Louisiana
|
72-0651161
|
|||
(
State or other jurisdiction
of
|
(IRS
Employer
|
|||
incorporation
or organization)
|
Identification
No.)
|
100
CenturyTel Drive, Monroe, Louisiana
|
71203
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title of each
class
|
Name of each exchange
on which registered
|
Common
Stock, par value $1.00
|
New
York Stock Exchange
Berlin
Stock Exchange
|
Page
|
||
Part
I.
|
||
Item
1.
|
Business
|
4
|
Item
1A.
|
Risk
Factors
|
26
|
Item
1B.
|
Unresolved
Staff Comments
|
44
|
Item
2.
|
Properties
|
44
|
Item
3.
|
Legal
Proceedings
|
45
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders and Executive
Officers
of the Registrant
|
46
|
Part
II.
|
||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder
Matters
and Issuer Purchases of Equity Securities
|
47
|
Item
6.
|
Selected
Financial Data
|
48
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition
and
Results of Operations
|
50
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
76
|
Item
8.
|
Financial
Statements and Supplementary Data
|
77
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting
and
Financial Disclosure
|
119
|
Item
9A.
|
Controls
and Procedures
|
119
|
Item
9B.
|
Other
Information
|
119
|
Part
III.
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
120
|
Item
11.
|
Executive
Compensation
|
121
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
121
|
Item
13.
|
Certain
Relationships and Related Transactions
|
121
|
Item
14.
|
Principal
Accountant Fees and Services
|
121
|
Part
IV.
|
||
Item
15.
|
Exhibits,
Financial Statement Schedules and Reports on Form 8-K
|
122
|
Signatures
|
135
|
Item
1.
|
Business
|
December 31,
2008
|
December 31, 2008
|
December 31, 2007
|
||||||||||||||
Number
of
|
Percent
of
|
Number
of
|
Percent
of
|
|||||||||||||
State
|
access lines
|
access lines
|
access lines
|
access lines
|
||||||||||||
Missouri
|
387,000 | 19 | % | 408,000 | 19 | % | ||||||||||
Wisconsin
(1)
|
362,000 | 18 | 387,000 | 18 | ||||||||||||
Alabama
(2)
|
268,000 | 13 | 290,000 | 14 | ||||||||||||
Arkansas
|
197,000 | 10 | 211,000 | 10 | ||||||||||||
Washington
|
147,000 | 7 | 157,000 | 7 | ||||||||||||
Michigan
|
86,000 | 4 | 91,000 | 4 | ||||||||||||
Colorado
|
82,000 | 4 | 86,000 | 4 | ||||||||||||
Louisiana
|
80,000 | 4 | 84,000 | 4 | ||||||||||||
Oregon
|
62,000 | 3 | 66,000 | 3 | ||||||||||||
Ohio
|
57,000 | 3 | 64,000 | 3 | ||||||||||||
Illinois
(2)
|
53,000 | 3 | 57,000 | 3 | ||||||||||||
Montana
|
53,000 | 3 | 57,000 | 3 | ||||||||||||
Texas
|
31,000 | 2 | 33,000 | 2 | ||||||||||||
Georgia
(2)
|
30,000 | 2 | 34,000 | 2 | ||||||||||||
Minnesota
|
25,000 | 1 | 27,000 | 1 | ||||||||||||
Tennessee
|
22,000 | 1 | 23,000 | 1 | ||||||||||||
Mississippi
|
21,000 | 1 | 22,000 | 1 | ||||||||||||
North
Carolina (2)
|
13,000 | * | 14,000 | * | ||||||||||||
Wyoming
|
6,000 | * | 6,000 | * | ||||||||||||
New
Mexico
|
5,000 | * | 6,000 | * | ||||||||||||
Idaho
|
5,000 | * | 5,000 | * | ||||||||||||
Indiana
|
4,000 | * | 5,000 | * | ||||||||||||
Iowa
|
2,000 | * | 2,000 | * | ||||||||||||
1,998,000 | 100 | % | 2,135,000 | 100 | % |
*
|
Represents
less than 1% of access lines.
|
(1)
|
As
of December 31, 2008 and 2007, approximately 48,000 and 51,000,
respectively, of these lines were owned and operated by our 89%-owned
affiliate.
|
(2) | In connection with our acquisition of Madison River in April 2007, we acquired an aggregate of approximately 164,000 access lines in Illinois, Alabama, Georgia and North Carolina. |
Year
ended or as of December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Access
lines
|
1,998,000 | 2,135,000 | 2,094,000 | 2,214,000 | 2,314,000 | |||||||||||||||
%
Residential
|
73 | % | 73 | 74 | 75 | 75 | ||||||||||||||
%
Business
|
27 | % | 27 | 26 | 25 | 25 | ||||||||||||||
Internet
customers
|
683,000 | 623,000 | 459,000 | 357,000 | 271,000 | |||||||||||||||
%
High-speed Internet service
|
94 | % | 89 | 80 | 70 | 53 | ||||||||||||||
%
Dial-up service
|
6 | % | 11 | 20 | 30 | 47 | ||||||||||||||
Operating
revenues
|
$ | 2,599,747 | 2,656,241 | 2,447,730 | 2,479,252 | 2,407,372 | ||||||||||||||
Capital
expenditures
|
$ | 286,817 | 326,045 | 314,071 | 414,872 | 385,316 |
2008
|
2007
|
2006
|
||||||||||
Voice
|
33.6 | % | 33.5 | 35.6 | ||||||||
Network
access
|
31.6 | 35.4 | 35.9 | |||||||||
Data
|
20.2 | 17.4 | 14.4 | |||||||||
Fiber
transport and CLEC
|
6.2 | 6.0 | 6.1 | |||||||||
Other
|
8.4 | 7.7 | 8.0 | |||||||||
100.0 | % | 100.0 | 100.0 |
Year
ended December 31,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
%
of Total
|
%
of Total
|
|||||||||||||||
2008
|
2007
|
|||||||||||||||
Amount
|
Operating
|
Amount
|
Operating
|
|||||||||||||
Support
Program
|
Received
|
Revenues
|
Received
|
Revenues
|
||||||||||||
(amounts
in millions)
|
||||||||||||||||
USF
High Cost Loop Support
|
$ | 151.7 | 5.8 | % | $ | 166.5 | 6.3 | % | ||||||||
Other Federal Support
Programs
|
128.5 | 5.0 | % | 133.9 | 5.0 | % | ||||||||||
Total Federal Support
Receipts
|
280.2 | 10.8 | % | 300.4 | 11.3 | % | ||||||||||
State Support Programs
|
39.7 | 1.5 | % | 35.6 | 1.3 | % | ||||||||||
TOTAL
|
$ | 319.9 | 12.3 | % | $ | 336.0 | 12.6 | % |
·
|
power losses or physical damage to our access lines, whether caused by
fire, adverse weather conditions, terrorism or
otherwise
|
·
|
capacity limitations
|
·
|
software and hardware defects or
malfunctions
|
·
|
breaches of security, including sabotage, tampering, computer viruses and
break-ins, and
|
·
|
other disruptions that are beyond our
control.
|
|
•
|
being
required, under certain circumstances, to pay a termination fee of $140
million;
|
|
•
|
having
to pay certain costs relating to the proposed merger, such as legal,
accounting, financial advisor, filing, printing and mailing fees;
and
|
|
•
|
diverting
the focus of management from pursuing other opportunities that could be
beneficial to us,
|
·
|
the
inability to successfully combine our business and EMBARQ’s business in a
manner that permits the combined company to achieve the cost savings and
operating synergies anticipated to result from the merger, which would
result in the anticipated benefits of the merger not being realized partly
or wholly in the time frame currently anticipated or at
all;
|
·
|
lost
sales and customers as a result of certain customers of either of the two
companies deciding not to do business with the combined
company;
|
·
|
complexities
associated with managing the combined
businesses;
|
·
|
integrating
personnel from the two companies while maintaining focus on providing
consistent, high quality products and customer
service;
|
·
|
potential
unknown liabilities and unforeseen increased expenses, delays or
regulatory conditions associated with the merger;
and
|
·
|
performance
shortfalls at one or both of the two companies as a result of the
diversion of management’s attention caused by completing the merger and
integrating the companies’
operations.
|
·
|
we
may not have enough cash to pay such dividends due to changes in our cash
requirements, capital spending plans, cash flow or financial
position;
|
·
|
while
our dividend practices involve the distribution of a substantial portion
of our cash available to pay dividends, our board of directors could
change its practices at any time;
|
·
|
the
actual amounts of dividends distributed and the decision to make any
distribution will remain at all times entirely at the discretion of our
board of directors;
|
·
|
the
effects of regulatory reform, including any changes to intercarrier
compensation and the Universal Service Fund
rules;
|
·
|
our
ability to maintain investment grade credit ratings on our senior
debt;
|
·
|
the
amount of dividends that we may distribute is limited by restricted
payment and leverage covenants in our credit facilities and, potentially,
the terms of any future indebtedness that we may incur;
and
|
·
|
the
amount of dividends that we may distribute is subject to restrictions
under Louisiana law.
|
·
|
the
extent, timing, success and overall effects of competition from wireless
carriers, VoIP providers, CLECs, cable television companies, electric
utilities and others, including without limitation the risks that these
competitors may offer less expensive or more innovative products and
services
|
·
|
the
risks inherent in rapid technological change, including without limitation
the risk that new technologies will displace our products and
services
|
·
|
the
effects of ongoing changes in the regulation of the communications
industry, including without limitation (i) increased competition resulting
from regulatory changes, (ii) the final outcome of various federal, state
and local regulatory initiatives and proceedings that could impact our
competitive position, revenues, compliance costs, capital expenditures or
prospects, including regulatory changes recently proposed by the chairman
of the FCC, and (iii) reductions in revenues received from the federal
Universal Service Fund or other current or future federal and state
support programs designed to compensate LECs operating in high-cost
markets
|
·
|
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 our will be more difficult,
disruptive
or costly than anticipated
|
·
|
our
ability to effectively manage our expansion opportunities, including
without limitation our ability to (i) effectively integrate newly-acquired
or newly-developed businesses into our operations, (ii) attract and retain
technological, managerial and other key personnel, (iii) achieve projected
growth, revenue and cost savings targets from the EMBARQ merger within the
anticipated timeframe, and (iv) otherwise monitor our operations, costs,
regulatory compliance, and service quality and maintain other necessary
internal controls
|
·
|
possible
changes in the demand for, or pricing of, our products and services,
including without limitation reduced demand for our traditional telephone
or access services caused by greater use of wireless, electronic mail or
Internet communications or other
factors
|
·
|
our
ability to successfully introduce new product or service offerings on a
timely and cost-effective basis, including without limitation our ability
to (i) successfully roll out our new video, voice and broadband services,
(ii) successfully exploiting the 700 MHz spectrum that we purchased in
2008, (iii) expand successfully our full array of service offerings to new
or acquired markets and (iv) offer bundled service packages on terms
attractive to our customers
|
·
|
our
continued access to credit markets on favorable terms, including our
continued access to financing in amounts, and on terms and conditions,
necessary to support our operations and refinance existing indebtedness
when it becomes due
|
·
|
our
ability to collect 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
|
·
|
regulatory
limits on our ability to change the prices for telephone services in
response to industry changes
|
·
|
impediments
to our ability to expand through attractively priced acquisitions, whether
caused by regulatory limits, financing constraints, a decrease in the pool
of attractive target companies, or competition for acquisitions from other
interested buyers
|
·
|
the
possible need to make abrupt and potentially disruptive changes in our
business strategies due to changes in competition, regulation, technology,
product acceptance or other factors
|
·
|
the
lack of assurance that we can compete effectively against
better-capitalized competitors
|
·
|
the
impact of potential network disruptions on our
business
|
·
|
general
worldwide economic conditions and related uncertainties, including
continued access to credit markets on favorable
terms
|
·
|
the
effects of adverse weather on our customers or
properties
|
·
|
other
risks referenced in this report and from time to time in our other filings
with the Securities and Exchange
Commission
|
·
|
the
effects of more general factors, including without
limitation:
|
Item
1B.
|
Unresolved
Staff Comments
|
Item
2.
|
Properties.
|
December 31,
|
||||||||
2008
|
2007
|
|||||||
Cable
and wire
|
52.5 | % | 52.8 | |||||
Central
office
|
32.3 | 32.0 | ||||||
General
support
|
9.2 | 9.4 | ||||||
Fiber
transport
|
3.7 | 3.3 | ||||||
Construction
in progress
|
.8 | 1.1 | ||||||
Other
|
1.5 | 1.4 | ||||||
100.0 | % | 100.0 |
Item
3.
|
Legal
Proceedings.
