Lumen Technologies, Inc. — Earnings Release 2002

Oct 25, 2002

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 24, 2002 CenturyTel, Inc. (Exact name of registrant as specified in its charter) Louisiana 1-7784 72-0651161 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 100 CenturyTel 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. On October 24, 2002, CenturyTel, Inc. issued a press release announcing its third quarter 2002 consolidated operating results. The entire text of the release is reproduced below: FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: October 24, 2002 Media: Patricia Cameron 318.388.9674 patricia.cameron@centurytel.com Investors: Tony Davis 318.388.9525 tony.davis@centurytel.com CenturyTel Announces Successful Repositioning of the Company and Strong - -------------------------------------------------------------------------------- Third Quarter Results - --------------------- Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results for third quarter 2002, which reflect recently completed acquisitions. o Revenues from continuing operations, excluding nonrecurring items, increased 25.5% to $532.1 million. o Earnings from continuing operations before interest, taxes, depreciation and amortization (EBITDA), excluding nonrecurring items, rose 28.6% to $272.3 million. o Income from continuing operations, excluding nonrecurring items, climbed 53.5% to $68.6 million. o Diluted earnings per share, excluding nonrecurring items, increased to $.57. o Free cash flow, excluding nonrecurring items, was $82.3 million.

"During the third quarter CenturyTel completed the divestiture of its wireless business and the acquisitions of the Verizon properties in Alabama and Missouri, repositioning the Company as a leading pure-play rural local exchange carrier," Glen F. Post, III, chairman and chief executive officer, said. "We achieved a solid 24.0% growth in Telephone Revenues reflecting the contribution from the acquired properties and a strong 37.5% growth in Other Operations Revenues, primarily due to the continued growth in long distance and Internet customers." Consolidated revenues from continuing operations, excluding nonrecurring items, for the third quarter rose 25.5% to $532.1 million from $424.0 million. EBITDA from continuing operations, excluding nonrecurring items, grew to $272.3 million from $211.7 million. The Company achieved a consolidated EBITDA margin of 51.2% during the quarter. Income from continuing operations for the quarter, excluding nonrecurring items, increased 53.5% to $68.6 million from $44.7 million in third quarter 2001 (as adjusted). Diluted earnings per share from continuing operations, excluding nonrecurring items, increased 54.8% to $.48 from $.31 (as adjusted). Diluted earnings per share, excluding nonrecurring items, increased 3.6% to $.57 from $.55 (as adjusted). Telephone revenues, excluding nonrecurring items, grew 24.0% to $468.6 million during the quarter, compared with $377.7 million in third quarter 2001. The Alabama and Missouri properties acquired from Verizon contributed $85.6 million of the increase. The remaining increase resulted primarily from growth in vertical services and interstate revenues that more than offset declines in intrastate access and toll revenues. Telephone operating expenses increased primarily due to the acquisitions, higher employee-related costs and depreciation expenses that were offset by reductions in retail bad debt and access expenses. Telephone operating income, excluding nonrecurring items, increased 28.5% to $152.3 million from $118.5 million (as adjusted), and telephone EBITDA, excluding nonrecurring items, rose 25.4% to $256.6 million from $204.7 million a year ago. CenturyTel's third quarter telephone EBITDA margin was 54.8% while the operating income margin was 32.5%. Other Operations revenues grew 37.5% to $63.6 million during third quarter 2002, compared with $46.2 million in third quarter 2001. CenturyTel's long distance revenues increased $8.5 million, or 27.5%, to $39.6 million. CenturyTel now serves more than 584,000 long distance customers. Internet revenues increased 42.0% to $15.0 million in third quarter 2002 from $10.6 million in third quarter 2001. The Internet business generated operating cash flow of $1.2 million for the quarter compared to operating cash flow of $319,000 for the third quarter 2001. CenturyTel CLEC revenues increased by $4.4 million, of which $3.9 million resulted from the acquisition of CLEC assets in February, 2002. "We added over 6,800 DSL connections and more than 48,000 long distance customers during the quarter. These results represent the second strongest quarter for DSL and long distance customer net additions in the Company's history," Post said. For third quarter 2002, in accordance with generally accepted accounting principles (GAAP), the Company reported net income of $607.7 million, or $4.26 per diluted