.
o Revenues from continuing operations, excluding nonrecurring items, increased
13.5% to $603.8 million from $532.1 million, while GAAP revenues from
continuing operations increased 15.1% to $603.8 million from $524.5 million.
o Operating Cash Flow (OCF) from continuing operations (defined as operating
income plus depreciation and amortization), excluding nonrecurring items,
rose 12.7% to $307.6 million.
o Net income, excluding nonrecurring items, grew 9.1% to $88.5 million.
Reported under GAAP, net income was $91.0 million.
o Diluted earnings per share, excluding nonrecurring items, increased 7.0% to
$.61, while GAAP diluted earnings per share was $.63 in third quarter 2003.
o Free cash flow, excluding nonrecurring items, climbed to $103.1 million
from $89.9 million.
------------------------------------------------------------------------------
Third Quarter Highlights (1) Quarter Ended Quarter Ended % Change
(In thousands, except per 9/30/03 9/30/02
share and customer amounts)
------------------------------------------------------------------------------
Revenues from continuing
operations $ 603,752 $ 532,142 13.5%
OCF from continuing
operations $ 307,638 $ 272,875 (2) 12.7%
Income from continuing
operations $ 88,452 $ 69,558 (2) 27.2%
Net Income $ 88,452 $ 81,093 9.1%
Diluted Earnings Per Share
from continuing operations $ .61 $ .49 24.5%
Diluted Earnings Per Share $ .61 $ .57 7.0%
Average Diluted Shares
Outstanding 145,171 142,770 1.7%
Telephone Revenues $ 521,439 $ 468,580 11.3%
Other Operations Revenues $ 82,313 $ 63,562 29.5%
------------------------------------------------------------------------------
Telephone Access Lines 2,394,623 2,437,744 (1.8)%
Long Distance Customers 745,204 584,890 27.4%
------------------------------------------------------------------------------
(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. For 2002, these results reflect only one month of operations
of the Company's Missouri telephone properties acquired from Verizon on
August 31, 2002.
(2) Includes corporate overheads previously allocated to discontinued
operations.
***********
"CenturyTel again achieved solid results that reflect our focus on
bringing quality communications services to customers in rural areas and
smaller cities while driving revenue and controlling costs," Glen F. Post, III,
chairman and chief executive officer, said. "We are pleased with our ability
to sustain revenue and earnings growth in the currently challenging industry
and economic environment."
Consolidated revenues from continuing operations, excluding nonrecurring
items, for the third quarter rose 13.5% to $603.8 million from $532.1 million,
primarily due to contributions from the Missouri properties acquired from
Verizon on August 31, 2002. Operating cash flow from continuing operations,
excluding nonrecurring items, grew to $307.6 million from $272.9 million, a
12.7% increase. The Company achieved a consolidated cash flow margin, excluding
nonrecurring items, of 51.0% for the quarter versus 51.3% in third quarter 2002.
Income from continuing operations for the quarter, excluding nonrecurring items,
increased 27.2% to $88.5 million from $69.6 million in third quarter 2002.
Diluted earnings per share from continuing operations, excluding nonrecurring
items, increased 24.5% to $.61 from $.49. Diluted earnings per share, excluding
nonrecurring items, were $.61 in third quarter 2003 compared to $.57 in third
quarter 2002.
Telephone revenues, excluding nonrecurring items, for third quarter reached
$521.4 million, an 11.3% increase over $468.6 million in third quarter 2002. The
Verizon Missouri properties acquired August 31, 2002, contributed $44.5 million
of the increase. The remaining increase resulted primarily from growth in
vertical services and access revenues that more than offset revenue declines due
to access line losses. Telephone operating expenses increased primarily due to
the Verizon Missouri acquisition. Telephone operating income, excluding
nonrecurring items, increased 13.4% to $172.6 million from $152.3 million, and
telephone operating cash flow, excluding nonrecurring items, rose 10.8% to
$284.3 million from $256.6 million a year ago. CenturyTel's third quarter 2003
telephone cash flow margin was 54.5% while the operating income margin was
33.1%.
