OVERLAND PARK, Kan., Nov. 1 /PRNewswire-FirstCall/ -- EMBARQ (NYSE: EQ) today announced results for the third quarter of 2007, which were highlighted by strong free cash flow and continued progress toward Telecommunications revenue growth. The company reported total revenues of $1.59 billion, operating income of $363 million and diluted earnings per share of $1.01. Third quarter results were unfavorably impacted by $33 million, or $0.13 per diluted share, in severance charges related to recent workforce reductions and $4 million of non-recurring spin-off related expenses.

"We were pleased with the continued growth in average revenue per household and our strong free cash flow performance during the quarter, so we are reaffirming our recently improved forecast for the year," said Dan Hesse, EMBARQ Chairman and Chief Executive Officer. "We intend to build on these results, continue to improve the efficiency and effectiveness of our operations and fortify our long-term competitive position."

    Third Quarter Highlights
    *  Average revenue per household increased 7% compared to the year-ago
       period, the largest increase on record.
    *  High-speed Internet revenue grew 27% year-over-year.
    *  Data revenue grew 8% year-over-year.
    *  Free cash flow increased by $77 million year-over-year to $330 million.
    *  The company improved its 2007 outlook for capital expenditures and
       reaffirmed other forecast measures.


    Financial Results

EMBARQ reported total net operating revenues of $1.594 billion for the third quarter of 2007, a decrease of 0.7% sequentially and 0.7% from the year- ago period. Third quarter Telecommunications segment revenues declined 0.6% compared to the previous quarter and 0.5% year-over-year to $1.473 billion. Within Telecommunications, growth in high-speed Internet, data and wireless revenues partially offset a decline in voice revenue. Revenue for the Logistics segment was $121 million, a decrease of 1.6% compared to the second quarter and 3.2% below the year-ago period.

Operating income results for the third quarter were negatively impacted by $33 million of severance expenses and $4 million of non-recurring spin-off charges. The company also reported that dilution related to its wireless business was $21 million in the period. Due in part to these items, third quarter consolidated operating income decreased by 9.3% from the previous quarter and 0.8% from the year-ago period to $363 million.

The $33 million severance charge in the third quarter arose from the company's decision to close two call centers and reduce staffing in several functional areas. An additional severance charge of more than $20 million is expected in the fourth quarter. In 2008, the company expects to realize recurring expense savings of approximately $75 million.

Capital Expenditures and Cash Flow

Capital expenditures were $195 million in the third quarter, including $2 million of non-recurring spin-off related capital spending.

Free cash flow before dividends was $330 million in the quarter, compared to $253 million in the prior year period. The increase was driven primarily by lower capital spending and working capital requirements, partially offset by lower operating income and a $75 million contribution to the company's defined benefit pension plan. Year-to-date, the company has generated free cash flow of $687 million.

As a result of the strong cash flow generated during the period, EMBARQ reduced its net debt by $246 million to $5.86 billion. In addition, the company paid a third quarter dividend of $0.625 per share.

Subscriber Results

EMBARQ reported a decline of 126,000 access lines in the third quarter. The company added 60,000 high-speed Internet subscribers, bringing the total to over 1.2 million at quarter end. The company's wireless business grew by 19,000 subscribers, reaching 108,000 at quarter end. Video net additions totaled 12,000, and the company ended the quarter with 190,000 of its customers subscribing to video services.

2007 Outlook

EMBARQ improved its 2007 outlook for capital expenditures, due partly to the slowdown in residential construction. The company reaffirmed other expectations provided on July 26, 2007. Current expectations for the year are as follows:

    *  Access lines are expected to decline at a low-to-mid 6% rate,
       consistent with the company's prior forecast.
    *  Telecommunications segment revenues are expected to be $5.87 to
       $5.92 billion, which is also unchanged from previous expectations.
    *  Consolidated operating income is expected to be $1.51 to $1.56 billion,
       consistent with the previous outlook.
    *  The company's operating income guidance includes approximately
       $30 million of non-recurring spin-off expenses, approximately
       $80 million of wireless dilution, and depreciation of approximately
       $1.06 billion.
    *  The outlook for operating income does not include the $33 million
       severance charge EMBARQ reported this quarter or the more than
       $20 million in severance the company expects to report next quarter.
    *  Capital expenditures are expected to be approximately $840 million,
       including approximately $15 million of non-recurring spin-off related
       capital spending.  Previously the company expected capital spending of
       approximately $865 million, including $15 million of non-recurring
       spin-off related capital spending.


