OVERLAND PARK, Kan., Oct. 27 /PRNewswire-FirstCall/ -- EMBARQ (NYSE: EQ) today reported results for the third quarter of 2008, which were highlighted by strong recurring cash flow, despite economic headwinds impacting subscriber and revenue numbers. The company reported third quarter revenue of $1.53 billion, operating income of $353 million, diluted earnings per share of $1.11 and cash flow before dividends of $242 million. Income and cash flow results were negatively impacted by charges associated with a reduction in the company's workforce, which totaled $66 million or $0.29 per diluted share.

"As we have done consistently since our spin-off, we again demonstrated the stability of our cash flow in the third quarter," said Tom Gerke, EMBARQ Chief Executive Officer. "Although evidence of the economic slowdown is apparent in our revenue numbers, we continue to diligently manage expenses and capital, enabling us to again raise our cash flow outlook for the year."

Third Quarter Highlights

-- Cash flow before dividends increased 8.0% year-over-year to $242 million in the third quarter.

-- Data revenues surpassed $200 million for the first time in the third quarter.

-- High-speed Internet (HSI) revenue increased by 11.3% over the year ago period.

-- EMBARQ Wholesale Markets was selected by the Texas Department of Criminal Justice to provide calling services to state correctional facilities, EMBARQ's sixth state correctional contract.

-- The company added a record 45,000 video subscribers during the quarter, finishing the period with 284,000 in total.

-- For consumers, the company introduced RescueIT(SM), a computer support service available to EMBARQ(R) HSI customers. The service includes PC tune- ups, hardware and software installation, security and virus support, new computer set-up, home networking, and troubleshooting.

-- EMBARQ(R) Business recently announced two new security solutions, EMBARQ(R) Managed Security Services, a suite that includes 24-hour monitoring and notification of security events, as well as EMBARQ Security Assessment Services, which evaluates customer networks for security vulnerabilities and provides recommendations for corrective action.

-- EMBARQ(R) Business and EMBARQ Wholesale Markets each received three customer-driven "best-in-class" awards from ATLANTIC-ACM(R). Areas of recognition included customer service and timeliness of service provisioning.

Financial Results

EMBARQ reported consolidated operating revenue of $1.53 billion for the third quarter, a decline of 4.3% from the prior year period. Revenue in the Logistics segment declined 3.3% year-over-year to $117 million.

Revenue in the Telecommunications segment declined 4.4% from the year ago period to $1.41 billion. The primary drivers of the revenue decline were an 8.6% decline in access lines, which led to an 8.7% decline in voice revenue, and a decline in wireless revenue resulting from the company's decision to transition away from its wireless business. These factors were partially offset by year-over-year growth in data and high-speed Internet revenues of 3.6% and 11.3%, respectively.

Operating income was $353 million in the third quarter, compared to $363 million in the prior year period. In current and prior periods, operating income was impacted by the following items:


    Increase (Decrease)          3Q-08      2Q-08      3Q-07
     (in millions)

     Spin-off related expenses      $0         $0        ($4)

     Net wireless dilution         ($1)       ($3)      ($21)

     Workforce reduction          ($66)       ($2)      ($33)

     Gain from sale of real
      estate                        $0         $9         $0

Diluted earnings per share increased 9.9% over the year ago period to $1.11 for the third quarter, which reflects the after tax impact of the items above. Earnings per share benefited from the company's share repurchase program, which was completed in the third quarter.

During the quarter, the company purchased 2.22 million shares for approximately $100 million. In total, the company purchased 11.79 million shares, or 7.7% of shares outstanding at the end of 2007, to complete the $500 million repurchase program.

Capital Expenditures and Cash Flow

Net capital expenditures improved to $170 million in the period, compared to $193 million in the year-ago period.

Cash flow before dividends increased 8.0% over the prior year period to $242 million.

The company paid a dividend of $0.6875 per share in the quarter.

Subscriber Results

Access lines declined by 169,000 during the third quarter, ending the period at 5.85 million in total. This compares to decline of 130,000 lines in the prior year period.

The company added 24,000 high-speed Internet subscribers during the period, bringing its subscriber base to 1.39 million, an increase of 14.1% over the prior year.

Video net additions were a record 45,000 during the quarter, and the company ended the period with 284,000 of its customers subscribing to video services.

2008 Outlook

The company revised its outlook for 2008, which was previously provided on July 29, 2008. Current expectations for the year are as follows:

-- In the near term, EMBARQ expects absolute access line losses to be somewhat higher than prior year levels, consistent with the company's results in the first three quarters of 2008. Previously, the company expected line losses to be close to prior year levels.

