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Our significant levels of debt can adversely affect us in several other respects, including: • limiting the ability of CenturyLink and its subsidiaries to access the capital markets; • exposing CenturyLink and its subsidiaries to the risk of credit rating downgrades, as described further below; • hindering our flexibility to plan for or react to changing market, industry or economic conditions; • limiting the amount of cash flow available for future operations, acquisitions, strategic initiatives, dividends, stock repurchases or other uses; • making us more vulnerable to economic or industry downturns, including interest rate increases; • placing us at a competitive disadvantage compared to less leveraged competitors; • increasing the risk that we will need to sell securities or assets, possibly on unfavorable terms, or take other unfavorable actions to meet payment obligations; or • increasing the risk that we may not meet the financial covenants contained in our debt agreements or timely make all required debt payments.

Decisions on whether, when and in which amounts to continue making any future dividend distributions will remain at all times entirely at the discretion of our Board of Directors, which reserves the right to change or terminate our dividend practices at any time and for any reason, including without limitation any of the following: • our supply of cash or other liquid assets is anticipated to decrease due to our projected payment of higher cash taxes and might decrease further for any of the reasons or potential adverse events or developments described in this report, including (i) changes in competition, regulation, Universal Service support payments, technology, taxes, capital markets, operating costs or litigation costs, or (ii) the impact of any liquidity shortfalls caused by the below-described restrictions on the ability of our subsidiaries to lawfully transfer cash to us; • our cash requirements or plans might change for a wide variety of reasons, including changes in our capital allocation plans (including a desire to retain or accumulate cash), capital spending plans, stock purchase plans, acquisition strategies, strategic initiatives, debt payment plans (including a desire to maintain or improve credit ratings on our debt securities), pension funding payments, or financial position; • our ability to service and refinance our current and future indebtedness and our ability to borrow or raise additional capital to satisfy our capital needs; • the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and restrictions imposed by our existing or future credit facilities, debt securities, outstanding preferred stock securities, leases and other agreements, including restricted payment and leverage covenants; and • the amount of cash that our subsidiaries may make available to us, whether by dividends, loans or other payments, may be subject to the legal, regulatory and contractual restrictions described in the immediately preceding risk factor.

Operating Revenues We currently categorize our products, services and revenues among the following four categories: • Strategic services, which include primarily broadband, private line (including special access), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including our facilities-based video services, which we now offer in fourteen markets, and our commissions on satellite service), VoIP and Verizon Wireless services; • Legacy services, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allow a local communications network to link to networks in remote locations); • Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our business customers; and • Other revenues, which consists primarily of Universal Service Fund ("USF") support and USF surcharges.

Product and Service Categories We categorize our products, services and revenues among the following four categories: • Strategic services, which include primarily broadband, private line (including special access), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), VoIP and Verizon Wireless services; • Legacy services, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allow a local communications network to link to networks in remote locations); • Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and • Other revenues, which consist primarily of Universal Service Fund ("USF") revenue and surcharges.

Network disruptions, security breaches and other significant failures of the above-described systems could: • disrupt the proper functioning of these networks and systems and therefore our operations or those of certain of our customers; • result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our customers’ end users, including trade secrets, which others could use for competitive, disruptive, destructive or otherwise harmful purposes and outcomes; • require significant management attention or financial resources to remedy the damages that result or to change our systems, including expenses to repair systems, add new personnel or develop additional protective systems; • require us to offer expensive incentives to retain existing customers or subject us to claims for contract breach, damages, credits, fines, penalties, termination or other remedies, particularly with respect to service standards set by state regulatory commissions; or • result in a loss of business, damage our reputation among our customers and the public generally, subject us to additional regulatory scrutiny or expose us to litigation.

However, you should be aware that these practices are reviewed periodically and are subject to change for reasons that may include any of the following factors: • we may not have enough cash to pay such dividends due to changes in our cash requirements, capital spending plans, stock repurchase plans, cash flows or financial position; • the effects of regulatory reform, including any changes to intercarrier compensation, Universal Service Fund or special access rules; • our desire to maintain or improve the credit ratings on our debt; • the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and 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 our subsidiaries may distribute to us is subject to restrictions imposed by state law, restrictions that have been or may be imposed by state regulators in connection with obtaining necessary approvals for our acquisitions, and restrictions imposed by the terms of credit facilities applicable to certain subsidiaries and, potentially, the terms of any future indebtedness that these subsidiaries may incur.

We may encounter difficulties in the integration process, including the following: • the inability to successfully combine our businesses in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the acquisitions, either due to technological challenges, personnel shortages, strikes or otherwise, any of which would result in the anticipated benefits of the acquisitions not being realized partly or wholly in the time frame anticipated or at all; • delays or limitations in connection with offering new products or providing current ones arising out of the multiplicity of different legacy systems, network and processes used by each of the companies; • the complexities associated with managing the combined businesses out of several different locations and integrating personnel from multiple companies, while at the same time attempting to provide consistent, high-quality products and services under a unified culture; • the difficulties of producing combined financial information using dispersed personnel with different past practices, including the attendant risk of errors; • the complexities of combining companies with different histories, regulatory restrictions, cost structures, products, sales forces, markets, marketing strategies, and customer bases; • the failure to retain key employees, some of whom could be critical to integrating, operating or expanding the companies; • potential unknown liabilities and unforeseen increased expenses or regulatory conditions associated with the acquisitions; and • performance shortfalls at one or all of the companies as a result of the diversion of management’s attention caused by integrating the companies’ operations.

In addition to these international regulatory risks, some of the other risks inherent in conducting business internationally include: • tax, licensing, currency, political or other business restrictions or requirements; • import and export restrictions; • longer payment cycles and problems collecting accounts receivable; • additional U.S. and other regulation of non-domestic operations, including regulation under the Foreign Corrupt Practices Act, or FCPA, as well as other anti-corruption laws; • economic, social and political instability, with the attendant risks of terrorism, kidnapping, extortion, civic unrest and potential seizure or nationalization of assets; • fluctuations in currency exchange rates; • the ability to secure and maintain the necessary physical and telecommunications infrastructure; • the inability to enforce contract rights either due to underdeveloped legal systems or government actions that result in a deprivation of contract rights; • laws, policies or practices that limit the scope of operations that can legally or practicably be conducted within any particular country; and • challenges in staffing and managing foreign operations.

Operating Revenues We currently categorize our products, services and revenues among the following four categories: • Strategic services, which include primarily broadband, private line (including special access, which we market to wholesale and business customers), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including our facilities-based video services, which we now offer in twelve markets, and our resold satellite service), VoIP and Verizon Wireless services; • Legacy services, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations); • Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and • Other revenues, which consists primarily of USF revenue and surcharges.

We categorize our products and services related to revenues into the following four categories: • Strategic services, which include primarily broadband, private line (including special access which we market to wholesale and business customers), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), VoIP and Verizon Wireless services; • Legacy services, which include primarily local, long-distance, switched access, Integrated Services Digital Network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations); • Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers; and • Other revenues, which consist primarily of Universal Service Fund ("USF") revenue and surcharges.

Network disruptions, security breaches and other significant failures of the above-described systems could: •disrupt the proper functioning of these networks and systems and therefore our operations or those of certain of our customers; •result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our customers' end-users, including trade secrets, which others could use for competitive, disruptive, destructive or otherwise harmful purposes and outcomes; •require significant management attention or financial resources to remedy the damages that result or to change our systems, including expenses to repair systems, add new personnel or develop additional protective systems; •subject us to claims for contract breach, damages, credits, fines, penalties, termination or other remedies, particularly with respect to service standards set by state regulatory commissions; or •result in a loss of business, damage our reputation among our customers and the public generally, subject us to additional regulatory scrutiny or expose us to litigation.

However, you should be aware that these practices are reviewed periodically and are subject to change for reasons that may include any of the following factors: •we may not have enough cash to pay such dividends due to changes in our cash requirements, capital spending plans, stock purchase plans, cash flows or financial position; •the effects of regulatory reform, including any changes to intercarrier compensation, Universal Service Fund or special access rules; •our desire to maintain or improve the credit ratings on our debt; •the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and 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 our subsidiaries may distribute to us is subject to restrictions imposed by state law, restrictions that have been or may be imposed by state regulators in connection with obtaining necessary approvals for our acquisitions, and restrictions imposed by the terms of credit facilities applicable to certain subsidiaries and, potentially, the terms of any future indebtedness that these subsidiaries may incur.

We may encounter difficulties in the integration process, including the following: •the inability to successfully combine our businesses in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the acquisitions, either due to technological challenges, personnel shortages, strikes or otherwise, any of which would result in the anticipated benefits of the acquisitions not being realized partly or wholly in the time frame anticipated or at all; •lost sales as a result of customers deciding not to do business with the combined company; •the complexities associated with managing the combined businesses out of several different locations and integrating personnel from multiple companies, while at the same time attempting to provide consistent, high-quality products and services under a unified culture; •the additional complexities of combining companies with different histories, regulatory restrictions, sales forces, marketing strategies, product markets and customer bases; •the failure to retain key employees, some of whom could be critical to integrating or expanding the companies; •potential unknown liabilities and unforeseen increased expenses or regulatory conditions associated with the acquisitions; and •performance shortfalls at one or all of the companies as a result of the diversion of management's attention caused by integrating the companies' operations.

Operating Revenues We currently categorize our products, services and revenues among the following four categories: •Strategic services, which include primarily broadband, private line (including special access which we market to wholesale and business customers who require dedicated equipment to transmit large amounts of data between sites), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), VoIP and Verizon Wireless services; •Legacy services, which include primarily local, long-distance, switched access, public access, ISDN (which uses regular telephone lines to support voice, video and data applications), and WAN services (which allows a local communications network to link to networks in remote locations); •Data integration, which includes the sale of telecommunications equipment to customers for use on their premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic networks for our government and business customers; and •Other revenues, which consists primarily of USF revenue and surcharges.

For comparability purposes, we have included our segment information for the years ended December 31, 2011 and 2010 based on the segment categorization we were operating under on December 31, 2011: We categorize our products and services related to revenues into the following four categories: •Strategic services, which include primarily broadband, private line (including special access which we market to wholesale and business customers), MPLS (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), hosting (including cloud hosting and managed hosting), colocation, Ethernet, video (including resold satellite and our facilities-based video services), voice over Internet Protocol ("VoIP") and Verizon Wireless services; •Legacy services, which include primarily local, long-distance, switched access, public access, integrated services digital network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations); •Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic networks for our government and business customers; and •Other revenues, which consists primarily of USF revenue and surcharges.

/s/ Glen F. Post, III Glen F. Post, III Chief Executive Officer, President and Director March 1, 2013 /s/ William A. Owens William A. Owens Chairman of the Board March 1, 2013 /s/ R. Stewart Ewing, Jr. R. Stewart Ewing, Jr. Executive Vice President, Chief Financial Officer and Assistant Secretary March 1, 2013 /s/ David D. Cole David D. Cole Senior Vice President, Controller and Operations Support March 1, 2013 /s/ Virginia Boulet Virginia Boulet Director March 1, 2013 /s/ Peter C. Brown Peter C. Brown Director March 1, 2013 /s/ Richard A. Gephardt Richard A. Gephardt Director March 1, 2013 /s/ W. Bruce Hanks W. Bruce Hanks Director March 1, 2013 /s/ Gregory J. McCray Gregory J. McCray Director March 1, 2013 /s/ C. G. Melville, Jr. C. G. Melville, Jr. Director March 1, 2013 /s/ Fred R. Nichols Fred R. Nichols Director March 1, 2013 /s/ Harvey P. Perry Harvey P. Perry Director March 1, 2013 /s/ Michael J. Roberts Michael J. Roberts Director March 1, 2013 /s/ Laurie A. Siegel Laurie A. Siegel Director March 1, 2013 /s/ Joseph R. Zimmel Joseph R. Zimmel Director March 1, 2013

These statements include, among others: •statements concerning the benefits that we expect will result from our business activities and certain transactions we have completed, such as increased revenue and decreased capital or operating expenditures; •statements about our anticipated future operating and financial performance, financial position and liquidity, tax position, contingent liabilities, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing alternatives and sources and pricing plans; and •other similar statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts, many of which are highlighted by words such as "may," "would," "could," "should," "plan," "believes," "expects," "anticipates," "estimates," "projects," "intends," "likely," "seeks," "hopes," or variations or similar expressions.

