-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VhzRDTcZF1XbB4inNHKRdofOzr3xyj4CRWHByXmUi82Avny1BNMYpUnd9cLhlXpO iZPFocayOXWyYzTT0mHQAA== 0000018926-05-000003.txt : 20050203 0000018926-05-000003.hdr.sgml : 20050203 20050203105711 ACCESSION NUMBER: 0000018926-05-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050203 DATE AS OF CHANGE: 20050203 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURYTEL INC CENTRAL INDEX KEY: 0000018926 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 720651161 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50260 FILM NUMBER: 05571836 BUSINESS ADDRESS: STREET 1: P O BOX 4065 STREET 2: 100 CENTURYTEL DR CITY: MONROE STATE: LA ZIP: 71203 BUSINESS PHONE: 3183889000 MAIL ADDRESS: STREET 1: 100 CENTURYTEL DR STREET 2: P O BOX 4065 CITY: MONROE STATE: LA ZIP: 71203 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY TELEPHONE ENTERPRISES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL TELEPHONE & ELECTRONICS CORP DATE OF NAME CHANGE: 19720512 8-K 1 leadin8k.txt FORM 8-K 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) February 3, 2005 Commission file number 1-7784 CENTURYTEL, INC. (Exact name of Registrant as specified in its charter) Louisiana 72-0651161 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 100 CenturyTel Drive, Monroe, Louisiana 71203 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code - (318) 388-9000 The information included in Item 2.02 and Item 9.01, except for any forward-looking statements (including our forecast for the upcoming quarter and year) 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 and 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 information included in Item 2.02 or Item 9.01 shall be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. Item 2.02 Results of Operations and Financial Condition On February 3, 2005, we issued a press release announcing our fourth quarter 2004 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, 2004, which we expect to file shortly with the Securities and Exchange Commission. The complete press release is included as Exhibit 99.1. Item 8.01 Other Events On February 3, 2005, we issued a press release announcing (i) that our board of directors approved a stock repurchase program authorizing us to repurchase up to an aggregate of $200 million of either our common stock or equity units and (ii) that we have entered into a definitive agreement to purchase metro fiber networks in 16 markets from KMC Telecom Holdings, Inc. for $65 million cash, subject to certain purchase price adjustments. The complete press release is included as Exhibit 99.2. Item 9.01 Financial Statements and Exhibits (c) Exhibits 99.1 Press release dated February 3, 2005 reporting fourth quarter 2004 operating results. 99.2 Press release dated February 3, 2005 announcing stock repurchase program and definitive agreement to purchase metro fiber networks from KMC Telecom Holdings, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned hereunto duly authorized. CenturyTel, Inc. By: /s/ Neil A. Sweasy --------------------- Neil A. Sweasy Vice-President and Controller Dated: February 3, 2005 EX-99 2 ex99.txt EX. 99 Exhibit 99.1 FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: February 3, 2005 Media: Patricia Cameron 318.388.9674 patricia.cameron@centurytel.com Investors: Tony Davis 318.388.9525 tony.davis@centurytel.com CenturyTel Reports Fourth Quarter 2004 Earnings and Record Broadband Growth - --------------------------------------------------------------------------- Monroe, La. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results for fourth quarter 2004 that met or exceeded First Call consensus estimates. o Operating revenues, excluding nonrecurring items, increased to $606.2 million from $601.1 million, while GAAP operating revenues increased to $606.2 million from $602.6 million. o Operating cash flow (as defined in the attached financial schedules) was $318.9 million. o Net income, excluding nonrecurring items, was $85.1 million compared to $89.3 million in fourth quarter 2003. Net income, reported under GAAP, was $84.5 million compared to $82.4 million in fourth quarter 2003. o Diluted earnings per share, excluding nonrecurring items, was $.62 in fourth quarter 2004 and $.61 in fourth quarter 2003, while GAAP diluted earnings per share was $.62 in fourth quarter 2004 