-----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, Cxwp+k1fqTSO84gPOpmI4wuYjL8WwK52g7nfCs0iN8+0dr+Mc/thZqFeCDA8Qlop QVXWM1542ufARja4E37Wsw== 0000018926-09-000006.txt : 20090219 0000018926-09-000006.hdr.sgml : 20090219 20090219103831 ACCESSION NUMBER: 0000018926-09-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20081231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20090219 DATE AS OF CHANGE: 20090219 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: 09620379 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 file8k.htm FOURTH QTR 2008 ER file8k.htm
 
 
 
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 19, 2009
 
 
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 19, 2009, we issued a press release announcing our fourth quarter 2008 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, 2008, 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 19, 2009 reporting fourth quarter 2008 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 19, 2009  
By:  /s/ Neil A. Sweasy
   
        Neil A. Sweasy
   
        Vice President and Controller
 
EX-99 2 exh99.htm PRESS RELEASE exh99.htm
Exhibit 99
 
NEWS RELEASE

FOR IMMEDIATE RELEASE:
FOR MORE INFORMATION CONTACT:
February 19, 2009
Tony Davis 318.388.9525
tony.davis@centurytel.com


CenturyTel Reports Fourth Quarter 2008 Earnings

Monroe, La... CenturyTel, Inc. (NYSE: CTL) announces operating results for fourth quarter 2008.

·  
  Operating revenues, excluding nonrecurring items, declined 2.3% to $642.6 million from $657.8 million in fourth quarter 2007. Operating revenues, reported under GAAP, were
  $643.0 million.

·  
  Operating cash flow (as defined in the attached financial schedules), excluding nonrecurring items, decreased 3.0% to $311.9 million from $321.5 million in fourth quarter 2007.

·  
  Net income, excluding nonrecurring items, declined 3.1% to $87.0 million from $89.8 million in fourth quarter 2007. Net income, reported under GAAP, was $100.1 million compared to $115.0
  million in fourth quarter 2007.

·  
  Diluted earnings per share, excluding nonrecurring items, increased 7.3% to $.88 from $.82 in fourth quarter 2007, while GAAP diluted earnings per share was $1.01 in fourth quarter 2008
  and $1.04 in fourth quarter 2007.

·  
  Free cash flow (as defined in the attached financial schedules), excluding nonrecurring items, was $114.0 million in fourth quarter 2008 and a record $584.1 million for full year 2008.
 
Fourth Quarter Highlights
(Excluding nonrecurring items reflected in the attached financial schedules)
(In thousands, except per share amounts and subscriber data)
 
Quarter Ended
12/31/08
 
Quarter Ended
12/31/07
 
% Change
 
Operating Revenues
Operating Cash Flow (1)
Net Income
Diluted Earnings Per Share
Average Diluted Shares Outstanding
Capital Expenditures
 
 
$
$
$
$
 
$
 
642,647
311,944
87,044
.88
99,228
101,813
 
 
$
$
$
$
 
$
 
657,846
321,472
89,822
.82
110,119
141,744
 
 
(2.3)
(3.0)
(3.1)
7.3
(9.9)
(28.2)
 
 %
 %
 %
 %
 %
 %
 
Access Lines
High-Speed Internet Customers
 
 
 
1,998,000
641,000
   
 
2,135,000
   555,000
 
 
(6.4)
15.5
 
 %
 %
 
(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.
 
“CenturyTel achieved record free cash flow of more than $584 million during 2008 driven by solid revenue performance in a challenging economy, a diligent focus on cost containment and prudent capital investment,” Glen F. Post, III, chairman and chief executive officer, said.  “We are working diligently toward completion of the EMBARQ acquisition which we believe represents a great strategic combination that will diversify our markets. Our combined high-quality broadband networks and IT systems, along with our enhanced financial and operational scale should provide significant advantages for our customers.”
 
