MONROE, La., Feb. 19 /PRNewswire-FirstCall/ -- 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       Quarter Ended    Quarter Ended     % Change
     items reflected in the          12/31/08         12/31/07
     attached financial
     schedules)
    (In thousands, except
     per share amounts and
     subscriber data)

    Operating Revenues              $642,647           $657,846        (2.3)%
    Operating Cash Flow (1)         $311,944           $321,472        (3.0)%
    Net Income                       $87,044            $89,822        (3.1)%
    Diluted Earnings Per
     Share                              $.88               $.82         7.3%
    Average Diluted Shares
     Outstanding                      99,228            110,119        (9.9)%
    Capital Expenditures            $101,813           $141,744       (28.2)%

    Access Lines                   1,998,000          2,135,000        (6.4)%
    High-Speed Internet
     Customers                       641,000            555,000        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 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 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 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 866.259.1024. 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 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 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
                                                                As adjusted
                                                       Less      excluding
                                                       non-         non-
    In thousands, except per              As        recurring    recurring
     share amounts                     reported        items        items

    OPERATING REVENUES
      Voice                            $215,407                    215,407
      Network access                    198,396         307(1)     198,089
      Data                              133,731                    133,731
      Fiber transport and CLEC           41,245                     41,245
      Other                              54,175                     54,175
                                        642,954         307        642,647

OPERATING EXPENSES

      Cost of services and products     235,792       1,483(1)     234,309
      Selling, general and
       administrative                   101,924       5,530(2)      96,394
      Depreciation and amortization     128,796                    128,796
                                        466,512       7,013        459,499

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

    OTHER INCOME (EXPENSE)
      Interest expense                  (53,446)                   (53,446)
      Other income (expense)             15,517      10,000(3)       5,517
      Income tax expense                (38,441)      9,734(4)     (48,175)

    NET INCOME                         $100,072      13,028         87,044

    BASIC EARNINGS PER SHARE              $1.01        0.13           0.88

DILUTED EARNINGS PER SHARE $1.01 0.13 0.88

AVERAGE SHARES OUTSTANDING

      Basic                              98,883                     98,883
      Diluted                            99,228                     99,228

    DIVIDENDS PER COMMON SHARE          $0.7000                     0.7000



                   Three months ended December 31, 2007
                                         As adjusted                Increase
                                   Less    excluding               (decrease)
    In thousands,                  non-       non-     Increase     excluding
     except per           As    recurring recurring  (decrease)   nonrecurring
     share amounts     reported   items      items   as reported      items

OPERATING REVENUES

      Voice             225,525              225,525    (4.5%)       (4.5%)
      Network access    215,415   (1,216)(5) 216,631    (7.9%)       (8.6%)
      Data              122,055      (68)(5) 122,123     9.6%         9.5%
      Fiber transport
       and CLEC          38,466               38,466     7.2%         7.2%
      Other              55,101               55,101    (1.7%)       (1.7%)
                        656,562   (1,284)    657,846    (2.1%)       (2.3%)

OPERATING EXPENSES

      Cost of services
       and products     251,026   13,740(6)  237,286    (6.1%)       (1.3%)
      Selling, general
       and
       administrative    99,008      (80)(6)  99,088     2.9%        (2.7%)
      Depreciation and
       amortization     137,554              137,554    (6.4%)       (6.4%)
                        487,588   13,660     473,928    (4.3%)       (3.0%)
    OPERATING INCOME    168,974  (14,944)    183,918     4.4%        (0.4%)

    OTHER INCOME

(EXPENSE)

      Interest expense  (53,102)             (53,102)    0.6%         0.6%
      Other income
       (expense)         10,639    2,206(7)    8,433    45.9%       (34.6%)
      Income tax
       expense          (11,478)  37,949(8)  (49,427)  234.9%        (2.5%)

    NET INCOME          115,033   25,211      89,822   (13.0%)       (3.1%)

    BASIC EARNINGS
     PER SHARE             1.05     0.23        0.82    (3.8%)        7.3%
    DILUTED EARNINGS
     PER SHARE             1.04     0.23        0.82    (2.9%)        7.3%

