-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MOajqCgnS3dhj04SSKt10iHymi7YDO8BeDrrYwm9BHPvXyuozceQcAgIhz5DXX7Y Uu36Z+3pGR2m0e3LA78kiw== 0000020520-03-000013.txt : 20030807 0000020520-03-000013.hdr.sgml : 20030807 20030807085032 ACCESSION NUMBER: 0000020520-03-000013 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030630 ITEM INFORMATION: FILED AS OF DATE: 20030807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS COMMUNICATIONS CO CENTRAL INDEX KEY: 0000020520 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 060619596 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11001 FILM NUMBER: 03827681 BUSINESS ADDRESS: STREET 1: HIGH RIDGE PK BLDG 3 CITY: STAMFORD STATE: CT ZIP: 06905 BUSINESS PHONE: 2036145600 MAIL ADDRESS: STREET 1: HIGH RIDGE PARK BLDG NO 3 CITY: STAMFORD STATE: CT ZIP: 06905 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS UTILITIES CO DATE OF NAME CHANGE: 19920703 8-K 1 analsched2qtr.txt 2ND QUARTER ANALYST SCHEDULES 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): August 7, 2003 CITIZENS COMMUNICATIONS COMPANY (Exact name of registrant as specified in its charter) Delaware 001-11001 06-0619596 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 3 High Ridge Park Stamford, Connecticut 06905 (Address of Principal Executive Offices) (203) 614-5600 (Registrant's Telephone Number, Including Area Code) No Change Since Last Report --------------------------- (Former name or former address, if changed since last report) ITEM 12. Disclosure of Results of Operations and Financial Condition ----------------------------------------------------------- On August 7, 2003, Citizens Communications Company issued a press release. A copy of the press release is attached hereto as Exhibit 99.3. The information in this Form 8-K and the Exhibits attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing. 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. CITIZENS COMMUNICATIONS COMPANY (Registrant) By: /s/ Jerry Elliott -------------------------------- Jerry Elliott Chief Financial Officer Date: August 7, 2003 Exhibit 99.3 Citizens Communications 3 High Ridge Park Stamford, CT 06905 203.614.5600 - -------------------------------------------------------------------------------- FOR IMMEDIATE RELEASE Contacts: Michael A. Zarrella Brigid M. Smith Vice President Assistant Vice President Corporate Development Corporate Communications 203.614.5179 203.614.5042 mzarrell@czn.com bsmith@czn.com - ---------------- -------------- CITIZENS COMMUNICATIONS REPORTS 2003 SECOND-QUARTER RESULTS Stamford, Conn., August 7, 2003 -- Citizens Communications (NYSE: CZN) today reported second-quarter 2003 consolidated revenues of $644 million, consolidated operating income of $135.2 million, and consolidated net income of $34.1 million, or 12 cents per share. Consolidated net income for the quarter includes a $25 million non-cash gain from the extinguishment of a capital lease obligation at Electric Lightwave, a $4.4 million gain on the sale of a wireless partnership investment, a $2.3 million gain on the sale of access lines in North Dakota, a $10.1 million charge related to restructuring and other expenses, $4.5 million of non-cash expense for restricted stock-related compensation, a $4.4 million charge related to early debt retirement and a $2.3 million charge related to the Touch America bankruptcy. Excluding these items, consolidated net income was $27.9 million, or 10 cents per share. The company produced free cash flow of $113.3 million for the second-quarter 2003 and achieved a ratio of net debt to annualized cash generated by operations of 3.5x and a ratio of net debt to annualized operating income of 7.9x. The company reached its year-end target leverage ratio of 3.5x two quarters early. The company retired $231.5 million of debt during the quarter and ended the quarter with $385 million in cash. The company has retired $355 million of debt during 2003. The company remains focused on and committed to the continuing improvement of its balance sheet through the generation of free cash flow applied to further debt reduction. In addition, the sale of the company's Arizona Gas and Electric divisions for $220 million in cash and The Gas Company of Hawaii division for $115 million in cash and assumed liabilities remain on track for closings during the third quarter of 2003. After completion of these sales Citizens will have generated $1.9 billion of proceeds from its utility divestiture program, which exceeds the company's original estimate of $1.8 billion of total proceeds. The net proceeds from these sales will be used to further reduce debt. The sale of the company's last public service business, the Vermont Electric division, for $25 million in cash is expected to close in the first half of 2004. Telecommunications Second-quarter 2003 revenue from the company's ILEC operations was $510.2 million, down $4.5 million or 1 percent from $514.7 million in the second-quarter of 2002. The decrease is due to a $2.8 million decrease resulting