      Operating revenues, excluding nonrecurring items, declined 2.3% to $642.6 million in fourth quarter 2008 from $657.8 million in fourth quarter 2007. Revenue increases during the quarter of approximately $17 million resulted primarily from growth associated with the 15.5% increase in high-speed Internet customers. These increases were more than offset by revenue declines of approximately $32 million primarily attributable to previously anticipated access line losses and lower access revenues.

      Operating expenses, excluding nonrecurring items, decreased 3.0% to $459.5 million from $473.9 million in fourth quarter 2007 as lower cash expenses and lower depreciation expense due to fully depreciated assets more than offset increased costs associated with the growth in high-speed Internet customers.

      “We experienced solid demand for broadband services during 2008 as high-speed Internet customers increased by more than 15% year over year,” Post said. “We are also pleased with our business customers’ rapid adoption of high bandwidth Ethernet services.”

      Operating cash flow, excluding nonrecurring items, for fourth quarter 2008 declined 3.0% to $311.9 million from $321.5 million in fourth quarter 2007. CenturyTel achieved an operating cash flow margin, excluding nonrecurring items, of 48.5% during the quarter versus 48.9% in fourth quarter 2007.
 
      Other income, excluding nonrecurring items, of $5.5 million for fourth quarter 2008 was $2.9 million lower than during fourth quarter 2007 primarily due to favorable 2006 audit adjustments recorded in fourth quarter 2007 related to a cellular partnership in which we own a 49% interest.

      Net income, excluding nonrecurring items, was $87.0 million, a 3.1% decrease from $89.8 million in fourth quarter 2007. Diluted earnings per share, excluding nonrecurring items, increased 7.3% to $.88 in fourth quarter 2008 compared to $.82 in fourth quarter 2007 due to the items discussed above and the reduction in diluted shares outstanding as a result of share repurchases.

      For the year 2008, operating revenues, excluding nonrecurring items, were $2.598 billion compared to $2.606 billion in 2007, a 0.3% decrease. Operating cash flow, excluding nonrecurring items, was $1.258 billion for 2008 compared to $1.292 billion for 2007. Net income, excluding nonrecurring items, was $347.1 million compared to $354.3 million in 2007, while diluted earnings per share was $3.37 compared to $3.16 in 2007.

      Under generally accepted accounting principles (GAAP),  net income for fourth quarter 2008 was $100.1 million compared to $115.0 million for fourth quarter 2007. Diluted earnings per share was $1.01 in fourth quarter 2008 compared to $1.04 in fourth quarter 2007. Fourth quarter 2008 results reflect a $12.8 million tax benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48 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 pending acquisition of EMBARQ. Fourth quarter 2007 results reflect an after-tax benefit of $1.8 million related to hurricane-related insurance reimbursements, an after-tax benefit of $2.4 million related to the liquidation of Rural Telephone Bank stock, and a $32.7 million tax benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48, which were partially offset by $12.2 million of after-tax impairment charges associated with certain operating and non-operating investments described further in the attached financial schedules.

Under GAAP, for the year 2008, the Company reported net income of $365.7 million, or $3.56 per diluted share, compared to net income of $418.4 million, or $3.72 per diluted share, for the year 2007. See the accompanying financial schedules for detail of the Company’s nonrecurring items for the years 2008 and 2007.
 
      Outlook for 2009.  The following 2009 outlook discussion is for CenturyTel only and does not include any benefit or impact of the pending acquisition of EMBARQ. Acquisition-related costs incurred by CenturyTel in 2009 are considered nonrecurring items and are also not included in these 2009 outlooks.
 
Based on current conditions, for full year 2009, CenturyTel anticipates operating revenues to be modestly lower than 2008 operating revenues. The Company expects revenue increases associated with growth in high-speed Internet and data revenues to be more than offset by revenue declines associated with lower access revenues, reduced universal service funding and access line losses.
 
