CenturyLink Reports Fourth Quarter And Full-Year 2012 Earnings

Wed Feb 13, 2013 4:07pm EST

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Achieved fourth quarter operating revenues of $4.58 billion and full-year
operating revenues of $18.4 billion, in line with guidance
MONROE, La.,  Feb. 13, 2013  /PRNewswire/ -- CenturyLink, Inc. (NYSE: CTL) today
reported solid operating revenues, operating cash flow and free cash flow for
fourth quarter and full-year 2012.  

(Logo:  http://photos.prnewswire.com/prnh/20090602/DA26511LOGO)  

"We are pleased with our fourth quarter and full-year results, which reflect the
continued execution of our strategy to focus on investing in our key growth
drivers to further stabilize our top-line revenue while aligning our operating
costs with revenue and growth opportunities. Our investments in broadband,
PrismTM  TV, fiber-to-the-tower and data hosting continue to provide a broad
base of organic revenue growth opportunities and helped drive pro forma
full-year operating revenue improvement to a 1.7% decline in 2012 compared to a
3.8% decline a year ago," said  Glen F. Post, III, chief executive officer and
president.

"We realized solid strategic data and hosting revenue growth during 2012 driven
by strong demand from our business customers for high bandwidth data services,
colocation and managed services, including cloud. The December commercial launch
of our new savvisdirect product, which meets the increasing demand for a
simplified approach to cloud computing, reflects the combined strength of our
strategic asset portfolio and employee innovation.

"We remain focused on delivering innovative communications and hosted IT
solutions that meet the needs of customers, and we continue to expect further
improvement in our top-line revenue trend this year and to reach revenue
stabilization in 2014," Post concluded.

Fourth Quarter Highlights

* Improved year-over-year revenue trend to a 1.5% rate of decline compared to a
3.2% decline in fourth quarter 2011.  
* Achieved free cash flow of  $610 million, excluding special items and
integration-related capital expenditures.  
* Ended fourth quarter 2012 with approximately 5.85 million high-speed Internet
subscribers2; adding more than 41,000 customers in the fourth quarter.  
* Improved access line loss trend during fourth quarter 2012 to a 5.7% annual
decline compared to a 6.6% annual decline in fourth quarter 2011.  
* Added more than 10,000 CenturyLink® PrismTM  TV subscribers in fourth quarter
2012, ending the quarter with nearly 115,000 subscribers in service.  
* Generated sequential recurring revenue growth in our Enterprise Markets -
Network segment.  
* Opened a new data center3  in  Frankfurt, Germany, bringing total data centers
to 54 throughout  North America,  Europe  and  Asia, with total sellable floor
space of approximately 1.4 million square feet.

Consolidated Fourth Quarter Financial Results

Operating revenues  for fourth quarter 2012 were  $4.58 billion  compared to 
$4.65 billion  in fourth quarter 2011. This decrease was driven by lower legacy
services revenues primarily due to the impact of access line losses and lower
access revenues, partially offset by increases in strategic revenues resulting
primarily from strong business customer demand for high-bandwidth data services,
colocation and managed hosting services and growth in high-speed Internet and
CenturyLink® PrismTM  TV subscribers.  

Operating expenses, excluding special items, decreased to  $3.89 billion  from 
$4.06 billion  in fourth quarter 2011. The year-over-year decrease was primarily
due to lower personnel-related costs, professional fees and depreciation and
amortization expense, which were partially offset by higher colocation and
managed hosting expense and network costs.

Operating cash flow  (as defined in our attached supplemental schedules),
excluding special items, increased to  $1.91 billion  from  $1.85 billion  in
fourth quarter 2011. This increase was primarily the result of lower
personnel-related costs and professional fees being partially offset by the
impact of the decline in legacy revenues. For fourth quarter 2012, CenturyLink
achieved an operating cash flow margin, excluding special items, of 41.7% versus
39.7% in fourth quarter 2011.  

Adjusted Net Income and Adjusted Diluted Earnings Per Share (Adjusted Diluted
EPS)

Adjusted Net Income and Adjusted Diluted EPS exclude the after-tax impact of
special items, the non-cash after-tax impact of the amortization of intangibles,
and the non-cash after-tax impact to interest expense of the assignment of fair
value to debt outstanding related to our Embarq, Qwest and Savvis acquisitions.

Excluding the items outlined above, CenturyLink's Adjusted Net Income for fourth
quarter 2012 was  $415 million  compared to Adjusted Net Income of  $343 million
 in fourth quarter 2011. Fourth quarter 2012 Adjusted Diluted EPS was  $0.67 
compared to Adjusted Diluted EPS of  $0.55  in the year-ago period. See the
attached schedules for additional information.

Full-Year Results

For the full-year 2012, operating revenues increased to  $18.4 billion  from 
$15.4 billion  for 2011. Operating cash flow, excluding special items, was  $7.7
billion  for 2012 compared to  $6.5 billion  in 2011. Net income, excluding
special items, was  $947 million  in 2012 compared to  $867 million  in 2011.
Full year 2012 earnings per share, excluding special items, was  $1.52  compared
to  $1.62  for the prior year. The decrease in 2012 earnings per share compared
to 2011 is due to a higher average share count in 2012. Full-year 2011 results
include Qwest and Savvis operations from the  April 1, 2011  and  July 15, 2011 
transaction closing dates, respectively.

Full-year 2012 operating revenues of  $18.4 billion  declined 1.7% from
operating revenues of  $18.7 billion  for pro forma full-year 20114. Operating
cash flow, excluding special items, was  $7.7 billion  for 2012 compared to 
$7.8 billion  in pro forma 2011. Adjusted Net Income, excluding special items,
was  $1.66 billion  in 2012 compared to  $1.63 billion  in pro forma 2011.
Adjusted Diluted EPS, excluding special items, was  $2.67  in 2012 compared to 
$2.64  for pro forma 2011. The decline in operating revenues and operating cash
flow was driven by growth in lower-margin strategic revenues being more than
offset by a reduction in higher-margin legacy voice and access revenues.

GAAP Results - Fourth Quarter and Full-Year

Under generally accepted accounting principles (GAAP), net income for fourth
quarter 2012 was  $233 million  compared to  $109 million  for fourth quarter
2011, and diluted earnings per share for fourth quarter 2012 was  $0.37 
compared to  $0.18  for fourth quarter 2011. Fourth quarter 2012 net income and
diluted earnings per share reflect after-tax integration, severance, and
retention costs associated with the Qwest and Savvis acquisitions and costs
associated with reduction in force initiatives partially offset by a gain on the
sale of non-operating investments and the early retirement of debt, which
aggregated  $7 million  ($0.01  per share). Fourth quarter 2011 net income and
diluted earnings per share reflect after-tax integration, severance, and
retention costs associated with the Embarq, Qwest and Savvis acquisitions and
costs associated with the early retirement of Qwest Corporation debt, which
aggregated  $42 million  ($0.07  per share).

Net income under GAAP for full-year 2012 was  $777 million  compared to  $573
million  for full-year 2011, and diluted earnings per share for full-year 2012
was  $1.25  compared to  $1.07  for full-year 2011. For details regarding the
Company's special items for the three and twelve months ended  December 31, 2012
 and 2011, please see the accompanying financial schedules.