    AVERAGE SHARES
     OUTSTANDING
      Basic             109,008              109,008    (9.3%)       (9.3%)
      Diluted           110,119              110,119    (9.9%)       (9.9%)

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

    OPERATING REVENUES
      Voice                               $874,041                    874,041
      Network access                       820,383        1,319(1)    819,064
      Data                                 524,194           21(1)    524,173
      Fiber transport and CLEC             162,050                    162,050
      Other                                219,079                    219,079
                                         2,599,747        1,340     2,598,407

OPERATING EXPENSES

      Cost of services and products        955,473        1,483(2)    953,990
      Selling, general and
       administrative                      399,136       13,185(3)    385,951
      Depreciation and amortization        523,786                    523,786
                                         1,878,395       14,668     1,863,727

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

    OTHER INCOME (EXPENSE)
      Interest expense                    (202,217)                  (202,217)
      Other income (expense)                40,954       22,713(4)     18,241
      Income tax expense                  (194,357)       9,210(5)   (203,567)

    NET INCOME                            $365,732       18,595       347,137

    BASIC EARNINGS PER SHARE                 $3.57         0.18          3.39
    DILUTED EARNINGS PER SHARE               $3.56         0.18          3.37

AVERAGE SHARES OUTSTANDING

      Basic                                102,268                    102,268
      Diluted                              102,871                    102,871

    DIVIDENDS PER COMMON SHARE             $2.1675                     2.1675



                   Twelve months ended December 31, 2007
                                          As adjusted               Increase
                                   Less    excluding               (decrease)
    In thousands,                  non-       non-     Increase     excluding
     except per           As    recurring  recurring  (decrease)  nonrecurring
     share amounts     reported   items       items   as reported      items

OPERATING REVENUES

      Voice             889,960               889,960    (1.8%)       (1.8%)
      Network access    941,506   48,298(6)   893,208   (12.9%)       (8.3%)
      Data              460,755      (68)(6)  460,823    13.8%        13.7%
      Fiber transport
       and CLEC         159,317       13(6)   159,304     1.7%         1.7%
      Other             204,703    1,869(7)   202,834     7.0%         8.0%
                      2,656,241   50,112    2,606,129    (2.1%)       (0.3%)

    OPERATING EXPENSES
      Cost of services
       and products     937,375   11,655(8)   925,720     1.9%         3.1%
      Selling, general
       and
       administrative   389,533      694(8)   388,839     2.5%        (0.7%)
      Depreciation and
       amortization     536,255               536,255    (2.3%)       (2.3%)
                      1,863,163   12,349    1,850,814     0.8%         0.7%

    OPERATING INCOME    793,078   37,763      755,315    (9.0%)       (2.7%)

    OTHER INCOME

(EXPENSE)

      Interest expense (212,906)             (212,906)   (5.0%)       (5.0%)
      Other income
       (expense)         38,770   12,643(9)    26,127     5.6%       (30.2%)
      Income tax
       expense         (200,572)  13,701(10) (214,273)   (3.1%)       (5.0%)

    NET INCOME          418,370   64,107      354,263   (12.6%)       (2.0%)

    BASIC EARNINGS
     PER SHARE             3.82     0.59         3.24    (6.5%)        4.6%
    DILUTED EARNINGS
     PER SHARE             3.72     0.57         3.16    (4.3%)        6.6%

    AVERAGE SHARES
     OUTSTANDING
      Basic             109,360               109,360    (6.5%)       (6.5%)
      Diluted           113,094               113,094    (9.0%)       (9.0%)

    DIVIDENDS PER
     COMMON SHARE          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
                                                                  As adjusted
                                                          Less      excluding
                                                          non-         non-
    In thousands                             As        recurring    recurring
                                          reported       items        items

Operating cash flow and cash flow

margin

      Operating income                     $176,442    (6,706)(1)    183,148

Add: Depreciation and

       amortization                         128,796         -        128,796
      Operating cash flow                  $305,238    (6,706)       311,944

