OVERLAND PARK, Kan., Feb. 7 /PRNewswire-FirstCall/ -- EMBARQ (NYSE: EQ) today announced its fourth quarter and full-year 2007 results, highlighted by strong cash generation and continued growth in both Business Markets revenue and average revenue per household. The company also provided its outlook for 2008, which calls for a 3.1% to 7.5% increase in cash flow before dividends, as defined in the 'Non-GAAP Definitions' section below.

For the fourth quarter, EMBARQ reported total revenues of $1.58 billion, operating income of $370 million and diluted earnings per share of $1.23. For full-year 2007, the company reported total revenues of $6.37 billion, operating income of $1.50 billion and diluted earnings per share of $4.44.

"Our 2007 results met or exceeded the expectations we provided last quarter, which had been revised upward from our original outlook a year ago," said Tom Gerke, Interim Chief Executive Officer. "In 2008, we expect marked improvement in cash generation, as we continue to focus on delivering practical innovation, increasing customer satisfaction and achieving operational excellence throughout our business."

    Highlights
    -- Cash flow before dividends totaled $921 million for full-year 2007.
    -- Revenue in the company's Business Markets group grew at a 2.4%
       year-over-year rate in the fourth quarter.
    -- Fourth quarter average revenue per household increased 5.9% compared to
       the year-ago period.
    -- As previously announced, the Board of Directors authorized a 10%
       dividend increase and $500 million share repurchase program.
    -- Introduced EMBARQ(TM) Unlimited Music, which provides access to over
       3 million songs via the company's MyEMBARQ.com high-speed Internet
       portal.
    -- Opened the EMBARQ(TM) Video Store, which provides on-demand access to
       more than 5,000 movies, 5,000 music videos and 2,000 TV shows via the
       MyEMBARQ.com portal.


    Results Summary
    EMBARQ's 2007 results met or exceeded the updated outlook the company
provided on Nov. 1, 2007.


           2007                     Actual          11/1/07/ Outlook

    Access Lines                -6.3%            Low-to-mid 6% rate of decline

    Telecom Revenue             $5.90 billion    $5.87 to $5.92 billion

    Operating Income*           $1.50 billion    $1.45 to $1.50 billion

    Depreciation                $1.06 billion    Approximately $1.06 billion

    Net Capital Expenditures**  $819 million     Approximately $830 million

* For comparability, the outlook for operating income was adjusted downward by $64 million to reflect 3Q-07 and 4Q-07 severance expense, which was specifically excluded from guidance.

** For comparability, the outlook for capital spending was adjusted downward by $10 million to reflect the constructions reimbursements component of net capital spending, as defined in the 'Non-GAAP Definitions' section of this press release.

Financial Results

EMBARQ reported total revenue of $1.58 billion for the fourth quarter, a 2.5% decrease from the prior-year period. For the full year, total revenue was $6.37 billion, a decrease of 2.4% compared to as adjusted revenues in the prior year.

Telecommunications segment revenue was $1.46 billion in the fourth quarter, representing a decline of 2.5% compared to the prior year. For the year, Telecommunications revenue was $5.90 billion, a decrease of 1.5% compared to 2006 as adjusted revenue.

Total and Telecommunications revenue for both prior year periods included $34 million in revenue resulting from the settlement of a billing dispute.

Revenue for the Logistics segment was $113 million in the fourth quarter and $466 million for full-year 2007. Relative to 2006, fourth quarter and full-year revenue declined 1.7% and 12.1%, respectively.

Consolidated operating income was $370 million in the quarter, a decrease of 8.9% from the prior year. For the full year, operating income was $1.50 billion, a decrease of 6.5% from prior year as adjusted operating income.

    Operating income was impacted by the following items:


                                                 2007             2006
    Increase (Decrease)                      4Q      Total     4Q      Total
    (in millions)

    Revenue from billing dispute settlement $ -       $ -      $34        $34

    Severance expenses                     ($31)     ($80)     ($2)      ($34)

    Spin-off related expenses               ($5)     ($26)    ($13)     ($116)

    Net wireless dilution                  ($14)     ($77)    ($25)      ($44)



    Financial Results (continued)

EMBARQ reported diluted earnings per share of $1.23 for the fourth quarter and $4.44 for the full year. A lower than normal effective tax rate in the fourth quarter benefitted the company's earnings per share results by $0.18, which offset the fourth quarter items summarized above.

