UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2005
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 1-7784
CenturyTel, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0651161
(State or other jurisdiction of (I.R.S. 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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
[X] Yes [ ] No
As of April 30, 2005, there were 131,286,749 shares of common stock
outstanding.
CenturyTel, Inc.
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Income--Three Months
Ended March 31, 2005 and 2004 3
Consolidated Statements of Comprehensive Income--
Three Months Ended March 31, 2005 and 2004 4
Consolidated Balance Sheets--March 31, 2005 and
December 31, 2004 5
Consolidated Statements of Cash Flows--
Three Months Ended March 31, 2005 and 2004 6
Consolidated Statements of Stockholders' Equity--
Three Months Ended March 31, 2005 and 2004 7
Notes to Consolidated Financial Statements 8-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-18
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 18-19
Item 4. Controls and Procedures 20
Part II. Other Information:
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds 21
Item 6. Exhibits and Reports on Form 8-K 21-22
Signature 22
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months
ended March 31,
- ------------------------------------------------------------------------------
2005 2004
- ------------------------------------------------------------------------------
(Dollars, except per
share amounts, and
shares in thousands)
OPERATING REVENUES $ 595,282 593,704
- ------------------------------------------------------------------------------
OPERATING EXPENSES
Cost of services and products (exclusive
of depreciation and amortization) 191,993 181,549
Selling, general and administrative 94,254 101,606
Depreciation and amortization 132,175 126,992
- ------------------------------------------------------------------------------
Total operating expenses 418,422 410,147
- ------------------------------------------------------------------------------
OPERATING INCOME 176,860 183,557
- ------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (52,625) (52,543)
Income from unconsolidated cellular entity 1,313 2,059
Other income (expense) 1,535 2,304
- ------------------------------------------------------------------------------
Total other income (expense) (49,777) (48,180)
- ------------------------------------------------------------------------------
INCOME BEFORE INCOME TAX EXPENSE 127,083 135,377
Income tax expense 47,467 52,098
- ------------------------------------------------------------------------------
NET INCOME $ 79,616 83,279
==============================================================================
BASIC EARNINGS PER SHARE $ .60 .58
==============================================================================
DILUTED EARNINGS PER SHARE $ .59 .57
==============================================================================
DIVIDENDS PER COMMON SHARE $ .06 .0575
==============================================================================
AVERAGE BASIC SHARES OUTSTANDING 132,183 142,585
==============================================================================
AVERAGE DILUTED SHARES OUTSTANDING 137,169 147,426
==============================================================================
See accompanying notes to consolidated financial statements.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Three months
ended March 31,
- ------------------------------------------------------------------------------
2005 2004
- ------------------------------------------------------------------------------
(Dollars in thousands)
NET INCOME $ 79,616 83,279
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Minimum pension liability adjustment, net
of ($270) and ($1,739) tax (432) (3,229)
Unrealized gain (loss) on investments, net
of ($75) and $251 tax (120) 466
Derivative instruments:
Net losses on derivatives hedging the
variability of cash flows, net
of ($2,606) tax (4,181) -
Less: reclassification adjustment
for losses included in net income,
net of $19 tax 31 -
- ------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 74,914 80,516
==============================================================================
See accompanying notes to consolidated financial statements.
CenturyTel, Inc.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, December 31,
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands)
ASSETS
- ------
CURRENT ASSETS
Cash and cash equivalents $ 129,331 167,215
Accounts receivable, less allowance of
$18,531 and $21,187 225,693 232,580
Materials and supplies, at average cost 6,120 5,361
Other 17,462 14,691
- -------------------------------------------------------------------------------
Total current assets 378,606 419,847
- -------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment 7,496,363 7,431,017
Accumulated depreciation (4,208,514) (4,089,616)
- -------------------------------------------------------------------------------
Net property, plant and equipment 3,287,849 3,341,401
- -------------------------------------------------------------------------------
GOODWILL AND OTHER ASSETS
Goodwill 3,433,864 3,433,864
Other 602,205 601,841
- -------------------------------------------------------------------------------
Total goodwill and other assets 4,036,069 4,035,705
- -------------------------------------------------------------------------------
TOTAL ASSETS $ 7,702,524 7,796,953
===============================================================================
LIABILITIES AND EQUITY
- ----------------------
CURRENT LIABILITIES
Current maturities of long-term debt $ 144,811 249,617
Accounts payable 141,524 141,618
Accrued expenses and other liabilities
Salaries and benefits 65,316 60,858
Income taxes 82,750 54,648
Other taxes 56,201 47,763
Interest 53,835 67,379
Other 14,342 18,875
Advance billings and customer deposits 52,299 50,860
- -------------------------------------------------------------------------------
Total current liabilities 611,078 691,618
- -------------------------------------------------------------------------------
LONG-TERM DEBT 2,694,203 2,762,019
- -------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES 968,059 933,551
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, authorized
350,000,000 shares, issued and outstanding
131,272,294 and 132,373,912 shares 131,272 132,374
Paid-in capital 175,886 222,205
Accumulated other comprehensive loss,
net of tax (13,036) (8,334)
Retained earnings 3,127,087 3,055,545
Preferred stock - non-redeemable 7,975 7,975
- -------------------------------------------------------------------------------
Total stockholders' equity 3,429,184 3,409,765
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY $ 7,702,524 7,796,953
===============================================================================
See accompanying notes to consolidated financial statements.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three months
ended March 31,
- --------------------------------------------------------------------------------------
2005 2004
- --------------------------------------------------------------------------------------
(Dollars in thousands)
OPERATING ACTIVITIES
Net income $ 79,616 83,279
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 132,175 126,992
Income from unconsolidated cellular entity (1,313) (2,059)
Deferred income taxes 22,141 26,673
Changes in current assets and current liabilities:
Accounts receivable 6,887 22,506
Accounts payable (94) 14,559
Accrued income and other taxes 36,540 19,921
Other current assets and other current
liabilities, net (15,710) 709
Retirement benefits 6,004 10,830
Increase in other noncurrent assets (1,358) (11,032)
Decrease in other noncurrent liabilities (729) (3,949)
Other, net (7,340) (4,989)
- --------------------------------------------------------------------------------------
Net cash provided by operating activities 256,819 283,440
- --------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Payments for property, plant and equipment (74,903) (61,745)
Distribution from unconsolidated cellular entity - 490
Other, net (2,716) (511)
- --------------------------------------------------------------------------------------
Net cash used in investing activities (77,619) (61,766)
- --------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Payments of debt (509,254) (7,029)
Proceeds from issuance of debt 350,000 -
Proceeds from issuance of common stock 12,033 2,118
Repurchase of common stock (60,075) (139,256)
Cash dividends (8,074) (8,253)
Other, net (1,714) 858
- --------------------------------------------------------------------------------------
Net cash used in financing activities (217,084) (151,562)
- --------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (37,884) 70,112
Cash and cash equivalents at beginning of period 167,215 203,181
- --------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 129,331 273,293
======================================================================================
Supplemental cash flow information:
Income taxes paid $ 10,585 22,957
======================================================================================
Interest paid (net of capitalized interest
of $247 and $105) $ 65,922 60,515
======================================================================================
See accompanying notes to consolidated financial statements.
