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 31, 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superceded by information as of a subsequent date that is included in or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 July 31, 2003, we issued a press release announcing our second
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 June 30, 2003, which we expect to file shortly with the Securities
and Exchange Commission. The entire text of our July 31, 2003 press release is
reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
July 31, 2003 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Reports Second Quarter Earnings; Increases 2003 EPS Guidance
Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces
operating results for second quarter 2003.
o Revenues from continuing operations increased 34.5% from second quarter 2002
to $590.1 million.
o Operating Cash Flow (OCF), defined as operating income plus depreciation
and amortization, excluding nonrecurring items, rose to $305.2 million, an
increase of 39.7%.
o Net income, excluding nonrecurring items, grew 1.5% to $87.4 million.
Reported under GAAP, net income grew 10.9% to $87.4 million from
$78.8 million.
o Diluted earnings per share, excluding nonrecurring items, were $.60 in both
periods, while GAAP diluted earnings per share increased 9.1% to $.60 from
$.55.
o Free cash flow, excluding nonrecurring items, climbed to $109.6 million
from $60.5 million.
------------------------------------------------------------------------------
Second Quarter Highlights (1)
(In thousands, except per share Quarter Ended Quarter Ended % Change
and customer amounts) 06/30/03 (2) 06/30/02
------------------------------------------------------------------------------
Revenues from continuing operations $ 590,148 $ 438,702 34.5%
OCF from continuing operations $ 305,186 $ 218,535 (3) 39.7%
Income from continuing operations $ 87,367 $ 48,821 (3) 79.0%
Net Income $ 87,367 $ 86,102 1.5%
Diluted Earnings Per Share from
continuing operations $ .60 $ .34 76.5%
Diluted Earnings Per Share $ .60 $ .60 -%
Average Diluted Shares Outstanding 144,475 142,705 1.2%
Telephone Revenues $ 514,972 $ 380,499 35.3%
Other Operations Revenues $ 75,176 $ 58,203 29.2%
------------------------------------------------------------------------------
Telephone Access Lines 2,403,347 1,795,180 33.9%
Long Distance Customers 720,358 536,394 34.3%
------------------------------------------------------------------------------
(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 $127.7 million of telephone revenues during
second quarter 2003.
(3) Includes corporate overheads previously allocated to discontinued
operations.
----------------------
"CenturyTel's results for the second quarter reflect continuing demand
for communications services in rural markets and smaller cities where
CenturyTel offers bundled services including local, local distance
and broadband," Glen F. Post, III, chairman and chief executive officer, said.
"Our 29.2% increase in revenues from Other Operations primarily reflects the
continued strong growth in our long distance and Internet operations."
Consolidated revenues from continuing operations for the second quarter
rose 34.5% to $590.1 million from $438.7 million. Operating cash flow from
continuing operations, excluding nonrecurring items, grew to $305.2 million from
$218.5 million, a 39.7% increase. The Company achieved a consolidated cash flow
margin of 51.7% for the quarter. Income from continuing operations for the
quarter, excluding nonrecurring items, increased 79.0% to $87.4 million from
$48.8 million in second 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 76.5%
to $.60 from $.34. Diluted earnings per share, excluding nonrecurring items,
were $.60 in both second quarter 2003 and 2002. The wireless business sold by
the Company in August 2002 contributed $.26 to second quarter 2002 earnings per
share, including $.05 related to discontinuation of depreciation on the assets
held for sale.
Telephone revenues for second quarter reached $515.0 million, a 35.3%
increase over $380.5 million in second 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 increased revenue from rate increases more than offset declines in
access and toll revenues. Telephone operating income, excluding nonrecurring
items, increased 46.2% to $173.6 million from $118.7 million, and telephone
operating cash flow, excluding nonrecurring items, rose 36.9% to $285.9 million
from $208.9 million a year ago. CenturyTel's second quarter 2003 telephone cash
flow margin was 55.5% while the operating income margin was 33.7%.
Other operations revenues grew 29.2% to $75.2 million during second quarter
2003, compared with $58.2 million in second quarter 2002. CenturyTel's long
distance revenues increased 25.4% to $43.2 million. CenturyTel now serves more
than 720,000 long distance customers and nearly 68,000 DSL customers, adding
more than 30,800 and 7,300 customers, respectively, during the quarter. Internet
revenues increased 35.0% to $19.9 million in second quarter 2003 from $14.7
million in second quarter 2002. CenturyTel CLEC revenues were $5.1 million for
second quarter 2003.