Capital Expenditures and Cash Flow

Net capital expenditures were $260 million in the quarter and $819 million for the year, including spin-off related capital spending of $4 million and $12 million, respectively.

The company reported cash flow before dividends of $193 million in the quarter and $921 million for the full-year.

During the fourth quarter, EMBARQ paid a dividend of $0.625 per share.

The company reduced its net debt by $54 million during the quarter and $596 million for the year, ending the year with net debt of $5.81 billion.

Subscriber Results

Access lines declined by 91,000 lines during the quarter, ending the year at 6.47 million lines. High-speed Internet net additions were 61,000 for the quarter, bringing the end of year subscriber base to 1,277,000 customers. EMBARQ ended the year with 112,000 wireless subscribers, up 4,000 during the quarter as the company refined its approach in targeting wireless subscribers. Video net additions were 10,000 in the quarter, bringing the total number of the company's customers subscribing to video to 200,000 at the end of the year.

    2008 Outlook
    EMBARQ provided the following information related to its outlook for 2008:

    -- Cash flow before dividends is expected to increase between 3.1% and
       7.5% to $950 to $990 million.
    -- Wireless dilution is expected to improve by as much as 75% from the
       $77 million reported in 2007.
    -- Net capital expenditures are expected to be approximately $800 million.
    -- On an absolute basis, access line losses are expected to be flat or
       slightly higher relative to the 434,000 line losses reported in 2007.
    -- Despite access line losses, Telecommunications segment revenue is
       expected to only decrease 1.2% to 2.5% to $5.75 to $5.83 billion.

    Conference Call

On Thursday, February 7, 2008 EMBARQ will hold a conference call beginning at 4:30 p.m. EST. Dial-in numbers for the conference call are (866) 245-2310 (U.S. and Canada) and (816) 650-2838 (International). The code required to access the call is 29868977. 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 February 21, 2008 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 Regarding Forward-Looking Statements

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, cash flow measures, customer growth, wireless dilution, 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 but are not limited to: the effects of vigorous competition in the markets in which we operate, including access line loss to cable operators and wireless providers; the impact of new, emerging and competing technologies on our business; the effect of changes in the legal and regulatory environment and the impact of compliance with regulatory mandates; potential fluctuations in our financial performance, including revenues, capital expenditures and operating expenses; the impact of any adverse change in the ratings assigned to our debt by ratings agencies on the cost of financing or the ability to raise additional financing if needed; the effects of mergers, consolidations or other unexpected developments in the industries relevant to our operations; the failure to realize expected improvement in operating efficiencies; the costs and business risks with the development of new products and services; the uncertainties related to our investments in networks, systems and other businesses; the uncertainties related to the implementation of our business strategies; the inability of third parties to perform to our requirements under agreements related to our business operations; our ownership of or ability to license technology that may be necessary to expand our business offerings; restrictions in our patent agreement with Sprint Nextel; unexpected adverse results of legal proceedings involving our company; the impact of equipment failure or other breaches of network or information technology security; potential work stoppages; a determination by the IRS that the spin-off from Sprint Nextel should be treated as a taxable transaction; the volatility in the equity market; the possible impact of adverse changes in economic, political or other external factors over which we have no control; and the other risks referenced in the sections entitled "Risk Factors" 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 release any revisions to these forward-looking statements to reflect any events or circumstances after the date of this news release.


         Selected Financial Data (Unaudited) - Current Period Results
                            Compared to Prior Year
                  ($ in millions, except per share amounts)


    Consolidated                           4Q-07    4Q-06     Fav/(Unfav)
    Net Operating Revenues
       Voice                               $1,032   $1,120     ($88)  -7.9%
       Data                                   193      183       10    5.5%
       High-speed Internet                    128      108       20   18.5%
       Wireless                                16        4       12     n/a
       Other services                          59       57        2    3.5%
     Service revenues                       1,428    1,472      (44)  -3.0%
       EMBARQ Logistics                       113      115       (2)  -1.7%
       Other product                           36       30        6   20.0%
     Product revenues                         149      145        4    2.8%
    Total Net Operating Revenues            1,577    1,617      (40)  -2.5%

    Operating Expenses
       Cost of services                       399      411       12    2.9%
       Cost of products                       141      144        3    2.1%
       Selling, general and
        administrative                        404      388      (16)  -4.1%
       Depreciation                           263      268        5    1.9%
    Total Operating Expenses                1,207    1,211        4    0.3%