    GAAP and 'As Adjusted' Reporting

EMBARQ's reported results under generally accepted accounting principles (GAAP) for periods prior to its May 2006 spin-off from Sprint Nextel do not reflect certain items that are included in its GAAP reporting for periods subsequent to the spin-off. (These items are described in more detail in the "Financial Measures" section on page 4.) Accordingly, the company's pre spin- off GAAP results are not fully comparable to its post spin-off GAAP results.

The company's as adjusted basis of reporting reflects the current composition of its business for all periods prior and subsequent to its spin- off. Thus, as adjusted results are provided to help investors evaluate trends in the company's performance.

Reconciliations between EMBARQ's GAAP and as adjusted results are provided in Schedule 5.

Conference Call

On Thursday, Nov. 1, 2007 EMBARQ will hold a conference call beginning at 4:30 p.m. EDT. Dial-in numbers for the conference call are (866) 245-2310 (U.S. and Canada) and (706) 679-0843 (International). The code required to access the call is 17792767. Please plan to dial in at least five minutes before the scheduled start time. A simultaneous audio webcast of the call and a downloadable presentation will be available at www.embarq.com/investors.

For those unable to participate live, a replay of the call will be available until Nov. 16, 2007, by dialing (800) 642-1687 (U.S. and Canada) or (706) 645-9291 (International) as well as at www.embarq.com/investors. The accompanying presentation will also be archived and available for download at this website.

Cautionary Statement

This news release contains "forward-looking statements" within the meaning of the securities laws, including statements relating to EMBARQ's outlook or expectations for earnings, revenues, expenses, depreciation and amortization, asset quality, access line declines, customer growth, or other future financial or business performance, strategies or expectations. The words "estimate," "plan," "project," "forecast," "expect," "intend," "anticipate," "believe," "seek," "target," "guidance," "outlook" and similar expressions are intended to identify forward-looking statements. These statements reflect management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer and network usage, customer retention, pricing, operating costs, technology, and the economic and regulatory environment. Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include: economic, competitive, regulatory, technological, capital market and other factors, and the risks that are described in the sections entitled "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" contained in EMBARQ's Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (SEC) and in EMBARQ's other filings with the SEC.

Forward-looking statements speak only as of the date they were made, and EMBARQ undertakes no obligation to update or revise any forward-looking statements in light of new information or future events. You should not place undue reliance on any forward-looking statements, which speak only as of the date of this release. EMBARQ is not obligated to publicly update or news release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this news release.

Financial Measures

For periods prior to and including May 17, 2006, the date of EMBARQ's spin-off from Sprint Nextel, reported operating income reflects the combined performance of the specific legal entities that were spun-off from Sprint Nextel in accordance with GAAP. The reported information for these entities prior to and including the date of separation does not include certain items that are reflected in EMBARQ's reported operating income for periods subsequent to May 17, 2006. These items primarily consist of the following:

    *  In-territory consumer and business long distance customers transferred
       to Embarq by Sprint Nextel, as well as certain in-territory equipment
       and professional service customers transferred to Sprint Nextel by
       Embarq; and

    *  Other assets and liabilities related to ongoing business operations
       transferred to Embarq by Sprint Nextel.

In order to facilitate a comparison of EMBARQ's historical operating performance to its performance subsequent to the spin-off, Schedule 5 provides an as adjusted view of EMBARQ's quarterly operating income for 2006, including reconciliations to GAAP. The as adjusted financial information assumes the spin-off from Sprint Nextel had occurred on Jan. 1, 2006, and includes the items described above. The as adjusted financial information is a non-GAAP measure and should be considered in addition to, but not as a substitute for, the information contained in the company's financial reporting.


