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) January 29, 2004
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 2004 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superceded by information as of a subsequent date that is included in or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 January 29, 2004, we issued a press release announcing our fourth
quarter 2003 consolidated operating results. More complete information on our
operating results will be included in our Annual Report on Form 10-K for the
year ended December 31, 2003, which we expect to file shortly with the
Securities and Exchange Commission. The entire text of our January 29, 2004
press release is reproduced below:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
January 29, 2004 Media: Patricia Cameron 318.388.9674
patricia.cameron@centurytel.com
Investors: Tony Davis 318.388.9525
tony.davis@centurytel.com
CenturyTel Announces Fourth Quarter 2003 Earnings
-------------------------------------------------
Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results
for fourth quarter 2003.
o Revenues, excluding nonrecurring items, increased 3.2% to $604.8 million from
$585.9 million, while GAAP revenues increased 3.5% to $606.3 million from
$585.9 million.
o Operating cash flow (as defined in the attached financial schedules),
excluding nonrecurring items, rose 0.8% to $311.4 million.
o Net income, excluding nonrecurring items, grew 4.9% to $89.3 million.
Reported under GAAP, net income was $82.4 million.
o Diluted earnings per share, excluding nonrecurring items, increased 3.4% to
$.61, while GAAP diluted earnings per share was $.57 in fourth quarter 2003.
o Free cash flow (as defined in the attached financial schedules), excluding
nonrecurring items, was $86.8 million in fourth quarter 2003.
---------------------------------------------------------------------------------------
Fourth Quarter Highlights (1) Quarter Ended Quarter Ended % Change
(In thousands, except per share 12/31/03 12/31/02
and customer amounts)
---------------------------------------------------------------------------------------
Revenues $ 604,815 $ 585,879 3.2%
Operating Cash Flow $ 311,442 $ 308,920 0.8%
Net Income $ 89,267 $ 85,074 4.9%
Diluted Earnings Per Share $ .61 $ .59 3.4%
Average Diluted Shares Outstanding 145,354 143,380 1.4%
Telephone Revenues $ 522,691 $ 519,427 0.6%
Other Operations Revenues $ 82,124 $ 66,452 23.6%
---------------------------------------------------------------------------------------
Telephone Access Lines 2,376,118 2,414,564 (1.6)%
Long Distance Customers 769,766 648,797 18.6%
---------------------------------------------------------------------------------------
(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.
"During 2003, CenturyTel achieved revenue and earnings growth in a very
challenging industry environment," Glen F. Post, III, chairman and chief
executive officer, said. "Record cash flows generated in 2003 provided the
financial liquidity for CenturyTel to reduce debt by more than $467 million and
strengthen our cash position by nearly $200 million."
Consolidated revenues for the fourth quarter, excluding nonrecurring items,
rose 3.2% to $604.8 million from $585.9 million. Operating cash flow, excluding
nonrecurring items, grew to $311.4 million from $308.9 million. The Company
achieved a consolidated cash flow margin, excluding nonrecurring items, of 51.5%
for fourth quarter 2003. Net income for the quarter, excluding nonrecurring
items, increased 4.9% to $89.3 million from $85.1 million in fourth quarter
2002. Diluted earnings per share, excluding nonrecurring items, increased 3.4%
to $.61 from $.59.
Telephone revenues for the fourth quarter, excluding nonrecurring items,
reached $522.7 million compared to $519.4 million in fourth quarter 2002. Growth
in enhanced calling features and intrastate access revenues was partially offset
by declines in intrastate toll usage and access lines. Telephone operating
income, excluding nonrecurring items, was $175.5 million while telephone
operating cash flow, excluding nonrecurring items, was $289.1 million. Excluding
nonrecurring items, CenturyTel's fourth quarter 2003 telephone operating cash
flow margin was 55.3% while the operating income margin was 33.6%.
