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Press Release -- February 25th, 2010
Source: CenturyLink
Tags: CLEC, Earnings, Ethernet, Expansion, Merger, Video

CenturyLink Reports Fourth Quarter 2009 Earnings

MONROE, La., Feb. 25 /PRNewswire-FirstCall/ — CenturyLink (CenturyTel, Inc.) (NYSE:CTL, news, filings) announces operating results for fourth quarter 2009, which include the effect of the Embarq acquisition completed July 1, 2009.

  • Added nearly 47,000 high-speed Internet customers, reflecting an 8% increase compared to third quarter 2009 growth of 43,500.
  • Improved access line losses by 14% compared to third quarter 2009 and 24% compared to pro forma fourth quarter 2008.
  • Achieved approximately $40 million in synergies from the Embarq acquisition during fourth quarter 2009 and ended 2009 with estimated annual run rate synergies of more than $190 million.
  • Generated free cash flow (as defined in the attached financial schedules) of $333.7 million in fourth quarter 2009, excluding nonrecurring items and $28.1 million of acquisition related capital expenditures.
  • Announced 3.6% dividend increase, from $.70 to $.725 per share quarterly rate.

Fourth Quarter Highlights

    (Excluding nonrecurring items reflected in the attached financial
    schedules)
    (In thousands, except per share amounts and subscriber data)

                                      Quarter Ended  Quarter Ended
                                         12/31/09      12/31/08      % Change

    Operating Revenues                 $1,839,424      $642,647       186.2%
    Operating Cash Flow (1)              $943,592      $311,944       202.5%
    Net Income (2)                       $286,688       $87,044       229.4%
    Diluted Earnings Per Share               $.95          $.87         9.2%
    Average Diluted Shares Outstanding    299,233        98,920       202.5%
    Capital Expenditures                 $337,417 (3)  $101,813       231.4%

    Access Lines (4)                    7,039,000     2,025,000       247.6%
    High-Speed Internet Customers       2,236,000       641,000       248.8%

    (1)  Operating Cash Flow is a non-GAAP financial measure. A reconciliation
          of this item to comparable GAAP measures is included in the attached
          financial schedules.
    (2)  All references to net income contained in this release represent net
         income attributable to CenturyTel, Inc.
    (3)  Includes $28.1 million of capital expenditures related to the Embarq
         integration.
    (4)  Both periods reflect line count methodology adjustments to
         standardize legacy CenturyTel and Embarq line counts.

“CenturyLink continued to make solid progress with the Embarq integration and the implementation of our local-focused regional operating model as access line loss improved to an 8.6% annualized rate in the second half of 2009 compared to a 9.8% pro forma annualized rate in the second half of 2008,” Glen F. Post, III, chief executive officer and president, said. “Our launch of enhanced product offerings, targeted marketing campaigns and focus on achieving synergies from the Embarq acquisition helped CenturyLink achieve solid fourth quarter financial results.”

Operating revenues, excluding nonrecurring items, for fourth quarter 2009 were $1.839 billion compared to $642.6 million in fourth quarter 2008. This increase was primarily due to $1.266 billion of revenue contribution from the Embarq acquisition completed July 1, 2009. Additionally, revenue increases primarily driven by growth in high-speed Internet customers and favorable prior period revenue settlements were more than offset by revenue declines primarily due to the impact of access line losses and lower access revenues, along with the elimination of $54.5 million of revenues associated with the discontinuance of regulatory accounting for certain regulated operating entities reflected in fourth quarter 2009.

Operating expenses, excluding nonrecurring items, were $1.252 billion compared to $459.5 million in fourth quarter 2008, primarily due to $855.8 million of operating costs associated with the Embarq acquisition which more than offset the reduction in operating expenses associated with the discontinuance of regulatory accounting reflected in fourth quarter 2009.

Operating cash flow, excluding nonrecurring items, increased 202.5% to $943.6 million from $311.9 million in fourth quarter 2008, primarily due to the Embarq acquisition. For fourth quarter 2009, CenturyLink achieved an operating cash flow margin of 51.3% versus 48.5% in fourth quarter 2008.

“We continue to see strong customer demand for broadband services, including high-speed Internet and Ethernet services, as we added nearly 47,000 high-speed Internet customers during the fourth quarter,” Post said. “Based on 2009 pro forma financials, CenturyLink generated $3.8 billion of operating cash flow for full year 2009.”