For full year 2009, CenturyTel anticipates diluted earnings per share to be in the range of $3.20 to $3.30. The following items are expected to have a positive impact on 2009 diluted earnings per share:
·  
   anticipated further penetration of broadband service offerings - $.09 to $.11;
·  
   anticipated cost containment - $.20 to $.28; and
·  
   anticipated lower depreciation and interest expense - $.15 to $.17.
The following items are expected to negatively impact 2009 diluted earnings per share:
·  
   reduced interstate universal service funding - ($.07) to ($.08);
·  
   non-cash pension expense – ($.12) to ($.13);
·  
   anticipated access line losses of 5.7% to 6.7% and continued pressure on access revenues - ($.34) to ($.38); and
·  
   application of a new accounting pronouncement impacting EPS calculation ($.04) to ($.05).

For first quarter 2009, CenturyTel expects total revenues of $628 to $638 million and diluted earnings per share of $.77 to $.81.
 
Finally, the Company currently expects its capital expenditures in 2009, excluding any EMBARQ-related acquisition, integration or post-closing capital expenditures, to be between $280 and $300 million, in line with 2008 capital expenditures of $287 million.

These 2009 outlook figures exclude the effects of nonrecurring items, any share repurchases made after December 31, 2008, the pending EMBARQ acquisition and any changes in operating or capital plans related thereto, and any future mergers, acquisitions, divestitures or other similar business transactions.

We expect to update our outlook after completing the EMBARQ acquisition. We currently expect to close the transaction during second quarter 2009, subject to the receipt of regulatory approvals and satisfaction of other conditions.
 
      Reconciliation to GAAPThis 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 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.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 CallAs 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 866.259.1024.  The call will be accessible for replay through February 25, 2009 by calling 888.266.2081 and entering the conference ID number 1324380. Investors can also listen to CenturyTel’s earnings conference call and replay through March 11, 2009 by accessing the Investor Relations portion of the Company’s Web site at www.centurytel.com.
 
      Certain non-historical statements made in this release and future oral or written statements or press releases by us or our management, in each case as they relate to CenturyTel or EMBARQ, the operations of either such company or our pending merger with EMBARQ, 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 CenturyTel or EMBARQ, and issues relating to our pending merger with EMBARQ, 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 CenturyTel or EMBARQ, the combined company or the pending merger 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 the Federal Communication Commission’s proposed rules regarding inter-carrier compensation and the Universal Service Fund described in our recent SEC reports); our ability to effectively adjust to changes in the communications industry; our ability to successfully complete our pending merger with EMBARQ, including timely receiving all regulatory approvals and obtaining related financing; the possibility that the anticipated benefits from the 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 successfully integrating newly-acquired or newly-developed businesses into our operations and 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 $2.80 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; 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 this prospectus or other of 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, 2007, 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.

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, 2008 AND 2007  
 (UNAUDITED)  
                                               
   
Three months ended December 31, 2008
   
Three months ended December 31, 2007
           
               
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
   $ 215,407             215,407       225,525             225,525     (4.5 %)     (4.5 %)
   Network access
    198,396     307   (1 )   198,089       215,415     (1,216 )   (5 )   216,631     (7.9 %)     (8.6 %)
   Data
    133,731               133,731       122,055     (68 )   (5 )   122,123     9.6 %     9.5 %
   Fiber transport and CLEC
    41,245               41,245       38,466                 38,466     7.2 %     7.2 %
   Other
    54,175               54,175       55,101                 55,101     (1.7 %)     (1.7 %)
      642,954     307         642,647       656,562     (1,284 )         657,846     (2.1 %)     (2.3 %)
                                                                 
 OPERATING EXPENSES
                                                               
   Cost of services and products
    235,792     1,483   (1 )   234,309       251,026     13,740     (6 )   237,286     (6.1 %)     (1.3 %)
   Selling, general and administrative     101,924     5,530   (2 )   96,394       99,008     (80 )   (6 )   99,088     2.9 %     (2.7 %)
   Depreciation and amortization
    128,796               128,796       137,554                 137,554     (6.4 %)     (6.4 %)
      466,512     7,013         459,499       487,588     13,660           473,928     (4.3 %)     (3.0 %)
                                                                 
 OPERATING INCOME
    176,442     (6,706 )       183,148       168,974     (14,944 )         183,918     4.4 %     (0.4 %)
                                                                 