Other operations revenues grew 23.6% to $82.1 million during fourth quarter
2003, compared with $66.5 million in fourth quarter 2002. CenturyTel's long
distance revenues increased 5.5% to $42.9 million. Internet revenues increased
31.6% to $21.6 million in fourth quarter 2003 from $16.4 million in fourth
quarter 2002. CenturyTel now serves nearly 770,000 long distance customers and
more than 83,000 DSL customers, adding more than 24,500 and 7,100 customers,
respectively, during the quarter. Fiber transport revenues increased $7.4
million, primarily due to the June 2003 acquisition of fiber assets from Digital
Teleport, Inc.
For the year 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 $2.379 billion from $1.980 billion for the same period in 2002, a
20.2% increase. Operating cash flow from continuing operations, excluding
nonrecurring items, was $1.222 billion for 2003 compared to $1.012 billion a
year ago, a 20.8% increase. Income from continuing operations, excluding
nonrecurring items, increased 39.1% to $345.8 million from $248.5 million in
2002.
"Customer demand for long distance and Internet services continued to drive
solid revenue growth of nearly $49 million in 2003 as long distance customers
grew nearly 19% and DSL customers grew more than 58%. We believe the development
of our integrated bundle during 2004 will stimulate further demand for
services," Post said.
Under generally accepted accounting principles (GAAP), the Company's fourth
quarter 2003 net income was $82.4 million compared to $44.3 million in 2002,
while diluted earnings per share was $.57 for fourth quarter 2003 compared to
$.31 in fourth quarter 2002. Net income in fourth quarter 2003 reflects an $8.8
million after-tax charge associated with various operating tax audits and an
after-tax benefit of $2.0 million related to professional fees previously
accrued. Net income in fourth quarter 2002 included a $39.0 million after-tax
charge associated with the redemption of $400 million Series I remarketable
senior notes. See the accompanying financial information for additional
nonrecurring items that affected the fourth quarters and full years of 2003 and
2002.
For the year 2003, prepared in accordance with GAAP, the Company reported
net income of $344.7 million, or $2.38 per diluted share, compared to net income
of $801.6 million, or $5.61 per diluted share for the year 2002. The 2002
results included a $551.4 million after-tax gain, or $3.86 per diluted share,
from the sale of the Company's wireless operations in third quarter 2002.
Guidance for 2004. CenturyTel anticipates a decline in 2004 telephone
revenues primarily due to lower intrastate toll usage, lower cost study
adjustments, lower universal service funding and access line declines. Giving
effect to these revenue declines, the incremental amortization expense,
conversion and operating costs related to the new billing and customer care
system, and an expected increase in the Company's effective income tax rate to
38.5% primarily due to state income taxes, CenturyTel expects full year 2004
diluted earnings per share to be in the range of $2.05 to $2.20.
For first quarter 2004, CenturyTel expects total revenues of $585 to $600
million and diluted earnings per share of $.49 to $.53.
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 in identifying
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 timing, success and overall effects of competition
from a wide variety of competitive providers; the risks inherent in rapid
technological change; the effects of ongoing changes in the regulation of the
communications industry; 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; 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; other risks referenced from time
to time in the Company's filings with the Securities and Exchange Commission;
and the effects of more general factors such as changes in interest rates, in
accounting policies or practices, in operating, medical or administrative costs,
in general market, labor 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 January 29,
2004. The Company undertakes no obligation to update any of its forward-looking
statements.