     Selected Financial Data (Unaudited) - Current Period Results Compared to
                                    Prior Year

                         Embarq Corporation Consolidated
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Consolidated                    3Q-07       3Q-06        Fav/(Unfav)
       Voice                       $1,051      $1,109      ($58)    -5.2%
       Data                           195         180        15      8.3%
       High-speed Internet            124          98        26     26.5%
       Wireless                        15           3        12    400.0%
       Other services                  61          64        (3)    -4.7%
      Service revenues              1,446       1,454        (8)    -0.6%
       EMBARQ Logistics               121         125        (4)    -3.2%
       Other product                   27          27         -      0.0%
      Product revenues                148         152        (4)    -2.6%
    Net Operating Revenues          1,594       1,606       (12)    -0.7%

    Operating Expenses
      Cost of services                417         438        21      4.8%
      Cost of products                149         145        (4)    -2.8%
      Selling, general and
       administrative                 405         390       (15)    -3.8%
      Depreciation                    260         267         7      2.6%
    Total Operating Expenses        1,231       1,240         9      0.7%

    Operating Income                 $363        $366       ($3)    -0.8%
    Interest expense                  108         116         8      6.9%
    Other expense (income), net        (2)         (5)       (3)   -60.0%
    Income Before Taxes              $257        $255        $2      0.8%
    Income tax expense                100          95        (5)    -5.3%
    Net Income                       $157        $160       ($3)    -1.9%

    Diluted Earnings Per Share      $1.01       $1.06     ($0.05)   -4.8%



                        Embarq Telecommunications Segment
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Telecom                         3Q-07       3Q-06        Fav/(Unfav)
       Voice                       $1,051      $1,109      ($58)    -5.2%
       Data                           195         180        15      8.3%
       High-speed Internet            124          98        26     26.5%
       Wireless                        15           3        12    400.0%
       Other services                  61          64        (3)    -4.7%
      Service revenues              1,446       1,454        (8)    -0.6%
      Product revenues                 27          27         -      0.0%
    Net Operating Revenues          1,473       1,481        (8)    -0.5%

    Operating Expenses
      Cost of services                417         436        19      4.4%
      Cost of products                 41          31       (10)   -32.3%
      Selling, general and
       administrative                 393         379       (14)    -3.7%
      Depreciation                    257         265         8      3.0%
    Total Operating Expenses        1,108       1,111         3      0.3%

    Operating Income                 $365        $370      ($5)     -1.4%



                             Embarq Logistics Segment
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Logistics                        3Q-07      3Q-06         Fav/(Unfav)
    Net Operating Revenues            121         125        (4)    -3.2%

    Operating Expenses
      Cost of services & products     108         116         8      6.9%
      Selling, general and
       administrative                  12          11        (1)    -9.1%
      Depreciation                      3           2        (1)   -50.0%
    Total Operating Expenses          123         129         6      4.7%

    Operating Income                  ($2)       ($4)        $2     50.0%



     Selected Financial Data (Unaudited) - Current Period Results Compared to
                                  Prior Quarter

                         Embarq Corporation Consolidated
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Consolidated                    3Q-07       2Q-07        Fav/(Unfav)
       Voice                       $1,051      $1,071      ($20)    -1.9%
       Data                           195         188         7      3.7%
       High-speed Internet            124         121         3      2.5%
       Wireless                        15          11         4     36.4%
       Other services                  61          63        (2)    -3.2%
      Service revenues              1,446       1,454        (8)    -0.6%
       EMBARQ Logistics               121         123        (2)    -1.6%
       Other product                   27          28        (1)    -3.6%
      Product revenues                148         151        (3)    -2.0%
    Net Operating Revenues          1,594       1,605       (11)    -0.7%

    Operating Expenses
      Cost of services                417         404       (13)    -3.2%
      Cost of products                149         142        (7)    -4.9%
      Selling, general and
       administrative                 405         395       (10)    -2.5%
      Depreciation                    260         264         4      1.5%
    Total Operating Expenses        1,231       1,205       (26)    -2.2%

    Operating Income                 $363        $400      ($37)    -9.3%
    Interest expense                  108         111         3      2.7%
    Other expense (income), net        (2)          -         2       N/A
    Income Before Taxes              $257        $289      ($32)   -11.1%
    Income tax expense                100         113        13     11.5%
    Net Income                       $157        $176      ($19)   -10.8%

