MONROE, La., April 30 /PRNewswire-FirstCall/ -- CenturyTel, Inc. (NYSE: CTL) announces operating results for first quarter 2009.

    --  Operating revenues, excluding nonrecurring items, decreased 2.0% to
        $635.4 million from $648.6 million in first quarter 2008. Reported
        under GAAP (generally accepted accounting principles), operating
        revenues for first quarter 2009 were $636.4 million.
    --  Operating cash flow (as defined in the attached financial schedules),
        excluding nonrecurring items, was $305.5 million in first quarter 2009
        compared to $319.2 million in first quarter 2008.
    --  Net income attributable to CenturyTel, excluding nonrecurring items,
        for first quarter 2009 was $81.9 million versus $86.2 million in first
        quarter 2008. Reported under GAAP, net income attributable to
        CenturyTel was $67.2 million in first quarter 2009 and $88.8 million
        in first quarter 2008.
    --  Diluted earnings per share, excluding nonrecurring items, increased
        2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008.
        Reported under GAAP, diluted earnings per share was $.67 in first
        quarter 2009 and $.82 in first quarter 2008.
    --  Free cash flow (as defined in the attached financial schedules),
        excluding nonrecurring items and $6.4 million of capital expenditures
        related to the EMBARQ integration, was $170.4 million in first quarter
        2009 compared to $167.1 million in first quarter 2008.

    --  High-speed Internet customers increased by more than 24,000 in first
        quarter 2009, resulting in more than 665,000 high-speed Internet
        customers in service at the end of the quarter, or nearly 34% of total
        access lines.



    First Quarter Highlights

    (Excluding
     nonrecurring items
     reflected in the
     attached financial
     schedules)
                                 Quarter Ended   Quarter Ended
    (In thousands, except           3/31/09          3/31/08       % Change
     per share amounts
     and subscriber data)

    Operating Revenues              $635,357         $648,614        (2.0)%
    Operating Cash Flow(1)          $305,521         $319,177        (4.3)%
    Net Income
     Attributable to
     CenturyTel                      $81,898          $86,171        (5.0)%
    Diluted Earnings Per
     Share                              $.82             $.80         2.5%
    Average Diluted
     Shares Outstanding               99,144          106,675        (7.1)%
    Capital Expenditures             $45,496 (2)      $54,739       (16.9)%


    Access Lines                   1,967,000        2,108,000        (6.7)%
    High-Speed Internet
     Customers                       665,000          586,000        13.5%

    (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.
    (2)  Includes $6.4 million of capital expenditures related to the
         integration of EMBARQ.

"CenturyTel achieved solid operating results and generated free cash flow of $170 million during the first quarter,"  Glen F. Post, III , chairman and chief executive officer, said. "Broadband demand was strong as we added 24,000 high-speed Internet customers during the quarter, an 81% improvement over fourth quarter 2008."

Operating revenues, excluding nonrecurring items, decreased 2.0% to $635.4 million in first quarter 2009 from $648.6 million in first quarter 2008. Revenue increases during the quarter of approximately $23 million resulted primarily from growth in high-speed Internet customers and growth in fiber transport revenues. These increases were more than offset by revenue declines of approximately $36 million, primarily attributable to access line declines and lower access revenues.

Operating expenses, excluding nonrecurring items, decreased 1.7% to $457.4 million in first quarter 2009 from $465.1 million in first quarter 2008 primarily due to lower depreciation expense associated with fully depreciated assets which was partially offset by increased expenses due to growth in high-speed Internet customers, higher bad debt expense and higher personnel-related costs.

Operating cash flow, excluding nonrecurring items, decreased 4.3% to $305.5 million in first quarter 2009 from $319.2 million in first quarter 2008. CenturyTel achieved an operating cash flow margin of 48.1% during the quarter.

