UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 28, 1999
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) 388-9500
Item 5. Other Events
The following press release was issued by Century Telephone Enterprises.
Inc. on January 28, 1999:
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
January 28, 1999 Jeffrey S.Glover (318) 388-9648
jeff.glover@centurytel.com
CenturyTel Achieves 39.6% Increase in Fourth Quarter Core Earnings
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to Complete 15th Consecutive Year of Record Earnings
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Monroe, LA. . . CenturyTel (Century Telephone Enterprises, Inc., NYSE Symbol:
CTL) announces operating results for fourth quarter 1998.
o Revenues jumped 51.7% to $415.0 million.
o Net income (excluding gain on asset sales) climbed 39.6% to $52.2 million.
o Diluted earnings per share (excluding gain on asset sales) rose 36.6% to $.56.
o Earnings before interest, taxes, depreciation, amortization and gain on sales
of assets advanced 59.3% to $214.3 million.
Fourth Quarter Highlights
(Dollars, except per share data, and shares in thousands)
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Quarter Ended Quarter Ended
12/31/98 12/31/97 % Change
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Revenues $ 415,038 $ 273,609 51.7%
EBITDA (1) $ 214,318 $ 134,517 59.3%
Net Income (2) $ 52,194 $ 37,397 39.6%
Diluted Earnings Per Share (2) $ .56 $ .41 36.6%
Average Diluted Shares Outstanding 93,795 92,431 1.5%
Telephone Revenues $ 291,078 $ 171,143 70.1%
Wireless Revenues $ 102,050 $ 87,270 16.9%
Other Operations Revenues $ 21,910 $ 15,196 44.2%
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Telephone Access Lines 1,346,567 1,203,650 11.9%
Cellular Units in
Majority-Owned Markets 624,119 569,983 9.5%
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(1) Earnings before interest, taxes, depreciation, amortization and gain on
sales of assets
(2) Excludes after-tax gain on sales of assets of $60.8 million, or $.65
per share in fourth quarter 1997
"We are pleased to complete another year of record operating earnings for
CenturyTel with excellent fourth quarter results," Glen F. Post, III, President
and Chief Executive Officer, said. "CenturyTel achieved strong fourth quarter
customer growth while core earnings rose by almost 40%. We enter 1999 a
stronger, more dynamic company with a clear vision of pursuing additional growth
to further enhance shareholder value."
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Net income excluding gain on sales of assets for the quarter climbed 39.6% to
$52.2 million from $37.4 million in fourth quarter 1997. Diluted earnings per
share excluding gain on sales of assets increased 36.6% to $.56 from $.41, and
consolidated revenues rose 51.7% to $415.0 million from $273.6 million. Earnings
before interest, taxes, depreciation, amortization and gain on sales of assets
(EBITDA) grew to $214.3 million from $134.5 million, a 59.3% increase. The
Pacific Telecom (PTI) and Ameritech acquisitions contributed $114.4 million to
the increase in revenues and were accretive to earnings during fourth quarter
1998.
Telephone revenues grew 70.1% to $291.1 million during the quarter, compared
with $171.1 million in fourth quarter 1997. Telephone operating income increased
65.3%, reaching $88.7 million from $53.7 million, and operating cash flow rose
70.4% to $157.1 million from $92.2 million a year ago. CenturyTel's fourth
quarter telephone operating cash flow margin was 54.0% while the operating
income margin was 30.5%.
Wireless revenues grew 16.9% to $102.1 million in fourth quarter 1998,
compared with $87.3 million in fourth quarter 1997. Wireless operating income
advanced 19.7%, reaching $26.7 million from $22.3 million, and operating cash
flow climbed 27.9% to $43.5 million from $34.0 million a year ago. CenturyTel's
fourth quarter wireless operating cash flow margin was 42.6% (43.8% based on
service revenues), and operating income margin was 26.2% (26.9% based on service
revenues).
Average monthly cellular service revenue per user (ARPU) was $55 during
fourth quarter 1998, an 8.3% decrease from $60 a year ago. Cellular net
additions were more than 32,500 for the quarter, while the average monthly churn
rate was 2.17%. "CenturyTel's wireless operations finished the year strong by
achieving excellent subscriber growth and record fourth quarter margins, while
reducing customer churn," Post said.
Revenues from other operations grew 44.2% to $21.9 million during fourth
quarter 1998, compared with $15.2 million in fourth quarter 1997. CenturyTel now
serves more than 226,700 long distance customers, adding more than 12,000 during
the quarter.