"Through the first half of 2003, we generated free cash flow of nearly $250
million. Our strong cash flow and solid balance sheet provide us the flexibility
to respond to opportunities and challenges as they arise," Post said.
Under generally accepted accounting principles (GAAP), the Company reported
a 10.9% increase in net income to $87.4 million and a 9.1% increase in diluted
earnings per share reaching $.60 for second quarter 2003, compared to $78.8
million and $.55 per diluted share, respectively, in second quarter 2002. Net
income in second quarter 2002 included a nonrecurring $15 million pre-tax ($9.8
million after-tax) charge 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.
For the first six months of 2003, revenues from continuing operations
increased to $1.171 billion from $861.6 million for the same period in 2002, a
35.9% increase. Operating cash flow from continuing operations, excluding
nonrecurring items, was $603.0 million for the first half of 2003 compared to
$429.8 million a year ago, a 40.3% increase. Income from continuing operations,
excluding nonrecurring items, increased 79.0% to $168.1 million from $93.9
million in 2002.
For the third quarter 2003, CenturyTel expects total revenues of $590 to
$605 million and diluted earnings per share of $.55 to $.60. For the full year
2003, diluted earnings per share is expected to be in the range of $2.28 to
$2.34, increased from our previous guidance of $2.14 to $2.22. The increase in
2003 earnings per share guidance is driven by the financial results for second
quarter exceeding our expectations, the anticipated impact of stronger telephone
revenues and lower total expenses than originally forecast for second half 2003,
and the contribution from LightCore, which operates the fiber assets acquired
from Digital Teleport, Inc. in June 2003.
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 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. You are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this
release. The information contained in this release is as of July 31, 2003. The
Company undertakes no obligation to update any of its forward-looking statements
for any reason.
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 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 JUNE 30, 2003 AND 2002
(UNAUDITED)
Three months ended June 30, 2003 Three months ended June 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 $ 189,264 - 189,264 125,357 - 125,357 51.0% 51.0%
Network access 280,827 - 280,827 220,702 - 220,702 27.2% 27.2%
Other 44,881 - 44,881 34,440 - 34,440 30.3% 30.3%
---------------------------------- ----------------------------------
514,972 - 514,972 380,499 - 380,499 35.3% 35.3%
---------------------------------- ----------------------------------
Operating expenses
Plant operations 125,951 - 125,951 96,147 - 96,147 31.0% 31.0%
Customer operations 42,243 - 42,243 32,385 - 32,385 30.4% 30.4%
Corporate and other 60,899 - 60,899 58,099 15,000 (1) 43,099 4.8% 41.3%
Depreciation and
amortization 112,297 - 112,297 90,159 - 90,159 24.6% 24.6%
---------------------------------- ----------------------------------
341,390 - 341,390 276,790 15,000 261,790 23.3% 30.4%
---------------------------------- ----------------------------------
Telephone operating income 173,582 - 173,582 103,709 (15,000) 118,709 67.4% 46.2%
---------------------------------- ----------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 43,201 - 43,201 34,462 - 34,462 25.4% 25.4%
Internet 19,850 - 19,850 14,706 - 14,706 35.0% 35.0%
Other 12,125 - 12,125 9,035 - 9,035 34.2% 34.2%
---------------------------------- ----------------------------------
75,176 - 75,176 58,203 - 58,203 29.2% 29.2%
---------------------------------- ----------------------------------
Operating expenses
Cost of sales
and other 55,869 - 55,869 43,402 - 43,402 28.7% 28.7%
Depreciation and
amortization 4,508 - 4,508 3,845 - 3,845 17.2% 17.2%
---------------------------------- ----------------------------------
60,377 - 60,377 47,247 - 47,247 27.8% 27.8%