Other operations revenues grew 29.5% to $82.3 million during third quarter
2003, compared with $63.6 million in third quarter 2002. CenturyTel's long
distance revenues increased 14.2% to $45.2 million. Internet revenues increased
36.5% to $20.5 million in third quarter 2003 from $15.0 million in third quarter
2002. CenturyTel now serves more than 745,200 long distance customers and 76,300
DSL customers, adding more than 24,800 and 8,300 customers, respectively, during
the quarter. Fiber transport revenues increased $6.9 million, primarily due to
the June 2003 acquisition of fiber assets from Digital Teleport, Inc.
"People in rural areas want and need advanced communications services
similar to those in urban areas. In our markets, we are working to position
CenturyTel as the carrier of choice for broadband and other services, which is
reflected in CenturyTel's record DSL additions of more than 8,300 customers
during the third quarter," Post said.
Under generally accepted accounting principles (GAAP), the Company's net
income was $91.0 million compared to $607.7 million in 2002, while diluted
earnings per share was $.63 for third quarter 2003 compared to $4.26 in third
quarter 2002. Net income in third quarter 2003 included a net nonrecurring $2.5
million benefit from out of period income tax adjustments. Net income in third
quarter 2002 included a $551.4 million after-tax gain on the sale of its
wireless operations. See the accompanying financial information for additional
nonrecurring items that affected the third quarters and first nine months of
2003 and 2002.
For the first nine months of 2003, results from continuing operations
benefited from the Alabama and Missouri wireline properties acquired from
Verizon in third quarter 2002. Revenues from continuing operations, excluding
nonrecurring items, increased to $1.774 billion from $1.394 billion for the same
period in 2002, a 27.3% increase. Operating cash flow from continuing
operations, excluding nonrecurring items, was $910.6 million for the first nine
months of 2003 compared to $702.7 million a year ago, a 29.6% increase. Income
from continuing operations, excluding nonrecurring items, increased 56.9% to
$256.5 million from $163.4 million in 2002.
For the fourth quarter 2003, CenturyTel expects total revenues of $600 to
$615 million and diluted earnings per share of $.58 to $.62. For the full year
2003, diluted earnings per share is expected to be in the range of $2.36 to
$2.40, increased from our previous guidance of $2.28 to $2.34. The increase in
2003 earnings per share guidance is driven by our third quarter results
exceeding our expectations.
These outlook figures are presented on a GAAP basis, excluding nonrecurring
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 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 investors in their
understanding of period-to-period operating performance and to identify
historical and prospective trends. Reconciliations of non-GAAP financial
measures to the most comparable GAAP measures are included in the attached
financial schedules. 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.
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. 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 October 30, 2003.
The Company undertakes no obligation to update any of its forward-looking
statements.
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 and
the call will be accessible for replay until 1:30 p.m. CST, November 3, 2003, 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 at www.centurytel.com.