Network disruptions, security breaches and other significant failures of the above-described systems could: •disrupt the proper functioning of these networks and systems and therefore our operations or those of certain of our customers; •result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; •require significant management attention or financial resources to remedy the damages that result or to change our systems; •subject us to claims for contract breach, damages, credits, fines, penalties, termination or other remedies, particularly with respect to service standards set by state regulatory commissions; or •result in a loss of business, damage our reputation among our customers and the public generally, subject us to additional regulatory scrutiny or expose us to litigation.

However, you should be aware that these practices are subject to change for reasons that may include any of the following factors: •we may not have enough cash to pay such dividends due to changes in our cash requirements, capital spending plans, cash flows or financial position; •decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of our Board of Directors, which reserves the right to change our dividend practices at any time and for any reason; •the effects of regulatory reform, including any changes to intercarrier compensation, Universal Service Fund or special access rules; •our desire to maintain or improve the credit ratings on our debt; •the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and 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 our subsidiaries may distribute to us is subject to restrictions imposed by state law, restrictions that have been or may be imposed by state regulators in connection with obtaining necessary approvals for our recent acquisitions, and restrictions imposed by the terms of credit facilities applicable to certain subsidiaries and, potentially, the terms of any future indebtedness that these subsidiaries may incur.

We may encounter difficulties in the integration process, including the following: •the inability to successfully combine our businesses in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the acquisitions, either due to technological challenges, personnel shortages, strikes or otherwise, any of which would result in the anticipated benefits of the acquisitions not being realized partly or wholly in the time frame currently anticipated or at all; •lost sales as a result of customers of any of the three companies deciding not to do business with the combined company; •the complexities associated with managing the combined businesses out of several different locations and integrating personnel from the three companies, while at the same time attempting to provide consistent, high quality products and services under a unified culture; •the additional complexities of combining companies with different histories, regulatory restrictions, product markets and customer bases, and initiating this process before we had fully completed the integration of our operations with those of Embarq; •the failure to retain key employees, some of whom could be critical to integrating the companies; •potential unknown liabilities and unforeseen increased expenses or regulatory conditions associated with the acquisitions; and •performance shortfalls at one or all of the companies as a result of the diversion of management's attention caused by integrating the companies' operations.

We currently categorize our products, services and revenues among the following four categories: •Strategic services, which include primarily private line (including special access which we market to business customers who require dedicated equipment to transmit large amounts of data between sites), broadband, hosting (including cloud hosting and managed hosting), colocation, multi protocol line switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), video (including DIRECTV), voice over Internet Protocol ("VoIP") and Verizon Wireless services; •Legacy services, which include primarily local, long-distance, switched access, public access, integrated services digital network, ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations); •Data integration, which is telecommunications equipment we sell that is located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customers; and •Other revenues, which consists primarily of USF revenue and surcharges.

Due to system limitations, we have deemed it impracticable to report our 2011 revenue by our previous products and services, which were as follows: •Voice, which included our local calling service to residential, business and wholesale customers within our local service areas, generally for a fixed monthly charge; •Data, which included revenues primarily from monthly recurring charges for providing broadband access services, data transmission services over special circuits and private lines and switched digital television services; •Network Access, which included revenues primarily from providing wholesale services to various carriers and customers in connection with the use of our facilities to originate and terminate their interstate and intrastate voice transmissions as well as universal support funds and reciprocal compensation from CLECs and wireless service providers; and •Other revenues, which included revenues from providing (i) fiber transport, CLEC and security monitoring services; (ii) leasing, selling, installing and maintaining customer premise equipment and wiring; (iii) providing payphone services; (iv) participating in the publication of local directories; (v) providing network database services and (vi) providing video services, as well as other new product and service offerings.

These products and services are now described as follows: •Strategic services, which include primarily private line (including special access), broadband, hosting (including cloud hosting and managed hosting), colocation, multi protocol line switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), video (including DIRECTV), voice over Internet Protocol ("VoIP") and Verizon Wireless services; •Legacy services, which include primarily local, long-distance, switched access, public access, integrated services digital network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations); •Data integration, which is telecommunications equipment we sell that is located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customer; and •Other revenues, which consists primarily of USF revenue and surcharges.

/s/ Glen F. Post, III Glen F. Post, III Chief Executive Officer, President and Director February 27, 2012 /s/ William A. Owens William A. Owens Chairman of the Board February 27, 2012 /s/ R. Stewart Ewing, Jr. R. Stewart Ewing, Jr. Executive Vice President, Chief Financial Officer and Assistant Secretary February 27, 2012 /s/ David D. Cole David D. Cole Senior Vice President, Controller and Operations Support February 27, 2012 /s/ Charles L. Biggs Charles L. Biggs Director February 27, 2012 /s/ Virginia Boulet Virginia Boulet Director February 27, 2012 /s/ Peter C. Brown Peter C. Brown Director February 27, 2012 /s/ Richard A. Gephardt Richard A. Gephardt Director February 27, 2012 /s/ W. Bruce Hanks W. Bruce Hanks Director February 27, 2012 /s/ Gregory J. McCray Gregory J. McCray Director February 27, 2012 /s/ C. G. Melville, Jr. C. G. Melville, Jr. Director February 27, 2012 /s/ Edward A. Mueller Edward A. Mueller Director February 27, 2012 /s/ Fred R. Nichols Fred R. Nichols Director February 27, 2012 /s/ Harvey P. Perry Harvey P. Perry Director February 27, 2012 /s/ Michael J. Roberts Michael J. Roberts Director February 27, 2012 /s/ Laurie A. Siegel Laurie A. Siegel Director February 27, 2012 /s/ James A. Unruh James A. Unruh Director February 27, 2012 /s/ Joseph R. Zimmel Joseph R. Zimmel Director February 27, 2012

We may encounter difficulties in the integration process, including the following: • the inability to successfully combine our business and Qwest’s business in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the merger, either due to technological challenges, personnel shortages, strikes or otherwise, any of 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 as a result of customers of either of the two companies deciding not to do business with the combined company; • the complexities associated with managing the combined businesses out of several different locations and integrating personnel from the two companies, while at the same time attempting to provide consistent, high quality products and services under a unified culture; • the additional complexities of combining two companies with different histories, regulatory restrictions, markets and customer bases, and initiating this process before we have fully completed the integration of our operations with those of Embarq; • the failure to retain key employees of either of the two companies, some of whom could be critical to integrating the companies; • potential unknown liabilities and unforeseen increased expenses 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.

However, you should be aware that these practices are subject to change for reasons that may include any of the following factors: • we may not have enough cash to pay such dividends due to changes in our cash requirements, capital spending plans, cash flows or financial position; • decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of our board of directors, which reserves the right to change our dividend practices at any time and for any reason; • the effects of regulatory reform, including any changes to intercarrier compensation, Universal Service Fund or special access rules; • our desire to maintain or improve the credit ratings on our senior debt; • the amount of dividends that we may distribute to our shareholders is subject to restrictions under Louisiana law and 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 our subsidiaries may distribute to CenturyLink is subject to restrictions imposed by state law, restrictions that have been or may be imposed by state regulators in connection with obtaining necessary approvals for the Embarq merger and pending Qwest merger, and restrictions imposed by the terms of credit facilities applicable to certain subsidiaries and, potentially, the terms of any future indebtedness that these subsidiaries may incur.

Cautionary Statements Regarding Forward-Looking Statements This report and other documents filed by us under the federal securities laws include, and future oral or written statements or press releases by us and our management may include, certain forward-looking statements relating to CenturyLink or Qwest, the operations of either such company or our pending acquisition of Qwest, including without limitation statements with respect to CenturyLink’s or Qwest’s anticipated future operating and financial performance, financial position and liquidity, tax position, contingent liabilities, growth opportunities and growth rates, acquisition and divestiture opportunities, merger synergies, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives or accompanying statements of assumptions that are highlighted by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “projects,” “seeks,” “estimates,” “hopes,” “likely,” “should,” “could,” and “may,” and variations thereof and similar expressions.

Factors that could impact the actual results of CenturyLink or Qwest include but are not limited to: • the extent, timing, success and overall effects of competition from wireless carriers, VoIP and broadband providers, CLECs, cable television companies 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, disputes and proceedings that could impact our competitive position, revenues, compliance costs, capital expenditures or prospects, (iii) the effect of the National Broadband Plan, (iv) the reduction or elimination of revenues received from the federal Universal Service Fund or other current or future federal and state support programs designed to compensate communications companies operating in high-cost markets, (v) changes in the regulatory treatment of VoIP traffic, and (vi) changes in the regulation of special access; • our ability to effectively adjust to changes in the communications industry and changes in the composition of our markets and product mix caused by the Embarq merger and the pending Qwest merger; • the possibility that the anticipated benefits from the Embarq merger cannot be fully realized in a timely manner or at all, or that integrating Embarq’s operations into ours will be more difficult, disruptive or costly than anticipated; • our ability to (i) successfully complete our pending acquisition of Qwest, including timely receipt of the required regulatory approvals for the merger free of detrimental conditions, and (ii) timely realize the anticipated benefits of the transaction, including our ability after the closing to use the net operating losses of Qwest in the amounts projected; • 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 acquisition and the pending Qwest acquisition within the timeframes anticipated, 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 and broadband services, (ii) expand successfully our full array of service offerings to new or acquired markets and (iii) 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; • the inability of third parties to discharge their commitments to us; • the outcome of pending litigation in which CenturyLink, Embarq or Qwest is involved, including the KPNQwest litigation matters in which plaintiffs have sought, in the aggregate, billions of dollars in damages from Qwest; • our ability to pay a $2.90 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; • unanticipated increases in our capital expenditures; • our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; • our ownership of or access to technology that may be necessary for us to operate or expand our business; • 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; • uncertainties relating to the implementation of our business strategies, including 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 equipment failure, including potential network disruptions; • declines in the value of our business that result in non-cash earnings charges for goodwill impairment; • general worldwide economic conditions and related uncertainties; • 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 SEC; • the effects of more general factors, including without limitation: • changes in general industry and market conditions and growth rates • changes in labor conditions, including workforce levels and labor costs • changes in interest rates or other general national, regional or local economic conditions • changes in legislation, regulation or public policy, including changes that increase our tax rate • increases in capital, operating, medical, pension or administrative costs, or the impact of new business opportunities requiring significant up-front investments • changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis • failures in our internal controls that could result in inaccurate public disclosures or fraud • changes in our debt ratings • unfavorable outcomes of regulatory proceedings and investigations, including rate proceedings and tax audits • losses or unfavorable returns on our investments in other communications companies • delays in the construction of our networks • changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry (including those arising out of the FCC’s proposed rules regarding intercarrier compensation and the Universal Service Fund and the FCC’s related Notice of Proposed Rulemaking released on February 8, 2011); our ability to effectively adjust to changes in the communications industry and changes in the composition of our markets and product mix caused by our recent acquisitions; our ability to successfully integrate Embarq into our operations, including the possibility that the anticipated benefits from the Embarq merger cannot be fully realized in a timely manner or at all, or that integrating Embarq’s operations into ours will be more difficult, disruptive or costly than anticipated; our ability to successfully complete our pending acquisition of Qwest, including timely receiving all regulatory approvals and realizing the anticipated benefits of the transaction; our ability to effectively manage our expansion opportunities, including retaining and hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to pay a $2.90 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; unanticipated increases in our capital expenditures; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this report or other of our filings with the Securities and Exchange Commission, or SEC; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical, pension or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

Documents filed as a part of this report (1) The following Reports and 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, 2010, 2009 and 2008 Consolidated Statements of Comprehensive Income for the years ended December 31, 2010, 2009 and 2008 Consolidated Balance Sheets - December 31, 2010 and 2009 Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2010, 2009 and 2008 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.

10.3 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).