Segment Results / Highlights  

Regional Markets  

The Regional Markets segment realized continued strategic revenue growth driven
by increased high-speed Internet and CenturyLink® PrismTM  TV subscribers and
higher revenue from strategic business data services.

* Strategic revenues were  $914 million  in the quarter, a 3.6% increase over
fourth quarter 2011.  
* Generated  $2.45 billion  in total revenues, a decrease of 3.9% from fourth
quarter 2011, reflecting the continued decline in legacy services tempered by
the impact of Access Recovery Charges implemented effective  July 1, 2012  in
accordance with the CAF Order5.  
* Added more than 10,000 CenturyLink® PrismTM  TV subscribers during fourth
quarter with more than 90% attachment rate of broadband services.

Wholesale Markets  

The Wholesale Markets segment completed approximately 1,175 fiber-to-the-tower
builds during the fourth quarter, ending the year with more than 14,700
fiber-connected towers.

* Strategic revenues of  $572 million  in the quarter increased slightly
compared to fourth quarter 2011, as wireless carrier bandwidth expansion and
higher Ethernet sales offset declines in copper-based revenue.  
* Generated  $908 million  in total revenues, a decrease of 5.5% from fourth
quarter 2011, reflecting the continued decline in legacy revenues primarily
driven by the implementation of access rate reductions effective  July 1, 2012 
in accordance with the CAF Order5  and lower long distance and switched access
minutes of use.  
* Completed more than 4,500 fiber builds in 2012 and expect to complete 4,000 to
5,000 fiber builds in 2013.

Enterprise Markets - Network  

The Enterprise Markets - Network segment achieved solid growth in recurring
revenue sales in the fourth quarter and continues to experience solid sales
momentum from enterprise and government customers.

* Strategic revenues were  $346 million  in the quarter, a 7.8% increase over
fourth quarter 2011, driven by strength in high-bandwidth offerings such as
MPLS6  and Ethernet services. Excluding the impact of private line services, the
adjusted growth rate was nearly 13%.  
* Generated  $671 million  in total revenues, an increase of 5.7% from fourth
quarter 2011, reflecting growth in high-bandwidth offerings and data integration
revenues.  
* Achieved recurring revenue growth of 4.5% year-over-year and the fourth
straight sequential quarter of recurring revenue growth.

Enterprise Markets - Data Hosting  

The Enterprise Markets - Data Hosting segment (primarily Savvis operations) grew
managed hosting (including cloud) and colocation services revenue, with strength
in core managed hosting products and in the financial and consumer brands
verticals.

* Operating revenues were  $292 million  in the quarter, a 12.7% increase from
fourth quarter 2011. Colocation revenues were  $114 million, a 9.6% increase
from fourth quarter 2011, and managed hosting revenues were  $120 million,
representing a 21.2% increase over the same period a year ago. Managed hosting
revenues include approximately  $13 million  of revenues contributed by the
Ciber global IT outsourcing, or ITO, assets acquired  October 15, 2012.  
* Continued to expand global geographic reach in key markets with opening of new
data center in  Frankfurt, Germany.  
* Achieved strong bookings in fourth quarter -the highest quarterly bookings
level in four years.  
* Launched savvisdirect7, expanding CenturyLink's portfolio of cloud services to
businesses of all sizes and announced the limited release of Savvis Symphony
Cloud Storage and the availability of Savvis Symphony Database in  Europe.

Integration Update  

During fourth quarter 2012, CenturyLink incurred pre-tax integration, severance
and retention costs of  $14 million  ($9 million  after-tax) related to the
Qwest and Savvis acquisitions.

CenturyLink ended 2012 with an annualized operating expense synergy run rate of
approximately  $480 million  from the Qwest acquisition. Based on current
expectations, CenturyLink anticipates exiting 2013 with approximately  $600
million  in annual run-rate synergies related to the Qwest acquisition.  

Changes in Capital Allocation Strategy

We have announced today certain capital allocation initiatives. Please see
separate press release for further detail.

Guidance - First Quarter 2013 and Full-Year 2013

The Company expects first quarter 2013 revenue and operating cash flow to
decrease compared to fourth quarter 2012 primarily due to the decline in legacy
and data integration revenues. The Company also anticipates a decline in
depreciation and amortization expense in the first quarter of 2013 driven
primarily by the impact of the annual review and update of depreciation and
amortization rates. This anticipated lower level of depreciation and
amortization expense is expected to more than offset the decrease in operating
cash flow and result in an increase in Adjusted Diluted EPS in first quarter
2013 compared to fourth quarter 2012.

CenturyLink anticipates full-year 2013 operating cash flow and free cash flow to
decline from full-year 2012 primarily driven by the impact of the decline in
legacy revenues, along with a lower level of incremental synergies in 2013
compared to the level of incremental synergies achieved in 2012. The Company
also anticipates a decline in depreciation and amortization expense for
full-year 2013 compared to full-year 2012.

 First Quarter 2013                                                        
                                                                          
 Operating Revenue                           $4.46 to $4.51 billion       
 Operating Cash Flow (excl special items)    $1.83 to $1.88 billion       
 Adjusted Diluted EPS (excl special items)   $0.67 to $0.72               
                                                                          
 Full-Year 2013                                                           
                                                                          
 Operating Revenue                           $18.1 to $18.3 billion       
 Annual percent change in Operating Revenue  -0.5% to -1.5%               
 Operating Cash Flow (excl special item(s)   $7.3 to $7.5 billion         
 Adjusted Diluted EPS (excl special items)   $2.50 to $2.70               
 Capital Expenditures8                       $2.8 to $3.0 billion         
 Free Cash Flow (excl special items)         $3.0 to $3.2 billion         


All 2013 guidance figures and 2013 outlook statements included in this release
(i) speak as of  February 13, 2013  only, (ii) include the impact of the Ciber
ITO assets acquired on  October 15, 2012, (iii) exclude the potential impact of
our stock buyback program separately announced today and (iv) exclude the
effects of special items, future changes in regulation or accounting rules,
integration expenses associated with the Qwest and Savvis acquisitions, any
changes in operating or capital plans, the impact of litigation expenses or
other unforeseen events or circumstances that impact our financial performance,
and any future mergers, acquisitions, divestitures or other similar business
transactions. See "Forward Looking Statements" below. For additional information
on how we define certain of the terms used above, see the attached schedules.

Investor Call

As previously announced, CenturyLink's management will host a conference call at
 4:00 p.m. Central Time  today,  February 13, 2013. Interested parties can
access the call by dialing 866-847-7859. The call will be accessible for replay
through  February 20, 2013, by calling 888-266-2081 and entering the access code
1601920. Investors can also listen to CenturyLink's earnings conference call and
replay by accessing the Investor Relations portion of the Company's Web site at 
www.centurylink.com  through  March 6, 2013.  