**********
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
Three months ended September 30, 2003 Three months ended September 30, 2002
-------------------------------------- -------------------------------------
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
-------------------------------------- ------------------------------------- ------------------------
TELEPHONE OPERATIONS
Operating revenues
Local service $ 188,951 - 188,951 169,098 - 169,098 11.7% 11.7%
Network access 287,191 - 287,191 249,047 (7,645)(2) 256,692 15.3% 11.9%
Other 45,297 - 45,297 42,790 - 42,790 5.9% 5.9%
-------------------------------------- -------------------------------------
521,439 - 521,439 460,935 (7,645) 468,580 13.1% 11.3%
-------------------------------------- -------------------------------------
Operating expenses
Plant operations 130,098 - 130,098 117,997 - 117,997 10.3% 10.3%
Customer operations 41,101 - 41,101 41,161 - 41,161 (0.1%) (0.1%)
Corporate and other 65,931 - 65,931 52,774 - 52,774 24.9% 24.9%
Depreciation and
amortization 111,666 - 111,666 104,384 - 104,384 7.0% 7.0%
-------------------------------------- -------------------------------------
348,796 - 348,796 316,316 - 316,316 10.3% 10.3%
-------------------------------------- -------------------------------------
Telephone operating income 172,643 - 172,643 144,619 (7,645) 152,264 19.4% 13.4%
-------------------------------------- -------------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 45,207 - 45,207 39,592 - 39,592 14.2% 14.2%
Internet 20,469 - 20,469 14,996 - 14,996 36.5% 36.5%
Other 16,637 - 16,637 8,974 - 8,974 85.4% 85.4%
-------------------------------------- -------------------------------------
82,313 - 82,313 63,562 - 63,562 29.5% 29.5%
-------------------------------------- -------------------------------------
Operating expenses
Cost of sales and other 58,984 - 58,984 45,992 - 45,992 28.2% 28.2%
Depreciation and
amortization 5,191 - 5,191 3,130 - 3,130 65.8% 65.8%
-------------------------------------- -------------------------------------
64,175 - 64,175 49,122 - 49,122 30.6% 30.6%
-------------------------------------- -------------------------------------
Other operating income 18,138 - 18,138 14,440 - 14,440 25.6% 25.6%
-------------------------------------- -------------------------------------
Corporate overhead costs
allocable to discontinued
operations - - - (1,343) - (1,343) (100.0%) (100.0%)
-------------------------------------- -------------------------------------
TOTAL OPERATING INCOME 190,781 - 190,781 157,716 (7,645) 165,361 21.0% 15.4%
OTHER INCOME (EXPENSE)
Interest expense (54,360) - (54,360) (60,021) - (60,021) (9.4%) (9.4%)
Income from
unconsolidated
cellular entity 1,736 - 1,736 1,492 - 1,492 16.4% 16.4%
Other income and expense (1,076) - (1,076) (573) - (573) 87.8% 87.8%
Income tax expense (46,102) 2,527 (1) (48,629) (34,025) 2,676 (3) (36,701) 35.5% 32.5%
-------------------------------------- -------------------------------------
INCOME FROM CONTINUING
OPERATIONS 90,979 2,527 88,452 64,589 (4,969) 69,558 40.9% 27.2%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 543,160 531,625 (4) 11,535 (100.0%) (100.0%)
-------------------------------------- -------------------------------------
NET INCOME $ 90,979 2,527 88,452 607,749 526,656 81,093 (85.0%) 9.1%
====================================== =====================================
BASIC EARNINGS PER SHARE
From continuing
operations $ 0.63 0.02 0.61 0.46 (0.04) 0.49 37.0% 24.5%
From discontinued
operations $ - - - 3.83 3.75 0.08 (100.0%) (100.0%)
Basic earnings
per share $ 0.63 0.02 0.61 4.29 3.72 0.57 (85.3%) 7.0%
DILUTED EARNINGS PER SHARE
From continuing
operations $ 0.63 0.02 0.61 0.45 (0.03) 0.49 40.0% 24.5%
From discontinued
operations $ - - - 3.80 3.72 0.08 (100.0%) (100.0%)
Diluted earnings
per share $ 0.63 0.02 0.61 4.26 3.69 0.57 (85.2%) 7.0%
SHARES OUTSTANDING
Basic 143,897 143,897 141,692 141,692 1.6% 1.6%
Diluted 145,171 145,171 142,770 142,770 1.7% 1.7%
DIVIDENDS PER
COMMON SHARE $ 0.0550 0.0550 0.0525 0.0525 4.8% 4.8%
NONRECURRING ITEMS
(1) - Net out of period income tax adjustments.
(2) - Reserve for refunds of access charges to interexchange carriers.
(3) - Tax effect of item (2).
(4) - Gain on sale of wireless operations ($551.4 million after tax), net
of write down of wireless portion of billing system ($19.8
million after tax).
