MONROE, La., July 31 /PRNewswire-FirstCall/ -- CenturyTel, Inc. (NYSE: CTL) announces operating results for second quarter 2008.

     *    Operating revenues, excluding nonrecurring items, increased 2.8% to
          $657.1 million compared to $639.1 million in second quarter 2007.
          Reported under GAAP, operating revenues decreased 4.6% to
          $658.1 million, primarily due to a nonrecurring $49 million
          favorable access dispute settlement in second quarter 2007.

     *    Operating cash flow (as defined in the attached financial
          schedules), excluding nonrecurring items, rose 2.3% to
          $318.3 million from $311.2 million in second quarter 2007.

     *    Net income, excluding nonrecurring items, increased 16.2% to
          $91.2 million from $78.4 million in second quarter 2007. Net income,
          reported under GAAP, was $92.2 million compared to $112.3 million in
          second quarter 2007.

     *    Diluted earnings per share, excluding nonrecurring items, rose 24.3%
          to $.87 in second quarter 2008 compared to $.70 in second quarter
          2007, while GAAP diluted earnings per share was $.88 in second
          quarter 2008 compared to $1.00 in second quarter 2007.

    *     Free cash flow (as defined in the attached financial schedules),
          excluding nonrecurring items, rose to $162.5 million in second
          quarter 2008 compared to $154.8 million in second quarter 2007.



    Second Quarter Highlights
    (Excluding nonrecurring items
     reflected in the attached
     financial schedules)

    (In thousands, except per       Quarter         Quarter
     share amounts and subscriber    Ended           Ended
     data)                          6/30/08         6/30/07       % Change

    Operating Revenues             $657,073        $639,122          2.8%
    Operating Cash Flow (1)        $318,266        $311,226          2.3%
    Net Income                      $91,162         $78,434         16.2%
    Diluted Earnings Per Share          .87             .70         24.3%
    Average Diluted Shares
     Outstanding                   $104,273        $113,721        (8.3)%
    Capital Expenditures            $59,659         $57,976          2.9%

    Access Lines                  2,077,000       2,205,000        (5.8)%
    High-Speed Internet
     Customers                      607,000         500,000         21.4%

    (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 solid second quarter results as operating revenues
    and diluted earnings per share exceeded our expectations for the quarter,"
    Glen F. Post, III, chairman and chief executive officer, said. "We
    generated free cash flow of more than $162 million for the quarter, a
    nearly 5% increase over second quarter 2007. Our strong cash flows enable
    us to return significant cash to shareholders through our recently
    announced dividend increase and the acceleration of our current share
    repurchase program."

Operating revenues, excluding nonrecurring items, increased 2.8% to $657.1 million in second quarter 2008 compared to $639.1 million in second quarter 2007. Revenue increases of approximately $41 million were driven primarily by revenues contributed by the Madison River properties acquired April 30, 2007 and growth in high-speed Internet customers, along with selected price increases and favorable network access dispute settlements. These increases more than offset revenue declines of approximately $23 million primarily attributable to lower access revenues, lower universal service fund receipts and access line losses.

Operating expenses, excluding nonrecurring items, increased 1.6% to $469.8 million from $462.2 million in second quarter 2007, primarily due to operating costs associated with the Madison River properties, growth in high- speed Internet customers and increased marketing expenses. These increases were partially offset by reduced personnel related costs and lower depreciation expense.

"We completed the integration of the Madison River properties in late June and expect to reach our $17 million annual synergy run rate target by the end of the third quarter," Post said. "We expect these synergies, along with continued broadband growth and cost containment efforts, to enable CenturyTel to continue to generate solid cash flows in the months ahead."

Operating cash flow, excluding nonrecurring items, for second quarter 2008 increased 2.3% to $318.3 million from $311.2 million in second quarter 2007. CenturyTel achieved an operating cash flow margin of 48.4% during the quarter versus 48.7% in second quarter 2007.

Net income, excluding nonrecurring items, was $91.2 million, a 16.2% increase over the $78.4 million in second quarter 2007. Diluted earnings per share, excluding nonrecurring items, increased 24.3% to $.87 in second quarter 2008 compared to $.70 in second quarter 2007, primarily due to increased operating income, lower interest expense, a lower effective tax rate for 2008 and the reduction in diluted shares outstanding as a result of share repurchases.