and $.56 in fourth quarter 2003. o Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $82.7 million in fourth quarter 2004. o CenturyTel completed its previously announced $400 million share repurchase program. - ------------------------------------------------------------------------------- Fourth Quarter Highlights (1) Quarter Ended Quarter Ended % Change (Excluding nonrecurring items) 12/31/04 12/31/03 (In thousands, except per share amounts and customer data) - ------------------------------------------------------------------------------- Operating Revenues 606,234 601,103 .9 % Operating Cash Flow 318,920 319,954 (.3)% Net Income 85,105 89,267 (4.7)% Diluted Earnings Per Share (2) .62 .61 1.6 % Average Diluted Shares Outstanding (2) 138,368 149,433 (7.4)% Capital Expenditures 131,719 121,480 8.4 % - ------------------------------------------------------------------------------- Telephone Access Lines 2,313,626 2,376,118 (2.6)% Long Distance Lines (3) 1,067,817 931,761 14.6 % DSL Connections 142,575 83,465 70.8 % - -------------------------------------------------------------------------------- (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) Diluted earnings per share and average diluted shares outstanding reflect the application of a change in accounting related to the effect of contingent convertible debt on the diluted earnings per share calculation. Prior periods have been restated to reflect this change in accounting. (3) In first quarter 2004, the Company began reporting long distance units on a line basis instead of a customer basis. Fourth quarter 2003 has been restated on a line basis to ensure period-to-period comparability. - -------------------------------------------------------------------------------- "CenturyTel achieved record broadband subscriber growth as we added nearly 22,000 DSL connections in the fourth quarter," Glen F. Post, III, chairman and chief executive officer, said. "Our focus on bundled offerings and delivering quality broadband solutions that provide our customers flexibility and choice resulted in full year DSL subscriber growth of nearly 71% as we ended 2004 with more than 142,000 DSL connections." - -------------------------------------------------------------------------------- Operating revenues, excluding nonrecurring items, rose to $606.2 million in fourth quarter 2004 from $601.1 million in fourth quarter 2003. Revenue increases resulted primarily from approximately $21 million of aggregate incremental revenues generated by the regional fiber transport operations acquired during 2003, data revenue growth primarily from DSL subscribers, continued long distance subscriber growth and increased enhanced calling feature penetration. These increases more than offset revenue declines of $17 million attributable to lower intrastate toll revenues, universal service funding, and the effect of access line losses. Operating expenses, excluding nonrecurring items, increased 2.0% to $416.6 million from $408.6 million in fourth quarter 2003, due primarily to costs associated with the fiber assets acquired during 2003 and DSL subscriber growth. Operating cash flow, excluding nonrecurring items, was $318.9 million. CenturyTel achieved an operating cash flow margin, excluding nonrecurring items, of 52.6% during the quarter versus 53.2% in fourth quarter 2003. Net income, excluding nonrecurring items, was $85.1 million compared to $89.3 million in fourth quarter 2003. Diluted earnings per share, excluding nonrecurring items, was $.62 in fourth quarter 2004, a 1.6% increase over the $.61 in fourth quarter 2003. "Data revenue growth of 12.8% for the fourth quarter and 12.7% for full year 2004 reflects our customers' strong demand for broadband solutions. Additionally, we continued to invest in our broadband networks during the year to deliver advanced communications solutions. At year end 2004, nearly 71% of our access lines were DSL-enabled. Also, we upgraded our LightCore fiber optic network to offer IP services to our wholesale and enterprise customers," Post said. For the year 2004, operating revenues, excluding nonrecurring items, increased to $2.411 billion from $2.366 billion in 2003, a 1.9% increase. Operating cash flow, excluding nonrecurring items, was $1.258 billion for 2004 compared to $1.255 billion a year ago. Net income, excluding nonrecurring items, decreased 