/s/ Glen F. Post, III Chief Executive Officer, Glen F. Post, III President and Director March 1, 2011 /s/ William A. Owens Chairman of the Board William A. Owens March 1, 2011 /s/ R. Stewart Ewing, Jr. Executive Vice President and R. Stewart Ewing, Jr. Chief Financial Officer March 1, 2011 /s/ Neil A. Sweasy Vice President and Controller Neil A. Sweasy March 1, 2011 /s/ Virginia Boulet Director Virginia Boulet March 1, 2011 /s/ Peter C. Brown Director Peter C. Brown March 1, 2011 /s/ Richard A. Gephardt Director Richard A. Gephardt March 1, 2011 /s/ W. Bruce Hanks Director W. Bruce Hanks March 1, 2011 /s/ Gregory J. McCray Director Gregory J. McCray March 1, 2011 /s/ C. G. Melville, Jr. Director March 1, 2011 C. G. Melville, Jr. /s/ Fred R. Nichols Director March 1, 2011 Fred R. Nichols /s/ Harvey P. Perry Director March 1, 2011 Harvey P. Perry /s/ Laurie A. Siegel Director March 1, 2011 Laurie A. Siegel /s/ Joseph R. Zimmel Director March 1, 2011 Joseph R. Zimmel SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYLINK, INC. For the years ended December 31, 2010, 2009 and 2008 (1) Customers’ accounts written-off, net of recoveries.

Potential difficulties that we may encounter in the integration process include the following: ● the inability to successfully combine our legacy business and Embarq’s business in a manner that permits us 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 revenues or opportunities as a result of current or potential customers or strategic partners of either of the two companies deciding to delay or forego business with the combined company; ● complexities associated with managing the combined businesses; ● integrating personnel from the two predecessor 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 as a result of the diversion of management’s attention caused by integrating the companies’ operations.

However, you should be aware that these practices are subject to change for reasons that may include any of the following factors: ● 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.

Cautionary Statements Regarding Forward-Looking Statements This Annual Report on Form 10-K and other documents filed by us under the federal securities laws include, and future oral or written statements or press releases by us and our management may include, certain forward-looking statements relating to the operations of our company, including without limitation statements with respect to our anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, acquisition and divestiture opportunities, merger synergies, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives or accompanying statements of assumptions that are highlighted by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “projects,” “seeks,” “estimates,” “hopes,” “should,” “could,” and “may,” and variations thereof and similar expressions.

Factors that could impact actual our results include but are not limited to: ■ 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, including switched access-related proceedings and legislation, that could impact our competitive position, revenues, compliance costs, capital expenditures or prospects, (iii) the effect of the National Broadband Plan, (iv) reductions in revenues received from the federal Universal Service Fund or other current or future federal and state support programs designed to compensate ILECs operating in high-cost markets, and (v) changes in the regulation of special access; ■ our ability to effectively adjust to changes in the communications industry; ■ the possibility that the anticipated benefits from the Embarq merger cannot be fully realized in a timely manner or at all, or that integrating Embarq’s operations into ours will be more difficult, disruptive or costly than anticipated; ■ our ability to effectively manage our expansion opportunities, including 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 acquisition 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; ■ the inability of third parties to discharge their commitments to us; ■ our ability to pay a $2.90 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; ■ unanticipated increases in our capital expenditures; ■ our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; ■ our ownership of or access to technology that may be necessary for us to operate or expand our business; ■ 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; ■ uncertainties relating to the implementation of our business strategies, including 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 equipment failure, including potential network disruptions; ■ 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: ▪ changes in general industry and market conditions and growth rates ▪ changes in labor conditions, including workforce levels and labor costs ▪ changes in interest rates or other general national, regional or local economic conditions ▪ changes in legislation, regulation or public policy, including changes that increase our tax rate ▪ increases in capital, operating, medical or administrative costs, or the impact of new business opportunities requiring significant up-front investments ▪ changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis ▪ failures in our internal controls that could result in inaccurate public disclosures or fraud ▪ changes in our debt ratings ▪ unfavorable outcomes of regulatory or legal proceedings and investigations, including rate proceedings and tax audits ▪ losses or unfavorable returns on our investments in other communications companies ▪ delays in the construction of our networks ▪ changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry (including those arising out of the FCC’s proposed rules regarding intercarrier compensation and the Universal Service Fund and the FCC’s National Broadband Plan scheduled to be released in the first quarter of 2010, each as described elsewhere herein); our ability to effectively adjust to changes in the communications industry; our ability to successfully integrate Embarq into our operations, including realizing the anticipated benefits of the transaction and retaining and hiring key personnel; our ability to effectively manage our expansion opportunities; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to pay a $2.90 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; unanticipated increases in our capital expenditures; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this report or other of our filings with the Securities and Exchange Commission; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

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, 2009, 2008 and Consolidated Statements of Comprehensive Income for the years ended December 31, 2009, 2008 and 2007 Consolidated Balance Sheets - December 31, 2009 and Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009, 2008 and 2007 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.

10.3 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).

Chief Executive Officer, /s/ Glen F. Post, III President and Director Glen F. Post, III March 1, 2010 /s/ William A. Owens Chairman of the Board William A. Owens March 1, 2010 Executive Vice President and /s/ R. Stewart Ewing, Jr. Chief Financial Officer R. Stewart Ewing, Jr. March 1, 2010 /s/ Neil A. Sweasy Vice President and Controller Neil A. Sweasy March 1, 2010 /s/ Virginia Boulet Director Virginia Boulet March 1, 2010 /s/ Peter C. Brown Director Peter C. Brown March 1, 2010 /s/ Richard A. Gephardt Director Richard A. Gephardt March 1, 2010 /s/ Thomas A. Gerke Director Thomas A. Gerke March 1, 2010 /s/ W. Bruce Hanks Director W. Bruce Hanks March 1, 2010 /s/ Gregory J. McCray Director Gregory J. McCray March 1, 2010 /s/ C. G. Melville, Jr. Director C. G. Melville, Jr. March 1, 2010 /s/ Fred R. Nichols Director Fred R. Nichols March 1, 2010 /s/ Harvey P. Perry Director Harvey P. Perry March 1, 2010 /s/ Stephanie M. Shern Director Stephanie M. Shern March 1, 2010 /s/ Laurie A. Siegel Director Laurie A. Siegel March 1, 2010 /s/ Joseph R. Zimmel Director Joseph R. Zimmel March 1, 2010 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYTEL, INC. For the years ended December 31, 2009, 2008 and 2007 (1) Customers’ accounts written-off, net of recoveries.

Potential difficulties the combined company may encounter in the integration process include the following: · 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.

However, you should be aware that our shareholders may not receive the same dividends for reasons that may include any of the following factors: · 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.

Cautionary Statements Regarding Forward-Looking Statements This report on Form 10-K and other documents filed by us under the federal securities laws include, and future oral or written statements or press releases by us and our management may include, certain forward-looking statements relating to CenturyTel or EMBARQ, the operations of either such company or our pending merger with EMBARQ, including without limitation statements with respect to CenturyTel’s or EMBARQ’s anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives or accompanying statements of assumptions that are highlighted by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “projects,” “seeks,” “estimates,” “hopes,” “should,” “could,” and “may,” and variations thereof and similar expressions.

Factors that could impact actual results of CenturyTel or EMBARQ, the combined company or the pending merger include but are not limited to: · 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: v changes in general industry and market conditions and growth rates v changes in labor conditions, including workforce levels and labor costs v changes in interest rates or other general national, regional or local economic conditions v changes in legislation, regulation or public policy, including changes in federal rural financing programs or changes that increase our tax rate v increases in capital, operating, medical or administrative costs, or the impact of new business opportunities requiring significant up-front investments v changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis v failures in our internal controls that could result in inaccurate public disclosures or fraud v changes in our debt ratings v unfavorable outcomes of regulatory or legal proceedings and investigations, including rate proceedings and tax audits v losses or unfavorable returns on our investments in other communications companies v delays in the construction of our networks v changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles, including the possible future discontinuance of Statement of Financial Accounting Standards No.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry (including the FCC’s proposed rules regarding intercarrier compensation and the Universal Service Fund described elsewhere herein); our ability to effectively adjust to changes in the communications industry; our ability to successfully complete our pending merger with EMBARQ, including timely receiving all regulatory approvals and realizing the anticipated benefits of the transaction; our ability to effectively manage our expansion opportunities, including successfully integrating newly-acquired businesses into our operations and retaining and hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to pay a $2.80 per common share dividend annually, which may be affected by changes in our cash requirements, capital spending plans, cash flows or financial position; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this report or other of our filings with the Securities and Exchange Commission; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

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 Consolidated Statements of Comprehensive Income for the years ended December 31, 2008, 2007 and 2006 Consolidated Balance Sheets - December 31, 2008 and Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 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.

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).

/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 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYTEL, INC. For the years ended December 31, 2008, 2007 and 2006 (1) Customers’ accounts written-off, net of recoveries.

Forward-Looking Statements This report on Form 10-K and other documents filed by us under the federal securities laws include, and future oral or written statements or press releases by us and our management may include, certain forward-looking statements, including without limitation statements with respect to our anticipated future operating and financial performance, financial position and liquidity, growth opportunities and growth rates, acquisition and divestiture opportunities, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on our financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives or accompanying statements of assumptions that are highlighted by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “projects,” “seeks,” “estimates,” “hopes,” “should,” “could,” and “may,” and variations thereof and similar expressions.

These uncertainties include but are not limited to those set forth below: · 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 the FCC’s regulations relating to interconnection and other matters, (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, 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 effectively manage our growth, including without limitation our ability to (i) effectively manage our expansion opportunities, including successfully integrating newly-acquired businesses into our operations, (ii) attract and retain technological, managerial and other key personnel, (iii) achieve projected growth, revenue and cost savings targets, 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 traditional telephone services caused by greater use of wireless or Internet communications or other factors and reduced demand for our access services · 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) expand successfully our long distance, Internet access and fiber transport service offerings to new or acquired markets and (iii) 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 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 network disruptions on our business · 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: \ changes in general industry and market conditions and growth rates \ changes in labor conditions, including workforce levels and labor costs \ changes in interest rates or other general national, regional or local economic conditions \ changes in legislation, regulation or public policy, including changes in federal rural financing programs or changes that increase our tax rate \ increases in capital, operating, medical or administrative costs, or the impact of new business opportunities requiring significant up-front investments \ changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis \ failures in our internal controls that could result in inaccurate public disclosures or fraud \ changes in our debt ratings \ unfavorable outcomes of regulatory or legal proceedings, including rate proceedings and tax audits \ losses or unfavorable returns on our investments in other communications companies \ delays in the construction of our networks \ changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles, including the possible future unavailability of Statement of Financial Accounting Standards No.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry; our ability to effectively manage our expansion opportunities, including successfully integrating newly-acquired businesses into our operations and retaining and hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this report or other of our filings with the Securities and Exchange Commission; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

Chairman of the Board and /s/ Glen F. Post, III Chief Executive Officer Glen F. Post, III February 29, Executive Vice President and /s/ R. Stewart Ewing, Jr. Chief Financial Officer R. Stewart Ewing, Jr. February 29, /s/ Neil A. Sweasy Vice President and Controller Neil A. Sweasy February 29, /s/ William R. Boles, Jr. Director William R. Boles, Jr. February 29, /s/ Virginia Boulet Director Virginia Boulet February 29, /s/ Calvin Czeschin Director Calvin Czeschin February 29, /s/ James B. Gardner Director James B. Gardner February 29, /s/ W. Bruce Hanks Director W. Bruce Hanks February 29, /s/ Gregory J. McCray Director Gregory J. McCray February 29, 2008 /s/ C. G. Melville, Jr. Director C. G. Melville, Jr. February 29, /s/ Fred R. Nichols Director Fred R. Nichols February 29, 2008 /s/ Harvey P. Perry Director Harvey P. Perry February 29, 2008 Director Jim D. Reppond February ___, /s/ Joseph R. Zimmel Director Joseph R. Zimmel February 29, SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYTEL, INC. For the years ended December 31, 2007, 2006 and 2005 (1) Customers’ accounts written-off, net of recoveries.

o the effects of more general factors, including without limitation: * changes in general industry and market conditions and growth rates * changes in labor conditions, including workforce levels and labor negotiations * changes in interest rates or other general national, regional or local economic conditions * changes in legislation, regulation or public policy, including changes in federal rural financing programs or changes that increase our tax rate * increases in capital, operating, medical or administrative costs, or the impact of new business opportunities requiring significant up-front investments * the continued availability of financing in amounts, and on terms and conditions, necessary to support our operations * changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis * changes in our senior debt ratings * unfavorable outcomes of regulatory or legal proceedings, including rate proceedings * losses or unfavorable returns on our investments in other communications companies * delays in the construction of our networks * changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry; the Company's ability to effectively manage its growth, including integrating newly-acquired businesses into the Company's operations and hiring adequate numbers of qualified staff; possible changes in the demand for, or pricing of, the Company's products and services; the Company's ability to successfully introduce new product or service offerings on a timely and cost-effective basis; the Company's ability to successfully take steps to mitigate the dilutive effect of the $500 million of equity units currently scheduled to settle in May 2005; other risks referenced from time to time in this report or other of the Company's filings with the Securities and Exchange Commission; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

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 controls over financial reporting Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements and Financial Statement Schedule Report of Independent Registered Public Accounting Firm on management's assessment of, and the effective operation of, internal controls over financial reporting Consolidated Statements of Income for the years ended December 31, 2004, 2003 and 2002 Consolidated Statements of Comprehensive Income for the years ended December 31, 2004, 2003 and 2002 Consolidated Balance Sheets - December 31, 2004 and 2003 Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2004, 2003 and 2002 Notes to Consolidated Financial Statements Consolidated Quarterly Income Statement Information (unaudited) (2) Schedule:* II Valuation and Qualifying Accounts * Those schedules not listed above are omitted as not applicable or not required.

