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Archive for April, 2009

Acme Packet Acquires Covergence

FOR IMMEDIATE RELEASE

Media Contact: Investor Relations:

Richard Williams Brian Norris

Connect2 Communications Acme Packet

+1.919.523.0621 +1.781.328.4790

rmwilliams@connect2comm.com bnorris@acmepacket.com


Acme Packet Acquires Covergence

Industry leader in session border control

extends product line with low-end, software-based, enterprise-focused solutions,

adds 4 of the Fortune 25 to customer base

BURLINGTON, MA, APRIL 30, 2009 — Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control solutions, today announced that it has acquired privately-held Covergence, Inc. for consideration valued at approximately $22.8 million, consisting of approximately $22.2 million of Acme Packet common stock and an aggregate of $0.6 million in cash payments to stockholders of Covergence and tax withholding payments. The Maynard, Massachusetts based company is an emerging, innovative provider of software-based session border controllers (SBCs) for delivering VoIP/IP telephony, Unified Communications and Service-Oriented Architecture (SOA) applications within global 1000 enterprises.

“SIP trunking – with its compelling return-on-investment and increasing worldwide availability – will drive many enterprises to deploy it to even the smallest of locations,” stated Andy Ory, CEO and co-founder of Acme Packet. “With the acquisition of Covergence, Acme Packet accelerates its ability to now satisfy the SIP trunking SBC requirements of enterprise small offices and remote sites.”

Covergence’s software-based SBCs will complement Acme Packet’s existing Net-Net family of custom hardware-based SBCs by extending Acme Packet’s low-end product range to address the needs of small and remote enterprise locations. Available as hardened Unix-based software for Intel x86-class servers or as a virtual machine package, Covergence’s SBCs will provide Acme Packet’s distribution partners and enterprise customers with new, capital expenditure and operating expense friendly price points for smaller sites. Opportunities for Acme Packet partners will also include the physical integration of this software-based SBC with other enterprise IP networking or communications equipment. From a customer leadership perspective, the Covergence acquisition will add four of the Fortune 25 to Acme Packet’s growing base of enterprise customers.

The core Covergence team will be relocated to Acme Packet’s headquarters in nearby Burlington, Massachusetts. Three Covergence executives will be joining Acme Packet in roles closely related to their positions at Covergence: Ken Kuenzel, Office of the Chief Technology Officer; Jim Donovan, Vice President, Enterprise Product Management; and Marty Falaro, Vice President, Business Development.

Company to Host Live Conference Call and Webcast

The Company’s management team will review the acquisition of Covergence during its previously scheduled conference call and webcast at 5:00 p.m. eastern daylight savings time today. The conference call may be accessed in the United States by dialing (800) 230-1074 and using access code “APKT”. The conference call may be accessed outside of the United States by dialing (612) 332-1213 and using access code “APKT”. The conference call will be simultaneously webcast on the Company’s investor relations website, which can be accessed at www.ir.acmepacket.com. A replay of the conference call will be available approximately two hours after the call by dialing (800) 475-6701 and using access code 995307 or by accessing the webcast replay on the Company’s investor relations website.


About Acme Packet

Acme Packet, Inc. (NASDAQ: APKT), the leader in session border control solutions, enables the delivery of trusted, first-class interactive communications—voice, video and multimedia sessions—and data services across IP network borders. Our Net-Net family of session border controllers, multiservice security gateways and session routing proxies supports multiple applications in service provider, enterprise and contact center networks—from VoIP trunking to hosted enterprise and residential services to fixed-mobile convergence. They satisfy critical security, service assurance and regulatory requirements in wireline, cable and wireless networks; and support multiple protocols—SIP, H.323, MGCP/NCS, H.248 and RTSP—and multiple border points—interconnect, access and data center. Our products have been selected by more than 635 customers in 92 countries, including 29 of the top 30, and 89 of the top 100 service providers in the world. For more information, contact us at +1 781.328.4400, or visit www.acmepacket.com.


Acme Packet Safe Harbor Statement

Statements contained herein that are not historical fact may be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may relate, among other things, to our position in the session border control market, our expected financial and operating results, the opportunities created by the acquisition of Covergence and our ability to satisfy certain SIP trunking requirements, our ability to establish and maintain intellectual property rights, our ability to build and grow Acme Packet, the benefits and advantages of our products, including any enhancements or new features, services and programs, and our ability to achieve our goals, plans and objectives. Such forward-looking statements do not constitute guarantees of future performance and are subject to a variety of risks and uncertainties that could cause our actual results to differ materially from those anticipated. These include, but are not limited to: difficulties in growing our customer base, difficulties leveraging market opportunities, difficulties providing solutions that meet the needs of customers, difficulties in integrating an acquired business, poor product sales, long sales cycles, difficulty developing new products, difficulty in relationships with vendors and partners, higher risk in international operations, difficulty managing rapid growth, and increased competition. Additional factors that could cause actual results to differ materially form those projected or suggested in any forward-looking statements are contained in our recent filings with the Securities and Exchange Commission, including those factors discussed under the caption “Risk Factors” in such filings.


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CenturyTel Reports First Quarter Earnings

CenturyTel Reports First Quarter Earnings

Date: 4/30/2009 8:20:00 AM

For a complete listing of our news releases, please click here


MONROE, La., April 30 /PRNewswire-FirstCall/ — CenturyTel, Inc. (NYSE:

CTL) announces operating results for first quarter 2009.


— Operating revenues, excluding nonrecurring items, decreased 2.0% to

$635.4 million from $648.6 million in first quarter 2008. Reported

under GAAP (generally accepted accounting principles), operating

revenues for first quarter 2009 were $636.4 million.

— Operating cash flow (as defined in the attached financial schedules),

excluding nonrecurring items, was $305.5 million in first quarter 2009

compared to $319.2 million in first quarter 2008.

— Net income attributable to CenturyTel, excluding nonrecurring items,

for first quarter 2009 was $81.9 million versus $86.2 million in first

quarter 2008. Reported under GAAP, net income attributable to

CenturyTel was $67.2 million in first quarter 2009 and $88.8 million

in first quarter 2008.

— Diluted earnings per share, excluding nonrecurring items, increased

2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008.

Reported under GAAP, diluted earnings per share was $.67 in first

quarter 2009 and $.82 in first quarter 2008.