    Diluted Earnings Per Share      $1.01       $1.15    ($0.14)   -11.7%



                        Embarq Telecommunications Segment
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Telecom                         3Q-07       2Q-07        Fav/(Unfav)
       Voice                       $1,051      $1,071      ($20)    -1.9%
       Data                           195         188         7      3.7%
       High-speed Internet            124         121         3      2.5%
       Wireless                        15          11         4     36.4%
       Other services                  61          63        (2)    -3.2%
      Service revenues              1,446       1,454        (8)    -0.6%
      Product revenues                 27          28        (1)    -3.6%
    Net Operating Revenues          1,473       1,482        (9)    -0.6%

    Operating Expenses
      Cost of services                417         404       (13)    -3.2%
      Cost of products                 41          33        (8)   -24.2%
      Selling, general and
       administrative                 393         387        (6)    -1.6%
      Depreciation                    257         262         5      1.9%
    Total Operating Expenses        1,108       1,086       (22)    -2.0%

    Operating Income                 $365        $396      ($31)    -7.8%



                             Embarq Logistics Segment
                        Selected Unaudited Financial Data
                    ($ in millions, except per share amounts)

    Logistics                       3Q-07       2Q-07         Fav/(Unfav)
    Net Operating Revenues            121         123        (2)    -1.6%

    Operating Expenses
      Cost of services & products     108         109         1      0.9%
      Selling, general and
       administrative                  12           8        (4)   -50.0%
      Depreciation                      3           2        (1)   -50.0%
    Total Operating Expenses          123         119        (4)    -3.4%

    Operating Income                  ($2)         $4       ($6)  -150.0%



    Definitions

Net Debt is consolidated debt, including current maturities, less cash and equivalents. This non-GAAP measure should be used in addition to, but not as a substitute for the information provided in the balance sheets and statements of cash flows. EMBARQ believes that Net Debt provides useful information about its capacity to reduce debt and improve its capital structure.

    Reconciliation of Non-GAAP
     measure - Net Debt           September 30,      June 30,
                                      2007            2007       Change

    Current maturities                    $99            $54         $45
    Long-term debt                      5,774          6,069        (295)
    Less: Cash and equivalents            (10)           (14)          4
    Net Debt                           $5,863         $6,109       $(246)


Free Cash Flow is defined as the change in cash and equivalents less cash provided or used by financing activities. This non-GAAP measure should be used in addition to, but not as a substitute for the information provided in the statement of cash flows. EMBARQ believes that Free Cash Flow provides useful information about the cash generated from core operations and its ability to fund dividends, scheduled debt maturities and other financing activities.

    Reconciliation of Free Cash        QTD            QTD           YTD
     Flow                         September 30,  September 30, September 30,
                                      2006           2007          2007

    Current maturities
    Change in cash and equivalents      $(16)           $(4)       $(43)
    Net cash used by investing
     activities
    Less: Net cash used by
     financing activities                 269            334         730
    Free Cash Flow                       $253           $330        $687


Average Revenue per Household is calculated by dividing consumer revenues by average primary consumer access lines. While this measure is not defined under accounting principles generally accepted in the United States, the measure uses a GAAP measure as the basis for the calculation. EMBARQ believes Average Revenue per Household provides useful information concerning the success of its bundling initiatives and performance in attracting and retaining high value customers.

HSI Average Revenue per Subscriber is calculated by dividing high-speed Internet revenues by average high-speed Internet subscribers. While this measure is not defined under accounting principles generally accepted in the United States, the measure uses a GAAP measure as the basis for the calculation. EMBARQ believes HSI Average Revenue per Subscriber provides useful information concerning the appeal of its high-speed Internet pricing plans and performance in attracting and retaining high value customers.

About EMBARQ

Embarq Corporation (NYSE: EQ), headquartered in Overland Park, Kansas, offers a complete suite of communications services. The company has approximately 19,000 employees and operates in 18 states. EMBARQ is included in the S&P 500.