CenturyTel, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Three months
ended March 31,
- ----------------------------------------------------------------------------------------
2005 2004
- ----------------------------------------------------------------------------------------
(Dollars in thousands)
COMMON STOCK
Balance at beginning of period $ 132,374 144,364
Issuance of common stock through dividend reinvestment,
incentive and benefit plans and other 678 72
Repurchase of common stock (1,780) (4,942)
- ----------------------------------------------------------------------------------------
Balance at end of period 131,272 139,494
- ----------------------------------------------------------------------------------------
PAID-IN CAPITAL
Balance at beginning of period 222,205 576,515
Issuance of common stock through dividend
reinvestment, incentive and benefit plans and other 11,355 2,046
Repurchase of common stock (58,295) (134,314)
Amortization of unearned compensation 621 753
- ----------------------------------------------------------------------------------------
Balance at end of period 175,886 445,000
- ----------------------------------------------------------------------------------------
ACCUMULATED OTHER COMPREHENSIVE LOSS, NET OF TAX
Balance at beginning of period (8,334) -
Change in other comprehensive loss, net of tax (4,702) (2,763)
- ----------------------------------------------------------------------------------------
Balance at end of period (13,036) (2,763)
- ----------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance at beginning of period 3,055,545 2,750,162
Net income 79,616 83,279
Cash dividends declared
Common stock - $.06 and $.0575 per share,
respectively (7,974) (8,153)
Preferred stock (100) (100)
- ----------------------------------------------------------------------------------------
Balance at end of period 3,127,087 2,825,188
- ----------------------------------------------------------------------------------------
UNEARNED ESOP SHARES
Balance at beginning of period - (500)
Release of ESOP shares - 250
- ----------------------------------------------------------------------------------------
Balance at end of period - (250)
- ----------------------------------------------------------------------------------------
PREFERRED STOCK - NON-REDEEMABLE
Balance at beginning and end of period 7,975 7,975
- ----------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY $ 3,429,184 3,414,644
========================================================================================
See accompanying notes to consolidated financial statements.
CenturyTel, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2005
(UNAUDITED)
(1) Basis of Financial Reporting
The consolidated financial statements of CenturyTel, Inc. and its
subsidiaries (the "Company") include the accounts of CenturyTel, Inc.
("CenturyTel") and its majority-owned subsidiaries. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to rules and regulations of the Securities and Exchange
Commission; however, in the opinion of management, the disclosures made are
adequate to make the information presented not misleading. The consolidated
financial statements and footnotes included in this Form 10-Q should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K for the year ended December
31, 2004.
The financial information for the three months ended March 31, 2005 and
2004 has not been audited by independent certified public accountants; however,
in the opinion of management, all adjustments necessary to present fairly the
results of operations for the three-month periods have been included therein.
The results of operations for the first three months of the year are not
necessarily indicative of the results of operations which might be expected for
the entire year.
(2) Goodwill and Other Intangible Assets
The following information relates to the Company's goodwill and other
intangible assets as of March 31, 2005 and December 31, 2004:
March 31, Dec. 31,
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands)
Goodwill $ 3,433,864 3,433,864
Intangible assets subject to amortization
Customer base
Gross carrying amount $ 22,700 22,700
Accumulated amortization (4,134) (3,756)
----------- -----------
Net carrying amount $ 18,566 18,944
=========== ===========
Contract rights
Gross carrying amount $ 4,187 4,187
Accumulated amortization (814) (465)
----------- -----------
Net carrying amount $ 3,373 3,722
=========== ===========
Intangible asset not subject to
amortization - franchise costs $ 35,300 35,300
- -------------------------------------------------------------------------------
Total amortization expense related to the intangible assets subject to
amortization for the first quarter of 2005 was $727,000 and is expected to be
$2.9 million annually through 2006, $2.4 million in 2007 and $1.5 million
annually thereafter through 2009.
(3) Postretirement Benefits
The Company sponsors health care plans that provide postretirement
benefits to all qualified retired employees.
Net periodic postretirement benefit cost for the three months ended March
31, 2005 and 2004 included the following components:
Three months
ended March 31,
- -------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands)
Service cost $ 1,665 1,654
Interest cost 4,229 4,572
Expected return on plan assets (577) (616)
Amortization of unrecognized actuarial loss 689 1,123
Amortization of unrecognized prior service cost (487) (938)
- -------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 5,519 5,795
===============================================================================
The Company contributed $3.2 million to its postretirement health care
plan in the first quarter of 2005 and expects to contribute approximately $13
million for the full year.