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
Item
6.
|
Selected
Financial Data.
|
Year ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(Dollars,
except per share amounts, and shares expressed in
thousands)
|
||||||||||||||||||||
Operating
revenues
|
$ | 2,599,747 | 2,656,241 | 2,447,730 | 2,479,252 | 2,407,372 | ||||||||||||||
Operating
income
|
$ | 721,352 | 793,078 | 665,538 | 736,403 | 753,953 | ||||||||||||||
Net
income
|
$ | 365,732 | 418,370 | 370,027 | 334,479 | 337,244 | ||||||||||||||
Basic
earnings per share
|
$ | 3.57 | 3.82 | 3.17 | 2.55 | 2.45 | ||||||||||||||
Diluted
earnings per share
|
$ | 3.56 | 3.72 | 3.07 | 2.49 | 2.41 | ||||||||||||||
Dividends
per common share
|
$ | 2.1675 | .26 | .25 | .24 | .23 | ||||||||||||||
Average
basic shares outstanding
|
102,268 | 109,360 | 116,671 | 130,841 | 137,215 | |||||||||||||||
Average
diluted shares outstanding
|
102,871 | 113,094 | 122,229 | 136,087 | 142,144 |
December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
|
||||||||||||||||||||
Net
property, plant and
equipment
|
$ | 2,895,892 | 3,108,376 | 3,109,277 | 3,304,486 | 3,341,401 | ||||||||||||||
Goodwill
|
$ | 4,015,674 | 4,010,916 | 3,431,136 | 3,432,649 | 3,433,864 | ||||||||||||||
Total
assets
|
$ | 8,254,195 | 8,184,553 | 7,441,007 | 7,762,707 | 7,796,953 | ||||||||||||||
Long-term
debt
|
$ | 3,294,119 | 2,734,357 | 2,412,852 | 2,376,070 | 2,762,019 | ||||||||||||||
Stockholders'
equity
|
$ | 3,163,240 | 3,409,205 | 3,190,951 | 3,617,273 | 3,409,765 |
December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Telephone
access lines (1) (2)
|
1,998,000 | 2,135,000 | 2,094,000 | 2,214,000 | 2,314,000 | |||||||||||||||
High-speed
Internet customers (1)
|
641,000 | 555,000 | 369,000 | 249,000 | 143,000 |
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars,
except per share amounts, and shares in thousands)
|
||||||||||||
Operating
income
|
$ | 721,352 | 793,078 | 665,538 | ||||||||
Interest
expense
|
(202,217 | ) | (212,906 | ) | (195,957 | ) | ||||||
Other
income (expense)
|
40,954 | 38,770 | 121,568 | |||||||||
Income tax expense
|
(194,357 | ) | (200,572 | ) | (221,122 | ) | ||||||
Net income
|
$ | 365,732 | 418,370 | 370,027 | ||||||||
Basic
earnings per share
|
$ | 3.57 | 3.82 | 3.17 | ||||||||
Diluted
earnings per share
|
$ | 3.56 | 3.72 | 3.07 | ||||||||
Average basic shares
outstanding
|
102,268 | 109,360 | 116,671 | |||||||||
Average diluted shares
outstanding
|
102,871 | 113,094 | 122,229 |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Voice
|
$ | 874,041 | 889,960 | 871,767 | ||||||||
Network
access
|
820,383 | 941,506 | 878,702 | |||||||||
Data
|
524,194 | 460,755 | 351,495 | |||||||||
Fiber
transport and CLEC
|
162,050 | 159,317 | 149,088 | |||||||||
Other
|
219,079 | 204,703 | 196,678 | |||||||||
Operating revenues
|
$ | 2,599,747 | 2,656,241 | 2,447,730 |
2008
|
2007
|
|||||||
increase
|
increase
|
|||||||
(decrease)
|
(decrease
)
|
|||||||
(Dollars
in thousands)
|
||||||||
Favorable
settlement of a dispute with a carrier in 2007
|
$ | (48,987 | ) | 48,987 | ||||
Intras
tat
e revenues
due to decreased minutes of use, decreased
access rates in
certain states and recovery from state support funds
|
(29,022 | ) | (20,912 | ) | ||||
Revenue
recognition upon expiration of regulatory
monitoring periods
in 2007
|
(25,402 | ) | 25,402 | |||||
Partial
recovery of operating costs through revenue
sharing
arrangements with
other telephone companies, interstate
access
revenues and return on rate base
|
(15,857 | ) | (21,311 | ) | ||||
Recovery
from the federal Universal Service
High Cost Loop
support program
|
(14,596 | ) | 2,231 | |||||
Acquisition
of Madison River
|
12,345 | 33,923 | ||||||
Prior
year revenue settlement agreements
|
1,922 | (2,346 | ) | |||||
Other, net
|
(1,526 | ) | (3,170 | ) | ||||
$ | (121,123 | ) | 62,804 |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Cost
of services and products (exclusive of depreciation
and
amortization)
|
$ | 955,473 | 937,375 | 888,414 | ||||||||
Selling,
general and administrative
|
399,136 | 389,533 | 370,272 | |||||||||
Depreciation and
amortization
|
523,786 | 536,255 | 523,506 | |||||||||
Operating expenses
|
$ | 1,878,395 | 1,863,163 | 1,782,192 |
Payments due by period
|
||||||||||||||||||||
|
After
|
|||||||||||||||||||
Contractual
obligations
|
Total
|
2009
|
2010-2011
|
2012-2013
|
2013 and Other
|
|||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Long-term
debt, including current
|
||||||||||||||||||||
maturities
and capital lease obligations (1)
|
$ | 3,314,526 | 20,407 | 1,098,921 | 775,759 | 1,419,439 | ||||||||||||||
|
||||||||||||||||||||
Interest
on long-
term debt
obligations
|
$ | 1,345,267 | 191,326 | 316,128 | 215,950 | 621,863 | ||||||||||||||
Unrecognized
tax
benefits
(2)
|
17,285 | - | - | - | 17,285 |
2008
|
2007
|
2006
|
||||||||||
Debt
to total capitalization
|
51.2 | % | 46.9 | 44.8 | ||||||||
Ratio
of earnings to fixed charges
and preferred stock
dividends*
|
3.74 | 3.85 | 3.94 |
Item
7A.
|
Quantitative
and Qualitative Disclosure About Market
Risk
|
Item 8
.
|
Financial Statements and
Supplementary Data
|
Year ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars,
except per share amounts, and shares in thousands)
|
||||||||||||
OPERATING REVENUES
|
$ | 2,599,747 | 2,656,241 | 2,447,730 | ||||||||
OPERATING
EXPENSES
|
||||||||||||
Cost
of services and products (exclusive of depreciation and
amortization)
|
955,473 | 937,375 | 888,414 | |||||||||
Selling,
general and administrative
|
399,136 | 389,533 | 370,272 | |||||||||
Depreciation and
amortization
|
523,786 | 536,255 | 523,506 | |||||||||
Total operating
expenses
|
1,878,395 | 1,863,163 | 1,782,192 | |||||||||
OPERATING INCOME
|
721,352 | 793,078 | 665,538 | |||||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||
Interest
expense
|
(202,217 | ) | (212,906 | ) | (195,957 | ) | ||||||
Other income (expense)
|
40,954 | 38,770 | 121,568 | |||||||||
Total other income
(expense)
|
(161,263 | ) | (174,136 | ) | (74,389 | ) | ||||||
INCOME
BEFORE INCOME TAX EXPENSE
|
560,089 | 618,942 | 591,149 | |||||||||
Income tax expense
|
194,357 | 200,572 | 221,122 | |||||||||
NET INCOME
|
$ | 365,732 | 418,370 | 370,027 | ||||||||
BASIC EARNINGS PER SHARE
|
$ | 3.57 | 3.82 | 3.17 | ||||||||
DILUTED EARNINGS PER SHARE
|
$ | 3.56 | 3.72 | 3.07 | ||||||||
DIVIDENDS PER COMMON SHARE
|
$ | 2.1675 | .26 | .25 | ||||||||
AVERAGE BASIC SHARES
OUTSTANDING
|
102,268 | 109,360 | 116,671 | |||||||||
AVERAGE DILUTED SHARES
OUTSTANDING
|
102,871 | 113,094 | 122,229 |
Year ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousands)
|
||||||||||||
NET INCOME
|
$ | 365,732 | 418,370 | 370,027 | ||||||||
OTHER
COMPREHENSIVE INCOME, NET OF TAXES
|
||||||||||||
Minimum pension liability adjustment, net of $965 tax
|
- | - | 1,548 | |||||||||
Marketable securities:
|
||||||||||||
Unrealized gain (loss) on investments, net of ($332), $547 and $411
tax
|
(533 | ) | 877 | 659 | ||||||||
Reclassification adjustment for gain included in net income, net of
($1,730) tax
|
(2,776 | ) | - | - | ||||||||
Derivative instruments:
|
||||||||||||
Net gains on derivatives hedging variability of cash flows, net of $294
tax
|
- | 471 | - | |||||||||
Reclassification adjustment for gains included in net income, net of $267,
$254 and $234 tax
|
429 | 407 | 375 | |||||||||
Items related to employee benefit plans*:
|
||||||||||||
Change
in net actuarial loss, net of ($48,656) and $28,583 tax
|
(82,505 | ) | 52,485 | - | ||||||||
Change in net prior service credit, net of ($589) and $1,724
tax
|
(945 | ) | 2,766 | - | ||||||||
Reclassification adjustment for gains (losses) included in net
income:
|
||||||||||||
Amortization of net actuarial loss, net of $1,198 and $4,409
tax
|
1,921 | 6,554 | - | |||||||||
Amortization
of net prior service credit, net of $2,261 and ($771) tax
|
3,627 | (1,236 | ) | - | ||||||||
Amortization of unrecognized transition asset,
net of ($55) tax
|
- | (89 | ) | - | ||||||||
Net change in other comprehensive income (loss)
(net of reclassification adjustment), net of
taxes
|
(80,782 | ) | 62,235 | 2,582 | ||||||||
COMPREHENSIVE INCOME
|
$ | 284,950 | 480,605 | 372,609 |
December 31, | ||||||||
2008
|
2007
|
|||||||
(Dollars
in thousands)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 243,327 | 34,402 | |||||
Accounts receivable
|
||||||||
Customers,
less allowance of $10,973 and $12,129
|
153,838 | 152,809 | ||||||
Interexchange carriers and other, less allowance of $5,317 and
$8,232
|
76,454 | 70,218 | ||||||
Materials and supplies, at average cost
|
8,862 | 8,558 | ||||||
Other
|
72,926 | 26,412 | ||||||
Total current assets
|
555,407 | 292,399 | ||||||
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 | |||||
Accounts
payable
|
135,086 | 120,381 | ||||||
Accrued
expenses and other current liabilities
|
||||||||
Salaries and benefits
|
99,648 | 64,380 | ||||||
Income taxes
|
- | 54,233 | ||||||
Other taxes
|
44,137 | 48,961 | ||||||
Interest
|
75,769 | 80,103 | ||||||
Other
|
26,773 | 30,942 | ||||||
Advance billings and customer
deposits
|
56,570 | 57,637 | ||||||
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
|
||||||||
Common
stock, $1.00 par value, authorized 350,000,000 shares, issued
and
outstanding
100,277,216 and 108,491,736 shares
|
100,277 | 108,492 | ||||||
Paid-in
capital
|
39,961 | 91,147 | ||||||
Accumulated
other comprehensive loss, net of tax
|
(123,489 | ) | (42,707 | ) | ||||
Retained
earnings
|
3,146,255 | 3,245,302 | ||||||
Preferred stock -
non-redeemable
|
236 | 6,971 | ||||||
Total stockholders' equity
|
3,163,240 | 3,409,205 | ||||||
TOTAL
LIABILITIES AND EQUITY
|
$ | 8,254,195 | 8,184,553 |
Year ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
(Dollars
in thousands)
|
||||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
income
|
$ | 365,732 | 418,370 | 370,027 | ||||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation and amortization
|
523,786 | 536,255 | 523,506 | |||||||||
Gains
on asset dispositions and liquidation
of marketable
securities
|
(12,452 | ) | (15,643 | ) | (118,649 | ) | ||||||
Deferred income taxes
|
67,518 | 1,018 | 49,685 | |||||||||
Share-based compensation
|
16,390 | 19,962 | 11,904 | |||||||||
Income from unconsolidated cellular entity
|
(12,045 | ) | (14,578 | ) | (5,861 | ) | ||||||
Distributions from unconsolidated cellular entity
|