CenturyTel's management will host a conference call at 11:00 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 1:00 p.m. CST, February 5, 2004, 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 DECEMBER 31, 2003 AND 2002
(UNAUDITED)
Three months ended December 31, 2003 Three months ended December 31, 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 $ 188,464 - 188,464 186,248 - 186,248 1.2% 1.2%
Network access 289,224 1,500 (1) 287,724 285,978 - 285,978 1.1% 0.6%
Other 46,503 - 46,503 47,201 - 47,201 (1.5%) (1.5%)
------------------------------------ ------------------------------------
524,191 1,500 522,691 519,427 - 519,427 0.9% 0.6%
------------------------------------ ------------------------------------
Operating expenses
Plant operations 127,199 - 127,199 127,957 - 127,957 (0.6%) (0.6%)
Customer operations 43,526 - 43,526 45,018 - 45,018 (3.3%) (3.3%)
Corporate and other 70,351 7,500 (1) 62,851 56,655 - 56,655 24.2% 10.9%
Depreciation and
amortization 113,601 - 113,601 112,980 - 112,980 0.5% 0.5%
------------------------------------ ------------------------------------
354,677 7,500 347,177 342,610 - 342,610 3.5% 1.3%
------------------------------------ ------------------------------------
Telephone operating
income 169,514 (6,000) 175,514 176,817 - 176,817 (4.1%) (0.7%)
------------------------------------ ------------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 42,916 - 42,916 40,665 - 40,665 5.5% 5.5%
Internet 21,588 - 21,588 16,402 - 16,402 31.6% 31.6%
Other 17,620 - 17,620 9,385 - 9,385 87.7% 87.7%
------------------------------------ ------------------------------------
82,124 - 82,124 66,452 - 66,452 23.6% 23.6%
------------------------------------ ------------------------------------
Operating expenses
Cost of sales and
other 59,797 - 59,797 49,258 1,929 (4) 47,329 21.4% 26.3%
Depreciation and
amortization 5,380 - 5,380 4,901 - 4,901 9.8% 9.8%
------------------------------------ ------------------------------------
65,177 - 65,177 54,159 1,929 52,230 20.3% 24.8%
------------------------------------ ------------------------------------
Other operating income 16,947 - 16,947 12,293 (1,929) 14,222 37.9% 19.2%
------------------------------------ ------------------------------------
TOTAL OPERATING INCOME 186,461 (6,000) 192,461 189,110 (1,929) 191,039 (1.4%) 0.7%
OTHER INCOME (EXPENSE)
Interest expense (60,842) (7,500)(1) (53,342) (57,019) - (57,019) 6.7% (6.4%)
Income from
unconsolidated
cellular entity 1,265 - 1,265 1,730 - 1,730 (26.9%) (26.9%)
Other income and
expense 3,188 3,000 (2) 188 (63,458) (60,730)(5) (2,728) (105.0%) (106.9%)
Income tax expense (47,630) 3,675 (3) (51,305) (26,018) 21,930 (6) (47,948) 83.1% 7.0%
------------------------------------ ------------------------------------
NET INCOME $ 82,442 (6,825) 89,267 44,345 (40,729) 85,074 85.9% 4.9%
==================================== ====================================
BASIC EARNINGS PER SHARE $ 0.57 (0.05) 0.62 0.31 (0.29) 0.60 83.9% 3.3%
DILUTED EARNINGS
PER SHARE $ 0.57 (0.05) 0.61 0.31 (0.28) 0.59 83.9% 3.4%
SHARES OUTSTANDING
Basic 144,204 144,204 142,465 142,465 1.2% 1.2%
Diluted 145,354 145,354 143,380 143,380 1.4% 1.4%
DIVIDENDS PER
COMMON SHARE $ 0.0550 0.0550 0.0525 0.0525 4.8% 4.8%
NONRECURRING ITEMS
(1) - Operating taxes, including related revenue effect, and interest
associated with various operating tax audits.
(2) - Reversal of costs previously accrued to defend unsolicited takeover
proposal.
(3) - Tax effect of items (1) and (2).
(4) - Write-off costs associated with abandoned project.
(5) - Redemption premium on remarketable notes, net of unamortized premium
($59.9 million), and write-off of nonoperating investment ($781,000).
(6) - Tax effect of items (4) and (5).