(4) Retirement Plans
CenturyTel and certain subsidiaries sponsor defined benefit pension plans
for substantially all employees. CenturyTel also sponsors an Outside Directors'
Retirement Plan (a frozen plan that accrues no additional benefits) and a
Supplemental Executive Retirement Plan to provide directors and selected
officers, respectively, with supplemental retirement, death and disability
benefits.
Net periodic pension expense for the three months ended March 31, 2005 and
2004 included the following components:
Three months
ended March 31,
- -------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands)
Service cost $ 3,875 4,467
Interest cost 5,812 7,339
Expected return on plan assets (7,256) (7,076)
Settlements - 1,093
Recognized net losses 1,316 2,494
Net amortization and deferral 79 359
- -------------------------------------------------------------------------------
Net periodic pension expense $ 3,826 8,676
===============================================================================
Currently, the Company does not expect to make any contributions to its
pension plans for 2005.
(5) Long-term Debt
In May 2002, the Company issued and sold in an underwritten public
offering $500 million of equity units, which were priced at $25 and consisted
initially of a beneficial interest in a CenturyTel senior unsecured note (Series
J, due 2007 and remarketable in 2005) with a principal amount of $25 and a
contract to purchase shares of CenturyTel common stock no later than May 2005.
Each purchase contract generally requires the holder to purchase between .6944
and .8741 of a share of CenturyTel common stock on May 16, 2005 (with the actual
number to be based on the 20-day average closing price (ending on May 11, 2005)
of CenturyTel common stock) in exchange for $25, subject to certain adjustments
and exceptions. Accordingly, assuming each of the approximately 15.9 million
currently outstanding equity units remain outstanding on May 16, 2005, the
Company would receive proceeds of approximately $398.2 million and would deliver
between 11.1 million and 13.9 million common shares in the aggregate. See Note
10. The senior notes were initially pledged by the holders to secure their
obligations under the purchase contracts.
In February 2005, the Company remarketed substantially all of its $500
million of outstanding Series J senior notes due 2007 (the notes described in
the previous paragraph), at an interest rate of 4.628%. The Company received no
proceeds in connection with the remarketing as all proceeds were placed into a
trust to secure the equity unit holders' obligation to purchase common stock
from the Company on May 16, 2005. In connection with the remarketing, the
Company purchased and retired approximately $400 million of the notes, resulting
in approximately $100 million remaining outstanding. The Company incurred a
pre-tax charge of approximately $6 million in the first quarter of 2005 related
to purchasing and retiring the notes. Proceeds to purchase such notes came from
the February 2005 issuance of $350 million of 5% senior notes, Series M, due
2015 and cash on hand.
As previously disclosed, the Company is reviewing various transactions
designed to mitigate the dilutive impact of issuing stock pursuant to the
purchase contracts on May 16, 2005, including repurchases of equity units and a
potential accelerated share repurchase program. For information on recent
repurchases of equity units, see Note 10 and Item 2 of Part II of this quarterly
report.
(6) Stock-based Compensation
The Company accounts for employee stock compensation plans using the
intrinsic value method in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," as allowed by Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Options have been granted at a price either equal to
or exceeding the then-current market price. Accordingly, the Company has not
recognized compensation cost in connection with issuing stock options.
If compensation cost for CenturyTel's options had been determined
consistent with SFAS 123, the Company's net income and earnings per share on a
pro forma basis for the three months ended March 31, 2005 and 2004 would have
been as follows:
Three months
ended March 31,
- -------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands,
except per share amounts)
Net income, as reported $ 79,616 83,279
Less: Total stock-based employee compensation
expense determined under fair value based
method, net of tax $ (4,218) (4,290)
- -------------------------------------------------------------------------------
Pro forma net income $ 75,398 78,989
===============================================================================
Basic earnings per share
As reported $ .60 .58
Pro forma $ .57 .55
Diluted earnings per share
As reported $ .59 .57
Pro forma $ .56 .54
- -------------------------------------------------------------------------------
See Note 8 for information concerning the requirement to recognize the
fair value of stock options as an expense in future financial statements of the
Company.
(7) Business Segments
The Company is an integrated communications company engaged primarily in
providing an array of communications services to its customers, including local
exchange, long distance, Internet access and broadband services. The Company
strives to maintain its customer relationships by, among other things, bundling
its service offerings to provide its customers with a complete offering of
integrated communications services. The Company's operating revenues for its
products and services include the following components:
Three months
ended March 31,
- -------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------
(Dollars in thousands)
Local service $ 176,985 178,058
Network access 230,278 240,957
Long distance 47,515 44,589
Data 72,906 65,628
Fiber transport and CLEC 20,243 17,432
Other 47,355 47,040
- --------------------------------------------------------------------------------
Total operating revenues $ 595,282 593,704
================================================================================
Local service revenues are derived from the provision of local exchange
telephone services in the Company's service areas.
Network access revenues primarily relate to (i) services provided by the
Company to long distance carriers, wireless carriers and other carriers and
customers in connection with the use of the Company's facilities to originate
and terminate their interstate and intrastate voice and data transmissions and
(ii) the receipt of universal support funds which allows the Company to recover
a portion of its costs under federal and state cost recovery mechanisms.
Long distance revenues relate to the provision of retail long distance
services to its customers.
Data revenues include revenues primarily related to the provision of
Internet access services (both dial-up and digital subscriber line ("DSL")
services), special circuits and local private lines.
Fiber transport and CLEC revenues include revenues from the Company's
fiber transport, competitive local exchange carrier and security monitoring
businesses.