 OTHER INCOME (EXPENSE)
                                                               
   Interest expense
    (53,446 )             (53,446 )     (53,102 )               (53,102 )   0.6 %     0.6 %
   Other income (expense)
    15,517     10,000   (3 )   5,517       10,639     2,206     (7 )   8,433     45.9 %     (34.6 %)
   Income tax expense
    (38,441 )   9,734   (4 )   (48,175 )     (11,478 )   37,949     (8 )   (49,427 )   234.9 %     (2.5 %)
 NET INCOME
   $ 100,072     13,028         87,044       115,033     25,211           89,822     (13.0 %)     (3.1 %)
                                                                 
 BASIC EARNINGS PER SHARE
   $ 1.01     0.13         0.88       1.05     0.23           0.82     (3.8 %)     7.3 %
 DILUTED EARNINGS PER SHARE
   $ 1.01     0.13         0.88       1.04     0.23           0.82     (2.9 %)     7.3 %
                                                                 
AVERAGE SHARES OUTSTANDING
                                                       
   Basic
    98,883               98,883       109,008                 109,008     (9.3 %)     (9.3 %)
   Diluted
    99,228               99,228       110,119                 110,119     (9.9 %)     (9.9 %)
                                                                 
DIVIDENDS PER COMMON SHARE
   $ 0.7000               0.7000       0.0650                 0.0650     976.9 %     976.9 %
                                                                 
                                                                 
 NONRECURRING ITEMS
                                                               
     (1) - Severance and related costs due to workforce reduction, including revenue impact.
 
     (2) - Includes costs associated with the pending acquisition of EMBARQ ($5.0 million) and severance and related costs due to workforce reductions ($.5 million).
 
     (3) - Recognition of previously accrued transaction related and other contingencies.
 
     (4) - Includes $12.8 million benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48, plus the aggregate tax effect of Items (1) through (3).
 
     (5) - Revenue reduction associated with gain on liquidation of Rural Telephone Bank.
 
     (6) - Includes write-down due to impairment of CLEC assets ($16.6 million), net of insurance reimbursements associated with previously recorded hurricane related expenses ($3.0 million).
 
     (7) - Includes gain on liquidation of Rural Telephone Bank ($5.2 million), net of $3.0 million impairment of a nonoperating investment.
 
     (8) - Includes $32.7 million benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48, plus the aggregate tax effect of Items (5) through (7).
 
 
 
 
 
 CenturyTel, Inc.  
 CONSOLIDATED STATEMENTS OF INCOME  
 TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007  
 (UNAUDITED)  
                                                     
 
Twelve months ended December 31, 2008
   
Twelve months ended December 31, 2007
             
               
 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
$ 874,041               874,041       889,960                 889,960       (1.8 %)     (1.8 %)
 Network access
  820,383       1,319   (1 )   819,064       941,506       48,298     (6 )     893,208       (12.9 %)     (8.3 %)
 Data
  524,194       21   (1 )   524,173       460,755       (68 )   (6 )     460,823       13.8 %     13.7 %
 Fiber transport and CLEC
  162,050                 162,050       159,317       13     (6 )     159,304       1.7 %     1.7 %
 Other
  219,079                 219,079       204,703       1,869     (7 )     202,834       7.0 %     8.0 %
    2,599,747       1,340         2,598,407       2,656,241       50,112             2,606,129       (2.1 %)     (0.3 %)
                                                                       
 OPERATING EXPENSES
                                                                     
 Cost of services and products
  955,473       1,483   (2 )   953,990       937,375       11,655     (8 )     925,720       1.9 %     3.1 %
 Selling, general and administrative
  399,136       13,185   (3 )   385,951       389,533       694     (8 )     388,839       2.5 %     (0.7 %)
 Depreciation and amortization
  523,786                 523,786       536,255                     536,255       (2.3 %)     (2.3 %)
    1,878,395       14,668         1,863,727       1,863,163       12,349             1,850,814       0.8 %     0.7 %
                                                                       