"We have made solid progress toward completing the EMBARQ merger as both companies' shareholders overwhelmingly approved the merger in late January and to date, we have received approval from 10 of the 15 states which require formal approval," said Post. "We continue to expect to receive all necessary state and federal regulatory approvals and to complete the merger during the second quarter. This strategic combination of CenturyTeland EMBARQ creates a larger and financially stronger company, and I am confident we will be well positioned to drive long-term shareholder value and deliver the reliable, high-quality communications services our customers and communities want and need."

Net income attributable to CenturyTel, excluding nonrecurring items, decreased 5.0% to $81.9 million in first quarter 2009 from $86.2 million in first quarter 2008. Diluted earnings per share, excluding nonrecurring items, increased 2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008. First quarter 2009 diluted earnings per share was favorably impacted by the 7.1% fewer average diluted shares outstanding due to share repurchases during the twelve months ended March 31, 2009.

Under generally accepted accounting principles (GAAP), the Company reported net income attributable to CenturyTel of $67.2 million and diluted earnings per share of $.67 in first quarter 2009 compared to $88.8 million and$.82, respectively, in first quarter 2008. Net income and diluted earnings per share in first quarter 2009 include an aggregate after-tax charge of $10.9 million associated with the discontinuance of our supplemental executive retirement plan; a $5.0 million after-tax cost associated with our October 2008 bridge credit facility related to the EMBARQ acquisition; and a $4.7 million after-tax charge related to integration costs associated with our pending acquisition of EMBARQ. Such factors were partially offset by a $5.8 million tax benefit associated with the reduction of a deferred tax asset valuation allowance.

New accounting pronouncements effective first quarter 2009. First quarter 2009 results include the effects of two new accounting pronouncements, SFAS 160 and FSP EITF 03-6-1. SFAS 160 requires that noncontrolling interests be recognized as equity on the balance sheet and net income attributable to noncontrolling interests be included in consolidated net income. FSP EITF 03-6-1 requires that outstanding non-vested restricted stock be considered a participating security and therefore included in the earnings allocation in computing earnings per share under the two-class method. Both pronouncements require prior periods to be recast using the current applicable guidance; therefore, our first quarter 2008 results of operations included in this press release reflect the retroactive application of these new accounting pronouncements.

For second quarter 2009, CenturyTel expects total revenues of $628 to $638 million and diluted earnings per share of $.77 to $.81. The seasonal impact of outside plant maintenance activities, along with annual wage adjustments effective in the second quarter, will result in higher cash expenses compared to the first quarter of 2009.

These outlook figures, along with previously announced guidance for full year 2009, exclude the effects of nonrecurring items, the pending EMBARQ acquisition and any changes in operating or capital plans related thereto, the pending conversion to price cap regulation recently approved by the Federal Communications Commission, 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 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 readers 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 on 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 866.206.6509. The call will be accessible for replay through May 6, 2009, by calling 888.266.2081 and entering the conference ID number 1346640. 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 through May 20, 2009.

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 ofCenturyTel 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; 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, 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.

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 MARCH 31, 2009 AND 2008
                                 (UNAUDITED)

                                   Three months ended March 31, 2009
                            --------------------------------------------
                                                             As adjusted
                                                             excluding
                                              Less non-         non-
    In thousands, except         As           recurring       recurring
     per share amounts        reported          items           items
                            ------------      -----------    -----------

    OPERATING REVENUES
      Voice                     $209,918                      209,918
      Network access             192,844         1,028  (1)   191,816
      Data                       139,937                      139,937
      Fiber
       transport
       and CLEC                   41,498                       41,498
      Other                       52,188                       52,188
                                  ------         -----         ------
                                 636,385         1,028        635,357
                                 -------         -----        -------

    OPERATING EXPENSES
      Cost of services
       and products              234,631                      234,631
      Selling, general
       and administrative        109,845        14,640  (2)    95,205
      Depreciation and
       amortization              127,572                      127,572
                                 -------        ------        -------
                                 472,048        14,640        457,408
                                 -------        ------        -------

    OPERATING INCOME             164,337       (13,612)       177,949

    OTHER INCOME (EXPENSE)
      Interest expense           (52,032)                     (52,032)
      Other income
       (expense)                  (1,818)       (8,000) (3)     6,182
      Income tax
       expense                   (43,107)        6,868  (4)   (49,975)

