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) October 27, 1998
CENTURY TELEPHONE ENTERPRISES, 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
Item 5. Other Events
The following press release was issued by Century Telephone
Enterprises, Inc. on October 27, 1998:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
October 27, 1998 Jeffrey S. Glover (318) 388-9648
jeff.glover@centurytel.com
Excellent Growth in CenturyTel's Core Businesses Drives
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32 Percent Increase in Third Quarter Net Income
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Monroe, LA. . . CenturyTel (Century Telephone Enterprises, Inc., NYSE Symbol:
CTL) announces operating results for third quarter 1998.
Revenues jumped 84.1% to $401.9 million.
Net income climbed 32.0% to $54.7 million.
Diluted earnings per share rose 31.1% to $.59.
Earnings before interest, taxes, depreciation and amortization advanced 88.9%
to $216.5 million.
Third Quarter Highlights
(Dollars, except per share data, and shares in thousands)
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Quarter Ended Quarter Ended
9/30/98 9/30/97 % Change
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Revenues $ 401,949 $ 218,351 84.1%
EBITDA (1) $ 216,496 $ 114,617 88.9%
Net Income $ 54,678 $ 41,433 32.0%
Diluted Earnings Per Share $ .59 $ .45 31.1%
Average Diluted Shares
Outstanding 93,548 91,710 2.0%
Telephone Revenues $ 275,397 $ 121,934 125.9%
Wireless Revenues $ 106,662 $ 80,163 33.1%
Other Operations Revenues $ 19,890 $ 16,254 22.4%
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Telephone Access Lines 1,251,735 530,936 135.8%
Cellular Units in
Majority-Owned Markets 591,598 429,599 37.7%
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(1) Earnings before interest, taxes, depreciation and amortization
"CenturyTel's third quarter results reflect excellent growth in revenues and
increased operating margins in our core businesses," Glen F. Post, III,
President and Chief Executive Officer, said. "CenturyTel's net income and
earnings per share growth exceeded 30% during the quarter, while cash flow
nearly doubled, rising 88.9%. We were able to bring a greater percentage of
incremental revenues to bottom line earnings which enabled CenturyTel to
achieve record results this quarter."
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Net income for the quarter rose 32.0% to $54.7 million from $41.4 million.
Diluted earnings per share increased 31.1% to $.59 from $.45, and consolidated
revenues rose 84.1% to $401.9 million from $218.4 million. Earnings before
interest, taxes, depreciation and amortization (EBITDA) grew to $216.5 million
from $114.6 million, an 88.9% increase. Acquisitions completed during the past
four quarters contributed $162.9 million to revenues and were accretive to
earnings during the third quarter.
"The December 1997 acquisition of Pacific Telecom continues to positively
impact our operating results as it has strengthened our market position and
accelerated our earnings growth," Post said.
Telephone revenues grew 125.9% to $275.4 million during the quarter,
compared with $121.9 million in third quarter 1997. Telephone operating income
increased 119.9% reaching $88.2 million from $40.1 million, and operating cash
flow rose 131.3% to $153.5 million from $66.4 million a year ago. CenturyTel's
third quarter telephone operating cash flow margin was 55.7% while the operating
income margin was 32.0%. The PTI acquisition contributed $139.8 million in
revenues to the telephone segment during the quarter. "CenturyTel achieved
excellent margins in our wireline operations during the quarter resulting from
solid revenue growth combined with the realization of additional acquisition
synergies," Post said.
CenturyTel's wireline operations experienced strong internal access line
growth at an annualized rate of 4.6% during the quarter. Demand for second lines
contributed 20.8% of CenturyTel's internal access line growth during the period.
Wireless revenues grew 33.1% to $106.7 million in third quarter 1998,
compared with $80.2 million in third quarter 1997. Wireless service revenues
rose 32.6% to $104.5 million during the quarter. Wireless operating income
surged 33.9%, reaching $36.7 million from $27.4 million, and operating cash flow
climbed 38.9% to $52.2 million from $37.6 million a year ago. CenturyTel's third
quarter wireless operating cash flow margin was 49.0% (50.0% based on service
revenues), and operating income margin was 34.4% (35.1% based on service
revenues). The former PTI wireless operations contributed $21.2 million in
revenues to the wireless segment during the quarter. "CenturyTel's wireless
operations once again achieved excellent results. This is the second consecutive
quarter wireless cash flow margins have reached 50%," Post said.