---------------------------------- ----------------------------------
Other operating income 14,799 - 14,799 10,956 - 10,956 35.1% 35.1%
---------------------------------- ----------------------------------
Corporate overhead costs
allocable to discontinued
operations - - - (5,134) - (5,134) (100.0%) (100.0%)
---------------------------------- ----------------------------------
TOTAL OPERATING INCOME 188,381 - 188,381 109,531 (15,000) 124,531 72.0% 51.3%
OTHER INCOME (EXPENSE)
Interest expense (55,957) - (55,957) (54,157) - (54,157) 3.3% 3.3%
Income from
unconsolidated
cellular entity 1,590 - 1,590 1,960 - 1,960 (18.9%) (18.9%)
Nonrecurring gains
and losses - - - 3,709 3,709 (2) - (100.0%) -%
Other income and
expense 974 - 974 2,485 - 2,485 (60.8%) (60.8%)
Income tax expense (47,621) - (47,621) (22,046) 3,952 (3) (25,998) 116.0% 83.2%
---------------------------------- ----------------------------------
INCOME FROM CONTINUING
OPERATIONS 87,367 - 87,367 41,482 (7,339) 48,821 110.6% 79.0%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 37,281 - 37,281 (100.0%) (100.0%)
---------------------------------- ----------------------------------
NET INCOME $ 87,367 - 87,367 78,763 (7,339) 86,102 10.9% 1.5%
================================== ==================================
BASIC EARNINGS PER SHARE
From continuing
operations $ 0.61 - 0.61 0.29 (0.05) 0.34 110.3% 79.4%
From discontinued
operations $ - - - 0.26 - 0.26 (100.0%) (100.0%)
Basic earnings
per share $ 0.61 - 0.61 0.56 (0.05) 0.61 8.9% -%
DILUTED EARNINGS PER SHARE
From continuing
operations $ 0.60 - 0.60 0.29 (0.05) 0.34 106.9% 76.5%
From discontinued
operations $ - - - 0.26 - 0.26 (100.0%) (100.0%)
Diluted earnings
per share $ 0.60 - 0.60 0.55 (0.05) 0.60 9.1% -%
SHARES OUTSTANDING
Basic 143,329 143,329 141,243 141,243 1.5% 1.5%
Diluted 144,475 144,475 142,705 142,705 1.2% 1.2%
DIVIDENDS PER
COMMON SHARE $ 0.0550 0.0550 0.0525 0.0525 4.8% 4.8%
NONRECURRING ITEMS
(1) - Reserve for uncollectible receivables, primarily WorldCom
(2) - Gain on sale of PCS license
(3) - Tax effect of items (1) and (2)
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED)
Six months ended June 30, 2003 Six months ended June 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 $ 376,648 - 376,648 249,234 - 249,234 51.1% 51.1%
Network access 558,808 - 558,808 437,278 - 437,278 27.8% 27.8%
Other 90,894 - 90,894 66,718 - 66,718 36.2% 36.2%
---------------------------------- ------------------------------------
1,026,350 - 1,026,350 753,230 - 753,230 36.3% 36.3%
---------------------------------- ------------------------------------
Operating expenses
Plant operations 248,489 - 248,489 187,233 - 187,233 32.7% 32.7%
Customer operations 82,967 - 82,967 62,323 - 62,323 33.1% 33.1%
Corporate and other 123,353 (4,959)(1) 128,312 102,495 15,000 (3) 87,495 20.4% 46.7%
Depreciation and
amortization 225,584 - 225,584 179,502 - 179,502 25.7% 25.7%
---------------------------------- ------------------------------------
680,393 (4,959) 685,352 531,553 15,000 516,553 28.0% 32.7%
---------------------------------- ------------------------------------
Telephone operating
income 345,957 4,959 340,998 221,677 (15,000) 236,677 56.1% 44.1%
---------------------------------- ------------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 85,761 - 85,761 66,279 - 66,279 29.4% 29.4%
Internet 37,876 - 37,876 27,267 - 27,267 38.9% 38.9%
Other 20,691 - 20,691 14,844 - 14,844 39.4% 39.4%
---------------------------------- ------------------------------------
144,328 - 144,328 108,390 - 108,390 33.2% 33.2%
---------------------------------- ------------------------------------
Operating expenses
Cost of sales
and other 107,912 - 107,912 84,826 - 84,826 27.2% 27.2%
Depreciation and
amortization 9,219 - 9,219 6,729 - 6,729 37.0% 37.0%
---------------------------------- ------------------------------------
117,131 - 117,131 91,555 - 91,555 27.9% 27.9%
---------------------------------- ------------------------------------
Other operating income 27,197 - 27,197 16,835 - 16,835 61.6% 61.6%
---------------------------------- ------------------------------------