                                  ------       -------         ------
    NET INCOME                    67,380       (14,744)        82,124
     Less: Net income
      attributable
      to noncontrolling
      interests                     (226)                        (226)
                                    ----       -------           ----
     NET INCOME
      ATTRIBUTABLE
      TO CENTURYTEL, INC.        $67,154       (14,744)        81,898
                                 =======       =======         ======

    BASIC EARNINGS PER
     SHARE                         $0.67         (0.15)          0.82
    DILUTED EARNINGS PER
     SHARE                         $0.67         (0.15)          0.82

AVERAGE SHARES OUTSTANDING

      Basic                       99,126                       99,126
      Diluted                     99,144                       99,144

    DIVIDENDS PER COMMON
     SHARE                       $0.7000                       0.7000


                                  Three months ended March 31, 2008
                              ----------------------------------------
                                                           As adjusted
                                                            excluding
                                              Less non-        non-
    In thousands, except           As         recurring      recurring
     per share amounts          reported        items          items
                              ------------   ------------   ----------

    OPERATING REVENUES
      Voice                      220,480                      220,480
      Network access             208,698                      208,698
      Data                       126,772                      126,772
      Fiber
       transport
       and CLEC                   39,633                       39,633
      Other                       53,031                       53,031
                                  ------          -            ------
                                 648,614          -           648,614
                                 -------        ---           -------

    OPERATING EXPENSES
      Cost of services
       and products              237,812                      237,812
      Selling, general
       and administrative         91,625                       91,625
      Depreciation and
       amortization              135,684                      135,684
                                 -------        ---           -------
                                 465,121          -           465,121
                                 -------        ---           -------

    OPERATING INCOME             183,493          -           183,493

    OTHER INCOME (EXPENSE)
      Interest expense           (50,122)                     (50,122)
      Other income
       (expense)                   8,663      4,136    (5)      4,527
      Income tax expense         (53,028)    (1,547)   (6)    (51,481)

                                  ------      -----            ------
    NET INCOME                    89,006      2,589            86,417
     Less: Net income
      attributable
      to noncontrolling
      interests                     (246)                        (246)
                                    ----      -----              ----
     NET INCOME
      ATTRIBUTABLE
      TO CENTURYTEL, INC.         88,760      2,589            86,171
                                  ======      =====            ======

    BASIC EARNINGS PER
     SHARE                          0.83       0.02              0.80
    DILUTED EARNINGS PER
     SHARE                          0.82       0.02              0.80

AVERAGE SHARES OUTSTANDING

      Basic                      106,142                      106,142
      Diluted                    106,675                      106,675

    DIVIDENDS PER COMMON
     SHARE                        0.0675                       0.0675


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

      OPERATING REVENUES
        Voice                            (4.8%)             (4.8%)
        Network access                   (7.6%)             (8.1%)
        Data                             10.4%              10.4%
        Fiber
         transport
         and CLEC                         4.7%               4.7%
        Other                            (1.6%)             (1.6%)
                                         (1.9%)             (2.0%)

      OPERATING EXPENSES
        Cost of services
         and products                    (1.3%)             (1.3%)
        Selling, general
         and administrative              19.9%               3.9%
        Depreciation and
         amortization                    (6.0%)             (6.0%)
                                          1.5%              (1.7%)

      OPERATING INCOME                  (10.4%)             (3.0%)

      OTHER INCOME (EXPENSE)
        Interest expense                  3.8%               3.8%
        Other income
         (expense)                     (121.0%)             36.6%
         Income tax
         expense                        (18.7%)             (2.9%)

      NET INCOME                        (24.3%)             (5.0%)
       Less: Net income
        attributable
        to noncontrolling
        interests                        (8.1%)             (8.1%)
       NET INCOME
        ATTRIBUTABLE
        TO CENTURYTEL, INC.             (24.3%)             (5.0%)

      BASIC EARNINGS PER
       SHARE                            (19.3%)              2.5%
      DILUTED EARNINGS PER
       SHARE                            (18.3%)              2.5%

AVERAGE SHARES OUTSTANDING

        Basic                            (6.6%)             (6.6%)
        Diluted                          (7.1%)             (7.1%)

    DIVIDENDS PER COMMON
     SHARE                              937.0%             937.0%


    NONRECURRING ITEMS

(1) - Revenue impact of settlement loss related to Supplemental Executive

Retirement Plan.

