-----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, UicQuY8e/DqvFQAAg5DFKkFhOV3hDKTGwjG2pimFkYDfEO7JeOq/BvSJEorC6s5r 8+SznD0xnWNqM/wd97gMGQ== 0000018926-07-000001.txt : 20070215 0000018926-07-000001.hdr.sgml : 20070215 20070215111648 ACCESSION NUMBER: 0000018926-07-000001 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070215 DATE AS OF CHANGE: 20070215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURYTEL INC CENTRAL INDEX KEY: 0000018926 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 720651161 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07784 FILM NUMBER: 07625947 BUSINESS ADDRESS: STREET 1: P O BOX 4065 STREET 2: 100 CENTURYTEL DR CITY: MONROE STATE: LA ZIP: 71203 BUSINESS PHONE: 3183889000 MAIL ADDRESS: STREET 1: 100 CENTURYTEL DR STREET 2: P O BOX 4065 CITY: MONROE STATE: LA ZIP: 71203 FORMER COMPANY: FORMER CONFORMED NAME: CENTURY TELEPHONE ENTERPRISES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: CENTRAL TELEPHONE & ELECTRONICS CORP DATE OF NAME CHANGE: 19720512 8-K 1 earnings4thqtr.htm FOURTH QTR EARNINGS 2006 Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

 
FORM 8-K

 
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
 

 
February 15, 2007

 
 
CenturyTel, Inc.
(Exact name of registrant as specified in its charter)

 
Louisiana
1-7784
72-0651161
(State or other jurisdiction of
(Commission File Number)
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
 
 

 
100 CenturyTel Drive, Monroe, Louisiana 71203
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (318) 388-9000
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240. 14a-12)
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
Item 2.02.     Results of Operations and Financial Condition.

The following information, except for any forward-looking statements (including our forecasts for the upcoming quarter and year) and except for our references to non-GAAP financial measures (as defined in Regulation G promulgated by the Securities and Exchange Commission), shall be deemed incorporated by reference into any registration statement heretofore and hereafter filed by us under the Securities Act of 1933, as amended, except to the extent that such incorporated information is superceded by information as of a subsequent date that is included in or incorporated by reference into any such registration statement. None of the following information shall be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

On February 15, 2007, we issued a press release announcing our fourth quarter 2006 consolidated operating results. More complete information on our operating results will be included in our Annual Report on Form 10-K  for the year ended December 31, 2006, which we expect to file shortly with the Securities and Exchange Commission. The complete press release is included as Exhibit 99.

Item 9.01.     Financial Statements and Exhibits.

(d)  
   Exhibit.

99  
   Press release dated February 15, 2007 reporting fourth quarter 2006 operating results.


SIGNATURES

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 hereunto duly authorized.

 
   
CENTURYTEL, INC.
     
     
 Dated: February 15, 2007  
By: /s/ Neil A. Sweasy
   
Neil A. Sweasy
   
Vice President and Controller

EX-99 2 ex99.htm EXHIBIT 99 Unassociated Document
 
Exhibit 99
 
FOR IMMEDIATE RELEASE
FOR MORE INFORMATION CONTACT:
February 15, 2007
Media: Patricia Cameron 318.388.9674
 
patricia.cameron@centurytel.com
 
Investors: Tony Davis 318.388.9525
 
tony.davis@centurytel.com
 

CenturyTel Reports Fourth Quarter 2006 Earnings

Monroe, La... CenturyTel, Inc. (NYSE: CTL) announces operating results for fourth quarter 2006.
 
·  
Operating revenues were $607.7 million compared to $620.5 million in fourth quarter 2005.
·  
Operating cash flow (as defined in the attached financial schedules) was $300.0 million.
·  
Net income, excluding nonrecurring items, was $79.4 million compared to $82.2 million in fourth quarter 2005. Net income, reported under GAAP, was $72.2 million compared to $78.3 million in fourth quarter 2005.
·  
Diluted earnings per share, excluding nonrecurring items, was $.68 in fourth quarter 2006 compared to $.61 in fourth quarter 2005, while GAAP diluted earnings per share was $.62 in fourth quarter 2006 and $.59 in fourth quarter 2005.
·  
Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $104.8 million in fourth quarter 2006.
·  
Nearly 3.2 million shares were repurchased and retired for $132.3 million during the quarter.
 