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(UNAUDITED)
Nine months ended September 30, 2003 Nine months ended September 30, 2002
------------------------------------ ------------------------------------
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
------------------------------------ ------------------------------------ -------------------------
TELEPHONE OPERATIONS
Operating revenues
Local service $ 565,599 - 565,599 418,332 - 418,332 35.2% 35.2%
Network access 845,999 - 845,999 686,325 (7,645)(3) 693,970 23.3% 21.9%
Other 136,191 - 136,191 109,508 - 109,508 24.4% 24.4%
------------------------------------ ------------------------------------
1,547,789 - 1,547,789 1,214,165 (7,645) 1,221,810 27.5% 26.7%
------------------------------------ ------------------------------------
Operating expenses
Plant operations 378,587 - 378,587 305,230 - 305,230 24.0% 24.0%
Customer operations 124,068 - 124,068 103,484 - 103,484 19.9% 19.9%
Corporate and other 189,284 (4,959)(1) 194,243 155,269 15,000 (4) 140,269 21.9% 38.5%
Depreciation and
amortization 337,250 - 337,250 283,886 - 283,886 18.8% 18.8%
------------------------------------ ------------------------------------
1,029,189 (4,959) 1,034,148 847,869 15,000 832,869 21.4% 24.2%
------------------------------------ ------------------------------------
Telephone operating income 518,600 4,959 513,641 366,296 (22,645) 388,941 41.6% 32.1%
------------------------------------ ------------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 130,968 - 130,968 105,871 - 105,871 23.7% 23.7%
Internet 58,345 - 58,345 42,263 - 42,263 38.1% 38.1%
Other 37,328 - 37,328 23,818 - 23,818 56.7% 56.7%
------------------------------------ ------------------------------------
226,641 - 226,641 171,952 - 171,952 31.8% 31.8%
------------------------------------ ------------------------------------
Operating expenses
Cost of sales and other 166,896 - 166,896 130,818 - 130,818 27.6% 27.6%
Depreciation and
amortization 14,410 - 14,410 9,859 - 9,859 46.2% 46.2%
------------------------------------ ------------------------------------
181,306 - 181,306 140,677 - 140,677 28.9% 28.9%
------------------------------------ ------------------------------------
Other operating income 45,335 - 45,335 31,275 - 31,275 45.0% 45.0%
------------------------------------ ------------------------------------
Corporate overhead costs
allocable to discontinued
operations - - - (11,275) - (11,275) (100.0%) (100.0%)
------------------------------------ ------------------------------------
TOTAL OPERATING INCOME 563,935 4,959 558,976 386,296 (22,645) 408,941 46.0% 36.7%
OTHER INCOME (EXPENSE)
Interest expense (165,909) - (165,909) (164,826) - (164,826) 0.7% 0.7%
Income from unconsolidated
cellular entity 4,895 - 4,895 3,852 - 3,852 27.1% 27.1%
Nonrecurring gains and
losses - - - 3,709 3,709 (5) - (100.0%) -%
Other income and expense (1,034) - (1,034) (356) (3,000)(6) 2,644 190.4% (139.1%)
Income tax expense (139,622) 791 (2) (140,413) (79,487) 7,678 (7) (87,165) 75.7% 61.1%
------------------------------------ ------------------------------------
INCOME FROM CONTINUING
OPERATIONS 262,265 5,750 256,515 149,188 (14,258) 163,446 75.8% 56.9%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 608,091 531,625 (8) 76,466 (100.0%) (100.0%)
------------------------------------ ------------------------------------
NET INCOME $ 262,265 5,750 256,515 757,279 517,367 239,912 (65.4%) 6.9%
==================================== ====================================
BASIC EARNINGS PER SHARE
From continuing
operations $ 1.83 0.04 1.79 1.05 (0.10) 1.15 74.3% 55.7%
From discontinued
operations $ - - - 4.30 3.76 0.54 (100.0%) (100.0%)
Basic earnings
per share $ 1.83 0.04 1.79 5.36 3.66 1.70 (65.9%) 5.3%
DILUTED EARNINGS PER SHARE
From continuing
operations $ 1.82 0.04 1.78 1.05 (0.10) 1.15 73.3% 54.8%
From discontinued
operations $ - - - 4.26 3.73 0.54 (100.0%) (100.0%)
Diluted earnings
per share $ 1.82 0.04 1.78 5.31 3.63 1.68 (65.7%) 6.0%
SHARES OUTSTANDING
Basic 143,370 143,370 141,324 141,324 1.4% 1.4%
Diluted 144,481 144,481 142,710 142,710 1.2% 1.2%
DIVIDENDS PER COMMON SHARE $ 0.1650 0.1650 0.1575 0.1575 4.8% 4.8%
NONRECURRING ITEMS
(1) - Partial recovery of amounts previously written off in connection
with WorldCom bankruptcy. See Note 4.