3.8% to $332.8 million from $345.8 million in 2003, while diluted earnings per share increased to $2.38 from $2.36 in 2003. Fourth quarter and full year 2004 diluted earnings per share reflect reductions of approximately $.01 and $.035, respectively, due to the recently adopted accounting change in the calculation of earnings per share for contingent convertibles. Prior periods have been restated to reflect this accounting change. Under generally accepted accounting principles (GAAP), net income for fourth quarter 2004 was $84.5 million compared to $82.4 million for fourth quarter 2003. Diluted earnings per share for fourth quarter 2004 was $.62 compared to $.56 for fourth quarter 2003. Fourth quarter 2004 results reflect an after-tax $616,000 charge for the impairment of a non-operating investment. Fourth quarter 2003 results were negatively impacted by $6.8 million of aggregate after-tax adjustments for operating taxes and interest associated with various operating tax audits and the related revenue effect, as well as other nonrecurring items detailed in the accompanying financial information. For the year 2004, prepared in accordance with GAAP, the Company reported net income of $337.2 million, or $2.41 per diluted share, compared to net income of $344.7 million, or $2.35 per diluted share, for the year 2003. The 2004 results included a favorable $4.4 million net after-tax for an adjustment for over-depreciated assets and the related revenue effect and for an adjustment for the impairment of a non-operating investment. The 2003 results included adjustments for operating taxes and interest costs associated with various operating tax audits, as well as other nonrecurring items detailed in the accompanying financial information. Other Information. Earlier today the Company announced that its Board had approved a $200 million share repurchase program and a definitive agreement to purchase for $65 million in cash certain metro fiber assets from KMC Telecom Holdings, Inc. Guidance for 2005. As previously announced, CenturyTel expects 2005 diluted earnings per share to be negatively impacted $.05 to $.07 due to lower universal service funding. We also expect our satellite entertainment and wireless service initiatives to negatively impact diluted earnings per share an additional $.04 to $.07. CenturyTel believes the Company can continue to drive revenue growth primarily from the further penetration of its bundled offerings and continued expansion in its fiber business. Giving effect to these expectations, the incremental amortization expense related to the new billing and customer care system, the anticipation of continued access line declines and the estimated $.03 impact from the change in accounting for stock options, CenturyTel expects 2005 diluted earnings per share to be in the range of $2.20 to $2.35. For first quarter 2005, CenturyTel expects total revenues of $585 to $595 million and diluted earnings per share of $.53 to $.57. The anticipated decline in revenues from fourth quarter 2004 is primarily due to a network access revenue settlement during the fourth quarter that increased revenue approximately $8 million. These outlook figures assume the successful mitigation of the dilutive effect of the $500 million in Equity Units currently scheduled to settle in May 2005, and exclude nonrecurring items, any costs associated with transactions related to the Equity Units, share repurchases, 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 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 statements. Reconciliations of additional non-GAAP financial measures that may be discussed during the earnings call described below will be available in the Investor Relations portion of 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. Investor Call. As previously announced, CenturyTel's management will host a conference call at 10:30 a.m. Central Time today. Interested parties can access the call by dialing 888.535.2555. The call will be accessible for replay through February 9, 2005, by calling 888.266.2081 and entering the conference ID number 624572. Investors can also listen to CenturyTel's earnings conference call and replay by accessing the Investor Relations portion of the Company's Web site at www.centurytel.com prior to February 23, 2005. 