Average monthly cellular service revenue per user (ARPU) was $59 during
third quarter 1998, a 7.8% decrease from $64 a year ago. Cellular net additions
were more than 7,600 for the quarter, while the average monthly churn rate was
2.3%.
Revenues from other operations grew 22.4% to $19.9 million during third
quarter 1998, compared with $16.3 million in third quarter 1997. CenturyTel now
serves more than 214,500 long distance customers, adding more than 9,800 during
the third quarter.
During the first nine months of 1998, net income, excluding gain on sale or
exchange of assets, rose 30.2% to $146.0 million from $112.2 million. Diluted
earnings per share, excluding gains, rose 27.6% to $1.57 from $1.23, and
consolidated revenues increased 85.1% to $1.2 billion from $627.9 million.
Earnings before interest, taxes, depreciation, amortization and gain on sale or
exchange of assets (EBITDA) grew to $619.4 million from $320.2 million, a 93.5%
increase. "CenturyTel's excellent cash flow generation combined with
non-strategic asset dispositions has allowed us to reduce long-term debt by $227
million since year end. Free-cash flow for the first nine months of 1998
increased 100% over 1997," Post said.
In addition to historical information, this release includes certain
forward-looking statements that are subject to uncertainties that could cause
the Company's actual results to differ materially from such statements. Such
uncertainties include but are not limited to: the effects of ongoing
deregulation in the telecommunications industry; the effects of greater than
anticipated competition in the Company's markets; possible changes in the demand
for the Company's products and services; the Company's ability to successfully
introduce new offerings on a timely and cost-effective basis; the risks inherent
in rapid technological change; the Company's ability to effectively manage its
growth, including integrating the operations of Pacific Telecom, Inc. into the
Company's operations; the success and expense of the remediation efforts of the
Company and/or its vendors in achieving year 2000 compliance; 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, 1997.
CenturyTel (Century Telephone Enterprises, Inc.) provides integrated
communications services including local exchange, wireless, long distance,
Internet access and security services to more than two 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 10th largest
local exchange telephone company, based on access lines, and the 10th largest
cellular company, based on population equivalents owned, in the United States.
Visit CenturyTel's corporate website at (www.centurytel.com)
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
INCREASE
In thousands,except per share amounts 1998 1997 (DECREASE)
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TELEPHONE OPERATIONS
Operating revenues
Local service $ 84,082 33,443 151.4%
Network access 159,422 73,385 117.2%
Other 31,893 15,106 111.1%
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275,397 121,934 125.9%
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Operating expenses
Plant operations 62,402 24,971 149.9%
Customer operations 22,107 11,931 85.3%
Corporate and other 37,436 18,679 100.4%
Depreciation and
amortization 65,242 26,239 148.6%
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187,187 81,820 128.8%
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Telephone operating income 88,210 40,114 119.9%
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WIRELESS OPERATIONS
Operating revenues
Cellular revenues 104,527 78,839 32.6%
Equipment sales 2,135 1,324 61.3%
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106,662 80,163 33.1%
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Operating expenses
Cost of equipment sold 3,784 2,987 26.7%
System operations 15,326 12,549 22.1%
General, administrative and
customer service 21,991 15,090 45.7%
Sales and marketing 13,312 11,918 11.7%
Depreciation and
amortization 15,556 10,216 52.3%
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69,969 52,760 32.6%
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Wireless operating income 36,693 27,403 33.9%
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OTHER OPERATIONS
Operating revenues 19,890 16,254 22.4%
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Operating expenses
Cost of sales and other 15,797 13,337 18.4%
Depreciation and
amortization 812 619 31.2%
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16,609 13,956 19.0%
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Other operating income 3,281 2,298 42.8%
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TOTAL OPERATING INCOME 128,184 69,815 83.6%
OTHER INCOME (EXPENSE)
Interest expense (41,904) (11,175) 275.0%
Income from unconsolidated
cellular entities 9,162 8,371 9.4%
Minority interest (3,619) (1,817) 99.2%
Other income and expense 1,159 1,174 (1.3%)
Income tax expense (38,304) (24,935) 53.6%
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NET INCOME $ 54,678 41,433 32.0%
=============================================================
EARNINGS PER SHARE
Basic $ 0.60 0.46 30.4%
Diluted $ 0.59 0.45 31.1%
SHARES OUTSTANDING
Basic 91,471 90,134 1.5%
Diluted 93,548 91,710 2.0%
DIVIDENDS PER COMMON SHARE $ 0.065 0.0617 5.3%
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
INCREASE
In thousands, except per share amounts 1998 1997 (DECREASE)