from the sale of access lines in North Dakota and a decline in network access revenue, in part because of approximately $3.0 million less in subsidy revenue resulting from regulatory agency true-ups relating to prior years. These decreases were partially offset by continued increases in enhanced service and data revenues. The company's primary access line count, which does not take into account DSL subscriptions, decreased 5,600 lines during the quarter, excluding the sale of 10,800 access lines in North Dakota. The company added 12,300 DSL customers during the quarter. Taking into account DSL subscriptions, total subscriptions increased 6,700 for the quarter. ILEC operating income for the second-quarter of 2003 was $121.8 million, up $21.2 million, or 21 percent from the second quarter of 2002. Operating income margin was 23.9 percent compared to 19.5 percent in the second quarter of 2002. ILEC cash generated from operations for the second-quarter of 2003 was $280.5 million, an increase of $6.2 million or 2 percent compared to the prior year quarter. ILEC cash generated from operations margin for the second-quarter of 2003 increased to 55 percent from 53.3 percent in the second-quarter of 2002, reflecting increases in high-margin revenues, an ongoing focus on increased productivity and the efficiencies achieved from consolidation of the company's activities. Capital expenditures for the ILEC were $56.4 million for the second-quarter 2003. Second-quarter 2003 revenue from Electric Lightwave totaled $43.7 million, operating income was $2.4 million, cash generated from operations was $10.7 million and capital expenditures were $2.3 million. Public Service The gas and electric segments accounted for $90.1 million of second-quarter 2003 consolidated revenue, $11 million of operating income, $11.2 million of cash generated from operations, and $9.1 million of capital expenditures. The company uses certain non-GAAP financial measures in evaluating its performance. These include cash generated from operations, cash generated from operations margin, net income excluding certain items, free cash flow and the ratio of net debt to annualized cash generated from operations. A reconciliation of the differences between these non-GAAP financial measures and the most comparable financial measures calculated and presented in accordance with GAAP is included in the tables that follow. The non-GAAP financial measures referred to in this press release are by definition not measures of financial performance under generally accepted accounting principles and are not alternatives to operating income or net income reflected in the statement of operations or to cash flow as reflected in the statement of cash flows and are not necessarily indicative of cash available to fund all cash flow needs. The non-GAAP financial measures used by the company may not be comparable to similarly titled measures of other companies. Cash generated by operations is operating income plus (i) depreciation and amortization, (ii) reserve for certain telecom bankruptcies (Global Crossing, WorldCom and Touch America), (iii) restructuring and other expenses (primarily the write-off of software costs and severance costs and expenses), and (iv) restricted stock-related compensation expense. Cash generated by operations margin is cash generated by operations divided by revenue. Net income excluding certain items is net income without taking into account the items described in the first paragraph. Free cash flow is operating income plus depreciation and amortization and restricted stock-related compensation minus capital expenditures, interest expense and cash taxes. Net debt to annualized cash generated by operations is the ratio of (i) total debt (excluding equity units and convertible preferred) net of cash and cash equivalents to (ii) cash generated by operations for the period indicated multiplied by four (for a quarter) or by two (for a six-month period). The company believes that presentation of these non-GAAP financial measures is useful to investors because it (i) reflects management's view of core operations and cash flow generation upon which management bases financial, operational, compensation and planning decisions, (ii) presents measurements that investors and rating agencies have indicated to management are important in assessing the company, and (iii) is indicative of the company's actual performance compared to the covenant limiting the ratio of net debt to cash generated by operations contained in certain of its debt agreements. Management uses these non-GAAP financial measures to plan and measure the performance of its core operations and its divisions measure performance and report to management based upon these measures. In addition, the company believes that free cash flow, as the company defines it, can assist in comparing performance from period to period, without taking into account factors affecting cash flow reflected in the statement of cash flows, including changes in working