For consumers, EMBARQ offers an innovative portfolio of services that includes reliable local and long distance home phone service, high-speed Internet, wireless, and satellite TV from DISH Network(R) -- all on one monthly bill. For businesses, EMBARQ has a comprehensive range of flexible and integrated services designed to help businesses of all sizes be more productive and communicate with their customers. This service portfolio includes local voice and data services, long distance, Business Class DSL, wireless, enhanced data network services, voice and data communication equipment and managed network services.

    For more information, visit embarq.com.


                                Embarq Corporation
                      Consolidated Statements of Operations
                    ($ in millions, except per share amounts)
                                   (unaudited)

    Schedule 1                       Quarter Ended       Nine Months Ended
                                     September 30,         September 30,
                                    2007       2006        2007      2006

    Net Operating Revenues
      Service revenues             $1,446     $1,454     $4,358    $4,250
      Product revenues                148        152        430       496
    Net operating revenues          1,594      1,606      4,788     4,746

    Operating Expenses
      Cost of services                417        438      1,238     1,183
      Cost of products                149        145        418       454
      Selling, general and
       administrative                 405        390      1,204     1,212
      Depreciation                    260        267        794       759
    Total Operating Expenses        1,231      1,240      3,654     3,608

    Operating Income                  363        366      1,134     1,138
    Interest expense                  108        116        328       203
    Other (income) expense, net        (2)        (5)        (2)      (13)
    Income Before Taxes               257        255        808       948
    Income tax expense                100         95        315       358
    Net Income                       $157       $160       $493      $590


    Basic Earnings Per Share (1)    $1.02      $1.07      $3.25     $3.96
    Basic weighted average
     shares (1)                     152.8      149.2      151.6     149.1

    Diluted Earnings Per Share (1)  $1.01      $1.06      $3.21     $3.93
    Diluted weighted average
     shares (1)                     154.5      150.5      153.5     150.1

    (1)  Basic and diluted earnings per share and weighted average shares
         outstanding have been presented on as adjusted basis for the nine
         months ended September 30, 2006.  Shares outstanding and dilution
         effects at the spin-off date of May 17, 2006 were assumed to be
         outstanding at January 1, 2006.



                                Embarq Corporation
                           Consolidated Balance Sheets
                                 ($ in millions)

    Schedule 2                                  September 30,   December 31,
                                                     2007           2006
                                                 (unaudited)

    Assets
      Cash and equivalents                               $10            $53
      Accounts receivable, net                           672            660
      Inventories                                        160            179
      Prepaid expenses and other current assets          150            131
        Total current assets                             992          1,023

      Property, plant and equipment, net               7,761          7,988
      Prepaid pension asset                               58              -
      Other non-current assets                            60             80
        Total non-current assets                       7,879          8,068

      Total assets                                    $8,871         $9,091

    Liabilities and stockholders' equity
      Current maturities                                 $99            $37
      Accounts payable                                   407            503
      Accrued payroll & benefits                         183            198
      Accrued taxes                                      169            164
      Deferred revenue                                   206            211
      Accrued interest                                   136             52
      Other current liabilities                          131             99
        Total current liabilities                      1,331          1,264

      Long-term debt                                   5,774          6,421
      Postretirement and other benefit obligations       336            685
      Deferred income taxes                            1,104          1,039
      Other non-current liabilities                      204            150
        Total non-current liabilities                  7,418          8,295

    Stockholders' equity
      Common stock                                         2              1
      Treasury stock, at cost                              -              -
      Paid in capital                                   (246)          (414)
      Retained earnings                                  529            308
      Accumulated other comprehensive income (loss)     (163)          (363)
        Total stockholders' equity                       122           (468)

    Total liabilities and stockholders' equity        $8,871         $9,091



                                Embarq Corporation
                      Consolidated Statements of Cash Flows
                                 ($ in millions)
                                   (unaudited)

    Schedule 3                                Nine Months Ended September 30,
                                                        2007           2006