Corporate overhead costs
allocable to
discontinued
operations - - - (9,932) - (9,932) (100.0%) (100.0%)
---------------------------------- ------------------------------------
TOTAL OPERATING INCOME 373,154 4,959 368,195 228,580 (15,000) 243,580 63.2% 51.2%
OTHER INCOME (EXPENSE)
Interest expense (111,549) - (111,549) (104,805) - (104,805) 6.4% 6.4%
Income from
unconsolidated
cellular entity 3,159 - 3,159 2,360 - 2,360 33.9% 33.9%
Nonrecurring gains
and losses - - - 3,709 3,709 (4) - (100.0%) -%
Other income and
expense 42 - 42 217 (3,000)(5) 3,217 (80.6%) (98.7%)
Income tax expense (93,520) (1,736)(2) (91,784) (45,462) 5,002 (6) (50,464) 105.7% 81.9%
---------------------------------- ------------------------------------
INCOME FROM CONTINUING
OPERATIONS 171,286 3,223 168,063 84,599 (9,289) 93,888 102.5% 79.0%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 64,931 - 64,931 (100.0%) (100.0%)
---------------------------------- ------------------------------------
NET INCOME $ 171,286 3,223 168,063 149,530 (9,289) 158,819 14.5% 5.8%
================================== ====================================
BASIC EARNINGS PER SHARE
From continuing
operations $ 1.20 0.02 1.17 0.60 (0.07) 0.66 100.0% 77.3%
From discontinued
operations $ - - - 0.46 - 0.46 (100.0%) (100.0%)
Basic earnings
per share $ 1.20 0.02 1.17 1.06 (0.07) 1.12 13.2% 4.5%
DILUTED EARNINGS
PER SHARE
From continuing
operations $ 1.19 0.02 1.17 0.59 (0.07) 0.66 101.7% 77.3%
From discontinued
operations $ - - - 0.46 - 0.46 (100.0%) (100.0%)
Diluted earnings
per share $ 1.19 0.02 1.17 1.05 (0.07) 1.11 13.3% 5.4%
SHARES OUTSTANDING
Basic 143,109 143,109 141,136 141,136 1.4% 1.4%
Diluted 144,136 144,136 142,679 142,679 1.0% 1.0%
DIVIDENDS PER
COMMON SHARE $ 0.1100 0.1100 0.1050 0.1050 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) - Reserve for uncollectible receivables, primarily WorldCom
(4) - Gain on sale of PCS license
(5) - Costs to defend unsolicited takeover proposal
(6) - Tax effect of items (3) through (5)
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
June 30, Dec. 31,
2003 2002
------------- ------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 24,322 3,661
Other current assets 258,416 292,241
------------- ------------
Total current assets 282,738 295,902
------------- ------------
PROPERTY, PLANT AND EQUIPMENT
Telephone 6,467,310 6,347,900
Other 550,938 521,292
Accumulated depreciation (3,544,565) (3,337,547)
------------- ------------
Net property, plant and equipment 3,473,683 3,531,645
------------- ------------
INVESTMENTS AND OTHER ASSETS
Goodwill 3,428,699 3,427,281
Other 507,928 515,580
------------- ------------
Total investments and other assets 3,936,627 3,942,861
------------- ------------
TOTAL ASSETS $ 7,693,048 7,770,408
============= ============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 118,941 70,737
Other current liabilities 400,591 317,367
------------- ------------
Total current liabilities 519,532 388,104
LONG-TERM DEBT 3,137,772 3,578,132
DEFERRED CREDITS AND OTHER LIABILITIES 765,220 716,168
STOCKHOLDERS' EQUITY 3,270,524 3,088,004
------------- ------------
TOTAL LIABILITIES AND EQUITY $ 7,693,048 7,770,408
============= ============
CAPITAL EXPENDITURES
SIX MONTHS ENDED JUNE 30, 2003 AND 2002
Six months ended June 30, Increase
2003 2002 (decrease)
------------- ----------- -----------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 131,398 145,822 (9.9%)
Wireless (discontinued operations) - 20,264 (100.0%)
Other 22,860 33,212 (31.2%)
------------- -----------
Total capital expenditures $ 154,258 199,298 (22.6%)
============= ===========
CAPITAL EXPENDITURES
THREE MONTHS ENDED JUNE 30, 2003 AND 2002
Three months ended June 30, Increase
2003 2002 (decrease)
------------- ----------- -----------
in thousands)
CAPITAL EXPENDITURES
Telephone $ 77,888 78,284 (0.5%)
Wireless (discontinued operations) - 14,127 (100.0%)
Other 16,701 27,218 (38.6%)
------------- -----------
Total capital expenditures $ 94,589 119,629 (20.9%)
============= ===========