-- The company now expects telecommunications revenue to be $5.66 to $5.70 billion. The previous range was $5.72 to $5.80 billion.

-- Net capital spending is now expected to be less than $710 million, an improvement from the previous outlook of less than $740 million.

-- Cash flow before dividends is expected to be between $1.05 and $1.07 billion, excluding the $66 million in workforce reduction-related charges the company recorded in the third quarter. This is an improvement from the previous range of $1.00 to $1.04 billion.

-- Including the $66 million in workforce reduction-related charges recorded in the third quarter, cash flow before dividends is expected to be $1.01 to $1.03 billion.

Other Information

Information about the proposed merger between EMBARQ and CenturyTel, Inc. can be found in a separate news release issued today.

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, 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, including the FCC's proposal regarding changes to intercarrier compensation and federal Universal Service Fund support; 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; volatility and other market conditions in the equity and credit markets, including impacts on the stability of banks and other financial institutions; the effects of changes in both general and local economic conditions on the markets we serve, which can impact demand for our products and services; customer purchasing decisions; collectability of revenue; and, required levels of capital expenditures related to new construction of residences and businesses; the possible impact of adverse changes in political or other external factors over which we have no control, including hurricanes and other severe weather; and other risks referenced in our Annual Report on Form 10-K, including in Part I, Item 1A, "Risk Factors", and from time to time in other filings of ours 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


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


       Consolidated                         3Q-08    3Q-07      Fav/(Unfav)
       Net Operating Revenues
         Voice                               $960   $1,051    ($91)   -8.7%
         Data                                 202      195       7     3.6%
         High-speed Internet                  138      124      14    11.3%
         Wireless                              13       15      (2)  -13.3%
         Other services                        64       61       3     4.9%
        Service revenues                    1,377    1,446     (69)   -4.8%
         EMBARQ Logistics                     117      121      (4)   -3.3%
         Other product                         31       27       4    14.8%
        Product revenues                      148      148       0     0.0%
       Total Net Operating Revenues         1,525    1,594     (69)   -4.3%

       Operating Expenses
        Cost of services                      421      417      (4)   -1.0%
        Cost of products                      137      149      12     8.1%
        Selling, general and administrative   362      405      43    10.6%
        Depreciation                          252      260       8     3.1%
       Total Operating Expenses             1,172    1,231      59     4.8%

       Operating Income                      $353     $363    ($10)   -2.8%
       Interest expense                       101      108       7     6.5%
       Other expense (income), net             (1)      (2)     (1)  -50.0%
       Income Before Taxes                   $253     $257     ($4)   -1.6%
       Income tax expense                      93      100       7     7.0%
       Net Income                            $160     $157      $3     1.9%



       Diluted Earnings Per Share           $1.11    $1.01   $0.10     9.9%



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


       Telecom                              3Q-08    3Q-07      Fav/(Unfav)
       Net Operating Revenues
         Voice                               $960   $1,051   ($91)    -8.7%
         Data                                 202      195      7      3.6%
         High-speed Internet                  138      124     14     11.3%
         Wireless                              13       15     (2)   -13.3%
         Other services                        64       61      3      4.9%
        Service revenues                    1,377    1,446    (69)    -4.8%
        Product revenues                       31       27      4     14.8%
       Total Net Operating Revenues         1,408    1,473    (65)    -4.4%

       Operating Expenses
        Cost of services                      422      417     (5)    -1.2%
        Cost of products                       30       41     11     26.8%
        Selling, general and administrative   350      393     43     10.9%
        Depreciation                          251      257      6      2.3%
       Total Operating Expenses             1,053    1,108     55      5.0%

       Operating Income                      $355     $365   ($10)    -2.7%


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


       Logistics                            3Q-08   3Q-07       Fav/(Unfav)

       Net Operating Revenues                 117     121     (4)     -3.3%

       Operating Expenses
        Cost of services & products           106     108      2       1.9%
        Selling, general and
         administrative                        12      12      0       0.0%
        Depreciation                            1       3      2      66.7%
       Total Operating Expenses               119     123      4       3.3%