 OPERATING INCOME
  721,352       (13,328 )       734,680       793,078       37,763             755,315       (9.0 %)     (2.7 %)
                                                                       
 OTHER INCOME (EXPENSE)
                                                                     
 Interest expense
  (202,217 )               (202,217 )     (212,906 )                   (212,906 )     (5.0 %)     (5.0 %)
 Other income (expense)
  40,954       22,713   (4 )   18,241       38,770       12,643     (9 )     26,127       5.6 %     (30.2 %)
 Income tax expense
  (194,357 )     9,210   (5 )   (203,567 )     (200,572 )     13,701     (10 )     (214,273 )     (3.1 %)     (5.0 %)
 NET INCOME
$ 365,732       18,595         347,137       418,370       64,107             354,263       (12.6 %)     (2.0 %)
                                                                       
 BASIC EARNINGS PER SHARE
$ 3.57       0.18         3.39       3.82       0.59             3.24       (6.5 %)     4.6 %
 DILUTED EARNINGS PER SHARE
$ 3.56       0.18         3.37       3.72       0.57             3.16       (4.3 %)     6.6 %
                                                                       
AVERAGE SHARES OUTSTANDING
                                                                 
 Basic
  102,268                 102,268       109,360                     109,360       (6.5 %)     (6.5 %)
 Diluted
  102,871                 102,871       113,094                     113,094       (9.0 %)     (9.0 %)
                                                                       
 DIVIDENDS PER COMMON SHARE
$ 2.1675                 2.1675       0.26                     0.26       733.7 %     733.7 %
                                                                       
                                                                       
 NONRECURRING ITEMS
                                                                     
    (1) -  Revenue impact of curtailment loss related to Supplemental Executive Retirement Plan ($1.0 million) and revenue impact of severance and related costs due to workforce
             reductions ($.3 million).
 
    (2) -  Severance and related costs due to workforce reductions.
                                               
    (3) -  Includes curtailment loss related to Supplemental Executive Retirement Plan ($7.7 million), costs associated with pending acquisition of EMBARQ ($5.0 million) and
 
             severance and related costs due to workforce reductions ($.5 million).
                                       
    (4) -  Includes recognition of previously accrued transaction related and other contingencies ($10 million); gain on the sales of non-core assets ($7.3 million); gain upon liquidation
 
             of Supplemental Executive Retirement Plan trust assets ($4.5 million) and interest income recorded upon the resolution of certain income tax audit issues ($.9 million).
 
    (5) -  Includes $12.8 million benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48 and $1.8 million income tax benefit recorded upon the resolution
 
             of certain income tax audit issues; net of $5.3 million net income tax expense related to Items (1) through (4).
                 
    (6) -  Includes (i) revenue recorded upon settlement of a dispute with a carrier ($49.0 million) and (ii) revenue impact of severance and related costs due to workforce reductions ($.5 million),
             net of (iii) revenue reduction associated with gain on liquidation of Rural Telephone Bank ($1.3 million).
 
    (7) -  Reimbursement of amounts upon a change in our satellite television arrangement.
                                       
    (8) -  Includes (i) write-down due to impairment of CLEC assets ($16.6 million) and (ii) severance and related costs due to workforce reductions ($2.7 million), net of (iii) reimbursement of amounts
 
             upon a change in our satellite television arrangement ($4.1 million) and (iv) insurance reimbursements associated with previously recorded hurricane related expenses ($3.0 million).
 
    (9) -  Includes (i) gain on sale of non-core asset ($10.4 million) and (ii) gain on liquidation of Rural Telephone Bank ($5.2 million), net of (iii) $3.0 million impairment of a nonoperating investment.
 
   (10) - Includes (i) $32.7 million benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48, net of the aggregate tax effects of items (6) through (9).
 
 
 
 
 
CenturyTel, Inc.
 