 
 
Quarter Ended
 
Quarter Ended
 
 
 
(Excluding nonrecurring items)
 
12/31/2006
 
12/31/2005
 
% Change
 
(In thousands, except per share amounts and customer units)
             
               
Operating Revenues
 
$
607,695
 
$
620,472
   
(2.1
)%
Operating Cash Flow   (1)
 
$
300,039
 
$
308,197
   
(2.6
)%
Net Income
 
$
79,449
 
$
82,184
   
(3.3
)%
Diluted Earnings Per Share
 
$
.68
 
$
.61
   
11.5
%
Average Diluted Shares Outstanding
   
118,874
   
135,917
   
(12.5
)%
    Capital Expenditures
 
$
101,037
 
$
132,914
   
(24.0
)%
                     
Telephone Access Lines  (2)
   
2,094,000
   
2,214,000
 
 
(5.4
)%
    High-speed Internet Customers
   
369,000
   
249,000
   
48.2
%
                     
    (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)    Excluding adjustments during 2006 to reflect the removal of test lines, database conversion and clean-up, and the sale of our Arizona properties, access line losses for 2006 were
           approximately 107,000, a year-over-year line loss of 4.8%.

“CenturyTel generated a record $512 million of free cash flow during 2006, reflecting our continued success in aligning our costs and capital deployment with the changing landscape of our industry,” Glen F. Post, III, chairman and chief executive officer, said. “At the same time, we invested more than $300 million in our business and returned more than $800 million to shareholders through the repurchase of more than 21 million common shares.”
 
    Operating revenues were $607.7 million in fourth quarter 2006 compared to $620.5 million in fourth quarter 2005. Revenue increases during the quarter of approximately $17 million resulted primarily from an increase in high-speed Internet customers and growth in fiber transport revenues, as well as new initiatives. These increases were more than offset by revenue declines of approximately $30 million primarily attributable to previously anticipated lower access revenues, reduced universal service funding, and access line losses.
 
    Operating expenses decreased 3.1% to $434 million from $448 million in fourth quarter 2005, principally due to a $9.4 million decline in depreciation expense primarily associated with fully depreciated assets. Additionally, cash expenses were $4.6 million lower than in fourth quarter 2005 driven primarily by lower marketing, personnel and contract labor costs that more than offset increased expenses associated with new initiatives, long distance usage and growth in high-speed Internet customers.

“CenturyTel remains focused on being the broadband provider of choice in our markets. Customer demand for high-quality broadband service drove more than 29,000 high-speed Internet additions during the quarter resulting in over 120,000 net additions for the full year, a 48.2% annual increase,” Post said. “We also expanded our addressable market for broadband services during the quarter with the launch of CenturyTel’s first mesh-WiFi network in Vail, Colorado.”
 
    Operating cash flow for fourth quarter 2006 was $300.0 million. CenturyTel achieved an operating cash flow margin of 49.4% during the quarter versus 49.7% in fourth quarter 2005. This margin decline was expected due to the growth in lower margin revenues versus the anticipated decline in higher margin revenues discussed above.
 
    Net income, excluding nonrecurring items, was $79.4 million compared to $82.2 million in fourth quarter 2005. Diluted earnings per share, excluding nonrecurring items, increased to $.68 in fourth quarter 2006 compared to $.61 in fourth quarter 2005, primarily due to the reduction in diluted shares outstanding as a result of share repurchases during 2006.
 
    For the year 2006, operating revenues, excluding nonrecurring items, were $2.446 billion compared to $2.479 billion in 2005, a 1.4% decrease. Operating cash flow, excluding nonrecurring items, was $1.197 billion for 2006 compared to $1.274 billion a year ago. Net income, excluding nonrecurring items, was $303.0 million compared to $346.3 million in 2005, while diluted earnings per share was $2.52 compared to $2.58 in 2005.
 
Under generally accepted accounting principles (GAAP), net income for fourth quarter 2006 was $72.2 million compared to $78.3 million for fourth quarter 2005. Diluted earnings per share was $.62 in fourth quarter 2006 compared to $.59 in fourth quarter 2005. Fourth quarter 2006 and fourth quarter 2005 results reflect after-tax charges of $7.2 million and $3.9 million, respectively, related to impairment charges associated with certain non-operating investments.

For the year 2006, prepared in accordance with GAAP, the Company reported net income of $370.0 million, or $3.07 per diluted share, compared to net income of $334.5 million, or $2.49 per diluted share, for the year 2005. See the accompanying financial schedules for detail of the Company’s nonrecurring items for the years 2006 and 2005.