    Operating Income                         $370     $406     ($36)  -8.9%
    Interest expense                          104      121       17   14.0%
    Other expense (income), net                (1)      (1)       0    0.0%
    Income Before Taxes                      $267     $286     ($19)  -6.6%
    Income tax expense                         77       92       15   16.3%
    Net Income                               $190     $194      ($4)  -2.1%

    Diluted Earnings Per Share              $1.23    $1.28   ($0.05)  -3.9%



    Telecom                                 4Q-07    4Q-06     Fav/(Unfav)
    Net Operating Revenues
       Voice                               $1,032   $1,120   ($88)    -7.9%
       Data                                   193      183     10      5.5%
       High-speed Internet                    128      108     20     18.5%
       Wireless                                16        4     12       n/a
       Other services                          59       57      2      3.5%
     Service revenues                       1,428    1,472    (44)    -3.0%
     Product revenues                          36       30      6     20.0%
    Total Net Operating Revenues            1,464    1,502    (38)    -2.5%

    Operating Expenses
       Cost of services                       397      411     14      3.4%
       Cost of products                        39       39      0      0.0%
       Selling, general and
        administrative                        395      379    (16)    -4.2%
       Depreciation                           262      265      3      1.1%
    Total Operating Expenses                1,093    1,094      1      0.1%

    Operating Income                         $371     $408   ($37)    -9.1%




    Logistics                               4Q-07   4Q-06     Fav/(Unfav)

    Net Operating Revenues                   113     115     (2)     -1.7%

    Operating Expenses
       Cost of services & products           104     105      1       1.0%
       Selling, general and
        administrative                         9       9      0       0.0%
       Depreciation                            1       3      2      66.7%
    Total Operating Expenses                 114     117      3       2.6%

    Operating Income                         ($1)    ($2)    $1      50.0%



         Selected Financial Data (Unaudited) - Current Period Results
                          Compared to Prior Quarter
                  ($ in millions, except per share amounts)


    Consolidated                           4Q-07    3Q-07      Fav/(Unfav)
    Net Operating Revenues
       Voice                               $1,032   $1,051    ($19)   -1.8%
       Data                                   193      195      (2)   -1.0%
       High-speed Internet                    128      124       4     3.2%
       Wireless                                16       15       1     6.7%
       Other services                          59       61      (2)   -3.3%
     Service revenues                       1,428    1,446     (18)   -1.2%
       EMBARQ Logistics                       113      121      (8)   -6.6%
       Other product                           36       27       9    33.3%
     Product revenues                         149      148       1     0.7%
    Total Net Operating Revenues            1,577    1,594     (17)   -1.1%

    Operating Expenses
       Cost of services                       399      417      18     4.3%
       Cost of products                       141      149       8     5.4%
       Selling, general and
        administrative                        404      405       1     0.2%
       Depreciation                           263      260      (3)   -1.2%
    Total Operating Expenses                1,207    1,231      24     1.9%

    Operating Income                         $370     $363      $7     1.9%
    Interest expense                          104      108       4     3.7%
    Other expense (income), net                (1)      (2)     (1)  -50.0%
    Income Before Taxes                      $267     $257     $10     3.9%
    Income tax expense                         77      100      23    23.0%
       Net Income                            $190     $157     $33    21.0%

    Diluted Earnings Per Share              $1.23    $1.01   $0.22    21.8%



    Telecom                                4Q-07    3Q-07      Fav/(Unfav)
    Net Operating Revenues
       Voice                               $1,032   $1,051   ($19)    -1.8%
       Data                                   193      195     (2)    -1.0%
       High-speed Internet                    128      124      4      3.2%
       Wireless                                16       15      1      6.7%
       Other services                          59       61     (2)    -3.3%
     Service revenues                       1,428    1,446    (18)    -1.2%
     Product revenues                          36       27      9     33.3%
    Total Net Operating Revenues            1,464    1,473     (9)    -0.6%

    Operating Expenses
       Cost of services                       397      417     20      4.8%
       Cost of products                        39       41      2      4.9%
       Selling, general and
        administrative                        395      393     (2)    -0.5%
       Depreciation                           262      257     (5)    -1.9%
    Total Operating Expenses                1,093    1,108     15      1.4%

    Operating Income                         $371     $365     $6      1.6%



    Logistics                               4Q-07   3Q-07      Fav/(Unfav)

    Net Operating Revenues                   113     121     (8)     -6.6%

    Operating Expenses
       Cost of services & products           104     108      4       3.7%
       Selling, general and
        administrative                         9      12      3      25.0%
       Depreciation                            1       3      2      66.7%
    Total Operating Expenses                 114     123      9       7.3%

    Operating Income                         ($1)    ($2)    $1      50.0%



    Non-GAAP Definitions

The following non-GAAP (generally accepted accounting principles) measures should be used in addition to, but not as a substitute for the information provided in the Embarq's consolidated financial statements.