Chairman of the Board and /s/ Glen F. Post, III Chief Executive Officer - --------------------------- Glen F. Post, III March 16, 2005 Executive Vice President and /s/ R. Stewart Ewing, Jr. Chief Financial Officer - --------------------------- R. Stewart Ewing, Jr. March 16, 2005 /s/ Neil A. Sweasy Vice President and Controller - --------------------------- Neil A. Sweasy March 16, 2005 /s/ William R. Boles, Jr. Director - --------------------------- William R. Boles, Jr. March 16, 2005 /s/ Virginia Boulet Director - --------------------------- Virginia Boulet March 16, 2005 /s/ Calvin Czeschin Director - --------------------------- Calvin Czeschin March 16, 2005 /s/ James B. Gardner Director - --------------------------- James B. Gardner March 16, 2005 /s/ W. Bruce Hanks Director - --------------------------- W. Bruce Hanks March 16, 2005 /s/ R. L. Hargrove, Jr. Director - --------------------------- R. L. Hargrove, Jr. March 16, 2005 /s/ Johnny Hebert Director - --------------------------- Johnny Hebert March 16, 2005 /s/ C. G. Melville, Jr. Director - --------------------------- C. G. Melville, Jr. March 16, 2005 /s/ Fred Nichols Director - --------------------------- Fred Nichols March 16, 2005 /s/ Harvey P. Perry Director - --------------------------- Harvey P. Perry March 16, 2005 /s/ Jim D. Reppond Director - --------------------------- Jim D. Reppond March 16, 2005 /s/ Joseph R. Zimmel Director - --------------------------- Joseph R. Zimmel March 16, 2005 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYTEL, INC. For the years ended December 31, 2004, 2003 and 2002 (1) Customers' accounts written-off, net of recoveries.

o the effects of more general factors, including without limitation: -- changes in general industry and market conditions and growth rates -- changes in labor conditions, including workforce levels and labor negotiations -- changes in interest rates or other general national, regional or local economic conditions -- changes in legislation, regulation or public policy, including changes in federal rural financing programs or changes that increase our tax rate -- increases in capital, operating, medical or administrative costs, or the impact of new business opportunities requiring significant up-front investments -- the continued availability of financing in amounts, and on terms and conditions, necessary to support our operations -- changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis -- changes in our senior debt ratings -- unfavorable outcomes of regulatory or legal proceedings, including rate proceedings -- losses or unfavorable returns on our investments in other communications companies -- delays in the construction of our networks -- changes in accounting policies, assumptions, estimates or practices adopted voluntarily or as required by generally accepted accounting principles.

Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry; the Company's ability to effectively manage its growth, including integrating newly-acquired businesses into the Company's operations, hiring adequate numbers of qualified staff, and successfully upgrading its billing and other information systems; possible changes in the demand for, or pricing of, the Company's products and services; the Company's ability to successfully introduce new product or service offerings on a timely and cost-effective basis; the Company's ability to collect its receivables from financially troubled communications companies; other risks referenced from time to time in this report or other of the Company's filings with the Securities and Exchange Commission; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy.

Chairman of the Board and /s/ Glen F. Post, III Chief Executive Officer - ---------------------------- Glen F. Post, III March 12, 2004 Executive Vice President and /s/ R. Stewart Ewing, Jr. Chief Financial Officer - ---------------------------- R. Stewart Ewing, Jr. March 12, 2004 /s/ Neil A. Sweasy Vice President and Controller - ---------------------------- Neil A. Sweasy March 12, 2004 /s/ William R. Boles, Jr. Director - ---------------------------- William R. Boles, Jr. March 12, 2004 /s/ Virginia Boulet Director - ---------------------------- Virginia Boulet March 12, 2004 Director - ---------------------------- Calvin Czeschin /s/ James B. Gardner Director - ---------------------------- James B. Gardner March 12, 2004 /s/ W. Bruce Hanks Director - ---------------------------- W. Bruce Hanks March 12, 2004 /s/ R. L. Hargrove, Jr. Director - ---------------------------- R. L. Hargrove, Jr. March 12, 2004 /s/ Johnny Hebert Director - ---------------------------- Johnny Hebert March 12, 2004 /s/ C. G. Melville, Jr. Director - ---------------------------- C. G. Melville, Jr. March 12, 2004 /s/ Fred Nichols Director - ---------------------------- Fred Nichols March 12, 2004 /s/ Harvey P. Perry Director - ---------------------------- Harvey P. Perry March 12, 2004 Director - ---------------------------- Jim D. Reppond /s/ Joseph R. Zimmel Director - ---------------------------- Joseph R. Zimmel March 12, 2004 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS CENTURYTEL, INC. For the years ended December 31, 2003, 2002 and 2001 (1) Customers' accounts written-off, net of recoveries.

December 31, 2002 December 31, 2001 - ------------------------------------------------------------------------------ Number of Percent of Number of Percent of State access lines access lines access lines access lines - ------------------------------------------------------------------------------ Wisconsin (1) 490,116 21% 498,331 28% Missouri (2) 478,207 20 130,651 7 Alabama 289,015 12 - - Arkansas 268,220 11 271,617 15 Washington 188,733 8 189,868 11 Michigan 112,713 5 114,643 6 Louisiana 104,408 4 104,043 6 Colorado 96,799 4 97,571 6 Ohio 84,452 4 84,636 5 Oregon 76,751 3 78,592 4 Montana 65,666 3 65,974 4 Texas 48,931 2 51,451 3 Minnesota 30,930 1 31,110 2 Tennessee 27,365 1 27,660 2 Mississippi 24,156 1 23,579 1 New Mexico 6,565 - 6,396 - Idaho 5,976 - 6,119 - Wyoming 5,494 - 5,408 - Indiana 5,468 - 5,490 - Iowa 2,099 - 2,072 - Arizona 1,986 - 1,937 - Nevada 514 - 495 - - ------------------------------------------------------------------------------ 2,414,564 100% 1,797,643 100% ============================================================================== (1) As of December 31, 2002 and 2001, approximately 61,060 and 61,990, respectively, of these lines are owned and operated by CenturyTel's 89%-owned affiliate.

o the effects of more general factors, including without limitation: * changes in general industry and market conditions and growth rates * changes in interest rates or other general national, regional or local economic conditions * changes in legislation, regulation or public policy, including changes in federal rural financing programs * unanticipated increases in capital, operating or administrative costs, or the impact of new business opportunities requiring significant up-front investments * the continued availability of financing in amounts, and on terms and conditions, necessary to support our operations * changes in our relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis * changes in our senior debt ratings * unfavorable outcomes of regulatory or legal proceedings, including rate proceedings and environmental proceedings * losses or unfavorable returns on our investments in other communications companies * delays in the construction of our networks * changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles.

Executive Vice President and /s/ R. Stewart Ewing, Jr. Chief Financial Officer - -------------------------- R. Stewart Ewing, Jr. March 27, 2003 Executive Vice President, Corporate Secretary, General Counsel, /s/ Harvey P. Perry Chief Administrative Officer - -------------------------- and Director Harvey P. Perry March 27, 2003 /s/ Neil A. Sweasy Vice President and Controller - -------------------------- Neil A. Sweasy March 27, 2003 /s/ William R. Boles, Jr. Director - -------------------------- William R. Boles, Jr. March 27, 2003 /s/ Virginia Boulet Director - -------------------------- Virginia Boulet March 27, 2003 /s/ Calvin Czeschin Director - -------------------------- Calvin Czeschin March 27, 2003 /s/ James B. Gardner Director - -------------------------- James B. Gardner March 27, 2003 /s/ W. Bruce Hanks Director - -------------------------- W. Bruce Hanks March 27, 2003 /s/ R. L. Hargrove, Jr. Director - -------------------------- R. L. Hargrove, Jr. March 27, 2003 /s/ Johnny Hebert Director - -------------------------- Johnny Hebert March 27, 2003 /s/ F. Earl Hogan Director - -------------------------- F. Earl Hogan March 27, 2003 /s/ C. G. Melville, Jr. Director - -------------------------- C. G. Melville, Jr. March 27, 2003 /s/ Jim D. Reppond Director - -------------------------- Jim D. Reppond March 27, 2003 /s/ Joseph R. Zimmel Director - -------------------------- Joseph R. Zimmel March 27, 2003 CERTIFICATIONS I, Glen F. Post, III, certify that: 1.

FORWARD-LOOKING STATEMENTS This report on Form 10-K and other documents filed by the Company under the federal securities laws include, and future oral or written statements or press releases of the Company and its management may include, certain forward-looking statements, including without limitation statements with respect to the Company's anticipated future operating and financial performance (including the impact of pending acquisitions), financial position and liquidity, growth opportunities and growth rates, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on the Company's financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives that are highlighted by words such as "expects," "anticipates," "intends," "plans," "believes," "projects," "seeks," "estimates," "hopes," "should," and "may," and variations thereof and similar expressions.

o the effects of ongoing changes in the regulation of the communications industry, including without limitation (i) changes as a result of the 1996 Act and other similar federal and state legislation and federal and state regulations enacted thereunder, (ii) greater than anticipated interconnection requests or competition in the Company's predominately rural local exchange telephone markets resulting therefrom, (iii) greater than anticipated reductions in revenues received from the Universal Service Fund or other current or future federal and state support funds designed to compensate LECs that provide services in high-cost markets, (iv) the final outcome of regulatory and judicial proceedings with respect to interconnection agreements, (v) future judicial or regulatory actions taken in response to the 1996 Act and (vi) future legislation or regulations addressing potential concerns about radio frequency emissions from wireless handsets and base stations, or the potential hazards of using wireless phones while driving motor vehicles.

o the effects of more general factors, including without limitation: + changes in general industry and market conditions and growth rates + changes in interest rates or other general national, regional or local economic conditions + changes in legislation, regulation or public policy, including changes in federal rural financing programs + unanticipated increases in capital, operating or administrative costs, or the impact of new business opportunities requiring significant up-front investments + the continued availability of financing in amounts, and on terms and conditions, necessary to support the Company's operations + changes in the Company's relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis + changes in the Company's senior debt ratings + unfavorable outcomes of regulatory or legal proceedings, including rate proceedings and environmental proceedings + losses or unfavorable returns on the Company's investments in other communications companies + delays in the construction of the Company's networks + changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles.