Net income, excluding nonrecurring items, was $286.7 million in fourth quarter 2009 compared to $87.0 million in fourth quarter 2008, primarily driven by the Embarq acquisition. Diluted earnings per share, excluding nonrecurring items, was $.95 for fourth quarter 2009, a 9.2% increase from the $.87 reported in fourth quarter 2008. This increase was primarily due to the higher net income as discussed above, partially offset by the 202.5% increase in average diluted shares outstanding as a result of our all-stock acquisition of Embarq.

For the year 2009, operating revenues, excluding nonrecurring items, increased 91.4% to $4.973 billion from $2.598 billion for the same period in 2008. Operating cash flow, excluding nonrecurring items, was $2.483 billion for 2009 compared to $1.258 billion in 2008. Net income, excluding nonrecurring items, was $720.9 million compared to $347.1 million in 2008. Diluted earnings per share, excluding nonrecurring items, was $3.60 compared to $3.35 in 2008.

Under generally accepted accounting principles (GAAP), net income for fourth quarter 2009 was $230.2 million compared to $100.1 million for fourth quarter 2008, and diluted earnings per share for fourth quarter 2009 was $.77 compared to $1.00 for fourth quarter 2008.

Fourth quarter 2009 net income and diluted earnings per share reflect after-tax costs of $37.8 million ($.13 per share) associated with debt extinguishments, $19.8 million ($.07 per share) related to integration costs associated with the Embarq acquisition, $5.0 million ($.02 per share) related to a litigation settlement, and $4.4 million ($.01 per share) associated with severance related costs and the accelerated recognition of share-based compensation and pension expense. These after-tax costs more than offset a $10.7 million ($.04 per share) net tax benefit related to the recognition of previously unrecognized tax benefits and an adjustment to deferred tax liabilities related to the Embarq acquisition.

Fourth quarter 2008 net income and diluted earnings per share reflect a $12.8 million tax benefit due to the recognition of previously unrecognized tax benefits and a $6.3 million after-tax benefit primarily related to the recognition of previously accrued transaction-related and other contingencies.  Such favorable items were partially offset by an after-tax charge of $1.1 million due to severance and related costs due to a workforce reduction and an after-tax charge of $5.0 million related to costs associated with the acquisition of Embarq.

Net income under GAAP for full year 2009 was $647.2 million compared to $365.7 million for full year 2008 and diluted earnings per share for full year 2009 was $3.23 compared to $3.52 for full year 2008. See the accompanying financial schedules for detail of the Company’s nonrecurring items for full year 2009 and 2008.

Dividend Increase. As noted in a separate press release issued today, CenturyLink’s Board of Directors voted to declare a quarterly cash dividend of $.725 per share, representing a 3.6% dividend increase.

“CenturyLink remains committed to maintaining a solid balance sheet and delivering long-term shareholder value. We believe this dividend increase is reflective of our continued strong free cash flow and achieves an appropriate balance of returning cash to shareholders while maintaining a solid credit profile,” said Post.

Outlook for 2010. For full year 2010, CenturyLink expects operating revenues, excluding certain unusual items, to be 5.5% to 6.5% lower than 2009 pro forma operating revenues as revenue increases associated with growth in high-speed Internet are expected to be more than offset by revenue declines associated with lower access revenues, reduced universal service funding, access line losses and other items. Giving effect to these unusual items, which approximate $135 to $145 million of revenue reductions, 2010 operating revenues are expected to decline 7.5% to 8.5% compared to pro forma 2009. We expect the additional revenue decline in 2011 associated with these unusual items to be approximately $30 million. Additionally, approximately $75 to $80 million of these unusual items is not expected to affect 2010 operating cash flow because of direct offsetting expense reductions.

Free cash flow for full year 2010 is anticipated to be $1.475 to $1.525 billion, reflecting a dividend payout ratio of 57% to 59%.  The Company currently expects 2010 capital expenditures to be between $825 and $875 million, or approximately 15% lower than 2009 pro forma capital expenditures of $1.0 billion.

For full year 2010, CenturyLink anticipates diluted earnings per share to be in the range of $3.10 to $3.20. The following items are expected to have a positive impact on 2010 diluted earnings per share:

  • expected synergies associated with the Embarq acquisition – $.39 to $.43;
  • increased revenues associated with expected growth in high-speed Internet customers – $.09 to $.11; and
  • anticipated lower depreciation and interest expense – $.10 to $.12.