Reconciliation to GAAP  

This release includes certain non-GAAP financial measures, including but not
limited to operating cash flow, free cash flow, adjustments to GAAP measures to
exclude the effect of special items and certain pro forma combined operating
results. In addition to providing key metrics for management to evaluate the
Company's performance, we believe these measurements assist investors in their
understanding of period-to-period operating performance and in identifying
historical and prospective trends. Reconciliations of non-GAAP financial
measures to the most comparable GAAP measures are included in the attached
financial schedules. Reconciliation of additional non-GAAP financial measures
that may be discussed during the earnings call described below will be available
in the Investor Relations portion of the Company's Web site at 
www.centurylink.com. Investors are urged to consider these non-GAAP measures in
addition to, and not in substitution for, measures prepared in accordance with
GAAP.

About CenturyLink

CenturyLink is the third largest telecommunications company in  the United
States  and is recognized as a leader in the network services market by
technology industry analyst firms. The Company is a global leader in cloud
infrastructure and hosted IT solutions for enterprise customers. CenturyLink
provides data, voice and managed services in local, national and select
international markets through its high-quality advanced fiber optic network and
multiple data centers for businesses and consumers. The company also offers
advanced entertainment services under the CenturyLinkTM  PrismTM  TV and DIRECTV
brands. Headquartered in  Monroe, La., CenturyLink is an S&P 500 company and is
included among the Fortune 500 list of America's largest corporations. For more
information, visit  www.centurylink.com.  

Forward Looking Statements  

Certain non-historical statements made in this release and future oral or
written statements or press releases by us or our management are intended to be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based on
current expectations only, and are subject to a number of risks, uncertainties
and assumptions, many of which are beyond our control. Actual events and results
may differ materially from those anticipated, estimated or projected if one or
more of these risks or uncertainties materialize, or if underlying assumptions
prove incorrect. Factors that could affect actual results include but are not
limited to: the timing, success and overall effects of competition from a wide
variety of competitive providers; the risks inherent in rapid technological
change; the effects of ongoing changes in the regulation of the communications
industry (including recent reforms and changes by the Federal Communications
Commission regarding intercarrier compensation and the Universal Service Fund,
among other things); our ability to successfully negotiate collective bargaining
agreements on reasonable terms without work stoppages; 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 recently acquired operations into our
incumbent operations, including the possibility that the anticipated benefits
from our recent acquisitions cannot be fully realized in a timely manner or at
all, or that integrating the acquired operations will be more difficult,
disruptive or costly than anticipated; our ability to use the net operating loss
carryovers of Qwest in projected amounts; 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; any adverse developments in legal proceedings involving us; our
ability to pay common share dividends in amounts previously indicated, which may
be affected by changes in our cash requirements, capital spending plans, cash
flows or financial position; unanticipated increases or other changes in our
future cash requirements, whether caused by unanticipated increases in capital
expenditures, increases in pension funding requirements or otherwise; the
effects of adverse weather; other risks referenced from time to time in our
filings with the Securities and Exchange Commission (the "SEC"); and the effects
of more general factors such as changes in interest rates, in tax rates, in
accounting policies or practices, in operating, medical, pension or
administrative costs, in general market, labor or economic conditions, or in
legislation, regulation or public policy. These and other uncertainties related
to our business and our recent acquisitions are described in greater detail in
Item 1A to our Form 10-Q for the quarter ended  September 30, 2012, as updated
and supplemented by our subsequent SEC reports. You should be aware that new
factors may emerge from time to time and it is not possible for us to identify
all such factors nor can we predict the impact of each such factor on the
business or the extent to which any one or more factors may cause actual results
to differ from those reflected in any forward-looking statements. You are
further cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this release. We undertake no
obligation to update any of our forward-looking statements for any reason.

                                                                                                                                                                                                                                                                
 1  See attachments for non-GAAP reconciliations.                                                                                                                                                                                                               
 2  Effective second quarter 2012, CenturyLink modified its high-speed Internet reporting to include consumer, business and wholesale subscribers instead of only consumer and small business subscribers.                                                      
 3  We define a "data center" as any facility where we market, sell and deliver either colocation services or multi-tenant managed services, or both.                                                                                                           
 4  The pro forma figures assume we acquired Qwest and Savvis as of January 1, 2010, as explained further in the attached schedules.                                                                                                                            
 5  Federal Communications Commission's Connect America and Intercarrier Compensation Reform Order (the CAF Order) adopted on October 27, 2011                                                                                                                  
 6  Multiprotocol Label Switching                                                                                                                                                                                                                               
 7  savvisdirect is CenturyLink's highly scalable and easy-to-use cloud services platform designed for business of all sizes that is immediately accessible to business users, IT administrators and developers through an intuitive, user-friendly Web portal  
 8  Excludes approximately $70 million of integration-related capital expenditures                                                                                                                                                                              


 CenturyLink, Inc.                                                                                                                                                                                                 
 CONSOLIDATED STATEMENTS OF INCOME                                                                                                                                                                                 
 THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011                                                                                                                                                                     
 (UNAUDITED)                                                                                                                                                                                                       
 (Dollars in millions, except per share amounts; shares in thousands)                                                                                                                                              
                                                                                                                                                                                                  
                                                         Three months ended December 31, 2012                       Three months ended December 31, 2011                                                  
                                                                                                                                                                                                  
                                                                                                 As adjusted                                            As adjusted                   Increase    
                                                                                                 excluding                                              excluding                     (decrease)  
                                                                             Less                special                            Less                special        Increase       excluding   
                                                         As                  special             items          As                  special             items          (decrease)     special     
                                                         reported            items               (Non-GAAP)     reported            items               (Non-GAAP)     as reported    items       
                                                                                                                                                                                                  
 OPERATING REVENUES                                                                                                                                                                                
                 Strategic                            $  2,124                                   2,124          2,033                                   2,033          4.5%           4.5%        
                 Legacy                                  2,003                                   2,003          2,178                                   2,178          (8.0%)         (8.0%)      
                 Data integration                        189                                     189            188                                     188            0.5%           0.5%        
                 Other                                   267                                     267            254                                     254            5.1%           5.1%        
                                                         4,583               -                   4,583          4,653               -                   4,653          (1.5%)         (1.5%)      
                                                                                                                                                                                                  
 OPERATING EXPENSES                                                                                                                                                                                
                 Cost of services and products           1,907               9         (1)       1,898          1,968               10        (4)       1,958          (3.1%)         (3.1%)      
                 Selling, general and administrative     790                 18        (1)       772            900                 51        (4)       849            (12.2%)        (9.1%)      
                 Depreciation and amortization           1,220                                   1,220          1,252                                   1,252          (2.6%)         (2.6%)      
                                                         3,917               27                  3,890          4,120               61                  4,059          (4.9%)         (4.2%)      
                                                                                                                                                                                                  
 OPERATING INCOME                                         666                 (27)                693            533                 (61)                594            25.0%          16.7%       
                                                                                                                                                                                                  
 OTHER INCOME (EXPENSE)                                                                                                                                                                            
                 Interest expense                        (315)                                   (315)          (340)                                   (340)          (7.4%)         (7.4%)      
                 Other income (expense)                  23                  18        (2)       5              (1)                 (6)       (5)       5              (2400.0%)      0.0%        
                 Income tax expense                      (141)               2         (3)       (143)          (83)                25        (6)       (108)          69.9%          32.4%       
                                                                                                                                                                                                  
 NET INCOME                                            $  233                 (7)                 240            109                 (42)                151            113.8%         58.9%       
                                                                                                                                                                                                  
