MONROE, La., May 4, 2016 /PRNewswire/ -- CenturyLink, Inc. (NYSE: CTL) today reported results for first quarter 2016.

CenturyLink logo. (PRNewsFoto/CenturyLink, Inc.) (PRNewsFoto/CenturyLink, Inc.)

"CenturyLink achieved another solid quarter, with core revenues, operating cash flow and adjusted diluted earnings per share in-line with our previous guidance," said Glen F. Post III, chief executive officer and president. "Additionally, since the first of the year, we have completed two debt issuances totaling more than $1.2 billion, which strengthens our ability to invest in our business while returning cash to shareholders.

"We remain on track with our data centers and colocation business strategic alternatives process and are pleased with the level of interest and progress to date. We continue to focus on leveraging our strategic asset portfolio and financial strength to execute on our operational initiatives and better serve our customers," Post concluded.

First Quarter 2016 Highlights

  • Achieved core revenues of approximately $4.0 billion.
  • Grew revenue from high-bandwidth data services provided to Business customers, including MPLS(4) and Ethernet, by more than 7% year-over-year and revenue from Consumer strategic(5) services by approximately 5% year-over-year.
  • Generated free cash flow of $824 million, excluding special items.
  • Added more than 16,900 CenturyLink® PrismTM TV customers during first quarter 2016, ending the period with approximately 302,000 customers.
  • Ended the quarter with approximately 6.1 million high-speed Internet customers, an increase of approximately 7,800 customers in first quarter 2016.
  • Announced placement of approximately $1.2 billion of debt to refinance substantially all 2016 debt maturities.

Consolidated Financial Results

Operating revenues for first quarter 2016 were $4.40 billion compared to $4.45 billion in first quarter 2015. Declines in voice and long distance revenues, low-bandwidth data services revenues and data integration revenues were partially offset by the increases in Business high-bandwidth data services revenues, Consumer high-speed Internet and PrismTM TV revenues and high-cost support revenues related to Connect America Fund Phase 2 (CAF Phase 2) support in first quarter 2016.

Operating expenses, excluding special items, decreased to $3.69 billion from $3.76 billion in first quarter 2015. The year-over-year decrease was primarily driven by lower depreciation and amortization expenses and employee-related expenses.

Operating cash flow (as defined in our attached supplemental schedules), excluding special items, decreased to $1.69 billion from $1.74 billion in first quarter 2015. For first quarter 2016, CenturyLink achieved an operating cash flow margin, excluding special items, of 38.4% versus 39.0% in first quarter 2015.

Adjusted Net Income and Adjusted Diluted Earnings Per Share (EPS) exclude the after-tax impact of special items, the non-cash after-tax impact of the amortization of certain intangible assets related to major acquisitions since mid-2009, and the non-cash after-tax impact to interest expense relating to the assignment of fair value to the outstanding debt assumed in connection with those acquisitions. Excluding these items, CenturyLink's Adjusted Net Income for first quarter 2016 was $386 million compared to Adjusted Net Income of $375 million in first quarter 2015. First quarter 2016 Adjusted Diluted EPS was $0.71 compared to $0.67 in the year-ago period due to the higher Adjusted Net Income and the impact of the lower number of shares outstanding due to share repurchases in 2015. See the attached schedules for additional information.

GAAP Results - First Quarter

Under generally accepted accounting principles (GAAP), net income for first quarter 2016 was $236 million compared to a net income of $192 million for first quarter 2015, and diluted earnings per share was $0.44 for first quarter 2016 compared to $0.34 for first quarter 2015.

Additional details regarding the company's special items for the three months ended March 31, 2016 and 2015 are provided in the accompanying financial schedules.

Segment Financial Results6

Business

The Business segment continued to experience solid demand for high-bandwidth data services in first quarter 2016.

  • High-bandwidth data services revenues from Business customers grew more than 7% year-over-year.
  • Strategic revenues were $1.58 billion in the quarter, flat from first quarter 2015, primarily due to increased high-bandwidth data services revenues offset by continued declines in low-bandwidth data services and hosting revenues.
  • Total segment revenues were $2.60 billion, a decrease of 3.4% from first quarter 2015, primarily due to declines in legacy services, low-bandwidth data services and data integration revenues, which were partially offset by growth in high-bandwidth data services revenues.

