Lumen Technologies, Inc. — Interim / Quarterly Report 2000

Mar 7, 2000

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 27, 2000 CenturyTel, Inc. (Exact name of registrant as specified in its charter) Louisiana 1-7784 72-0651161 (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) 100 Century Park Drive, Monroe, Louisiana 71203 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (318) 388-9000 Item 5. Other Events The following press release was issued by CenturyTel,Inc. on January 27, 2000: FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT: January 27, 2000 Jeffrey S. Glover (318) 388-9648 jeff.glover@centurytel.com CenturyTel Achieves Excellent Customer Growth During 1999 and Completes 16th - ---------------------------------------------------------------------------- Consecutive Year of Record Earnings -------------------------------------------------------------------------- Monroe, LA. . . CenturyTel, Inc. (NYSE Symbol: CTL) announces operating results for fourth quarter 1999. o Revenues from recurring operations climbed 11.8% to $426.5 million. o Net income from recurring operations jumped 15.7% to $58.9 million. o Diluted earnings per share from recurring operations rose 16.7% to $.42. o Earnings before interest, taxes, depreciation, amortization and gain on sales of assets, from recurring operations increased 8.8% to $214.3 million.

(1) 1999 results include a $9.6 million incremental revenue contribution from the 1998 acquisition of properties in Wisconsin from Ameritech (2) Earnings before interest, taxes, depreciation, amortization and gain on sales of assets (3) Excludes after-tax gain on asset sales of $7.6 million, or $.05 per share, and nonrecurring charges of $5.8 million, or $.04 per share, in fourth quarter 1999 (4) Reflects a three-for-two stock split effected as a stock dividend distri- buted March 31, 1999 "CenturyTel finished 1999 with excellent customer growth during the fourth quarter," Glen F. Post, III, President and Chief Executive Officer, said. "For the quarter, CenturyTel added 56,600 wireless subscribers, 18,200 long distance customers and 4,700 Internet customers. Financial performance from recurring operations was very strong during the quarter. We enter 2000 focused on driving additional growth in our core wireline and wireless operations, aggressively deploying DSL technology, expanding our CLEC initiative and completing previously announced acquisitions." Net income for the quarter from recurring operations climbed 15.7% to $58.9 million from $50.9 million in fourth quarter 1998. Diluted earnings per share from recurring operations increased 16.7% to $.42 from $.36. Consolidated revenues from recurring operations rose 11.8% to $426.5 million from $381.4 million. EBITDA from recurring operations grew to $214.3 million from $196.9 million, an 8.8% increase. CenturyTel achieved a consolidated EBITDA margin of 50.2% during the quarter. These results exclude the 1998 contribution to revenues of $33.6 million and associated expenses from the sale of non-strategic assets in Alaska and South Texas during the second quarter 1999. Also excluded are a one-time gain of $7.6 million, or $.05 per share, related to the sale of non-strategic assets and one-time charges of $5.8 million, or $.04 per share, in the fourth quarter of 1999. $4.1 million of these one-time charges is related to a non-cash charge taken by BellSouth in a market in which CenturyTel has a minority ownership interest. The remaining one-time charge of $1.7 million relates to the closure of CenturyTel's call center operations. Telephone revenues from recurring operations grew 12.3% to $293.2 million during the quarter, compared with $261.1 million in fourth quarter 1998. A prior-year acquisition contributed $9.6 million in incremental telephone revenues during the quarter. Telephone operating income from recurring operations increased 13.4%, reaching $91.4 million from $80.6 million, and EBITDA from recurring operations rose 12.7% to $159.8 million from $141.7 million a year ago. CenturyTel's fourth quarter telephone EBITDA margin was 54.5% while the operating income margin was 31.2% from recurring operations. These results exclude the 1998 contribution to revenues of $31.2 million and associated expenses from telephone properties in Alaska that were sold during second quarter 1999. "During the quarter, CenturyTel deployed DSL service utilizing the new G-lite equipment and the demand has been very strong. In addition, we successfully initiated a CLEC trial in Shreveport, Louisiana, during the quarter and we look forward to making our CLEC services commercially available during the first half of 2000," Post said. Wireless revenues from recurring operations grew 3.6% to $102.0 million in fourth quarter 1999, compared with $98.5 million in fourth quarter 1998. Wireless operating income from recurring operations was $22.1 million compared to $25.1 million, an 11.7% decrease, and EBITDA from recurring operations decreased 3.3% to $39.8 million compared to $41.1 million a year ago. Higher customer growth directly increased sales and marketing expenses which reduced operating income and cash flow for the quarter. CenturyTel's fourth quarter wireless EBITDA margin was 39.0% (40.3% based on service revenues), and operating income margin was 21.7% (22.4% based on service revenues). Average monthly cellular service revenue per user (ARPU) was $49 during fourth quarter 1999, a 10.9% decrease from $55 a year ago. The average monthly churn rate was 1.9%. These results exclude the 1998 contribution to revenues of $3.7 million and associated expenses from cellular properties in South Texas and Alaska that were sold during second quarter 1999. "CenturyTel achieved company-record fourth quarter wireless customer growth as we added more than 56,000 wireless subscribers, surpassing the 700,000 wireless customer mark. Subscriber growth accelerated 73% for the year, while customer churn declined 33 basis points. This strong customer growth led to increased sales and marketing costs in the current quarter but should generate additional revenue in future quarters," Post said. Other operations revenues from recurring operations grew 43.2% to $31.3 million during fourth quarter 1999, compared with $21.8 million in fourth quarter 1998. CenturyTel's long distance business generated $7.9 million of the increase in other operations revenues. CenturyTel now serves more than 303,700 long distance customers, adding nearly 18,200 during the quarter. CenturyTel recently announced its intentions to close its operator services call center business due to continuing losses and the lack of viable long-term growth prospects. "CenturyTel's long distance customer base surpassed the 300,000 customer mark as long distance revenues jumped 49% to $24 million for the quarter," Post said. For the full year of 1999, net income from recurring operations climbed 22.7% to $237.9 million from $193.9 million in 1998. Diluted earnings per share increased 20.9% to $1.68 from $1.39, and consolidated revenues rose 12.4% to $1.6 billion from $1.4 billion. EBITDA grew to $861.2 million from $765.4 million, a 12.5% increase. These results exclude the revenue impact and associated expenses related to the sale of the assets in Alaska and South Texas, which occurred in second quarter 1999. Also excluded are one-time gains of $7.3 million, or $.05 per share, related to the sale of non-strategic assets and one-time charges of $5.8 million, or $.04 per share, during 1999. "CenturyTel generated free-cash flow of $167 million, demonstrating our financial strength and ability to reduce debt. We reduced long-term debt by $470 million during 1999, utilizing free-cash flow and proceeds from asset sales," 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 the timely consummation of pending acquisitions, and integrating newly-acquired properties into the Company's operations; 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, 1998. CenturyTel, Inc. provides integrated communications services including local exchange, wireless, long distance, Internet access and security monitoring 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 seventh largest local exchange telephone company, based on access lines, and the ninth largest cellular company, based on population equivalents owned, in the United States. Visit CenturyTel's corporate website at (www.centurytel.com). CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)

