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) April 26, 2001
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 Century Park Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 388-9000
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
April 26, 2001 Media: Patricia Cameron (318) 388-9674
patricia.cameron@centurytel.com
Investors: Jeffrey S. Glover (318) 388-9648
jeff.glover@centurytel.com
CenturyTel Achieves Solid First Quarter Revenue and Cash Flow Growth
MONROE, La....CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results
for first quarter 2001.
o Revenues climbed 25.0% to $516.0 million.
o Excluding one-time items, earnings before interest, taxes, depreciation and
amortization increased 27.0% to $257.2 million.
o Net income, excluding one-time items, was $47.9 million.
o Excluding one-time items, cash earnings per share was $.44.
o Diluted earnings per share, excluding one-time items, was $.34.
First Quarter Highlights Qtr Ended Qtr Ended % Change
(Dollars in thousands, except per share amounts) 3/31/01 3/31/00
- ------------------------------------------------------------------------------------------
Revenues $ 516,008 $ 412,956 25.0%
EBITDA* $ 257,235 $ 202,545 27.0%
Net Income* $ 47,922 $ 47,897 0.1%
Cash Earnings Per Share* $ .44 $ .42 4.8%
Diluted Earnings Per Share* $ .34 $ .34 -
Average Diluted Shares Outstanding $ 142,482 $ 141,728 0.5%
Telephone Revenues $ 371,249 $ 276,926 34.1%
Wireless Revenues $ 104,406 $ 100,404 4.0%
Other Operations Revenues $ 40,353 $ 35,626 13.3%
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Telephone Access Lines 1,803,062 1,282,237 40.6%
Wireless Units in Majority-Owned Markets 768,815 727,507 5.7%
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* Excludes one-time expenses in first quarter 2001 of $1.2 million after tax,
or $.01 per share, related to ice storm damages; also excludes an after-tax
gain on asset sales of $5.2 million, or $.04 per share, and nonrecurring
after-tax charges of $3.8 million, or $.03 per share, in first quarter 2000
____________________
"CenturyTel achieved solid revenue and cash flow growth this quarter
despite a weaker than anticipated economy, a major ice-storm in our Southern
markets, and additional expenses related to our CLEC and DSL growth
initiatives," Glen F. Post, III, President and Chief Executive Officer, said.
"Data revenues, excluding acquisitions, rose 37% during the quarter. We also
achieved strong long distance and DSL customer growth as CenturyTel added 29,600
long distance customers and 5,400 DSL customers representing 90% growth in DSL
subscribers since fourth quarter 2000. While we remain confident regarding
CenturyTel's growth initiatives and long-term outlook, we are concerned about
weaker consumer demand over the remainder of 2001."
Consolidated revenues rose 25.0% to $516.0 million from $413.0 million.
Excluding non-recurring items, EBITDA grew to $257.2 million from $202.5
million, a 27.0% increase. CenturyTel achieved a consolidated EBITDA margin of
49.9% during the quarter. Excluding non-recurring items, net income was $47.9
million in both the first quarter of 2001 and 2000. The lack of growth in net
income is due to higher interest expense, amortization of goodwill stemming from
acquisitions, certain regulatory issues that are being addressed, and higher
expenses related to CLEC and DSL growth initiatives. Excluding non-recurring
items, cash earnings per share was $.44 in first quarter 2001 compared to $.42
in first quarter 2000. Excluding non-recurring items, diluted earnings per share
was $.34 in both periods.
"In the near term, we remain focused on resolving the regulatory issues
that are adversely affecting the revenues and expenses of several of our
acquired properties," Post said. "Although the process is not going as fast as
we would like, we believe CenturyTel is making solid progress in enhancing the
financial performance of these acquired properties, and we look forward to
seeing these issues resolved over the remainder of the year."
Telephone revenues grew 34.1% to $371.2 million during the quarter compared
with $276.9 million in first quarter 2000. The 493,000 access lines acquired
from Verizon during 2000 contributed $88.4 million in telephone revenues during
the first quarter. Telephone operating income increased 23.1%, reaching $104.0
million from $84.5 million in first quarter 2000, and EBITDA rose 32.6% to
$201.3 million from $151.9 million a year ago. CenturyTel's first quarter
telephone EBITDA margin was 54.2% while the operating income margin was 28.0%.
"After a review of the profitability of our rate plans on a
market-by-market basis, we discovered a major expense issue with some of the
unlimited calling plans in the properties acquired from Verizon in Arkansas,"
Post said. "These plans cost CenturyTel $.02 per share during the quarter, and
we are seeking to cap them in order to lower our expenses."
On April 19, the Wisconsin Public Service Commission approved an interim
rate increase of $8.8 million annually on the former Ameritech properties
pending the determination of final rates in a rate case CenturyTel has filed
with the commission. Separately, the commission ordered CenturyTel to make a
refund of $14.7 million related to access charges collected on the former
Ameritech properties from December 1998 through 2000. The company is challenging
the refund order in Wisconsin State Court. Should CenturyTel lose the appeal,
the company will have to take a one-time charge of $.03 per share.