— Free cash flow (as defined in the attached financial schedules),

excluding nonrecurring items and $6.4 million of capital expenditures

related to the EMBARQ integration, was $170.4 million in first quarter

2009 compared to $167.1 million in first quarter 2008.


— High-speed Internet customers increased by more than 24,000 in first

quarter 2009, resulting in more than 665,000 high-speed Internet

customers in service at the end of the quarter, or nearly 34% of total

access lines.


First Quarter Highlights


(Excluding

nonrecurring items

reflected in the

attached financial

schedules)

Quarter Ended Quarter Ended

(In thousands, except 3/31/09 3/31/08 % Change

per share amounts

and subscriber data)


Operating Revenues $635,357 $648,614 (2.0)%

Operating Cash Flow(1) $305,521 $319,177 (4.3)%

Net Income

Attributable to

CenturyTel $81,898 $86,171 (5.0)%

Diluted Earnings Per

Share $.82 $.80 2.5%

Average Diluted

Shares Outstanding 99,144 106,675 (7.1)%

Capital Expenditures $45,496 (2) $54,739 (16.9)%


Access Lines 1,967,000 2,108,000 (6.7)%

High-Speed Internet

Customers 665,000 586,000 13.5%


(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) Includes $6.4 million of capital expenditures related to the

integration of EMBARQ.


“CenturyTel achieved solid operating results and generated free cash flow

of $170 million during the first quarter,” Glen F. Post, III, chairman and

chief executive officer, said. “Broadband demand was strong as we added 24,000

high-speed Internet customers during the quarter, an 81% improvement over

fourth quarter 2008.”


Operating revenues, excluding nonrecurring items, decreased 2.0% to $635.4

million in first quarter 2009 from $648.6 million in first quarter 2008.

Revenue increases during the quarter of approximately $23 million resulted

primarily from growth in high-speed Internet customers and growth in fiber

transport revenues. These increases were more than offset by revenue declines

of approximately $36 million, primarily attributable to access line declines

and lower access revenues.


Operating expenses, excluding nonrecurring items, decreased 1.7% to $457.4

million in first quarter 2009 from $465.1 million in first quarter 2008

primarily due to lower depreciation expense associated with fully depreciated

assets which was partially offset by increased expenses due to growth in

high-speed Internet customers, higher bad debt expense and higher

personnel-related costs.


Operating cash flow, excluding nonrecurring items, decreased 4.3% to

$305.5 million in first quarter 2009 from $319.2 million in first quarter

2008. CenturyTel achieved an operating cash flow margin of 48.1% during the

quarter.


“We have made solid progress toward completing the EMBARQ merger as both

companies’ shareholders overwhelmingly approved the merger in late January and

to date, we have received approval from 10 of the 15 states which require

formal approval,” said Post. “We continue to expect to receive all necessary

state and federal regulatory approvals and to complete the merger during the

second quarter. This strategic combination of CenturyTel and EMBARQ creates a

larger and financially stronger company, and I am confident we will be well

positioned to drive long-term shareholder value and deliver the reliable,

high-quality communications services our customers and communities want and

need.”


Net income attributable to CenturyTel, excluding nonrecurring items,

decreased 5.0% to $81.9 million in first quarter 2009 from $86.2 million in

first quarter 2008. Diluted earnings per share, excluding nonrecurring items,

increased 2.5% to $.82 in first quarter 2009 from $.80 in first quarter 2008.

First quarter 2009 diluted earnings per share was favorably impacted by the

7.1% fewer average diluted shares outstanding due to share repurchases during

the twelve months ended March 31, 2009.


Under generally accepted accounting principles (GAAP), the Company

reported net income attributable to CenturyTel of $67.2 million and diluted

earnings per share of $.67 in first quarter 2009 compared to $88.8 million and

$.82, respectively, in first quarter 2008. Net income and diluted earnings per

share in first quarter 2009 include an aggregate after-tax charge of $10.9

million associated with the discontinuance of our supplemental executive

retirement plan; a $5.0 million after-tax cost associated with our October

2008 bridge credit facility related to the EMBARQ acquisition; and a $4.7

million after-tax charge related to integration costs associated with our

pending acquisition of EMBARQ. Such factors were partially offset by a $5.8

million tax benefit associated with the reduction of a deferred tax asset

valuation allowance.


New accounting pronouncements effective first quarter 2009. First quarter

2009 results include the effects of two new accounting pronouncements, SFAS

160 and FSP EITF 03-6-1. SFAS 160 requires that noncontrolling interests be

recognized as equity on the balance sheet and net income attributable to

noncontrolling interests be included in consolidated net income. FSP EITF

03-6-1 requires that outstanding non-vested restricted stock be considered a

participating security and therefore included in the earnings allocation in

computing earnings per share under the two-class method. Both pronouncements

require prior periods to be recast using the current applicable guidance;

therefore, our first quarter 2008 results of operations included in this press

release reflect the retroactive application of these new accounting

pronouncements.


For second quarter 2009, CenturyTel expects total revenues of $628 to $638

million and diluted earnings per share of $.77 to $.81. The seasonal impact of

outside plant maintenance activities, along with annual wage adjustments

effective in the second quarter, will result in higher cash expenses compared

to the first quarter of 2009.


These outlook figures, along with previously announced guidance for full

year 2009, exclude the effects of nonrecurring items, the pending EMBARQ

acquisition and any changes in operating or capital plans related thereto, the

pending conversion to price cap regulation recently approved by the Federal

Communications Commission, and any future mergers, acquisitions, divestitures

or other similar business transactions.


We expect to update our outlook after completing the EMBARQ acquisition.

We currently expect to close the transaction during second quarter 2009,

subject to the receipt of regulatory approvals and satisfaction of other

conditions.


Reconciliation to GAAP. This release includes certain non-GAAP financial

measures, including but not limited to operating cash flow, free cash flow and

adjustments to GAAP measures to exclude the effect of nonrecurring items. In

addition to providing key metrics for management to evaluate the Company’s

performance, we believe these measurements assist readers in their

understanding of period-to-period operating performance and in identifying

historical and prospective trends. Reconciliations of non-GAAP financial

measures to the most comparable GAAP measures are included in the attached

financial schedules. Reconciliation of additional non-GAAP financial measures

that may be discussed during the earnings call described below will be

available on the Company’s Web site at www.centurytel.com. Investors are urged

to consider these non-GAAP measures in addition to, and not in substitution

for, measures prepared in accordance with GAAP.