CONSOLIDATED BALANCE SHEETS
 
DECEMBER 31, 2008 AND DECEMBER 31, 2007
 
(UNAUDITED)
 
             
   
December 31,
   
December 31,
 
   
2008
   
2007
 
     (in thousands)  
ASSETS
           
CURRENT ASSETS
           
Cash and cash equivalents
  $ 243,327       34,402  
Other current assets
    312,080       257,997  
     Total current assets
    555,407       292,399  
                 
NET PROPERTY, PLANT AND EQUIPMENT
               
Property, plant and equipment
    8,868,451       8,666,106  
Accumulated depreciation
    (5,972,559 )     (5,557,730 )
     Net property, plant and equipment
    2,895,892       3,108,376  
                 
GOODWILL AND OTHER ASSETS
               
Goodwill
    4,015,674       4,010,916  
Other
    787,222       772,862  
     Total goodwill and other assets
    4,802,896       4,783,778  
                 
                 
TOTAL ASSETS
  $ 8,254,195       8,184,553  
                 
                 
LIABILITIES AND EQUITY
               
CURRENT LIABILITIES
               
Current maturities of long-term debt
  $ 20,407       279,898  
Other current liabilities
    437,983       456,637  
     Total current liabilities
    458,390       736,535  
                 
LONG-TERM DEBT
    3,294,119       2,734,357  
DEFERRED CREDITS AND OTHER LIABILITIES
    1,338,446       1,304,456  
STOCKHOLDERS' EQUITY
    3,163,240       3,409,205  
                 
TOTAL LIABILITIES AND EQUITY
  $ 8,254,195       8,184,553  
 
 
 
 
CenturyTel, Inc.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
(UNAUDITED)
 
                                     
                                     
   
Three months ended December 31, 2008
   
Three months ended December 31, 2007
 
               
 As adjusted
               
As adjusted
 
       
Less
     
excluding
       
Less
     
excluding
 
       
non-
     
non-
       
non-
     
non-
 
 
 
As
 
recurring
     
recurring
   
As
 
recurring
     
recurring
 
  In thousands  
reported
 
items
     
items
   
reported
 
items
     
items
 
                                     
 Operating cash flow and cash flow margin
                                   
  Operating income
  $ 176,442     (6,706 ) (1 )   183,148       168,974     (14,944 ) (4 )   183,918  
  Add:  Depreciation and amortization
    128,796     -         128,796       137,554     -         137,554  
  Operating cash flow
  $ 305,238     (6,706 )       311,944       306,528     (14,944 )       321,472  
                                                 
  Revenues
  $ 642,954     307   (2 )   642,647       656,562     (1,284 ) (5 )   657,846  
                                                 
  Operating income margin (operating income divided by revenues)
    27.4 %             28.5 %     25.7 %             28.0 %
                                                 
  Operating cash flow margin (operating cash flow divided by revenues)
    47.5 %             48.5 %     46.7 %             48.9 %
                                                 
                                                 
 Free cash flow (prior to debt service requirements and dividends)
                                               
  Net income
  $ 100,072     13,028   (3 )   87,044       115,033     25,211   (6 )   89,822  
  Add:  Depreciation and amortization
    128,796     -         128,796       137,554     -         137,554  
  Less:  Capital expenditures
    (101,813 )   -         (101,813 )     (141,744 )   -         (141,744 )
  Free cash flow
  $ 127,055     13,028         114,027       110,843     25,211         85,632  
                                                 
  Free cash flow
  $ 127,055                       110,843                  
  Gain on asset dispositions
    -                       (5,207 )                
  Deferred income taxes
    43,561                       (42,093 )                
  Changes in current assets and current liabilities
    (20,636 )                     9,094                  
  Decrease in other noncurrent assets
    3,636                       4,665                  
  Decrease in other noncurrent liabilities
    (23,583 )                     (6,572 )                
  Retirement benefits
    (47,412 )                     5,958                  
  Excess tax benefits from share-based compensation
    (336 )                     7                  
  Other, net
    1,969                       22,114                  
  Add:  Capital expenditures
    101,813                       141,744                  
  Net cash provided by operating activities
  $ 186,067                       240,553                  
                                                 
                                                 
 NONRECURRING ITEMS
                                               
    (1) - Includes costs associated with the pending acquisition of EMBARQ ($5.0 million) and severance and related costs due to workforce reduction, including revenue
            impact ($1.7 million).
 