(2) - Includes settlement loss related to Supplemental Executive

Retirement Plan ($7.7 million) and integration costs associated with

pending acquisition of EMBARQ ($6.9 million).

(3) - Costs associated with our October 2008 $800 million bridge credit

facility related to the EMBARQ acquisition.

(4) - Includes $5.8 million income tax benefit caused by a reduction to

our deferred tax asset valuation allowance and $7.8 million income

tax benefit related to items (1) through (3); net of $6.7 million

income tax expense due to the nondeductible portion of settlement

payments related to the Supplemental Executive Retirement Plan.

(5) - Gain on the sale of a nonoperating investment.

(6) - Tax effect of item (5).


                             CenturyTel, Inc.
                        CONSOLIDATED BALANCE SHEETS
                   MARCH 31, 2009 AND DECEMBER 31, 2008
                                (UNAUDITED)

                                              March 31,    December 31,                                                  2009          2008
                                              ---------     ---------
                                                   (in thousands)
                  ASSETS

CURRENT ASSETS

      Cash and cash equivalents                 $61,230       243,327
      Other current assets                      259,400       312,080
                                                -------       -------
         Total current assets                   320,630       555,407
                                                -------       -------

NET PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment           8,900,683     8,868,451
      Accumulated depreciation               (6,079,113)   (5,972,559)
                                             ----------    ----------
         Net property, plant and equipment    2,821,570     2,895,892
                                             ----------    ----------

    GOODWILL AND OTHER ASSETS
      Goodwill                                4,015,674     4,015,674
      Other                                     775,939       787,222
                                                -------       -------
         Total goodwill and other assets      4,791,613     4,802,896
                                              ---------     ---------

    TOTAL ASSETS                             $7,933,813     8,254,195
                                             ==========     =========


              LIABILITIES AND EQUITY

CURRENT LIABILITIES

      Current maturities of long-term debt      $20,148        20,407
      Other current liabilities                 394,714       437,983
                                                -------       -------
          Total current liabilities             414,862       458,390

    LONG-TERM DEBT                            3,002,402     3,294,119

DEFERRED CREDITS AND OTHER LIABILITIES 1,341,340 1,333,878

    STOCKHOLDERS' EQUITY                      3,175,209     3,167,808
                                              ---------     ---------

    TOTAL LIABILITIES AND EQUITY             $7,933,813     8,254,195
                                             ==========     =========



                                  CenturyTel, Inc.
                  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                    (UNAUDITED)


                                 Three months ended March 31, 2009
                               ---------------------------------------
                                                          As adjusted
                                               Less        excluding
                                               non-          non-
      In thousands                  As       recurring     recurring
                                 reported      items         items
                                ----------   ----------  -------------
    Operating cash flow
     and cash flow margin
      Operating income            $164,337    (13,612) (1)   177,949
      Add:  Depreciation
       and amortization            127,572          -        127,572
                                   -------        ---        -------
      Operating
       cash flow                  $291,909    (13,612)       305,521
                                  ========    =======        =======

      Revenues                    $636,385      1,028  (2)   635,357
                                  ========      =====        =======

      Operating income
       margin (operating
       income divided by
       revenues)                     25.8%                     28.0%
                                     ====                      ====

      Operating cash flow
       margin (operating
       cash flow divided by
       revenues)                     45.9%                     48.1%
                                     ====                      ====