/s/ Clarke M. Williams - ---------------------------- Chairman of the Board Clarke M. Williams of Directors March 14, 2002 Vice Chairman of the /s/ Glen F. Post, III Board of Directors, - ---------------------------- President, and Chief Glen F. Post, III Executive Officer March 14, 2002 /s/ R. Stewart Ewing, Jr. - ---------------------------- Executive Vice President and R. Stewart Ewing, Jr. Chief Financial Officer March 14, 2002 /s/ Harvey P. Perry Executive Vice President, - ---------------------------- Chief Administrative Officer Harvey P. Perry and Director March 14, 2002 /s/ Neil A. Sweasy - ---------------------------- Vice President and Controller Neil A. Sweasy (Principal Accounting Officer) March 14, 2002 /s/ William R. Boles, Jr. - ---------------------------- William R. Boles, Jr. Director March 14, 2002 /s/ Virginia Boulet - ---------------------------- Virginia Boulet Director March 14, 2002 /s/ Ernest Butler, Jr. - --------------------------- Ernest Butler, Jr. Director March 14, 2002 /s/ Calvin Czeschin - --------------------------- Calvin Czeschin Director March 14, 2002 /s/ James B. Gardner - --------------------------- James B. Gardner Director March 14, 2002 /s/ W. Bruce Hanks - --------------------------- W. Bruce Hanks Director March 14, 2002 /s/ R. L. Hargrove, Jr. - --------------------------- R. L. Hargrove, Jr. Director March 14, 2002 /s/ Johnny Hebert - --------------------------- Johnny Hebert Director March 14, 2002 /s/ F. Earl Hogan - --------------------------- F. Earl Hogan Director March 14, 2002 /s/ C. G. Melville, Jr. - --------------------------- C. G. Melville, Jr. Director March 14, 2002 /s/ Jim D. Reppond - --------------------------- Jim D. Reppond Director March 14, 2002 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURYTEL, INC. (Parent Company) STATEMENTS OF INCOME See accompanying notes to condensed financial information of registrant.

FORWARD-LOOKING STATEMENTS This report on Form 10-K and other documents filed by the Company under the federal securities laws include, and future oral or written statements or press releases of the Company and its management may include, certain forward-looking statements, including without limitation statements with respect to the Company's anticipated future operating and financial performance (including the impact of pending acquisitions), financial position and liquidity, growth opportunities and growth rates, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on the Company's financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives that are highlighted by words such as "expects," "anticipates," "intends," "plans," "believes," "projects," "seeks," "estimates," "hopes," "should," and "may," and variations thereof and similar expressions.

o the effects of ongoing changes in the regulation of the communications industry, including without limitation (i) changes as a result of the 1996 Act and other similar federal and state legislation and federal and state regulations enacted thereunder, (ii) greater than anticipated interconnection requests or competition in the Company's predominately rural local exchange telephone markets resulting therefrom, (iii) greater than anticipated reductions in revenues received from the Universal Service Fund or other current or future federal and state support funds designed to compensate LECs that provide services in high-cost markets, (iv) the final outcome of regulatory and judicial proceedings with respect to interconnection agreements and access charge reforms, (v) future judicial or regulatory actions taken in response to the 1996 Act and (vi) future legislation or regulations addressing potential concerns about radio frequency emissions from wireless handsets and base stations, or the potential hazards of using wireless phones while driving motor vehicles.

o the effects of more general factors, including without limitation: - changes in general industry and market conditions and growth rates - changes in interest rates or other general national, regional or local economic conditions - changes in legislation, regulation or public policy, including changes in federal rural financing programs - unanticipated increases in capital, operating or administrative costs, or the impact of new business opportunities requiring significant up-front investments - the continued availability of financing in amounts, and on terms and conditions, necessary to support the Company's operations - changes in the Company's relationships with vendors, or the failure of these vendors to provide competitive products on a timely basis - changes in the Company's senior debt ratings - unfavorable outcomes of regulatory or legal proceedings, including rate proceedings and environmental proceedings - losses or unfavorable returns on the Company's investments in other communications companies - delays in the construction of the Company's networks - changes in accounting policies or practices adopted voluntarily or as required by generally accepted accounting principles.

Network access revenues increased $73.8 million (11.3%) in 2000 and $24.4 million (3.9%) in 1999 due to the following factors: 2000 1999 increase increase (decrease) (decrease) - -------------------------------------------------------------------------------- (Dollars in thousands) Acquisitions $ 75,938 17,645 Increased recovery from the federal Universal Service Fund ("USF") 15,753 8,193 Disposition of Alaska properties (23,348) (39,985) Partial recovery of increased operating costs through revenue sharing arrangements with other telephone companies, increased minutes of use, increased recovery from state support funds and return on rate base 3,637 19,524 Revision of prior year revenue settlement agreements 4,228 15,944 Other, net (2,414) 3,099 - -------------------------------------------------------------------------------- $ 73,794 24,420 ================================================================================ Other revenues - Other revenues include revenues related to (i) leasing, selling, installing, maintaining and repairing customer premise telecommunications equipment and wiring ("CPE services"), (ii) providing billing and collection services for long distance carriers and (iii) participating in the publication of local directories.

10.1 Qualified Employee Benefit Plans (a) Registrant's Employee Stock Ownership Plan and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995), amendment thereto dated July 15, 1996 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,1996), amendment thereto dated December 31, 1996 (incorporated by reference to Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), amendment thereto dated March 18, 1997 (incorporated by reference to Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998 (incorporated by reference to Exhibit 10.1 (a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998).

(b) Registrant's Stock Bonus Plan, PAYSOP and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated July 11, 1995 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(b) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995), amendment thereto dated July 15, 1996(incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996), and amendment thereto dated December 31, 1996 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998 (incorporated by reference to Exhibit 10.1(b) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998).

/s/ Clarke M. Williams - ---------------------------- Chairman of the Board Clarke M. Williams of Directors March 22, 2001 Vice Chairman of the /s/ Glen F. Post, III Board of Directors, - ---------------------------- President, and Chief Glen F. Post, III Executive Officer March 22, 2001 /s/ R. Stewart Ewing, Jr. Executive Vice President and - ---------------------------- Chief Financial Officer March 22, 2001 R. Stewart Ewing, Jr (Principal Accounting Officer) /s/ Harvey P. Perry Executive Vice President, - ---------------------------- Chief Administrative Officer Harvey P. Perry and Director March 22, 2001 /s/ William R. Boles, Jr. - ---------------------------- William R. Boles, Jr. Director March 22, 2001 /s/ Virginia Boulet - ---------------------------- Virginia Boulet Director March 22, 2001 /s/ Ernest Butler, Jr. - ---------------------------- Ernest Butler, Jr. Director March 22, 2001 /s/ Calvin Czeschin - ---------------------------- Calvin Czeschin Director March 22, 2001 /s/ James B. Gardner - ---------------------------- James B. Gardner Director March 22, 2001 /s/ W. Bruce Hanks - ---------------------------- W. Bruce Hanks Director March 22, 2001 /s/ R. L. Hargrove, Jr. - ---------------------------- R. L. Hargrove, Jr. Director March 22, 2001 /s/ Johnny Hebert - ---------------------------- Johnny Hebert Director March 22, 2001 /s/ F. Earl Hogan - ---------------------------- F. Earl Hogan Director March 22, 2001 /s/ C. G. Melville, Jr. - ---------------------------- C. G. Melville, Jr. Director March 22, 2001 /s/ Jim D. Reppond - ---------------------------- Jim D. Reppond Director March 22, 2001 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURYTEL, INC. (Parent Company) STATEMENTS OF INCOME See accompanying notes to condensed financial information of registrant.

FORWARD-LOOKING STATEMENTS This report on Form 10-K and other documents filed by the Company under the federal securities laws include, and future oral or written statements or press releases of the Company and its management may include, certain forward-looking statements, including without limitation statements with respect to the Company's anticipated future operating and financial performance (including the impact of pending acquisitions), financial position and liquidity, growth opportunities and growth rates, business prospects, regulatory and competitive outlook, investment and expenditure plans, investment results, financing opportunities and sources (including the impact of financings on the Company's financial position, financial performance or credit ratings), pricing plans, strategic alternatives, business strategies, and other similar statements of expectations or objectives that are highlighted by words such as "expects," "anticipates," "intends," "plans," "believes," "projects," "seeks," "estimates," "should," and "may," and variations thereof and similar expressions.

10.1 Employee Benefit Plans (a) Registrant's Employee Stock Ownership Plan and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995) and amendment thereto dated July 15, 1996 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996), and amendment thereto dated December 31, 1996 (incorp- orated by reference to Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendment thereto dated March 18, 1997 (incorporated by reference to Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998 (incorporated by reference to Exhibit 10.1 (a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998).

(b) Registrant's Stock Bonus Plan, PAYSOP and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated July 11, 1995 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(b) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995) and amendment thereto dated July 15, 1996 (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996), and amendment thereto dated December 31, 1996 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998 (incorpor- ated by reference to Exhibit 10.1 (b) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998).

/s/ Clarke M. Williams - ---------------------------- Chairman of the Board Clarke M. Williams of Directors March 15, 2000 Vice Chairman of the /s/ Glen F. Post, III Board of Directors, - ---------------------------- President, and Chief Glen F. Post, III Executive Officer March 15, 2000 /s/ R. Stewart Ewing, Jr. Executive Vice President and - ---------------------------- Chief Financial Officer R. Stewart Ewing, Jr (Principal Accounting Officer) March 15, 2000 /s/ Harvey P. Perry Executive Vice President, - ---------------------------- Chief Administrative Officer Harvey P. Perry and Director March 15, 2000 /s/ W. Bruce Hanks - ---------------------------- Vice President Strategic Issues W. Bruce Hanks and Director March 15, 2000 /s/ William R. Boles, Jr. - ---------------------------- William R. Boles, Jr. Director March 15, 2000 /s/ Virginia Boulet - ---------------------------- Virginia Boulet Director March 15, 2000 - ---------------------------- Ernest Butler, Jr. Director March 15, 2000 /s/ Calvin Czeschin - ---------------------------- Calvin Czeschin Director March 15, 2000 /s/ James B. Gardner - ---------------------------- James B. Gardner Director March 15, 2000 /s/ R. L. Hargrove, Jr. - ---------------------------- R. L. Hargrove, Jr. Director March 15, 2000 /s/ Johnny Hebert - ---------------------------- Johnny Hebert Director March 15, 2000 /s/ F. Earl Hogan - ---------------------------- F. Earl Hogan Director March 15, 2000 /s/ C. G. Melville, Jr. - ---------------------------- C. G. Melville, Jr. Director March 15, 2000 /s/ Jim D. Reppond - ---------------------------- Jim D. Reppond Director March 15, 2000 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURYTEL, INC. (Parent Company) STATEMENTS OF INCOME See accompanying notes to condensed financial information of registrant.

A one-percentage-point change in assumed health care cost rates would have the following effects: 1-Percentage 1-Percentage Point Increase Point Decrease - -------------------------------------------------------------------------------- (Dollars in thousands) Effect on total of service and interest cost components $ 1,012 (934) Effect on postretirement benefit obligation $ 9,884 (9,089) - -------------------------------------------------------------------------------- (9) Stockholders' Equity Common stock - At December 31, 1998, unissued shares of Century common stock were reserved as follows: December 31, 1998 - -------------------------------------------------------------------------------- (In thousands) Incentive compensation program 6,488 Acquisitions 4,825 Employee stock purchase plan 1,016 Conversion of convertible preferred stock 511 Other employee benefit plans 3,849 - -------------------------------------------------------------------------------- 16,689 ================================================================================ Under Century's Articles of Incorporation each share of common stock beneficially owned continuously by the same person since May 30, 1987 generally entitles the holder thereof to ten votes per share.

10.1 Employee Benefit Plans (a) Registrant's Employee Stock Ownership Plan and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995) and amendment thereto dated July 15, 1996 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996), and amendment thereto dated December 31, 1996 (incorporated by reference to Exhibit 10.5 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendment thereto dated March 18, 1997 (incorporated by reference to Exhibit 10.6 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998, included elsewhere herein.

(b) Registrant's Stock Bonus Plan, PAYSOP and Trust, as amended and restated December 30, 1994 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995), amendment thereto dated July 11, 1995 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995), amendment thereto dated January 26, 1996 (incorporated by reference to Exhibit 10.1(b) to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995) and amendment thereto dated July 15, 1996 (incorporated by reference to Exhibit 10.1 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996), and amendment thereto dated December 31, 1996 (incorporated by reference to Exhibit 10.4 to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997), and amendments thereto dated January 1, 1997 (incorporated by reference to Exhibit 10.2 to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997), and amendment thereto dated December 29, 1998, included elsewhere herein.