      Revenues                             $642,954       307(2)    642,647

Operating income margin (operating

       income divided by revenues)            27.4%                    28.5%

Operating cash flow margin

(operating cash flow divided by

       revenues)                              47.5%                    48.5%


Free cash flow (prior to debt

service requirements and dividends)

      Net income                           $100,072    13,028(3)     87,044

Add: Depreciation and

       amortization                         128,796         -        128,796
      Less: Capital expenditures           (101,813)        -       (101,813)
      Free cash flow                       $127,055    13,028        114,027

      Free cash flow                       $127,055
      Gain on asset dispositions                  -
      Deferred income taxes                  43,561

Changes in current assets and

       current liabilities                  (20,636)

Decrease in other noncurrent

       assets                                 3,636

Decrease in other noncurrent

       liabilities                          (23,583)
      Retirement benefits                   (47,412)

Excess tax benefits from share-

       based compensation                      (336)
      Other, net                              1,969
      Add: Capital expenditures             101,813

Net cash provided by operating

        activities                         $186,067


                                     Three months ended December 31, 2007
                                                                  As adjusted
                                                          Less      excluding
                                                          non-         non-
    In thousands                             As        recurring    recurring
                                          reported       items        items

Operating cash flow and cash flow

margin

      Operating income                     168,974     (14,944)(4)    183,918

Add: Depreciation and

       amortization                        137,554           -        137,554
      Operating cash flow                  306,528     (14,944)       321,472

      Revenues                             656,562      (1,284)(5)    657,846

Operating income margin (operating

       income divided by revenues)            25.7%                      28.0%

Operating cash flow margin

(operating cash flow divided by

       revenues)                              46.7%                      48.9%


Free cash flow (prior to debt

service requirements and dividends)

      Net income                           115,033      25,211(6)      89,822

Add: Depreciation and

       amortization                        137,554           -        137,554

Less: Capital expenditures (141,744) - (141,744)

      Free cash flow                       110,843      25,211         85,632

      Free cash flow                       110,843
      Gain on asset dispositions            (5,207)
      Deferred income taxes                (42,093)

Changes in current assets and

       current liabilities                   9,094

Decrease in other noncurrent

       assets                                4,665

Decrease in other noncurrent

       liabilities                          (6,572)
      Retirement benefits                    5,958

Excess tax benefits from share-

       based compensation                        7
      Other, net                            22,114
      Add: Capital expenditures            141,744

Net cash provided by operating

       activities                          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
                                                                  As adjusted
                                                          Less      excluding
                                                          non-         non-
    In thousands                             As        recurring    recurring
                                          reported       items        items

Operating cash flow and cash flow

margin

      Operating income                    $721,352     (13,328)(1)    734,680

Add: Depreciation and

       amortization                        523,786           -        523,786
      Operating cash flow               $1,245,138     (13,328)     1,258,466

      Revenues                          $2,599,747       1,340(2)   2,598,407

Operating income margin (operating

       income divided by revenues)            27.7%                      28.3%

Operating cash flow margin

(operating cash flow divided by

       revenues)                              47.9%                      48.4%


Free cash flow (prior to debt service

requirements and dividends)

      Net income                          $365,732      18,595(3)     347,137
      Add: Depreciation and amortization   523,786           -        523,786

Less: Capital expenditures (286,817) - (286,817)

                                          $602,701      18,595        584,106

      Free cash flow                      $602,701
      Gain on asset dispositions           (12,452)
      Deferred income taxes                 67,518

Changes in current assets and

       current liabilities                 (74,325)

Decrease in other noncurrent assets 9,744

Decrease in other noncurrent

       liabilities                         (27,561)
      Retirement benefits                  (26,066)

Excess tax benefits from share-based

       compensation                         (1,123)
      Other, net                            28,047
      Add: Capital expenditures            286,817

Net cash provided by operating

       activities                         $853,300



                                    Twelve months ended December 31, 2007
                                                                  As adjusted
                                                          Less      excluding
                                                          non-         non-
    In thousands                             As        recurring    recurring
                                          reported       items        items