15,960 | 10,229 | - | |||||||||
Changes in current assets and current liabilities:
|
||||||||||||
Accounts receivable
|
(7,978 | ) | 15,920 | 7,909 | ||||||||
Accounts payable
|
14,043 | (13,698 | ) | 24,906 | ||||||||
Accrued taxes
|
(64,778 | ) | 11,604 | (49,735 | ) | |||||||
Other current assets and other current
liabilities,
net
|
(15,612 | ) | 23,782 | 10,269 | ||||||||
Retirement benefits
|
(26,066 | ) | 27,350 | 5,963 | ||||||||
Excess tax benefits from share-based compensation
|
(1,123 | ) | (6,427 | ) | (12,034 | ) | ||||||
Decrease in noncurrent assets
|
9,744 | 12,718 | 9,078 | |||||||||
Increase (decrease) in other noncurrent liabilities
|
(27,561 | ) | (20,781 | ) | 709 | |||||||
Other,
net
|
7,742 | 23,905 | 13,042 | |||||||||
Net cash provided by operating activities
|
853,300 | 1,029,986 | 840,719 | |||||||||
INVESTING
ACTIVITIES
|
||||||||||||
Payments
for property, plant and equipment
|
(286,817 | ) | (326,045 | ) | (314,071 | ) | ||||||
Purchase
of wireless spectrum
|
(148,964 | ) | - | - | ||||||||
Acquisitions,
net of cash acquired
|
- | (306,805 | ) | - | ||||||||
Proceeds
from liquidation of marketable securities
|
34,945 | - | - | |||||||||
Proceeds
from redemption of
Rural Telephone Bank
stock
|
- | 5,206 | 122,819 | |||||||||
Proceeds
from sale of assets
|
15,809 | 8,231 | 5,865 | |||||||||
Other, net
|
(3,968 | ) | 225 | (8,344 | ) | |||||||
Net cash used in investing activities
|
(388,995 | ) | (619,188 | ) | (193,731 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||||||
Payments
of debt
|
(285,401 | ) | (712,980 | ) | (81,995 | ) | ||||||
Proceeds
from issuance of debt
|
563,115 | 741,840 | 23,000 | |||||||||
Repurchase
of common stock
|
(347,264 | ) | (460,676 | ) | (802,188 | ) | ||||||
Net
proceeds from settlement of hedges
|
20,745 | - | - | |||||||||
Proceeds
from issuance of common stock
|
14,599 | 49,404 | 97,803 | |||||||||
Excess
tax benefits from share-based compensation
|
1,123 | 6,427 | 12,034 | |||||||||
Cash
dividends
|
(220,266 | ) | (29,052 | ) | (29,203 | ) | ||||||
Other, net
|
(2,031 | ) | 2,973 | 383 | ||||||||
Net cash used in financing activities
|
(255,380 | ) | (402,064 | ) | (780,166 | ) | ||||||
Net
increase (decrease) in cash and cash equivalents
|
208,925 | 8,734 | (133,178 | ) | ||||||||
Cash and cash equivalents at beginning of
year
|
34,402 | 25,668 | 158,846 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF
YEAR
|
$ | 243,327 | 34,402 | 25,668 |
Cash
paid (1)
|
$ | 321,516 | ||
Closing
costs (2)
|
5,268 | |||
Total
purchase price
|
$ | 326,784 |
Current
assets (1)
|
$ | 33,761 | ||
Net
property, plant and equipment
|
208,317 | |||
Identifiable
intangible assets
|
||||
Customer
list
|
156,800 | |||
Franchise
|
6,400 | |||
Goodwill
|
579,780 | |||
Other
assets
|
21,998 | |||
Current
liabilities (2)
|
(25,578 | ) | ||
Long-term
debt (2)
|
(520,000 | ) | ||
Deferred
income taxes
|
(105,168 | ) | ||
Other
liabilities
|
(29,526 | ) | ||
Total
purchase price
|
$ | 326,784 |
(3)
|
GOODWILL
AND OTHER ASSETS
|
December
31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
Goodwill
|
$ | 4,015,674 | 4,010,916 | |||||
Billing
system development costs, less accumulated
amortization
of $49,979 and $38,285
|
181,210 | 192,904 | ||||||
Investment
in 700 MHz wireless spectrum licenses
|
148,964 | - | ||||||
Intangible
assets subject to amortization
|
||||||||
Customer list, less accumulated amortization of $35,026 and
$18,149
|
146,283 | 163,160 | ||||||
Cash
surrender value of life insurance contracts
|
96,606 | 95,654 | ||||||
Deferred
costs associated with installation activities
|
77,202 | 81,908 | ||||||
Pension
asset
|
- | 28,536 | ||||||
Intangible
assets not subject to amortization
|
42,750 | 42,750 | ||||||
Marketable
securities
|
- | 35,811 | ||||||
Investment
in unconsolidated cellular partnership
|
33,662 | 33,714 | ||||||
Deferred
interest rate hedge contracts
|
19,149 | 23,692 | ||||||
Investment
in debt security
|
- | 22,807 | ||||||
Other
|
41,396 | 51,926 | ||||||
$ | 4,802,896 | 4,783,778 |
December
31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
Cable
and wire
|
$ | 4,659,001 | 4,570,930 | |||||
Central
office
|
2,861,929 | 2,775,479 | ||||||
General
support
|
815,638 | 811,488 | ||||||
Fiber
transport
|
327,010 | 289,392 | ||||||
Information
origination/termination
|
81,296 | 78,981 | ||||||
Construction
in progress
|
72,129 | 99,641 | ||||||
Other
|
51,448 | 40,195 | ||||||
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 |
December
31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
CenturyTel
|
||||||||
4.32%* Senior credit facility
|
$ | 563,115 | - | |||||
Senior notes and debentures:
|
||||||||
7.20% Series D, due 2025
|
100,000 | 100,000 | ||||||
6.30% Series F
|
- | 240,000 | ||||||
6.875% Series G, due 2028
|
425,000 | 425,000 | ||||||
8.375% Series H, due 2010
|
500,000 | 500,000 | ||||||
7.875% Series L, due 2012
|
500,000 | 500,000 | ||||||
5.0%
Series M, due 2015
|
350,000 | 350,000 | ||||||
6.0% Series N, due 2017
|
500,000 | 500,000 | ||||||
5.5% Series O, due 2013
|
250,000 | 250,000 | ||||||
Unamortized net discount
|
(6,539 | ) | (7,840 | ) | ||||
Unamortized premium associated with derivative
instruments:
|
||||||||
Series H senior notes
|
5,128 | 7,991 | ||||||
Series L senior notes
|
20,018 | 3,048 | ||||||
Total CenturyTel
|
3,206,722 | 2,868,199 | ||||||
Subsidiaries
|
||||||||
First mortgage debt | ||||||||
5.36%*
notes, payable to agencies of the U. S. government and cooperative
lending
associations,
due in installments through 2028
|
107,704 | 120,788 | ||||||
Other
debt
|
||||||||
Unsecured medium-term notes
|
- | 25,000 | ||||||
10.0% notes
|
100 | 100 | ||||||
Capital
lease obligations
|
- | 168 | ||||||
Total subsidiaries
|
107,804 | 146,056 | ||||||
Total
long-term debt
|
3,314,526 | 3,014,255 | ||||||
Less current maturities
|
20,407 | 279,898 | ||||||
Long-term debt, excluding current
maturities
|
$ | 3,294,119 | 2,734,357 |
December
31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
Deferred
federal and state income taxes
|
$ | 854,102 | 810,571 | |||||
Accrued
postretirement benefit costs
|
276,082 | 278,230 | ||||||
Deferred
revenue
|
99,549 | 105,491 | ||||||
Accrued
pension costs
|
72,058 | 37,296 | ||||||
Other
|
36,655 | 72,868 | ||||||
$ | 1,338,446 | 1,304,456 |
Balance
at December 31, 2005
|
$ | - | ||
Amount
accrued to expense
|
9,431 | |||
Adjustments
to accrual amounts
|
(529 | ) | ||
Amount
paid
|
(8,445 | ) | ||
Balance
at December 31, 2006
|
$ | 457 | ||
Amount
accrued to expense
|
2,741 | |||
Amount
paid
|
(1,363 | ) | ||
Balance
at December 31, 2007
|
$ | 1,835 | ||
Amount
accrued to expense
|
2,046 | |||
Amount
paid
|
(2,083 | ) | ||
Balance
at December 31, 2008
|
$ | 1,798 |
December
31,
|
2008
|
|||
(In thousands)
|
||||
Incentive
compensation programs
|
5,513 | |||
Acquisitions
|
4,064 | |||
Employee
stock purchase plan
|
4,321 | |||
Dividend
reinvestment plan
|
188 | |||
Conversion of convertible preferred
stock
|
13 | |||
14,099 |
December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Change
in benefit obligation
|
||||||||||||
Benefit obligation at beginning of year
|
$ | 306,633 | 357,417 | 353,942 | ||||||||
Service cost
|
4,926 | 6,923 | 6,982 | |||||||||
Interest cost
|
19,395 | 20,133 | 18,980 | |||||||||
Participant contributions
|
2,789 | 2,016 | 1,583 | |||||||||
Plan amendments
|
(9,093 | ) | (4,552 | ) | (7,978 | ) | ||||||
Acquisition
|
- | 2,277 | - | |||||||||
Direct subsidy receipts
|
1,092 | 1,299 | 717 | |||||||||
Actuarial (gain) loss
|
(11,992 | ) | (60,312 | ) | 319 | |||||||
Benefits paid
|
(20,863 | ) | (18,568 | ) | (17,128 | ) | ||||||
Benefit obligation at end of
year
|
$ | 292,887 | 306,633 | 357,417 | ||||||||
Change
in plan assets
|
||||||||||||
Fair
value of plan assets at beginning of year
|
$ | 28,324 | 30,080 | 29,545 | ||||||||
Return (loss) on plan assets
|
(6,166 | ) | 1,916 | 3,280 | ||||||||
Employer contributions
|
12,721 | 12,880 | 12,800 | |||||||||
Participant contributions
|
2,789 | 2,016 | 1,583 | |||||||||
Benefits paid
|
(20,863 | ) | (18,568 | ) | (17,128 | ) | ||||||
Fair value of plan assets at end of
year
|
$ | 16,805 | 28,324 | 30,080 |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Service
cost
|
$ | 4,926 | 6,923 | 6,982 | ||||||||
Interest
cost
|
19,395 | 20,133 | 18,980 | |||||||||
Expected
return on plan assets
|
(2,337 | ) | (2,482 | ) | (2,437 | ) | ||||||
Amortization
of unrecognized actuarial loss
|
- | 3,595 | 3,719 | |||||||||
Amortization of unrecognized prior service
credit
|
(2,606 | ) | (2,020 | ) | (855 | ) | ||||||
Net periodic postretirement benefit
cost
|
$ | 19,378 | 26,149 | 26,389 |
December
31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars in thousands) | ||||||||||||
Benefit
obligation
|
$ | (292,887 | ) | (306,633 | ) | (357,417 | ) | |||||
Fair value of plan assets
|
16,805 | 28,324 | 30,080 | |||||||||
Accrued benefit cost
|
$ | (276,082 | ) | (278,309 | ) | (327,337 | ) |
2008
|
2007
|
||
Determination
of benefit obligation
|
|||
Discount rate
|
6.90%
|
6.50
|
|
Healthcare
cost increase trend rates (Medical/Prescription Drug)
|
|||
Following year
|
7.0%/10.0%
|
7.0/10.0
|
|
Rate to which the cost trend rate is assumed to decline (the ultimate cost
trend rate)
|
5.0%/5.0%
|
5.0/5.0
|
|
Year that the rate reaches the ultimate cost trend rate
|
2011/2014
|
2010/2013
|
|
Determination
of benefit cost
|
|||
Discount rate
|
6.50%
|
5.75
|
|
Expected return on plan assets | 8.25% | 8.25 |
1-Percentage
|
1-Percentage
|
|||||||
Point Increase
|
Point Decrease
|
|||||||
(Dollars
in thousands)
|
||||||||
Effect
on annual total of service and interest cost components
|
$ | 214 | (282 | ) | ||||
Effect on postretirement benefit
obligation
|
$ | 2,763 | (3,632 | ) |
Before
Medicare
|
Medicare
|
Net
of
|
||||||||||
Year
|
Subsidy
|
Subsidy
|
Medicare Subsidy
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
2009
|
$ | 19,377 | 1,212 | 18,165 | ||||||||
2010
|
$ | 21,514 | 1,394 | 20,120 | ||||||||
2011
|
$ | 23,388 | 1,595 | 21,793 | ||||||||
2012
|
$ | 24,316 | 1,842 | 22,474 | ||||||||
2013
|
$ | 25,465 | 2,035 | 23,430 | ||||||||
2014-2018
|
$ | 137,634 | 6,384 | 131,250 |
December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Change
in benefit obligation
|
||||||||||||
Benefit obligation at beginning of year
|
$ | 469,437 | 474,302 | 460,599 | ||||||||
Service cost