/s/ Clark M. Williams - ------------------------- Chairman of the Board Clarke M. Williams of Directors March 15, 1999 Vice Chairman of the /s/ Glen F. Post, III Board of Directors, - ------------------------- President, and Chief Glen F. Post, III Executive Officer March 15, 1999 /s/ R. Stewart Ewing, Jr. Senior Vice President - ------------------------- and Principal Financial R. Stewart Ewing, Jr and Accounting Officer March 15, 1999 /s/ Harvey P. Perry Senior Vice President, - ------------------------ General Counsel, Harvey P. Perry Secretary and Director March 15, 1999 /s/ W. Bruce Hanks Executive Vice President, - ------------------------ Chief Operating Officer W. Bruce Hanks and Director March 15, 1999 /s/ William R. Boles, Jr. - ------------------------ William R. Boles, Jr. Director March 15, 1999 /s/ Virginia Boulet - ------------------------ Virginia Boulet Director March 15,1999 /s/ Ernest Butler, Jr. - ------------------------- Ernest Butler, Jr. Director March 15, 1999 /s/ Calvin Czeschin - ------------------------ Calvin Czeschin Director March 15, 1999 /s/ James B. Gardner - ------------------------ James B. Gardner Director March 15, 1999 /s/ R. L. Hargrove, Jr. - ------------------------ R. L. Hargrove, Jr. Director March 15, 1999 /s/ Johnny Hebert - ------------------------ Johnny Hebert Director March 15, 1999 /s/ F. Earl Hogan - ------------------------ F. Earl Hogan Director March 15, 1999 /s/ C. G. Melville, Jr. - ------------------------ C. G. Melville, Jr. Director March 15, 1999 /s/ Jim D. Reppond - ------------------------ Jim D. Reppond Director March 15, 1999 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF INCOME See accompanying notes to condensed financial information of registrant.

Officer /s/ Harvey P. Perry Senior Vice President, March 17, 1997 - ------------------------- General Counsel, Harvey P. Perry Secretary and Director /s/ W. Bruce Hanks Senior Vice President - March 17, 1997 - ------------------------- Corporate Development W. Bruce Hanks and Strategy and Director /s/ Murray H. Greer Controller (Principal March 17, 1997 - ------------------------- Accounting Officer) Murray H. Greer /s/ William R. Boles, Jr. Director March 17, 1997 - ------------------------- William R. Boles, Jr. /s/ Virginia Boulet Director March 17, 1997 - ------------------------- Virginia Boulet /s/ Ernest Butler, Jr. Director March 17, 1997 - ------------------------- Ernest Butler, Jr. - ------------------------- Director Calvin Czeschin /s/ James B. Gardner Director March 17, 1997 - ------------------------- James B. Gardner /s/ R. L. Hargrove, Jr. Director March 17, 1997 - ------------------------- R. L. Hargrove, Jr. /s/ Johnny Hebert Director March 17, 1997 - ------------------------- Johnny Hebert /s/ F. Earl Hogan Director March 17, 1997 - ------------------------- F. Earl Hogan /s/ C. G. Melville, Jr. Director March 17, 1997 - ------------------------- C. G. Melville, Jr. /s/ Jim D. Reppond Director March 17, 1997 - ------------------------- Jim D. Reppond SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF INCOME SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) BALANCE SHEETS SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF CASH FLOWS SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (A) LONG-TERM DEBT The approximate annual debt maturities (including sinking fund requirements) for the five years subsequent to December 31, 1996 are as follows: 1997 - $ 5.1 million 1998 - $ 4.7 million 1999 - $ 4.3 million 2000 - $ 67.7 million 2001 - $ 5.1 million (B) GUARANTEES As of December 31, 1996, Century has guaranteed a promissory note for a subsidiary of $2.4 million, as well as the applicable interest and premium.

The table below sets forth certain information with respect to Century's access lines as of December 31, 1994: As indicated in the following table, Century has experienced growth in its telephone operations over the past several years, a substantial portion of which was attributable to acquisitions of other telephone companies and to the expansion of services: Year Ended or As of December 31, ----------------------------------------------------------------------- 1994 1993 1992 1991 ----------------------------------------------------------------------- (Dollars in thousands) Access lines 454,963 434,691 397,300 314,819 % Residential 79% 80 81 81 % Business 21% 20 19 19 Operating revenues $ 389,438 348,485 297,510 235,796 Capital expenditures $ 152,336 131,180 108,974 73,913 Future growth in telephone operations is expected to be derived from (i) acquiring additional telephone companies, (ii) providing service to new customers, (iii) upgrading existing customers to higher grades of service, (iv) increasing network usage and (v) providing additional services made possible by advances in technology and changes in regulation.

/s/ KPMG Peat Marwick LLP Shreveport, Louisiana February 6, 1995 CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Statements of Income Year ended December 31, ====================================================================== 1994 1993 1992 ---------------------------------------------------------------------- (Dollars in thousands, except per share amounts) OPERATING REVENUES Telephone $ 389,438 348,485 297,510 Mobile Communications 150,802 84,712 62,092 ---------------------------------------------------------------------- Total revenues 540,240 433,197 359,602 ---------------------------------------------------------------------- OPERATING EXPENSES Cost of sales and operating expenses 276,375 231,855 187,076 Depreciation and amortization 94,430 76,534 62,898 ---------------------------------------------------------------------- Total expenses 370,805 308,389 249,974 ---------------------------------------------------------------------- OPERATING INCOME 169,435 124,808 109,628 ---------------------------------------------------------------------- OTHER INCOME (EXPENSE) Interest expense (42,577) (30,149) (27,166) Income from unconsolidated cellular entities 15,698 6,626 1,692 Gain on sales of assets 15,877 1,661 3,985 Other income and expense 3,105 3,310 4,433 ---------------------------------------------------------------------- Total other income (expense) (7,897) (18,552) (17,056) ---------------------------------------------------------------------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 161,538 106,256 92,572 Income tax expense 61,300 37,252 32,599 ---------------------------------------------------------------------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 100,238 69,004 59,973 Cumulative effect of changes in accounting principles - - (15,668) ---------------------------------------------------------------------- NET INCOME $ 100,238 69,004 44,305 ====================================================================== PRIMARY EARNINGS PER SHARE : Before cumulative effect of changes in accounting principles $ 1.88 1.35 1.23 Cumulative effect of changes in accounting principles - - (.32) ---------------------------------------------------------------------- PRIMARY EARNINGS PER SHARE $ 1.88 1.35 .91 ====================================================================== FULLY DILUTED EARNINGS PER SHARE : Before cumulative effect of changes in accounting principles $ 1.80 1.32 1.22 Cumulative effect of changes in accounting principles - - (.31) ---------------------------------------------------------------------- FULLY DILUTED EARNINGS PER SHARE $ 1.80 1.32 .91 ====================================================================== DIVIDENDS PER COMMON SHARE $ .320 .310 .293 ====================================================================== See accompanying notes to consolidated financial statements.

CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Balance Sheets December 31, ========================================================================== 1994 1993 -------------------------------------------------------------------------- (Dollars in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,154 9,777 Accounts receivable Customers, less allowance for doubtful accounts of $2,360 and $1,473 40,824 34,438 Other 23,180 21,771 Materials and supplies, at average cost 7,090 4,418 Other 2,980 2,068 -------------------------------------------------------------------------- Total current assets 81,228 72,472 -------------------------------------------------------------------------- NET PROPERTY, PLANT AND EQUIPMENT 947,131 827,776 -------------------------------------------------------------------------- INVESTMENTS AND OTHER ASSETS Excess cost of net assets acquired, less accumulated amortization of $40,756 and $29,253 441,436 297,158 Other 173,458 121,984 -------------------------------------------------------------------------- Total investments and other assets 614,894 419,142 -------------------------------------------------------------------------- TOTAL ASSETS $1,643,253 1,319,390 ========================================================================== LIABILITIES AND EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 12,718 14,233 Notes payable to banks 158,000 165,700 Accounts payable 52,331 49,506 Accrued expenses and other current liabilities Salaries and benefits 17,884 15,990 Taxes 16,530 9,327 Interest 8,243 6,476 Other 9,237 5,162 Advance billings and customer deposits 11,725 9,312 -------------------------------------------------------------------------- Total current liabilities 286,668 275,706 -------------------------------------------------------------------------- LONG-TERM DEBT 518,603 364,433 -------------------------------------------------------------------------- DEFERRED CREDITS AND OTHER LIABILITIES 187,746 165,483 -------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock, $1.00 par value, authorized 100,000,000 shares, issued and outstanding 53,574,361 and 51,294,705 shares 53,574 51,295 Paid-in capital 319,235 262,294 Retained earnings 291,999 208,945 Unearned ESOP shares (16,840) (9,220) Preferred stock - non-redeemable 2,268 454 -------------------------------------------------------------------------- Total stockholders' equity 650,236 513,768 -------------------------------------------------------------------------- TOTAL LIABILITIES AND EQUITY $1,643,253 1,319,390 ========================================================================== See accompanying notes to consolidated financial statements.

CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Statements of Cash Flows Year ended December 31, ========================================================================= 1994 1993 1992 ------------------------------------------------------------------------- (Dollars in thousands) OPERATING ACTIVITIES Net income $ 100,238 69,004 44,305 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 103,591 85,209 70,367 Cumulative effect of changes in accounting principles - - 15,668 Income from unconsolidated cellular entities (15,698) (6,626) (1,692) Deferred income taxes 7,423 6,781 (1,427) Gain on sales of assets (15,877) (1,661) (3,985) Changes in current assets and current liabilities: Increase in accounts receivable (1,581) (7,026) (2,307) Increase (decrease) in accounts payable (2,383) 11,024 11,694 Increase (decrease) in other accrued taxes 8,347 (1,476) 3,115 Changes in other current assets and other current liabilities, net 6,543 2,135 7,434 Increase in other noncurrent liabilities 7,469 8,536 148 Other, net 1,732 854 3,004 ------------------------------------------------------------------------- Net cash provided by operating activities 199,804 166,754 146,324 ------------------------------------------------------------------------- INVESTING ACTIVITIES Payments for property, plant and equipment (200,776) (204,229) (140,057) Acquisitions, net of cash acquired (55,979) (37,116) (134,999) Note receivable (25,000) - - Investments in unconsolidated cellular entities (5,516) (3,605) (2,161) Distributions from unconsolidated cellular entities 5,969 1,587 395 Proceeds from sales of assets 10,475 - 5,049 Purchase of life insurance investment (7,664) (7,670) (6,160) Other, net (1,764) 2,361 6,771 ------------------------------------------------------------------------- Net cash used in investing activities (280,255) (248,672) (271,162) ------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from issuance of long-term debt 155,427 35,847 142,081 Payments of long-term debt (59,792) (32,564) (25,246) Notes payable, net (7,700) 88,285 13,115 Proceeds from issuance of common stock 4,814 3,529 8,776 Cash dividends paid (17,184) (15,735) (14,119) Other, net 2,263 2,562 (1,636) ------------------------------------------------------------------------- Net cash provided by financing activities 77,828 81,924 122,971 ------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,623) 6 (1,867) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 9,777 9,771 11,638 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 7,154 9,777 9,771 ========================================================================= See accompanying notes to consolidated financial statements.

(2) PROPERTY, PLANT AND EQUIPMENT Net property, plant and equipment at December 31, 1994 and 1993 was composed of the following: December 31, 1994 1993 ========================================================================== (Dollars in thousands) Telephone, at original cost Cable and wire $ 580,012 512,240 Central office 310,684 281,123 General support 91,722 85,303 Information origination/termination 21,478 36,925 Construction in progress 67,244 53,838 Other 5,356 10,020 -------------------------------------------------------------------------- 1,076,496 979,449 Accumulated depreciation (295,255) (288,479) -------------------------------------------------------------------------- 781,241 690,970 -------------------------------------------------------------------------- Mobile Communications, at cost Cell site 104,553 81,528 General support 34,235 22,974 Pagers - 3,166 Construction in progress 12,602 2,192 Other 915 3,392 -------------------------------------------------------------------------- 152,305 113,252 Accumulated depreciation (38,552) (27,736) -------------------------------------------------------------------------- 113,753 85,516 -------------------------------------------------------------------------- Other, at cost General support 81,932 77,011 Other 3,474 726 -------------------------------------------------------------------------- 85,406 77,737 Accumulated depreciation (33,269) (26,447) -------------------------------------------------------------------------- 52,137 51,290 -------------------------------------------------------------------------- Net property, plant and equipment $ 947,131 827,776 ========================================================================== Depreciation expense was $92.1 million, $78.0 million and $64.3 million in 1994, 1993 and 1992, respectively.