 BASIC EARNINGS PER SHARE                              $  0.37                (0.01)              0.39           0.18                (0.07)              0.24           105.6%         62.5%       
 DILUTED EARNINGS PER SHARE                            $  0.37                (0.01)              0.38           0.18                (0.07)              0.24           105.6%         58.3%       
                                                                                                                                                                                                  
 AVERAGE SHARES OUTSTANDING                                                                                                                                                                        
                 Basic                                   621,578                                 621,578        616,575                                 616,575        0.8%           0.8%        
                 Diluted                                 623,654                                 623,654        618,510                                 618,510        0.8%           0.8%        
                                                                                                                                                                                                  
 DIVIDENDS PER COMMON SHARE                            $  0.725                                   0.725          0.725                                   0.725          -              -           
                                                                                                                                                                                                  


 SPECIAL ITEMS                                                                                                                                                                                                                                                                                                                                                                                
 (1) -  Includes severance costs associated with recent reduction in force initiatives ($13 million), integration, severance and retention costs associated with our acquisition of Qwest ($9 million) and integration, severance, and retention costs associated with our acquisition of Savvis ($5 million).                                                                               
 (2) -  Gain on the sale of non-operating investments ($3 million) and early retirement of debt ($15 million).                                                                                                                                                                                                                                                                               
 (3) -  Income tax benefit of Items (1) and (2) and effect of rate adjustment on first three quarters of year.                                                                                                                                                                                                                                                                               
 (4) -  Includes integration, severance, and retention costs associated with our acquisition of Qwest, along with restructuring charges ($55 million); integration and severance costs associated with our acquisition of Embarq ($2 million); and transaction and other costs associated with our acquisition of Savvis ($4 million).                                                       
 (5) -  Cost associated with early retirement of Qwest debt.                                                                                                                                                                                                                                                                                                                                 
 (6) -  Income tax benefit of Items (4) and (5).                                                                                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                                                                                                             


 CenturyLink, Inc.                                                                                                                                                                                                 
 CONSOLIDATED STATEMENTS OF INCOME                                                                                                                                                                                 
 TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011                                                                                                                                                                    
 (UNAUDITED)                                                                                                                                                                                                       
 (Dollars in millions, except per share amounts; shares in thousands)                                                                                                                                              
                                                                                                                                                                                                  
                                                         Twelve months ended December 31, 2012                      Twelve months ended December 31, 2011                                                 
                                                                                                                                                                                                  
                                                                                                 As adjusted                                            As adjusted                   Increase    
                                                                                                 excluding                                              excluding                     (decrease)  
                                                                             Less                special                            Less                special        Increase       excluding   
                                                         As                  special             items          As                  special             items          (decrease)     special     
                                                         reported            items               (Non-GAAP)     reported            items               (Non-GAAP)     as reported    items       
                                                                                                                                                                                                  
 OPERATING REVENUES                                                                                                                                                                                
                 Strategic                            $  8,361                                   8,361          6,262                                   6,262          33.5%          33.5%       
                 Legacy                                  8,287                                   8,287          7,672                                   7,672          8.0%           8.0%        
                 Data integration                        672                                     672            537                                     537            25.1%          25.1%       
                 Other                                   1,056                                   1,056          880                                     880            20.0%          20.0%       
                                                         18,376              -                   18,376         15,351              -                   15,351         19.7%          19.7%       
                                                                                                                                                                                                  
 OPERATING EXPENSES                                                                                                                                                                                
                 Cost of services and products           7,639               34        (1)       7,605          6,325               70        (5)       6,255          20.8%          21.6%       
                 Selling, general and administrative     3,244               129       (1)       3,115          2,975               395       (5)       2,580          9.0%           20.7%       
                 Depreciation and amortization           4,780               (30)      (2)       4,810          4,026                                   4,026          18.7%          19.5%       
                                                         15,663              133                 15,530         13,326              465                 12,861         17.5%          20.8%       
                                                                                                                                                                                                  
 OPERATING INCOME                                         2,713               (133)               2,846          2,025               (465)               2,490          34.0%          14.3%       
                                                                                                                                                                                                  
 OTHER INCOME (EXPENSE)                                                                                                                                                                            
                 Interest expense                        (1,319)                                 (1,319)        (1,072)             5         (6)       (1,077)        23.0%          22.5%       
                 Other income (expense)                  (144)               (165)     (3)       21             (5)                 (22)      (7)       17             2780.0%        23.5%       
                 Income tax expense                      (473)               128       (4)       (601)          (375)               188       (8)       (563)          26.1%          6.7%        
                                                                                                                                                                                                  
 NET INCOME                                            $  777                 (170)               947            573                 (294)               867            35.6%          9.2%        
                                                                                                                                                                                                  
 BASIC EARNINGS PER SHARE                              $  1.25                (0.27)              1.52           1.07                (0.55)              1.62           16.8%          (6.2%)      
 DILUTED EARNINGS PER SHARE                            $  1.25                (0.27)              1.52           1.07                (0.55)              1.62           16.8%          (6.2%)      
                                                                                                                                                                                                  
 AVERAGE SHARES OUTSTANDING                                                                                                                                                                        
                 Basic                                   620,205                                 620,205        532,780                                 532,780        16.4%          16.4%       
                 Diluted                                 622,285                                 622,285        534,121                                 534,121        16.5%          16.5%       
                                                                                                                                                                                                  
 DIVIDENDS PER COMMON SHARE                            $  2.90                                    2.90           2.90                                    2.90           -              -           
                                                                                                                                                                                                  


 SPECIAL ITEMS                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
 (1) -  Includes severance costs associated with recent reduction in force initiatives ($81 million), integration, severance, and retention costs associated with our acquisition of Qwest ($71 million) and integration, severance, and retention costs associated with our acquisition of Savvis ($14 million); partially offset with a $3 million credit related to tax incentives for the Embarq integration.                                                                 
 (2) -  Out-of-period depreciation adjustment ($30 million) to correct an overstatement of depreciation.                                                                                                                                                                                                                                                                                                                                                                          
 (3) -  Net loss associated with early retirement of debt ($179 million), partially offset by gains on the sales of non-operating investments $14 million.                                                                                                                                                                                                                                                                                                                        
 (4) -  Income tax benefit of Items (1) through (3) and benefit from the reversal of a valuation allowance ($14 million).                                                                                                                                                                                                                                                                                                                                                         
 (5) -  Includes integration, severance, and retention costs associated with our acquisition of Qwest, along with restructuring charges ($371 million); integration and severance costs associated with our acquisition of Embarq ($81 million); and transaction and other costs associated with our acquisition of Savvis ($26 million); net of a favorable settlement of an operating tax issue $13 million.                                                                    
 (6) -  Reflects the interest component of a favorable settlement of an operating tax issue.                                                                                                                                                                                                                                                                                                                                                                                      
 (7) -  Expense associated with terminating a bridge credit facility related to the Savvis acquisition ($16 million) and costs associated with early retirement of Qwest debt ($6 million).                                                                                                                                                                                                                                                                                       
 (8) -  Income tax benefit of Items (5) through (7) and a benefit from the reduction of a valuation allowance ($14 million).                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  