|
13,761 | 16,431 | 17,679 | |||||||||
Interest cost
|
29,373 | 28,180 | 25,935 | |||||||||
Plan amendments
|
2,393 | 61 | (3,827 | ) | ||||||||
Acquisition
|
- | 15,266 | - | |||||||||
Actuarial
(gain) loss
|
(24,819 | ) | (16,153 | ) | 6,789 | |||||||
Curtailment
|
8,235 | - | - | |||||||||
Settlements
|
(1,945 | ) | (410 | ) | (13,232 | ) | ||||||
Benefits paid
|
(33,734 | ) | (48,240 | ) | (19,641 | ) | ||||||
Benefit obligation at end of
year
|
$ | 462,701 | 469,437 | 474,302 | ||||||||
Change
in plan assets
|
||||||||||||
Fair value of plan assets at beginning of year
|
$ | 459,198 | 452,293 | 407,367 | ||||||||
Return (loss) on plan assets
|
(123,210 | ) | 41,537 | 46,297 | ||||||||
Acquisition
|
- | 12,502 | - | |||||||||
Employer contributions
|
52,521 | 1,516 | 31,502 | |||||||||
Settlements
|
(1,945 | ) | (410 | ) | (13,232 | ) | ||||||
Benefits paid
|
(33,734 | ) | (48,240 | ) | (19,641 | ) | ||||||
Fair value of plan assets at end of
year
|
$ | 352,830 | 459,198 | 452,293 |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Service
cost
|
$ | 13,761 | 16,431 | 17,679 | ||||||||
Interest
cost
|
29,373 | 28,180 | 25,935 | |||||||||
Expected
return on plan assets
|
(36,667 | ) | (36,780 | ) | (32,706 | ) | ||||||
Curtailment
loss
|
8,235 | - | - | |||||||||
Settlements
|
410 | 410 | 3,344 | |||||||||
Recognized
net losses
|
3,119 | 7,367 | 9,670 | |||||||||
Net amortization and
deferral
|
258 | (131 | ) | 19 | ||||||||
Net periodic pension
expense
|
$ | 18,489 | 15,477 | 23,941 |
December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Benefit
obligation
|
$ | (462,701 | ) | (469,437 | ) | (474,302 | ) | |||||
Fair value of plan assets
|
352,830 | 459,198 | 452,293 | |||||||||
Net amount recognized
|
$ | (109,871 | ) | (10,239 | ) | (22,009 | ) |
December
31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
Pension
asset (reflected in Other Assets)*
|
$ | - | 28,536 | |||||
Accrued
expenses and other current liabilities*
|
(37,813 | ) | (1,479 | ) | ||||
Other deferred credits*
|
(72,058 | ) | (37,296 | ) | ||||
Net amount recognized
|
$ | (109,871 | ) | (10,239 | ) |
2008
|
2007
|
|||||||
Determination
of benefit obligation
|
||||||||
Discount rate
|
6.60-6.90 | % | 6.30-6.50 | |||||
Weighted average rate of compensation increase
|
4.0 | % | 4.0 | |||||
Determination
of benefit cost
|
||||||||
Discount rate
|
6.30-6.50 | % | 5.80 | |||||
Weighted average rate of compensation increase
|
4.0 | % | 4.0 | |||||
Expected return on plan assets
|
8.25 | % | 8.25 |
2008
|
2007
|
|||||||
Equity
securities
|
64.3 | % | 70.8 | |||||
Debt
securities
|
32.7 | 27.2 | ||||||
Other
|
3.0 | 2.0 | ||||||
Total
|
100.0 | % | 100.0 |
Year ended December
31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Federal
|
||||||||||||
Current
|
$ | 141,604 | 192,424 | 146,201 | ||||||||
Deferred
|
59,669 | 2,220 | 37,687 | |||||||||
State
|
||||||||||||
Current
|
(14,765 | ) | 7,130 | 25,236 | ||||||||
Deferred
|
7,849 | (1,202 | ) | 11,998 | ||||||||
$ | 194,357 | 200,572 | 221,122 |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Income
tax expense in the consolidated statements of income
|
$ | 194,357 | 200,572 | 221,122 | ||||||||
Stockholders’
equity:
|
||||||||||||
Compensation expense for tax purposes in excess of amounts recognized for
financial reporting purposes
|
(1,123 | ) | (6,427 | ) | (12,034 | ) | ||||||
Tax effect of the change in accumulated other
comprehensive loss
|
(47,581 | ) | (34,985 | ) | (63,837 | ) |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Percentage
of pre-tax income)
|
||||||||||||
Statutory
federal income tax rate
|
35.0 | % | 35.0 | 35.0 | ||||||||
State
income taxes, net of federal income tax benefit
|
2.0 | 2.8 | 4.1 | |||||||||
Recognition
of previously unrecognized tax benefits
|
(2.3 | ) | (5.3 | ) | - | |||||||
Other, net
|
- | (0.1 | ) | (1.7 | ) | |||||||
Effective income tax rate
|
34.7 | % | 32.4 | 37.4 |
December 31,
|
2008
|
2007
|
||||||
(Dollars
in thousands)
|
||||||||
Deferred
tax assets
|
||||||||
Postretirement and pension benefit costs
|
$ | 155,772 | 119,119 | |||||
Net state operating loss carryforwards
|
35,548 | 31,646 | ||||||
Other
employee benefits
|
24,474 | 22,229 | ||||||
Other
|
37,946 | 49,841 | ||||||
Gross deferred tax assets
|
253,740 | 222,835 | ||||||
Less valuation allowance
|
(33,858 | ) | (30,907 | ) | ||||
Net deferred tax assets
|
219,882 | 191,928 | ||||||
Deferred
tax liabilities
|
||||||||
Property, plant and equipment, primarily due to depreciation
differences
|
(343,812 | ) | (373,181 | ) | ||||
Goodwill and other intangible assets
|
(688,765 | ) | (604,809 | ) | ||||
Other
|
(11,986 | ) | (12,900 | ) | ||||
Gross deferred tax liabilities
|
(1,044,563 | ) | (990,890 | ) | ||||
Net deferred tax liability
|
$ | (824,681 | ) | (798,962 | ) |
Unrecognized
tax benefits at January 1, 2008
|
$ | 33,829 | ||
Increase
in tax positions taken in the current year
|
320 | |||
Decrease
due to the reversal of tax positions taken in a prior year
|
(12,315 | ) | ||
Decrease from the lapse of statute of
limitations
|
(1,840 | ) | ||
Unrecognized tax benefits at December 31,
2008
|
$ | 19,994 |
Year ended December
31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars,
except per share amounts, and shares in thousands)
|
||||||||||||
Income
(Numerator):
|
||||||||||||
Net
income
|
$ | 365,732 | 418,370 | 370,027 | ||||||||
Dividends applicable to preferred
stock
|
(155 | ) | (368 | ) | (380 | ) | ||||||
Net
income applicable to common stock for computing basic earnings per
share
|
365,577 | 418,002 | 369,647 | |||||||||
Interest
on convertible debentures, net of tax
|
- | 2,832 | 4,828 | |||||||||
Dividends applicable to preferred
stock
|
155 | 368 | 380 | |||||||||
Net
income as adjusted for purposes of computing
diluted earnings per share
|
$ | 365,732 | 421,202 | 374,855 | ||||||||
Shares
(Denominator):
|
||||||||||||
Weighted
average number of shares:
|
||||||||||||
Outstanding during period
|
103,467 | 110,183 | 117,363 | |||||||||
Nonvested
restricted stock
|
(1,199 | ) | (823 | ) | (692 | ) | ||||||
Weighted
average number of shares outstanding during period for computing basic
earnings per share
|
102,268 | 109,360 | 116,671 | |||||||||
Incremental
common shares attributable to dilutive securities:
|
||||||||||||
Shares issuable under convertible securities
|
169 | 2,951 | 4,493 | |||||||||
Shares issuable upon settlement of accelerated share repurchase
agreements
|
- | - | 365 | |||||||||
Shares issuable
under incentive compensation plans
|
434 | 783 | 700 | |||||||||
Number
of shares as adjusted for purposes of
computing diluted earnings per share
|
102,871 | 113,094 | 122,229 | |||||||||
Basic earnings per share
|
$ | 3.57 | 3.82 | 3.17 | ||||||||
Diluted earnings per share
|
$ | 3.56 | 3.72 | 3.07 |
Remaining
|
Aggregate
|
|||||||||||||||
Number
|
Average
|
contractual
|
intrinsic
|
|||||||||||||
of options
|
price
|
term (in years)
|
value
|
|||||||||||||
Outstanding
December 31, 2007
|
3,632,205 | $ | 36.80 | |||||||||||||
Granted
|
25,700 | 36.14 | ||||||||||||||
Exercised
|
(43,210 | ) | 32.52 | |||||||||||||
Forfeited/Cancelled
|
(87,548 | ) | 42.40 | |||||||||||||
Outstanding
December 31, 2008
|
3,527,147 | $ | 36.71 | 5.7 | $ | 59,000 | ||||||||||
Exercisable
December 31, 2008
|
2,617,969 | $ | 34.72 | 4.9 | $ | 59,000 |
Number
|
Average
grant
|
||||||
of shares
|
date fair value
|
||||||
Nonvested
at January 1, 2008
|
846,880 | $ | 36.85 | ||||
Granted
|
643,397 | 34.86 | |||||
Vested
|
(181,310 | ) | 38.30 | ||||
Forfeited
|
(19,350 | ) | 35.63 | ||||
Nonvested
at December 31, 2008
|
1,289,617 | $ | 35.67 |
Carrying
|
Fair
|
|||||||||
Amount
|
value
|
|||||||||
(Dollars
in thousands)
|
||||||||||
December 31,
2008
|
||||||||||
Financial
assets
|
||||||||||
Other
|
$ | 129,981 | 129,981 | (2 | ) | |||||
Financial
liabilities
|
||||||||||
Long-term debt (including current maturities)
|
$ | 3,314,526 | 2,720,227 | (1 | ) | |||||
Other
|
$ | 56,570 | 56,570 | (2 | ) | |||||
December 31,
2007
|
||||||||||
Financial
assets
|
||||||||||
Interest rate swaps
|
$ | 3,048 | 3,048 | (2 | ) | |||||
Other
|
$ | 168,039 | 172,175 | (2 | ) | |||||
Financial
liabilities
|
||||||||||
Long-term debt (including current maturities)
|
$ | 3,014,255 | 2,975,707 | (1 | ) | |||||
Interest rate swaps
|
$ | 834 | 834 | (2 | ) | |||||
Other
|
$ | 57,637 | 57,637 | (2 | ) |
Balance
|
||||||||||||||||
Description
|
Dec. 31, 2008
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||
(Dollars
in thousands)
|
||||||||||||||||
Cash
surrender value of life insurance contracts
|
$ | 96,606 | 96,606 | - | - |
Year ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
(Dollars
in thousands)
|
||||||||||||
Voice
|
$ | 874,041 | 889,960 | 871,767 | ||||||||
Network
access
|
820,383 | 941,506 | 878,702 | |||||||||
Data
|
524,194 | 460,755 | 351,495 | |||||||||
Fiber
transport and CLEC
|
162,050 | 159,317 | 149,088 | |||||||||
Other
|
219,079 | 204,703 | 196,678 | |||||||||
Total operating revenues
|
$ | 2,599,747 | 2,656,241 | 2,447,730 |
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
quarter
|
quarter
|
quarter
|
quarter
|
|||||||||||||
(Dollars
in thousands, except per share amounts)
|
||||||||||||||||
2008
|
(unaudited)
|
|||||||||||||||
Operating
revenues
|
$ | 648,614 | 658,106 | 650,073 | 642,954 | |||||||||||
Operating
income
|
$ | 183,493 | 180,690 | 180,727 | 176,442 | |||||||||||
Net
income
|
$ | 88,760 | 92,167 | 84,733 | 100,072 | |||||||||||
Basic
earnings per share
|
$ | .84 | .89 | .84 | 1.01 | |||||||||||
Diluted
earnings per share
|
$ | .83 | .88 | .84 | 1.01 | |||||||||||
2007
|
||||||||||||||||
Operating
revenues
|
$ | 600,855 | 689,991 | 708,833 | 656,562 | |||||||||||
Operating
income
|
$ | 168,083 | 231,836 | 224,185 | 168,974 | |||||||||||
Net
income
|
$ | 77,870 | 112,265 | 113,202 | 115,033 | |||||||||||
Basic
earnings per share
|
$ | .70 | 1.03 | 1.04 | 1.05 | |||||||||||
Diluted
earnings per share
|
$ | .68 | 1.00 | 1.01 | 1.04 | |||||||||||
2006
|
||||||||||||||||
Operating
revenues
|
$ | 611,291 | 608,907 | 619,837 | 607,695 | |||||||||||
Operating
income
|
$ | 157,924 | 164,993 | 168,942 | 173,679 | |||||||||||
Net
income
|
$ | 69,260 | 152,210 | 76,324 | 72,233 | |||||||||||
Basic
earnings per share
|
$ | .57 | 1.32 | .66 | .63 | |||||||||||
Diluted
earnings per share
|
$ | .55 | 1.26 | .64 | .62 |
Item
9.