The following items are expected to negatively impact 2010 diluted earnings per share:

  • lower voice-related revenues, primarily due to anticipated access line losses of 7.5% to 8.5% – ($.54) to ($.58);
  • lower access revenues primarily driven by access line losses and continued pressure on access minutes of use – ($.37) to ($.41);
  • reduced interstate universal service funding – ($.08) to ($.10); and
  • expected migration of network traffic from a wireless carrier customer – ($.06) to ($.08).

Additionally, CenturyLink expects to make a voluntary pre-tax $300 million contribution to one of its pension plans during first quarter 2010.

See the attached supplemental schedule for pro forma 2009 information.

For first quarter 2010, CenturyLink expects total revenues of $1.77 to $1.80 billion and diluted earnings per share of $.84 to $.88.

These 2010 outlook figures exclude the effects of nonrecurring items, future changes in regulation, integration expenses associated with the Embarq acquisition, any changes in operating or capital plans related thereto, and any future mergers, acquisitions, divestitures or other similar business transactions.

Integration Update. CenturyLink incurred $39 million of integration and other costs related to the Embarq acquisition during fourth quarter 2009. The Company also incurred approximately $28 million of integration-related capital expenditures during the fourth quarter.

CenturyLink achieved approximately $40 million in operating cost synergies during fourth quarter 2009 and expects to realize additional incremental operating cost synergies of approximately $10 million in first quarter 2010 and approximately $200 million in incremental synergies for full year 2010 compared to the level of synergies recognized in 2009.

Reconciliation to GAAP. This release includes certain non-GAAP financial measures, including but not limited to operating cash flow, free cash flow, adjustments to GAAP measures to exclude the effect of nonrecurring items and certain pro forma combined operating results. In addition to providing key metrics for management to evaluate the Company’s performance, we believe these measurements assist investors in their understanding of period-to-period operating performance and in identifying historical and prospective trends. Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the attached financial schedules. Reconciliation of additional non-GAAP financial measures that may be discussed during the earnings call described below will be available in the Investor Relations portion of the Company’s Web site at www.centurylink.com. Investors are urged to consider these non-GAAP measures in addition to, and not in substitution for, measures prepared in accordance with GAAP.

Investor Call. As previously announced, CenturyLink’s management will host a conference call at 10:30 a.m. Central Time today. Interested parties can access the call by dialing 866.219.5894. The call will be accessible for replay through March 3, 2010, by calling 888.266.2081 and entering the conference ID number 1427251. Investors can also listen to CenturyLink’s earnings conference call and replay by accessing the Investor Relations portion of the Company’s Web site at www.centurylink.com through March 17, 2010.

Certain non-historical statements made in this release and future oral or written statements or press releases by us or our management are intended to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond our control.  Actual results or performance by CenturyLink 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 impact actual results of CenturyLink include but are not limited to:  the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry (including those arising out of the Federal Communication Commission’s proposed rules regarding inter-carrier compensation and the Universal Service Fund,  and the Federal Communications Commission’s National Broadband Plan scheduled to be released in first quarter 2010, each as described in our recent SEC reports); our ability to effectively adjust to changes in the communications industry; changes in our allocation of the Embarq purchase price after the date hereof; our ability to successfully integrate Embarq into our operations, including the possibility that the anticipated benefits from the Embarq merger cannot be fully realized in a timely manner or at all, or that integrating Embarq’s operations into ours will be more difficult, disruptive or costly than anticipated; our ability to effectively manage our expansion opportunities, including retaining and  hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to pay a $2.90 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; unanticipated increases in our capital expenditures; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in our filings with the SEC; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy. These and other uncertainties related to the business and our plans are described in greater detail in Item 1A to our Form 10-K for the year ended December 31, 2008, as updated and supplemented by our subsequent SEC reports.  You should be aware that new factors may emerge from time to time and it is not possible for us to identify all such factors nor can we predict the impact of each such factor on the business or the extent to which any one or more factors may cause actual results to differ from those reflected in any forward-looking statements.  You are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We undertake no obligation to update any of our forward-looking statements for any reason, whether as a result of new information, future events or otherwise.

CenturyLink is a leading provider of high-quality voice, broadband and video services over its advanced communications networks to consumers and businesses in 33 states. CenturyLink, headquartered in Monroe, La., is an S&P 500 Company and expects to be listed in the Fortune 500 list of America’s largest corporations. For more information on CenturyLink, visit www.centurylink.com.