    Operating Activities
    Net income                                          $493           $590
    Depreciation                                         794            759
    Deferred and uncertain income tax provisions         (18)           (36)
    Provision for losses on accounts receivable           67             40
    Stock-based compensation expense                      46              9
    Net losses (gains) on sales of assets                 (7)           (12)
    Other, net                                            32             27
    Changes in assets and liabilities:
        Accounts receivable                              (72)           (39)
        Inventories and other current assets             (17)            27
        Accounts payable and other current
         liabilities                                     (24)           341
        Noncurrent assets and liabilities, net           (67)           (25)
      Net cash provided by operating activities        1,227          1,681

    Investing Activities
    Capital expenditures                                (566)          (709)
    Proceeds from construction reimbursements              7              8
    Proceeds from sales of assets                         19             30
      Net cash used by investing activities             (540)          (671)

    Financing Activities
    Changes in debt, net                                (582)         1,393
    Net cash paid to Sprint Nextel associated
     with the spin off                                     -         (2,208)
    Dividends paid to stockholders                      (271)           (75)
    Common stock issued                                   95             10
    Dividends paid to Sprint Nextel                        -           (194)
    Other, net                                            28             (5)
      Net cash used by financing activities             (730)        (1,079)

    Change in cash and equivalents                       (43)           (69)

    Cash and equivalents at beginning of period           53            103

    Cash and equivalents at end of period                $10            $34



                                Embarq Corporation
                 Operating Statistics - As Adjusted* (unaudited)
            (Revenues in millions; lines and subscribers in thousands)
         (* Note: As adjusted is a non-GAAP measure.See Schedule 5 for a
                             reconciliation to GAAP.)

    Schedule 4
                                   3Q-07 (1)  2Q-07 (1) 1Q-07 (1)   2006
    Service and Product Revenues
       Voice                         $1,051    $1,071    $1,084    $4,519
       Data                             195       188       189       716
       High-speed Internet              124       121       116       393
       Wireless                          15        11         9         7
       Other                             61        63        60       248
      Service revenues                1,446     1,454     1,458     5,883
       EMBARQ Logistics                 121       123       109       530
       Other                             27        28        22       106
      Product revenues                  148       151       131       636
    Net operating revenues           $1,594    $1,605    $1,589    $6,519

    Operating Unit Revenues
       Consumer                        $665      $675      $682    $2,726
       Business                         391       385       384     1,522
       Wholesale                        417       422       414     1,741
      Telecommunications              1,473     1,482     1,480     5,989
      EMBARQ Logistics                  121       123       109       530
    Net operating revenues           $1,594    $1,605    $1,589    $6,519

    Access Lines
       Consumer                       4,345     4,461     4,588
       Business                       2,049     2,054     2,065
       Wholesale                        171       176       184
    Total                             6,565     6,691     6,837

    Average Revenue per Household
       Consumer revenue                $665      $675      $682
       Average primary consumer
        access lines                  4,076     4,180     4,261
    Monthly revenue per average HH   $54.38    $53.83    $53.35

    High-speed Internet Lines
       Consumer                       1,017       963       916
       Business                         160       154       149
       Wholesale                         39        39        39
    Total                             1,216     1,156     1,104

    HSI Average Revenue per
     Subscriber
       High-speed Internet revenue     $124      $121      $116
       Average HSI subscribers        1,186     1,130     1,061
    Monthly revenue per average
     subscriber                      $34.85    $35.69    $36.44

    Wireless Subscribers
       Consumer                          98        81        65
       Business                          10         8         6
    Total                               108        89        71

    Entertainment Subscribers           190       178       170

    (1)  As Embarq completed the spin-off from Sprint-Nextel on May 17, 2006,
         periods subsequent to the second quarter 2006 represent GAAP results


    Schedule 4
                                    4Q-06 (1) 3Q-06 (1)   2Q-06     1Q-06
    Service and Product Revenues
       Voice                         $1,120    $1,109    $1,129    $1,161
       Data                             183       180       178       175
       High-speed Internet              108        98        95        92
       Wireless                           4         3         -         -
       Other                             57        64        61        66
      Service revenues                1,472     1,454     1,463     1,494
       EMBARQ Logistics                 115       125       138       152
       Other                             30        27        29        20
      Product revenues                  145       152       167       172
    Net operating revenues           $1,617    $1,606    $1,630    $1,666