Other revenues include revenues primarily related to (i) leasing, selling,
installing, maintaining and repairing customer premise telecommunications
equipment and wiring, (ii) providing billing and collection services for long
distance carriers and (iii) participating in the publication of local
directories.
(8) Accounting Pronouncements
In the fourth quarter of 2004, the Company adopted Emerging Issues Task
Force No. 04-8, "The Effect of Contingently Convertible Instruments on Diluted
Earnings Per Share" ("EITF 04-8"). EITF 04-8 requires securities issuable under
contingently convertible instruments be included in the diluted earnings per
share calculation. The Company's $165 million Series K senior notes are
convertible into common stock under various contingent circumstances, including
the common stock attaining a specified trading price in excess of the notes'
fixed conversion price. Beginning in the fourth quarter of 2004, the Company's
diluted earnings per share and diluted shares outstanding reflect the
application of EITF 04-8. Prior periods have been restated to reflect this
change in accounting.
The Company has elected to account for employee stock-based compensation
using the intrinsic value method in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," as allowed by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation". In December 2004, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 (Revised 2004), "Share-Based
Payment" ("SFAS 123(R)"). SFAS 123(R) establishes standards for the accounting
for transactions in which an entity exchanges its equity instruments for goods
or services, focusing primarily on accounting for transactions in which an
entity obtains employee services in exchange for the issuance of stock options.
SFAS 123(R) requires the Company to measure the cost of the employee services
received in exchange for an award of equity instruments based upon the fair
value of the award on the grant date. Under SFAS 123(R), such cost must be
recognized as an expense over the period during which the employee is required
to provide service in exchange for the award. Pursuant to an April 2005 ruling
from the Securities and Exchange Commission, SFAS 123(R) will initially become
effective for financial statements to be filed by the Company in its Form 10-Q
quarterly report for the quarter ended March 31, 2006. In accordance with SFAS
123(R), compensation cost is also recognized over the applicable remaining
vesting period for any awards that are not fully vested as of the effective
date.
(9) Commitments and Contingencies
The Telecommunications Act of 1996 allows local exchange carriers to file
access tariffs on a streamlined basis and, if certain criteria are met, deems
those tariffs lawful. Tariffs that have been "deemed lawful" in effect nullify
an interexchange carrier's ability to seek refunds should the earnings from the
tariffs ultimately result in earnings above the authorized rate of return
prescribed by the FCC. Certain of the Company's telephone subsidiaries file
interstate tariffs directly with the FCC using this streamlined filing approach.
As of March 31, 2005, the amount of the Company's earnings in excess of the
authorized rate of return reflected as a liability on the balance sheet for the
combined 2001/2002 and 2003/2004 monitoring periods aggregated approximately $65
million. The settlement period related to (i) the 2001/2002 monitoring period
lapses on September 30, 2005 and (ii) the 2003/2004 monitoring period lapses on
September 30, 2007. The Company will continue to monitor the legal status of any
pending or future proceedings that could impact its entitlement to these funds,
and may recognize as revenue some or all of the amounts reflected as a liability
at the end of the applicable settlement period or as the legal status becomes
more certain.
The Company is involved in certain legal proceedings discussed in Part I,
Item 3, of the Company's Annual Report on Form 10-K for the year ended December
31, 2004. From time to time, the Company is involved in other proceedings
incidental to its business, including administrative hearings of state public
utility commissions relating primarily to rate making, actions relating to
employee claims, occasional grievance hearings before labor regulatory agencies,
and miscellaneous third party tort actions. The outcome of these other
proceedings is not predictable. However, the Company believes that the ultimate
resolution of these other proceedings, after considering available insurance
coverage, will not have a material adverse effect on its financial position,
results of operations or cash flows.
(10) Subsequent Event
Between April 15, 2005 and May 4, 2005, the Company repurchased and
cancelled an aggregate of approximately 4.1 million of its equity units in
privately-negotiated transactions with six institutional holders at an average
price of $25.18 per unit. Each equity unit that remains outstanding on May 16,
2005 will be settled in stock in accordance with the terms and conditions of the
purchase contract that forms a part of such unit. As of the date hereof, there
were approximately 15.9 million equity units outstanding. For additional
information, see Item 2 of Part II of this quarterly report.
Item 2.
CenturyTel, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") included herein should be read in conjunction with MD&A and
the other information included in the Company's annual report on Form 10-K for
the year ended December 31, 2004. The results of operations for the three months
ended March 31, 2005 are not necessarily indicative of the results of operations
which might be expected for the entire year.
CenturyTel, Inc. and its subsidiaries (the "Company") is an integrated
communications company engaged primarily in providing local exchange, long
distance, Internet access and broadband services to customers in 22 states. The
Company derives its revenues from providing (i) local exchange telephone
services, (ii) network access services, (iii) long distance services, (iv) data
services, which includes both dial-up and DSL Internet services, as well as
special access circuits and local private line services, (v) fiber transport,
competitive local exchange and security monitoring services and (vi) other
related services. For additional information on the Company's revenue sources,
see Note 7 to the Company's financial statements included in Item 1 of Part I of
this quarterly report.
In addition to historical information, this management's discussion and
analysis includes certain forward-looking statements 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 equity units currently scheduled to settle
on May 16, 2005; the Company's ability to collect its receivables from
financially troubled communications companies; the Company's ability to
successfully negotiate collective bargaining agreements on reasonable terms;
other risks referenced from time to time in this report or other of the
Company's filings with the Securities and Exchange Commission; and the effects
of more general factors such as changes in interest rates, in tax 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 business are
described in greater detail in Item 1 to the Company's Form 10-K for the year
ended December 31, 2004. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this report. The
Company undertakes no obligation to update any of its forward-looking statements
for any reason.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2005 Compared
to Three Months Ended March 31, 2004
Net income was $79.6 million and $83.3 million for the first quarter of
2005 and 2004, respectively. Diluted earnings per share for the first quarter of
2005 and 2004 was $.59 and $.57, respectively.