Investor Call. As previously announced, CenturyTel’s management will host

a conference call at 10:30 a.m. Central Time today. Interested parties can

access the call by dialing 866.206.6509. The call will be accessible for

replay through May 6, 2009, by calling 888.266.2081 and entering the

conference ID number 1346640. Investors can also listen to CenturyTel’s

earnings conference call and replay by accessing the Investor Relations

portion of the Company’s Web site at www.centurytel.com through May 20, 2009.


Certain non-historical statements made in this release and future oral or

written statements or press releases by us or our management, in each case as

they relate to CenturyTel or EMBARQ, the operations of either such company or

our pending merger with EMBARQ, are intended to be forward-looking statements

within the meaning of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based on current expectations only, and

are subject to a number of risks, uncertainties and assumptions, many of which

are beyond our control. Actual results or performance by CenturyTel or

EMBARQ, and issues relating to our pending merger with EMBARQ, may differ

materially from those anticipated, estimated or projected if one or more of

these risks or uncertainties materialize, or if underlying assumptions prove

incorrect. Factors that could impact actual results of CenturyTel or EMBARQ,

the combined company or the pending merger include but are not limited to:

the timing, success and overall effects of competition from a wide variety of

competitive providers; the risks inherent in rapid technological change; the

effects of ongoing changes in the regulation of the communications industry

(including the Federal Communication Commission’s proposed rules regarding

inter-carrier compensation and the Universal Service Fund described in our

recent SEC reports); our ability to effectively adjust to changes in the

communications industry; our ability to successfully complete our pending

merger with EMBARQ, including timely receiving all regulatory approvals; the

possibility that the anticipated benefits from the merger cannot be fully

realized in a timely manner or at all, or that integrating EMBARQ’s operations

into ours will be more difficult, disruptive or costly than anticipated; our

ability to effectively manage our expansion opportunities, including

successfully integrating newly-acquired or newly-developed businesses into our

operations and retaining and hiring key personnel; possible changes in the

demand for, or pricing of, our products and services; our ability to

successfully introduce new product or service offerings on a timely and

cost-effective basis; our continued access to credit markets on favorable

terms; our ability to collect our receivables from financially troubled

communications companies; our ability to pay a $2.80 per common share dividend

annually, which may be affected by changes in our cash requirements, capital

spending plans, cash flows or financial position; our ability to successfully

negotiate collective bargaining agreements on reasonable terms without work

stoppages; the effects of adverse weather; other risks referenced from time to

time in this prospectus or other of our filings with the SEC; and the effects

of more general factors such as changes in interest rates, in tax rates, in

accounting policies or practices, in operating, medical or administrative

costs, in general market, labor or economic conditions, or in legislation,

regulation or public policy. These and other uncertainties related to the

business and our plans are described in greater detail in Item 1A to our Form

10-K for the year ended December 31, 2008, as updated and supplemented by our

subsequent SEC reports. You should be aware that new factors may emerge from

time to time and it is not possible for us to identify all such factors nor

can we predict the impact of each such factor on the business or the extent to

which any one or more factors may cause actual results to differ from those

reflected in any forward-looking statements. You are further cautioned not to

place undue reliance on these forward-looking statements, which speak only as

of the date hereof. We undertake no obligation to update any of our

forward-looking statements for any reason, whether as a result of new

information, future events or otherwise.


CenturyTel (NYSE: CTL) is a leading provider of communications, high-speed

Internet and entertainment services in small-to-mid-size cities through our

broadband and fiber transport networks. Included in the S&P 500 Index,

CenturyTel delivers advanced communications with a personal touch to customers

in 25 states. Visit us at www.centurytel.com.


CenturyTel, Inc.

CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED MARCH 31, 2009 AND 2008

(UNAUDITED)


Three months ended March 31, 2009

——————————————–

As adjusted

excluding

Less non- non-

In thousands, except As recurring recurring

per share amounts reported items items

———— ———– ———–


OPERATING REVENUES

Voice $209,918 209,918

Network access 192,844 1,028 (1) 191,816

Data 139,937 139,937

Fiber

transport

and CLEC 41,498 41,498

Other 52,188 52,188

—— —– ——

636,385 1,028 635,357

——- —– ——-


OPERATING EXPENSES

Cost of services

and products 234,631 234,631

Selling, general

and administrative 109,845 14,640 (2) 95,205

Depreciation and

amortization 127,572 127,572

——- —— ——-

472,048 14,640 457,408

——- —— ——-


OPERATING INCOME 164,337 (13,612) 177,949


OTHER INCOME (EXPENSE)

Interest expense (52,032) (52,032)

Other income

(expense) (1,818) (8,000) (3) 6,182

Income tax

expense (43,107) 6,868 (4) (49,975)


—— ——- ——

NET INCOME 67,380 (14,744) 82,124

Less: Net income

attributable

to noncontrolling

interests (226) (226)

—- ——- —-

NET INCOME

ATTRIBUTABLE

TO CENTURYTEL, INC. $67,154 (14,744) 81,898

======= ======= ======


BASIC EARNINGS PER

SHARE $0.67 (0.15) 0.82

DILUTED EARNINGS PER

SHARE $0.67 (0.15) 0.82


AVERAGE SHARES OUTSTANDING


Basic 99,126 99,126

Diluted 99,144 99,144


DIVIDENDS PER COMMON

SHARE $0.7000 0.7000


Three months ended March 31, 2008

—————————————-

As adjusted

excluding

Less non- non-

In thousands, except As recurring recurring

per share amounts reported items items

———— ———— ———-


OPERATING REVENUES

Voice 220,480 220,480

Network access 208,698 208,698

Data 126,772 126,772

Fiber

transport

and CLEC 39,633 39,633

Other 53,031 53,031

—— - ——

648,614 - 648,614

——- — ——-


OPERATING EXPENSES

Cost of services

and products 237,812 237,812

Selling, general

and administrative 91,625 91,625

Depreciation and

amortization 135,684 135,684

——- — ——-

465,121 - 465,121

——- — ——-


OPERATING INCOME 183,493 - 183,493


OTHER INCOME (EXPENSE)

Interest expense (50,122) (50,122)

Other income

(expense) 8,663 4,136 (5) 4,527

Income tax expense (53,028) (1,547) (6) (51,481)