As Adjusted Reporting

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.

Accordingly, EMBARQ's pre spin-off GAAP results are not fully comparable to its post spin-off GAAP results. 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.


    Net Debt

Net debt is consolidated debt, including current maturities, less cash and equivalents. EMBARQ believes that Net Debt provides useful information about its capacity to reduce debt and improve its capital structure.


       Reconciliation - Net Debt                4Q06        3Q07        4Q07

       Current maturities                         $37         $99         $99
       Long-term debt                           6,421       5,774       5,779
       Less: Cash and equivalents                 (53)        (10)        (69)
       Net Debt                                $6,405      $5,863      $5,809


    Net Capital Expenditures

Net capital expenditures are capital expenditures less proceeds from construction reimbursements. EMBARQ believes that net capital expenditures provides useful information about the capital requirements of our operations.

      Reconciliation - Net Capital
       Expenditures                              4Q07        2007

      Capital expenditures                        263        829
      Less: Proceeds from construction
       reimbursements                              (3)       (10)
      Net Capital Expenditures                   $260       $819


    Cash Flow Before Dividends

Cash flow before dividends is net cash provided by operating activities, excluding the effects of changes in assets and liabilities and other non-cash items, less net capital expenditures. EMBARQ believes that cash flow before dividends provides more consistent and useful information about its capacity to return value to shareholders and pay debt.

      Reconciliation - Cash Flow before
       Dividends                               3Q07       4Q07         2007

      Net cash provided by operating
       activities                              $522       $397       $1,624
      Add: Changes in assets and
       liabilities, net of other non-cash
       items                                   (105)        56          116
      Net Income excluding depreciation         417        453        1,740
      Less: Net Capital expenditures           (193)      (260)        (819)
      Cash Flow before Dividends               $224       $193         $921

Because Embarq cannot accurately predict the level of cash flow from operating activities and proceeds from construction reimbursements, Embarq does not provide reconciliations to GAAP of its forward looking measures of cash flow before dividends and net capital expenditures.

Other Financial Measures

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 18,000 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 High Speed Internet, wireless, satellite TV from DIRECTV(R), 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)


                                           Quarter Ended       Year Ended
    Schedule 1                              December 31,      December 31,
                                           2007     2006     2007      2006
                                     (unaudited)(unaudited)(unaudited)

    Net Operating Revenues
      Service revenues                     $1,428   $1,472   $5,786   $5,722
      Product revenues                        149      145      579      641
    Net operating revenues                  1,577    1,617    6,365    6,363

    Operating Expenses
      Cost of services                        399      411    1,637    1,594
      Cost of products                        141      144      559      598
      Selling, general and administrative     404      388    1,608    1,600
      Depreciation                            263      268    1,057    1,027
    Total Operating Expenses                1,207    1,211    4,861    4,819

    Operating Income                          370      406    1,504    1,544
    Interest expense                          104      121      432      324
    Other (income) expense, net                (1)      (1)      (3)     (14)
    Income Before Taxes                       267      286    1,075    1,234
    Income tax expense                         77       92      392      450
    Net Income                               $190     $194     $683     $784

    Basic Earnings Per Share (1)            $1.24    $1.30    $4.50    $5.26
    Basic weighted average shares (1)       153.0    149.6    151.9    149.2

    Diluted Earnings Per Share (1)          $1.23    $1.28    $4.44    $5.21
    Diluted weighted average shares (1)     154.9    151.4    153.9    150.4

    (1) Basic and diluted earnings per share and weighted average shares
    outstanding have been presented on a pro forma basis for the year ended
    December 31, 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
                      Condensed Consolidated Balance Sheets
                                 ($ in millions)

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

    Assets
    Cash and equivalents                               $69               $53
    Accounts receivable, net                           616               660
    Inventories                                        138               179
    Prepaid expenses and other current
     assets                                            117               131
        Total current assets                           940             1,023