Three months
ended March 31,
- -------------------------------------------------------------------------------
2005 2004
- -------------------------------------------------------------------------------
(Dollars, except per share
amounts, and shares in
thousands)
Operating income $ 176,860 183,557
Interest expense (52,625) (52,543)
Income from unconsolidated
cellular entity 1,313 2,059
Other income (expense) 1,535 2,304
Income tax expense (47,467) (52,098)
- -------------------------------------------------------------------------------
Net income $ 79,616 83,279
===============================================================================
Basic earnings per share $ .60 .58
===============================================================================
Diluted earnings per share $ .59 .57
===============================================================================
Average basic shares outstanding 132,183 142,585
===============================================================================
Average diluted shares outstanding 137,169 147,426
===============================================================================
Operating income decreased $6.7 million (3.6%) as a $1.6 million (0.3%)
increase in operating revenues was more than offset by an $8.3 million (2.0%)
increase in operating expenses.
As previously disclosed, the Company anticipates its diluted earnings per
share for 2005 will be lower than 2004 as a result of (i) lower Universal
Service Fund and intrastate revenues, (ii) declines in access lines, (iii)
incremental amortization and operating expenses related to the new billing and
customer care system and (iv) expenses associated with rolling out the Company's
new video and wireless service initiatives. See below for additional
information.
Operating Revenues
Three months
ended March 31,
- -----------------------------------------------------------------------------
2005 2004
- -----------------------------------------------------------------------------
(Dollars in thousands)
Local service $ 176,985 178,058
Network access 230,278 240,957
Long distance 47,515 44,589
Data 72,906 65,628
Fiber transport and CLEC 20,243 17,432
Other 47,355 47,040
- -----------------------------------------------------------------------------
$ 595,282 593,704
- -----------------------------------------------------------------------------
The $1.1 million (0.6%) decrease in local service revenues is primarily
due a $3.4 million decrease due to a 2.7% decline in the average number of
access lines. Such decrease was partially offset by a $2.7 million increase due
to the provision of custom calling features to more customers.
Access lines declined 15,100 (0.7%) during the first quarter of 2005
compared to a decline of 9,700 (0.4%) in the first quarter of 2004. The Company
believes the decline in the number of access lines during 2005 and 2004 is
primarily due to the displacement of traditional wireline telephone services by
other competitive services, including the Company's DSL product offering. Based
on current conditions, the Company expects access lines to decline between 2.5
and 3.5% for 2005.
Network access revenues decreased $10.7 million (4.4%) in the first
quarter of 2005 primarily due to (i) a $3.5 million decrease in revenues from
the federal Universal Service Fund due to an increase in the nationwide average
cost per loop factor used by the Federal Communications Commission to allocate
funds among all recipients; (ii) a $3.1 million decrease as a result of lower
intrastate revenues due to a reduction in intrastate minutes (partially due to
the displacement of minutes by wireless, electronic mail and other optional
calling services); and (iii) a $3.5 million decrease in revenue associated with
prior year settlement agreements. The Company believes that intrastate minutes
will continue to decline in 2005, although the magnitude of such decrease cannot
be precisely estimated.
The $2.9 million (6.6%) increase in long distance revenues was due to
growth in the Company's nonregulated long distance operations. A $5.5 million
revenue increase due to a 14.3% increase in the average number of long distance
lines and a 11.7% increase in minutes of use was partially offset by a $2.5
million decrease attributable to lower average rates charged by the Company.
Data revenues increased $7.3 million (11.1%) due primarily to a $5.2
million increase in Internet revenues due to growth in the number of customers,
principally due to the expansion of the Company's DSL product offering, and a
$4.4 million increase in special access revenues due to an increase in the
number of special circuits provided and an increase in the partial recovery of
increased operating expenses through revenue sharing arrangements with other
telephone companies. Such increases were partially offset by a $1.8 million
decrease in revenue associated with prior year settlement agreements.
Fiber transport and CLEC revenues increased $2.8 million (16.1%),
primarily due to a $2.2 million increase in revenues attributable to growth in
the number of customers in the Company's fiber transport business.
Operating Expenses
Three months
ended March 31,
- -----------------------------------------------------------------------------
2005 2004
- -----------------------------------------------------------------------------
(Dollars in thousands)
Cost of services and products (exclusive
of depreciation and amortization) $ 191,993 181,549
Selling, general and administrative 94,254 101,606
Depreciation and amortization 132,175 126,992
- -----------------------------------------------------------------------------
$ 418,422 410,147
- -----------------------------------------------------------------------------
Cost of services and products increased $10.4 million (5.8%) primarily
due to (i) a $4.3 million increase in access expense (of which $3.1 million was
attributable to a one-time credit recorded in the first quarter of 2004); (ii) a
$4.2 million increase in expenses associated with the Company's Internet
operations due to an increase in the number of customers; (iii) a $2.7 million
increase in costs associated with growth in the Company's fiber transport
business; and (iv) a $1.8 million increase in expenses associated with growth in
the Company's long distance business. Such increases were partially offset by a
$5.3 million decrease in expenses caused by the Company settling certain pole
attachment disputes in the first quarter of 2005 for amounts less than those
previously accrued.
Selling, general and administrative expenses decreased $7.4 million
(7.2%) primarily due to (i) a $6.2 million decrease in bad debt expense and
(ii) a $1.5 million decrease in salaries and benefits (primarily due to lower
pension expense).