—— —– ——

NET INCOME 89,006 2,589 86,417

Less: Net income

attributable

to noncontrolling

interests (246) (246)

—- —– —-

NET INCOME

ATTRIBUTABLE

TO CENTURYTEL, INC. 88,760 2,589 86,171

====== ===== ======


BASIC EARNINGS PER

SHARE 0.83 0.02 0.80

DILUTED EARNINGS PER

SHARE 0.82 0.02 0.80


AVERAGE SHARES OUTSTANDING


Basic 106,142 106,142

Diluted 106,675 106,675


DIVIDENDS PER COMMON

SHARE 0.0675 0.0675


Increase

(decrease)

Increase excluding

In thousands, except (decrease) nonrecurring

per share amounts as reported items

———– ———–


OPERATING REVENUES

Voice (4.8%) (4.8%)

Network access (7.6%) (8.1%)

Data 10.4% 10.4%

Fiber

transport

and CLEC 4.7% 4.7%

Other (1.6%) (1.6%)

(1.9%) (2.0%)


OPERATING EXPENSES

Cost of services

and products (1.3%) (1.3%)

Selling, general

and administrative 19.9% 3.9%

Depreciation and

amortization (6.0%) (6.0%)

1.5% (1.7%)


OPERATING INCOME (10.4%) (3.0%)


OTHER INCOME (EXPENSE)

Interest expense 3.8% 3.8%

Other income

(expense) (121.0%) 36.6%

Income tax

expense (18.7%) (2.9%)


NET INCOME (24.3%) (5.0%)

Less: Net income

attributable

to noncontrolling

interests (8.1%) (8.1%)

NET INCOME

ATTRIBUTABLE

TO CENTURYTEL, INC. (24.3%) (5.0%)


BASIC EARNINGS PER

SHARE (19.3%) 2.5%

DILUTED EARNINGS PER

SHARE (18.3%) 2.5%


AVERAGE SHARES OUTSTANDING


Basic (6.6%) (6.6%)

Diluted (7.1%) (7.1%)


DIVIDENDS PER COMMON

SHARE 937.0% 937.0%


NONRECURRING ITEMS


(1) - Revenue impact of settlement loss related to Supplemental Executive


Retirement Plan.


(2) - Includes settlement loss related to Supplemental Executive


Retirement Plan ($7.7 million) and integration costs associated with


pending acquisition of EMBARQ ($6.9 million).


(3) - Costs associated with our October 2008 $800 million bridge credit


facility related to the EMBARQ acquisition.


(4) - Includes $5.8 million income tax benefit caused by a reduction to


our deferred tax asset valuation allowance and $7.8 million income


tax benefit related to items (1) through (3); net of $6.7 million


income tax expense due to the nondeductible portion of settlement


payments related to the Supplemental Executive Retirement Plan.


(5) - Gain on the sale of a nonoperating investment.


(6) - Tax effect of item (5).


CenturyTel, Inc.

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2009 AND DECEMBER 31, 2008

(UNAUDITED)


March 31, December 31,

2009 2008

——— ———

(in thousands)

ASSETS


CURRENT ASSETS


Cash and cash equivalents $61,230 243,327

Other current assets 259,400 312,080

——- ——-

Total current assets 320,630 555,407

——- ——-


NET PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment 8,900,683 8,868,451

Accumulated depreciation (6,079,113) (5,972,559)

———- ———-

Net property, plant and equipment 2,821,570 2,895,892

———- ———-


GOODWILL AND OTHER ASSETS

Goodwill 4,015,674 4,015,674

Other 775,939 787,222

——- ——-

Total goodwill and other assets 4,791,613 4,802,896

——— ———


TOTAL ASSETS $7,933,813 8,254,195

========== =========


LIABILITIES AND EQUITY


CURRENT LIABILITIES


Current maturities of long-term debt $20,148 20,407

Other current liabilities 394,714 437,983

——- ——-

Total current liabilities 414,862 458,390


LONG-TERM DEBT 3,002,402 3,294,119


DEFERRED CREDITS AND OTHER LIABILITIES 1,341,340 1,333,878


STOCKHOLDERS’ EQUITY 3,175,209 3,167,808

——— ———


TOTAL LIABILITIES AND EQUITY $7,933,813 8,254,195

========== =========


CenturyTel, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(UNAUDITED)


Three months ended March 31, 2009

—————————————

As adjusted

Less excluding

non- non-

In thousands As recurring recurring

reported items items

———- ———- ————-

Operating cash flow

and cash flow margin

Operating income $164,337 (13,612) (1) 177,949

Add: Depreciation

and amortization 127,572 - 127,572

——- — ——-

Operating

cash flow $291,909 (13,612) 305,521

======== ======= =======


Revenues $636,385 1,028 (2) 635,357

======== ===== =======


Operating income

margin (operating

income divided by

revenues) 25.8% 28.0%

==== ====


Operating cash flow

margin (operating

cash flow divided by

revenues) 45.9% 48.1%

==== ====


Free cash flow (prior

to debt service

requirements and

dividends)

Net income

attributable

to CenturyTel, Inc. $67,154 (14,744) (3) 81,898

Add: Depreciation

and amortization 127,572 - 127,572

Less: Capital

expenditures (45,496) - (45,496) (5)

——- — ——-

Free cash flow $149,230 (14,744) 163,974

======== ======= =======


Free cash flow $149,230

Gain on asset

disposition -

Deferred

income taxes 17,249

Changes in

current assets

and current

liabilities 33,031

Increase in other

noncurrent assets (306)

Decrease in

other

noncurrent

liabilities (2,779)

Retirement benefits (23,497)

Excess tax

benefits from

share-based

compensation (335)

Other, net 12,078

Add: Capital

expenditures 45,496

——

Net cash

provided by

operating

activities $230,167

========


Three months ended March 31, 2008

—————————————–

As adjusted

Less excluding

non- non-

In thousands As recurring recurring

reported items items

———- ——— ————

Operating cash flow

and cash flow margin

Operating income 183,493 - 183,493

Add: Depreciation

and amortization 135,684 - 135,684

——- — ——-

Operating cash flow 319,177 - 319,177

======= === =======


Revenues 648,614 - 648,614

======= === =======


Operating income

margin (operating

income divided by

revenues) 28.3% 28.3%

==== ====


Operating cash flow

margin (operating

cash flow divided

by revenues) 49.2% 49.2%

==== ====


Free cash flow

(prior to debt

service

requirements and

dividends)