(3) LONG-TERM DEBT Long-term debt at December 31, 1994 and 1993 was composed of the following: December 31, 1994 1993 ========================================================================== (Dollars in thousands) Century 6.0% convertible debentures, due 2007 $ 115,000 115,000 8.25% senior notes, due 2024 100,000 - 9.4%* senior notes, due through 2004 65,000 69,600 7.75% senior notes, due 2004 50,000 - 7.2%* Employee Stock Ownership Plan commitment, due in installments through 2004 16,840 9,220 10.7%* notes, due in installments through 2006 975 1,245 -------------------------------------------------------------------------- Total Century 347,815 195,065 -------------------------------------------------------------------------- Subsidiaries First mortgage debt 5.8%* notes, payable to agencies of the United States government and cooperative lending associations, due in installments through 2026 166,175 158,998 7.4%* bonds, due in installments through 2002 7,094 11,699 Other debt 9.0%* notes, due in installments through 2020 8,632 8,633 7.8%* capital lease obligations, due in installments through 1997 1,605 4,271 -------------------------------------------------------------------------- Total subsidiaries 183,506 183,601 -------------------------------------------------------------------------- Total long-term debt 531,321 378,666 Less current maturities 12,718 14,233 -------------------------------------------------------------------------- Long-term debt, excluding current maturities $ 518,603 364,433 ========================================================================== * weighted average interest rate at December 31, 1994 The approximate annual debt maturities (including sinking fund requirements) for the five years subsequent to December 31, 1994 are as follows: 1995 - $12.7 million; 1996 - $43.7 million; 1997 - $13.6 million; 1998 - $11.4 million; and 1999 - $11.0 million.

(7) DEFERRED CREDITS AND OTHER LIABILITIES Deferred credits and other liabilities at December 31, 1994 and 1993 were composed of the following: December 31, 1994 1993 ========================================================================== (Dollars in thousands) Deferred federal and state income taxes $ 73,966 60,122 Accrued postretirement benefit costs 41,126 36,642 Regulatory liability - income taxes 31,278 36,111 Minority interest 22,585 10,504 Deferred investment tax credits 8,175 10,431 Other 10,616 11,673 -------------------------------------------------------------------------- $187,746 165,483 ========================================================================== (8) INCOME TAXES Income tax expense for the years ended December 31, 1994, 1993 and 1992 was allocated as follows: Year ended December 31, 1994 1993 1992 ========================================================================== (Dollars in thousands) Income before cumulative effect of changes in accounting principles $ 61,300 37,252 32,599 Cumulative effect of changes in accounting principles - - (8,272) -------------------------------------------------------------------------- Net tax expense in the consolidated statements of income 61,300 37,252 24,327 Stockholders' equity, primarily for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes (1,243) (800) (2,885) -------------------------------------------------------------------------- $ 60,057 36,452 21,442 ========================================================================== The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 1994 and 1993 were as follows: December 31, 1994 1993 ========================================================================= (Dollars in thousands) Deferred tax assets: Postretirement benefit costs $ 12,908 10,809 Net operating loss carryforwards of an acquired subsidiary 10,283 - Regulatory liability 10,948 12,011 Deferred compensation 2,676 2,522 Deferred investment tax credits 2,658 3,465 Other employee benefits 4,205 3,842 Other 2,556 630 ------------------------------------------------------------------------- Total gross deferred tax assets 46,234 33,279 Less valuation allowance (10,283) - ------------------------------------------------------------------------- Net deferred tax assets 35,951 33,279 ------------------------------------------------------------------------- Deferred tax liabilities: Property, plant and equipment, primarily due to depreciation differences (97,073) (84,159) Intercompany profits (3,497) (3,236) Other (9,347) (6,006) ------------------------------------------------------------------------- Total gross deferred tax liabilities (109,917) (93,401) ------------------------------------------------------------------------- Net deferred tax liability $(73,966) (60,122) ========================================================================= As a result of the acquisition of Celutel, Inc. ("Celutel") (see Note 16) the Company has $29.4 million of net operating loss carryforwards at December 31, 1994 which relate to various entities acquired.

Income tax expense attributable to income before cumulative effect of changes in accounting principles was as follows: Year ended December 31, 1994 1993 1992 ========================================================================= (Dollars in thousands) Federal Current $ 47,969 26,409 29,100 Deferred 5,703 6,133 (1,742) State Current 5,908 4,062 4,926 Deferred 1,720 648 315 ------------------------------------------------------------------------- $ 61,300 37,252 32,599 ========================================================================= The following is a reconciliation from the statutory federal income tax rate to the Company's effective income tax rate: Year ended December 31, 1994 1993 1992 ========================================================================== (Percentage of pre-tax income) Statutory federal income tax rate 35.0% 35.0 34.0 State income taxes, net of federal income tax benefit 3.0 2.9 3.7 Amortization of nondeductible excess cost of net assets acquired 2.1 1.2 2.0 Amortization of investment tax credits (1.4) (2.0) (2.3) Amortization of regulatory liability (1.2) (1.8) (2.6) Other, net .4 (.2) .4 -------------------------------------------------------------------------- Effective income tax rate 37.9% 35.1 35.2 ========================================================================== (9) POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS The Company sponsors defined benefit health care plans that provide postretirement medical, life and dental benefits to substantially all retired full-time employees.

In connection with these acquisitions, the following assets were acquired, liabilities assumed and common and preferred stock issued: Year ended December 31, 1994 1993 1992 ========================================================================== (Dollars in thousands) Property, plant and equipment $ 11,301 33,020 67,514 Excess cost of net assets acquired 152,239 85,251 113,913 Investment in unconsolidated cellular entities - 7,508 - Long-term debt (46,478) (18,609) (20,271) Deferred credits and other liabilities (5,706) (7,648) (9,652) Other assets and liabilities, excluding cash and cash equivalents (1,191) 5,766 4,970 Common stock issued (52,311) (68,172) (21,475) Preferred stock issued (1,875) - - -------------------------------------------------------------------------- Decrease in cash $ 55,979 37,116 134,999 ========================================================================== Century has consummated the disposition of various telephone and cellular operations, along with certain other assets, during the three years ended December 31, 1994.

Mobile Telephone Communications Total ========================================================================== (Dollars in thousands) Year ended December 31, 1994 -------------------------------------------------------------------------- Operating revenues $ 389,438 150,802 540,240 Depreciation and amortization $ 73,175 21,255 94,430 Operating income $ 137,992 31,443 169,435 Year ended December 31, 1993 -------------------------------------------------------------------------- Operating revenues $ 348,485 84,712 433,197 Depreciation and amortization $ 65,175 11,359 76,534 Operating income $ 114,902 9,906 124,808 Year ended December 31, 1992 -------------------------------------------------------------------------- Operating revenues $ 297,510 62,092 359,602 Depreciation and amortization $ 53,927 8,971 62,898 Operating income $ 103,672 5,956 109,628 ========================================================================== Year ended December 31, 1994 1993 1992 ========================================================================== (Dollars in thousands) Operating income $169,435 124,808 109,628 Interest expense (42,577) (30,149) (27,166) Income from unconsolidated cellular entities 15,698 6,626 1,692 Gain on sales of assets 15,877 1,661 3,985 Other income and expense 3,105 3,310 4,433 -------------------------------------------------------------------------- Income before income taxes and cumulative effect of changes in accounting principles $161,538 106,256 92,572 ========================================================================== Income before income taxes $161,538 106,256 76,904 ========================================================================== Capital expenditures Telephone $152,336 131,180 108,974 Mobile Communications $ 39,937 56,092 10,904 ========================================================================== Identifiable assets Telephone $1,053,950 969,388 803,901 Mobile Communications 430,777 224,913 141,522 General corporate 88,305 62,827 54,733 Other 70,221 62,262 40,331 -------------------------------------------------------------------------- Total assets $1,643,253 1,319,390 1,040,487 ========================================================================== (14) ACCOUNTING FOR THE EFFECTS OF REGULATION The Company's regulated telephone operations are subject to the provisions of Statement of Financial Accounting Standards No.

December 31, 1994 1993 ====================================================================== (Dollars in thousands) (unaudited) Assets Current assets $ 76,191 52,273 Property and other noncurrent assets 277,269 234,512 ---------------------------------------------------------------------- $ 353,460 286,785 ====================================================================== Liabilities and equity Current liabilities $ 48,144 47,814 Noncurrent liabilities 11,080 9,627 Equity 294,236 229,344 ---------------------------------------------------------------------- $ 353,460 286,785 ====================================================================== Year ended December 31, 1994 1993 1992 ====================================================================== (Dollars in thousands) (unaudited) Results of operations Revenues $ 329,907 236,230 151,978 Operating income $ 93,512 52,742 26,683 Income before cumulative effect of changes in accounting principles $ 92,446 53,617 29,148 Net income $ 92,446 53,607 25,971 ====================================================================== (19) COMMITMENTS AND CONTINGENCIES Construction expenditures and investments in vehicles, buildings and other work equipment during 1995 are estimated to be $112.0 million for telephone operations, $59.0 million for mobile communications operations and $12.0 million for other operations.

CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Quarterly Income Information (unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter ======================================================================== (Dollars in thousands, except per share amounts) ------------------------------------------------------------------------ Operating revenues $ 120,980 132,880 141,515 144,865 Operating income $ 35,886 41,713 45,781 46,055 Net income $ 19,201 21,485 24,613 34,939 Fully diluted earnings per share $ .35 .39 .44 .62 ======================================================================== ------------------------------------------------------------------------ Operating revenues $ 96,825 107,338 112,765 116,269 Operating income $ 28,267 31,343 33,477 31,721 Net income $ 15,740 16,517 17,596 19,151 Fully diluted earnings per share $ .31 .32 .33 .36 ======================================================================== Fully diluted earnings per share for the fourth quarter of 1994 includes $.16 per share of gain on the sales of assets; such increase in fully diluted earnings per share was partially offset by a decrease of $.03 per share related to cellular commissions incurred (during the fourth quarter of 1994 as compared to the average of the first three quarters of 1994) as a result of the significant increase in the number of cellular subscribers activated during the quarter.