|
Changes
in and Disagreements With Accountants on Accounting
and
Financial Disclosure
|
Name
|
Age
|
Office(s) held with
CenturyTel
|
Glen
F. Post, III
|
56
|
Chairman
of the Board of Directors
and Chief Executive Officer
|
Karen
A. Puckett
|
48
|
President
and Chief Operating Officer
|
R.
Stewart Ewing, Jr.
|
57
|
Executive
Vice President and
Chief Financial Officer
|
|
||
David
D. Cole
|
51
|
Senior
Vice President –
Operations Support
|
Stacey
W. Goff
|
43
|
Senior
Vice President, General Counsel
and Secretary
|
Michael
Maslowski
|
61
|
Senior
Vice President and
Chief Information
Officer
|
|
(a).
|
Documents
filed as a part of this report
|
|
(1)
|
The
following Consolidated Financial Statements are included in Part II, Item
8:
|
|
Report
of Management, including its assessment of the effectiveness of its
internal control over financial
reporting
|
|
Reports
of Independent Registered Public Accounting Firm on Consolidated Financial
Statements, Financial Statement Schedule and Effectiveness
of
the Company’s Internal Control over Financial
Reporting
|
|
Consolidated
Statements of Income for the years ended December 31, 2008, 2007 and
2006
|
|
Consolidated
Statements of Comprehensive Income for the years ended December 31, 2008,
2007 and 2006
|
|
Consolidated
Balance Sheets - December 31, 2008 and
2007
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007 and
2006
|
|
Consolidated
Statements of Stockholders' Equity for the years ended December 31, 2008,
2007 and 2006
|
|
Notes
to Consolidated Financial
Statements
|
|
Consolidated
Quarterly Income Statement Information
(unaudited)
|
|
(2)
|
The
attached Schedule II, Valuation and Qualifying Accounts, is the only
applicable schedule that we are required to
file.
|
|
(3)
|
Exhibits:
|
|
1
|
Agreement
and Plan of Merger, dated as of October 26, 2008 among CenturyTel, Embarq
Corporation and Cajun Acquisition Company (incorporated by reference to
Exhibit
99.1
of our Current Report on Form 8-K filed on October 30,
2008).
|
|
3.1
|
Articles
of Incorporation, as amended and restated through November 14, 2008
(incorporated by reference to Exhibit 4.1 of CenturyTel’s registration
statement on Form S-3
filed
February 9, 2009, File No.
333-157188).
|
|
3.2
|
Bylaws,
as amended and restated through August 26, 2003 (incorporated by reference
to Exhibit 3.1 of our Current Report on Form 8-K dated August 29, 2003
and
filed
on September 2, 2003).
|
|
3.3
|
Corporate
Governance Guidelines, as amended through August 21, 2007 (incorporated by
reference to Exhibit 3 of our Quarterly Report on Form 10-Q for
the
quarter
ended September 30, 2007).
|
|
3.4
|
Charters
of Committees of Board of
Directors
|
|
(a)
|
Charter
of the Audit Committee of the Board of Directors, as amended through
November 15, 2006 (incorporated by reference to Exhibit 3.4(a) of our
Annual Report on
Form
10-K for the year ended December 31,
2006).
|
|
(b)
|
Charter
of the Compensation Committee of the Board of Directors, as amended
through February 27, 2007 (incorporated by reference to Exhibit 3.4 of our
Quarterly
Report
on Form 10-Q for the quarter ended March 31,
2007).
|
|
(c)
|
Charter
of the Nominating and Corporate Governance Committee of the Board of
Directors, as amended through February 25, 2004 (incorporated by reference
to
Exhibit
3.3 of our Annual Report on Form 10-K for the year ended December 31,
2003).
|
|
(d)
|
Charter
of the Risk Evaluation Committee of the Board of Directors, as amended
through February 26, 2008, (incorporated by reference to Exhibit 3.4(d) of
our
Annual
Report on Form 10-K for the year ended December 31,
2007).
|
|
(a)
|
Indenture
dated as of March 31, 1994 between CenturyTel and Regions Bank (formerly
First American Bank & Trust of Louisiana), as Trustee (incorporated
by
reference to
Exhibit
4.1 of our Registration Statement on Form S-3, Registration No.
33-52915).
|
|
(b)
|
Form
of CenturyTel’s 7.2% Senior Notes, Series D, due 2025 (incorporated by
reference to Exhibit 4.27 to our Annual Report on Form 10-K for the year
ended
December 31, 1995).
|
|
(c)
|
Form
of CenturyTel’s 6.875% Debentures, Series G, due 2028, (incorporated by
reference to Exhibit 4.9 to our Annual Report on Form 10-K for the
year
ended
December 31, 1997).
|
|
(d)
|
Form
of 8.375% Senior Notes, Series H, Due 2010, issued October 19, 2000
(incorporated by reference to Exhibit 4.2 of our Quarterly Report on Form
10-Q
for the quarter
ended
September 30, 2000).
|
|
(e)
|
Form
of CenturyTel’s 7.875% Senior Notes, Series L, due 2012 (incorporated by
reference to Exhibit 4.2 of our Registration Statement on Form
S-4,
File No. 333-100480).
|
|
(f)
|
Third
Supplemental Indenture dated as of February 14, 2005 between CenturyTel
and Regions Bank, as Trustee, designating and outlining the terms
and
conditions of
CenturyTel’s
5% Senior Notes, Series M, due 2015 (incorporated by reference to Exhibit
4.1 of our Current Report on Form 8-K
dated
February 15, 2005).
|
|
(g)
|
Form
of 5% Senior Notes, Series M, due 2015 (included in Exhibit
4.2(f)).
|
|
(h)
|
Fourth
Supplemental Indenture dated as of March 26, 2007 between CenturyTel and
Regions Bank, as Trustee, designating and outlining the terms
and
conditions
of
CenturyTel’s 6.0% Senior Notes, Series N, due 2017 and 5.5% Senior Notes,
Series O, due 2013 (incorporated by reference to Exhibit
4.1
of our Current Report on
Form
8-K dated March 29, 2007).
|
|
(i)
|
Form
of 6.0% Senior Notes, Series N, due 2017 and 5.5% Senior Notes, Series O,
due 2013 (included in Exhibit
4.2(h)).
|
|
4.3
|
Five-Year
Revolving Credit Facility, dated December 14, 2006, between CenturyTel and
the lenders named therein (incorporated by reference to Exhibit
4.3
of our Annual
Report
on Form 10-K for the year ended December 31,
2006).
|
|
10.1
|
Qualified
Employee Benefit Plans (excluding several narrow-based qualified plans
that cover union employees or other limited groups of
employees)
|
|
(a)
|
CenturyTel
Dollars & Sense 401(k) Plan and Trust, as amended and restated as of
December 31, 2006 (incorporated by reference to Exhibit 10.1(a) of
our
Annual Report on Form 10-K for the year ended December 31, 2006),
amendments thereto dated December 31, 2007 (incorporated by reference
to
Exhibit
10.1(a) of our Annual Report on Form 10-K for the year ended December 31,
2007) and amendment thereto dated November 20, 2008,
included
elsewhere herein.
|
|
(b)
|
CenturyTel
Union 401(k) Plan and Trust, as amended and restated through December 31,
2006 (incorporated by reference to Exhibit 10.1(b) of our Annual
Report
on Form 10-K for the year ended December 31, 2006) and amendment thereto
dated December 31, 2007, (incorporated by reference to Exhibit 10.1(b)
of
our Annual Report on Form 10-K for the year ended December 31, 2007),
amendment thereto dated December 31, 2006 (incorporated by reference to
Exhibit
10.1(b)
of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008)
and amendment thereto dated November 20, 2008, included elsewhere
herein.
|
|
(c)
|
Amended
and Restated Retirement Plan, effective as of December 31, 2006
(incorporated by reference to Exhibit 10.1(c) of our Annual Report on Form
10-K for the
year
ended December 31, 2006) and amendment thereto dated December 31, 2007
(incorporated by reference to Exhibit 10.1(c) of our Annual Report on Form
10-K
for
the year ended December 31, 2007), amendment thereto dated as of April 2,
2007 (incorporated by reference to Exhibit 10.1(c) of our Quarterly Report
on Form
10-Q
for the quarter ended March 31, 2008) and amendment thereto dated October
24, 2008, included elsewhere
herein.
|
|
10.2
|
Stock-based
Incentive Plans
|
|
(a)
|
1983
Restricted Stock Plan, dated February 21, 1984, as amended and restated as
of November 16, 1995 (incorporated by reference to Exhibit 10.1(e) to our
Annual
Report
on Form 10-K for the year ended December 31, 1995) and amendment thereto
dated November 21, 1996, (incorporated by reference to Exhibit 10.1(e) of
our
Annual
Report on Form 10-K for the year ended December 31, 1996), and amendment
thereto dated February 25, 1997 (incorporated by reference to Exhibit 10.3
of
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and
amendment thereto dated April 25, 2001 (incorporated by reference to
Exhibit 10.1 of
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001), and
amendment thereto dated April 17, 2000 (incorporated by reference to
Exhibit 10.2(a)
of
our Annual Report on Form 10-K for the year ended December 31,
2001).
|
|
(b)
|
1995
Incentive Compensation Plan approved by CenturyTel’s shareholders on May
11, 1995 (incorporated by reference to Exhibit 4.4 to Registration No.