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 and hiring adequate numbers of qualified staff; 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 successfully take steps to mitigate the dilutive effect of the $500 million of Equity Units currently scheduled to settle in May 2005; 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, 2003. 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 February 3, 2005. The Company undertakes no obligation to update any of its forward-looking statements. CenturyTel, Inc. (NYSE: CTL) provides a full range of local, long distance, Internet and broadband services to consumers in 22 states. Included in the S&P 500 Index, CenturyTel is a leading provider of integrated communications services to rural areas and smaller cities in the United States. Visit CenturyTel at www.centurytel.com. * * * * * * * * * CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (UNAUDITED)
Three months ended December 31, 2004 Three months ended December 31, 2003 ------------------------------------- ------------------------------------- As adjusted As adjusted Increase Less excluding Less excluding (decrease) non- non- non- non- Increase excluding In thousands, except per As recurring recurring As recurring recurring (decrease) nonrecurring share amounts reported items items reported items items as reported items ------------ --------- ----------- ------------ --------- ----------- ----------- ------------ OPERATING REVENUES Local service $ 178,035 178,035 178,056 178,056 (0.0%) (0.0%) Network access 242,017 242,017 254,155 1,500 (3) 252,655 (4.8%) (4.2%) Long distance 46,938 46,938 42,916 42,916 9.4% 9.4% Data 72,410 72,410 64,182 64,182 12.8% 12.8% Fiber transport and CLEC 19,543 19,543 14,580 14,580 34.0% 34.0% Other 47,291 47,291 48,714 48,714 (2.9%) (2.9%) ------------ --------- ----------- ------------ --------- ----------- 606,234 - 606,234 602,603 1,500 601,103 0.6% 0.9% ------------ --------- ----------- ------------ --------- ----------- OPERATING EXPENSES Cost of services and products 192,638 192,638 187,197 187,197 2.9% 2.9% Selling, general and administrative 94,676 94,676 101,452 7,500 (3) 93,952 (6.7%) 0.8% Depreciation and amortization 129,304 129,304 127,493 127,493 1.4% 1.4% ------------ --------- ----------- ------------ --------- ----------- 416,618 - 416,618 416,142 7,500 408,642 0.1% 2.0% ------------ --------- ----------- ------------ --------- ----------- OPERATING INCOME 189,616 - 189,616 186,461 (6,000) 192,461 1.7% (1.5%) OTHER INCOME (EXPENSE) Interest expense (53,245) (53,245) (60,842) (7,500)(3) (53,342) (12.5%) (0.2%) Income from unconsolidated cellular entity 953 953 1,265 1,265 (24.7%) (24.7%) Other income (expense) (268) (1,000)(1) 732 3,188 3,000 (4) 188 (108.4%) 289.4% Income tax expense (52,567) 384 (2) (52,951) (47,630) 3,675 (5) (51,305) 10.4% 3.2% ------------ --------- ----------- ------------ --------- ----------- NET INCOME $ 84,489 (616) 85,105 82,442 (6,825) 89,267 2.5% (4.7%) ============ ========= =========== ============ ========= =========== BASIC EARNINGS PER SHARE $ 0.63 0.00 0.64 0.57 (0.05) 0.62 10.5% 3.2% DILUTED EARNINGS PER SHARE $ 0.62 0.00 0.62 0.56 (0.05) 0.61 10.7% 1.6% SHARES OUTSTANDING Basic 133,324 133,324 144,204 144,204 (7.5%) (7.5%) Diluted 138,368 138,368 149,433 149,433 (7.4%) (7.4%) DIVIDENDS PER COMMON SHARE $ 0.0575 0.0575 0.055 0.055 4.5% 4.5%
NONRECURRING ITEMS (1) - Impairment of nonoperating investment. (2) - Tax effect of item (1). (3) - Operating taxes, including related revenue effect, and interest associated with various operating tax audits. (4) - Reversal of costs previously accrued to defend unsolicited takeover proposal. (5) - Tax effect of items (3) and (4). CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (UNAUDITED)