                                 CenturyTel, Inc.
                       CONSOLIDATED STATEMENTS OF INCOME
               THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008
                                    (UNAUDITED)

                                        Three months ended December 31, 2009

                                                                 As adjusted
                                                         Less      excluding
                                                          non-        non-
    In thousands, except                  As           recurring   recurring
     per share amounts                 reported           items       items

    OPERATING REVENUES
      Voice                            $692,422           (8,236)(1) 700,658
      Network access                    436,346                      436,346
      Data                              459,211           (2,128)(1) 461,339
      Fiber transport and CLEC           45,593                       45,593
      Other                             195,488                      195,488
                                      1,829,060          (10,364)  1,839,424

    OPERATING EXPENSES
      Cost of services and products     596,859           (6,882)(2) 603,741
      Selling, general and
       administrative                   335,479           43,388(2)  292,091
      Depreciation and amortization     356,384                      356,384
                                      1,288,722           36,506   1,252,216

    OPERATING INCOME                    540,338          (46,870)    587,208

    OTHER INCOME (EXPENSE)
      Interest expense                 (133,023)          11,119(3) (144,142)
      Other income (expense)            (63,354)         (71,968)(3)   8,614
      Income tax expense               (116,084)          48,467(4) (164,551)

    INCOME BEFORE NONCONTROLLING
     INTERESTS AND EXTRAORDINARY ITEM   227,877          (59,252)    287,129
      Noncontrolling interests             (441)                        (441)
    NET INCOME BEFORE EXTRAORDINARY
     ITEM                               227,436          (59,252)    286,688

      Extraordinary item                  2,744            2,744(5)        -
    NET INCOME ATTRIBUTABLE TO
     CENTURYTEL, INC.                  $230,180          (56,508)    286,688

    BASIC EARNINGS PER SHARE
      Income before extraordinary item    $0.76            (0.20)       0.96
      Extraordinary item                  $0.01             0.01           -
      Basic earnings per share            $0.77            (0.19)       0.96

    DILUTED EARNINGS PER SHARE
      Income before extraordinary item    $0.76            (0.20)       0.95
      Extraordinary item                  $0.01             0.01           -
      Diluted earnings per share          $0.77            (0.19)       0.95

    AVERAGE SHARES OUTSTANDING
      Basic                             298,580                      298,580
      Diluted                           299,233                      299,233

    DIVIDENDS PER COMMON SHARE            $0.70                         0.70

                                        Three months ended December 31, 2008

                                                                 As adjusted
                                                         Less      excluding
                                                          non-        non-
    In thousands, except                  As           recurring   recurring
     per share amounts                 reported           items       items

    OPERATING REVENUES
      Voice                             215,407                      215,407
      Network access                    198,396              307(6)  198,089
      Data                              133,731                      133,731
      Fiber transport and CLEC           41,245                       41,245
      Other                              54,175                       54,175
                                        642,954              307     642,647

    OPERATING EXPENSES
      Cost of services and products     235,792            1,483(6)  234,309
      Selling, general and
       administrative                   101,924            5,530(7)   96,394
      Depreciation and amortization     128,796                      128,796
                                        466,512            7,013     459,499

    OPERATING INCOME                    176,442           (6,706)    183,148

    OTHER INCOME (EXPENSE)
      Interest expense                  (53,446)                     (53,446)
      Other income (expense)             15,816           10,000(8)    5,816
      Income tax expense                (38,441)           9,734(9)  (48,175)

    INCOME BEFORE NONCONTROLLING
     INTERESTS AND EXTRAORDINARY
     ITEM                               100,371           13,028      87,343
    Noncontrolling interests               (299)                        (299)
    NET INCOME BEFORE EXTRAORDINARY
     ITEM                               100,072           13,028      87,044

      Extraordinary item                      -                            -
    NET INCOME ATTRIBUTABLE TO
     CENTURYTEL, INC.                   100,072           13,028      87,044

    BASIC EARNINGS PER SHARE
      Income before extraordinary item     1.00             0.13        0.87
      Extraordinary item                      -                -           -
      Basic earnings per share             1.00             0.13        0.87

    DILUTED EARNINGS PER SHARE
      Income before extraordinary item     1.00             0.13        0.87
      Extraordinary item                      -                -           -
      Diluted earnings per share           1.00             0.13        0.87

    AVERAGE SHARES OUTSTANDING
      Basic                              98,883                       98,883
      Diluted                            98,920                       98,920