Consumer

The Consumer segment achieved solid year-over-year strategic revenue growth driven primarily by increased high-speed Internet and CenturyLink® PrismTM TV revenues.

  • Total segment revenues were $1.49 billion for first quarter 2016, a slight decrease of 0.5% from first quarter 2015.
  • Strategic revenues were $774 million in the quarter, a 4.9% increase over first quarter 2015.
  • Approximately 16,900 CenturyLink® PrismTM TV customers were added during first quarter 2016; added nearly 150,000 addressable homes in new and existing service areas, ending the quarter with more than 3.3 million addressable homes.

Guidance - Second Quarter 2016

CenturyLink expects second quarter 2016 operating revenues to be in-line with first quarter 2016 operating revenues primarily due to anticipated growth in data integration, high-bandwidth data services, high-speed Internet and Prism TV revenues being offset by expected declines in legacy and low-bandwidth data services revenues. The company expects second quarter 2016 operating cash flow to decrease compared to first quarter 2016 primarily due to expected higher seasonal cash expenses. 

                                                                                                                                                                       

Second Quarter 2016 (excluding special items)

Operating Revenues

 

$4.38 to $4.43 billion

Core Revenues

 

$3.94 to $3.99 billion

Operating Cash Flow

 

$1.59 to $1.64 billion

Adjusted Diluted EPS

 

$0.57 to $0.62

                                                                                                                                                                       

During first quarter 2016, CenturyLink revised its free cash flow calculation to include the cash impact of pension/other post-employment benefit costs as well as stock-based compensation. The company believes this calculation provides additional detail and insight into CenturyLink's ongoing cash requirements. Although the inclusion of these items in the free cash flow calculation is anticipated to result in a slightly lower level of free cash flow for 2016, CenturyLink still expects to generate full-year 2016 free cash flow within the previously provided guidance range of $1.8 billion to $2.0 billion.

All 2016 guidance figures and 2016 outlook statements included in this release (i) speak as of May 4, 2016 only, (ii) exclude the impact of any share repurchases made after March 31, 2016 and (iii) exclude the effects of special items, future impairment charges, future changes in regulation (including changes in the CAF Phase 2 program), future changes in tax laws, accounting rules or our accounting policies, unforeseen litigation or contingencies, integration expenses associated with major acquisitions, any changes in our expected pension fundings, any changes in operating or capital plans or other unforeseen events or circumstances that impact our financial performance, and any future mergers, acquisitions, divestitures, joint ventures 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, May 4, 2016. Interested parties can access the call by dialing 866-814-1933. The call will be accessible for replay through May 12, 2016, by dialing 888-266-2081 and entering the access code 1670691. Investors can also listen to CenturyLink's earnings conference call and webcast replay by accessing the Investor Relations portion of the company's website at http://www.centurylink.com through May 27, 2016. Financial, statistical and other information related to the call will also be posted to our website.

Reconciliation to GAAP

This release includes certain non-GAAP financial measures, including but not limited to operating cash flow, free cash flow, core revenues, Adjusted Net Income, Adjusted Diluted EPS and adjustments to GAAP measures to exclude the effect of special items. In addition to providing key metrics for management to evaluate the company's performance, we believe these measurements assist investors in their understanding of period-to-period operating performance and in identifying historical and prospective trends. Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the attached financial schedules. Reconciliation of additional non-GAAP financial measures that may be discussed during the earnings call described above will be available in the Investor Relations portion of the company's website 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 (NYSE: CTL) is a global communications, hosting, cloud and IT services company enabling millions of customers to transform their businesses and their lives through innovative technology solutions. CenturyLink offers network and data systems management, Big Data analytics and IT consulting, and operates more than 55 data centers in North America, Europe and Asia. The company provides broadband, voice, video, data and managed services over a robust 250,000-route-mile U.S. fiber network and a 300,000-route-mile international transport network. Visit www.centurylink.com for more information.