Twelve months ended December 31, 2004 Twelve months ended December 31, 2003 ------------------------------------- ------------------------------------- As adjusted As adjusted Increase Less excluding Less excluding (decrease) non- non- non- non- Increase excluding In thousands, except per As recurring recurring As recurring recurring (decrease) nonrecurring share amounts reported items items reported items items as reported items ------------ --------- ----------- ------------ --------- ----------- ----------- ------------ OPERATING REVENUES Local service $ 716,028 716,028 712,565 712,565 0.5% 0.5% Network access 966,011 (3,091)(1) 969,102 1,001,462 1,500 (4) 999,962 (3.5%) (3.1%) Long distance 186,997 186,997 173,884 173,884 7.5% 7.5% Data 275,777 (422)(1) 276,199 244,998 244,998 12.6% 12.7% Fiber transport and CLEC 74,409 74,409 43,041 43,041 72.9% 72.9% Other 188,150 188,150 191,660 191,660 (1.8%) (1.8%) ------------ --------- ----------- ------------ -------- ----------- 2,407,372 (3,513) 2,410,885 2,367,610 1,500 2,366,110 1.7% 1.9% ------------ --------- ----------- ------------ -------- ----------- OPERATING EXPENSES Cost of services and products 755,413 755,413 739,210 739,210 2.2% 2.2% Selling, general and administrative 397,102 397,102 374,352 2,541 (4) 371,811 6.1% 6.8% Depreciation and amortization 500,904 (13,221)(1) 514,125 503,652 503,652 (0.5%) 2.1% ------------ --------- ----------- ------------ -------- ----------- 1,653,419 (13,221) 1,666,640 1,617,214 2,541 1,614,673 2.2% 3.2% ------------ --------- ----------- ------------ -------- ----------- OPERATING INCOME 753,953 9,708 744,245 750,396 (1,041) 751,437 0.5% (1.0%) OTHER INCOME (EXPENSE) Interest expense (211,051) (211,051) (226,751) (7,500)(4) (219,251) (6.9%) (3.7%) Income from unconsolidated cellular entity 7,067 7,067 6,160 6,160 14.7% 14.7% Other income (expense) (2,597) (2,500)(2) (97) 2,154 3,000 (5) (846) (220.6%) (88.5%) Income tax expense (210,128) (2,767)(3) (207,361) (187,252) 4,466 (6) (191,718) 12.2% 8.2% ------------ --------- ----------- ------------ -------- ----------- NET INCOME $ 337,244 4,441 332,803 344,707 (1,075) 345,782 (2.2%) (3.8%) ============ ========= =========== ============ ======== =========== BASIC EARNINGS PER SHARE $ 2.45 0.03 2.42 2.40 (0.01) 2.41 2.1% 0.4% DILUTED EARNINGS PER SHARE $ 2.41 0.03 2.38 2.35 (0.01) 2.36 2.6% 0.8% SHARES OUTSTANDING Basic 137,215 137,215 143,583 143,583 (4.4%) (4.4%) Diluted 142,144 142,144 148,779 148,779 (4.5%) (4.5%) DIVIDENDS PER COMMON SHARE $ 0.2300 0.2300 0.220 0.220 4.5% 4.5% NONRECURRING ITEMS (1) - Adjustment for overdepreciated assets, including related revenue effect. (2) - Impairment of nonoperating investment. (3) - Tax effect of items (1) and (2). (4) - 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). (5) - Reversal of costs previously accrued to defend unsolicited takeover proposal. (6) - Net out of period income tax adjustments ($2.5 million credit), net of tax effect of items (4) and (5).
CenturyTel, Inc. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2004 AND DECEMBER 31, 2003 (UNAUDITED)
December 31, December 31, 2004 2003 ------------- ------------- (in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 167,215 203,181 Other current assets 252,632 259,758 ------------- ------------- Total current assets 419,847 462,939 ------------- ------------- NET PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment 7,431,017 7,184,155 Accumulated depreciation (4,089,616) (3,728,674) ------------- ------------- Net property, plant and equipment 3,341,401 3,455,481 ------------- ------------- INVESTMENTS AND OTHER ASSETS Goodwill 3,433,864 3,425,001 Other 601,841 552,431 ------------- ------------- Total investments and other assets 4,035,705 3,977,432 ------------- ------------- TOTAL ASSETS $ 7,796,953 7,895,852 ============= ============= LIABILITIES AND EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 249,617 72,453 Other current liabilities 442,001 398,930 ------------- ------------- Total current liabilities 691,618 471,383 LONG-TERM DEBT 2,762,019 3,109,302 DEFERRED CREDITS AND OTHER LIABILITIES 933,551 836,651 STOCKHOLDERS' EQUITY 3,409,765 3,478,516 ------------- ------------- TOTAL LIABILITIES AND EQUITY $ 7,796,953 7,895,852 ============= =============
CenturyTel, Inc. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Three months ended December 31, 2004 Three months ended December 31, 2003 ---------------------------------------- ---------------------------------------- As adjusted As adjusted Less excluding Less excluding non- non- non- non- As recurring recurring As recurring recurring In thousands reported items items reported items items ----------- ---------- ----------- ----------- ---------- ----------- Operating cash flow and cash flow margin Operating income $ 189,616 - 189,616 186,461 (6,000)(2) 192,461 Add: Depreciation and amortization 129,304 - 129,304 127,493 127,493 ----------- ---------- ----------- ----------- ---------- ---------- Operating