    Property, plant and equipment, net               7,748             7,988
    Prepaid pension asset                              108                 -
    Other non-current assets                            59                80
        Total non-current assets                     7,915             8,068

    Total assets                                    $8,855            $9,091

    Liabilities and stockholders' equity
    Current maturities                                 $99               $37
    Accounts payable                                   387               503
    Accrued payroll & benefits                         208               198
    Accrued taxes                                       27                68
    Deferred revenue                                   202               211
    Accrued interest                                    56                52
    Other current liabilities                          219               195
        Total current liabilities                    1,198             1,264

    Long-term debt                                   5,779             6,421
    Postretirement and other benefit
     obligations                                       320               685
    Deferred income taxes                            1,084             1,039
    Other non-current liabilities                      210               150
    Total non-current liabilities                    7,393             8,295

    Stockholders' equity
    Common stock                                         2                 1
    Paid in capital                                   (231)             (414)
    Retained earnings                                  623               308
    Accumulated other comprehensive
     income (loss)                                    (130)             (363)
        Total stockholders' equity                     264              (468)

    Total liabilities and stockholders'
     equity                                         $8,855            $9,091




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


    Schedule 3                                      Year Ended December 31,
                                                    2007              2006
                                                 (unaudited)
    Operating Activities
    Net income                                        $683              $784
    Depreciation                                     1,057             1,027
    Deferred and uncertain income tax
     provisions                                        (43)              (69)
    Provision for losses on accounts
     receivable                                         94                55
    Stock-based compensation expense                    50                31
    Net losses (gains) on sales of assets               (7)              (17)
    Other, net                                          45                39
    Changes in assets and liabilities:
           Accounts receivable                         (75)              (35)
           Inventories and other current
            assets                                      (4)               29
           Accounts payable and other
            current liabilities                        (98)              235
           Noncurrent assets and
            liabilities, net                           (78)              (26)
        Net cash provided by operating
         activities                                  1,624             2,053

    Investing Activities
    Net capital expenditures                          (819)             (913)
    Proceeds from sales of assets                       25                33
        Net cash used by investing
         activities                                   (794)             (880)

    Financing Activities
    Changes in debt, net                              (577)            1,308
    Net cash paid to Sprint Nextel
     associated with the spin off                        -            (2,208)
    Dividends paid to stockholders                    (367)             (150)
    Common stock issued                                109                20
    Dividends paid to Sprint Nextel, pre-
     spin-off                                            -              (194)
    Other, net                                          21                 1
        Net cash used by financing
         activities                                   (814)           (1,223)

    Change in cash and equivalents                      16               (50)

    Cash and equivalents at beginning of
     period                                             53               103

    Cash and equivalents at end of period              $69               $53




                           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
                                        2007    4Q-07   3Q-07   2Q-07  1Q-07
                                         (1)     (1)     (1)     (1)    (1)
    Service and Product Revenues
     Voice                             $4,238  $1,032  $1,051  $1,071  $1,084
     Data                                 765     193     195     188     189
     High-speed Internet                  489     128     124     121     116
     Wireless                              51      16      15      11       9
     Other                                243      59      61      63      60
    Service revenues                    5,786   1,428   1,446   1,454   1,458
     Logistics                            466     113     121     123     109
     Other                                113      36      27      28      22
    Product revenues                      579     149     148     151     131
    Net operating revenues             $6,365  $1,577  $1,594  $1,605  $1,589

    Operating Unit Revenues
     Consumer                          $2,680    $658    $665    $675    $682
     Business                           1,550     390     391     385     384
     Wholesale                          1,669     416     417     422     414
    Telecommunications segment          5,899   1,464   1,473   1,482   1,480
    Logistics segment                     466     113     121     123     109
    Net operating revenues             $6,365  $1,577  $1,594  $1,605  $1,589

    Access Lines
     Consumer                                   4,272   4,345   4,461   4,588
     Business                                   2,038   2,049   2,054   2,065
     Wholesale                                    164     171     176     184
    Total                                       6,474   6,565   6,691   6,837

    Average Revenue per Household (HH)
     Consumer revenue                            $658    $665    $675    $682
     Average primary consumer access
     lines                                      3,997   4,076   4,180   4,261
    Monthly revenue per average HH             $54.87  $54.38  $53.83  $53.35

