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CenturyLink Reports Fourth Quarter 2010 Earnings

MONROE, La. Feb. 15, 2011

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

  • Added nearly 29,000 high-speed Internet customers during the quarter and ended 2010 with 2,394,000 high-speed Internet customers.
  • Reduced access line losses by 12% compared to third quarter 2010 and 15.8% compared to fourth quarter 2009.
  • $342 million $7.1 million $9.1 million
  • $85 million $340 million

Fourth Quarter Highlights

(Excluding nonrecurring items reflected in the attached financial schedules)

(In thousands, except per share amounts and subscriber data)

Quarter Ended

12/31/10

Quarter Ended

12/31/09

% Change

Operating Revenues

$1,721,977

$1,839,424

(6.4)%

Operating Cash Flow (1)

$864,318

$943,592

(8.4)%

Net Income (2)

$232,287

$286,688

(19.0)%

Diluted Earnings Per Share

$.76

$.95

(20.0)%

Average Diluted Shares Outstanding

303,201

299,233

1.3%

Capital Expenditures (3)

$263,990

$337,417

(21.8)%

Access Lines

6,504,000

7,039,000

(7.6)%

High-Speed Internet Customers

2,394,000

2,236,000

7.1%

(1) Operating Cash Flow is a non-GAAP financial measure. A reconciliation of this item to comparable GAAP measures is included in the attached financial schedules.

(2) All references to net income contained in this release represent net income attributable to CenturyLink, Inc.

(3) Includes nonrecurring capital expenditures of $9.1 million in fourth quarter 2010 and $28.1 million in fourth quarter 2009 related to the Embarq integration.

"CenturyLink’s financial and operating results for the fourth quarter and for full year 2010 reflect an improving revenue trend along with the challenge of reducing costs in the near term due to the pending Qwest merger and the market expansion of IPTV service," Glen F. Post, III, chief executive officer and president, said. "Operating revenues were better than we had originally anticipated for both the quarter and full year and our annual rate of access line decline improved to 7.6% in 2010 from pro forma 8.8% in 2009. We expect our revenue trend to improve in 2011 compared to 2010 driven by anticipated lower access line losses and revenues from strategic initiatives. "

Operating revenues $1.72 billion $1.84 billion

Operating expenses $1.22 billion $1.25 billion

Operating cash flow $864.3 million $943.6 million

"CenturyLink is well positioned to meet the growing demand for broadband and IP-based services across all customer segments. We added 29,000 high-speed Internet subscribers during the fourth quarter and 158,000 subscriber additions for full year 2010, representing 7.1% annual subscriber growth." Post said. "We expect strategic revenues to increase in the months ahead driven by continued growth in high-speed Internet subscribers, consumer demand for broadband services such as IPTV, and business customer demand for high-bandwidth data services and data transport services."  

Net income $232.3 million $286.7 million $.76 $.95

For the year 2010 $7.04 billion $4.97 billion $3.62 billion $2.48 billion $1.03 billion $720.9 million $3.39 $3.60 July 1, 2009

Under generally accepted accounting principles (GAAP) $225.2 million $230.2 million $.74 $.77

$16.9 million $.056 $6.9 million $.023 $13.0 million $.04 $3.7 million $.01

$37.8 million $.13 $19.8 million $.07 $5.0 million $.02 $4.4 million $.015 $10.7 million $.04

$947.7 million $647.2 million $3.13 $3.23

Outlook for 2011 .

$1 billion $864 million

$.49 to $.55

The following items are expected to have a positive impact on 2011 diluted earnings per share (excluding any positive impacts related to the Qwest acquisition):

  • $.09 to $.11
  • $.10 to $.14
  • $.06 to $.08
  • $.05 to $.07

The following items are expected to negatively impact 2011 diluted earnings per share:

  • ($.40) to ($.45)
  • ($.18) to ($.22)
  • ($.12) to ($.14)
  • ($.05) to ($.06)
  • ($.05) to ($.07)

$1.68 to $1.70 billion $.66 to $.70

Additionally, CenturyLink is providing the following information regarding the estimated impact that the accounting rules related to business combinations are expected to have on the combined company’s annual financial results in order to assist the investment community to better understand the combined company.  None of these items will impact cash flow:

  • December 31, 2010 $287 million
  • December 31, 2010 $140 million $100 million
  • Additionally, under purchase accounting rules, the tangible and intangible assets of the acquired company must be reflected on the books of the combined company at their fair value. The final fair value assignment may significantly impact depreciation and amortization expense; however, the impact cannot be determined at this time.
  • $70 million

All of the assets and liabilities of Qwest will be assigned a fair value pursuant to business combination accounting rules upon the consummation of the merger. The actual fair values assigned to the above items may change significantly from those estimates provided herein. The above estimates also assume the associated income statement impacts occur for a full year. The actual results of the fair value adjustments to reflect the business combination accounting rules will only occur subsequent to the merger date.

All 2011 outlook figures included in this release exclude the effects of nonrecurring items, future changes in regulation, integration expenses associated with the Embarq acquisition, transaction or integration expenses associated with the pending Qwest transaction, any changes in operating or capital plans, and any future mergers, acquisitions, divestitures or other similar business transactions.

Integration Update.   $27.2 million $7.1 million $9.1 million

$85 million $340 million

Qwest Transaction .   April 21, 2010

District of Columbia April 1st

Shareholder Returns. $221 million December 20, 2010 December 7, 2010 January 24 February 25, 2011 February 18, 2011

Reconciliation to GAAP. www.centurylink.com

Investor Call. 10:30 a.m. Central Time February 21, 2011 www.centurylink.com March 7, 2011

Forward Looking Statements

$2.90

Monroe, La. www.centurylink.com

CenturyLink, Inc.

CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009

(UNAUDITED)

Three months ended December 31, 2010

Three months ended December 31, 2009

As adjusted

As adjusted

Increase

Less

excluding

Less

excluding

(decrease)

non-

non-

non-

non-

Increase

excluding

As

recurring

recurring

As

recurring

recurring

(decrease)

nonrecurring

In thousands, except per share amounts

reported

items

items

reported

items

items

as reported

items

OPERATING REVENUES

Voice

$

757,098

757,098

821,502

(8,236)

(3)

829,738

(7.8%)

(8.8%)

Data

488,351

488,351

459,211

(2,128)

(3)

461,339

6.3%

5.9%

Network access

254,175

254,175

307,266

307,266

(17.3%)

(17.3%)

Other

222,353

222,353

241,081

241,081

(7.8%)

(7.8%)

1,721,977

1,721,977

1,829,060

(10,364)

1,839,424

(5.9%)

(6.4%)

OPERATING EXPENSES

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