For the first six months of 2008, operating revenues, excluding nonrecurring items, were $1.31 billion compared to $1.24 billion in 2007, a 5.3% increase. Operating cash flow, excluding nonrecurring items, was $637.4 million for 2008, a 5.0% increase over the $607.1 million a year ago. Net income, excluding nonrecurring items, increased 13.5% to $177.3 million from $156.3 million in 2007, while diluted earnings per share, excluding nonrecurring items, increased 21.7% to $1.68 from $1.38 in 2007.

Under generally accepted accounting principles (GAAP), net income for second quarter 2008 was $92.2 million compared to $112.3 million for second quarter 2007. Diluted earnings per share was $.88 in second quarter 2008 compared to $1.00 in second quarter 2007. Second quarter 2008 results include a net $1.3 million after-tax charge related to the freeze of our supplemental executive pension plan and a net $2.3 million benefit related to the resolution of certain income tax audit issues. Second quarter 2007 results include a $30.2 million after-tax positive revenue settlement related to the resolution of network access disputes and a $3.6 million after-tax benefit related to the amended satellite television agreement with EchoStar.

For the first six months of 2008, under GAAP, the Company reported net income of $180.9 million, or $1.71 per diluted share, compared to net income of $190.1 million, or $1.67 per diluted share, for the six months ended June 30, 2007. See the accompanying financial schedules for detail of the Company's nonrecurring items for the years 2008 and 2007.

For third quarter 2008, CenturyTel expects total revenues of $640 to $650 million and diluted earnings per share of $.79 to $.83. This decrease in revenues and diluted earnings per share compared to second quarter 2008 is primarily due to approximately $6 million in favorable revenue adjustments recognized in the second quarter, including the network access dispute settlements management discussed during the Company's first quarter earnings call, that are not expected to reoccur in the third quarter.

For the full year 2008, diluted earnings per share is expected to be in the range of $3.20 to $3.30, an increase over the $3.05 to $3.20 range previously provided. This increase in 2008 diluted earnings per share guidance is primarily due to the better than anticipated results during second quarter 2008 and share repurchases since April 30.

These outlook figures for second quarter and full year 2008 exclude nonrecurring items, any share repurchases settled after July 31, 2008, and any future mergers, acquisitions, divestitures, or other similar business transactions.

"We are pleased with the operational performance and continued share buybacks that are driving an increase in our full year 2008 outlook," said Post. "We continue to evaluate deployment and technology alternatives for our 700 MHz spectrum and are currently leaning toward the same type of LTE-based deployment that has been discussed by the larger carriers. We do not foresee material 700 MHz related effects on our capital or operating budgets in either 2008 or 2009 since LTE-based network elements and end-user devices are not expected to be commercially available until early 2010 or later."

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 http://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 866.206.5917. The call will be accessible for replay through August 6, 2008, by calling 888.258.7854 and entering the conference ID number 1253493. 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 http://www.centurytel.com through August 20, 2008.

In addition to historical information, this release includes certain forward-looking statements, estimates and projections that are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of the Company. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry; the Company's ability to effectively adjust to changes in the communications industry; the Company's ability to effectively manage its expansion opportunities, including successfully integrating newly-acquired properties into the Company's operations and retaining and hiring key personnel; possible changes in the demand for, or pricing of, the Company's products and services; the Company's continued access to credit markets on favorable terms; the Company's ability to successfully introduce new product or service offerings on a timely and cost-effective basis; the Company's ability to collect its receivables from financially troubled communications companies; the Company's ability to pay a $2.80 per share common dividend annually, which may be affected by changes in its cash requirements, capital spending plans, cash flow or financial position; the Company's ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effect of adverse weather; other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission (the "SEC"); and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy. These and other uncertainties related to the Company's business and plans are described in greater detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as updated and supplemented by the Company's subsequent SEC reports. You should be aware that new factors may emerge from time to time and it is not possible for management to identify all such factors, nor can it predict the impact of each such factor on the business or the extent to which any one or more factors may cause actual results to differ from those reflected in any forward-looking statements. You are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The information contained in this release is as of July 31, 2008. The Company undertakes no obligation to update any of its forward- looking statements for any reason.