    Operating Unit Revenues
       Consumer                        $671      $668      $686      $701
       Business                         381       389       379       373
       Wholesale                        450       424       427       440
      Telecommunications              1,502     1,481     1,492     1,514
      EMBARQ Logistics                  115       125       138       152
    Net operating revenues           $1,617    $1,606    $1,630    $1,666

    Access Lines
       Consumer                       4,659     4,731     4,835     4,970
       Business                       2,059     2,069     2,074     2,079
       Wholesale                        190       198       208       219
    Total                             6,908     6,998     7,117     7,268

    Average Revenue per Household
       Consumer revenue                $671      $668      $686      $701
       Average primary consumer
        access lines                  4,316     4,384     4,482     4,571
    Monthly revenue per average HH   $51.82    $50.79    $51.02    $51.12

    High-speed Internet Lines
       Consumer                         838       763       690       625
       Business                         142       135       127       121
       Wholesale                         37        35        32        31
    Total                             1,017       933       849       777

    HSI Average Revenue per
     Subscriber
       High-speed Internet revenue     $108       $98       $95       $92
       Average HSI subscribers          975       891       813       735
    Monthly revenue per average
     subscriber                      $36.92    $36.66    $38.95    $41.72

    Wireless Subscribers
       Consumer                          44        21         4         -
       Business                           4         3         1         -
    Total                                48        24         5         -

    Entertainment Subscribers           162       146       131       109

    (1)  As Embarq completed the spin-off from Sprint-Nextel on May 17, 2006,
         periods subsequent to the second quarter 2006 represent GAAP results



                                Embarq Corporation
                 Reconciliations of Non-GAAP Measures (unaudited)
                                 ($ in millions)
    Schedule 5

                                  LD               Shared
    Year Ended                 Customer            Assets /           As
    December 31, 2006    GAAP Transfers Pension  Liabilities Other Adjusted

    Net Operating
     Revenues
       Voice            $4,346   $172       $-        $-      $1   $4,519
       Data                706      6        -         -       4      716
       High-speed
        Internet           393      -        -         -       -      393
       Wireless              7      -        -         -       -        7
       Other               270    (22)       -         -       -      248
      Service revenues   5,722    156        -         -       5    5,883
       EMBARQ
        Logistics          530      -        -         -       -      530
       Other               111     (5)       -         -       -      106
      Product revenues     641     (5)       -         -       -      636
    Net operating
     revenues           $6,363   $151       $-        $-      $5   $6,519

    Operating Expenses
       Cost of services  1,594     73        -         -       1    1,668
       Cost of products    598     (4)       -         -       -      594
       Selling,
        general and
        administrative   1,600     35        -       (52)      1    1,584
       Depreciation      1,027      -        -        38       -    1,065
    Total Operating
      Expenses           4,819    104        -       (14)      2    4,911

    Operating Income    $1,544    $47       $-       $14      $3   $1,608

    Operating Unit
     Revenues
       Consumer         $2,590   $136       $-        $-      $-   $2,726
       Business          1,492     28        -         -       2    1,522
       Wholesale         1,751    (13)       -         -       3    1,741
      Telecommunications 5,833    151        -         -       5    5,989
      EMBARQ Logistics     530      -        -         -       -      530
    Net operating
     revenues           $6,363   $151       $-        $-      $5   $6,519

    Capital Expenditures  $923     $-       $-       $67      $-     $990



                                Embarq Corporation
                 Reconciliations of Non-GAAP Measures (unaudited)
                                 ($ in millions)
    Schedule 5

                                  LD               Shared
    Quarter Ended              Customer            Assets /           As
    June 30, 2006        GAAP Transfers Pension  Liabilities Other Adjusted

    Net Operating
     Revenues
       Voice            $1,073    $56       $-        $-      $-   $1,129
       Data                174      2        -         -       2      178
       High-speed
        Internet            95      -        -         -       -       95
       Wireless              -      -        -         -       -       -
       Other                68     (7)       -         -       -       61
      Service revenues   1,410     51        -         -       2    1,463
       EMBARQ Logistics    138      -        -         -       -      138
       Other                31     (2)       -         -       -       29
      Product revenues     169     (2)       -         -       -      167
    Net operating
      revenues          $1,579    $49       $-        $-      $2   $1,630