capital and the timing of purchases and payments. While the company utilizes these non-GAAP financial measures in managing and analyzing its business and financial condition and believes they are useful to management and to investors for the reasons described above, these non-GAAP financial measures have certain shortcomings. In particular, cash generated by operations and net income excluding certain items do not take into account the items described above, some of which will recur in future periods, in order to focus on core operations. In addition, free cash flow does not represent the residual cash flow available for discretionary expenditures, since items such as debt repayments are not deducted from such measures. Management compensates for the shortcomings of these measures by utilizing them in conjunction with their comparable GAAP financial measures. In addition, annualized cash generated by operations and annualized operating income present quarterly or six-month information for purposes of ratio analysis as annualized information by multiplying the quarterly information by four and the six- month information by two, without representing in any way a forecast, projection or estimate of cash generated by operations or operating income for future periods. The information in this press release should be read in conjunction with the financial statements and footnotes contained in our documents to be filed with the U.S. Securities and Exchange Commission. About Citizens Communications More information about Citizens can be found at www.czn.net. This document contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. These and all forward-looking statements (including oral representations) are only predictions or statements of current plans that are constantly under review by the company. All forward-looking statements may differ from actual results. The foregoing information should be read in conjunction with the company's filings with the U.S. Securities and Exchange Commission including, but not limited to, reports on Forms 10-K and 10-Q. The company does not intend to update or revise these forward-looking statements to reflect the occurrence of future events or circumstances.
Citizens Communications Company Consolidated Financial Data (unaudited) For the quarter ended For the six months ended June 30, June 30, -------------------------- % -------------------------- % (Amounts in thousands - except per-share amounts) 2003 2002 Change 2003 2002 Change ------------------------------------ ------------------------------------- Income Statement Data Continuing operations Revenue $ 643,954 $ 662,439 -3% $1,295,816 $1,341,773 -3% Cost of services 113,537 113,786 0% 226,756 242,024 -6% Other operating expenses 227,985 251,175 -9% 462,428 509,931 -9% Restricted stock based compensation 4,508 251 1696% 5,886 2,349 151% Depreciation and amortization (1) 150,359 186,378 -19% 288,907 364,552 -21% Reserve for telecommunications bankruptcies 2,260 10,001 -77% 2,260 17,805 -87% Restructuring and other expenses 10,113 18,280 -45% 10,092 22,185 -55% Operating income 135,192 82,568 64% 299,487 182,927 64% Investment and other income (loss), net 24,566 (29,188) 184% 74,388 (78,139) 195% Gain on sales of assets, net 6,671 - 100% 5,021 - 100% Interest expense (includes dividends on preferred securities) 107,988 121,499 -11% 218,817 244,659 -11% Income tax expense (benefit) 24,384 (26,560) 192% 64,360 (53,502) 220% Loss from discontinued operations, net of tax - - - - (1,478) -100% Gain on disposal of water segment, net of tax - - - - 169,326 -100% Cumulative effect of change in accounting principle (2) - - - 65,769 (39,812) 265% Net income (loss) attributable to common shareholders 34,057 (41,559) 182% 161,488 41,667 288% Weighted average shares outstanding 282,180 280,610 1% 281,934 280,432 1% Net income (loss) attributable to common shareholders $ 0.12 $ (0.15) 180% $ 0.57 $ 0.15 280% Other Financial Data (3) Cash generated by operations $ 302,432 $ 297,478 2% $ 606,632 $ 589,818 3% Total capital expenditures (4) 67,850 94,119 -28% 115,602 162,558 -29% Free cash flow 113,295 44,040 157% 258,625 131,716 96% Total debt (5) 4,662,168 5,403,338 -14% 4,662,168 5,403,338 -14% Less: Cash and cash equivalents 385,038 421,069 -9% 385,038 421,069 -9% Net debt 4,277,130 4,982,269 -14% 4,277,130 4,982,269 -14% Net debt to annualized cash generated by operations 3.5 4.2 -17% 3.5 4.2 -17%
(1) 2002 includes $900,000 and $12,800,000, respectively, of accelerated depreciation related to the closing of our Plano, Texas facility. (2) 2003 represents the effect of adoption of SFAS No. 143. 2002 represents the write-off of ELI's goodwill. Both are net of tax. (3) A reconciliation of these non-GAAP measures to the most comparable GAAP measure is presented at the end of these tables. (4) 2002 excludes $110,000,000 of previously leased facilities purchased by ELI in April 2002. (5) Excludes equity units and convertible preferred stock. Total debt includes current portion of long term debt.