CenturyTel (NYSE: CTL) is a leading provider of communications, high-speed Internet and entertainment services in small-to-mid-size cities through our broadband and fiber transport networks. Included in the S&P 500 Index, CenturyTel delivers advanced communications with a personal touch to customers in 25 states. Visit us at http://www.centurytel.com.


                               CenturyTel, Inc.
                      CONSOLIDATED STATEMENTS OF INCOME
                  THREE MONTHS ENDED JUNE 30, 2008 AND 2007
                                 (UNAUDITED)

                                           Three months ended June 30, 2008

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

     OPERATING REVENUES
        Voice                               $219,901                 219,901
        Network access                       207,904     1,012 (1)   206,892
        Data                                 131,060        21 (1)   131,039
        Fiber transport and CLEC              43,166                  43,166
        Other                                 56,075                  56,075
                                             658,106     1,033       657,073

     OPERATING EXPENSES
        Cost of services and products        239,626                 239,626
        Selling, general and
         administrative                      106,836     7,655 (1)    99,181
        Depreciation and amortization        130,954                 130,954
                                             477,416     7,655       469,761

     OPERATING INCOME                        180,690    (6,622)      187,312

     OTHER INCOME (EXPENSE)
        Interest expense                     (49,166)                (49,166)
        Other income (expense)                12,907     5,425 (2)     7,482
        Income tax expense                   (52,264)    2,202 (3)   (54,466)

     NET INCOME                              $92,167     1,005        91,162

     BASIC EARNINGS PER SHARE                  $0.89      0.01          0.88
     DILUTED EARNINGS PER SHARE                $0.88      0.01          0.87

     AVERAGE SHARES OUTSTANDING
        Basic                                103,644                 103,644
        Diluted                              104,273                 104,273

    DIVIDENDS PER COMMON SHARE               $0.0675                  0.0675



                            Three months ended June 30, 2007

                                                     As               Increase
                                                  adjusted          (decrease)
                                         Less     excluding Increase excluding
                                          non-       non-  (decrease)   non-
     In thousands, except per    As    recurring  recurring    as    recurring
      share amounts           reported   items      items   reported   items

     OPERATING REVENUES
       Voice                   222,677              222,677   (1.2%)   (1.2%)
       Network access          266,202   48,987 (4) 217,215  (21.9%)   (4.8%)
       Data                    108,206              108,206   21.1%    21.1%
       Fiber transport and
        CLEC                    40,714       13 (4)  40,701    6.0%     6.1%
       Other                    52,192    1,869 (5)  50,323    7.4%    11.4%
                               689,991   50,869     639,122   (4.6%)    2.8%

     OPERATING EXPENSES
       Cost of services and
        products               226,388   (4,052)(5) 230,440    5.8%     4.0%
       Selling, general and
        administrative          97,456               97,456    9.6%     1.8%
       Depreciation and
        amortization           134,311              134,311   (2.5%)   (2.5%)
                               458,155   (4,052)    462,207    4.2%     1.6%

     OPERATING INCOME          231,836   54,921     176,915  (22.1%)    5.9%

     OTHER INCOME (EXPENSE)
       Interest expense        (57,667)             (57,667) (14.7%)  (14.7%)
       Other income (expense)    8,080                8,080   59.7%    (7.4%)
       Income tax expense      (69,984) (21,090)(6) (48,894) (25.3%)   11.4%

     NET INCOME                112,265   33,831      78,434  (17.9%)   16.2%

     BASIC EARNINGS PER
      SHARE                       1.03     0.31        0.72  (13.6%)   22.2%
     DILUTED EARNINGS PER
      SHARE                       1.00     0.30        0.70  (12.0%)   24.3%

     AVERAGE SHARES
      OUTSTANDING
       Basic                   108,405              108,405   (4.4%)   (4.4%)
       Diluted                 113,721              113,721   (8.3%)   (8.3%)

    DIVIDENDS PER COMMON SHARE  0.0650               0.0650    3.8%     3.8%

     NONRECURRING ITEMS
       (1) -  Curtailment loss related to freezing Supplemental Executive
              Retirement Plan, including revenue impact.
       (2) -  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
              ($919,000).
       (3) -  Includes $448,000 net income tax benefit related to items
              (1) and (2) and $1.8 million income tax benefit recorded upon
              resolution of certain income tax audit issues.
       (4) -  Revenue recorded upon settlement of a dispute with a
              carrier.
       (5) -  Reimbursement of amounts upon a change in our satellite
              television arrangement.
       (6) -  Tax effects of items (4) and (5).