    Operating Expenses
      Cost of services     367     23        -         -       -      390
      Cost of products     149     (1)       -         -       -      148
      Selling, general
       and administrative  403     13        -       (18)      -      398
      Depreciation         254      -        -        13       -      267
    Total Operating
     Expenses            1,173     35        -        (5)      -    1,203

    Operating Income      $406    $14       $-        $5      $2     $427

    Operating Unit
     Revenues
       Consumer           $642    $44       $-        $-      $-     $686
       Business            369      9        -         -       1      379
       Wholesale           430     (4)       -         -       1      427
      Telecommunications 1,441     49        -         -       2    1,492
      EMBARQ Logistics     138      -        -         -       -      138
    Net operating
      revenues          $1,579    $49       $-        $-      $2   $1,630

    Capital Expenditures  $265     $-       $-       $47      $-     $312



                                Embarq Corporation
                 Reconciliations of Non-GAAP Measures (unaudited)
                                 ($ in millions)
    Schedule 5

                                 LD               Shared
    Quarter Ended             Customer            Assets /           As
    March 31, 2006      GAAP Transfers Pension  Liabilities Other  Adjusted

    Net Operating
     Revenues
       Voice            $1,044   $116       $-        $-      $1   $1,161
       Data                169      4        -         -       2      175
       High-speed
        Internet            92      -        -         -       -       92
       Wireless              -      -        -         -       -       -
       Other                81    (15)       -         -       -       66
      Service revenues   1,386    105        -         -       3    1,494
       EMBARQ Logistics    152      -        -         -       -      152
       Other                23     (3)       -         -       -       20
      Product revenues     175     (3)       -         -       -      172
    Net operating
     revenues           $1,561   $102       $-        $-      $3   $1,666

    Operating Expenses
      Cost of services     378     50        -         -       1      429
      Cost of products     160     (3)       -         -       -      157
      Selling, general
       and administrative  419     22        -       (34)      1      408
      Depreciation         238      -        -        25       -      263
    Total Operating
     Expenses            1,195     69        -        (9)      2    1,257

    Operating Income      $366    $33       $-        $9      $1     $409

    Operating Unit
     Revenues
       Consumer           $609    $92       $-        $-      $-     $701
       Business            353     19        -         -       1      373
       Wholesale           447     (9)       -         -       2      440
      Telecommunications 1,409    102        -         -       3    1,514
      EMBARQ Logistics     152      -        -         -       -      152
    Net operating
     revenues           $1,561   $102       $-        $-      $3   $1,666

    Capital Expenditures  $184     $-       $-       $20      $-     $204



                                Embarq Corporation
                           Supplemental Cash Flow Data
                                 ($ in millions)
                                   (unaudited)

    Schedule 6                                              Quarter Ended
                                                         September 30, 2007

    Operating Activities
    Net income                                                         $157
    Depreciation                                                        260
    Deferred and uncertain income tax provisions                         34
    Provision for losses on accounts receivable                          30
    Stock-based compensation expense                                     16
    Net losses (gains) on sales of assets                                 -
    Other, net                                                           10
    Changes in assets and liabilities:
            Accounts receivable                                         (46)
            Inventories and other current assets                         13
            Accounts payable and other current liabilities              122
            Noncurrent assets and liabilities, net                      (74)
        Net cash provided by operating activities                       522

    Investing Activities
    Capital expenditures                                               (195)
    Proceeds from construction reimbursements                             2
    Proceeds from sales of assets                                         1
        Net cash used by investing activities                          (192)

    Financing Activities
    Changes in debt, net                                               (250)
    Dividends paid to stockholders                                      (97)
    Common stock issued                                                   7
    Other, net                                                            6
        Net cash used by financing activities                          (334)

    Change in cash and equivalents                                       (4)

    Cash and equivalents at beginning of period                          14

    Cash and equivalents at end of period                               $10
SOURCE  Embarq Corporation
    -0-                             11/01/2007
   
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    /Web site:  http://www.embarq.com
                http://www.embarq.com/investors /
    (EQ)

CO:  Embarq Corporation
ST:  Kansas
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