Depreciation and amortization increased $5.2 million (4.1%) primarily due
to a $5.7 million increase due to higher levels of plant in service and a $2.3
million increase associated with amortization of the Company's new billing
system. Such increases were partially offset by a $4.0 million reduction in
depreciation expense due to certain assets becoming fully depreciated.
Interest Expense
Interest expense increased $82,000 (0.2%) in the first quarter of 2005
compared to the first quarter of 2004. A $4.5 million reduction due to decreased
average debt outstanding was partially offset by (i) a $2.4 million increase
due to higher average interest rates and (ii) the one-time charge discussed in
the next paragraph.
In February 2005, the Company remarketed substantially all of its $500
million of outstanding Series J senior notes due 2007 at an interest rate of
4.628%. In connection with the remarketing, the Company purchased and retired
approximately $400 million of the notes, resulting in approximately $100 million
remaining outstanding. Included in interest expense for the first quarter of
2005 was a one-time charge of $1.2 million related to the write-off of
unamortized deferred debt costs related to the portion of the Series J notes
retired. See Other Income (Expense) for additional amounts that were expensed in
the first quarter related to this transaction.
Other Income (Expense)
Other income (expense) was $1.5 million for the first quarter of 2005
compared to $2.3 million for the first quarter of 2004. The first quarter of
2005 included a one-time $4.8 million debt extinguishment expense related to
purchasing and retiring approximately $400 million of the Series J notes, as
mentioned above. The first quarter of 2005 was favorably impacted by $3.2
million of non-recurring interest income related to the settlement of various
income tax audits.
Income Tax Expense
The effective income tax rate from continuing operations was 37.4% and
38.5% for the three months ended March 31, 2005 and 2004, respectively. Income
tax expense for the first quarter of 2005 was reduced by approximately $1.3
million as a result of the settlement of various income tax audits.
LIQUIDITY AND CAPITAL RESOURCES
Excluding cash used for acquisitions, the Company relies on cash provided
by operations to fund its operating and capital expenditures. The Company's
operations have historically provided a stable source of cash flow which has
helped the Company continue its long-term program of capital improvements.
Net cash provided by operating activities was $256.8 million during the
first three months of 2005 compared to $283.4 million during the first three
months of 2004. The Company's accompanying consolidated statements of cash flows
identify major differences between net income and net cash provided by operating
activities for each of these periods. For additional information relating to the
operations of the Company, see Results of Operations.
Net cash used in investing activities was $77.6 million and $61.8 million
for the three months ended March 31, 2005 and 2004, respectively. Payments for
property, plant and equipment were $13.2 million more in the first quarter of
2005 than in the comparable period during 2004. Revised budgeted capital
expenditures for 2005 total approximately $425 million, reflecting additional
budgeted expenditures related to growth in the Company's DSL business and the
expansion of LightCore's operations.
Net cash used in financing activities was $217.1 million during the first
three months of 2005 compared to $151.6 million during the first three months of
2004. In accordance with previously announced stock repurchase programs, the
Company repurchased 1.8 million shares (for $60.1 million) and 4.9 million
shares (for $139.3 million) in the first quarters of 2005 and 2004,
respectively. See Part II, Item 2, of this quarterly report for additional
information related to the 2005 repurchases.
In the first quarter of 2005, the Company paid $100 million to retire its
Series E senior notes at their scheduled maturity with cash on hand.
In February 2005, the Company remarketed substantially all of its $500
million of outstanding Series J senior notes due 2007 at an interest rate of
4.628%. The Company received no proceeds in connection with the remarketing as
all proceeds were placed into a trust to secure the obligation of the Company's
equity unit holders to purchase common stock from the Company on May 16, 2005.
In connection with the remarketing, the Company purchased and retired
approximately $400 million of the notes, resulting in approximately $100 million
remaining outstanding. The Company incurred a pre-tax charge of approximately $6
million in the first quarter of 2005 related to purchasing and retiring the
notes. Proceeds to purchase such notes came from the February 2005 issuance of
$350 million of 5% senior notes, Series M, due 2015 and cash on hand.
On February 2, 2005, the Company signed a definitive purchase agreement to
acquire metro fiber assets in 16 markets from KMC Telecom Holdings, Inc. ("KMC")
for $65 million cash, subject to purchase price adjustments.
The following table contains certain information concerning the Company's
material contractual obligations as of March 31, 2005.
Payments due by period
- ------------------------------------------------------------------------------------------------
Total contractual Less than After
obligations Total 1 year 1-3 years 4-5 years 5 years
- ------------------------------------------------------------------------------------------------
(Dollars in thousands)
Long-term debt,
including current
maturities and capital
lease obligations $ 2,839,014 144,811 646,708 (1) 65,846 1,981,649
Interest on long-term
debt obligations $ 1,898,960 186,630 346,909 303,926 1,061,495
KMC purchase price
obligation $ 65,000 65,000 - - -
- ------------------------------------------------------------------------------------------------
(1) Includes $165 million aggregate principal amount of the Company's convertible debentures,
Series K, due 2032, which can be put to the Company at various dates beginning in 2006.
As previously disclosed, the Company is reviewing various transactions
designed to mitigate the dilutive impact of issuing stock on May 16, 2005
pursuant to its equity units issued in 2002, including repurchases of equity
units and a potential accelerated share repurchase program. For additional
information on the Company's obligations under its equity units, see Note 5 to
the Company's financial statements included in Item 1 of Part I of this
quarterly report, and for information on recent repurchases of equity units, see
Item 2 of Part II of this quarterly report.