Forward Looking Statements

Except for historical and factual information, the matters set forth in this release and other of our oral or written statements identified by words such as "estimates," "expects," "anticipates," "believes," "plans," "intends," and similar expressions are forward-looking statements as defined by the federal securities laws, and are subject to the "safe harbor" protections thereunder. These forward-looking statements are not guarantees of future results and are based on current expectations only, are inherently speculative, and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected, or implied by us if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the effects of competition from a wide variety of competitive providers, including lower demand for our legacy offerings; the effects of new, emerging or competing technologies, including those that could make our products less desirable or obsolete; the effects of ongoing changes in the regulation of the communications industry, including the outcome of regulatory or judicial proceedings relating to intercarrier compensation, interconnection obligations, access charges, universal service, broadband deployment, data protection and net neutrality; our ability to effectively adjust to changes in the communications industry and changes in the composition of our markets and product mix; possible changes in the demand for, or pricing of, our products and services, including our ability to effectively respond to increased demand for high-speed broadband service; our ability to successfully maintain the quality and profitability of our existing product and service offerings and to introduce new offerings on a timely and cost-effective basis; the adverse impact on our business and network from possible equipment failures, service outages, security breaches or similar events impacting our network; our ability to generate cash flows sufficient to fund our financial commitments and objectives, including our capital expenditures, operating costs, share repurchases, dividends, pension contributions and debt payments; changes in our operating plans, corporate strategies, dividend payment plans or other capital allocation plans, whether based upon changes in our cash flows, cash requirements, financial performance, financial position, or otherwise; our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; increases in the costs of our pension, health, post-employment or other benefits, including those caused by changes in markets, interest rates, mortality rates, demographics or regulations; adverse changes in our access to credit markets on favorable terms, whether caused by changes in our financial position, lower debt credit ratings, unstable markets or otherwise; our ability to maintain favorable relations with our key business partners, suppliers, vendors, landlords and financial institutions; our ability to effectively manage our expansion opportunities; our ability to collect our receivables from financially troubled customers; any adverse developments in legal or regulatory proceedings involving us; changes in tax, communications, pension, healthcare or other laws or regulations, in governmental support programs, or in general government funding levels; the effects of changes in accounting policies or practices, including potential future impairment charges; the effects of adverse weather or other natural or man-made disasters; the effects of more general factors such as changes in interest rates, in operating costs, in general market, labor, economic or geo-political conditions, or in public policy; and other risks referenced from time to time in our filings with the U.S. Securities and Exchange Commission (the "SEC"). For all the reasons set forth above and in our SEC filings, you are cautioned not to place undue reliance upon any of our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any of our forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, existing regulatory, technological, industry, competitive, economic and market conditions, and our assumptions as of such date. We may change our intentions, strategies or plans without notice at any time and for any reason.

(1) Core revenues defined as strategic revenues plus legacy revenues (excludes data integration and other revenues), as described further in the attached schedules.

(2) See attachments for non-GAAP reconciliations.

(3) Starting 1Q16, CenturyLink has revised its Free Cash Flow calculation for the reasons noted below. See attachments for non-GAAP reconciliations.

(4) Multi-Protocol Label Switching

(5) Beginning first quarter 2015, certain revenues were reclassified between strategic services and legacy services. All historical periods have been restated to reflect this change.

(6) All references to segment data herein reflect certain adjustments described in the attached schedules.

CenturyLink, Inc.

CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

(Dollars in millions, except per share amounts; shares in thousands)

                                 
   

Three months ended March 31, 2016

 

Three months ended March 31, 2015

       
           

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

$

2,354

   

   

2,354

   

2,320

   

   

2,320

   

1.5

%

 

1.5

%

 

Legacy

1,623

   

   

1,623

   

1,734

   

   

1,734

   

(6.4)

%

 

(6.4)

%

 

Data integration

116

   

   

116

   

140

   

   

140

   

(17.1)

%

 

(17.1)

%

 

Other

308

   

   

308

   

257

   

   

257

   

19.8

%

 

19.8

%

 

Total operating revenues

4,401

   

   

4,401

   

4,451

   

   

4,451

   

(1.1)

%

 

(1.1)%

 
                                 

OPERATING EXPENSES

                             
 

Cost of services and products

1,900

   

2

 

(1)

1,898

   

1,911

   

3

 

(3)

1,908

   

(0.6)

%

 

(0.5)

%

 

Selling, general and administrative

831

   

18

 

(1)

813

   

851

   

43

 

(3)

808

   

(2.4)

%

 

0.6

%

 

Depreciation and amortization

976

   

   

976

   

1,040

   

   

1,040

   

(6.2)

%

 

(6.2)

%

 

Total operating expenses

3,707

   

20

   

3,687

   

3,802

   

46

   

3,756

   

(2.5)

%

 

(1.8)

%

                                 

OPERATING INCOME

694

   

(20)

   

714

   

649

   

(46)

   

695

   

6.9

%

 

2.7

%

                               

OTHER INCOME (EXPENSE)

                             
 

Interest expense

(331)

   

   

(331)

   

(328)

       

(328)

   

0.9

%

 

0.9

%

 

Other income, net

17

   

   

17

   

2

   

   

2

   

750.0

%

 

750.0

%

 

Income tax expense

(144)

   

8

 

(2)

(152)

   

(131)

   

12

 

(4)

(143)

   

9.9

%

 

6.3

%

NET INCOME

$

236

   

(12)

   

248

   

192

   

(34)

   

226

   

22.9

%

 

9.7

%

BASIC EARNINGS PER SHARE

$

0.44

   

(0.02)

   

0.46

   

0.34

   

(0.06)

   

0.40

   

29.4

%

 

15.0

%

DILUTED EARNINGS PER SHARE

$

0.44

   

(0.02)

   

0.46

   

0.34

   

(0.06)

   

0.40

   

29.4

%

 

15.0

%

                                 

AVERAGE SHARES OUTSTANDING

                           
 

Basic

538,799

       

538,799

   

561,969

       

561,969

   

(4.1)

%

 

(4.1)

%

 

Diluted

540,187

       

540,187

   

563,505

       

563,505

   

(4.1)

%

 

(4.1)

%

                                 

DIVIDENDS PER COMMON SHARE

$

0.54

       

0.54

   

0.54

       

0.54

   

%

 

%

                               

SPECIAL ITEMS

                             

(1) -

Includes severance costs associated with recent headcount reductions ($14 million), integration costs associated with our acquisition of Qwest ($4 million) and a large billing system integration ($2 million).

(2) -

Income tax benefit of Item (1).

(3) -

Includes severance costs associated with reduction in force initiatives ($13 million), integration costs associated with our acquisition of Qwest ($10 million), the impairment of office buildings ($8 million) and regulatory fines associated with a 911 system outage ($15 million).

(4) -

Income tax benefit of Item (3).

 

 

CenturyLink, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

MARCH 31, 2016 AND DECEMBER 31, 2015

(UNAUDITED)

(Dollars in millions)

 

March 31,

 

December 31,

 

2016

 

2015

ASSETS

     

CURRENT ASSETS

     

Cash and cash equivalents

$

438

   

126

 

Other current assets

2,488

   

2,524

 

   Total current assets

2,926

   

2,650

 
       

NET PROPERTY, PLANT AND EQUIPMENT

     

Property, plant and equipment

39,229

   

38,785

 

Accumulated depreciation

(21,266)

   

(20,716)

 

   Net property, plant and equipment

17,963

   

18,069

 
       

GOODWILL AND OTHER ASSETS

     

Goodwill

20,743

   

20,742

 

Other, net

5,885

   

6,143

 

    Total goodwill and other assets

26,628

   

26,885

 
       

TOTAL ASSETS

$

47,517

   

47,604

 
       

LIABILITIES AND STOCKHOLDERS' EQUITY

         

CURRENT LIABILITIES

     