       Operating Income                       ($2)    ($2)    $0       0.0%



    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-08   2Q-08       Fav/(Unfav)
       Net Operating Revenues
         Voice                               $960    $994     ($34)   -3.4%
         Data                                 202     199        3     1.5%
         High-speed Internet                  138     137        1     0.7%
         Wireless                              13      17       (4)  -23.5%
         Other services                        64      60        4     6.7%
        Service revenues                    1,377   1,407      (30)   -2.1%
         EMBARQ Logistics                     117     110        7     6.4%
         Other product                         31      32       (1)   -3.1%
        Product revenues                      148     142        6     4.2%
       Total Net Operating Revenues         1,525   1,549      (24)   -1.5%

       Operating Expenses
        Cost of services                      421     381      (40)  -10.5%
        Cost of products                      137     132       (5)   -3.8%
        Selling, general and administrative   362     361       (1)   -0.3%
        Depreciation                          252     247       (5)   -2.0%
       Total Operating Expenses             1,172   1,121      (51)   -4.5%

       Operating Income                      $353    $428     ($75)  -17.5%
       Interest expense                       101     100       (1)   -1.0%
       Other expense (income), net             (1)     (1)       0     0.0%
       Income Before Taxes                   $253    $329     ($76)  -23.1%
       Income tax expense                      93     123       30    24.4%
       Net Income                            $160    $206     ($46)  -22.3%



       Diluted Earnings Per Share           $1.11   $1.38   ($0.27)  -19.6%


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


       Telecom                              3Q-08    2Q-08       Fav/(Unfav)
       Net Operating Revenues
         Voice                               $960     $994    ($34)   -3.4%
         Data                                 202      199       3     1.5%
         High-speed Internet                  138      137       1     0.7%
         Wireless                              13       17      (4)  -23.5%
         Other services                        64       60       4     6.7%
        Service revenues                    1,377    1,407     (30)   -2.1%
        Product revenues                       31       32      (1)   -3.1%
       Total Net Operating Revenues         1,408    1,439     (31)   -2.2%

       Operating Expenses
        Cost of services                      422      381     (41)  -10.8%
        Cost of products                       30       33       3     9.1%
        Selling, general and administrative   350      355       5     1.4%
        Depreciation                          251      246      (5)   -2.0%
       Total Operating Expenses             1,053    1,015     (38)   -3.7%

       Operating Income                      $355     $424    ($69)  -16.3%


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


       Logistics                            3Q-08   2Q-08       Fav/(Unfav)

       Net Operating Revenues                 117     110       7      6.4%

       Operating Expenses
        Cost of services & products           106      99      (7)    -7.1%
        Selling, general and administrative    12       6      (6)  -100.0%
        Depreciation                            1       1       0      0.0%
       Total Operating Expenses               119     106     (13)   -12.3%

       Operating Income                       ($2)     $4     ($6)      n/a

Non-GAAP Definitions & Reconciliations

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 EMBARQ's consolidated financial statements.

Net Debt

Net debt is consolidated debt, including current maturities, less cash and equivalents. EMBARQ believes that net debt provides useful information about its capital structure.


       Reconciliation - Net Debt             3Q08        2Q08        3Q07

       Current maturities                      $2         $82         $99
       Long-term debt                       5,838       5,888       5,774
       Less: Cash and equivalents             (83)        (50)        (10)
       Net Debt                            $5,757      $5,920      $5,863

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 its operations.


      Reconciliation - Net Capital
      Expenditures                           3Q08        2Q08        3Q07

      Capital expenditures                    172         181         195
      Less: Proceeds from construction
       reimbursements                          (2)         (2)         (2)
      Net Capital Expenditures               $170        $179        $193


      Reconciliation - Net Capital
      Expenditures                    Nine Months Ended September 30,
                                             2008        2007

      Capital expenditures                    532         566
      Less: Proceeds from construction
       reimbursements                          (6)         (7)
      Net Capital Expenditures               $526        $559

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 useful information about its capacity to return value to shareholders and reduce debt.


      Reconciliation of Non-GAAP measure
      - Cash Flow before Dividends            3Q08        2Q08        3Q07

      Net cash provided by operating
       activities                             $530        $250        $522
      Add: Changes in assets and
       liabilities, net of other non-cash
       items                                  (118)        203        (105)
      Net Income excluding depreciation        412         453         417
      Less: Net Capital expenditures          (170)       (179)       (193)
      Cash Flow before Dividends              $242        $274        $224


      Reconciliation of Non-GAAP measure
      - Cash Flow before Dividends            Nine Months Ended September 30,
                                                   2008              2007

      Net cash provided by operating activities  $1,373            $1,227
      Add: Changes in assets and
       liabilities, net of other non-cash items     (45)               60
      Net Income excluding depreciation           1,328             1,287
      Less: Net Capital expenditures               (526)             (559)
      Cash Flow before Dividends                   $802              $728

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. EMBARQ has operations in 18 states and is in the Fortune 500(R) list of America's largest corporations.