33-60061)
and
amendment thereto dated November 21, 1996 (incorporated by Reference to
Exhibit 10.1 (l) of our Annual Report on Form 10-K for the year ended
December 31,
1996),
and amendment thereto dated February 25, 1997 (incorporated by reference
to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the quarter ended
March
31,
1997) and amendment thereto dated May 29, 2003 (incorporated by reference
to Exhibit 10.1 of our Quarterly Report on Form 10-Q for the quarter ended
June 30,
2003).
|
|
(c)
|
Amended
and Restated 2000 Incentive Compensation Plan, as amended through May 23,
2000 (incorporated by reference to Exhibit 10.2 of our
Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000) and amendment
thereto dated May 29, 2003 (incorporated by reference to
Exhibit
10.2 of our Quarterly Report on Form 10-Q for the quarter ended June 30,
2003).
|
|
(i)
|
Form
of Stock Option Agreement, pursuant to the 2000 Incentive Compensation
Plan and dated as of May 21, 2001, entered into
by
CenturyTel and its officers (incorporated by reference to Exhibit 10.2(e)
of our Annual Report on Form 10-K for the year
ended
December 31, 2001).
|
|
(ii)
|
Form
of Stock Option Agreement, pursuant to the 2000 Incentive Compensation
Plan and dated as of February 25, 2002,
entered
into by CenturyTel and its officers (incorporated by reference to Exhibit
10.2(d)(ii) of our Annual Report on Form
10-K
for the year ended December 31,
2002).
|
|
(d)
|
Amended
and Restated 2002 Directors Stock Option Plan, dated as of February 25,
2004 (incorporated by reference to Exhibit 10.2(e)
of
our Annual Report on Form 10-K for the year ended December 31, 2003) and
amendment thereto dated October 24, 2008, included
elsewhere
herein.
|
|
(i)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan, entered into by
CenturyTel in connection with options
granted
to the outside directors as of May 10, 2002 (incorporated by reference to
Exhibit 10.2 of Registrant’s Quarterly
Report
on Form 10-Q for the period ended September 30,
2002).
|
|
(ii)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan, entered into by
CenturyTel in connection with options
granted
to the outside directors as of May 9, 2003 (incorporated by reference to
Exhibit 10.2(e)(ii) of our Annual Report on
Form
10-K for the year ended December 31,
2003).
|
|
(iii)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan, entered into by
CenturyTel in connection with options
granted
to the outside directors as of May 7, 2004 (incorporated by reference to
Exhibit 10.2(d)(iii) of our Annual Report
on
Form 10-K for the year ended December 31,
2005).
|
|
(e)
|
Amended
and Restated 2002 Management Incentive Compensation Plan, dated as of
February 25, 2004 (incorporated by reference to
Exhibit
10.2(f) of our Annual Report on Form 10-K for the year ended December 31,
2003) and amendment thereto dated October 24, 2008,
included
elsewhere herein.
|
|
(i)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan, entered into
between CenturyTel and certain of its officers and key
employees
at various dates since May 9, 2002 (incorporated by reference to Exhibit
10.4 of our Quarterly Report on Form 10-Q for the
period
ended September 30, 2002).
|
|
(ii)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan and dated as of
February 24, 2003, entered into by CenturyTel and
its
officers (incorporated by reference to Exhibit 10.2(f)(ii) of our Annual
Report on Form 10-K for the year ended December 31,
2002).
|
|
(iii)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan and dated as of
February 25, 2004, entered into by CenturyTel and
its
officers (incorporated by reference to Exhibit 10.2(f)(iii) of our Annual
Report on Form 10-K for the year ended December 31,
2003).
|
|
(iv)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 24, 2003, entered into by CenturyTel and
its
executive officers (incorporated by reference to Exhibit 10.1 of our
Quarterly Report on Form 10-Q for the period ended March 31,
2003).
|
|
(v)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 25, 2004, entered into by CenturyTel and
its
executive officers (incorporated by reference to Exhibit 10.2(f)(v) of our
Quarterly Report on Form 10-Q for the period ended March 31,
2004).
|
|
(vi)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan and dated as of
February 17, 2005, entered into by CenturyTel and its
executive
officers (incorporated by reference to Exhibit 10.2(e)(v) of our Annual
Report on From 10-K for the year ended December 31,
2004).
|
|
(vii)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 17, 2005, entered into by CenturyTel and its
executive
officers (incorporated by reference to Exhibit 10.2(e)(vi) of our Annual
Report on Form 10-K for the year ended December 31,
2004).
|
|
(f)
|
2005
Directors Stock Plan (incorporated by reference to our 2005 Proxy
Statement filed April 15, 2005) and amendment thereto dated
October
24,
2008, included elsewhere herein.
|
|
(i)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan, entered
into between CenturyTel and each of its outside directors as of May
13,
2005 (incorporated by reference to Exhibit 10.4 of our Current Report on
Form 8-K dated May 13, 2005).
|
|
(ii)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan, entered
into between CenturyTel and each of its outside directors as of May
12,
2006 (incorporated by reference to Exhibit 10.1 of our Quarterly Report on
Form 10-Q for the period ended June 30,
2006).
|
|
(iii)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan, entered
into between CenturyTel and each of its outside directors as of May
11,
2007, included elsewhere herein.
|
|
(iv)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan, entered
into between CenturyTel and each of its outside directors as of
May
9,
2008, included elsewhere herein.
|
|
(g)
|
2005
Management Incentive Compensation Plan (incorporated by reference to our
2005 Proxy Statement filed April 15, 2005) and amendment thereto
dated
October 24, 2008, included elsewhere
herein.
|
|
(i)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan, entered into
between CenturyTel and certain officers and key employees
at
various dates since May 12, 2005 (incorporated by reference to Exhibit
10.2 of our Quarterly Report on Form 10-Q for the period ended
September
30, 2005).
|
|
(ii)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan, entered
into between CenturyTel and certain officers and key employees
at
various dates since May 12, 2005 (incorporated by reference to Exhibit
10.3 of our Quarterly Report on Form 10-Q for the period ended
September
30, 2005).
|
|
(iii)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan and dated as of
February 21, 2006, entered into between CenturyTel and its
executive
officers (incorporated by reference to Exhibit 10.2(g)(iii) of our Annual
Report on Form 10-K for the year ended December 31,
2005).
|
|
(iv)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 21, 2006, entered into between CenturyTel
and
its executive officers (incorporated by reference to Exhibit 10.2(g)(iv)
of our Annual Report on Form 10-K for the year ended December 31,
2005).
|
|
(v)
|
Form
of Stock Option Agreement, pursuant to the foregoing plan and dated as of
February 26, 2007, entered into between CenturyTel and its
executive
offices (incorporated by reference to Exhibit 10.1 of our Quarterly Report
on Form 10-Q for the quarter ended March 31,
2007).
|
|
(vi)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 26, 2007, entered into between CenturyTel and
its
executive officers (incorporated by reference to Exhibit 10.2 of our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2007).
|
|
(vii)
|
Form
of Restricted Stock Agreement, pursuant to the foregoing plan and dated as
of February 21, 2008, entered into between CenturyTel and
its
executive officers (incorporated by reference to Exhibit 10.2 of our
Quarterly Report on Form 10-Q for the quarter ended March 31,
2008).
|
|
10.3
|
Other
Non-Qualified Employee Benefit
Plans
|
|
(a)
|
Key
Employee Incentive Compensation Plan, dated January 1, 1984,
as
amended and restated as of November 16, 1995 (incorporated by reference to
Exhibit
10.1(f) of our Annual Report on Form 10-K for the year ended December 31,
1995) and amendment thereto dated November 21, 1996
(incorporated
by
reference to Exhibit 10.1(f) of our Annual Report on Form 10-K for the
year ended December 31, 1996), amendment thereto dated February 25, 1997
(incorporated
by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997), amendment thereto dated April
25,
2001 (incorporated by reference to Exhibit 10.2 of our Quarterly Report on
Form 10-Q for the quarter ended March 31, 2001), amendment thereto
dated
April
17, 2000 (incorporated by reference to Exhibit 10.3(a) of our Annual
Report on Form 10-K for the year ended December 31, 2001) and amendment
thereto
dated February 27, 2007 (incorporated by reference to Exhibit 10.1 of our
Quarterly Report on Form 10-Q for the quarter ended June 30,
2007).
|
|
(b)
|
Supplemental
Executive Retirement Plan, 2008 Restatement, effective January 1, 2008,
(incorporated by reference to Exhibit 10.3(b) of our Annual Report
on
Form
10-K for the year ended December 31, 2007) and amendment thereto dated May
5, 2008, included elsewhere herein, and amendment thereto dated October
24,
2008, included elsewhere herein.
|
|
(c)
|
Supplemental
Dollars & Sense Plan, 2008 Restatement, effective
January
1, 2008, (incorporated by reference to Exhibit 10.3(c) of our Annual
Report on
Form
10-K for the year ended December 31, 2007) and amendment thereto dated
October 24, 2008, included elsewhere
herein.
|
|
(d)
|
Supplemental
Defined Benefit Plan, 2008 Restatement, effective as of January 1, 2008,
(incorporated by reference to Exhibit 10.3(d) of our Annual
Report
on Form 10-K for the year ended December 31, 2007) and amendment thereto
dated October 24, 2008, included elsewhere
herein.
|
|
(e)
|
Amended
and Restated Salary Continuation (Disability) Plan for Officers, dated
November 26, 1991 (incorporated by reference to Exhibit 10.16 of
our
Annual Report on Form 10-K for the year ended December 31,
1991).
|
|
(f)
|
2005
Executive Officer Short-Term Incentive Program (incorporated by reference
to our 2005 Proxy Statement filed April 5,
2005).
|
|
(g)
|
2001
Employee Stock Purchase Plan (incorporated by reference to our 2001 Proxy
Statement).
|
|
10.4
|
Employment,
Severance and Related
Agreements
|
|
(a)
|
Amended
and Restated Change of Control Agreement, effective January 1, 2008, by
and between Glen F. Post, III and CenturyTel, (incorporated
by
reference to Exhibit 10.4(a) of our Annual Report on Form 10-K for the
year ended December 31, 2007).
|
|
(b)
|
Form
of Amended and Restated Change of Control Agreement, effective January 1,
2008, by and between CenturyTel and each of its other
executive
officers (incorporated by reference to Exhibit 10.4(b) of our Annual
Report on Form 10-K for the year ended December 31,
2007).
|
|
(c)
|
Form
of Indemnification Agreement for Officers and Directors (incorporated by
reference to Exhibit 10.4(e) of our Annual Report on Form
10-K
for the year ended December 31,
2005).
|
|
(d)
|
Amended
and Restated CenturyTel, Inc. Bonus Life Insurance Plan for Executive
Officers, dated as of April 3, 2008, (incorporated by reference
to
Exhibit 10.4 of our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008).
|
|
12
|
Ratio
of Earnings to Fixed Charges and Preferred Stock Dividends, included
elsewhere herein.
|
|
14
|
Corporate
Compliance Program (incorporated by reference to Exhibit 14 of
our Annual Report on Form 10-K for the year ended December 31,
2003).
|
|
21
|
Subsidiaries
of CenturyTel, included elsewhere
herein.
|
|
23
|
Independent
Registered Public Accounting Firm Consent, included elsewhere
herein.
|
|
31.1
|
Chief
Executive Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, included elsewhere
herein.
|
|
31.2
|
Chief
Financial Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, included elsewhere
herein.
|
|
32
|
Chief
Executive Officer and Chief Financial Officer certification pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, included elsewhere
herein.
|
|
(b)
|
Reports
on Form 8-K.
|
|
Items 8.01 and 9.01 – Other Events
and Financial Statements and Exhibits. Documents concerning the
announced merger under which
CenturyTel
will acquire Embarq Corporation, including (i) joint press release
announcing the merger; (ii) joint investor presentation principally
concerning
the merger; (iii) transcript of joint investor presentation and (iv)
letter to CenturyTel employees concerning the execution of
the
merger
agreement.
|
|
October 30,
2008
|
|
Items
1.01 and 9.01 – Entry Into a Material Definitive Agreement and Financial
Statements and Exhibits. Agreement and Plan of Merger dated as
of
October
26, 2008 among Registrant, Embarq Corporation and Cajun Acquisition
Company.
|
|
November 18,
2008
Items 5.03 and 9.01 – Other Events and
Financial Statements and Exhibits. Articles of Amendment to the
Amended and Restated Articles of
Incorporation
of CenturyTel, Inc.
|
CenturyTel,
Inc.,
|
||
Date: F
ebruary
27, 2009
|
By:
/s/ Glen F. Post,
III
|
|
Glen
F. Post, III
|
||
Chairman
of the Board and
|
||
Chief
Executive Officer
|
/s/ Glen F. Post, III
|
Chairman
of the Board and
|
|||
Glen
F. Post, III
|
Chief
Executive Officer
|
February
27, 2009
|
||
/s/ R. Stewart Ewing,
Jr.
|
Executive
Vice President and
|
|||
R.