Citizens Communications Company Financial and Operating Data (unaudited) For the quarter ended For the six months ended June 30, June 30, ---------------------------- % ---------------------------- % (Dollars in thousands, except operating data) 2003 2002 Change 2003 2002 Change ---------------------------------------- ------------------------------------- TELECOMMUNICATIONS Select Income Statement Data Revenue Network access services $ 160,142 $ 171,163 -6% $ 325,139 $ 336,996 -4% Local network services 220,710 217,638 1% 441,805 434,438 2% Long distance and data services 76,487 71,029 8% 151,265 141,315 7% Directory services 26,736 25,810 4% 53,779 52,054 3% Other 26,078 29,046 -10% 51,774 57,914 -11% ILEC revenue 510,153 514,686 -1% 1,023,762 1,022,717 0% Electric Lightwave 43,719 45,287 -3% 84,812 92,534 -8% Total revenue 553,872 559,973 -1% 1,108,574 1,115,251 -1% Expenses Network access expense 58,168 58,598 -1% 114,683 116,556 -2% Other operating expenses 204,515 224,821 -9% 415,369 455,105 -9% Restricted stock based compensation 4,293 310 1285% 5,649 2,346 141% Depreciation and amortization (1) 150,359 186,332 -19% 288,907 364,422 -21% Reserve for telecommunications bankruptcies 2,260 10,001 -77% 2,260 17,805 -87% Restructuring and other expenses 10,113 18,280 -45% 10,092 22,185 -55% Total expenses 429,708 498,342 -14% 836,960 978,419 -14% Operating Income (Loss) ILEC $ 121,814 $ 100,607 21% $ 268,729 $ 192,828 39% ELI 2,350 (38,976) 106% 2,885 (55,996) 105% Other Financial and Operating Data (2) ILEC cash generated by operations $ 280,498 $ 274,316 2% $ 560,873 $ 540,331 4% ILEC cash generated by operations margin 55.0% 53.3% 3% 54.8% 52.8% 4% ILEC capital expenditures $ 56,415 $ 81,364 -31% $ 94,292 $ 137,404 -31% ELI cash generated by operations 10,691 2,238 378% 17,649 3,259 442% ELI capital expenditures (3) 2,254 3,067 -27% 3,401 5,656 -40% ILEC access lines 2,418,819 2,471,496 -2% 2,418,819 2,471,496 -2% ILEC switched access minutes of use (in millions) 2,995 3,034 -1% 6,040 6,048 0% ILEC average monthly revenue per average line $ 70.07 $ 69.32 1% $ 70.16 $ 68.84 2%
(1) See footnote (1) on first page. (2) See footnote (3) on first page. (3) See footnote (4) on first page.
Citizens Communications Company Financial and Operating Data (unaudited) For the quarter ended For the six months ended June 30, June 30, ---------------------------- % ---------------------------- % (Dollars in thousands) 2003 2002 Change 2003 2002 Change ----------------------------------------- ----------------------------------------- GAS AND ELECTRIC SECTORS (1) Select Income Statement Data Revenue $ 90,082 $ 102,466 -12% $ 187,242 $ 226,522 -17% Gas, electric energy and fuel oil purchased 55,369 55,188 0% 112,073 125,468 -11% Other operating expenses 23,470 26,354 -11% 47,059 54,826 -14% Restricted stock based compensation 215 (59) 464% 237 3 7800% Depreciation and amortization (2) - 46 -100% - 130 -100% Operating income 11,028 20,937 -47% 27,873 46,095 -40% Other Financial Data (3) Cash generated by operations $ 11,243 $ 20,924 -46% $ 28,110 $ 46,228 -39% Capital expenditures 9,123 9,440 -3% 17,437 19,023 -8%
(1) Our Kauai Electric operations were sold on November 1, 2002, which affects the comparability of data presented. (2) Our gas and electric operations are reported as "held for sale." Accordingly, we ceased to record depreciation expense effective October 1, 2000 and January 1, 2001, respectively. (3) See footnote (3) on first page.