                               CenturyTel, Inc.
                      CONSOLIDATED STATEMENTS OF INCOME
                   SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                                 (UNAUDITED)

                                             Six months ended June 30, 2008

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

     OPERATING REVENUES
        Voice                               $440,381                 440,381
        Network access                       416,602    1,012 (1)    415,590
        Data                                 257,832       21 (1)    257,811
        Fiber transport and CLEC              82,799                  82,799
        Other                                109,106                 109,106
                                           1,306,720    1,033      1,305,687

     OPERATING EXPENSES
        Cost of services and products        477,438                 477,438
        Selling, general and administrative  198,461    7,655 (1)    190,806
        Depreciation and amortization        266,638                 266,638
                                             942,537    7,655        934,882

     OPERATING INCOME                        364,183   (6,622)       370,805

     OTHER INCOME (EXPENSE)
        Interest expense                     (99,288)                (99,288)
        Other income (expense)                21,324    9,561 (2)     11,763
        Income tax expense                  (105,292)     655 (3)   (105,947)

     NET INCOME                             $180,927    3,594        177,333

     BASIC EARNINGS PER SHARE                  $1.72     0.03           1.69
     DILUTED EARNINGS PER SHARE                $1.71     0.03           1.68

     AVERAGE SHARES OUTSTANDING
        Basic                                104,893                 104,893
        Diluted                              105,635                 105,635

    DIVIDENDS PER COMMON SHARE               $0.1350                  0.1350



                             Six months ended June 30, 2007

                                                     As               Increase
                                                  adjusted          (decrease)
                                         Less     excluding Increase excluding
                                          non-       non-  (decrease)   non-
     In thousands, except per    As    recurring  recurring    as    recurring
      share amounts           reported   items      items   reported   items

     OPERATING REVENUES
       Voice                 434,573                434,573    1.3%     1.3%
       Network access        477,601     48,987 (4) 428,614  (12.8%)   (3.0%)
       Data                  204,070                204,070   26.3%    26.3%
       Fiber transport and
        CLEC                  79,040       13 (4)    79,027    4.8%     4.8%
       Other                  95,562    1,869 (5)    93,693   14.2%    16.5%
                           1,290,846   50,869     1,239,977    1.2%     5.3%

     OPERATING EXPENSES
       Cost of services and
        products             439,919   (4,052)(5)   443,971    8.5%     7.5%
       Selling, general and
        administrative       188,913                188,913    5.1%     1.0%
       Depreciation and
        amortization         262,095                262,095    1.7%     1.7%
                             890,927   (4,052)      894,979    5.8%     4.5%

     OPERATING INCOME        399,919   54,921       344,998   (8.9%)    7.5%

     OTHER INCOME (EXPENSE)
       Interest expense     (104,628)              (104,628)  (5.1%)   (5.1%)
       Other income
        (expense)             13,370                 13,370   59.5%   (12.0%)
       Income tax expense   (118,526) (21,090)(6)   (97,436) (11.2%)    8.7%

     NET INCOME              190,135   33,831       156,304   (4.8%)   13.5%

     BASIC EARNINGS PER
      SHARE                     1.73     0.31          1.42   (0.6%)   19.0%
     DILUTED EARNINGS PER
      SHARE                     1.67     0.29          1.38    2.4%    21.7%

     AVERAGE SHARES
      OUTSTANDING
       Basic                 109,718                109,718   (4.4%)   (4.4%)
       Diluted               115,015                115,015   (8.2%)   (8.2%)

    DIVIDENDS PER COMMON
     SHARE                     0.130                  0.130    3.8%     3.8%

     NONRECURRING ITEMS
       (1) -  Curtailment loss related to freezing Supplemental Executive
              Retirement Plan, including revenue impact.
       (2) -  Gain on the sale of a nonoperating investment
              ($4.1 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 ($919,000).
       (3) -  Includes $1.1 million net income tax expense related to
              items (1) and (2) and $1.8 million income tax benefit recorded
              upon resolution of certain income tax audit issues.
       (4) -  Revenue recorded upon settlement of a dispute with a
              carrier.
       (5) -  Reimbursement of amounts upon a change in our satellite
              television arrangement.
       (6) -  Tax effects of items (4) and (5).