share, compared to net income of $106.3 million (as adjusted), or $.75 per diluted share in third quarter 2001. Third quarter 2002 reflects a $551.4 million after-tax gain on the sale of our wireless operations. See the accompanying financial information for additional nonrecurring items that affected the third quarters and first nine months of 2002 and 2001. For the first nine months of 2002, income from continuing operations, excluding nonrecurring items, increased 29.9% to $160.9 million from $123.9 million in 2001 (as adjusted) and diluted earnings per share from continuing operations increased 29.9% to $1.13 from $.87 (as adjusted). Consolidated revenues, excluding nonrecurring items, increased 12.0% to $1.394 billion from $1.245 billion while EBITDA was $705.3 million compared to $620.9 million a year ago, a 13.6% increase. The Company continued to reflect its wireless business as discontinued operations during the quarter. As a result of this treatment, depreciation expense for the wireless operations was discontinued effective March 19, 2002, the date of the definitive agreement. This discontinuation of wireless depreciation contributed approximately $.02 to earnings per share for third quarter 2002 and $.08 from March 19, 2002, to the sale effective date of August 1, 2002. Income from continuing operations includes total interest expense and also includes corporate overheads previously absorbed by the Company's wireless operations of $1.3 million for third quarter 2002 and $11.3 million for the nine months ended September 30, 2002. For the fourth quarter 2002, CenturyTel expects revenue from continuing operations to be $560 to $575 million. Operating cash flow from continuing operations is expected to be $285 to $295 million. Total diluted earnings per share is anticipated to be $.51 to $.55 for fourth quarter 2002. For the full year 2002, the Company expects total diluted earnings per share to be $2.19 to $2.23. These estimates exclude nonrecurring items and the expected $38.1 million after-tax charge associated with the redemption on October 15, 2002, of the Company's $400 million Series I remarketable senior notes. In addition to historical information, this release includes forward-looking statements, estimates and projections that are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of CenturyTel. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the Company's ability to effectively manage its growth, including successfully integrating newly acquired businesses into its operations, hiring adequate numbers of qualified staff and successfully upgrading its billing and other information systems; the inherent risk of rapid technological change; the effects of on-going changes in the regulation of the Company or the communications industry generally; the effects of greater than anticipated competition in the Company's markets; possible changes in the demand for, or pricing of, the Company's products and services; the Company's ability to successfully introduce new offerings on a timely and cost-effective basis; higher than anticipated interest rates; the Company's ability to collect its receivables from financially troubled communications companies; 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, 2001. The information contained in this release is as of October 24, 2002. The Company undertakes no obligation to update or revise any of this information whether as a result of new information, future events or developments, or otherwise. CenturyTel's management will host a conference call at 10:30 A.M. Central time today. Interested parties can access the call by dialing 800.729.6845 and the call will be accessible for replay by calling 800.642.1687 and entering the conference-id number: 5972009. Investors can also listen to CenturyTel's earnings conference call and replay by accessing the Company's Web site at (www.centurytel.com) CenturyTel, Inc. provides communications services including local exchange, long distance, Internet access and data services to more than three million customers in 22 states. The company, headquartered in Monroe, Louisiana, is publicly traded on the New York Stock Exchange under the symbol CTL. CenturyTel is the 8th largest local exchange telephone company, based on access lines, in the United States. Visit CenturyTel's corporate Web site at (www.centurytel.com) CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED)

CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (UNAUDITED)

CenturyTel, Inc. CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 (UNAUDITED)

CAPITAL EXPENDITURES NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

CAPITAL EXPENDITURES THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

--------------------------- 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. October 24, 2002 By: /s/ Neil A. Sweasy ---------------------- Neil A. Sweasy Vice President and Controller