Current maturities of long-term debt

$

517

   

1,503

 

Other current liabilities

3,309

   

3,101

 

    Total current liabilities

3,826

   

4,604

 
       

LONG-TERM DEBT

19,508

   

18,722

 

DEFERRED CREDITS AND OTHER LIABILITIES

10,147

   

10,218

 

STOCKHOLDERS' EQUITY

14,036

   

14,060

 
       

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

47,517

   

47,604

 
       

 

CenturyLink, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

(Dollars in millions)

       
 

Three months ended

 

Three months ended

 

March 31, 2016

 

March 31, 2015

OPERATING ACTIVITIES

     

Net income

$

236

   

192

 

Adjustments to reconcile net income to net cash provided by operating activities:

     

Depreciation and amortization

976

   

1,040

 

Impairment of assets

   

8

 

Deferred income taxes

11

   

37

 

Provision for uncollectible accounts

46

   

42

 

Share-based compensation

18

   

18

 

Changes in current assets and liabilities, net

192

   

13

 

Retirement benefits

(21)

   

(9)

 

Changes in other noncurrent assets and liabilities, net

(35)

   

(10)

 

Other, net

   

5

 

Net cash provided by operating activities

1,423

   

1,336

 

INVESTING ACTIVITIES

     

Payments for property, plant and equipment and capitalized software

(611)

   

(616)

 

Proceeds from sale of property

7

   

14

 

Other, net

(1)

   

(8)

 

Net cash used in investing activities

(605)

   

(610)

 

FINANCING ACTIVITIES

     

Net proceeds from issuance of long-term debt

227

   

594

 

Payments of long-term debt

(25)

   

(386)

 

Net payments on credit facility and revolving line of credit

(410)

   

(425)

 

Dividends paid

(290)

   

(304)

 

Net proceeds from issuance of common stock

4

   

8

 

Repurchase of common stock

(12)

   

(185)

 

Other, net

   

(1)

 

Net cash used in financing activities

(506)

   

(699)

 

Net increase in cash and cash equivalents

312

   

27

 

Cash and cash equivalents at beginning of period

126

   

128

 

Cash and cash equivalents at end of period

$

438

   

155

 

 

 

CenturyLink, Inc.

SELECTED SEGMENT FINANCIAL INFORMATION

THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

(Dollars in millions)

         
   

Three months ended March 31,*

   

2016

 

2015

Total segment revenues

$

4,093

   

4,194

 

Total segment expenses

2,051

   

2,071

 

Total segment income

$

2,042

   

2,123

 

Total segment income margin (segment income divided by segment revenues)

49.9

%

 

50.6

%

         

Business

     

Revenues

     
 

Strategic services

$

1,580

   

1,582

 
 

Legacy services

909

   

976

 
 

Data integration

115

   

139

 
 

Total revenues

2,604

   

2,697

 

Expenses

     
 

Total expenses

1,427

   

1,463

 
         

Segment income

$

1,177

   

1,234

 

Segment income margin

45.2

%

 

45.8

%

         

Consumer

     

Revenues

     
 

Strategic services

$

774

   

738

 
 

Legacy services

714

   

758

 
 

Data integration

1

   

1

 
 

Total revenues

1,489

   

1,497

 

Expenses

     
 

Total expenses

624

   

608

 
         

Segment income

$

865

   

889

 

Segment income margin

58.1

%

 

59.4

%

         

*

During the first quarter of 2016, we implemented several changes with respect to the assignment of certain expenses to our reportable segments. We have recast our previously-reported segment results for the three months ended March 31, 2015, to conform to the current presentation. For the three months ended March 31, 2015, the segment expense recast resulted in an increase in consumer expenses of $19 million and a decrease in business expenses of $21 million.