    (2) - Revenue effect of severance and related costs due to workforce reduction.
 
    (3) - Includes $12.8 million income tax benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48 and $6.3 million after-tax benefit related
 
            to the recognition of previously accrued transaction related and other contingencies, net of the after-tax effects of costs associated with the pending acquisition of EMBARQ
 
            ($5.0 million) and severance and related costs due to workforce reductions, including revenue impact ($1.1 million).
 
    (4) - Includes write-down due to impairment of CLEC assets ($16.6 million) and revenue reduction associated with gain from liquidation of Rural Telephone Bank ($1.3 million),
 
            net of insurance reimbursements associated with previously recorded hurricane related expenses ($3.0 million).
 
    (5) - Revenue effect of gain from liquidation of Rural Telephone Bank.
 
    (6) - Includes (i) $32.7 million income tax benefit due to the recognition of previously unrecognized tax benefits in accordance with FIN 48, (ii) the after-tax effects of (a) the gain
 
            from liquidation of the Rural Telephone Bank, including revenue effect ($2.4 million), and (b) insurance reimbursements associated with previously recorded hurricane related
 
            expenses ($1.8 million), net of (iii) the after-tax effects of (a) the write-down due to impairment of CLEC assets ($10.4 million) and (b) the impairment of a nonoperating
 
            investment ($1.9 million).  
 
 
 
 
CenturyTel, Inc.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
(UNAUDITED)
 
                                       
   
 Twelve months ended December 31, 2008
   
Twelve months ended December 31, 2007
 
               
 As adjusted
                 
As adjusted
 
       
Less
     
excluding
         
Less
     
excluding
 
       
non-
     
non-
         
non-
     
non-
 
 
 
As
 
recurring
     
recurring
   
As
   
recurring
     
recurring
 
In thousands  
reported
 
items
     
items
   
reported
   
items
     
items
 
                                       
 Operating cash flow and cash flow margin
                                     
 Operating income
  $ 721,352     (13,328 ) (1 )   734,680       793,078       37,763   (4 )   755,315  
 Add:  Depreciation and amortization
    523,786     -         523,786       536,255       -         536,255  
 Operating cash flow
  $ 1,245,138     (13,328 )       1,258,466       1,329,333       37,763         1,291,570  
                                                   
 Revenues
  $ 2,599,747     1,340   (2 )   2,598,407       2,656,241       50,112   (5 )   2,606,129  
                                                   
 Operating income margin (operating income divided by revenues)
    27.7 %             28.3 %     29.9 %               29.0 %
                                                   
 Operating cash flow margin (operating cash flow divided by revenues)
    47.9 %             48.4 %     50.0 %               49.6 %
                                                   
                                                   
Free cash flow (prior to debt service requirements and dividends)
                                           
 Net income
  $ 365,732     18,595   (3 )   347,137       418,370       64,107   (6 )   354,263  
 Add:  Depreciation and amortization
    523,786     -         523,786       536,255       -         536,255  
 Less:  Capital expenditures
    (286,817 )   -         (286,817 )     (326,045 )     -         (326,045 )
    $ 602,701     18,595         584,106       628,580       64,107         564,473  
                                                   
 Free cash flow
  $ 602,701                       628,580                    
 Gain on asset dispositions
    (12,452 )                     (15,643 )                  
 Deferred income taxes
    67,518                       1,018                    
 Changes in current assets and current liabilities
    (74,325 )                     37,608                    
 Decrease in other noncurrent assets
    9,744                       12,718                    
 Decrease in other noncurrent liabilities
    (27,561 )                     (20,781 )                  
 Retirement benefits
    (26,066 )                     27,350                    
 Excess tax benefits from share-based compensation
    (1,123 )                     (6,427 )                  
 Other, net
    28,047                       39,518                    
 Add:  Capital expenditures
    286,817                       326,045                    
 Net cash provided by operating activities
  $ 853,300                       1,029,986