Outlook for 2007. For full year 2007, CenturyTel expects 2007 diluted earnings per share to be in the range of $2.60 to $2.70. As previously communicated, the Company expects revenue settlements related to prior periods to positively impact 2007 diluted earnings per share by $.17 to $.22. CenturyTel also expects share repurchases made during 2006 and January 2007 along with modestly lower interest expense to positively impact 2007 diluted earnings per share by $.10 to $.15. Additionally, CenturyTel believes it will continue to drive growth from the further penetration of its broadband service offerings and continued expansion in its fiber business that is anticipated to positively impact 2007 diluted earnings per share by $.08 to $.12, excluding depreciation expense. Also, lower depreciation expense, primarily due to certain telephone assets becoming fully depreciated that more than offsets higher depreciation related to broadband investments and new initiatives, is anticipated to positively impact 2007 diluted earnings per share by $.03 to $.05. These increases are expected to more than offset the negative impact on 2007 diluted earnings per share of $.30 to $.35 related to anticipated access line losses of 4.5% to 6.0% and continued pressure on access revenues.

For first quarter 2007, CenturyTel expects total revenues of $600 to $610 million and diluted earnings per share of $.60 to $.65.

Finally, the Company expects its capital expenditures in 2007 to be approximately $325 million, a slight increase over the $314 million expended in 2006.

These 2007 outlook figures exclude nonrecurring items, any share repurchases made after January 31, 2007, the pending acquisition of Madison River Communications Corp. and any future mergers, acquisitions, divestitures or other similar business transactions.

Other. During the fourth quarter of 2006, CenturyTel adopted the requirements of Staff Accounting Bulletin No. 108 (SAB 108), which required the results of operations previously reported in the first, second and third quarters of 2006 to be adjusted. The attached schedules reflect the nature of the adjustments and reconcile amounts previously reported to those amounts as adjusted for the application of SAB 108, both on a GAAP and non-GAAP basis.

In addition, the Company’s stockholders’ equity was reduced approximately $98 million during fourth quarter 2006 upon the adoption of SFAS 158, which requires companies to reflect the unrecognized actuarial loss related to pension and post-retirement plans as a reduction in stockholders’ equity.

Reconciliation to GAAP. This release includes certain non-GAAP financial measures, including but not limited to operating cash flow, free cash flow and adjustments to GAAP measures to exclude the effect of nonrecurring items. 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 statements. 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.centurytel.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, CenturyTel’s management will host a conference call at 10:30 a.m. Central Time today. Interested parties can access the call by dialing 866.814.8448. The call will be accessible for replay through February 21, 2007, by calling 888.266.2081 and entering the conference ID number 1023612. Investors can also listen to CenturyTel’s earnings conference call and replay by accessing the Investor Relations portion of the Company’s Web site at www.centurytel.com prior to March 8, 2007.

In addition to historical information, this release includes certain 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 the Company. 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 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; the Company’s ability to effectively manage its expansion opportunities, including successfully financing and timely consummating pending acquisitions, successfully integrating newly-acquired properties into the Company’s operations, and retaining and hiring key personnel; possible changes in the demand for, or pricing of, the Company’s products and services; the Company’s ability to successfully introduce new product or service offerings on a timely and cost-effective basis; the Company’s ability to collect its receivables from financially troubled communications companies; the Company’s ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effect of adverse weather; other risks referenced from time to time in the Company’s filings with the Securities and Exchange Commission (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 Company’s business are described in greater detail in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, as updated by the Company’s subsequent SEC reports. You should be aware that new factors may emerge from time to time and it is not possible for management to identify all such factors, nor can it 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 of this release. The information contained in this release is as of February 15, 2007. The Company undertakes no obligation to update any of its forward-looking statements for any reason.

CenturyTel (NYSE: CTL) is a leading provider of communications, high speed Internet and entertainment services in small-to-mid-size cities through our broadband and fiber transport networks. Included in the S&P 500 Index, CenturyTel delivers advanced communications with a personal touch to customers in 25 states. Visit us at www.centurytel.com.
 