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
(UNAUDITED)
Twelve months ended December 31, 2003 Twelve months ended December 31, 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 $ 754,063 - 754,063 604,580 - 604,580 24.7% 24.7%
Network access 1,135,223 1,500 (1) 1,133,723 972,303 (7,645)(4) 979,948 16.8% 15.7%
Other 182,694 - 182,694 156,709 - 156,709 16.6% 16.6%
------------------------------------- -------------------------------------
2,071,980 1,500 2,070,480 1,733,592 (7,645) 1,741,237 19.5% 18.9%
------------------------------------- -------------------------------------
Operating expenses
Plant operations 505,786 - 505,786 433,187 433,187 16.8% 16.8%
Customer operations 167,594 - 167,594 148,502 - 148,502 12.9% 12.9%
Corporate and other 259,635 2,541 (1) 257,094 211,924 15,000 (5) 196,924 22.5% 30.6%
Depreciation and
amortization 450,851 - 450,851 396,866 - 396,866 13.6% 13.6%
------------------------------------- -------------------------------------
1,383,866 2,541 1,381,325 1,190,479 15,000 1,175,479 16.2% 17.5%
------------------------------------- -------------------------------------
Telephone operating
income 688,114 (1,041) 689,155 543,113 (22,645) 565,758 26.7% 21.8%
------------------------------------- -------------------------------------
OTHER OPERATIONS
Operating revenues
Long distance 173,884 - 173,884 146,536 - 146,536 18.7% 18.7%
Internet 79,933 - 79,933 58,665 - 58,665 36.3% 36.3%
Other 54,948 - 54,948 33,203 - 33,203 65.5% 65.5%
------------------------------------- -------------------------------------
308,765 - 308,765 238,404 - 238,404 29.5% 29.5%
------------------------------------- -------------------------------------
Operating expenses
Cost of sales and other 226,693 - 226,693 180,076 1,929 (6) 178,147 25.9% 27.3%
Depreciation and
amortization 19,790 - 19,790 14,760 - 14,760 34.1% 34.1%
------------------------------------- -------------------------------------
246,483 - 246,483 194,836 1,929 192,907 26.5% 27.8%
------------------------------------- -------------------------------------
Other operating income 62,282 - 62,282 43,568 (1,929) 45,497 43.0% 36.9%
------------------------------------- -------------------------------------
Corporate overhead costs
allocable to dis-
continued operations - - - (11,275) - (11,275) (100.0%) (100.0%)
------------------------------------- -------------------------------------
TOTAL OPERATING INCOME 750,396 (1,041) 751,437 575,406 (24,574) 599,980 30.4% 25.2%
OTHER INCOME (EXPENSE)
Interest expense (226,751) (7,500)(1) (219,251) (221,845) - (221,845) 2.2% (1.2%)
Income from
unconsolidated
cellular entity 6,160 - 6,160 5,582 - 5,582 10.4% 10.4%
Nonrecurring gains
and losses - - - 3,709 3,709 (7) - (100.0%) -%
Other income and expense 2,154 3,000 (2) (846) (63,814) (63,730)(8) (84) (103.4%) 907.1%
Income tax expense (187,252) 4,466 (3) (191,718) (105,505) 29,608 (9) (135,113) 77.5% 41.9%
------------------------------------- -------------------------------------
INCOME FROM CONTINUING
OPERATIONS 344,707 (1,075) 345,782 193,533 (54,987) 248,520 78.1% 39.1%
DISCONTINUED OPERATIONS,
NET OF TAX - - - 608,091 531,625 (10) 76,466 (100.0%) (100.0%)
------------------------------------- -------------------------------------
NET INCOME $ 344,707 (1,075) 345,782 801,624 476,638 324,986 (57.0%) 6.4%
===================================== =====================================
BASIC EARNINGS PER SHARE
From continuing
operations $ 2.40 (0.01) 2.41 1.36 (0.39) 1.75 76.5% 37.7%
From discontinued
operations $ - - - 4.29 3.75 0.54 (100.0%) (100.0%)
Basic earnings
per share $ 2.40 (0.01) 2.41 5.66 3.37 2.29 (57.6%) 5.2%
DILUTED EARNINGS PER SHARE
From continuing
operations $ 2.38 (0.01) 2.39 1.35 (0.38) 1.74 76.3% 37.4%
From discontinued
operations $ - - - 4.26 3.72 0.54 (100.0%) (100.0%)
Diluted earnings per
share $ 2.38 (0.01) 2.39 5.61 3.34 2.27 (57.6%) 5.3%
SHARES OUTSTANDING
Basic 143,583 143,583 141,613 141,613 1.4% 1.4%
Diluted 144,700 144,700 142,879 142,879 1.3% 1.3%
DIVIDENDS PER
COMMON SHARE $ 0.2200 0.2200 0.2100 0.2100 4.8% 4.8%
NONRECURRING ITEMS
(1) - Includes (i) operating taxes ($7.5 million), net of related revenue
effect ($1.5 million), and interest cost ($7.5 million) associated
with various operating tax audits and (ii) partial recovery of amounts
previously written off in connection with WorldCom bankruptcy ($4.9
million; see Note 5).