(1) Reflects a three-for-two stock split effected as a stock dividend distributed March 31, 1999 (2) Excluding the effect of asset divestitures and nonrecurring gains and losses, basic earnings per share were $.42 and $.37 for 1999 and 1998, respectively (3) Excluding the effect of asset divestitures and nonrecurring gains and losses, diluted earnings per share were $.42 and $.36 for 1999 and 1998, respectively - ---------------------- CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)

(1) Reflects a three-for-two stock split effected as a stock dividend distributed March 31, 1999 - ------------------ CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME TWELVE MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)

(1) Reflects a three-for-two stock split effected as a stock dividend distributed March 31, 1999 (2) Excluding the effect of asset divestitures and nonrecurring gains and losses, basic earnings per share were $1.71 and $1.41 for 1999 and 1998, respectively (3) Excluding the effect of asset divestitures and nonrecurring gains and losses, diluted earnings per share were $1.68 and $1.39 for 1999 and 1998, respectively CenturyTel, Inc. CONSOLIDATED STATEMENTS OF INCOME TWELVE MONTHS ENDED DECEMBER 31, 1999 AND 1998 (UNAUDITED)

(1) Reflects a three-for-two stock split effected as a stock dividend distributed March 31, 1999 CenturyTel, Inc. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 (UNAUDITED)

CAPITAL EXPENDITURES TWELVE MONTHS ENDED DECEMBER 31, 1999 AND 1998

CAPITAL EXPENDITURES THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998

SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CenturyTel, Inc. By: /s/ Neil A. Sweasy ------------------------- Neil A. Sweasy Vice President and Controller