 

CenturyLink, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

(Dollars in millions)

                         
   

Three months ended March 31, 2016

 

Three months ended March 31, 2015

           

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

$

694

   

(20)

 

(1)

714

   

649

   

(46)

 

(2)

695

 
 

Add: Depreciation and amortization

976

   

   

976

   

1,040

   

   

1,040

 
 

Operating cash flow

$

1,670

   

(20)

   

1,690

   

1,689

   

(46)

   

1,735

 
                         
 

Revenues

$

4,401

   

   

4,401

   

4,451

   

   

4,451

 
                         
 

Operating income margin (operating income divided by revenues)

15.8

%

     

16.2

%

 

14.6

%

     

15.6

%

                         
 

Operating cash flow margin (operating cash flow divided by revenues)

37.9

%

     

38.4

%

 

37.9

%

     

39.0

%

                         

Free cash flow

                     
 

Operating cash flow

       

$

1,690

           

1,735

 
 

Less: Capital expenditures (3)

       

(607)

           

(613)

 
 

Less: Cash paid for interest, net of amounts capitalized

       

(262)

           

(270)

 
 

Less: Pension and post-retirement impacts (4)

       

(21)

           

(10)

 
 

Less: Cash paid for income taxes, net of refunds

       

(11)

           

(5)

 
 

Add: Stock-based Compensation

       

18

           

18

 
 

Add:  Other income

       

17

           

2

 
 

Free cash flow (5)

       

$

824

           

857

 
                         

SPECIAL ITEMS

                     

(1) -

Includes severance costs associated with recent headcount reductions ($14 million), integration costs associated with our acquisition of Qwest ($4 million) and a large billing system integration ($2 million).

(2) -

Includes severance costs associated with reduction in force initiatives ($13 million), integration costs associated with our acquisition of Qwest ($10 million), the impairment of office buildings ($8 million) and regulatory fines associated with a 911 system outage ($15 million).

   

FREE CASH FLOW

(3) -

Excludes $4 million in first quarter 2016 and $3 million in first quarter 2015 of capital expenditures related to the integration of Qwest and Savvis.

(4) -

2016 includes net periodic pension benefit income of ($20 million), net periodic post-retirement benefit expense of $36 million and ($2 million) of benefits paid to participants of our non-qualified pension plans.  Post-retirement contributions included benefits paid by company ($51 million) offset by participant contributions $15 million and direct subsidy receipts $1 million.

-

2015 includes net periodic pension benefit income of ($24 million), net periodic post-retirement benefit expense of $41 million and ($1 million) of benefits paid to participants of our non-qualified pension plans.  Post-retirement contributions included benefits paid by company ($42 million) offset by participant contributions $15 million and direct subsidy receipts $1 million.

(5) -

Excludes special items identified in items (1) and (2).

 

CenturyLink, Inc.

REVENUES

(UNAUDITED)

(Dollars in millions)

             
       

Three months ended

       

March 31, 2016

 

March 31, 2015

Strategic services

         
 

Business high-bandwidth data services (1)

   

$

738

   

687

 
 

Business low-bandwidth data services (2)

   

481

   

532

 
 

Business hosting services (3)

   

307

   

318

 
 

Other business strategic services (4)

   

54

   

45

 
 

Consumer high-speed Internet services (5)

   

667

   

635

 
 

Other consumer strategic services (6)

   

107

   

103

 
 

Total strategic services revenues

   

2,354

   

2,320

 
           

Legacy services

         
 

Business legacy voice services (7)

   

622

   

670

 
 

Other business legacy services (8)

   

287

   

306

 
 

Consumer legacy voice services (7)

   

634

   

688

 
 

Other consumer legacy services (9)

   

80

   

70

 
 

Total legacy services revenues

   

1,623

   

1,734

 
             

Data integration

         
 

Business data integration

   

115

   

139

 
 

Consumer data integration

   

1

   

1

 
 

Total data integration revenues

   

116

   

140

 
           

Other revenues

         
 

High-cost support revenue (10)

   

174

   

134

 
 

Other revenue (11)

   

134

   

123

 
 

Total other revenues

   

308

   

257

 
           

Total revenues

   

$

4,401

   

4,451

 
             
             

(1)

 

Includes MPLS and Ethernet revenue

(2)

 

Includes private line and high-speed Internet revenue

(3)

 

Includes colocation, hosting (including cloud hosting and managed hosting) and hosting area network revenue

(4)

 

Includes primarily VoIP, video, IT services and deferred revenue recognition

(5)

 

Includes high-speed Internet and related services revenue

(6)

 

Includes video and Verizon wireless revenue

(7)

 

Includes local and long-distance voice revenue

(8)

 

Includes UNEs, public access, switched access and other ancillary revenue

(9)

 

Includes other ancillary revenue

(10)

 

Includes CAF Phase 1, CAF Phase 2 and federal and state USF support revenue

(11)

 

Includes USF surcharges

             

 

CenturyLink, Inc.