Wireless revenues grew 4.0% to $104.4 million in first quarter 2001
compared with $100.4 million in first quarter 2000. Wireless operating income
was $24.9 million compared to $19.9 million, a 25.3% increase, and EBITDA
increased 14.6% to $41.5 million compared to $36.2 million a year ago.
CenturyTel's first quarter wireless EBITDA margin was 41.1% based on service
revenues, and operating income margin was 24.6% based on service revenues. Net
wireless subscriber additions were 17,600 for the quarter. Average monthly
cellular service revenue per user was $44 during first quarter 2001, reflecting
a 2.2% decline from first quarter 2000. The average monthly churn rate was 2.36%
for contract customers.
Other operations revenues grew 13.3% to $40.4 million during first quarter
2001 compared with $35.6 million in first quarter 2000. CenturyTel's long
distance revenues increased 11.2% to $27.6 million from $24.8 million.
CenturyTel now serves more than 392,900 long distance customers, adding more
than 29,600 during the quarter. Internet revenues rose 67.6% to $8.4 million
from $5.0 million. The company experienced a $2.8 million operating loss this
quarter in its Internet operations due to startup expenses pertaining to the
rapid growth of DSL. CenturyTel now serves more than 11,400 DSL customers,
adding more than 5,400 during the quarter. CLEC operating losses were $2.1
million during the quarter.
"CenturyTel's aggressive broadband deployment has enabled us to implement
high-speed data services ahead of the cable providers in most of our markets,"
Post said. "We increased the number of DSL-enabled access lines more than 80%
from year end 2000 to nearly 1.2 million DSL-enabled lines at the end of the
first quarter."
CenturyTel provides updated financial guidance for 2001. For the year, the
company anticipates achieving total revenues and EBITDA at the low end of its
previous guidance pending the outcome of state regulatory issues. Cash earnings
per share before one-time items is estimated to be $1.94 to $2.04. For 2001,
earnings per share, before one-time items, is anticipated to be in the range of
$1.52 to $1.62.
For the second quarter, total revenues are expected to range from $520
million to $535 million. CenturyTel believes second quarter operating cash flow
will be in the range of $250 million to $260 million. Operating income is
anticipated to be approximately $130 million to $145 million. Cash earnings per
share is anticipated to be $.46 to $.51, while earnings per share is expected to
be in the range of $.35 to $.40.
There are a number of factors which have led to the revised guidance: (1) a
weaker economy which has led CenturyTel to reduce its revenue growth
expectations; (2) lower expectations for earnings from unconsolidated cellular
partnerships; (3) higher than anticipated wireline expenses related to
unprofitable local calling plans in several of the Verizon markets in
Arkansas--an issue the company believes it can resolve during third quarter
2001; and (4) greater expenses related to the rapid growth of CenturyTel's DSL
subscriber base.
All amounts disclosed above exclude one-time items.
In addition to historical information, this release includes forward-looking
statements, estimates and projections that are based on current expectations
only, and are subject to a number of risks, uncertainties and assumptions, many
of which are beyond the control of CenturyTel. Actual events and results may
differ materially from those anticipated, estimated or projected if one or more
of these risks or uncertainties materialize, or if underlying assumptions prove
incorrect. Factors that could affect actual results include but are not limited
to: the Company's ability to effectively manage its growth, including
integrating newly acquired businesses into our operations, hiring adequate
numbers of qualified staff and successfully upgrading our billing and other
information systems; the inherent risk of rapid technological change; the
effects of on-going changes in the regulation of the Company or the
communications industry generally; the effects of greater than anticipated
competition in the Company's markets; possible changes in the demand for, or
pricing of, the Company's products and services; the Company's ability to
successfully introduce new offerings on a timely and cost-effective basis;
higher than anticipated interest rates; and the effects of more general factors
such as changes in overall market or economic conditions or in legislation,
regulation or public policy. These and other uncertainties related to the
Company's business are described in greater detail in the Company's Annual
Report on Form 10-K for the year ended December 31,2000. The information
contained in this release is as of April 26, 2001. The Company undertakes no
obligation to update or revise any of this information whether a result of new
information, future events or developments, or otherwise.
CenturyTel's management will be hosting a conference call April 26 at 9:30
A.M. Central time to discuss first quarter earnings and the outlook for 2001.
Investors can access CenturyTel's earnings conference call and replay by
accessing the company's Web site at (www.centurytel.com)
CenturyTel, Inc. provides communications services including local exchange,
wireless, long distance, Internet access and data services to nearly three
million customers in 21 states. The company, headquartered in Monroe, Louisiana,
is publicly traded on the New York Stock Exchange under the symbol CTL.