Citizens Communications Company Condensed Consolidated Balance Sheet Data (Dollars in thousands) June 30, 2003 (unaudited) December 31, 2002 --------------------- -------------------- ASSETS ------ Current assets: Cash and cash equivalents $ 385,038 $ 393,177 Accounts receivable and other current assets 317,862 360,043 Assets held for sale 471,331 447,764 --------------------- -------------------- Total current assets 1,174,231 1,200,984 Property, plant and equipment, net 3,620,734 3,690,056 Other long-term assets 3,167,307 3,255,702 --------------------- -------------------- Total assets $ 7,962,272 $ 8,146,742 ===================== ==================== LIABILITIES AND EQUITY ---------------------- Current liabilities: Long-term debt due within one year $ 105,776 $ 58,911 Accounts payable and other current liabilities 503,489 565,986 Liabilities related to assets held for sale 113,186 145,969 --------------------- -------------------- Total current liabilities 722,451 770,866 Deferred income taxes and other liabilities 666,228 585,126 Equity units 460,000 460,000 Long-term debt 4,556,392 4,957,361 Mandatorily Redeemable Convertible Preferred Securities 201,250 201,250 Shareholders' equity 1,355,951 1,172,139 --------------------- -------------------- Total liabilities and equity $ 7,962,272 $ 8,146,742 ===================== ====================
Schedule A Reconciliation of Non-GAAP Financial Measures Net Income (Loss) to Net Income (Loss) Excluding Items ------------------------------------------------------ (Dollars in thousands, except per-share amounts. All amounts shown net of tax.*) Three Months Ended June 30, Six Months Ended June 30, ---------------------------------- ----------------------------------- 2003 2002 2003 2002 ----------------------------------------------------------------------------------- ----------------------------------- Net income (loss) as reported $ 34,057 $ (41,559) $ 161,488 $ 41,667 Capital lease termination (14,852) - (39,802) - Investment write-downs - 27,393 - 58,049 Restructuring and other 6,003 10,986 6,112 13,511 Reserve for telecom bankruptcies 1,342 6,011 1,369 10,843 Restricted stock based compensation 2,676 151 3,565 1,431 Sale of assets (3,960) - (3,041) - Early retirement of debt 2,615 (8,006) 541 (7,843) Income from discontinued operations - - - (167,848) Cumulative effect of accounting change - - (65,769) 39,812 ---------------------------------- ----------------------------------- Net income (loss) excluding items $ 27,881 $ (5,024) $ 64,463 $ (10,378) ================================== =================================== Net Income (Loss) Per Share to Net Income ----------------------------------------- (Loss) Per Share Excluding Items -------------------------------- Net income (loss) per share as reported $ 0.12 $ (0.15) $ 0.57 $ 0.15 Capital lease termination (0.05) - (0.14) - Investment write-downs - 0.10 - 0.21 Restructuring and other 0.02 0.04 0.02 0.05 Reserve for telecom bankruptcies - 0.02 - 0.04 Restricted stock based compensation 0.01 - 0.01 0.01 Sale of assets (0.01) - (0.01) - Early retirement of debt 0.01 (0.03) - (0.03) Income from discontinued operations - - - (0.60) Cumulative effect of accounting change - - (0.23) 0.14 ---------------------------------- ----------------------------------- Net income (loss) per share excluding items $ 0.10 $ (0.02) $ 0.22 $ (0.03) ================================== =================================== *Effective Tax Rate 40.64% 39.90% 39.44% 39.10%
Schedule B Reconciliation of Non-GAAP Financial Measures (Dollars in thousands) Electric Gas and Electric ILEC Lightwave, Inc. Sectors As Reported ----------------------- --------------------- ------------------- -------------------- For the quarter ended June 30, 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------------------------------------------------------- Operating Income to Cash Generated by ------------------------------------- Operations ---------- Operating income (loss) $ 121,814 $ 100,607 $ 2,350 $(38,976) $ 11,028 $20,937 $ 135,192 $ 82,568 Add back: Depreciation and amortization 144,374 154,741 5,985 31,591 - 46 150,359 186,378 Reserve for telecom bankruptcies 