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended June 30, 2003 Three months ended June 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 188,381 - 188,381 109,531 (15,000)(1) 124,531
Add: Depreciation and amortization 116,805 - 116,805 94,004 - 94,004
----------- ----------- ----------- ----------- ----------- -----------
Consolidated operating cash flow
from continuing operations $ 305,186 - 305,186 203,535 (15,000) 218,535
=========== =========== =========== =========== =========== ===========
Revenues from continuing operations $ 590,148 - 590,148 438,702 - 438,702
=========== =========== =========== =========== =========== ===========
Consolidated cash flow margin
(operating cash flow divided
by revenues) 51.7% 51.7% 46.4% 49.8%
=========== =========== =========== ===========
Telephone operating cash flow, operating
income margin and cash flow margin
Telephone operating income $ 173,582 - 173,582 103,709 (15,000)(1) 118,709
Add: Depreciation and amortization 112,297 - 112,297 90,159 - 90,159
----------- ----------- ----------- ----------- ----------- -----------
Telephone operating cash flow $ 285,879 - 285,879 193,868 (15,000) 208,868
=========== =========== =========== =========== =========== ===========
Telephone revenues $ 514,972 - 514,972 380,499 - 380,499
=========== =========== =========== =========== =========== ===========
Telephone operating income margin
(operating income divided by revenues) 33.7% 33.7% 27.3% 31.2%
=========== =========== =========== ===========
Telephone cash flow margin (operating
cash flow divided by revenues) 55.5% 55.5% 51.0% 54.9%
=========== =========== =========== ===========
Other Operations operating cash flow,
operating income margin and cash
flow margin
Other Operations operating income $ 14,799 - 14,799 10,956 - 10,956
Add: Depreciation and amortization 4,508 - 4,508 3,845 - 3,845
----------- ----------- ----------- ----------- ----------- -----------
Other Operations operating cash flow $ 19,307 - 19,307 14,801 - 14,801
=========== =========== =========== =========== =========== ===========
Other Operations revenues $ 75,176 - 75,176 58,203 - 58,203
=========== =========== =========== =========== =========== ===========
Other Operations operating income
margin (operating income divided
by revenues) 19.7% 19.7% 18.8% 18.8%
=========== =========== =========== ===========
Other Operations cash flow margin
(operating cash flow divided
by revenues) 25.7% 25.7% 25.4% 25.4%
=========== =========== =========== ===========
Free cash flow (prior to debt service
requirements)
Net income $ 87,367 - 87,367 78,763 (7,339)(2) 86,102
Add: Depreciation and amortization 116,805 - 116,805 94,004 - 94,004
Less: Capital expenditures (3) (94,589) - (94,589) (119,629) - (119,629)
----------- ----------- ----------- ----------- ----------- -----------
Free cash flow $ 109,583 - 109,583 53,138 (7,339) 60,477
=========== =========== =========== =========== =========== ===========
Free cash flow $ 109,583 53,138
Income from discontinued operations,
net of tax - (37,281)
Nonrecurring gains and losses - (3,709)
Income from unconsolidated
cellular entity (1,590) (1,960)
Deferred income taxes 34,339 14,653
Changes in current assets
and current liabilities 11,017 5,137
Increase in other noncurrent assets (4,750) (9,305)
Increase in other noncurrent
liabilities 4,585 10,088
Other, net 11,999 10,003
Add: capital expenditures 94,589 119,629
----------- -----------
Net cash provided by operating
activities from continuing operations $ 259,772 160,393
=========== ===========
(1) Reserve for uncollecible receivables, primarily WorldCom
(2) Reserve for uncollectible receivables, primarily WorldCom
($9.8 million after tax), net of gain on sale of PCS license
($2.4 million after tax)
(3) Includes discontinued operations for 2002
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Six months ended June 30, 2003 Six months ended June 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 373,154 4,959 (1) 368,195 228,580 (15,000)(2) 243,580
Add: Depreciation and amortization 234,803 - 234,803 186,231 - 186,231