- --------------------------------------------------------------------------
TELEPHONE OPERATIONS
Operating revenues
Local service $ 243,664 98,749 146.8%
Network access 462,576 217,407 112.8%
Other 94,292 43,298 117.8%
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800,532 359,454 122.7%
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Operating expenses
Plant operations 176,609 73,013 141.9%
Customer operations 67,956 34,674 96.0%
Corporate and other 116,444 54,916 112.0%
Depreciation and amortization 194,516 77,241 151.8%
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555,525 239,844 131.6%
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Telephone operating income 245,007 119,610 104.8%
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WIRELESS OPERATIONS
Operating revenues
Cellular revenues 299,391 216,476 38.3%
Equipment sales 6,308 3,996 57.9%
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305,699 220,472 38.7%
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Operating expenses
Cost of equipment sold 11,182 10,373 7.8%
System operations 44,211 33,946 30.2%
General, administrative and
customer service 60,435 43,568 38.7%
Sales and marketing 40,745 37,345 9.1%
Depreciation and amortization 45,267 29,488 53.5%
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201,840 154,720 30.5%
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Wireless operating income 103,859 65,752 58.0%
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OTHER OPERATIONS
Operating revenues 55,816 47,986 16.3%
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Operating expenses
Cost of sales and other 42,373 41,419 2.3%
Depreciation and amortization 2,505 2,011 24.6%
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44,878 43,430 3.3%
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Other operating income 10,938 4,556 140.1%
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TOTAL OPERATING INCOME 359,804 189,918 89.5%
OTHER INCOME (EXPENSE)
Gain on sale or exchange of assets 49,859 70,121 (28.9%)
Interest expense (126,785) (33,539) 278.0%
Income from unconsolidated
cellular entities 25,105 21,750 15.4%
Minority interest (10,264) (3,722) 175.8%
Other income and expense 2,454 3,467 (29.2%)
Income tax expense (123,610) (90,251) 37.0%
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NET INCOME $ 176,563 157,744 11.9%
=============================================================
EARNINGS PER SHARE
Basic $ 1.93(1) 1.75(1) 10.3%
Diluted $ 1.90(2) 1.73(2) 9.8%
SHARES OUTSTANDING
Basic 91,238 89,802 1.6%
Diluted 93,272 91,325 2.1%
DIVIDENDS PER COMMON SHARE $ 0.195 0.1851 5.3%
(1) Includes $.33 and $.51 in 1998 and 1997, respectively, resulting from gain
on sale or exchange of assets.
(2) Includes $.33 and $.50 in 1998 and 1997, respectively, resulting from gain
on sale or exchange of assets.
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
SEPT. 30, DEC. 31,
1998 1997
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(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,940 26,017
Other current assets 214,400 257,463
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Total current assets 218,340 283,480
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PROPERTY, PLANT AND EQUIPMENT
Telephone 3,414,234 3,295,860
Wireless 421,412 380,218
Other 191,138 169,420
Accumulated depreciation (1,781,339) (1,586,935)
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Net property, plant and equipment 2,245,445 2,258,563
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INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 1,741,491 1,767,352
Other 430,894 400,006
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Total investments and other assets 2,172,385 2,167,358
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TOTAL ASSETS $ 4,636,170 4,709,401
=====================================================================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 45,015 55,244
Other current liabilities 219,884 266,764
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Total current liabilities 264,899 322,008
LONG-TERM DEBT 2,392,685 2,609,541
DEFERRED CREDITS AND OTHER LIABILITIES 509,951 477,580
STOCKHOLDERS' EQUITY 1,468,635 1,300,272
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TOTAL LIABILITIES AND EQUITY $ 4,636,170 4,709,401
=====================================================================
CAPITAL EXPENDITURES
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
INC
1998 1997 (DEC)
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Telephone $ 141,963 77,333 83.6%
Wireless 42,836 30,451 40.7%
Corporate and other 24,230 15,560 55.7%
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Total capital expenditures $ 209,029 123,344 69.5%
=====================================================================
CAPITAL EXPENDITURES
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
INC
1998 1997 (DEC)
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Telephone $ 63,908 28,106 127.4%
Wireless 8,536 5,639 51.4%
Corporate and other 10,165 2,180 366.3%
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Total capital expenditures $ 82,609 35,925 129.9%
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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.
CENTURY TELEPHONE ENTERPRISES, INC.
By: /s/ R. Stewart Ewing
-------------------------
R. Stewart Ewing
Senior Vice President and
Chief Financial Officer