(2) - Reversal of costs previously accrued to defend unsolicited takeover
proposal.
(3) - Net out of period income tax adjustments ($2.5 million credit), net
of tax effect of items (1) and (2).
(4) - Reserve for refunds of access charges to interexchange carriers.
(5) - Reserve for uncollectible receivables, primarily WorldCom.
(6) - Write off costs associated with abandoned project.
(7) - Gain on sale of PCS license.
(8) - Redemption premium on remarketable notes, net of unamortized premium
($59.9 million); costs to defend unsolicited takeover proposal
($3.0 million); and write-off of nonoperating investment ($781,000).
(9) - Tax effect of items (4) through (8).
(10)- 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
DECEMBER 31, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
Dec. 31, Dec. 31,
2003 2002
----------------------------
(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 203,181 3,661
Other current assets 259,758 292,241
----------------------------
Total current assets 462,939 295,902
----------------------------
PROPERTY, PLANT AND EQUIPMENT
Telephone 6,596,600 6,347,900
Other 587,555 521,292
Accumulated depreciation (3,728,674) (3,337,547)
----------------------------
Net property, plant and equipment 3,455,481 3,531,645
----------------------------
INVESTMENTS AND OTHER ASSETS
Goodwill 3,425,001 3,427,281
Other 552,431 515,580
----------------------------
Total investments and other assets 3,977,432 3,942,861
----------------------------
TOTAL ASSETS $ 7,895,852 7,770,408
============================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 72,453 70,737
Other current liabilities 398,930 317,367
----------------------------
Total current liabilities 471,383 388,104
LONG-TERM DEBT 3,109,302 3,578,132
DEFERRED CREDITS AND OTHER LIABILITIES 836,651 716,168
STOCKHOLDERS' EQUITY 3,478,516 3,088,004
----------------------------
TOTAL LIABILITIES AND EQUITY $ 7,895,852 7,770,408
============================
CAPITAL EXPENDITURES
TWELVE MONTHS ENDED DECEMBER 31, 2003 AND 2002
Twelve months ended December 31, Increase
2003 2002 (decrease)
---------------------------------- -------------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 317,357 319,536 (0.7%)
Wireless (discontinued operations) - 27,242 (100.0%)
Other 60,582 66,731 (9.2%)
----------------------------------
Total capital expenditures $ 377,939 413,509 (8.6%)
==================================
CAPITAL EXPENDITURES
THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002
Three months ended December 31, Increase
2003 2002 (decrease)
---------------------------------- -------------
(in thousands)
CAPITAL EXPENDITURES
Telephone $ 100,909 98,209 2.7%
Other 20,571 17,284 19.0%
----------------------------------
Total capital expenditures $ 121,480 115,493 5.2%
==================================
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Three months ended December 31, 2003 Three months ended December 31, 2002
------------------------------------- --------------------------------------
As adjusted As adjusted
Less excluding Less excluding
non- non- non- non-
As recurring recurring As recurring recurring
reported items items reported items items
------------------------------------- --------------------------------------
Consolidated operating cash flow and
cash flow margin
Operating income $ 186,461 (6,000)(1) 192,461 189,110 (1,929)(3) 191,039
Add: Depreciation and amortization 118,981 118,981 117,881 - 117,881
------------------------------------- --------------------------------------
Consolidated operating cash flow $ 305,442 (6,000) 311,442 306,991 (1,929) 308,920
===================================== ======================================