Stewart Ewing, Jr.
|
Chief
Financial Officer
|
February
27, 2009
|
||
/s/ Neil A. Sweasy
|
||||
Neil
A. Sweasy
|
Vice President and Controller |
February
27, 2009
|
||
/s/ William R. Boles,
Jr.
|
||||
William
R. Boles, Jr.
|
Director
|
February
27, 2009
|
||
/s/ Virginia Boulet
|
||||
Virginia
Boulet
|
Director
|
February
27, 2009
|
||
/s/ Calvin Czeschin
|
||||
Calvin
Czeschin
|
Director
|
February
27, 2009
|
||
/s/ James B. Gardner
|
||||
James
B. Gardner
|
Director
|
February
27, 2009
|
||
/s/ W. Bruce Hanks
|
||||
W.
Bruce Hanks
|
Director
|
February
27, 2009
|
||
/s/ Gregory J. McCray
|
||||
Gregory
J. McCray
|
Director
|
February
27, 2009
|
||
/s/ C. G. Melville,
Jr.
|
||||
C.
G. Melville, Jr.
|
Director
|
February
27, 2009
|
||
/s/ Fred R. Nichols
|
||||
Fred
R. Nichols
|
Director
|
February
27, 2009
|
||
/s/ Harvey P. Perry
|
||||
Harvey
P. Perry
|
Director
|
February
27, 2009
|
||
/s/ Jim D. Reppond
|
||||
Jim
D. Reppond
|
Director
|
February
27, 2009
|
||
/s/ Joseph R. Zimmel
|
||||
Joseph
R. Zimmel
|
Director
|
February
27, 2009
|
Additions
|
||||||||||||||||||||
Balance
at
|
charged
to
|
Deductions
|
Balance
|
|||||||||||||||||
beginning
|
costs
and
|
from
|
Other
|
at
end
|
||||||||||||||||
Description
|
of period
|
expenses
|
allowance
|
changes
|
of period
|
|||||||||||||||
(Dollars
in thousands)
|
||||||||||||||||||||
Year
ended December 31, 2008
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 20,361 | 9,866 | (13,524 | ) (1) | (413 | ) (2) | 16,290 | ||||||||||||
Valuation allowance for deferred tax
assets
|
$ | 30,907 | 1,603 | - | 1,348 | 33,858 | ||||||||||||||
Year
ended December 31, 2007
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 20,905 | 14,466 | (16,617 | ) (1) | 1,607 | (2) | 20,361 | ||||||||||||
Valuation allowance for deferred tax assets
|
$ | 61,049 | 3,744 | (33,886 | ) | - | 30,907 | |||||||||||||
Year
ended December 31, 2006
|
||||||||||||||||||||
Allowance for doubtful accounts
|
$ | 21,721 | 20,199 | (21,009 | ) (1) | (6 | ) (2) | 20,905 | ||||||||||||
Valuation allowance for deferred tax assets
|
$ | 54,412 | 6,637 | - | - | 61,049 |
|
1.
|
Section
1.12 of the Plan (“Company Stock”) is amended to read in its entirety as
follows:
|
|
2.
|
A
new Section 1.12A (“Company Stock Account”) is added after Section 1.12
("Company Stock") to read in its entirety as
follows:
|
|
3.
|
A
new Section 1.13A ("CT ESOP") is added after Section 1.13 ("Compensation")
to read as follows:
|
|
4.
|
A
new Section 1.23A ("ESOP") is added after Section 1.23 ("ERISA") to read
as follows:
|
|
5.
|
All
references to the "ESOP" in Section 3.8 ("Restoration of Forfeitures") are
redesignated as references to the "CT
ESOP".
|
|
6.
|
Section
6.4(a)(2)(ii) of the Plan ("Hardship") is amended to read in its entirety
as follows:
|
|
7.
|
Section
6.4(a)(3)(iv) of the Plan ("Hardship") is amended to read in its entirety
as follows:
|
|
8.
|
Section
10.1 of the Plan ("Status of ESOP") is amended to read in its entirety as
follows:
|
|
9.
|
Section
10.2 of the Plan ("Trust or Trusts") is amended by adding the following
sentence at the end thereof, to read as
follows:
|
|
10.
|
Section
10.4 ("Company Stock Distributions") is amended by inserting the words
"Company Stock Account," in front of the words "ESOP Account" wherever
they appear therein.
|
|
11.
|
Section
10.6 ("Payment in Shares or Cash") is amended to read in its
entirety as follows:
|
|
12.
|
Section
10.7 of the Plan ("Dividends") is amended to read in its entirety as
follows:
|
|
13.
|
A
new Section 10.8 ("Miscellaneous") is added after Section 10.7
("Dividends") to read as follows:
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial
Officer
|
1.
|
Section
1.13 of the Plan ("Company Stock") is amended to read in its entirety as
follows:
|
2.
|
A
new Section 1.13A of the Plan ("Company Stock Account") is added after
Section 1.13 ("Company Stock") to read in its entirety as
follows:
|
3.
|
A
new Section 1.24A of the Plan (“ESOP”) is added after Section 1.24
(“ERISA”) to read in its entirety as
follows:
|
4.
|
Section
6.6(a)(2)(ii) of the Plan ("Hardship") is amended to read in its entirety
as follows:
|
5.
|
Section
6.6(a)(3)(iv) of the Plan ("Hardship") is amended to read in its entirety
as follows:
|
6.
|
Section
7.2 of the Plan (“Method of Distribution”) is amended by adding the
following sentence at the ending of the last paragraph thereof to read in
its entirety as follows:
|
7.
|
A
new Article XV of the Plan ("ESOP Provisions") is added to read in its
entirety as follows:
|
|
(1)
one (1) year after the close of the Plan Year which is the fifth (5th)
Plan Year following the Plan Year in which his employment terminates,
unless the Participant is
reemployed
by
the Employer before the end of such year;
or
|
|
(2) the
sixtieth (60th) day following the end of the Plan Year in which the
Participant attains Normal Retirement
Age.
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial
Officer
|
|
(6)
|
In
no event shall a Participant’s Accrued Benefit, expressed as an annual
benefit at Normal Retirement Date, be less than $650, and in no event
shall a Participant’s Accrued Benefit be less than his or her Accrued
Benefit (if any) as of December 31, 2006. The $650 minimum
benefit noted in the previous sentence shall not apply to Participants
whose Accrued Benefit is determined solely under Section 6.1(b) or one of
the Constituent Plans, and shall not apply to Participants who become
Eligible Employees after December 31,
2008.
|
|
(b)
|
Except
as provided in Section 6.1(d) below, for Participants covered by a
collective bargaining agreement that provides for participation in this
Plan, and subject to the limitations contained in Section 5.7, the Accrued
Benefit on normal retirement for a person retiring on or after January 1,
1990 is a monthly pension for the life of the Participant equal to the
number of Years of Credited Service (YCS), up to a maximum of thirty (30),
times the sum of 1.3 percent of Final Average Pay (FAP) plus .65 percent
of Final Average Pay in excess of Social Security Covered Compensation
(SSCC) as follows:
|
|
(e)
|
The
minimum benefit provisions of the Plan at Section 6.1(a)(6) and in the
Constituent Plans, are mutually exclusive and shall not be added to each
other, or to any other benefit, when determining a Participant’s minimum
benefit under the Plan as a whole.
|
|
(a)
|
If
at death the Participant is age fifty-five (55) or over with five (5) or
more Years of Credited Service, or actively employed by the Employer with
thirty (30) or more Years of Service and five (5) or more Years of
Credited Service, the benefit of the Spouse shall be the amount payable to
the Spouse as Beneficiary under the survivor annuity portion of the
Qualified Joint and Survivor Annuity with respect to the Participant,
determined as though the Participant had retired on the first day of the
month in which death occurs. On the death of a Participant with
thirty (30) or more Years of Service and five (5) or more Years of
Credited Service before age fifty-five (55), the Participant shall be
assumed to be age fifty-five (55) for purposes of this subparagraph
(a).
|
|
(b)
|
If
the Participant does not meet the requirements of (a), above, at death,
the benefit of the Spouse shall be the amount payable to the Spouse as
Beneficiary under the survivor annuity portion of the Qualified Joint and
Survivor Annuity with respect to the Participant, determined as though the
Participant had separated from service on the date of death (if not
already separated) and had survived until age fifty-five (55) (if the
Participant was over age 55 at death, then his or her actual age at death
shall be used in determining the
benefit).
|
Union
|
Date
|
CWA
6171 Central
|
August
16, 2007
|
CWA
6171 Northwest
|
June
13, 2008
|
CWA
7906 (1)
|
May
1, 2008
|
IBEW
768
|
May
1, 2008
|
IBEW
257
|
January
1, 2007
|
IBEW
1106
|
April
1, 2007
|
CWA
6301, 6310, 6311, 6312, 6373
|
March
13, 2008
|
CWA
4370
|
April
1, 2007
|
CWA
4671
|
February
3, 2007
|
IBEW
89
|
September
1, 2008
|
CWA
7818
|
September
1, 2008
|
Age At
Retirement
|
Band
1
|
Band
2
|
|
Effective
4/1/07
|
65
or older
|
$35.84
|
$42.02
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
Scheduled Vesting
Date
|
Number of Shares of
Restricted Stock
|
May
15, 2008
|
708
|
May
15, 2009
|
709
|
May
15, 2010
|
709
|
CENTURYTEL,
INC.
|
|
By:
|
|
Glen
F. Post, III
Chairman
of the Board and
Chief
Executive Officer
|
|
|
|
«Director_Name»
Award Recipient
|
Scheduled Vesting
Date
|
Number of Shares of
Restricted Stock
|
May
15, 2009
|
1,004
|
May
15, 2010
|
1,004
|
May
15, 2011
|
1,004
|
CENTURYTEL,
INC.
|
|
By:
|
|
Glen
F. Post, III
Chairman
of the Board and
Chief
Executive Officer
|
|
|
|
«Director_Name»
Award Recipient
|
CENTURYTEL,
INC.
|
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
"Personnel
Number
|
Name
|
Lump
Sum
|
||
59164
|
Bowman,
Nick
|
1,064,364
|
||
2679
|
Cole,
Kenneth R.
|
988,420
|
||
25821
|
Conrad,
C. Kenneth
|
428,828
|
||
59165
|
Cunningham,
Marvin
|
1,526,479
|
||
25872
|
Dalrymple,
Gyl
|
129,067
|
||
59200
|
Davis,
Richard W
|
2,075,073
|
||
25148
|
Esker,
Robert
|
327,608
|
||
59166
|
Finney,
Ray
|
941,221
|
||
59167
|
Greer,
Murray
|
701,420
|
||
25336
|
Hames,
Harlin
|
605,606
|
||
25843
|
Hargrove
R L
|
1,058,960
|
||
25881
|
LaGrone
Harold
|
156,675
|
||
4500
|
Perleberg,
Gary
|
121,858
|
||
59168
|
Perry,
Harvey P
|
3,430,117
|
||
25100
|
Provance,
W. F.
|
234,552
|
||
25806
|
Reppond,
Jim D
|
1,607,771
|
||
25939
|
Robinson,
Jack
|
550,557
|
||
25899
|
Smith,
W P
|
775,426
|
||
56167
|
Williams,
Mary Katherine
|
3,747,730
|
||
54827
|
Davis,
Tony
|
127,952
|
||
2584
|
Hanks,
W. Bruce
|
2,567,686
|
||
2715
|
Thiels,
David G.
|
637,397
|
||
3095
|
Bailey,
Garland
|
389,226
|
||
2870
|
Cole,
David
|
2,372,743
|
||
4494
|
Davis,
Craig
|
411,654
|
||
3277
|
Ewing,
R.S.
|
2,381,202
|
||
5284
|
Goff,
Stacey
|
997,204
|
||
10370
|
Hughes,
Ivan
|
560,471
|
||
10111
|
Maslowski,
Michael
|
1,014,126
|
||
2859
|
Post,
Glen
|
11,926,166
|
||
52726
|
Puckett,
Karen
|
2,485,672
|
||
2067
|
Ring,
Duane
|
503,004
|
||
3189
|
Sweasy,
Neil A
|
349,536
|
||
62016
|
Navarre,
Debra
|
2,242,032"
|
|
CENTURYTEL,
INC.