    DIVIDENDS PER COMMON SHARE             0.70                         0.70

                                                                 Increase
                                                                (decrease)
                                               Increase         excluding
                                              (decrease)       nonrecurring
    In thousands, except per share amounts    as reported         items

    OPERATING REVENUES
      Voice                                      221.4%            225.3%
      Network access                             119.9%            120.3%
      Data                                       243.4%            245.0%
      Fiber transport and CLEC                    10.5%             10.5%
      Other                                      260.8%            260.8%
                                                 184.5%            186.2%

    OPERATING EXPENSES
      Cost of services and products              153.1%            157.7%
      Selling, general and administrative        229.1%            203.0%
      Depreciation and amortization              176.7%            176.7%
                                                 176.2%            172.5%

    OPERATING INCOME                             206.2%            220.6%

    OTHER INCOME (EXPENSE)
      Interest expense                           148.9%            169.7%
      Other income (expense)                    (500.6%)            48.1%
      Income tax expense                         202.0%            241.6%

    INCOME BEFORE NONCONTROLLING
     INTERESTS AND EXTRAORDINARY ITEM            127.0%            228.7%
      Noncontrolling interests                    47.5%             47.5%
    NET INCOME BEFORE EXTRAORDINARY ITEM         127.3%            229.4%

      Extraordinary item                             -                 -
    NET INCOME ATTRIBUTABLE TO CENTURYTEL, INC.  130.0%            229.4%

    BASIC EARNINGS PER SHARE
      Income before extraordinary item           (24.0%)            10.3%
      Extraordinary item                             -                 -
      Basic earnings per share                   (23.0%)            10.3%

    DILUTED EARNINGS PER SHARE
      Income before extraordinary item           (24.0%)             9.2%
      Extraordinary item                             -                 -
      Diluted earnings per share                 (23.0%)             9.2%

    AVERAGE SHARES OUTSTANDING
      Basic                                      202.0%            202.0%
      Diluted                                    202.5%            202.5%

    DIVIDENDS PER COMMON SHARE                       -                 -

    NONRECURRING ITEMS
    (1) - Pursuant to business combination accounting rules, certain deferred
          revenues and costs we assumed in our Embarq acquisition were
          assigned no fair value and have been eliminated from the balance
          sheet.  The above adjustment represents the revenues (and an
          equivalent amount of costs) that were eliminated in our fourth
          quarter results that are attributable to the third quarter of 2009.
    (2) - Includes integration costs associated with our acquisition of Embarq
          ($31.9 million); costs associated with a legal settlement ($8.0
          million); accelerated recognition of share-based compensation and
          pension expense ($5.5 million) and severance and related costs due
          to workforce reductions ($1.5 million).  Such increases were
          partially offset by the $10.4 million of costs eliminated in our
          fourth quarter results that were attributable to the third quarter
          of 2009 (as described in (1) above).
    (3)  - Impact of debt extinguishments.
    (4)  - Income tax effect of Items (1) through (3).  Also includes a $15.7
           million benefit due to the recognition of previously unrecognized
           tax benefits and other tax adjustments and a $5.0 million charge
           related to an adjustment to existing legacy CenturyTel deferred
           income tax liabilities due to apportionment factor changes as a
           result of the Embarq acquisition.
    (5) -  Adjust tax effect of extraordinary gain recognized in third quarter
           2009 related to the discontinuance of regulatory accounting.
    (6) -  Severance and related costs due to workforce reduction, including
           revenue impact.
    (7) -  Includes costs associated with the pending acquisition of Embarq
           ($5.0 million) and severance and related costs due to workforce
           reduction ($.5 million).
    (8) -  Recognition of previously accrued transaction related and other
           contingencies.
    (9) -  Includes $12.8 million benefit due to the recognition of previously
           unrecognized tax benefits, plus the aggregate tax effect of Items
           (6) through (8). 