(2) - Net out of period income tax adjustments ($2.5 million credit), net of
tax expense effect of item (1).
(3) - Reserve for refunds of access charges to interexchange carriers.
(4) - Reserve for uncollectible receivables, primarily WorldCom.
(5) - Gain on sale of PCS license.
(6) - Costs to defend unsolicited takeover proposal.
(7) - Tax effect of items (3) through (6).
(8) - Gain on sale of wireless operations ($551.4 million after-tax),
net of write down of wireless portion of billing system
($19.8 million after-tax).
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
Sept. 30, Dec. 31,
2003 2002
----------- ------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 157,944 3,661
Other current assets 265,057 292,241
----------- ------------
Total current assets 423,001 295,902
----------- ------------
PROPERTY, PLANT AND EQUIPMENT
Telephone 6,536,888 6,347,900
Other 566,045 521,292
Accumulated depreciation (3,647,723) (3,337,547)
----------- ------------
Net property, plant and equipment 3,455,210 3,531,645
----------- ------------
INVESTMENTS AND OTHER ASSETS
Goodwill 3,429,479 3,427,281
Other 504,131 515,580
----------- ------------
Total investments and other assets 3,933,610 3,942,861
----------- ------------
TOTAL ASSETS $ 7,811,821 7,770,408
=========== ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 115,167 70,737
Other current liabilities 419,850 317,367
----------- ------------
Total current liabilities 535,017 388,104
LONG-TERM DEBT 3,119,378 3,578,132
DEFERRED CREDITS AND OTHER LIABILITIES 795,853 716,168
STOCKHOLDERS' EQUITY 3,361,573 3,088,004
----------- ------------
TOTAL LIABILITIES AND EQUITY $ 7,811,821 7,770,408
=========== ============
CAPITAL EXPENDITURES
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
Nine months ended September 30, Increase
2003 2002 (decrease)
-------------------------------- ----------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 216,448 221,327 (2.2%)
Wireless (discontinued operations) - 27,242 (100.0%)
Other 40,011 49,447 (19.1%)
--------------------------------
Total capital expenditures $ 256,459 298,016 (13.9%)
================================
CAPITAL EXPENDITURES
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
Three months ended September 30, Increase
2003 2002 (decrease)
-------------------------------- ----------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 85,050 75,505 12.6%
Wireless (discontinued operations) - 6,978 (100.0%)
Other 17,151 16,235 5.6%
--------------------------------
Total capital expenditures $ 102,201 98,718 3.5%
================================
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended September 30, 2003 Three months ended September 30, 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
------------------------------------- --------------------------------------
Consolidated operating cash flow from
continuing operations and cash flow margin
Operating income $ 190,781 - 190,781 157,716 (7,645)(2) 165,361
Add: Depreciation and amortization 116,857 - 116,857 107,514 - 107,514
------------------------------------- --------------------------------------
Consolidated operating cash flow
from continuing operations $ 307,638 - 307,638 265,230 (7,645) 272,875
===================================== ======================================
Revenues from continuing operations $ 603,752 - 603,752 524,497 (7,645) 532,142