    High-speed Internet Lines
     Consumer                                   1,074   1,017     963     916
     Business                                     164     160     154     149
     Wholesale                                     39      39      39      39
    Total                                       1,277   1,216   1,156   1,104

    HSI Average Revenue per Subscriber
     High-speed Internet revenue                 $128    $124    $121    $116
     Average HSI subscribers                    1,247   1,186   1,130   1,061
    Monthly revenue per average
     subscriber                                $34.22  $34.85  $35.69  $36.44

    Wireless Subscribers
     Consumer                                     101      98      81      65
     Business                                      11      10       8       6
    Total                                         112     108      89      71

    Entertainment Subscribers                     200     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



                           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

                                        2006   4Q-06   3Q-06   2Q-06   1Q-06
                                                 (1)    (1)
    Service and Product Revenues
     Voice                             $4,519  $1,120  $1,109  $1,129  $1,161
     Data                                 716     183     180     178     175
     High-speed Internet                  393     108      98      95      92
     Wireless                               7       4       3       -       -
     Other                                248      57      64      61      66
    Service revenues                    5,883   1,472   1,454   1,463   1,494
     Logistics                            530     115     125     138     152
     Other                                106      30      27      29      20
    Product revenues                      636     145     152     167     172
    Net operating revenues             $6,519  $1,617  $1,606  $1,630  $1,666

    Operating Unit Revenues
     Consumer                          $2,726    $671    $668    $686    $701
     Business                           1,522     381     389     379     373
     Wholesale                          1,741     450     424     427     440
    Telecommunications segment          5,989   1,502   1,481   1,492   1,514
    Logistics segment                     530     115     125     138     152
    Net operating revenues             $6,519  $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 (HH)
     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
                                                       Shared
                                         LD            Assets /
    Year Ended December 31,           Customer         Liabili-          As
     2006                       GAAP  Transfers Pension  ties   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
     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
      segment                   5,833     151      -       -      5     5,989
     Logistics segment            530       -      -       -      -       530
    Net operating revenues     $6,363    $151     $-      $-     $5    $6,519



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

    Schedule 5
                                                       Shared
                                          LD           Assets /
    Quarter Ended June 30,             Customer        Liabili-          As
     2006                      GAAP   Transfers Pension  ties   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
     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
      segment                   1,441      49      -       -      2     1,492
     Logistics segment            138       -      -       -      -       138
    Net operating revenues     $1,579     $49     $-      $-     $2    $1,630



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

    Schedule 5
                                                        Shared
                                         LD             Assets /
    Quarter Ended March 31,            Customer         Liabili-         As
     2006                      GAAP   Transfers Pension  ties   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
     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
     segment                    1,409     102      -       -      3     1,514
    Logistics segment             152       -      -       -      -       152
    Net operating revenues     $1,561    $102     $-      $-     $3    $1,666




                                Embarq Corporation
                           Supplemental Cash Flow Data
                                 ($ in millions)


    Schedule 6                                       Quarter Ended
                                                   December 31, 2007
                                                      (unaudited)
    Operating Activities
    Net income                                          $190
    Depreciation                                         263
    Deferred and uncertain income tax
     provisions                                          (25)
    Provision for losses on accounts
     receivable                                           27
    Stock-based compensation expense                       4
    Net losses (gains) on sales of assets                  -
    Other, net                                            13
    Changes in assets and liabilities:
           Accounts receivable                            (3)
           Inventories and other current
            assets                                        13
           Accounts payable and other
            current liabilities                          (74)
           Noncurrent assets and
            liabilities, net                             (11)
        Net cash provided by operating
         activities                                      397

    Investing Activities
    Net capital expenditures                            (260)
    Proceeds from sales of assets                          6
        Net cash used by investing
         activities                                     (254)

    Financing Activities
    Changes in debt, net                                   5
    Dividends paid to stockholders                       (96)
    Common stock issued                                   14
    Other, net                                            (7)
        Net cash used by financing
         activities                                      (84)

    Change in cash and equivalents                        59

    Cash and equivalents at beginning of
     period                                               10

    Cash and equivalents at end of period                $69

SOURCE  EMBARQ
    -0-                             02/07/2008
 
    /Web site:  http://www.mullen.com/
    (EQ)

CO:  EMBARQ
ST:  Kansas
IN:  TLS MLM CPR
SU:  ERN CCA ERP

DL-JK
-- CLTH089 -- 
1261 02/07/2008 16:05 EST http://www.prnewswire.com