                               CenturyTel, Inc.
                         CONSOLIDATED BALANCE SHEETS
                     JUNE 30, 2008 AND DECEMBER 31, 2007
                                 (UNAUDITED)

                                                 June 30,           Dec. 31,
                                                   2008               2007
                                                       (in thousands)
                     ASSETS
    CURRENT ASSETS
        Cash and cash equivalents                 $63,900             34,402
        Other current assets                      267,416            257,997
           Total current assets                   331,316            292,399

    NET PROPERTY, PLANT AND EQUIPMENT
        Property, plant and equipment           8,751,414          8,666,106
        Accumulated depreciation               (5,783,574)        (5,557,730)
           Net property, plant and equipment    2,967,840          3,108,376

    GOODWILL AND OTHER ASSETS
        Goodwill                                4,010,027          4,010,916
        Other                                     858,881            772,862
            Total goodwill and other assets     4,868,908          4,783,778


    TOTAL ASSETS                               $8,168,064          8,184,553


             LIABILITIES AND EQUITY
    CURRENT LIABILITIES
        Current maturities of long-term debt      $45,344            279,898
        Other current liabilities                 444,774            456,637
            Total current liabilities             490,118            736,535

    LONG-TERM DEBT                              3,016,243          2,734,357
    DEFERRED CREDITS AND OTHER LIABILITIES      1,286,666          1,304,456
    STOCKHOLDERS' EQUITY                        3,375,037          3,409,205

    TOTAL LIABILITIES AND EQUITY               $8,168,064          8,184,553



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

                        Three months ended            Three months ended
                           June 30, 2008                 June 30, 2007
                                                                        As
                                        As adjusted                  adjusted
                                Less     excluding          Less     excluding
                                non-       non-             non-       non-
     In thousands        As   recurring  recurring   As   recurring  recurring
                      reported  items      items  reported  items      items
     Operating cash
      flow and cash
      flow margin
       Operating
        income        $180,690 (6,622)(1) 187,312  231,836 54,921 (3) 176,915
       Add:
        Depreciation
        and
        amortization   130,954            130,954  134,311            134,311
       Operating cash
        flow          $311,644 (6,622)    318,266  366,147 54,921     311,226

       Revenues       $658,106  1,033 (1) 657,073  689,991 50,869 (3) 639,122

       Operating
        income margin
        (operating
        income divided
        by revenues)     27.5%              28.5%    33.6%              27.7%

       Operating cash
        flow margin
        (operating
        cash flow
        divided by
        revenues)        47.4%              48.4%    53.1%              48.7%


     Free cash flow
      (prior to debt
      service
      requirements
      and dividends)
       Net income      $92,167  1,005 (2)  91,162  112,265 33,831 (3)  78,434
       Add:
        Depreciation
        and
        amortization   130,954            130,954  134,311            134,311
       Less:  Capital
        expenditures   (59,659)           (59,659) (57,976)           (57,976)
       Free cash flow $163,462  1,005     162,457  188,600 33,831     154,769

       Free cash flow $163,462                     188,600
       Gain on
        liquidation of
        marketable
        securities      (4,506)                          -
       Deferred income
        taxes            5,068                      16,634
       Changes in
        current assets
        and current
        liabilities    (44,749)                     36,943
       Decrease in
        other
        noncurrent
        assets           3,043                       2,621
       Decrease in
        other
        noncurrent
        liabilities     (2,689)                    (11,266)
       Retirement
        benefits        12,728                       9,011
       Excess tax
        benefits from
        share-based
        compensation       (55)                     (3,280)
       Other, net        4,816                       2,076
       Add:  Capital
        expenditures    59,659                      57,976
       Net cash
        provided by
        operating
        activities    $196,777                     299,315


     NONRECURRING ITEMS
      (1) -  Curtailment loss related to freezing Supplemental Executive
             Retirement Plan, including revenue impact.
      (2) -  Includes after-tax impact of gain upon liquidation of
             Supplemental Executive Retirement Plan trust assets
             ($2.8 million) and net benefit due to the resolution of certain
             income tax audit issues ($2.3 million), net of the after-tax
             impact of Item (1) ($4.1 million).
      (3) -  Includes $49.0 million revenue recorded upon settlement of a
             dispute with a carrier and $5.9 million reimbursement of amounts
             (of which $1.9 million increased revenues) upon a change
              in our satellite television arrangement (presented on both a
              pre-tax and after-tax basis).