__________________________________________
 
 
 
CenturyTel, Inc.
 CONSOLIDATED STATEMENTS OF INCOME
 
 THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005
 
 (UNAUDITED)
 
                                               
       
Three months ended December 31, 2006
 
Three months ended December 31, 2005
         
                   
As adjusted
             
As adjusted
     
Increase
 
           
Less
     
excluding
     
Less
     
excluding
     
(decrease)
 
           
non-
     
non-
     
non-
     
non-
 
Increase
 
excluding
 
       
As
 
recurring
     
recurring
 
As
 
recurring
     
recurring
 
(decrease)
 
nonrecurring
 
In thousands, except per share amounts
 
reported
 
items
     
items
 
reported
 
items
     
items
 
as reported
 
items
 
                                           
OPERATING REVENUES
                                         
Voice*
       
$
211,385
               
211,385
   
220,207
               
220,207
   
(4.0
%)
 
(4.0
%)
Network access
         
211,819
               
211,819
   
232,570
               
232,570
   
(8.9
%)
 
(8.9
%)
Data
         
92,337
               
92,337
   
80,904
               
80,904
   
14.1
%
 
14.1
%
Fiber transport and CLEC
         
39,770
               
39,770
   
37,214
               
37,214
   
6.9
%
 
6.9
%
Other
         
52,384
               
52,384
   
49,577
               
49,577
   
5.7
%
 
5.7
%
           
607,695
   
-
         
607,695
   
620,472
   
-
         
620,472
   
(2.1
%)
 
(2.1
%)
                                                                     
OPERATING EXPENSES
                                                           
Cost of services and products
         
223,132
               
223,132
   
212,339
               
212,339
   
5.1
%
 
5.1
%
Selling, general and administrative
         
84,524
               
84,524
   
99,936
               
99,936
   
(15.4
%)
 
(15.4
%)
Depreciation and amortization
         
126,360
               
126,360
   
135,778
               
135,778
   
(6.9
%)
 
(6.9
%)
           
434,016
   
-
         
434,016
   
448,053
   
-
         
448,053
   
(3.1
%)
 
(3.1
%)
                                                                     
OPERATING INCOME
 
173,679
   
-
         
173,679
   
172,419
   
-
         
172,419
   
0.7
%
 
0.7
%
                                                                     
OTHER INCOME (EXPENSE)
                                                           
Interest expense
         
(47,375
)
             
(47,375
)
 
(49,625
)
             
(49,625
)
 
(4.5
%)
 
(4.5
%)
Other income (expense)
         
(9,306
)
 
(11,715
)
 
(1
)
 
2,409
   
1,320
 
 
(6,250
)
 
(3
)
 
7,570
   
(805.0
%)
 
(68.2
%)
Income tax expense
         
(44,765
)
 
4,499
   
(2
)
 
(49,264
)
 
(45,780
)
 
2,400
   
(4
)
 
(48,180
)
 
(2.2
%)
 
2.2
%
NET INCOME
$
72,233
   
(7,216
)
       
79,449
   
78,334
   
(3,850
)
       
82,184
   
(7.8
%)
 
(3.3
%)
                                                                     
BASIC EARNINGS PER SHARE
$
0.63
   
(0.06
)
       
0.70
   
0.60
   
(0.03
)
       
0.63
   
5.0
%
 
11.1
%
DILUTED EARNINGS PER SHARE
$
0.62
   
(0.06
)
       
0.68
   
0.59
   
(0.03
)
       
0.61
   
5.1
%
 
11.5
%
                                                                     
AVERAGE SHARES OUTSTANDING
                                                           
Basic
         
113,629
               
113,629
   
130,730
               
130,730
   
(13.1
%)
 
(13.1
%)
Diluted
         
118,874
               
118,874
   
135,917
               
135,917
   
(12.5
%)
 
(12.5
%)
                                                                     
DIVIDENDS PER COMMON SHARE
$
0.0625
               
0.0625
   
0.0600
               
0.0600
   
4.2
%
 
4.2
%
                                                                     
NONRECURRING ITEMS
                                                           
(1) - Impairment of nonoperating investments.
                                                                   
(2) - Tax effect of Item (1).
                                                                   
(3) - Impairment of nonoperating investment.
                                                                   
(4) - Tax effect of Item (3).
                                                                   
                                                                     
*Revenues previously reported as "Local service" and "Long distance" have been combined into this "Voice" category for all periods presented.
               
 
 
 
 CenturyTel, Inc.
 