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)
                                 (unaudited)

                                            Quarter Ended   Nine Months Ended
                                             September 30,     September 30,
                                             2008     2007     2008     2007

    Net Operating Revenues
      Service revenues                     $1,377   $1,446   $4,217   $4,358
      Product revenues                        148      148      428      430
    Total net operating revenue             1,525    1,594    4,645    4,788

    Operating Expenses
      Cost of services                        421      417    1,192    1,238
      Cost of products                        137      149      407      418
      Selling, general and administrative     362      405    1,081    1,204
      Depreciation                            252      260      750      794
    Total Operating Expenses                1,172    1,231    3,430    3,654

    Operating Income                          353      363    1,215    1,134
    Interest expense                          101      108      305      328
    Other (income) expense, net                (1)      (2)      (3)      (2)
    Income Before Income Taxes                253      257      913      808
    Income tax expense                         93      100      335      315
    Net Income                               $160     $157     $578     $493



    Basic Earnings Per Share                $1.12    $1.02    $3.92    $3.25
    Basic weighted average shares           142.6    152.8    147.4    151.6

    Diluted Earnings Per Share              $1.11    $1.01    $3.88    $3.21
    Diluted weighted average shares         144.0    154.5    149.0    153.5



                               Embarq Corporation
                      Condensed Consolidated Balance Sheets
                                 ($ in millions)

                                             September 30,      December 31,
                                                 2008              2007
                                             (unaudited)

    Assets
     Cash and equivalents                         $83               $69
     Accounts receivable, net                     548               616
     Inventories, net                             116               138
     Prepaid expenses and other current assets    182               163
        Total current assets                      929               986

     Net property, plant and equipment          7,508             7,748
     Prepaid pension asset                        186               108
     Other noncurrent assets                       71                59
        Total noncurrent assets                 7,765             7,915

    Total assets                               $8,694            $8,901

    Liabilities and stockholders' equity
     Current maturities of long-term debt          $2               $99
     Accounts payable                             303               387
     Payroll and employee benefits                218               264
     Accrued income taxes                          40                27
     Accrued operating taxes                      110                97
     Deferred revenue                             190               202
     Accrued interest                             137                56
     Other current liabilities                     75                66
        Total current liabilities               1,075             1,198

     Long-term debt                             5,838             5,779
     Benefit plan obligations                     317               320
     Deferred income taxes                      1,166             1,130
     Other noncurrent liabilities                 230               210
        Total noncurrent liabilities            7,551             7,439

    Stockholders' equity
     Common stock                                   2                 2
     Paid-in capital                             (199)             (231)
     Retained earnings                            894               623
     Accumulated other comprehensive income
      (loss)                                     (129)             (130)
     Treasury stock, at cost                     (500)                -
        Total stockholders' equity                 68               264

    Total liabilities and stockholders'
     equity                                    $8,694            $8,901



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

                                               Nine Months Ended September 30,
                                                      2008              2007

    Operating Activities
    Net income                                        $578              $493
    Adjustments to reconcile net income
     to net cash provided by operating activities:
      Depreciation                                     750               794
      Deferred and noncurrent income taxes              15               (18)
      Provision for losses on accounts receivable       77                67
      Stock-based compensation expense                  35                46
      Net losses (gains) on sales of assets             (9)               (7)
       Other, net                                       40                32
      Changes in assets and liabilities:
         Accounts receivable                            (3)              (72)
         Inventories and other current assets          (13)              (17)
         Accounts payable and other current
          liabilities                                  (18)              (24)
         Noncurrent assets and liabilities, net        (79)              (67)
    Net cash provided by operating activities        1,373             1,227

    Investing Activities
      Net capital expenditures                        (526)             (559)
      Proceeds from sales of assets                     10                19
    Net cash used by investing activities             (516)             (540)

    Financing Activities
      Changes in debt, net                             (39)             (582)
      Dividends paid to stockholders                  (306)             (271)
      Repurchase of common stock                      (500)               (2)
      Proceeds from common stock issued                 13               105
      Other, net                                       (11)               20
    Net cash used by financing activities             (843)             (730)

    Change in Cash and Equivalents                      14               (43)