cash flow $ 318,920 - 318,920 313,954 (6,000) 319,954 =========== ========== =========== =========== ========== =========== Revenues $ 606,234 - 606,234 602,603 1,500 (2) 601,103 =========== ========== =========== =========== ========== =========== Operating income margin (operating income divided by revenues) 31.3% 31.3% 30.9% 32.0% =========== =========== =========== =========== Operating cash flow margin (operating cash flow divided by revenues) 52.6% 52.6% 52.1% 53.2% =========== =========== =========== =========== Free cash flow (prior to debt service requirements and dividends) Net income $ 84,489 (616)(1) 85,105 82,442 (6,825)(3) 89,267 Add: Depreciation and amortization 129,304 - 129,304 127,493 - 127,493 Less: Capital expenditures (131,719) - (131,719) (121,480) - (121,480) ----------- ---------- ----------- ----------- ---------- ----------- Free cash flow $ 82,074 (616) 82,690 88,455 (6,825) 95,280 =========== ========== =========== =========== ========== =========== Free cash flow 82,074 88,455 Income from unconsolidated cellular entity (953) (1,265) Deferred income taxes (1,034) 60,684 Changes in current assets and current liabilities 12,430 32,553 Increase in other noncurrent assets (5,240) (5,248) Decrease in other noncurrent liabilities (1,524) (1,361) Retirement benefits 3,954 (40,336) Other, net (1,389) (15,420) Add: Capital expenditures 131,719 121,480 ----------- ----------- Net cash provided by operating activities $ 220,037 239,542 =========== ===========
NONRECURRING ITEMS (1) - Impairment of nonoperating investment (presented on an after-tax basis). (2) - Operating taxes ($7.5 million), net of revenue effect ($1.5 million), associated with various operating tax audits. (3) - 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 (2). CenturyTel, Inc. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
Twelve months ended December 31, 2004 Twelve months ended December 31, 2003 ---------------------------------------- ---------------------------------------- As adjusted As adjusted Less excluding Less excluding non- non- non- non- As recurring recurring As recurring recurring In thousands reported items items reported items items ----------- ---------- ----------- ----------- ---------- ----------- Operating cash flow and cash flow margin Operating income $ 753,953 9,708 (1) 744,245 750,396 (1,041)(3) 751,437 Add: Depreciation and amortization 500,904 (13,221)(1) 514,125 503,652 503,652 ----------- ---------- ----------- ----------- ---------- ----------- Operating cash flow $ 1,254,857 (3,513) 1,258,370 1,254,048 (1,041) 1,255,089 =========== ========== =========== =========== ========== =========== Revenues $ 2,407,372 (3,513)(1) 2,410,885 2,367,610 1,500 (3) 2,366,110 =========== ========== =========== =========== ========== =========== Operating income margin (operating income divided by revenues) 31.3% 30.9% 31.7% 31.8% =========== =========== =========== =========== Operating cash flow margin (operating cash flow divided by revenues) 52.1% 52.2% 53.0% 53.0% =========== =========== =========== =========== Free cash flow (prior to debt service requirements and dividends) Net income $ 337,244 4,441 (2) 332,803 344,707 (1,075)(4) 345,782 Add: Depreciation and amortization 500,904 (13,221)(1) 514,125 503,652 - 503,652 Less: Capital expenditures (385,316) - (385,316) (377,939) - (377,939) ----------- ---------- ----------- ----------- ---------- ----------- Free cash flow $ 452,832 (8,780) 461,612 470,420 (1,075) 471,495 =========== ========== =========== =========== ========== =========== Free cash flow $ 452,832 470,420 Income from unconsolidated cellular entity (7,067) (6,160) Deferred income taxes 74,374 128,706 Changes in current assets and current liabilities 58,322 160,984 Increase in other noncurrent assets (31,714) (23,528) Decrease in other noncurrent liabilities (6,220) (6,151) Retirement benefits 26,954 (14,739) Other, net 3,034 (19,507) Add: Capital expenditures 385,316 377,939 ----------- ----------- Net cash provided by operating activities $ 955,831 1,067,964 =========== ===========