Year-End Highlights
(Dollars, except per share data, and shares in thousands)
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Year Ended Year Ended
12/31/98 12/31/97 % Change
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Revenues $ 1,577,085 $ 901,521 74.9%
EBITDA (1) $ 833,705 $ 454,670 83.4%
Net Income (2) $ 198,229 $ 149,562 32.5%
Diluted Earnings Per Share (2) $ 2.13 $ 1.64 29.9%
Average Diluted Shares Outstanding 93,403 91,608 2.0%
Telephone Revenues $ 1,091,610 $ 530,597 105.7%
Wireless Revenues $ 407,749 $ 307,742 32.5%
Other Operations Revenues $ 77,726 $ 63,182 23.0%
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(1) Earnings before interest, taxes, depreciation, amortization and gain on
sales of assets
(2) Excludes after-tax gain on sales of assets of $30.5 million, or $.32 per
share, in 1998 and $106.4 million, or $1.16 per share, in 1997
For the year 1998, net income, excluding gain on sales of assets, rose 32.5%
to $198.2 million from $149.6 million. Diluted earnings per share, excluding
gains, rose 29.9% to $2.13 from $1.64, and consolidated revenues increased 74.9%
to $1.6 billion from $901.5 million. EBITDA grew to $833.7 million from $454.7
million, an 83.4% increase.
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 newly-acquired properties into the Company's
operations; the success and expense of the remediation efforts of the Company
and 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 9th 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 DECEMBER 31, 1998 AND 1997
(UNAUDITED)
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INCREASE
In thousands, except per share amounts 1998 1997 (DECREASE)
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TELEPHONE OPERATIONS
Operating revenues
Local service $ 88,072 48,840 80.3%
Network access 167,007 101,894 63.9%
Other 35,999 20,409 76.4%
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291,078 171,143 70.1%
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Operating expenses
Plant operations 68,555 37,207 84.3%
Customer operations 24,596 16,145 52.3%
Corporate and other 40,849 25,635 59.3%
Depreciation and amortization 68,377 38,481 77.7%
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202,377 117,468 72.3%
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Telephone operating income 88,701 53,675 65.3%
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WIRELESS OPERATIONS
Operating revenues
Cellular service revenues 99,270 85,680 15.9%
Equipment sales 2,780 1,590 74.8%
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102,050 87,270 16.9%
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Operating expenses
Cost of equipment sold 5,772 4,203 37.3%
System operations 15,709 13,626 15.3%
General, administrative and
customer service 20,392 18,690 9.1%
Sales and marketing 16,721 16,783 (0.4%)
Depreciation and amortization 16,735 11,639 43.8%
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75,329 64,941 16.0%
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Wireless operating income 26,721 22,329 19.7%
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OTHER OPERATIONS
Operating revenues 21,910 15,196 44.2%
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Operating expenses
Cost of sales and other 16,171 12,713 27.2%
Depreciation and amortization 1,154 635 81.7%
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17,325 13,348 29.8%
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Other operating income 4,585 1,848 148.1%
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TOTAL OPERATING INCOME 120,007 77,852 54.1%
OTHER INCOME (EXPENSE)
Gain on sales of assets - 99,519 (100.0%)
Interest expense (40,767) (22,935) 77.8%
Income from unconsolidated
cellular entities 7,764 6,044 28.5%
Minority interest (2,533) (1,776) 42.6%
Other income and expense 2,814 1,642 71.4%
Income tax expense (35,091) (62,112) (43.5%)
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NET INCOME $ 52,194 98,234 (46.9%)
==================================================================
EARNINGS PER SHARE
Basic $ 0.57 1.08 (1) (47.2%)
Diluted $ 0.56 1.06 (2) (47.2%)
SHARES OUTSTANDING
Basic 91,646 90,549 1.2%
Diluted 93,795 92,431 1.5%
DIVIDENDS PER COMMON SHARE $ 0.065 0.0617 5.3%
(1) Includes $.67 resulting from gain on sales of assets
(2) Includes $.65 resulting from gain on sales of assets
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1998 AND 1997
(UNAUDITED)
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INCREASE
In thousands, except per share amounts 1998 1997 (DECREASE)
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TELEPHONE OPERATIONS
Operating revenues
Local service $ 331,736 147,589 124.8%
Network access 629,583 319,301 97.2%
Other 130,291 63,707 104.5%
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1,091,610 530,597 105.7%
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Operating expenses
Plant operations 245,164 110,220 122.4%
Customer operations 92,552 50,819 82.1%
Corporate and other 157,293 80,551 95.3%
Depreciation and amortization 262,893 115,722 127.2%