Net income

attributable to

CenturyTel, Inc. 88,760 2,589 (4) 86,171

Add: Depreciation

and amortization 135,684 - 135,684

Less: Capital

expenditures (54,739) - (54,739)

——- — ——-

Free cash flow 169,705 2,589 167,116

======= ===== =======


Free cash flow 169,705

Gain on asset

disposition (4,136)

Deferred

income taxes 8,357

Changes in current

assets and current

liabilities (12,277)

Increase in other

noncurrent assets (789)

Decrease in other

noncurrent liabilities (2,790)

Retirement

benefits 5,474

Excess tax benefits

from share-based

compensation (19)

Other, net 11,946

Add: Capital

expenditures 54,739

——

Net cash provided

by operating

activities 230,210

=======


NONRECURRING ITEMS


(1) - Includes integration costs associated with pending acquisition of


EMBARQ ($6.9 million) and settlement loss related to Supplemental

Executive Retirement Plan, including revenue impact ($6.7

million).


(2) - Revenue impact of settlement loss related to Supplemental


Executive Retirement Plan.


(3) - Includes (i) $6.7 million income tax expense due to the


nondeductible portion of settlement payments related to the

Supplemental Executive Retirement Plan; (ii) $5.0 million after-

tax charge associated with our $800 million bridge credit

facility related to the EMBARQ acquisition; (iii) $4.7 million

after-tax impact of integration costs associated with pending

acquisition of EMBARQ and (iv) $4.1 million after-tax impact of

settlement loss related to Supplemental Executive Retirement

Plan, including revenue impact. These unfavorable items were

partially offset by $5.8 million income tax benefit caused by a

reduction to our deferred tax asset valuation allowance.


(4) - Gain on the sale of a nonoperating investment, net of tax.


(5) - Includes $6.4 million of capital expenditures related to the


integration of EMBARQ. Excluding these costs, free cash flow was

$170.4 million for the three months ended March 31, 2009.


SOURCE CenturyTel, Inc.

-0- 04/30/2009

/CONTACT: Tony Davis of CenturyTel, Inc., +1-318-388-9525,

tony.davis@centurytel.com/

/Web Site: http://www.centurytel.com /

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Aricent and IMS Forum Launch the Industry’s First Collaborative Repository for Next Generation Equipment and Service Testing

Global Resource Designed to Reduce Testing Cycles, Complexity and Cost; Accelerate Time to Market for NGN Equipment and Services



Palo Alto, Calif., April 28, 2009 — IMS Forum, the only industry association dedicated to interoperability and certification of IP Multimedia Subsystem (IMS) and Next Generation Networks (NGN) applications and services, and Aricent, a global innovation, technology and service company focused exclusively on communications, today announced the launch of www.TestNGN.org. The www.TestNGN.org site hosts an industry-wide collaborative platform of comprehensive test cases for the validation of IMS and NGN equipment and services.


 www.TestNGN.org offers the industry’s first community-based, open repository for NGN testing that allows network equipment manufacturers and service providers to significantly reduce the time, complexity, and cost required to introduce next generation networks and services, including equipment such as multimedia gateways, home subscriber and application servers, and services including voice and multimedia over IP, converged Web-telephony services and IPTV.


The repository will allow equipment manufacturers and service providers to download, post and share global testing experiences, quickly creating a high value knowledge base. This approach will help minimize the time spent on test case development, planning, writing and preparation, and accelerate the testing cycle for NGN architectures while reducing complexity and time to market.


 “There is increased competition in the consumer and enterprise multimedia markets, with an urgent need for NGN equipment manufacturers and service providers to get new products and services to market quickly,” said Michael Khalilian, chairman of the IMS Forum and NGN Forum.  “This joint effort between Aricent and the IMS and NGN Forum, complements our landmark IMS Plugfestâ„¢ interoperability events. With easy access to downloadable test cases, equipment manufacturers will reduce their testing times and be assured of consistent compliance with the latest standards. Service providers will benefit from the ability to carry out their own end-to-end testing, and will be able to swiftly verify vendor assurances of NGN compliance testing. This site was designed to provide a major addition to the multivendor, multinetwork environment created for our IMS NGN Plugfest interoperability test events to further accelerate the deployment of Next Generation Services and Networks.”


The IMS Forum’s TestNGN and Interoperability Working groups are focused respectively on the product interoperability, reliability and operational and management issues associated with converged IMS and NGN applications and services delivered over wireless (3G, LTE), wireline (DSL, optical) and cable broadband. The groups ensure that converged applications and the vehicles which deliver such services will be timely and well supported from a provisioning, billing and management systems perspective.


Aricent has developed an extensive NGN testing practice, employing more than 1,600 test engineers and test consultants. The practice has over 70,000 test cases for wireless, VoIP and IMS, all designed to speed the worldwide delivery of Next Generation Networks.


“We are proud to be working closely with the IMS and NGN Forums to co-develop an innovative method of accelerating the standardized introduction of cutting-edge NGN products and services,” explained CP Murali, senior vice president at Aricent.  “Access to the professionally managed NGN test cases benefits both equipment manufacturers and services providers. This should lead to reduced development times for the whole NGN industry.”


For more information about the Aricent NGN testing practice, visit: http://www.aricent.com/services/testing_services.html. For more information on the IMS Plugfest visit www.imsforum.org.


 Keywords & tags: next generation network, NGN Forum, NGN Testing, testing practice, IMS forum


About the NGN ForumTM and IMS Forum®


The NGN/IMS Forum is the only global telecommunications association devoted to Next Generation Networks (NGN) service delivery and interoperable IP Multimedia Subsystem (IMS) services architectures and solutions. The Forum’s mission is to enable delivery of M-playTM: rich multimedia, mobility and fixed services over wireline, cable, GSM, UMTS, Wi-Fi, WiMAX, LTE and fiber broadband networks. The Forum is the creator and organizer of the IMS PlugfestsTM and NGN PlugfestsTM, the industry’s only events focused on verification and certification of IMS and NGN service interoperability through the IMS CertifiedTM and NGN CertifiedTM programs. Through organized Plugfests, technical working groups and other activities, Forum members develop cost-effective technical frameworks for revenue generating converged IP NGN solutions. 