 CenturyLink, Inc.                                                                                   
 CONDENSED CONSOLIDATED BALANCE SHEETS                                                               
 DECEMBER 31, 2012 AND 2011                                                                          
 (UNAUDITED)                                                                                         
 (Dollars in millions)                                                                               
                                                                                                
                                                                  December 31,    December 31,  
                                                                  2012            2011          
                                                                                                
                         ASSETS                                                                 
 CURRENT ASSETS                                                                                  
                         Cash and cash equivalents             $  211             128           
                         Other current assets                     3,396           3,389         
                         Total current assets                     3,607           3,517         
                                                                                                
 NET PROPERTY, PLANT AND EQUIPMENT                                                               
                         Property, plant and equipment            32,086          29,585        
                         Accumulated depreciation                 (13,054)        (10,141)      
                         Net property, plant and equipment        19,032          19,444        
                                                                                                
 GOODWILL AND OTHER ASSETS                                                                       
                         Goodwill                                 21,691          21,691        
                         Other, net                               9,642           11,351        
                         Total goodwill and other assets          31,333          33,042        
                                                                                                
 TOTAL ASSETS                                                   $  53,972          56,003        
                                                                                                
                                                                                                
                         LIABILITIES AND STOCKHOLDERS' EQUITY                                   
 CURRENT LIABILITIES                                                                             
                         Current maturities of long-term debt  $  1,205           480           
                         Other current liabilities                3,390           3,544         
                         Total current liabilities                4,595           4,024         
                                                                                                
 LONG-TERM DEBT                                                    19,400          21,356        
 DEFERRED CREDITS AND OTHER LIABILITIES                            10,688          9,796         
 STOCKHOLDERS' EQUITY                                              19,289          20,827        
                                                                                                
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $  53,972          56,003        
                                                                                                


 CenturyLink, Inc.                                                                                                                                                                        
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                                          
 TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011                                                                                                                                           
 (UNAUDITED)                                                                                                                                                                              
 (Dollars in millions)                                                                                                                                                                    
                                                                                                                                                                                  
                                                                                                                                                                                  
                                                                                                                                          Twelve Months        Twelve Months      
                                                                                                                                          Ended                Ended              
                                                                                                                                          December 31, 2012    December 31, 2011  
                                                                                                                                                                                  
 OPERATING ACTIVITIES                                                                                                                                                                 
                Net income                                                                                                                $  777                  573                
                Adjustments to reconcile net income to net cash provided by operating activities:                                                                                    
                                                              Depreciation and amortization                                                4,780                4,026              
                                                              Deferred income taxes                                                        394                  395                
                                                              Provision for uncollectible accounts                                         187                  153                
                                                              Net loss on early retirement of debt                                         179                  8                  
                                                              Changes in current assets and current liabilities, net                       (225)                (205)              
                                                              Retirement benefits                                                          (169)                (688)              
                                                              Changes in other noncurrent assets and liabilities                           162                  (6)                
                                                              Other, net                                                                   (20)                 (55)               
                                                                                            Net cash provided by operating activities     6,065                4,201              
                                                                                                                                                                                  
 INVESTING ACTIVITIES                                                                                                                                                                 
                Payments for property, plant and equipment and capitalized software                                                          (2,919)              (2,411)            
                Cash paid for Savvis acquisition, net of $94 cash acquired                                                                   -                    (1,671)            
                Cash acquired in Qwest acquisition, net of $5 cash paid                                                                      -                    419                
                Proceeds from sale of property and intangible assets                                                                         191                  -                  
                Other, net                                                                                                                   38                   16                 
                                                                                            Net cash used in investing activities         (2,690)              (3,647)            
                                                                                                                                                                                  
 FINANCING ACTIVITIES                                                                                                                                                                 
                Net proceeds from issuance of long-term debt                                                                                 3,362                4,102              
                Payments of long-term debt                                                                                                   (5,118)              (2,984)            
                Early retirement of debt costs                                                                                               (346)                (114)              
                Net borrowings (payments) on credit facility                                                                                 543                  (88)               
                Dividends paid                                                                                                               (1,811)              (1,556)            
                Net proceeds from issuance of common stock                                                                                   110                  103                
                Repurchase of common stock                                                                                                   (37)                 (31)               
                Other, net                                                                                                                   2                    (9)                
                                                                                            Net cash used in financing activities         (3,295)              (577)              
                                                                                                                                                                                  
 Effect of exchange rate changes on cash and cash equivalents                                                                                 3                    (22)               
                                                                                                                                                                                  
 Net increase (decrease) in cash and cash equivalents                                                                                         83                   (45)               
 Cash and cash equivalents at beginning of period                                                                                             128                  173                
                                                                                                                                                                                  
 Cash and cash equivalents at end of period                                                                                                $  211                  128                
                                                                                                                                                                                  


 CenturyLink, Inc.                                                                                                                                                                                                
 SELECTED SEGMENT FINANCIAL INFORMATION                                                                                                                                                                           
 THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2011                                                                                                                                                  
 (UNAUDITED)                                                                                                                                                                                                      
 (Dollars in millions)                                                                                                                                                                                            
                                                                                                                                                                                 Pro forma (*)      
                                                                                                                                                                                 Twelve months      
                                                                                                                                                                                 ended              
                                                                                        Three months ended December 31,                   Twelve months ended December 31,           December 31, 2011  
                                                                                        2012                      2011                  2012                      2011                              
 Total segment revenues                                                                 $  4,316                     4,399                 17,320                    14,471         17,690             
 Total segment expenses                                                                    2,055                     2,085                 8,094                     6,513          8,167              
 Total segment income                                                                   $  2,261                     2,314                 9,226                     7,958          9,523              
 Total segment income margin (segment income  divided by segment revenues)                                                                                                                             
                      52.4%                                     52.6%                                53.3%                     55.0%    53.8%        
                                                                                                                                                                                                      
 Regional Markets Segment                                                                                                                                                                              
 Revenues                                                                                                                                                                                              
                      Strategic services                                               $  914                       882                   3,607                     2,890          3,417              
                      Legacy services                                                     1,455                     1,575                 5,996                     5,593          6,468              
                      Data integration                                                    76                        87                    273                       260            296                
                                                                                       $  2,445                     2,544                 9,876                     8,743          10,181             
 Expenses                                                                                                                                                                                              
                      Direct                                                           $  994                       1,014                 3,939                     3,469          4,010              
                      Allocated                                                           66                        67                    279                       204            261                
                                                                                       $  1,060                     1,081                 4,218                     3,673          4,271              
                                                                                                                                                                                                      
 Segment income                                                                         $  1,385                     1,463                 5,658                     5,070          5,910              
 Segment income margin                                                                     56.6%                     57.5%                 57.3%                     58.0%          58.0%              
                                                                                                                                                                                                      
 Wholesale Markets Segment                                                                                                                                                                             
 Revenues                                                                                                                                                                                              
                      Strategic services                                               $  572                       571                   2,296                     1,915          2,266              
                      Legacy services                                                     335                       389                   1,424                     1,389          1,663              
                      Data integration                                                    1                         1                     1                         1              1                  
                                                                                       $  908                       961                   3,721                     3,305          3,930              
 Expenses                                                                                                                                                                                              
                      Direct                                                           $  38                        52                    169                       174            186                
                      Allocated                                                           233                       261                   948                       847            1,032              
                                                                                       $  271                       313                   1,117                     1,021          1,218              
                                                                                                                                                                                                      