 CONSOLIDATED STATEMENTS OF INCOME
 
 TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
 
 (UNAUDITED)
 
                                           
   
Twelve months ended December 31, 2006
 
Twelve months ended December 31, 2005
         
               
As adjusted
             
As adjusted
     
Increase
 
       
Less
     
excluding
     
Less
     
excluding
     
(decrease)
 
       
non-
     
non-
     
non-
     
non-
 
Increase
 
excluding
 
   
As
 
recurring
     
recurring
 
As
 
recurring
     
recurring
 
(decrease)
 
nonrecurring
 
In thousands, except per share amounts
 
reported
 
items
     
items
 
reported
 
items
     
items
 
as reported
 
items
 
                                           
OPERATING REVENUES
                                         
Voice*
 
$
860,741
               
860,741
   
892,272
               
892,272
   
(3.5
%)
 
(3.5
%)
Network access
   
878,702
   
1,688
   
(1
)
 
877,014
   
959,838
               
959,838
   
(8.5
%)
 
(8.6
%)
Data
   
351,495
   
275
   
(1
)
 
351,220
   
318,770
               
318,770
   
10.3
%
 
10.2
%
Fiber transport and CLEC
   
149,088
               
149,088
   
115,454
               
115,454
   
29.1
%
 
29.1
%
Other
   
207,704
               
207,704
   
192,918
               
192,918
   
7.7
%
 
7.7
%
     
2,447,730
   
1,963
         
2,445,767
   
2,479,252
   
-
         
2,479,252
   
(1.3
%)
 
(1.4
%)
                                                               
OPERATING EXPENSES
                                                             
Cost of services and products
   
888,414
   
8,585
   
(1
)
 
879,829
   
821,929
   
5,853
   
(4
)
 
816,076
   
8.1
%
 
7.8
%
Selling, general and administrative
   
370,272
   
845
   
(1
)
 
369,427
   
388,989
               
388,989
   
(4.8
%)
 
(5.0
%)
Depreciation and amortization
   
523,506
               
523,506
   
531,931
               
531,931
   
(1.6
%)
 
(1.6
%)
     
1,782,192
   
9,430
         
1,772,762
   
1,742,849
   
5,853
         
1,736,996
   
2.3
%
 
2.1
%
                                                               
OPERATING INCOME
   
665,538
   
(7,467
)
       
673,005
   
736,403
   
(5,853
)
       
742,256
   
(9.6
%)
 
(9.3
%)
                                                               
OTHER INCOME (EXPENSE)
                                                             
Interest expense
   
(195,957
)
             
(195,957
)
 
(201,801
)
 
(1,196
)
 
(5
)
 
(200,605
)
 
(2.9
%)
 
(2.3
%)
Other income (expense)
   
121,568
   
106,934
   
(2
)
 
14,634
   
3,168
 
 
(14,253
)
 
(6
)
 
17,421
   
3,737.4
%
 
(16.0
%)
Income tax expense
   
(221,122
)
 
(32,477
)
 
(3
)
 
(188,645
)
 
(203,291
)
 
9,511
   
(7
)
 
(212,802
)
 
8.8
%
 
(11.4
%)
NET INCOME
 
$
370,027
   
66,990
         
303,037
   
334,479
   
(11,791
)
       
346,270
   
10.6
%
 
(12.5
%)
                                                               
BASIC EARNINGS PER SHARE
 
$
3.17
   
0.57
         
2.59
   
2.55
   
(0.09
)
       
2.64
   
24.3
%
 
(1.9
%)
DILUTED EARNINGS PER SHARE
 
$
3.07
   
0.55
         
2.52
   
2.49
   
(0.09
)
       
2.58
   
23.3
%
 
(2.3
%)
                                                               
AVERAGE SHARES OUTSTANDING
                                                             
Basic
   
116,671
               
116,671
   
130,841
               
130,841
   
(10.8
%)
 
(10.8
%)
Diluted
   
122,229
               
122,229
   
136,087
               
136,087
   
(10.2
%)
 
(10.2
%)
                                                               
DIVIDENDS PER COMMON SHARE
 
$
0.25
               
0.25
   
0.24
               
0.24
   
4.2
%
 
4.2
%
                                                               
NONRECURRING ITEMS
                                                             
 (1) - Severance and related costs due to workforce reduction, including revenue effect.
 (2) - Includes (i) gains of $117.8 million recorded upon redemption of Rural Telephone Bank stock and $.9 million recorded upon sale of Arizona properties, net of  (ii) $11.7 million
       impairment of nonoperating investments.
 (3) - Includes $38.9 million net tax expense related to Items (1) and (2), net of $6.4 million net tax benefit due to the resolution of various income tax audit issues.
 (4) - Expenses associated with Hurricanes Katrina and Rita.
 (5) - Write-off of unamortized deferred debt costs associated with purchasing and retiring approximately $400 million of Series J notes.
 (6) - Includes (i) a $16.2 million impairment of nonoperating investment and a $4.8 million debt extinguishment charge related to purchasing and retiring approximately $400 million of Series J notes,
    net of (ii) a $3.5 million gain on sale of nonoperating investment and $3.2 million of interest income related to the settlement of various income tax audits.
 (7) - Includes (i) $1.3 million tax benefit related to the settlement of various income tax audits and (ii) $8.2 million net tax benefit of items (4) through (6).
                                                               
Revenues previously reported as "Local service" and "Long distance" have been combined into this "Voice" category for all periods presented.
 