In March 2005, the Company secured a new five-year, $750 million
revolving credit facility to replace its existing $533 million credit facility
which was set to expire in July 2005. Up to $150 million of the facility can be
used for letters of credit, which reduces the amount available for other
extensions of credit. As of March 31, 2005, the Company had no amounts
outstanding under its new credit facility. The Company's telephone subsidiaries
also had available for use $123.0 million of commitments for long-term financing
from the Rural Utilities Service and the Rural Telephone Bank. The Company has a
commercial paper program that authorizes it to have outstanding up to $1.5
billion in commercial paper at any one time; however, borrowings are effectively
limited to the amount available under its credit facility. At March 31, 2005,
the Company had no commercial paper outstanding under such program. At March 31,
2005, the Company held over $129 million of cash and cash equivalents.
OTHER MATTERS
Accounting for the Effects of Regulation
The Company currently accounts for its regulated telephone operations
(except for the properties acquired from Verizon in 2002) in accordance with the
provisions of Statement of Financial Accounting Standards No. 71, "Accounting
for the Effects of Certain Types of Regulation" ("SFAS 71"). While the Company
continuously monitors the ongoing applicability of SFAS 71 to its regulated
telephone operations due to the changing regulatory, competitive and legislative
environments, the Company believes that SFAS 71 still applies. However, it is
possible that changes in regulation or legislation or anticipated changes in
competition or in the demand for regulated services or products could result in
the Company's telephone operations not being subject to SFAS 71 in the near
future. In that event, implementation of Statement of Financial Accounting
Standards No. 101 ("SFAS 101"), "Regulated Enterprises - Accounting for the
Discontinuance of Application of FASB Statement No. 71," would require the
write-off of previously established regulatory assets and liabilities. SFAS 101
further provides that the carrying amounts of property, plant and equipment are
to be adjusted only to the extent the assets are impaired and that impairment
shall be judged in the same manner as for nonregulated enterprises.
If the Company's regulated operations ceased to qualify for the
application of SFAS 71, the Company does not expect to record an impairment
charge related to the carrying value of the property, plant and equipment of its
regulated telephone operations. Additionally, upon the discontinuance of SFAS
71, the Company would be required to revise the lives of its property, plant and
equipment to reflect the estimated useful lives of the assets. The Company does
not expect such revisions in asset lives, or the elimination of other regulatory
assets and liabilities, to have a material unfavorable impact on the Company's
results of operations. For regulatory purposes, the accounting and reporting of
the Company's telephone subsidiaries would not be affected by the discontinued
application of SFAS 71.
Recent Regulatory Developments
In March 2005, Level 3 Communications, Inc. withdrew its petition
requesting the FCC to forbear from imposing interstate or intrastate access
charges on Internet-based calls that originate or terminate on the public
switched telephone network. All other proposed rulemaking on Internet telephony
discussed in the Company's annual report on Form 10-K for the year ended
December 31, 2004, remains pending.
Recent Product Developments
During the first quarter of 2005, the Company continued to offer
co-branded satellite television service in a limited number of its
markets, and hopes to commercially offer this service as part of its bundled
product offerings by mid-year. The Company also hopes to begin commercial
reselling of wireless service as part of its bundled product offerings in the
coming months. In addition, the Company is continuing to develop a
facilities-based video trial in LaCrosse, Wisconsin.
Item 3.
CenturyTel, Inc.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates on
its long-term debt obligations. The Company has estimated its market risk using
sensitivity analysis. Market risk is defined as the potential change in the fair
value of a fixed-rate debt obligation due to a hypothetical adverse change in
interest rates. Fair value on long-term debt obligations is determined based on
a discounted cash flow analysis, using the rates and maturities of these
obligations compared to terms and rates currently available in the long-term
financing markets. The results of the sensitivity analysis used to estimate
market risk are presented below, although the actual results may differ from
these estimates.
At March 31, 2005, the fair value of the Company's long-term debt was
estimated to be $2.9 billion based on the overall weighted average rate of the
Company's long-term debt of 6.6% and an overall weighted maturity of 10 years
compared to terms and rates currently available in long-term financing markets.
Market risk is estimated as the potential decrease in fair value of the
Company's long-term debt resulting from a hypothetical increase of 66 basis
points in interest rates (ten percent of the Company's overall weighted average
borrowing rate). Such an increase in interest rates would result in
approximately a $121.1 million decrease in fair value of the Company's long-term
debt at March 31, 2005. As of March 31, 2005, after giving effect to interest
rate swaps currently in place, approximately 82% of the Company's long-term debt
obligations were fixed rate.
The Company seeks to maintain a favorable mix of fixed and variable rate
debt in an effort to limit interest costs and cash flow volatility resulting
from changes in rates. From time to time, the Company uses derivative
instruments to (i) lock-in or swap its exposure to changing or variable interest
rates for fixed interest rates or (ii) to swap obligations to pay fixed interest
rates for variable interest rates. The Company has established policies and
procedures for risk assessment and the approval, reporting and monitoring of
derivative instrument activities. The Company does not hold or issue derivative
financial instruments for trading or speculative purposes. Management
periodically reviews the Company's exposure to interest rate fluctuations and
implements strategies to manage the exposure.
At March 31, 2005, the Company had outstanding four fair value interest
rate hedges associated with the full $500 million aggregate principal amount of
its Series L senior notes, due 2012, that pay interest at a fixed rate of
7.875%. These hedges are "fixed to variable" interest rate swaps that
effectively convert the Company's fixed rate interest payment obligations under
these notes into obligations to pay variable rates that range from the six-month
London InterBank Offered Rate ("LIBOR") plus 3.229% to the six-month LIBOR plus
3.67%, with settlement and rate reset dates occurring each six months through
the expiration of the hedges in August 2012. At March 31, 2005, the Company
realized a rate under these hedges of 7.5%. Interest expense was reduced by
$879,000 during the first quarter of 2005 as a result of these hedges. The
aggregate fair market value of these hedges was $19.1 million at March 31, 2005
and is reflected both as a liability and as a decrease in the Company's
underlying long-term debt on the March 31, 2005 balance sheet. With respect to
each of these hedges, market risk is estimated as the potential change in the
fair value of the hedge resulting from a hypothetical 10% increase in the
forward rates used to determine the fair value. A hypothetical 10% increase in
the forward rates would result in a $15.6 million decrease in the fair value of
these hedges at March 31, 2005, and would also increase the Company's interest
expense.