 Segment income                                                                         $  637                       648                   2,604                     2,284          2,712              
 Segment income margin                                                                     70.2%                     67.4%                 70.0%                     69.1%          69.0%              
                                                                                                                                                                                                      
 Enterprise Markets - Network Segment                                                                                                                                                                  
 Revenues                                                                                                                                                                                              
                      Strategic services                                               $  346                       321                   1,344                     967            1,289              
                      Legacy services                                                     213                       214                   867                       690            897                
                      Data integration                                                    112                       100                   398                       276            361                
                                                                                       $  671                       635                   2,609                     1,933          2,547              
 Expenses                                                                                                                                                                                              
                      Direct                                                           $  209                       199                   781                       568            738                
                      Allocated                                                           280                       290                   1,110                     882            1,166              
                                                                                       $  489                       489                   1,891                     1,450          1,904              
                                                                                                                                                                                                      
 Segment income                                                                         $  182                       146                   718                       483            643                
 Segment income margin                                                                     27.1%                     23.0%                 27.5%                     25.0%          25.2%              
                                                                                                                                                                                                      
 Enterprise Markets - Data Hosting Segment                                                                                                                                                             
 Revenues                                                                                                                                                                                              
                      Strategic services                                               $  292                       259                   1,114                     490            1,032              
                                                                                       $  292                       259                   1,114                     490            1,032              
 Expenses                                                                                                                                                                                              
                      Direct                                                           $  253                       220                   940                       415            848                
                      Allocated                                                           (18)                      (18)                  (72)                      (46)           (74)               
                                                                                       $  235                       202                   868                       369            774                
                                                                                                                                                                                                      
 Segment income                                                                         $  57                        57                    246                       121            258                
 Segment income margin                                                                     19.5%                     22.0%                 22.1%                     24.7%          25.0%              
                                                                                                                                                     
                                                                                                                                                                                                                  


 During the second quarter of 2012, we restructured our four operating segments to more effectively leverage the strategic assets from our recent acquisitions of Embarq, Qwest and Savvis. We also revised our methodology for how we allocate our expenses to our segments to better align segment expenses with related revenues.  In addition, we now allocate certain expenses from our enterprise markets-data hosting segment to our other three segments.  We have restated prior periods to reflect these changes in our 
 methodology.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
 *The pro forma information presented above reflects the operations of CenturyLink, Qwest and Savvis assuming their respective results of operations had been combined as of January 1, 2010. Pro forma adjustments include the elimination of intercompany billings and the elimination of certain deferred revenues and costs. The above pro forma information (i) has not been prepared in accordance with generally accepted accounting principles, (ii) is for illustrative purposes only, and (iii) is not necessarily     
 indicative of the combined operating results that would have occurred if the Qwest and Savvis mergers had been consummated as of January 1, 2010.                                                                                                                                                                                                                                                                                                                                                                               


 CenturyLink, Inc.                                                                                                                                                
 ADJUSTED AND PRO FORMA STATEMENTS OF INCOME - NON-GAAP                                                                                                           
 TWELVE MONTHS ENDED DECEMBER 31, 2012 AND PRO FORMA TWELVE MONTHS ENDED DECEMBER 31, 2011                                                                        
 (UNAUDITED)                                                                                                                                                      
 (Dollars in millions, except per share amounts, shares in thousands)                                                                                             
                                                                                                                                                            
                                                                                                                         Pro forma*                         
                                                                                       Twelve months                     Twelve months                      
                                                                                       ended                             ended                              
                                                                                       December 31, 2012                 December 31, 2011                  
                                                                                       (excluding                        (excluding                         
                                                                                       special items)(1)                 special items)(1)                  
                                                                                                                                                            
 OPERATING REVENUES                                                                                                                                           
                                   Strategic services                   $              8,361                             7,995                              
                                   Legacy services                                     8,287                             9,037                              
                                   Data integration                                    672                               658                                
                                   Other                                               1,056                             1,002                              
                                                                                       18,376                            18,692                             
                                                                                                                                                            
 OPERATING EXPENSES                                                                                                                                           
                                   Cash expenses                                       10,720             (A)            10,910             (B)             
                                   Depreciation and amortization                       4,810                             4,953                              
                                                                                       15,530                            15,863                             
                                                                                                                                                            
 OPERATING INCOME                                                                        2,846                             2,829                              
                                                                                                                                                            
 OTHER INCOME (EXPENSE)                                                                                                                                       
                                   Interest expense                                    (1,319)                           (1,331)            (C)             
                                   Other income (expense)                              21                 (D)            22                 (E)             
                                   Income tax expense                                  (601)              (F)            (613)              (F)             
                                                                                                                                                            
 NET INCOME                                                               $              947                               907                                
                                                                                                                                                            
 DILUTED EARNINGS PER SHARE                                               $              1.52                              1.46                               
                                                                                                                                                            
 WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING                                             622,285                           615,800                            
                                                                                                                                                            
 OPERATING CASH FLOW                                                                                                                                          
                                   Operating income                     $              2,846                             2,829                              
                                   Add:  Depreciation and amortization                 4,810                             4,953                              
                                   Operating cash flow                  $              7,656                             7,782                              
                                                                                                                                                            
                                                                                                                                                            


                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
      *The pro forma information presented above reflects the operations of CenturyLink, Qwest and Savvis assuming their respective results of operations had been combined as of January 1, 2010.  Pro forma adjustments include (i) the elimination of intercompany billings and the elimination of certain deferred revenues and costs; (ii) the amortization of the fair value assigned to intangible assets (primarily customer relationship); (iii) adjustments to depreciation to reflect the fair value assigned to property, plant and equipment; (iv) adjustments to interest expense to reflect acquisition date financing and (v) the related income tax effects.  The above pro forma information (i) has not been prepared in accordance with generally accepted accounting principles, (ii) is for illustrative purposes only, and (iii) is not necessarily indicative of the combined operating results that would have occurred if the Qwest 
      and Savvis mergers had been consummated as of January 1, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
 (1)                                                                                                  Summary description of special items for 2012 and 2011 excluded from above schedule:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
      (A)                                                                                             Excludes severance costs associated with recent reduction in force initiatives ($81 million), integration, severance, and retention costs associated with our acquisition  of Qwest ($71 million) and integration, severance and retention costs associated with our acquisition of Savvis ($14 million); partially offset with a $3 million credit related to  tax incentives for the Embarq acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                            
      (B)                                                                                             Excludes integration and severance costs associated with the Qwest and Embarq acquisitions incurred by CenturyLink; realignment, severance and merger related costs  incurred by Qwest; and merger related costs incurred by Savvis ($482 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
      (C)                                                                                             Excludes the interest component of a favorable settlement of an operating tax issue ($5 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
      (D)                                                                                             Excludes net loss associated with early retirement of debt ($179 million); partially offset by gains on the sales of non-operating investments $14 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
      (E)                                                                                             Excludes expense associated with terminating a bridge credit facility related to the Savvis acquisition ($16 million) and costs associated with early retirement of Qwest  debt ($6 million).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
      (F)                                                                                             Excludes tax effect of above items (A) to (E) and a benefit from the reduction of a valuation allowance ($14 million) in 2012 and ($14 million) in 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              