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
|
CENTURYTEL,
INC.
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
|
CENTURYTEL,
INC.
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial Officer
|
Personnel Number | Name | Bi-weekly Benefit | Form of Payment |
59164
|
Bowman,
Nick
|
2,365.75
|
15-year
Certain & Life Annuity
|
2679
|
Cole,
Kenneth R.
|
2,245.33
|
100%
Joint & Survivor
|
25821
|
Conrad,
C. Kenneth
|
1,555.91
|
100%
Joint & Survivor
|
59165
|
Cunningham,
Marvin
|
2,544.86
|
100%
Joint & Survivor
|
25872
|
Dalrymple,
Gyl
|
426.72
|
Single
Life Annuity
|
59200
|
Davis,
Richard W
|
3,899.00
|
50%
Joint & Survivor
|
25148
|
Esker,
Robert
|
1,404.26
|
67%
Joint & Survivor
|
59166
|
Finney,
Ray
|
1,823.64
|
67%
Joint & Survivor
|
59167
|
Greer,
Murray
|
1,392.36
|
50%
Joint & Survivor
|
25843
|
Hargrove,
R L
|
4,457.97
|
Single
Life Annuity
|
4500
|
Perleberg,
Gary
|
221.80
|
100%
Joint & Survivor
|
25100
|
Provance,
W. F.
|
893.11
|
Single
Life Annuity
|
25806
|
Reppond,
Jim D
|
4,299.64
|
Single
Life Annuity
|
25939
|
Robinson,
Jack
|
1,955.99
|
50%
Joint & Survivor
|
25899
|
Smith,
W P
|
3,905.72
|
50%
Joint & Survivor
|
|
CENTURYTEL,
INC.
|
By:
/s/ R.
Stewart Ewing, Jr.
|
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial
Officer
|
Year ended December 31, | |||||||||
2008
|
2007
|
2006
|
|||||||
|
(Dollars
in thousands)
|
||||||||
Net
income
|
$ | 365,732 | 418,370 | 370,027 | |||||
Income taxes
|
194,357 | 200,572 | 221,122 | ||||||
Pre-tax
income
|
560,089 | 618,942 | 591,149 | ||||||
Adjustments
to earnings:
|
|||||||||
Fixed charges
|
204,872 | 214,775 | 198,479 | ||||||
Capitalized interest
|
(2,409 | ) | (1,278 | ) | (1,905 | ) | |||
Preferred stock dividends
|
(246 | ) | (591 | ) | (617 | ) | |||
Gross earnings from unconsolidated cellular partnership
|
(12,044 | ) | (14,578 | ) | (5,861 | ) | |||
Distributed earnings from
unconsolidated cellular partnership
|
15,960 | 10,229 | - | ||||||
Earnings, as adjusted
|
$ | 766,222 | 827,499 | 781,245 | |||||
Fixed
charges:
|
|||||||||
Interest expense
|
$ | 202,217 | 212,906 | 195,957 | |||||
Interest capitalized
|
2,409 | 1,278 | 1,905 | ||||||
Preferred
stock dividends (pre-tax)
|
246 | 591 | 617 | ||||||
Total fixed
charges
|
$ | 204,872 | 214,775 | 198,479 | |||||
Ratio of earnings to fixed charges and preferred
stock dividends
|
3.74 | 3.85 | 3.94 |
State
of
|
|
incorporation
|
|
Subsidiary
|
or
formation
|
Actel,
LLC
|
Delaware
|
Cajun
Acquisition Company
|
Louisiana
|
Century
Marketing Solutions, LLC
|
Louisiana
|
CenturyTel
Acquisitions, LLC
|
Louisiana
|
CenturyTel
Arkansas Holdings, Inc.
|
Arkansas
|
CenturyTel
Fiber Company II, LLC
|
Louisiana
|
CenturyTel
Holdings, Inc.
|
Louisiana
|
CenturyTel
Holdings Alabama, Inc.
|
Alabama
|
CenturyTel
Holdings Missouri, Inc.
|
Missouri
|
CenturyTel
Broadband Services, LLC
|
Louisiana
|
CenturyTel
Broadband Wireless, LLC
|
Louisiana
|
CenturyTel
Investments, LLC
|
Louisiana
|
CenturyTel
Investments of Texas, Inc.
|
Delaware
|
CenturyTel
Long Distance, LLC
|
Louisiana
|
CenturyTel
Midwest - Michigan, Inc.
|
Michigan
|
CenturyTel
of Adamsville, Inc.
|
Tennessee
|
CenturyTel
of Alabama, LLC
|
Louisiana
|
CenturyTel
of Arkansas, Inc.
|
Arkansas
|
CenturyTel
of Central Arkansas, LLC
|
Arkansas
|
CenturyTel
of Central Indiana, Inc.
|
Indiana
|
CenturyTel
of Central Louisiana, LLC
|
Louisiana
|
CenturyTel
of Central Wisconsin, LLC
|
Delaware
|
CenturyTel
of Chatham, LLC
|
Louisiana
|
CenturyTel
of Chester, Inc.
|
Iowa
|
CenturyTel
of Claiborne, Inc.
|
Tennessee
|
CenturyTel
of Colorado, Inc.
|
Colorado
|
CenturyTel
of Cowiche, Inc.
|
Washington
|
CenturyTel
of Eagle, Inc.
|
Colorado
|
CenturyTel
of East Louisiana, LLC
|
Louisiana
|
CenturyTel
of Eastern Oregon, Inc.
|
Oregon
|
CenturyTel
of Evangeline, LLC
|
Louisiana
|
CenturyTel
of Fairwater-Brandon-Alto, LLC
|
Delaware
|
CenturyTel
of Forestville, LLC
|
Delaware
|
CenturyTel
of Idaho, Inc.
|
Delaware
|
CenturyTel
of Inter Island, Inc.
|
Washington
|
CenturyTel
of Lake Dallas, Inc.
|
Texas
|
CenturyTel
of Larsen-Readfield, LLC
|
Delaware
|
CenturyTel
of Michigan, Inc.
|
Michigan
|
CenturyTel
of Minnesota, Inc.
|
Minnesota
|
CenturyTel
of Missouri, LLC
|
Louisiana
|
CenturyTel
of Monroe County, LLC
|
Wisconsin
|
CenturyTel
of Montana, Inc.
|
Oregon
|
CenturyTel
of Mountain Home, Inc.
|
Arkansas
|
CenturyTel
of North Louisiana, LLC
|
Louisiana
|
CenturyTel
of North Mississippi, Inc.
|
Mississippi
|
CenturyTel
of Northern Michigan, Inc.
|
Michigan
|
CenturyTel
of Northern Wisconsin, LLC
|
Delaware
|
CenturyTel
of Northwest Arkansas, LLC
|
Delaware
|
CenturyTel
of Northwest Louisiana, Inc.
|
Louisiana
|
CenturyTel
of Northwest Wisconsin, LLC
|
Delaware
|
CenturyTel
of Odon, Inc.
|
Indiana
|
CenturyTel
of Ohio, Inc.
|
Ohio
|
CenturyTel
of Ooltewah-Collegedale, Inc.
|
Tennessee
|
CenturyTel
of Oregon, Inc.
|
Oregon
|
CenturyTel
of Port Aransas, Inc.
|
Texas
|
CenturyTel
of Postville, Inc.
|
Iowa
|
CenturyTel
of Redfield, Inc.
|
Arkansas
|
CenturyTel
of Ringgold, LLC
|
Louisiana
|
CenturyTel
of San Marcos, Inc.
|
Texas
|
CenturyTel
of South Arkansas, Inc.
|
Arkansas
|
CenturyTel
of Southeast Louisiana, LLC
|
Louisiana
|
CenturyTel
of Southern Wisconsin, LLC
|
Louisiana
|
CenturyTel
of Southwest Louisiana, LLC
|
Louisiana
|
CenturyTel
of the Gem State, Inc.
|
Idaho
|
CenturyTel
of the Midwest-Kendall, LLC
|
Delaware
|
CenturyTel
of the Midwest-Wisconsin, LLC
|
Delaware
|
CenturyTel
of the Northwest, Inc.
|
Washington
|
CenturyTel
of the Southwest, Inc.
|
New
Mexico
|
CenturyTel
of Upper Michigan, Inc.
|
Michigan
|
CenturyTel
of Washington, Inc.
|
Washington
|
CenturyTel
of Wisconsin, LLC
|
Louisiana
|
CenturyTel
of Wyoming, Inc.
|
Wyoming
|
CenturyTel
Security Systems Holding Company, LLC
|
Louisiana
|
CenturyTel
Service Group, LLC
|
Louisiana
|
CenturyTel
Solutions, LLC
|
Louisiana
|
CenturyTel
Supply Group, Inc.
|
Louisiana
|
CenturyTel
TeleVideo, Inc.
|
Louisiana
|
CenturyTel/Teleview
of Wisconsin, Inc.
|
Wisconsin
|
Coastal
Long Distance Services, LLC
|
Georgia
|
Coastal
Utilities, Inc.
|
Georgia
|
Gallatin
River Communications, LLC
|
Delaware
|
Gulf
Communications, LLC
|
Delaware
|
Gulf
Long Distance, LLC
|
Alabama
|
Gulf
Telephone Company
|
Alabama
|
Madison
River Communications Corp.
|
Delaware
|
Madison
River Communications, LLC
|
Delaware
|
Madison
River Long Distance Solutions, LLC
|
Delaware
|
Mebtel,
Inc.
|
North
Carolina
|
Mebtel
Long Distance Solutions, LLC
|
North
Carolina
|
Spectra
Communications Group, LLC
|
Delaware
|
Telephone
USA of Wisconsin, LLC
|
Delaware
|
1.
|
I
have reviewed this annual report on Form 10-K of CenturyTel,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter of 2008) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors:
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
February
27, 2009
|
/s/ Glen F. Post,
III
|
Glen
F. Post, III
|
|
Chairman
of the Board and
|
|
Chief
Executive
Officer
|
1.
|
I
have reviewed this annual report on Form 10-K of CenturyTel,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15 (e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter of 2008) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors:
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
February
27, 2009
|
/s/ R.Stewart Ewing,
Jr.
|
R.
Stewart Ewing, Jr.
|
|
Executive
Vice President and
|
|
Chief
Financial
Officer
|
Re:
|
CenturyTel,
Inc.
|
/s/
Glen F. Post, III
|
/s/
R. Stewart Ewing, Jr.
|
|
Glen
F. Post, III
|
R.
Stewart Ewing, Jr.
|
|
Chairman
of the Board and
|
Executive
Vice President and
|
|
Chief
Executive Officer
|
Chief
Financial Officer
|