Revenues $ 606,315 1,500 (1) 604,815 585,879 - 585,879
===================================== ======================================
Consolidated cash flow margin
(operating cash flow divided by
revenues) 50.4% 51.5% 52.4% 52.7%
=========== =========== =========== ============
Telephone operating cash flow,
operating income margin and cash
flow margin
Telephone operating income $ 169,514 (6,000)(1) 175,514 176,817 - 176,817
Add: Depreciation and amortization 113,601 - 113,601 112,980 - 112,980
------------------------------------- --------------------------------------
Telephone operating cash flow $ 283,115 (6,000) 289,115 289,797 - 289,797
===================================== ======================================
Telephone revenues $ 524,191 1,500 (1) 522,691 519,427 - 519,427
===================================== ======================================
Telephone operating income margin
(operating income divided by
revenues) 32.3% 33.6% 34.0% 34.0%
=========== =========== =========== ============
Telephone cash flow margin
(operating cash flow divided
by revenues) 54.0% 55.3% 55.8% 55.8%
=========== =========== =========== ============
Other Operations operating cash flow,
operating income margin and cash
flow margin
Other Operations operating income $ 16,947 - 16,947 12,293 (1,929)(3) 14,222
Add: Depreciation and amortization 5,380 - 5,380 4,901 - 4,901
------------------------------------- --------------------------------------
Other Operations operating
cash flow $ 22,327 - 22,327 17,194 (1,929) 19,123
===================================== ======================================
Other Operations revenues $ 82,124 - 82,124 66,452 - 66,452
===================================== ======================================
Other Operations operating income
margin (operating income divided
by revenues) 20.6% 20.6% 18.5% 21.4%
=========== =========== =========== ============
Other Operations cash flow margin
(operating cash flow divided
by revenues) 27.2% 27.2% 25.9% 28.8%
=========== =========== =========== ============
Free cash flow (prior to debt
service requirements and dividends)
Net income $ 82,442 (6,825)(2) 89,267 44,345 (40,729)(4) 85,074
Add: Depreciation and amortization 118,981 - 118,981 117,881 - 117,881
Less: Capital expenditures (121,480) - (121,480) (115,493) - (115,493)
------------------------------------- --------------------------------------
Free cash flow $ 79,943 (6,825) 86,768 46,733 (40,729) 87,462
===================================== ======================================
Free cash flow $ 79,943 46,733
Income from unconsolidated
cellular entity (1,265) (1,730)
Deferred income taxes 60,684 27,769
Changes in current assets and
current liabilities 32,553 (35,340)
Increase in other noncurrent
assets (5,248) (6,981)
Increase (decrease) in other
noncurrent liabilities (1,361) 12,956
Retirement benefits (40,336) (18,046)
Other, net (6,908) 17,541
Add: capital expenditures 121,480 115,493
----------- -----------
Net cash provided by operating
activities $ 239,542 158,395
=========== ===========
(1) Operating taxes ($7.5 million), including revenue effect ($1.5 million),
associated with various operating tax audits.
(2) Includes (i) interest cost ($4.9 million after-tax) related to operating
tax audits; (ii) benefit from reversal of costs previously accrued to
defend unsolicited takeover proposal ($2.0 million after-tax); and (iii)
after tax effect of item (1)
(3) Write off costs associated with abandoned project.
(4) Redemption premium on remarketable notes, net of unamortized
premium ($39.0 million after tax); write off costs associated with
abandoned project ($1.3 million after tax); and write off of
nonoperating investment ($508,000 after tax).