 The combined organizations include over 2000 executives and technical, business development and marketing professionals from global and emerging equipment vendors, solution providers, integrators, service providers, and governmental agencies. For additional information or to join the NGN Forum, IMS Forum, the IMS Plugfest, and/or the NGN Plugfest, please visit www.IMSforum.org or www.NGNforum.org.


 About Aricent


Aricent is a global innovation, technology and outsourcing company focused exclusively on communications. Aricent combines the leading innovation capabilities of frog design with unparalleled domain expertise in communications gained as a strategic supplier to the world’s foremost infrastructure, application and service providers. The company is owned by Kohlberg Kravis Roberts & Co., Sequoia Capital and Flextronics International Ltd. and has more than 550 clients worldwide. For more information, visit www.aricent.com.


 Aricent is a trademark of Aricent Inc. in the United States and other jurisdictions. All other trademarks are the property of their respective owners.


________________________________________ 


For further information, contact 


Cathy Clarke


NGN Forum media relations


Tel: +1 508 833-8533


Email: pr@imsforum.org 


Steven Manuel


Aricent


Tel: +1 650 391 1621


Email: steven.manuel@aricent.com 


Chris Lalli


Aricent Americas: Cohn & Wolfe


Tel: +1 415 365 8540


Email: chris.lalli@cohnwolfe.com


 Paula Muezerie


Aricent Europe: AxiCom


Tel: +44 208 392 4081


Email: aricent@axicom.com


Shikha Singh Sehrawat

Aricent
India: Text 100

Tel: +91 989 107 1999

Email: shikhas@text100.co.in

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Washington State Ferry System Offers Wi-Fi® to Passengers on Boats Using Proxim’s Wireless Backhaul

Proxim’s Products Provide Vessel-to-Shore Wireless Connectivity with High Throughput to Support Data, Voice and Video


Silicon Valley, April 29, 2009Proxim Wireless Corporation (OTCQX: PRXM), a leading provider of end-to-end broadband wireless systems that deliver the quadruple play, today announced that the Washington State Ferry (WSF) system has deployed Proxim’s license-free WiMAX solutions to provide wireless backhaul to their entire fleet of vessels, enabling them to offer Wi-Fi access to all passengers. WSF has utilized a combination of Proxim’s Tsunamiâ„¢ MP.11 5054-R base station units and Tsunami MP.11 5054-LR base and subscriber units to provide point-to-multipoint connectivity with over 12 Mbps throughput to every vessel.


 wsf.jpg


WSF carries 25,000 passengers per day on 500 sailings. Wi-Fi service is available on 15 vessels ranging in size from 460 ft. vessels that carry 2,500 passengers and 200+ cars and trucks down to the smallest that carry about 1000 passengers and 80 cars and trucks. Users experience seamless internet coverage over five routes that vary in length from 2.8 miles to over 15.5 miles. Coverage is also provided at 11 of 14 WSF terminals.


To design the system, WSF contracted with Wi-Fi service provider Parsons Corp. of Irvine California, who sub-contracted system design, development and deployment to Sunrise Wireless, a San Francisco Bay Area wireless integrator. The original design goal was to provide a minimum of 12 Mbps throughput to each vessel in the WSF fleet, while guaranteeing an always-on connection.  The final solution using Proxim products exceeded that goal.


 


WSF has 25 vessels that run different routes from as far south as Port Defiance in Washington all the way up to Sidney in British Columbia, so one major challenge was developing a system that could maintain the high throughput levels and seamless connectivity regardless of where a vessel was located along a route and also be independent of what route a vessel was taking.


In addition to the size of the area that needed to be covered, Sunrise had the added challenge that water brings to all RF environments due to the added attenuation affects that water has on RF. After assessing connectivity needs and the present challenges, Sunrise determined that the only system that could meet users’ needs in a cost-effective manner was Proxim’s point-to-multipoint license-free WiMAX solution.


“We tested solutions from other wireless vendors, but had difficulty in getting reasonable performance particularly when it came to roaming over water – the requirements and environment were very demanding,” said Milt Gregory, President of Sunrise Wireless. “Satellite solutions would cost significantly more and provide less throughput than needed, so that wasn’t an option either. At the end of the day, Proxim’s WiMAX gear came through, and far exceeded the requirements for the project. We are consistently getting throughput that is significantly greater than the design goal of 12 Mbps, out to each vessel and throughout the system. Additionally, support from Proxim throughout the design and deployment has been exceptional – an important contribution because of the very harsh marine RF environment.”


The system, which is now completed and fully operational, connects 15 vessels with 11 terminals and numerous shoreline access points. And because Proxim’s products are providing greater throughput than the original 12 Mbps design goal, the system is already capable of supporting advanced wireless applications such as VoIP and streaming video in the future without requiring any additional radios.


“Wireless connectivity has become so ubiquitous that people just come to expect it wherever they are, whether they’re in stores, at coffee shops, or in public parks. Why shouldn’t they be able to remain connected while on the ferry each day?” said Robb Henshaw, Director of Marketing at Proxim Wireless. “At Proxim, all we do is wireless, so we have the focus and experience it takes to overcome challenging deployment environments like these and provide wireless connectivity that exceeds the performance of other solutions, and in a more cost-effective manner.”


About Sunrise Wireless


Sunrise Wireless is a pioneer in the development of marine Wi-Fi. Founded in 2003, the company has focused in general on mobile Wi-Fi/WiMax applications and has developed a specialization in bringing internet access to passengers and commuters as they move about in a marine environment. The company is committed to bringing advanced applications such as VoIP and streaming broadcast video to all mobile users through the use of Wi-Fi / WiMax technologies. For more information please call 408-892-2748.


About Proxim Wireless


Proxim Wireless Corporation (OTCQX: PRXM) is a leading provider of end-to-end broadband wireless systems that deliver the quadruple play of voice, video, data and mobility to all organizations today. Our systems enable a variety of wireless applications including security and surveillance, VoIP, last mile access, enterprise LAN connectivity and Point-to-Point backhaul. We have shipped more than 1.8 million wireless devices to more than 235,000 customers in over 65 countries worldwide. Proxim is ISO-9001 certified. Information about Proxim can be found at www.proxim.com. For investor relations information, e-mail ir@proxim.com or call + 1 413-584-1425.