----------- ----------- ----------- ----------- ----------- -----------
Consolidated operating cash flow
from continuing operations $ 607,957 4,959 602,998 414,811 (15,000) 429,811
=========== =========== =========== =========== =========== ===========
Revenues from continuing operations $ 1,170,678 - 1,170,678 861,620 - 861,620
=========== =========== =========== =========== =========== ===========
Consolidated cash flow margin
(operating cash flow divided
by revenues) 51.9% 51.5% 48.1% 49.9%
=========== =========== =========== ===========
Telephone operating cash flow, operating
income margin and cash flow margin
Telephone operating income $ 345,957 4,959 (1) 340,998 221,677 (15,000)(2) 236,677
Add: Depreciation and amortization 225,584 - 225,584 179,502 - 179,502
----------- ----------- ----------- ----------- ----------- -----------
Telephone operating cash flow $ 571,541 4,959 566,582 401,179 (15,000) 416,179
=========== =========== =========== =========== =========== ===========
Telephone revenues $ 1,026,350 - 1,026,350 753,230 - 753,230
=========== =========== =========== =========== =========== ===========
Telephone operating income margin
(operating income divided by revenues) 33.7% 33.2% 29.4% 31.4%
=========== =========== =========== ===========
Telephone cash flow margin (operating
cash flow divided by revenues) 55.7% 55.2% 53.3% 55.3%
=========== =========== =========== ===========
Other Operations operating cash flow,
operating income margin and cash
flow margin
Other Operations operating income $ 27,197 - 27,197 16,835 - 16,835
Add: Depreciation and amortization 9,219 - 9,219 6,729 - 6,729
----------- ----------- ----------- ----------- ----------- -----------
Other Operations operating cash flow $ 36,416 - 36,416 23,564 - 23,564
=========== =========== =========== =========== =========== ===========
Other Operations revenues $ 144,328 - 144,328 108,390 - 108,390
=========== =========== =========== =========== =========== ===========
Other Operations operating income
margin (operating income divided
by revenues) 18.8% 18.8% 15.5% 15.5%
=========== =========== =========== ===========
Other Operations cash flow margin
(operating cash flow divided
by revenues) 25.2% 25.2% 21.7% 21.7%
=========== =========== =========== ===========
Free cash flow (prior to debt service
requirements)
Net income $ 171,286 3,223 (1) 168,063 149,530 (9,289)(3) 158,819
Add: Depreciation and amortization (4) 234,803 - 234,803 199,125 - 199,125
Less: Capital expenditures (4) (154,258) - (154,258) (199,298) - (199,298)
----------- ----------- ----------- ----------- ----------- -----------
Free cash flow $ 251,831 3,223 248,608 149,357 (9,289) 158,646
=========== =========== =========== =========== =========== ===========
Free cash flow $ 251,831 149,357
Income from discontinued
operations, net of tax - (64,931)
Less: depreciation and amortization
of discontinued operations - (12,894)
Nonrecurring gains and losses - (3,709)
Income from unconsolidated
cellular entity (3,159) (2,360)
Deferred income taxes 43,841 29,259
Changes in current assets and
current liabilities 115,943 72,036
Increase in other noncurrent assets (11,501) (14,408)
Increase in other noncurrent liabilities 8,324 12,393
Other, net 19,536 14,256
Add: capital expenditures 154,258 199,298
----------- -----------
Net cash provided by operating
activities from continuing operations $ 579,073 378,297
=========== ===========
(1) Partial recovery of amounts previously written off in connection
with WorldCom bankruptcy (presented on both a pre-tax and after-tax
basis)
(2) Reserve for uncollectible receivables, primarily WorldCom
(3) Includes unfavorable charges for reserve for uncollectible
receivables, primarily WorldCom ($9.8 million after tax) and costs
to defend unsolicited takeover proposal ($2.0 million after tax),
partially offset by gain on sale of PCS license ($2.4 million
after tax)
(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.
July 31, 2003 By: /s/ Neil A. Sweasy
----------------------
Neil A. Sweasy
Vice President and Controller