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
Twelve months ended December 31, 2003 Twelve months ended December 31, 2002
------------------------------------- --------------------------------------
As adjusted As adjusted
Less excluding Less excluding
non- non- non- non-
As recurring recurring As recurring recurring
reported items items reported items items
------------------------------------- --------------------------------------
Consolidated operating cash flow from
continuing operations and cash flow
margin
Operating income $ 750,396 (1,041)(1) 751,437 575,406 (24,574)(3) 599,980
Add: Depreciation and amortization 470,641 470,641 411,626 - 411,626
------------------------------------- --------------------------------------
Consolidated operating cash flow
from continuing operations $ 1,221,037 (1,041) 1,222,078 987,032 (24,574) 1,011,606
===================================== ======================================
Revenues from continuing operations $ 2,380,745 1,500 2,379,245 1,971,996 (7,645)(4) 1,979,641
===================================== ======================================
Consolidated cash flow margin
(operating cash flow divided
by revenues) 51.3% 51.4% 50.1% 51.1%
=========== =========== =========== ============
Telephone operating cash flow,
operating income margin and cash
flow margin
Telephone operating income $ 688,114 (1,041)(1) 689,155 543,113 (22,645)(3) 565,758
Add: Depreciation and amortization 450,851 - 450,851 396,866 - 396,866
------------------------------------- --------------------------------------
Telephone operating cash flow $ 1,138,965 (1,041) 1,140,006 939,979 (22,645) 962,624
===================================== ======================================
Telephone revenues $ 2,071,980 1,500 2,070,480 1,733,592 (7,645)(4) 1,741,237
===================================== ======================================
Telephone operating income margin
(operating income divided
by revenues) 33.2% 33.3% 31.3% 32.5%
=========== =========== =========== ============
Telephone cash flow margin
(operating cash flow divided
by revenues) 55.0% 55.1% 54.2% 55.3%
=========== =========== =========== ============
Other Operations operating cash flow,
operating income margin and cash
flow margin
Other Operations operating income $ 62,282 - 62,282 43,568 (1,929) 45,497
Add: Depreciation and amortization 19,790 - 19,790 14,760 - 14,760
------------------------------------- --------------------------------------
Other Operations operating
cash flow $ 82,072 - 82,072 58,328 (1,929) 60,257
===================================== ======================================
Other Operations revenues $ 308,765 - 308,765 238,404 - 238,404
===================================== ======================================
Other Operations operating income
margin (operating income divided
by revenues) 20.2% 20.2% 18.3% 19.1%
=========== =========== =========== ============
Other Operations cash flow margin
(operating cash flow divided
by revenues) 26.6% 26.6% 24.5% 25.3%
=========== =========== =========== ============
Free cash flow (prior to debt service
requirements and dividends)
Net income $ 344,707 (1,075)(2) 345,782 801,624 476,638 (6) 324,986
Add: Depreciation and
amortization (7) 470,641 - 470,641 424,520 - 424,520
Less: Capital expenditures (7) (377,939) - (377,939) (413,509) - (413,509)
------------------------------------- --------------------------------------
Free cash flow $ 437,409 (1,075) 438,484 812,635 476,638 335,997
===================================== ======================================
Free cash flow $ 437,409 812,635
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 (6,160) (5,582)
Deferred income taxes 128,706 71,112
Changes in current assets and
current liabilities 160,984 69,650
Increase in other noncurrent assets (23,528) (30,543)
Increase (decrease) in other
noncurrent liabilities (6,151) 35,489
Retirement benefits (14,739) (9,416)
Other, net 13,504 61,274
Add: capital expenditures 377,939 413,509
----------- -----------
Net cash provided by operating
activities from continuing
operations $ 1,067,964 793,434
=========== ===========
(1) Operating taxes ($7.5 million), net of related revenue effect ($1.5
million), associated with various operating tax audits, net of
partial recovery of amounts previously written off in connection
with WorldCom bankruptcy ($4.9 million; see Note 3).
(2) Includes (i) interest cost ($4.9 million after-tax) related to
operating tax audits; (ii) benefit from reversal of costs previously
accrued to defend unsolicited takeover proposal ($2.0 million
after-tax); (iii) net out of period income tax adjustments ($2.5
million credit); and (iv) 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) Write off costs associated with abandoned project.
(6) 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).
(7) 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.
January 29, 2004 By: /s/ Neil A. Sweasy
----------------------
Neil A. Sweasy
Vice President and Controller