                                  CenturyTel, Inc.
                        CONSOLIDATED STATEMENTS OF INCOME
                  TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008
                                    (UNAUDITED)

                                       Twelve months ended December 31, 2009

                                                                 As adjusted
                                                         Less      excluding
                                                          non-        non-
    In thousands, except                  As           recurring   recurring
     per share amounts                 reported           items       items

    OPERATING REVENUES
      Voice                          $1,827,063                     1,827,063
      Network access                  1,269,322            1,028(1) 1,268,294
      Data                            1,202,284                     1,202,284
      Fiber transport and CLEC          172,541                       172,541
      Other                             503,029                       503,029
                                      4,974,239            1,028    4,973,211

    OPERATING EXPENSES
      Cost of services and products   1,752,087            5,704(2) 1,746,383
      Selling, general and
       administrative                 1,014,341          270,030(2)   744,311
      Depreciation and amortization     974,710                       974,710
                                      3,741,138          275,734    3,465,404

    OPERATING INCOME                  1,233,101         (274,706)   1,507,807

    OTHER INCOME (EXPENSE)
    Interest expense                   (370,414)          15,719(3)  (386,133)
      Other income (expense)            (48,175)         (78,368)(4)   30,193
      Income tax expense               (301,881)         127,673(5)  (429,554)

    INCOME BEFORE NONCONTROLLING
    INTERESTS AND EXTRAORDINARY ITEM    512,631         (209,682)     722,313
      Noncontrolling interests           (1,377)                       (1,377)
    NET INCOME BEFORE EXTRAORDINARY
     ITEM                               511,254         (209,682)     720,936
      Extraordinary items, net of income
       tax expense and noncontrolling
       interests                        135,957          135,957(6)         -
    NET INCOME ATTRIBUTABLE TO
     CENTURYTEL, INC.                  $647,211          (73,725)     720,936

    BASIC EARNINGS PER SHARE
      Income before extraordinary item    $2.55            (1.05)        3.60
      Extraordinary item                  $0.68             0.68            -
      Basic earnings per share            $3.23            (0.37)        3.60

    DILUTED EARNINGS PER SHARE
      Income before extraordinary item    $2.55            (1.05)        3.60
      Extraordinary item                  $0.68             0.68            -
      Diluted earnings per share          $3.23            (0.37)        3.60

    AVERAGE SHARES OUTSTANDING
      Basic                             198,813                       198,813
      Diluted                           199,057                       199,057

    DIVIDENDS PER COMMON SHARE            $2.80                          2.80

                                       Twelve months ended December 31, 2008

                                                                 As adjusted
                                                         Less      excluding
                                                          non-        non-
    In thousands, except                  As           recurring   recurring
     per share amounts                 reported           items       items
    OPERATING REVENUES
      Voice                             874,041                       874,041
      Network access                    820,383            1,319(7)   819,064
      Data                              524,194               21(7)   524,173
      Fiber transport and CLEC          162,050                       162,050
      Other                             219,079                       219,079
                                      2,599,747            1,340    2,598,407

    OPERATING EXPENSES
      Cost of services and products     955,473            1,483(8)   953,990
      Selling, general and
       administrative                   399,136           13,185(9)   385,951
      Depreciation and amortization     523,786                       523,786
                                      1,878,395           14,668    1,863,727

    OPERATING INCOME                    721,352          (13,328)     734,680

    OTHER INCOME (EXPENSE)
      Interest expense                 (202,217)                     (202,217)
      Other income (expense)             42,252           22,713(10)   19,539
      Income tax expense               (194,357)           9,210(11) (203,567)

    INCOME BEFORE NONCONTROLLING
    INTERESTS AND EXTRAORDINARY ITEM    367,030           18,595      348,435
    Noncontrolling interests             (1,298)                       (1,298)
    NET INCOME BEFORE EXTRAORDINARY
     ITEM                               365,732           18,595      347,137
      Extraordinary items, net of income
       tax expense and noncontrolling
       interests                              -                             -
    NET INCOME ATTRIBUTABLE TO
     CENTURYTEL, INC.                   365,732           18,595      347,137

    BASIC EARNINGS PER SHARE
      Income before extraordinary item     3.53             0.18         3.35
      Extraordinary item                      -                -            -
      Basic earnings per share             3.53             0.18         3.35

    DILUTED EARNINGS PER SHARE
      Income before extraordinary item     3.52             0.18         3.35
      Extraordinary item                      -                -            -
      Diluted earnings per share           3.52             0.18         3.35

    AVERAGE SHARES OUTSTANDING
      Basic                             102,268                       102,268
      Diluted                           102,560                       102,560

    DIVIDENDS PER COMMON SHARE           2.1675                        2.1675

                                                                 Increase
                                                                (decrease)
                                               Increase          excluding
                                              (decrease)        nonrecurring
    In thousands, except per share amounts    as reported           items

    OPERATING REVENUES
    Voice                                        109.0%            109.0%
    Network access                                54.7%             54.8%
    Data                                         129.4%            129.4%
    Fiber transport and CLEC                       6.5%              6.5%
    Other                  

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