 
 CenturyTel, Inc.
 
 CONSOLIDATED BALANCE SHEETS
 
 DECEMBER 31, 2006 AND DECEMBER 31, 2005
 
 (UNAUDITED)
 
           
   
December 31,
 
December 31,
 
   
2006
 
2005
 
   
(in thousands)
 
 ASSETS
         
CURRENT ASSETS
         
    Cash and cash equivalents
 
$
25,668
   
158,846
 
    Other current assets
   
264,449
   
264,170
 
        Total current assets
   
290,117
   
423,016
 
               
NET PROPERTY, PLANT AND EQUIPMENT
             
    Property, plant and equipment
   
7,893,760
   
7,801,377
 
    Accumulated depreciation
   
(4,784,483
)
 
(4,496,891
)
        Net property, plant and equipment
   
3,109,277
   
3,304,486
 
               
GOODWILL AND OTHER ASSETS
             
    Goodwill
   
3,431,136
   
3,432,649
 
    Other
   
610,477
   
602,556
 
        Total goodwill and other assets
   
4,041,613
   
4,035,205
 
               
TOTAL ASSETS
 
$
7,441,007
   
7,762,707
 
               
 LIABILITIES AND EQUITY
             
CURRENT LIABILITIES
             
    Short-term debt and current maturities of long-term debt
 
$
178,012
   
276,736
 
    Other current liabilities
   
439,553
   
469,494
 
        Total current liabilities
   
617,565
   
746,230
 
               
LONG-TERM DEBT
   
2,412,852
   
2,376,070
 
DEFERRED CREDITS AND OTHER LIABILITIES
   
1,219,639
   
1,023,134
 
STOCKHOLDERS' EQUITY
   
3,190,951
   
3,617,273
 
               
TOTAL LIABILITIES AND EQUITY
 
$
7,441,007
   
7,762,707
 
               
 
 
 
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
                             
                             
 
 
Three months ended December 31, 2006
Three months ended December 31, 2005
             
As adjusted
           
As adjusted
       
Less
   
excluding
     
Less
   
excluding
       
non-
   
non-
     
non-
   
non-
In thousands
 
As
 
recurring
   
recurring
 
As
 
recurring
   
recurring
   
reported
 
items
   
items
 
reported
 
items
   
items
Operating cash flow and cash flow margin
                           
Operating income
 
$
173,679
   
-
       
173,679
   
172,419
   
-
       
 172,419
Add: Depreciation and amortization
   
126,360
   
-
       
126,360
   
135,778
   
-
       
135,778
Operating cash flow
 
$
300,039
   
-
       
300,039
   
308,197
   
-
       
308,197
                                             
Revenues
 
$
607,695
   
-
       
607,695
   
620,472
   
-
       
620,472
                                             
Operating income margin (operating income divided by revenues)
   
28.6
%
           
28.6
%
 
27.8
%
           
27.8%
                                             
Operating cash flow margin (operating cash flow divided by revenues)
   
49.4
%
           
49.4
%
 
49.7
%
           
49.7%
                                             
Free cash flow (prior to debt service requirements and dividends)
                                           
Net income
 
$
72,233
   
(7,216
)
 (1)
 
 
79,449
   
78,334
   
(3,850
)
 (1)
 
 
82,184
Add: Depreciation and amortization
   
126,360
   
-
       
126,360
   
135,778
   
-
       
135,778
Less: Capital expenditures
   
(101,037
)
 
-
       
(101,037
)
 
(132,914
)
 
-
       
  (132,914)
Free cash flow
 
$
97,556
   
(7,216
)
     
104,772
   
81,198
   
(3,850
)
     
85,048
                                             
Free cash flow
 
$
97,556
                   
81,198
               
Income from unconsolidated cellular entity
   
(821
)
                 
(1,603
)
             