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

                                            Six months ended June 30, 2008

                                                                   As adjusted
                                                        Less        excluding
                                                        non-          non-
    In thousands                             As       recurring     recurring
                                          reported      items         items
    Operating cash flow and cash flow
     margin
      Operating income                     $364,183     (6,622)(1)   370,805
      Add:  Depreciation and
       amortization                         266,638                  266,638
      Operating cash flow                  $630,821     (6,622)      637,443

      Revenues                           $1,306,720      1,033 (1) 1,305,687

      Operating income margin (operating
       income divided by revenues)            27.9%                    28.4%

      Operating cash flow margin
       (operating cash flow divided by
       revenues)                              48.3%                    48.8%


    Free cash flow (prior to debt
     service requirements and dividends)
      Net income                           $180,927      3,594 (2)   177,333
      Add:  Depreciation and amortization   266,638                  266,638
      Less:  Capital expenditures          (114,398)                (114,398)
      Free cash flow                       $333,167      3,594       329,573

      Free cash flow                       $333,167
      Gain on asset dispositions and
       liquidation of marketable securities  (8,641)
      Deferred income taxes                  13,425
      Changes in current assets and
       current liabilities                  (57,026)
      Decrease in other noncurrent
       assets                                 2,254
      Decrease in other noncurrent
       liabilities                           (5,479)
      Retirement benefits                    18,202
      Excess tax benefits from share-
       based compensation                       (74)
      Other, net                             16,761
      Add:  Capital expenditures            114,398
      Net cash provided by operating
       activities                          $426,987



                                            Six months ended June 30, 2007

                                                                  As adjusted
                                                       Less        excluding
                                                       non-           non-
    In thousands                             As      recurring     recurring
                                          reported     items         items
    Operating cash flow and cash flow
     margin
      Operating income                      399,919     54,921 (3)   344,998
      Add:  Depreciation and amortization   262,095                  262,095
      Operating cash flow                   662,014     54,921       607,093

      Revenues                            1,290,846     50,869 (3) 1,239,977

      Operating income margin (operating
       income divided by revenues)            31.0%                    27.8%

      Operating cash flow margin
       (operating cash flow divided by
       revenues)                              51.3%                    49.0%


    Free cash flow (prior to debt service
     requirements and dividends)
      Net income                            190,135     33,831 (3)   156,304
      Add:  Depreciation and amortization   262,095                  262,095
      Less:  Capital expenditures          (106,856)                (106,856)
      Free cash flow                        345,374     33,831       311,543

      Free cash flow                        345,374
      Gain on asset dispositions and
       liquidation of marketable
       securities                                 -
      Deferred income taxes                  30,005
      Changes in current assets and
       current liabilities                   70,835
      Decrease in other noncurrent assets     3,653
      Decrease in other noncurrent
       liabilities                          (11,667)
      Retirement benefits                    14,647
      Excess tax benefits from share-
       based compensation                    (6,312)
      Other, net                              4,634
      Add:  Capital expenditures            106,856
      Net cash provided by operating
       activities                           558,025

    NONRECURRING ITEMS
      (1) -  Curtailment loss related to freezing Supplemental Executive
             Retirement Plan, including revenue impact.
      (2) -  Includes (i) after-tax impact of gain upon liquidation of
             Supplemental Executive Retirement Plan trust assets
             ($2.8 million), (ii) after-tax impact of gain on sale of
             nonoperating investment ($2.6 million), and (iii) net benefit due
             to the resolution of certain income tax audit issues
             ($2.3 million), all partially offset by the after-tax impact of
             Item (1) ($4.1 million).
      (3) -  Includes $49.0 million revenue recorded upon settlement of a
             dispute with a carrier and $5.9 million reimbursement of amounts
             (of which $1.9 million increased revenues) upon a change
             in our satellite television arrangement (presented on both a
             pre-tax and after-tax basis).

SOURCE CenturyTel, Inc.