 CenturyLink, Inc.                                                                                                                                                                                                        
 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES                                                                                                                                                                            
 (UNAUDITED)                                                                                                                                                                                                              
 (Dollars in millions)                                                                                                                                                                                                    
                                                                                                                                                                                                             
                                                                                                                                                                                                             
                                                                                                 Three months ended December 31, 2012                       Three months ended December 31, 2011                     
                                                                                                                                         As adjusted                                            As adjusted  
                                                                                                                     Less                excluding                          Less                excluding    
                                                                                                 As                  special             special        As                  special             special      
                                                                                                 reported            items               items          reported            items               items        
 Operating cash flow and cash flow margin                                                                                                                                                                     
                        Operating income                                                      $  666                 (27)      (1)       693            533                 (61)      (2)       594          
                        Add:  Depreciation and amortization                                      1,220               -                   1,220          1,252               -                   1,252        
                        Operating cash flow                                                   $  1,886               (27)                1,913          1,785               (61)                1,846        
                                                                                                                                                                                                             
                        Revenues                                                              $  4,583               -                   4,583          4,653               -                   4,653        
                                                                                                                                                                                                             
                        Operating income margin (operating income divided by revenues)           14.5%                                   15.1%          11.5%                                   12.8%        
                                                                                                                                                                                                             
                        Operating cash flow margin (operating cash flow divided by revenues)     41.2%                                   41.7%          38.4%                                   39.7%        
                                                                                                                                                                                                             
 Free cash flow                                                                                                                                                                                               
                        Operating cash flow                                                                                    $         1,913                                                  1,846        
                        Less: Cash (paid) refunded for income taxes                                                                      (23)                                                   25           
                        Less: Cash paid for interest, net of amounts capitalized                                                         (408)                                                  (465)        
                        Less: Capital expenditures (3)                                                                                   (877)                                                  (896)        
                        Other income (expense)                                                                                           5                                                      5            
                        Free cash flow (4)                                                                                               610                                                    515          
                                                                                                                                                                                                             
                                                                                                                                                                                                             
                                                                                                                                                                                                             


 SPECIAL ITEMS                                                                                                                                                                                                                                                                                                                                                                  
 (1) -  Includes severance costs associated with recent reduction in force initiatives ($13 million), integration, severance, and retention costs associated with our acquisition of Qwest ($9 million) and integration, severance and retention costs associated with our acquisition of Savvis ($5 million).                                                                 
 (2) -  Includes integration, severance, and retention costs associated with our acquisition of Qwest, along with restructuring charges ($55 million); integration and severance costs associated with our acquisition of Embarq ($2 million); transaction and other costs associated with our acquisition of Savvis ($4 million).                                             
 (3) -  Excludes $18 million in fourth quarter 2012 and $4 million in fourth quarter 2011 of capital expenditures related to the integration of Embarq, Qwest and Savvis.                                                                                                                                                                                                      
 (4) -  Excludes special items identified in items (1) and (2) and the impact of pension contributions of $487 million for fourth quarter 2011.                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                                                                                                 


 CenturyLink, Inc.                                                                                                                                                                                                            
 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES                                                                                                                                                                                
 (UNAUDITED)                                                                                                                                                                                                                  
 (Dollars in millions)                                                                                                                                                                                                        
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                  Twelve months ended December 31, 2012                          Twelve months ended December 31, 2011                    
                                                                                                                                          As adjusted                                                As adjusted  
                                                                                                                      Less                excluding                              Less                excluding    
                                                                                                  As                  special             special            As                  special             special      
                                                                                                  reported            items               items              reported            items               items        
 Operating cash flow and cash flow margin                                                                                                                                                                          
                 Operating income                                                           $     2,713               (133)     (1)       2,846              2,025               (465)     (3)       2,490        
                 Add:  Depreciation and amortization                                              4,780               (30)      (2)       4,810              4,026               -                   4,026        
                 Operating cash flow                                                        $     7,493               (163)               7,656              6,051               (465)               6,516        
                                                                                                                                                                                                                  
                 Revenues                                                                   $     18,376              -                   18,376             15,351              -                   15,351       
                                                                                                                                                                                                                  
                 Operating income margin (operating income divided by revenues)                   14.8%                                   15.5%              13.2%                                   16.2%        
                                                                                                                                                                                                                  
                 Operating cash flow margin (operating cash flow divided by revenues)             40.8%                                   41.7%              39.4%                                   42.4%        
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
 Free cash flow                                                                                                                                                                                                    
                 Operating cash flow                                                                                            $         7,656                                                      6,516        
                 Less: Cash (paid) refunded for income taxes                                                                              (82)                                                       118          
                 Less: Cash paid for interest, net of amounts capitalized                                                                 (1,405)                                                    (1,225)      
                 Less: Capital expenditures (4)                                                                                           (2,858)                                                    (2,381)      
                 Other income (expense)                                                                                                   21                                                         17           
                 Free cash flow (5)                                                                                                       3,332                                                      3,045        
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  
                                                                                                                                                                                                                  


 SPECIAL ITEMS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
 (1) -  Includes severance costs associated with recent reduction in force initiatives ($81 million), integration, severance, and retention costs associated with our acquisition of Qwest ($71 million) and integration, severance and retention costs associated with our acquisition of Savvis ($14 million); partially offset with a $30 million out-of-period depreciation adjustment and a $3 million credit related to tax incentives for the Embarq integration.                                              
 (2) -  Out-of-period depreciation adjustment ($30 million) to correct an overstatement of depreciation.                                                                                                                                                                                                                                                                                                                                                                                                              
 (3) -  Includes integration, severance, and retention costs associated with our acquisition of Qwest, along with restructuring charges ($371 million); integration and severance costs associated with our acquisition of Embarq ($81 million); transaction and other costs associated with our acquisition of Savvis ($26 million); net of a favorable settlement of an operating tax issue $13 million.                                                                                                            
 (4) -  Excludes $61 million for the twelve months ended December 31, 2012 and $30 million for the twelve months ended December 31, 2011 of capital expenditures related to the integration of Embarq, Qwest and Savvis.                                                                                                                                                                                                                                                                                              
 (5) -  Excludes (i) special items identified in items (1) to (3) and (ii) the impact of pension contributions of $32 million for the twelve months ended December 31, 2012 and $587 million for the twelve months ended December 31, 2011.                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        


 CenturyLink, Inc.                                                                            
 OPERATING METRICS                                                                            
 (UNAUDITED)                                                                                  
 (In thousands)                                                                               
                                                                                        
                                                                                        
                                                                                        
                          As of                As of                 As of              
                          December 31, 2012    September 30, 2012    December 31, 2011  
 Broadband subscribers    5,848                5,807                 5,652              
 Access lines             13,748               13,946                14,584             
                                                                                        