    Free cash flow (prior
     to debt service
     requirements and
     dividends)
      Net income
       attributable
       to CenturyTel, Inc.        $67,154     (14,744) (3)   81,898
      Add:  Depreciation
       and amortization           127,572           -       127,572
      Less:  Capital
       expenditures               (45,496)          -       (45,496) (5)
                                  -------         ---       -------
      Free cash flow             $149,230     (14,744)      163,974
                                 ========     =======       =======

      Free cash flow             $149,230
      Gain on asset
       disposition                      -
      Deferred
       income taxes                17,249
      Changes in
       current assets
       and current
       liabilities                 33,031
      Increase in other
       noncurrent assets             (306)
      Decrease in
       other
       noncurrent
       liabilities                 (2,779)
      Retirement benefits         (23,497)
      Excess tax
       benefits from
       share-based
       compensation                  (335)
      Other, net                   12,078
      Add:  Capital
       expenditures                45,496
                                   ------
      Net cash
       provided by
       operating
       activities                $230,167
                                 ========


                                      Three months ended March 31, 2008
                                  -----------------------------------------
                                                               As adjusted
                                                   Less         excluding
                                                    non-           non-
    In thousands                      As         recurring      recurring
                                   reported        items          items
                                  ----------     ---------     ------------
    Operating cash flow
     and cash flow margin
      Operating income              183,493            -         183,493
      Add:  Depreciation
       and amortization             135,684            -         135,684
                                    -------          ---         -------
      Operating cash flow           319,177            -         319,177
                                    =======          ===         =======

      Revenues                      648,614            -         648,614
                                    =======          ===         =======

      Operating income
       margin (operating
       income divided by
       revenues)                       28.3%                        28.3%
                                       ====                         ====

      Operating cash flow
       margin (operating
       cash flow divided
       by revenues)                    49.2%                        49.2%
                                       ====                         ====


    Free cash flow
     (prior to debt
     service
     requirements and
     dividends)
      Net income
       attributable  to
      CenturyTel, Inc.               88,760        2,589 (4)      86,171
      Add:  Depreciation
       and amortization             135,684            -         135,684
      Less:  Capital
       expenditures                 (54,739)           -         (54,739)
                                    -------          ---         -------
      Free cash flow                169,705        2,589         167,116
                                    =======        =====         =======

      Free cash flow                169,705
      Gain on asset
       disposition                   (4,136)
      Deferred
       income taxes                   8,357
      Changes in current
       assets and current
       liabilities                  (12,277)
      Increase in other
       noncurrent assets               (789)
      Decrease in other
       noncurrent liabilities        (2,790)
      Retirement
       benefits                       5,474
      Excess tax benefits
       from share-based
       compensation                     (19)
      Other, net                     11,946
      Add:  Capital
       expenditures                  54,739
                                     ------
      Net cash provided
        by operating
        activities                   230,210
                                     =======

     NONRECURRING ITEMS

(1) - Includes integration costs associated with pending acquisition of

           EMBARQ ($6.9 million) and settlement loss related to Supplemental
           Executive Retirement Plan, including revenue impact ($6.7            million).

(2) - Revenue impact of settlement loss related to Supplemental

           Executive Retirement Plan.

(3) - Includes (i) $6.7 million income tax expense due to the

           nondeductible portion of settlement payments related to the
           Supplemental Executive Retirement Plan; (ii) $5.0 million after-
           tax charge associated with our $800 million bridge credit
           facility related to the EMBARQ acquisition; (iii) $4.7 million
           after-tax impact of integration costs associated with pending
           acquisition of EMBARQ and (iv) $4.1 million after-tax impact of
           settlement loss related to Supplemental Executive Retirement
           Plan, including revenue impact.  These unfavorable items were
           partially offset by $5.8 million income tax benefit caused by a
           reduction to our deferred tax asset valuation allowance.

(4) - Gain on the sale of a nonoperating investment, net of tax.

(5) - Includes $6.4 million of capital expenditures related to the integration of EMBARQ. Excluding these costs, free cash flow was $170.4 million for the three months ended March 31, 2009.

 

SOURCE CenturyTel, Inc.