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Qwest Reports First Quarter 2009 Results

Qwest Reports First Quarter 2009 Results

On Wednesday April 29, 2009, 7:00 am EDT


DENVER–(BUSINESS WIRE)–Qwest Communications International Inc. (NYSE:Q - News): Unaudited (in millions, except per share amounts)


1Q 2009 4Q 2008 Change 1Q 2008 Change

Operating Revenue $ 3,173 $ 3,315 (4)

%

$ 3,399 (7)

%


Income before Income Taxes 298 290 3 % 245 22 %

Net Income 206 177 16 % 150 37 %

Net Income per Diluted Share $ 0.12 $ 0.10 20 % $ 0.08 50 %


First Quarter Highlights


Achieves substantial increase in adjusted free cash flow(a)

Strong growth in net income and EPS

Continued revenue growth in Business Markets supported by demand for data and IP services

Steady demand for consumer broadband services

Solid progress on wireless transition

Margins improve in each business segment on strong cost controls


(a)See Attachment E for Non GAAP Reconciliations


Qwest Communications International Inc. (NYSE:Q - News) today reported financial results for the first quarter 2009. In the quarter, net income was $206 million, an increase of 37 percent compared to $150 million for the first quarter of 2008. Earnings per share for the quarter were 12 cents, a 50 percent increase from the first quarter of 2008. The current quarter results reflect a strong contribution from each business segment. Earnings per share were impacted by an increase in non-cash pension and OPEB expense, which was offset by a lower tax rate and reduced net interest expense. First quarter 2009 results include a 1 cent per share charge for severance, realignment and restructuring cost compared to 2 cents per share in the first quarter of 2008.


Revenue in the quarter was $3.2 billion, a decline of 7 percent compared to $3.4 billion in the first quarter of 2008 and a decline of 4 percent compared to the fourth quarter of 2008. As expected, Qwest’s move from a wireless MVNO model to a reseller model beginning in the third quarter of 2008 impacted reported revenue comparisons in the period. Excluding wireless MVNO services, revenues decreased 5 percent vs. the first quarter of 2008 and declined 3 percent sequentially. Adjusted EBITDA for the quarter was $1.15 billion, flat to year-ago results and a 3 percent decline compared to $1.18 billion in the fourth quarter. In the first quarter of 2009, adjusted EBITDA includes approximately $50 million of incremental non-cash pension and OPEB expenses. The adjusted EBITDA margin percentage expanded to 36.1 percent in the period compared to 33.6 percent in the first quarter of 2008 and 35.6 percent in the fourth quarter. Adjusted free cash flow for the quarter was $339 million compared to $56 million reported in the first quarter of 2008.


In the first quarter, Qwest continued to demonstrate steady progress on profitability goals with all segments reporting year-over-year and sequential improvement in segment margin percentages. The company continued to achieve solid demand for data and Internet services across all segments. Business Markets revenue growth is once again expected to have outperformed the industry in the first quarter. Qwest added 42,000 net new broadband customers in the quarter. Demand was fueled by expanded availability of higher speeds offered with fiber-based services. Qwest transitioned nearly 100,000 customers from its wireless MVNO operation to the Verizon Wireless resale platform in the quarter and reported 30,000 net wireless additions. Qwest has announced that it expects to terminate its wireless MVNO services in October of this year. Qwest also reported strong growth in video subscribers, adding 34,000 customers in the quarter through its partnership with DIRECTV.


“Disciplined execution and focus on cost controls have produced a strong start to the year given the current economic climate”, said Edward A. Mueller, Qwest Chairman and CEO. “We are seeing tangible results from our focus on our key strategies to perfect the customer experience, including demand for our leading data services and strong results from our partnerships. We continue to tightly manage spending and investments to preserve financial strength and mitigate near-term economic pressures.”


CONSOLIDATED FINANCIAL RESULTS


Revenue


Total revenue for the first quarter of $3.2 billion reflects 5 percent year-over-year growth in data, Internet and video revenue, which was offset by a decline of 11 percent in voice revenue and lower wireless revenue. Data and Internet revenue growth was the result of strong service revenue growth in both Business Markets and Mass Markets. Voice revenue results reflect lower access lines and the company’s efforts to improve the profitability of its wholesale long-distance business, while wireless results include the impact from the migration to the resale platform.


Expense


First-quarter operating expenses of $2.6 billion decreased 9 percent compared to the year-ago period. Expense reductions were broad based including both facility and employee-related costs. At the end of the period, Qwest had approximately 32,800 employees compared to 36,500 at the end of the first quarter of 2008, a 10 percent reduction.


Net Income


Net income for the quarter was $206 million compared to $177 million in the fourth quarter and $150 million in the first quarter of 2008. Net income this quarter reflects an effective income tax rate of 31 percent compared to 39 percent in the year-ago period. The lower rate is primarily due to the reversal of reserves for uncertain tax positions. Qwest currently expects its effective income tax rate will return to more normal levels in the remaining quarters of the year.


SEGMENT FINANCIAL RESULTS


Business Markets


The Business Markets segment delivered solid performance under more challenging market conditions in the quarter. Business Markets revenue totaled $1.0 billion, an increase of 3 percent year over year and a decline of 3 percent from the fourth quarter. Top-line performance reflects continued growth in recurring services revenue offset by lower equipment revenue. Excluding equipment revenue, Business Markets revenue increased 2 percent annually and 1 percent over the fourth quarter. Strategic product revenue increased by 23 percent year over year while voice revenue declined 5 percent.


Segment income was $396 million in the quarter, a 6 percent increase year over year and in line with the fourth quarter. Operating expenses were up 1 percent year over year but decreased 5 percent from the fourth quarter mostly due to lower employee-related expenses and lower equipment costs. The segment income was 38.9 percent of revenues in the quarter, compared to 37.8 percent in the first quarter of 2008 and 37.5 percent in the fourth quarter.


Mass Markets


The Mass Markets segment produced solid broadband and video subscriber growth, and strong progress on expense initiatives largely offset revenue pressures. Revenue for Mass Markets was $1.3 billion, a decrease of 11 percent year over year and a decline of 4 percent sequentially. Revenue results were impacted by continued access line losses and the wireless migration. Excluding wireless MVNO services, Mass Markets revenue decreased 6 percent year over year and 1 percent sequentially. In the first quarter, data, Internet and video revenues improved 5 percent annually on continued subscriber growth.