 CenturyLink, Inc.                                                                                                                                                                                                 
 SUPPLEMENTAL NON-GAAP INFORMATION - ADJUSTED DILUTED EPS                                                                                                                                                          
 THREE MONTHS ENDED DECEMBER 31, 2012, SEPTEMBER 30, 2012 AND DECEMBER 31, 2011                                                                                                                                    
 (UNAUDITED)                                                                                                                                                                                                       
 (Dollars in millions, except per share amounts)                                                                                                                                                                   
                                                                                                                                                                                                              
                                                                                                                                                                                                              
                                                                                                                                                                                                              
                                                                                                                                                                                                              
                                                                                                                                                    Three months       Three months        Three months       
                                                                                                                                                    ended              ended               ended              
                                                                                                                                                    December 31, 2012  September 30, 2012  December 31, 2011  
                                                                                                                                                    (excluding         (excluding          (excluding         
                                                                                                                                                    special items)     special items)      special items)     
                                                                                                                                                                                                              
 Net income *                                                                                                                                     $  240                237                 151                
                                                                                                                                                                                                               
 Add back:                                                                                                                                                                                                     
 Amortization of customer base intangibles:                                                                                                                                                                    
                                                                         Qwest                                                                      237                241                 253                
                                                                         Embarq                                                                     34                 34                  39                 
                                                                         Savvis                                                                     15                 15                  20                 
                                                                                                                                                                                                              
 Amortization of trademark intangibles:                                                                                                                                                                        
                                                                         Qwest                                                                      14                 15                  19                 
                                                                         Savvis                                                                     2                  2                   2                  
                                                                                                                                                                                                              
 Amortization of fair value adjustment of long-term debt:                                                                                                                                                      
                                                                         Embarq                                                                     1                  1                   -                  
                                                                         Qwest                                                                      (18)               (20)                (31)               
                                                                                                                                                                                                              
 Subtotal                                                                                                                                            285                288                 302                
 Tax effect of above items                                                                                                                           (110)              (112)               (110)              
 Net adjustment, after taxes                                                                                                                         175                176                 192                
                                                                                                                                                                                                              
 Net income, as adjusted for above items                                                                                                          $  415                413                 343                
                                                                                                                                                                                                              
 Weighted average diluted shares outstanding                                                                                                         623.7              623.3               618.5              
                                                                                                                                                                                                              
 Diluted EPS (excluding special items)                                                                                                            $  0.38               0.38                0.24               
                                                                                                                                                                                                              
 Adjusted diluted EPS as adjusted for the above-listed purchase accounting intangible and interest amortizations (excluding  special items)       $  0.67               0.66                0.55               
                                                                                                                                                                                                              
                                                                                                                                                                                                              


 The above schedule presents adjusted net income and adjusted earnings per share (both excluding special items) by adding back to net income and earnings per share certain non-cash expense items that arise as a result of the application of business combination accounting rules to recent acquisitions.  Such presentation is not in accordance with generally accepted accounting principles but management believes the presentation is useful to analysts and investors to understand the impacts of growing our 
 business through acquisitions. 
             
 *See preceding schedule for a summary description of special items. 
             


 CenturyLink, Inc.                                                                                                                                                                            
 SUPPLEMENTAL NON-GAAP INFORMATION - ADJUSTED DILUTED EPS                                                                                                                                     
 TWELVE MONTHS ENDED DECEMBER 31 AND DECEMBER 31, 2011                                                                                                                                        
 (UNAUDITED)                                                                                                                                                                                  
 (Dollars in millions, except per share amounts)                                                                                                                                              
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                                          
                                                                                                                                                                       Pro Forma*         
                                                                                                                                                    Twelve months      Twelve months      
                                                                                                                                                    ended              ended              
                                                                                                                                                    December 31, 2012  December 31, 2011  
                                                                                                                                                    (excluding         (excluding         
                                                                                                                                                    special items)     special items)     
                                                                                                                                                                                          
 Net income **                                                                                                                                    $  947                907                
                                                                                                                                                                                           
 Add back:                                                                                                                                                                                 
 Amortization of customer base intangibles:                                                                                                                                                
                                                                         Qwest                                                                      966                1,016              
                                                                         Embarq                                                                     146                166                
                                                                         Savvis                                                                     59                 80                 
                                                                                                                                                                                          
 Amortization of trademark intangibles:                                                                                                                                                    
                                                                         Qwest                                                                      63                 76                 
                                                                         Savvis                                                                     9                  8                  
                                                                                                                                                                                          
 Amortization of fair value adjustment of long-term debt:                                                                                                                                  
                                                                         Embarq                                                                     4                  3                  
                                                                         Qwest                                                                      (86)               (198)              
                                                                                                                                                                                          
 Subtotal                                                                                                                                            1,161              1,151              
 Tax effect of above items                                                                                                                           (445)              (426)              
 Net adjustment, after taxes                                                                                                                         716                725                
                                                                                                                                                                                          
 Net income, as adjusted for above items                                                                                                          $  1,663              1,632              
                                                                                                                                                                                          
 Weighted average diluted shares outstanding                                                                                                         622.3              615.8              
                                                                                                                                                                                          
 Diluted EPS (excluding special items)                                                                                                            $  1.52               1.46               
                                                                                                                                                                                          
 Adjusted diluted EPS as adjusted for the above-listed purchase accounting intangible and interest amortizations (excluding  special items)       $  2.67               2.64               
                                                                                                                                                                                          
                                                                                                                                                                                          


 The above schedule presents adjusted net income and adjusted earnings per share (both excluding special items) by adding back to net income and earnings per share certain non-cash expense items that arise as a result of the application of business combination accounting rules to recent acquisitions.  Such presentation is not in accordance with generally accepted accounting principles but management believes the presentation is useful to analysts and investors to understand the impacts of growing our 
 business through acquisitions. 
           
 *The pro forma information presented above reflects the operations of CenturyLink, Qwest and Savvis assuming their respective results of operations had been combined as of January 1, 2010.  Pro forma adjustments include (i) the elimination of intercompany billings and the elimination of certain deferred revenues and costs; (ii) the amortization of the fair value assigned to intangible assets (primarily customer relationship); (iii) adjustments to depreciation to reflect the fair value assigned to property, 
 plant and equipment; (iv) adjustments to interest expense to reflect acquisition date financing and (v) the related income tax effects.  The above pro forma information (i) has not been prepared in accordance with generally accepted accounting principles, (ii) is for illustrative purposes only, and (iii) is not necessarily indicative of the combined operating results that would have occurred if the Qwest and Savvis mergers had been consummated as of January 1, 2010. 
           
 **See preceding schedule for a summary description of special items. 
           


 CenturyLink, Inc.                                                                                  
 SUPPLEMENTAL SELECT SAVVIS REVENUE INFORMATION                                                     
 THREE MONTHS ENDED DECEMBER 31, 2012, SEPTEMBER 30, 2012 AND DECEMBER 31, 2011                     
 (UNAUDITED)                                                                                        
 (Dollars in millions)                                                                              
                                                                                             
                                                                                             
                             Three months         Three months            Three months       
                             ended                ended                   ended              
                             December 31, 2012    September 30, 2012      December 31, 2011  
                                                                                             
 Colocation revenue       $  113                  110                     99                 
 Managed hosting revenue     121                  108                     98                 
                                                                                             


SOURCE  CenturyLink, Inc.


Kristina Waugh, 318.340.5627, kristina.r.waugh@centurylink.com

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