===================================== ======================================
Consolidated cash flow margin (operating
cash flow divided by revenues) 51.0% 51.0% 50.6% 51.3%
=========== ============== ============ ==============
Telephone operating cash flow, operating
income margin and cash flow margin
Telephone operating income $ 172,643 - 172,643 144,619 (7,645)(2) 152,264
Add: Depreciation and amortization 111,666 - 111,666 104,384 - 104,384
------------------------------------- --------------------------------------
Telephone operating cash flow $ 284,309 - 284,309 249,003 (7,645) 256,648
===================================== ======================================
Telephone revenues $ 521,439 - 521,439 460,935 (7,645) 468,580
===================================== ======================================
Telephone operating income margin
(operating income divided by revenues) 33.1% 33.1% 31.4% 32.5%
=========== ============== ============ ==============
Telephone cash flow margin
(operating cash flow divided by revenues) 54.5% 54.5% 54.0% 54.8%
=========== ============== ============ ==============
Other Operations operating cash flow,
operating income margin and cash flow margin
Other Operations operating income $ 18,138 - 18,138 14,440 - 14,440
Add: Depreciation and amortization 5,191 - 5,191 3,130 - 3,130
------------------------------------- --------------------------------------
Other Operations operating cash flow $ 23,329 - 23,329 17,570 - 17,570
===================================== ======================================
Other Operations revenues $ 82,313 - 82,313 63,562 - 63,562
===================================== ======================================
Other Operations operating income margin
(operating income divided by revenues) 22.0% 22.0% 22.7% 22.7%
=========== ============== ============ ==============
Other Operations cash flow margin
(operating cash flow divided by revenues) 28.3% 28.3% 27.6% 27.6%
=========== ============== ============ ==============
Free cash flow (prior to debt
service requirements)
Net income $ 90,979 2,527 (1) 88,452 607,749 526,656 (3) 81,093
Add: Depreciation and amortization 116,857 - 116,857 107,514 - 107,514
Less: Capital expenditures (4) (102,201) - (102,201) (98,718) - (98,718)
------------------------------------- --------------------------------------
Free cash flow $ 105,635 2,527 103,108 616,545 526,656 89,889
===================================== ======================================
Free cash flow $ 105,635 616,545
Income from discontinued operations,
net of tax - (543,160)
Income from unconsolidated
cellular entity (1,736) (1,492)
Deferred income taxes 24,181 14,084
Changes in current assets and
current liabilities 12,604 32,686
Increase in other noncurrent assets (6,779) (9,154)
Increase in other noncurrent liabilities (1,277) 19,456
Other, net 14,520 29,059
Add: capital expenditures 102,201 98,718
----------- ------------
Net cash provided by operating
activities from continuing operations $ 249,349 256,742
=========== ============
(1) Net out of period income tax adjustments.
(2) Reserve for refunds of access charges to interexchange carriers.
(3) Gain on sale of wireless operations ($551.4 million after tax), net of
write down of wireless portion of billing system ($19.8 million after
tax) and reserve for refunds of access charges to interexchange
carriers ($5.0 million after tax).
(4) Includes discontinued operations for 2002.