    Cash and Equivalents at Beginning of Period         69                53

    Cash and Equivalents at End of Period              $83               $10



                              Embarq Corporation
                             Operating Statistics
          (Revenues in millions; lines and subscribers in thousands)
                                 (unaudited)


                                            3Q-08    2Q-08    1Q-08     2007
    Service and Product Revenues
      Voice                                  $960     $994   $1,024   $4,238
      Data                                    202      199      198      765
      High-speed Internet                     138      137      133      489
      Wireless                                 13       17       16       51
      Other                                    64       60       62      243
     Service revenues                       1,377    1,407    1,433    5,786
      Logistics                               117      110      115      466
      Other                                    31       32       23      113
     Product revenues                         148      142      138      579
    Net operating revenues                 $1,525   $1,549   $1,571   $6,365

    Operating Unit Revenues
      Consumer                               $619     $641     $656   $2,655
      Business                                382      386      381    1,544
      Wholesale                               407      412      419    1,700
     Telecommunications segment             1,408    1,439    1,456    5,899
     Logistics segment                        117      110      115      466
    Net operating revenues                 $1,525   $1,549   $1,571   $6,365

    Access Lines
      Consumer                              3,894    4,029    4,172
      Business                              1,815    1,841    1,861
      Wholesale                               144      152      159
    Total                                   5,853    6,022    6,192

    Average Revenue per Household (HH)
      Consumer revenue                       $619     $641     $656
      Average households                    3,698    3,821    3,926
    Monthly revenue per average HH         $55.80   $55.92   $55.70

    High-speed Internet Lines
      Consumer                              1,177    1,155    1,132
      Business                                172      170      167
      Wholesale                                39       39       41
    Total                                   1,388    1,364    1,340

    HSI Average Revenue per Subscriber
      High-speed Internet revenue            $138     $137     $133
      Average HSI subscribers              $1,376   $1,352   $1,309
    Monthly revenue per average subscriber $33.43   $33.78   $33.87

    Wireless Subscribers
      Consumer                                 83       97      101
      Business                                  9       10       11
    Total                                      92      107      112

    Entertainment Subscribers                 284      239      217



                              Embarq Corporation
                             Operating Statistics
          (Revenues in millions; lines and subscribers in thousands)
                                 (unaudited)


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

    Operating Unit Revenues
      Consumer                               $652     $658     $669     $676
      Business                                389      388      384      383
      Wholesale                               423      427      429      421
     Telecommunications segment             1,464    1,473    1,482    1,480
     Logistics segment                        113      121      123      109
    Net operating revenues                 $1,577   $1,594   $1,605   $1,589

    Access Lines
      Consumer                              4,272    4,345    4,461    4,588
      Business                              1,876    1,887    1,896    1,909
      Wholesale                               164      171      176      184
    Total                                   6,312    6,403    6,533    6,681

    Average Revenue per Household (HH)
      Consumer revenue                       $652     $658     $669     $676
      Average households                    3,997    4,076    4,180    4,261
    Monthly revenue per average HH         $54.37   $53.81   $53.35   $52.88

    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


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

                                                       Quarter Ended
                                                    September 30, 2008

    Operating Activities
    Net income                                             $160
    Adjustments to reconcile net income
     to net cash provided by operating activities:
      Depreciation                                          252
      Deferred and noncurrent income taxes                   36
      Provision for losses on accounts receivable            28
      Stock-based compensation expense                       13
      Net losses (gains) on sales of assets                   -
      Other, net                                             14
      Changes in assets and liabilities:
        Accounts receivable                                  11
        Inventories and other current assets                 (9)
        Accounts payable and other current liabilities       80
        Noncurrent assets and liabilities, net              (55)
    Net cash provided by operating activities               530

    Investing Activities
      Net capital expenditures                             (170)
      Proceeds from sales of assets                           8
    Net cash used by investing activities                  (162)

    Financing Activities
      Changes in debt, net                                 (130)
      Dividends paid to stockholders                        (98)
      Repurchase of common stock                           (110)
      Proceeds from common stock issued                       3
      Other, net                                              -
    Net cash used by financing activities                  (335)

    Change in Cash and Equivalents                           33

    Cash and Equivalents at Beginning of Period              50

    Cash and Equivalents at End of Period                   $83


    Media Contact:
    Francisco Ybarra
    913-345-6529
    francisco.a.ybarra@embarq.com

    Investor Relations Contact:
    Trevor Erxleben, 866-591-1964
    investorrelations@embarq.com

 

SOURCE EMBARQ



Web site: http://www.embarq.com 

(EQ)