NONRECURRING ITEMS (1) - Adjustment for overdepreciated assets, including related revenue effect (presented on a pre-tax basis). (2) - Adjustment for overdepreciated assets, including related revenue effect, and impairment of nonoperating investment (presented on an after-tax basis). (3) - 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). (4) - 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 (3). EX-99 3 kmc.txt KMC PRSSRELS Exhibit 99.2 FOR IMMEDIATE RELEASE: FOR MORE INFORMATION CONTACT: February 3, 2005 Media: Annmarie Sartor 318.388.9671 annmarie.sartor@centurytel.com Investors: Tony Davis 318.388.9525 tony.davis@centurytel.com CenturyTel announces $200 million stock repurchase program; signs definitive agreement to buy metro fiber networks MONROE, La. . . CenturyTel, Inc. (NYSE: CTL) announced today that it has entered into a definitive agreement to purchase metro fiber networks in 16 markets, primarily in the central United States, from KMC Telecom Holdings, Inc. (KMC) for $65 million cash, subject to purchase price adjustments. CenturyTel anticipates completing this transaction by third quarter 2005, subject to regulatory approval. The transition of these markets is expected to be seamless to KMC's existing customers. The transaction is anticipated to be breakeven, or slightly dilutive including transition costs, for the first 12 months of operation and accretive to earnings per share thereafter. CenturyTel will operate these networks and related assets through its LightCore subsidiary, which provides fiber optic services to national and regional communications carriers. The KMC networks being acquired include almost 1,000 lit route miles of metro fiber and more than 100 points of presence (POPs), and will bring LightCore's total network to more than 9,700 lit route miles of fiber and 618 total POPs. "This acquisition advances CenturyTel's strategic goal of continuing to grow and diversify our revenue streams by becoming a dominant fiber transport provider to smaller cities and rural areas in and near our local exchange and LightCore markets," Glen F. Post, III, CenturyTel chairman and CEO, said. "It also positions LightCore to grow the enterprise and government segments of its customer base." With this purchase, CenturyTel will add key markets to its LightCore footprint across Alabama, Indiana, Kansas, Louisiana, Michigan, Minnesota, Mississippi, Ohio, Tennessee, Texas and Wisconsin. Stock Repurchase Program - ------------------------ CenturyTel also announced today that its board of directors approved a stock repurchase program authorizing it to repurchase up to an aggregate of $200 million of either its common stock or convertible equity units. Repurchases under the program may be made in the open market or in privately negotiated transactions at such times and in such amounts as management deems appropriate, depending on market conditions and other factors. The program will expire in December 2005, unless extended by CenturyTel's board of directors. The new program follows CenturyTel's $400 million repurchase program, which was completed during 2004. "CenturyTel's free cash flow generation and strong balance sheet enable us to return value to shareholders through another stock repurchase program while continuing to grow our business through this strategic acquisition," Post said. As of December 31, 2004, CenturyTel had outstanding approximately 132.4 million common shares and $500 million stated value of convertible equity units. Wednesday's closing prices of CenturyTel's common stock and convertible equity units (CUSIP 156700403) were $34.05 and $25.45 per share, respectively. 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: Company's ability to obtain governmental approvals and third-party consents in a timely manner; the possibility of unforeseen near-term cash requirements; the ability to manage and maintain key customer relationships; 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; 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 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, 2003. 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 February 3, 2005. The Company undertakes no obligation to update any of its forward-looking statements. CenturyTel, Inc. (NYSE: CTL) provides a full range of local, long distance, Internet and broadband services to consumers in 22 states. Included in the S&P 500 Index, CenturyTel is a leading provider of integrated communications services to rural areas and smaller cities in the United States. Visit CenturyTel at www.centurytel.com. * * * * * * * * -----END PRIVACY-ENHANCED MESSAGE-----