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Nine months ended September 30, 2003 Nine months ended September 30, 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
-------------------------------------- --------------------------------------
Consolidated operating cash flow from
continuing operations and cash flow margin
Operating income $ 563,935 4,959 (1) 558,976 386,296 (22,645)(3) 408,941
Add: Depreciation and amortization 351,660 - 351,660 293,745 - 293,745
-------------------------------------- --------------------------------------
Consolidated operating cash flow from
continuing operations $ 915,595 4,959 910,636 680,041 (22,645) 702,686
====================================== ======================================
Revenues from continuing operations $ 1,774,430 - 1,774,430 1,386,117 (7,645)(4) 1,393,762
====================================== ======================================
Consolidated cash flow margin
(operating cash flow divided by revenues) 51.6% 51.3% 49.1% 50.4%
=========== =========== ============ ===========
Telephone operating cash flow, operating
income margin and cash flow margin
Telephone operating income $ 518,600 4,959 (1) 513,641 366,296 (22,645)(3) 388,941
Add: Depreciation and amortization 337,250 - 337,250 283,886 - 283,886
-------------------------------------- --------------------------------------
Telephone operating cash flow $ 855,850 4,959 850,891 650,182 (22,645) 672,827
====================================== ======================================
Telephone revenues $ 1,547,789 - 1,547,789 1,214,165 (7,645)(4) 1,221,810
====================================== ======================================
Telephone operating income margin
(operating income divided by revenues) 33.5% 33.2% 30.2% 31.8%
=========== =========== ============ ===========
Telephone cash flow margin
(operating cash flow divided by revenues) 55.3% 55.0% 53.5% 55.1%
=========== =========== ============ ===========
Other Operations operating cash flow,
operating income margin and cash flow margin
Other Operations operating income $ 45,335 - 45,335 31,275 - 31,275
Add: Depreciation and amortization 14,410 - 14,410 9,859 - 9,859
-------------------------------------- --------------------------------------
Other Operations operating cash flow $ 59,745 - 59,745 41,134 - 41,134
====================================== ======================================
Other Operations revenues $ 226,641 - 226,641 171,952 - 171,952
====================================== ======================================
Other Operations operating income margin
(operating income divided by revenues) 20.0% 20.0% 18.2% 18.2%
=========== =========== ============ ===========
Other Operations cash flow margin
(operating cash flow divided by revenues) 26.4% 26.4% 23.9% 23.9%
=========== =========== ============ ===========
Free cash flow (prior to debt
service requirements)
Net income $ 262,265 5,750 (2) 256,515 757,279 517,367 (5) 239,912
Add: Depreciation and amortization (6) 351,660 - 351,660 306,639 - 306,639
Less: Capital expenditures (6) (256,459) - (256,459) (298,016) - (298,016)
-------------------------------------- --------------------------------------
Free cash flow $ 357,466 5,750 351,716 765,902 517,367 248,535
====================================== ======================================
Free cash flow $ 357,466 765,902
Income from discontinued
operations, net of tax - (608,091)
Less: depreciation and amortization
of discontinued operations - (12,894)
Nonrecurring gains and losses - (3,709)
Income from unconsolidated cellular entity (4,895) (3,852)
Deferred income taxes 68,022 43,343
Changes in current assets and
current liabilities 128,547 104,722
Increase in other noncurrent assets (18,280) (23,562)
Increase in other noncurrent liabilities 7,047 31,849
Other, net 34,056 43,315
Add: capital expenditures 256,459 298,016
----------- ------------
Net cash provided by operating
activities from continuing operations $ 828,422 635,039
=========== ============
(1) Partial recovery of amounts previously written off in connection with
WorldCom bankruptcy. See Note 3.
(2) Net out of period income tax adjustments ($2.5 million credit), and
after tax effect of item (1).
(3) Reserve for refunds of access charges to interexchange carriers ($7.6
million) and reserve for uncollectible receivables, primarily
WorldCom ($15.0 million).
(4) Reserve for refunds of access charges to interexchange carriers.
(5) Includes gain on sale of wireless operations ($551.4 million after
tax) and gain on sale of a PCS license ($2.4 million after tax). Such
favorable items were partially offset by unfavorable charges for
reserve for refunds of access charges to interexchange carriers ($5.0
million after tax), reserve for uncollectible receivables, primarily
WorldCom ($9.8 million after tax), costs to defend unsolicited takeover
proposal ($2.0 million after tax) and write down of wireless portion of
billing system ($19.8 million after tax).
(6) 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.
October 30, 2003 By: /s/ Neil A. Sweasy
----------------------
Neil A. Sweasy
Vice President and Controller