Deferred income taxes
   
16,272
                   
36,112
               
Changes in current assets and current liabilities
   
7,821
                   
(2,366
)
             
Decrease in other noncurrent assets
   
4,649
                   
6,180
               
Increase in other noncurrent liabilities
   
152
                   
142
               
Retirement benefits
   
(19,369
)
                 
(30,804
)
             
Excess tax benefits from share-based compensation
   
(4,174
)
                 
-
               
Other, net
   
15,088
                   
9,597
               
Add: Capital expenditures
   
101,037
                   
132,914
               
Net cash provided by operating activities
 
$
218,211
                   
231,370
               
                                             
NONRECURRING ITEMS
                                           
(1) - Impairment of nonoperating investments (presented on an after-tax basis).
 
 
CenturyTel, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
                               
                               
   
Twelve months ended December 31, 2006
 
Twelve months ended December 31, 2005
               
As adjusted
           
As adjusted
       
Less
     
excluding
     
Less
   
excluding
       
non-
     
non-
     
non-
   
non-
In thousands
 
As
 
recurring
     
recurring
 
As
 
recurring
   
recurring
   
reported
 
items
     
items
 
reported
 
items
   
items
Operating cash flow and cash flow margin
                             
Operating income
 
$
665,538
   
(7,467
)
(1
)
 
673,005
   
736,403
   
(5,853
)
(3
)
 
  742,256  
Add: Depreciation and amortization
   
523,506
   
-
       
523,506
   
531,931
   
-
       
531,931  
Operating cash flow
 
$
1,189,044
   
(7,467
)
     
1,196,511
   
1,268,334
   
(5,853
)
     
1,274,187  
                                             
Revenues
 
$
2,447,730
   
1,963
 
(1
)
 
2,445,767
   
2,479,252
   
-
       
2,479,252  
                                             
Operating income margin (operating income divided by revenues)
   
27.2
%
           
27.5
%
 
29.7
%
           
29.9%  
                                             
Operating cash flow margin (operating cash flow divided by revenues)
   
48.6
%
           
48.9
%
 
51.2
%
           
51.4% 
                                             
Free cash flow (prior to debt service requirements and dividends)
                                           
Net income
 
$
370,027
   
66,990
 
(2
)
 
303,037
   
334,479
   
(11,791
)
(4
)
 
346,270  
Add: Depreciation and amortization
   
523,506
   
-
       
523,506
   
531,931
   
-
       
531,931  
Less: Capital expenditures
   
(314,071
)
 
-
       
(314,071
)
 
(414,872
)
 
-
       
            (414,872)
   
$
579,462
   
66,990
       
512,472
   
451,538
   
(11,791
)
     
463,329  
                                             
Free cash flow
 
$
579,462
                   
451,538
               
Gain on asset dispositions
   
(118,649
)
                 
(3,500
)
             
Income from unconsolidated cellular entity
   
(5,861
)
                 
(4,910
)
             
Deferred income taxes
   
49,685
                   
69,530
               
Changes in current assets and current liabilities
   
(6,651
)
                 
27,001
               
Decrease in other noncurrent assets
   
9,078
                   
1,973
               
Increase in other noncurrent liabilities
   
709
                   
2,638
               
Retirement benefits
   
5,963
                   
(16,815
)
             
Excess tax benefits from share-based compensation
   
(12,034
)
                 
-
               
Other, net
   
24,946
                   
22,412
               
Add: Capital expenditures
   
314,071
                   
414,872
               
Net cash provided by operating activities
 
$
840,719
                   
964,739
               
                                             
NONRECURRING ITEMS
                                           
(1) - Severance and related costs due to workforce reduction (including revenue effect).
(2) - Includes (i) $72.4 million after-tax gains recorded upon redemption of Rural Telephone Bank stock and sale of Arizona properties, (ii) $7.2 million after-tax impairment of
    nonoperating investments, (iii) $4.6 million severance and related costs due to workforce reduction (including revenue effect), net of tax, and (iv) $6.4 million net tax benefit
    due to the resolution of various income tax audit issues.
(3) - Expenses associated with Hurricanes Katrina and Rita (presented on a pre-tax basis).
(4) - Includes (i) a $10.0 million after-tax impairment of nonoperating investment, a $3.7 million after-tax expense related to purchasing and retiring approximately $400 million of Series J
    notes and a $3.6 million after-tax expense associated with Hurricanes Katrina and Rita, net of (ii) a $3.3 million net benefit related to the settlement of various income tax audits
    and a $2.2 million after-tax gain on sale of nonoperating investment.
 