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757,902 357,312 112.1%
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Telephone operating income 333,708 173,285 92.6%
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WIRELESS OPERATIONS
Operating revenues
Cellular service revenues 398,661 302,156 31.9%
Equipment sales 9,088 5,586 62.7%
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407,749 307,742 32.5%
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Operating expenses
Cost of equipment sold 16,954 14,576 16.3%
System operations 59,920 47,572 26.0%
General, administrative and
customer service 80,827 62,258 29.8%
Sales and marketing 57,466 54,128 6.2%
Depreciation and amortization 62,002 41,127 50.8%
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277,169 219,661 26.2%
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Wireless operating income 130,580 88,081 48.2%
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OTHER OPERATIONS
Operating revenues 77,726 63,182 23.0%
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Operating expenses
Cost of sales and other 58,544 54,132 8.2%
Depreciation and amortization 3,659 2,646 38.3%
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62,203 56,778 9.6%
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Other operating income 15,523 6,404 142.4%
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TOTAL OPERATING INCOME 479,811 267,770 79.2%
OTHER INCOME (EXPENSE)
Gain on sales or exchange of assets 49,859 169,640 (70.6%)
Interest expense (167,552) (56,474) 196.7%
Income from unconsolidated
cellular entities 32,869 27,794 18.3%
Minority interest (12,797) (5,498) 132.8%
Other income and expense 5,268 5,109 3.1%
Income tax expense (158,701) (152,363) 4.2%
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NET INCOME $ 228,757 255,978 (10.6%)
==================================================================
EARNINGS PER SHARE
Basic $ 2.50 (1) 2.84 (1) (12.0%)
Diluted $ 2.45 (2) 2.80 (2) (12.5%)
SHARES OUTSTANDING
Basic 91,340 89,990 1.5%
Diluted 93,403 91,608 2.0%
DIVIDENDS PER COMMON SHARE $ 0.26 0.247 5.3%
(1) Includes $.33 and $1.18 in 1998 and 1997, respectively, resulting from gain
on sale or exchange of assets
(2) Includes $.32 and $1.16 in 1998 and 1997, respectively, resulting from gain
on sale or exchange of assets
CENTURY TELEPHONE ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
(UNAUDITED)
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1998 1997
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(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,742 26,017
Other current assets 220,496 257,463
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Total current assets 226,238 283,480
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PROPERTY,PLANT AND EQUIPMENT
Telephone 3,660,252 3,295,860
Wireless 428,984 380,218
Other 200,422 169,420
Accumulated depreciation (1,938,205) (1,586,935)
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Net property, plant and equipment 2,351,453 2,258,563
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INVESTMENTS AND OTHER ASSETS
Excess cost of net assets acquired 1,956,701 1,767,352
Other 401,063 400,006
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Total investments and other assets 2,357,764 2,167,358
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TOTAL ASSETS $ 4,935,455 4,709,401
==============================================================================
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 53,010 55,244
Other current liabilities 251,834 266,764
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Total current liabilities 304,844 322,008
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LONG-TERM DEBT 2,558,000 2,609,541
DEFERRED CREDITS AND OTHER LIABILITIES 541,129 477,580
STOCKHOLDERS' EQUITY 1,531,482 1,300,272
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TOTAL LIABILITIES AND EQUITY $ 4,935,455 4,709,401
==============================================================================
CAPITAL EXPENDITURES
TWELVE MONTHS ENDED DECEMBER 31, 1998 AND 1997
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INC
1998 1997 (DEC)
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( in thousands)
Telephone $ 233,190 115,854 101.3%
Wireless 49,538 39,102 26.7%
Corporate and other 36,875 26,269 40.4%
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Total capital expenditures $ 319,603 181,225 76.4%
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CAPITAL EXPENDITURES
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
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INC
1998 1997 (DEC)
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( in thousands)
Telephone $ 91,227 38,521 136.8%
Wireless 6,702 8,651 (22.5%)
Corporate and other 12,645 10,709 18.1%
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Total capital expenditures $ 110,574 57,881 91.0%
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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