Officer March 17, 1995 Senior Vice President, /s/ Harvey P. Perry Secretary, General Harvey P. Perry Counsel and Director March 17, 1995 /s/ W. Bruce Hanks President - Telecommunications W. Bruce Hanks Services and Director March 17, 1995 /s/ Murray H. Greer Controller (Principal Murray H. Greer Accounting Officer) March 17, 1995 /s/ William R. Boles, Jr. Director William R. Boles, Jr. March 17, 1995 /s/ Virginia Boulet Director Virginia Boulet March 17, 1995 /s/ Ernest Butler, Jr. Director Ernest Butler, Jr. March 17, 1995 /s/ Calvin Czeschin Director Calvin Czeschin March 17, 1995 /s/ James B. Gardner Director James B. Gardner March 17, 1995 /s/ R. L. Hargrove, Jr. Director R. L. Hargrove, Jr. March 17, 1995 /s/ Johnny Hebert Director Johnny Hebert March 17, 1995 /s/ F. Earl Hogan Director F. Earl Hogan March 17, 1995 /s/ C. G. Melville, Jr. Director C. G. Melville, Jr. March 17, 1995 /s/ Jim D. Reppond Director Jim D. Reppond March 17, 1995 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF INCOME Year ended December 31, ========================================================================= 1994 1993 1992 ------------------------------------------------------------------------- (Dollars in thousands) REVENUES $ 6,190 5,860 6,562 ------------------------------------------------------------------------- EXPENSES Operating expenses 5,400 6,014 6,281 Depreciation and amortization 6,603 5,877 4,086 ------------------------------------------------------------------------- Total expenses 12,003 11,891 10,367 ------------------------------------------------------------------------- OPERATING LOSS (5,813) (6,031) (3,805) ------------------------------------------------------------------------- OTHER INCOME (EXPENSE) Interest expense (34,463) (20,678) (18,630) Interest income 24,088 10,696 10,080 ------------------------------------------------------------------------- Total other income (expense) (10,375) (9,982) (8,550) ------------------------------------------------------------------------- LOSS BEFORE INCOME TAXES, CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES AND EQUITY IN SUBSIDIARIES' EARNINGS (16,188) (16,013) (12,355) Income tax benefit 3,205 5,037 2,173 ------------------------------------------------------------------------- LOSS BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES AND EQUITY IN SUBSIDIARIES' EARNINGS (12,983) (10,976) (10,182) Cumulative effect of changes in accounting principles - - 1,292 ------------------------------------------------------------------------- LOSS BEFORE EQUITY IN SUBSIDIARIES' EARNINGS (12,983) (10,976) (8,890) Equity in subsidiaries' earnings 113,221 79,980 53,195 ------------------------------------------------------------------------- NET INCOME $ 100,238 69,004 44,305 ========================================================================= SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) BALANCE SHEETS December 31, =========================================================================== 1994 1993 --------------------------------------------------------------------------- (Dollars in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,097 2,975 Receivables from subsidiaries 126,821 53,638 Other receivables 941 7,330 Prepayments and other 844 857 --------------------------------------------------------------------------- Total current assets 131,703 64,800 --------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT Property and equipment 932 1,192 Accumulated depreciation (524) (772) --------------------------------------------------------------------------- Net property, plant and equipment 408 420 --------------------------------------------------------------------------- INVESTMENTS AND OTHER ASSETS Investments in subsidiaries (at equity) 1,032,991 771,062 Receivables from subsidiaries 155,156 130,568 Note receivable 24,167 - Deferred charges and other 33,518 28,728 --------------------------------------------------------------------------- Total investments and other assets 1,245,832 930,358 --------------------------------------------------------------------------- TOTAL ASSETS $1,377,943 995,578 =========================================================================== LIABILITIES AND EQUITY CURRENT LIABILITIES Current maturities of long-term debt $ 5,481 4,450 Notes payable to banks 158,000 150,500 Payables to subsidiaries 155,551 93,540 Accrued interest 7,345 5,431 Other accrued liabilities 11,420 3,656 --------------------------------------------------------------------------- Total current liabilities 337,797 257,577 --------------------------------------------------------------------------- LONG-TERM DEBT 342,334 190,615 --------------------------------------------------------------------------- PAYABLES TO SUBSIDIARIES 34,197 25,696 --------------------------------------------------------------------------- DEFERRED CREDITS AND OTHER LIABILITIES 13,379 7,922 --------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock, $1.00 par value, authorized 100,000,000 shares, issued and outstanding 53,574,361 and 51,294,705 shares 53,574 51,295 Paid-in capital 319,235 262,294 Retained earnings 291,999 208,945 Unearned ESOP shares (16,840) (9,220) Preferred stock - non-redeemable 2,268 454 --------------------------------------------------------------------------- Total stockholders' equity 650,236 513,768 --------------------------------------------------------------------------- TOTAL LIABILITIES AND EQUITY $1,377,943 995,578 =========================================================================== SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) STATEMENTS OF CASH FLOWS Year ended December 31, =========================================================================== 1994 1993 1992 --------------------------------------------------------------------------- (Dollars in thousands) OPERATING ACTIVITIES Net income $ 100,238 69,004 44,305 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 6,603 5,877 4,086 Deferred income taxes 5,918 (451) 2,886 Earnings of subsidiaries (113,221) (79,980) (53,195) Cumulative effect of changes in accounting principles - - (1,292) Gain on sale of subsidiary - - (641) Changes in current assets and current liabilities: (Increase) decrease in other receivables 7,078 (6,692) (500) Increase in other accrued liabilities 5,063 1,203 1,075 Change in other current assets and other current liabilities, net 6,014 102 3,806 Other, net 766 1,934 635 --------------------------------------------------------------------------- Net cash provided by (used in) operating activities 18,459 (9,003) 1,165 --------------------------------------------------------------------------- INVESTING ACTIVITIES Acquisitions (55,979) (33,209) (135,131) Capital contributions to subsidiaries (47,516) (16,819) (14,881) Dividends received from subsidiaries 3,841 908 12,030 Increase in receivables from subsidiaries (98,917) (13,024) (6,020) Increase in payables to subsidiaries 70,512 23,848 20,471 Note receivable (25,000) - - Purchase of Industrial Development Revenue bonds - (19,000) - Other, net (3,292) (2,893) 9,932 --------------------------------------------------------------------------- Net cash used in investing activities (156,351) (60,189) (113,599) --------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from issuance of long-term debt 147,754 - 112,987 Payments of long-term debt (4,870) (6,697) (10,118) Notes payable, net 7,500 88,500 14,700 Proceeds from issuance of common stock 4,814 3,529 8,776 Cash dividends paid (17,184) (15,735) (14,119) --------------------------------------------------------------------------- Net cash provided by financing activities 138,014 69,597 112,226 --------------------------------------------------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 122 405 (208) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,975 2,570 2,778 --------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,097 2,975 2,570 =========================================================================== SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued) CENTURY TELEPHONE ENTERPRISES, INC. (Parent Company) NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT (A) LONG-TERM DEBT The approximate annual debt maturities (including sinking fund requirements) for the five years subsequent to December 31, 1994 are as follows: 1995- $5.5 million 1996- $35.5 million 1997- $5.0 million 1998- $4.7 million 1999- $4.3 million (B) GUARANTEES As of December 31, 1994, Century has guaranteed a promissory note for a subsidiary of $2.7 million, as well as the applicable interest and premium.

Year ended December 31, 1993 1992 1991 ================================================================== (expressed in thousands, except per share amounts) Operating income (loss) Telephone $ 114,902 103,672 80,039 Mobile Communications 9,906 5,956 (4,952) __________________________________________________________________ 124,808 109,628 75,087 Interest expense (30,149) (27,166) (22,504) Earnings from unconsolidated cellular partnerships 6,626 1,692 697 Gain on sales of assets 1,661 3,985 - Other income, net 3,310 4,433 4,209 Income tax expense (37,252) (32,599) (20,070) __________________________________________________________________ Income before cumulative effect of changes in accounting principles 69,004 59,973 37,419 Cumulative effect of changes in accounting principles - (15,668) - __________________________________________________________________ Net income $ 69,004 44,305 37,419 ================================================================== Fully diluted earnings per share: Income before cumulative effect of changes in accounting principles $ 1.32 1.22 .79 Cumulative effect of changes in accounting principles - (.31) - __________________________________________________________________ Fully diluted earnings per share $ 1.32 .91 .79 ================================================================== The operating income of the telephone segment includes the operations, subsequent to each respective acquisition, of Century Telephone of San Marcos, Inc. ("San Marcos"), acquired in April 1993; Century Telephone of Ohio, Inc. ("Ohio"), acquired in April 1992; and two other local exchange telephone companies collectively with Ohio the "1992 Acquisitions") acquired during the first quarter of 1992.

The following chart illustrates this trend: Year ended December 31, 1993 1992 1991 ================================================================== Telephone Operations: Revenues (% of total revenues) 80.4% 82.7 83.5 Operating income (% of total operating income) 92.1% 94.6 106.6 Mobile Communications Operations: Revenues (% of total revenues) 19.6% 17.3 16.5 Operating income (% of total operating income) 7.9% 5.4 (6.6) ================================================================== TELEPHONE OPERATIONS 1993 1992 1991 ================================================================== (expressed in thousands) Revenues Local service $ 88,704 78,108 58,653 Network access and long distance 217,055 182,711 145,279 Other 42,726 36,691 31,864 __________________________________________________________________ 348,485 297,510 235,796 __________________________________________________________________ Expenses Plant operations 80,578 66,878 52,546 Customer operations 32,225 26,242 19,502 Corporate and other 55,605 46,791 39,227 Depreciation and amortization 65,175 53,927 44,482 __________________________________________________________________ 233,583 193,838 155,757 __________________________________________________________________ Operating income $ 114,902 103,672 80,039 ================================================================== Telephone revenues increased $50,975,000 (17.1%) in 1993 and $61,714,000 (26.2%) in 1992.

Network Access and Long Distance Revenues Network access and long distance revenues increased $34,344,000 (18.8%) in 1993 and $37,432,000 (25.8%) in 1992 due to the following factors: 1993 1992 ================================================================== (expressed in thousands) San Marcos acquisition $ 11,279 - 1992 Acquisitions 8,458 13,687 Partial recovery of increased operating expenses through revenue pools in which the Company participates with other telephone companies and return on rate base 7,326 9,931 Increased recovery as a result of additional investment and phase-in of the Federal Communications Commission ("FCC") mandated Universal Service Fund 6,161 7,040 Increased minutes of use 3,444 3,607 Other (2,324) 3,167 __________________________________________________________________ $ 34,344 37,432 ================================================================== Network access and long distance revenues primarily relate to services provided to interexchange carriers (long distance carriers) in connection with the completion of long distance telephone calls.

KPMG PEAT MARWICK Shreveport, Louisiana February 4, 1994 CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Statements of Income Year ended December 31, ================================================================== 1993 1992 1991 __________________________________________________________________ (expressed in thousands, except per share amounts) REVENUES Telephone $348,485 297,510 235,796 Mobile Communications Cellular 80,513 57,683 41,515 Paging 4,199 4,409 5,216 __________________________________________________________________ Total revenues 433,197 359,602 282,527 __________________________________________________________________ EXPENSES Cost of sales and operating expenses 231,855 187,076 155,200 Depreciation and amortization 76,534 62,898 52,240 __________________________________________________________________ Total expenses 308,389 249,974 207,440 __________________________________________________________________ OPERATING INCOME 124,808 109,628 75,087 __________________________________________________________________ OTHER INCOME (EXPENSE) Interest expense (30,149) (27,166) (22,504) Earnings from unconsolidated cellular partnerships 6,626 1,692 697 Gain on sales of assets 1,661 3,985 - Other income, net 3,310 4,433 4,209 __________________________________________________________________ Total other income (expense) (18,552) (17,056) (17,598) __________________________________________________________________ INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 106,256 92,572 57,489 INCOME TAXES 37,252 32,599 20,070 __________________________________________________________________ INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES 69,004 59,973 37,419 CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES - (15,668) - __________________________________________________________________ NET INCOME $69,004 44,305 37,419 ================================================================== PRIMARY EARNINGS PER SHARE : Income before cumulative effect of changes in accounting principles $ 1.35 1.23 .79 Cumulative effect of changes in accounting principles - (.32) - __________________________________________________________________ PRIMARY EARNINGS PER SHARE $ 1.35 .91 .79 ================================================================== FULLY DILUTED EARNINGS PER SHARE : Income before cumulative effect of changes in accounting principles $ 1.32 1.22 .79 Cumulative effect of changes in accounting principles - (.31) - __________________________________________________________________ FULLY DILUTED EARNINGS PER SHARE $ 1.32 .91 .79 ================================================================== DIVIDENDS PER COMMON SHARE $ .310 .293 .287 ================================================================== See accompanying notes to consolidated financial statements.

CENTURY TELEPHONE ENTERPRISES, INC. Consolidated Balance Sheets December 31, =================================================================== 1993 1992 ___________________________________________________________________ (expressed in thousands) ASSETS CURRENT ASSETS Cash and cash equivalents $ 9,777 9,771 Accounts receivable Customers, less allowance for doubtful accounts of $1,473,000 and $960,000 34,438 28,436 Other 21,771 14,111 Materials and supplies, at cost 4,418 4,512 Other 2,068 3,226 ___________________________________________________________________ Total current assets 72,472 60,056 ___________________________________________________________________ PROPERTY, PLANT AND EQUIPMENT Telephone, at original cost 979,449 871,383 Accumulated depreciation (288,479) (280,242) ___________________________________________________________________ 690,970 591,141 ___________________________________________________________________ Mobile Communications, at cost 113,252 71,926 Accumulated depreciation (27,736) (27,613) ___________________________________________________________________ 85,516 44,313 ___________________________________________________________________ Other, at cost 77,737 61,110 Accumulated depreciation (26,447) (20,686) ___________________________________________________________________ 51,290 40,424 ___________________________________________________________________ Net property, plant and equipment 827,776 675,878 ___________________________________________________________________ INVESTMENTS AND OTHER ASSETS Excess cost of net assets acquired, less accumulated amortization of $29,253,000 and $21,975,000 297,158 217,688 Other investments 98,142 67,478 Deferred charges 23,842 19,387 ___________________________________________________________________ Total investments and other assets 419,142 304,553 ___________________________________________________________________ TOTAL ASSETS $1,319,390 1,040,487 =================================================================== See accompanying notes to consolidated financial statements.