Operating cash flow and cash flow

margin

       Operating income                    793,078      37,763(4)     755,315

Add: Depreciation and

        amortization                       536,255           -        536,255
       Operating cash flow               1,329,333      37,763      1,291,570

       Revenues                          2,656,241      50,112(5)   2,606,129

Operating income margin (operating

        income divided by revenues)           29.9%                      29.0%

Operating cash flow margin

(operating cash flow divided by

        revenues)                             50.0%                      49.6%


Free cash flow (prior to debt

service requirements and dividends)

       Net income                          418,370      64,107(6)     354,263

Add: Depreciation and

        amortization                       536,255           -        536,255

Less: Capital expenditures (326,045) - (326,045)

                                           628,580      64,107        564,473

       Free cash flow                      628,580

Gain on asset dispositions (15,643)

       Deferred income taxes                 1,018

Changes in current assets and

        current liabilities                 37,608

Decrease in other noncurrent

        assets                              12,718

Decrease in other noncurrent

        liabilities                        (20,781)
       Retirement benefits                  27,350

Excess tax benefits from share-

        based compensation                  (6,427)
       Other, net                           39,518

Add: Capital expenditures 326,045

Net cash provided by operating

        activities                       1,029,986

NONRECURRING ITEMS

      (1) - Includes curtailment loss related to Supplemental Executive
            Retirement Plan, including revenue impact ($6.6 million), costs
            associated with the pending acquisition of EMBARQ ($5.0 million)
            and severance and related costs due to workforce reductions,
            including revenue impact ($1.7 million).
      (2) - Includes revenue impact of curtailment loss related to
            Supplemental Executive Retirement Plan ($1.0 million) and revenue
            impact of severance and related costs due to workforce reduction
            ($.3 million).
      (3) - Includes (i) $12.8 million income tax benefit due to the
            recognition of previously unrecognized tax benefits in accordance
            with FIN 48, (ii) $6.3 million after-tax benefit related to the
            recognition of previously accrued transaction related and other
            contingencies, (iii) after-tax impact of gain upon liquidation of
            the Supplemental Executive Retirement Plan trust assets ($2.8             million), (iv) after-tax impact of gain on sales of non-core
            assets ($4.6 million) and (v) net benefit due to the resolution of
            certain income tax audit issues ($2.3 million). Such favorable
            adjustments were partially offset by the (i) after-tax impact of
            curtailment loss related to Supplemental Executive Retirement
            Plan, including revenue impact ($4.1 million), (ii) after-tax
            impact of costs associated with the pending acquisition of EMBARQ
            ($5.0 million) and (iii) after-tax impact of severance and related
            costs due to workforce reductions ($1.1 million).
      (4) - Includes (i) $49.0 million revenue recorded upon settlement of a
            dispute with a carrier; (ii) $5.9 million reimbursement of amounts
            upon a change in our satellite television arrangement and (iii)
            $3.0 million insurance reimbursements associated with previously
            recorded hurricane related expenses. These favorable items were
            partially offset by (i) write-down due to the impairment of CLEC
            assets ($16.6 million), (ii) impact of severance and related costs
            due to workforce reductions ($2.2 million), and (iii) revenue
            reduction associated with gain from liquidation of Rural Telephone             Bank ($1.3 million).
      (5) - Includes the sum of (i) $49.0 million revenue recorded upon
            settlement of a dispute with a carrier; (ii) $1.9 million
            reimbursement of amounts upon a change in our satellite television
            arrangement and (iii) revenue impact of severance and related
            costs due to workforce reductions ($.5 million), net of revenue
            reduction associated with gain from liquidation of Rural Telephone             Bank ($1.3 million).
      (6) - Includes the after-tax impact of Item (4), the after-tax gain on
            the sale of a non-core asset ($6.5 million), the after-tax gain
            from liquidation of Rural Telephone Bank ($3.2 million), the
            after-tax impairment of a nonoperating investment ($1.9 million),
            and $32.7 million income tax benefit due to the recognition of
            previously unrecognized tax benefits in accordance with FIN 48.