HOSTING REVENUES AND OPERATING METRICS

(UNAUDITED)

             
       

Three months ended

       

March 31,
2016

 

March 31,
2015

             

Hosting Revenue Detail (1)

   

(In millions)

Colocation

   

$

155

   

156

 

Managed Hosting / Cloud

   

131

   

140

 

Hosting Area Network

   

21

   

22

 

Total Hosting Revenue

   

$

307

   

318

 
             
             

(1)

Excludes Wide-Area Network (WAN) revenue previously reported in total Hosting revenue.

             
   

As of

 

As of

 

As of

   

March 31,
2016

 

December 31,
2015

 

March 31,
2015

Hosting Data Center Metrics

         

Number of data centers (2)

59

   

59

   

58

 

Sellable square feet, million sq ft

1.57

   

1.58

   

1.53

 

Billed square feet, million sq ft

1.01

   

0.99

   

0.93

 

Utilization

65

%

 

63

%

 

61

%

             
             

(2)

We define a data center as any facility where we market, sell and deliver colocation services, managed hosting (including cloud hosting) services, multi-tenant managed services, or any combination thereof.

             
   

As of

 

As of

 

As of

   

March 31,
2016

 

December 31,
2015

 

March 31,
2015

             

Operating Metrics

(In thousands)

High-speed Internet subscribers

6,056

   

6,048

   

6,117

 

Access lines

11,611

   

11,748

   

12,270

 

Prism TV subscribers

302

   

285

   

249

 
             
             
 

Our methodology for counting high-speed Internet subscribers, access lines and Prism TV subscribers may not be comparable to those of other companies.

 

CenturyLink, Inc.

SUPPLEMENTAL NON-GAAP INFORMATION - ADJUSTED DILUTED EPS

THREE MONTHS ENDED MARCH 31, 2016 AND 2015

(UNAUDITED)

(Dollars and shares in millions, except per share amounts)

           
     

Three months ended

     

March 31, 2016
(excluding
special items)

 

March 31, 2015
(excluding
special items)

           

Net income *

 

$

248

   

226

 
           

Add back:

       

Amortization of customer base intangibles:

       
 

Qwest

 

191

   

205

 
 

Embarq

 

20

   

25

 
 

Savvis

 

15

   

15

 
           

Amortization of trademark intangibles

 

   

1

 
           

Amortization of fair value adjustment of long-term debt:

       
 

Embarq

 

2

   

1

 
 

Qwest

 

(5)

   

(6)

 
           

Subtotal

 

223

   

241

 

Tax effect of above items

 

(85)

   

(92)

 

Net adjustment, after taxes

 

138

   

149

 
           

Net income, as adjusted for above items

 

$

386

   

375

 
           

Weighted average diluted shares outstanding

 

540.2

   

563.5

 
           

Diluted EPS

(excluding special items)

 

$

0.46

   

0.40

 
           

Adjusted diluted EPS as adjusted for the above-listed purchase accounting intangible and interest amortizations (excluding special items)

 

$

0.71

   

0.67

 
 

The above non-GAAP schedule presents adjusted net income and adjusted diluted earnings per share (both excluding special items) by adding back to net income and diluted earnings per share certain non-cash expense items that arise as a result of the application of business combination accounting rules to our major acquisitions since mid-2009. 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 schedules for a summary description of special items.

Logo - http://photos.prnewswire.com/prnh/20140806/134213

 

SOURCE CenturyLink, Inc.