1,113 9,567 1,147 434 - - 2,260 10,001 Restructuring and other expenses 9,482 9,207 631 9,073 - - 10,113 18,280 Restricted stock based compensation 3,715 194 578 116 215 (59) 4,508 251 ------------------------------------------------------------------------------------------- Cash Generated by Operations $ 280,498 $ 274,316 $ 10,691 $ 2,238 $ 11,243 $20,924 $ 302,432 $297,478 =========================================================================================== Electric Gas and Electric ILEC Lightwave, Inc. Sectors As Reported ----------------------- --------------------- ------------------- -------------------- For the six months ended June 30, 2003 2002 2003 2002 2003 2002 2003 2002 ------------------------------------------------------------------------------------------- Operating Income to Cash Generated by ------------------------------------- Operations ---------- Operating income (loss) $ 268,729 $ 192,828 $ 2,885 $ (55,996) $ 27,873 $46,095 $ 299,487 $182,927 Add back: Depreciation and amortization 276,729 313,031 12,178 51,391 - 130 288,907 364,552 Reserve for telecom bankruptcies 1,113 17,371 1,147 434 - - 2,260 17,805 Restructuring and other expenses 9,482 15,212 610 6,973 - - 10,092 22,185 Restricted stock based compensation 4,820 1,889 829 457 237 3 5,886 2,349 ------------------------------------------------------------------------------------------- Cash Generated by Operations $ 560,873 $ 540,331 $ 17,649 $ 3,259 $ 28,110 $46,228 $ 606,632 $589,818 ===========================================================================================
Schedule C Reconciliation of Non-GAAP Financial Measures For the quarter ended June 30, For the six months ended June 30, ---------------------------------- --------------------------------- (Dollars in thousands) 2003 2002 2003 2002 ----------------------------------------------- --------------- --------------- -------------- ---------------- Operating Income to Free Cash Flow ---------------------------------- Operating income $ 135,192 $ 82,568 $ 299,487 $ 182,927 Add back: Depreciation and amortization 150,359 186,378 288,907 364,552 Restricted stock based compensation 4,508 251 5,886 2,349 Subtract: Cash paid for income taxes 926 9,539 1,236 10,895 Interest expense 107,988 121,499 218,817 244,659 Capital expenditures 67,850 94,119 115,602 162,558 --------------- --------------- -------------- ---------------- Free cash flow $ 113,295 $ 44,040 $ 258,625 $ 131,716 =============== =============== ============== ================
Schedule D Reconciliation of Non-GAAP Financial Measures For the quarter ended June 30, For the six months ended June 30, ---------------------------------------------- ------------------------------------------------ (Dollars in thousands) 2003 2002 2003 2002 ------------------------------- ---------------------- ---------------------- ----------------------- ------------------------ Net Debt to Annualized Cash --------------------------- Generated by Operations ----------------------- Cash Generated by Operations (1) $ 302,432 $ 297,478 $ 606,632 $ 589,818 Multiplied by: Number of quarters 4 4 2 2 ----------- ------------ ------------ ------------ Annualized Cash Generated by Operations 1,209,728 1,189,912 1,213,264 1,179,636 Total debt (2) 4,662,168 5,403,338 4,662,168 5,403,338 Less: Cash and cash equivalents (2) 385,038 421,069 385,038 421,069 ----------- ------------ ------------ ------------ Net debt 4,277,130 4,982,269 4,277,130 4,982,269 Divided by: Annualized Cash Generated by Operations (3) 1,209,728 1,189,912 1,213,264 1,179,636 Net Debt to Annualized Cash Generated by Operations Ratio 3.5 4.2 3.5 4.2
(1) See Schedule B. (2) As reported in the Company's financial statements prepared in accordance with GAAP. (3) Annualized cash generated by operations and annualized operating income present quarterly or six month information for purposes of ratio analysis as annualized information by multiplying the quarterly information by four and six month information by two, without representing in any way a forecast, projection or estimate of cash generated by operations or operating income for future periods. -----END PRIVACY-ENHANCED MESSAGE-----