 
 CenturyTel, Inc.
 
 CONSOLIDATED STATEMENTS OF INCOME
 
 FIRST, SECOND AND THIRD QUARTERS OF 2006
 
 ADJUSTED TO REFLECT THE APPLICATION OF SAB 108
 
PRESENTED ON A GAAP BASIS
 
 (UNAUDITED)
 
                                                       
                                                       
       
Three months ended March 31, 2006
 
Three months ended June 30, 2006
 
Three months ended September 30, 2006
 
                   
As adjusted
             
As adjusted
             
As adjusted
 
       
As
 
SAB 108
     
for
 
As
 
SAB 108
     
for
 
As
 
SAB 108
     
for
 
In thousands, except per share amounts
 
reported
 
Adjustments
     
SAB 108
 
reported
 
Adjustments
     
SAB 108
 
reported
 
Adjustments
     
SAB 108
 
                                                       
OPERATING REVENUES
                                                 
Voice
       
$
217,449
   
(435
)
 
(1
)
 
217,014
   
216,786
   
(301
)
 
(1
)
 
216,485
   
216,180
   
(323
)
 
(1
)
 
215,857
 
Network access
         
225,246
   
77
   
(2
)
 
225,323
   
221,586
   
77
   
(2
)
 
221,663
   
219,820
   
77
   
(2
)
 
219,897
 
Data
         
83,238
               
83,238
   
84,447
               
84,447
   
91,473
               
91,473
 
Fiber transport and CLEC
         
35,780
               
35,780
   
36,051
               
36,051
   
37,487
               
37,487
 
Other
         
49,936
               
49,936
   
50,261
               
50,261
   
55,123
               
55,123
 
           
611,649
   
(358
)
       
611,291
   
609,131
   
(224
)
       
608,907
   
620,083
   
(246
)
       
619,837
 
                                                                                 
OPERATING EXPENSES
                                                                       
Cost of services and products
         
222,952
   
(397
)
 
(1
)
 
222,555
   
216,466
   
(275
)
 
(1
)
 
216,191
   
226,831
   
(295
)
 
(1
)
 
226,536
 
Selling, general and administrative
         
95,940
               
95,940
   
95,596
               
95,596
   
94,212
               
94,212
 
Depreciation and amortization
         
134,565
   
307
   
(2
)
 
134,872
   
131,820
   
307
   
(2
)
 
132,127
   
129,840
   
307
   
(2
)
 
130,147
 
           
453,457
   
(90
)
       
453,367
   
443,882
   
32
         
443,914
   
450,883
   
12
         
450,895
 
                                                                                 
OPERATING INCOME
 
158,192
   
(268
)
       
157,924
   
165,249
   
(256
)
       
164,993
   
169,200
   
(258
)
       
168,942
 
                                                                                 
OTHER INCOME (EXPENSE)
                                                                       
Interest expense
         
(50,086
)
             
(50,086
)
 
(50,639
)
             
(50,639
)
 
(47,857
)
             
(47,857
)
Other income (expense)
         
4,597 
               
4,597 
   
123,459 
               
123,459 
   
2,818 
               
2,818 
 
Income tax expense
         
(43,278
)
 
103
   
(3
)
 
(43,175
)
 
(85,701
)
 
98
   
(3
)
 
(85,603
)
 
(47,678
)
 
99
   
(3
)
 
(47,579
)
NET INCOME
$
69,425
   
(165
)
       
69,260
   
152,368
   
(158
)
       
152,210
   
76,483
   
(159
)
       
76,324
 
                                                                                 
BASIC EARNINGS PER SHARE
$
0.57
   
0.00
         
0.57
   
1.32
   
0.00
         
1.32
   
0.66
   
0.00
         
0.66
 
DILUTED EARNINGS PER SHARE
$
0.55
   
0.00
         
0.55
   
1.26
   
0.00
         
1.26
   
0.65
   
0.00
         
0.64
 
                                                                                 
AVERAGE SHARES OUTSTANDING
                                                                       
Basic
         
122,394
               
122,394
   
115,441
               
115,441
   
115,221
               
115,221
 
Diluted
         
127,959
               
127,959
   
121,636
               
121,636
   
120,448
               
120,448
 
                                                                                 
DIVIDENDS PER COMMON SHARE
$
0.0625
               
0.0625
   
0.0625
               
0.0625
   
0.0625
               
0.0625