CenturyTel is the 8th largest local exchange telephone company, based on access
lines, and the 8th largest cellular company, based on population equivalents
owned, in the United States.
Visit CenturyTel's corporate Web site at (www.centurytel.com)
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(UNAUDITED)
INCREASE
In thousands, except per share amount 2001 2000 (DECREASE)
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TELEPHONE OPERATIONS
Operating revenues
Local service $ 121,161 88,065 37.6%
Network access 213,867 162,253 31.8%
Other 36,221 26,608 36.1%
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371,249 276,926 34.1%
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Plant operations 93,885 62,776 49.6%
Customer operations 29,257 22,761 28.5%
Corporate and other 46,765 39,532 18.3%
Depreciation and amortization 97,361 67,360 44.5%
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267,268 192,429 38.9%
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Telephone operating income 103,981 84,497 23.1%
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WIRELESS OPERATIONS
Operating revenues
Service revenues 101,100 96,623 4.6%
Equipment sales 3,306 3,781 (12.6%)
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104,406 100,404 4.0%
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Operating expenses
Cost of equipment sold 5,844 8,180 (28.6%)
System operations 17,466 15,653 11.6%
General, administrative and customer service 20,737 18,206 13.9%
Sales and marketing 18,825 22,125 (14.9%)
Depreciation and amortization 16,614 16,349 1.6%
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79,486 80,513 (1.3%)
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Wireless operating income 24,920 19,891 25.3%
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OTHER OPERATIONS
Operating revenues 40,353 35,626 13.3%
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Operating expenses
Cost of sales and other 33,589 27,490 22.2%
Depreciation and amortization 1,457 1,102 32.2%
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35,046 28,592 22.6%
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Other operating income 5,307 7,034 (24.6%)
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TOTAL OPERATING INCOME 134,208 111,422 20.5%
OTHER INCOME (EXPENSE)
Gain on sales of assets - 9,910 (100.0%)
Interest expense (61,703) (36,042) 71.2%
Income (loss) from unconsolidated cellular entities 5,321 (1,459) 464.7%
Minority interest (2,649) (2,292) 15.6%
Other income and expense 2,923 4,229 (30.9%)
Income tax expense (31,378) (36,484) (14.0%)
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NET INCOME $ 46,722 49,284 (5.2%)
=====================================================================================
NET INCOME EXCLUDING NONRECURRING ITEMS* $ 47,922 47,897 0.1%
=====================================================================================
EARNINGS PER SHARE
Basic $ 0.33 0.35 (5.7%)
Diluted $ 0.33 0.35 (5.7%)
EARNINGS PER SHARE EXCLUDING NONRECURRING ITEMS*
Basic $ 0.34 0.34 -
Diluted $ 0.34 0.34 -
SHARES OUTSTANDING
Basic 140,572 139,737 0.6%
Diluted 142,482 141,728 0.5%
DIVIDENDS PER COMMON SHARE $ 0.0500 0.0475 5.3%
*Nonrecurring after-tax items include (i) $1.2 million ($.01 per share) of ice
storm expenses in 2001 and (ii) gain on asset sales of $5.2 million ($.04 per
share) and nonrecurring charges of $3.8 million ($.03 per share) in 2000
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND DECEMBER 31, 2000
(UNAUDITED)
March 31, December 31,
2001 2000
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(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 15,873 19,039
Other current assets 319,446 357,465
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Total current assets 335,319 376,504
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PROPERTY, PLANT AND EQUIPMENT
Telephone 5,067,201 4,999,808
Wireless 518,901 522,684
Other 415,165 392,024
Accumulated depreciation (3,046,600) (2,955,223)
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Net property, plant and equipment 2,954,667 2,959,293
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INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 2,526,785 2,509,033
Other 571,954 548,460
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Total investments and other assets 3,098,739 3,057,493
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TOTAL ASSETS $ 6,388,725 6,393,290
======================================================================================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term debt and current maturities of $ 474,921 425,962
Other current liabilities 317,980 317,408
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Total current liabilities 792,901 743,370
LONG-TERM DEBT 2,980,442 3,050,292
DEFERRED CREDITS AND OTHER LIABILITIES 540,376 567,549
STOCKHOLDERS' EQUITY 2,075,006 2,032,079
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TOTAL LIABILITIES AND EQUITY $ 6,388,725 6,393,290
======================================================================================
CAPITAL EXPENDITURES
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
INC
2001 2000 (DEC)
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(in thousands)
Telephone $ 72,680 29,309 148.0%
Wireless 18,332 3,679 398.3%
Other 29,573 25,177 17.5%
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Total capital expenditures $ 120,585 58,165 107.3%
=================================================================
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CenturyTel, Inc.
By: /s/ Neil A. Sweasy
--------------------
Neil A. Sweasy
Vice President and Controller