In late 2004 and early 2005, the Company entered into several cash flow
hedges that effectively locked in the interest rate on a majority of certain
anticipated debt transactions that ultimately were completed in February 2005.
The Company locked in the interest rate on (i) $100 million of 2.25-year debt
(remarketed in February 2005) at 3.9%; (ii) $75 million of 10-year debt (issued
in February 2005) at 5.4%; and (iii) $225 million of 10-year debt (issued in
February 2005) at 5.5%. In February 2005, upon settlement of such hedges, the
Company (i) received $366,000 related to the 2.25-year debt remarketing, which
is being amortized as a reduction of interest expense over the remaining term of
the debt, and (ii) paid $7.7 million related to the 10-year debt issuance, which
is being amortized as an increase in interest expense over the 10-year term of
the debt.
Certain shortcomings are inherent in the method of analysis presented in
the computation of fair value of financial instruments. Actual values may differ
from those presented if market conditions vary from assumptions used in the fair
value calculations. The analysis above incorporates only those risk exposures
that existed as of March 31, 2005.
Item 4.
CenturyTel, Inc.
CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures designed to
provide reasonable assurances that information required to be disclosed by the
Company in the reports it files under the Securities Exchange Act of 1934 is
timely recorded, processed, summarized and reported as required. The Company's
Chief Executive Officer, Glen F. Post, III, and the Company's Chief Financial
Officer, R. Stewart Ewing, Jr., have evaluated the Company's disclosure controls
and procedures as of March 31, 2005. Based on the evaluation, Messrs. Post and
Ewing concluded that the Company's disclosure controls and procedures have been
effective in providing reasonable assurance that they have been timely alerted
of material information required to be filed in this quarterly report. Since the
date of Messrs. Post's and Ewing's most recent evaluation, there have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls. The design of any system of controls
is based in part upon certain assumptions about the likelihood of future events
and contingencies, and there can be no assurance that any design will succeed in
achieving its stated goals. Because of inherent limitations in any control
system, misstatements due to error or fraud could occur and not be detected.
PART II. OTHER INFORMATION
CenturyTel, Inc.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In early February 2005, the Company announced that its board of directors
approved a repurchase program that will allow the Company to repurchase up to an
aggregate of $200 million of either its common stock or equity units prior to
December 31, 2005. The following table reflects the Company's repurchases of its
common stock during the first quarter of 2005, all of which were effected in
open-market transactions in accordance with the above-described program.
Total Approximate
Number of Dollar Value
Shares of Shares (or
Purchased as Units) that
Part of Publicly May Yet Be
Total Number Announced Purchased
of Shares Average Price Plans or Under the Plans
Period Purchased Per Share Programs or Programs
- -----------------------------------------------------------------------------------------------------------
January 1 - January 31, 2005 - $ - - $ 200,000,000
February 1 - February 28, 2005 - $ - - $ 200,000,000
March 1 - March 31, 2005 1,780,016 $ 33.72 1,780,016 $ 139,969,473
--------- ---------
Total 1,780,016 $ 33.72 1,780,016 $ 139,969,473
========= =========
The Company did not repurchase any of its equity units during the first
quarter of 2005.
Between April 15, 2005 and May 4, 2005, the Company repurchased the
following amounts of its equity units in privately-negotiated transactions with
six institutional holders:
Total Number
of Equity Units Average Price Total Amount
Purchased Per Unit Paid for Units
-----------------------------------------------------------------
4,072,888 $ 25.18 $ 102,567,920
The Company has cancelled each of the equity units repurchased, but will
remain responsible for making any final distributions with respect to those
units repurchased after May 1, 2005, the record date for determining the holders
entitled to receive such payments. Each equity unit that remains outstanding on
May 16, 2005 will be settled in stock in accordance with the terms and
conditions of the purchase contract that forms a part of such unit. As of the
date hereof, there were 15,927,112 equity units outstanding.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A. Exhibits
11 Computations of Earnings Per Share.
31.1 Registrant's Chief Executive Officer certification pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Registrant's Chief Financial Officer certification pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Registrant's Chief Executive Officer and Chief Financial
Officer certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
B. Reports on Form 8-K
-------------------
The following item was reported in the Form 8-K filed January 26,
2005:
Item 8.01. Other Events - Restate certain portions of the
Registrant's 2003 Form 10-K to reflect the change in
segment reporting in accordance with Statement of
Financial Accounting Standards No. 131.
The following items were reported in the Form 8-K filed February 3,
2005:
Items 2.02 Results of Operations and Financial Condition and
and 9.01 Financial Statements and Exhibits-
News release announcing fourth quarter 2004 operating
results.
Items 8.01 Other Events and Financial Statements and Exhibits -
and 9.01 News release announcing (i) that the Registrant's board
of directors approved a stock repurchase program and
(ii) that the Registrant entered into a definitive
purchase agreement to purchase metro fiber networks in
16 markets from KMC Telecom Holdings, Inc.
The following items were reported in the Form 8-K filed February
15, 2005:
Items 8.01 Other Events and Financial Statements and Exhibits -
and 9.01 Completion of the public sale of $350 million of Series M
senior notes and the remarketing of approximately $460
million of Series J senior notes.
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.
Date: May 10, 2005 /s/ Neil A. Sweasy
-------------------------
Neil A. Sweasy
Vice President and Controller
(Principal Accounting Officer)