At the end of the first quarter, Qwest was serving 2.9 million broadband subscribers, which is an increase of 7 percent from the year-ago period. The video subscriber base was 832,000 at the end of the period, an increase of 21 percent from the first quarter of 2008. Mass market access lines were 7.5 million at the end of the quarter and declined at an annual rate of 11.4 percent in the period. The total wireless base at the end of the first quarter was 747,000, with about 60 percent of customers being served on the Verizon Wireless platform.


Mass Markets segment income was $724 million, which was flat with the year-ago period and a decline of 2 percent sequentially. Operating expenses declined 21 percent compared to the first quarter of 2008 and 6 percent sequentially due to lower marketing expenses, reduced wireless MVNO operating costs and lower network operations costs. Segment margin percentage of 54.7 percent increased from both the 48.6 percent reported in the year-ago period and 53.5 percent reported in the fourth quarter.


Wholesale Markets


Wholesale Markets segment revenue was lower in the quarter due to lower long-distance volumes and a decline in access revenue. Revenue was impacted by the company’s continued focus on improving wholesale profitability. Wholesale reported first quarter revenue of $752 million, a decline of 11 percent compared to the first quarter of 2008 and a 5 percent decline from the fourth quarter. Compared to the year-ago period, data and Internet revenue was essentially flat, while voice revenue declined 19 percent.


A more profitable revenue mix and strong expense controls largely offset the impact of lower revenue. Wholesale segment income for the quarter was $475 million, a decline of 2 percent from the first and fourth quarter of 2008. Segment income was 63.2 percent of revenues in the first quarter, an increase from 57.5 percent in the first quarter a year ago and 61.7 percent in the fourth quarter.


Cash Flow and Capital Spending


Adjusted free cash flow for the quarter of $339 million was substantially ahead of the year-ago period and was particularly strong in light of typical first quarter seasonal effects including annual bonus payments and semi-annual debt interest payments. These impacts were more than offset by improved cash from operations, lower capital investment spending and reduced working capital requirements due to improved collections and extended days payable outstanding.


Capital spending in the quarter was $334 million, a decrease of 20 percent from the year-ago quarter and 7 percent sequentially. The decline in capital expenditures was mostly due to project timing. A significant portion of capital investment continues to be focused on broadband expansion, including fiber to the node.


Balance Sheet


In the first quarter, Qwest retired approximately $230 million of maturing debt. At the end of the quarter, the company had gross debt outstanding of $13.3 billion. With cash and cash equivalents of $541 million, net debt was $12.8 billion, a decline of nearly $200 million from the fourth quarter of 2008. The ratio of net debt to annualized adjusted EBITDA for the quarter was approximately 2.8 compared to a ratio of 2.9 in the year-ago period and the fourth quarter.


Earlier this month Qwest sold 8.375 percent, 7-year notes at its Qwest Corporation subsidiary. The debt securities have an aggregate principal value of $811 million and the sale netted $738 million in cash proceeds for Qwest. The company also expanded its undrawn revolving credit facility to $910 million, an increase of $60 million.


Shareholder Returns


During the first quarter, Qwest paid a dividend of 8 cents per share, returning nearly $140 million to shareholders. On April 15, Qwest’s Board of Directors approved the payment of a second quarter dividend of 8 cents per share. The dividend will be paid on June 12, 2009, to shareholders of record as of May 22, 2009.


Guidance


Qwest continues to expect full year 2009 adjusted free cash flow will be $1.4 to $1.5 billion. Full year adjusted EBITDA is expected to be $4.2 to $4.4 billion, inclusive of an expected increase in non-cash pension and OPEB expense of $200 million. Capital expenditures are expected to be $1.8 billion or lower.


Conference Call Today


As previously announced, Qwest will host a conference call for investors and the media today at 9 a.m. EDT. A live webcast, including a simultaneous slide presentation, and replay of the call is available at www.qwest.com/about/investor/events. Additional quarterly historical financial information can be found at www.qwest.com/about/investors/financial/index.


About Qwest


Customers coast to coast turn to Qwest’s industry-leading national fiber-optic network and world-class customer service to meet their communications and entertainment needs. For residential customers, Qwest offers a new generation of fiber-optic high-speed Internet service, as well as digital home phone, Verizon Wireless, and DIRECTV services. Qwest is also the choice of 95 percent of Fortune 500 companies, offering a full suite of network, data and voice services for small businesses, large businesses, government agencies and wholesale customers. Additionally, Qwest participates in Networx, the largest communications services contract in the world, and is recognized as a leader in the network services market by a leading technology industry analyst firm.


Forward-Looking Statement Note


This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: access line losses due to increased competition, including from technology substitution of our access lines with wireless and cable alternatives, among others; our substantial indebtedness, and our inability to complete any efforts to further de-lever our balance sheet; adverse results of increased review and scrutiny by media and others (including any internal analyses) of financial reporting issues and practices or otherwise; rapid and significant changes in technology and markets; any adverse developments in commercial disputes or legal proceedings; potential fluctuations in quarterly results; volatility of our stock price; intense competition in the markets in which we compete including the effects of consolidation in our industry; changes in demand for our products and services; acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; changes in the outcome of future events from the assumed outcome included in our significant accounting policies; our ability to utilize net operating losses in projected amounts; and continued unfavorable general economic conditions, including the current financial crisis.


The information contained in this release is a statement of Qwest’s present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest’s assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest’s assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This release may include analysts’ estimates and other information prepared by third parties for which Qwest assumes no responsibility.


Qwest undertakes no obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements and other statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


By including any information in this release, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material.


The marks that comprise the Qwest logo are registered trademarks of Qwest Communications International Inc. in the U.S. and certain other countries.


ATTACHMENT A


QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1) (2)

(UNAUDITED)


Three Months Ended

March 31,

2009 2008 % Change

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


Operating revenue $ 3,173 $ 3,399 (6.6 )%

Operating expenses:

Cost of sales (exclusive of depreciation and amortization)

928 1,181 (21.4 )%

Selling 548 550 (0.4 )%

General, administrative and other operating 575 572 0.5 %

Depreciation and amortization 573 576 (0.5 )%

Total operating expenses 2,624 2,879 (8.9

)%

Other expense (income)—net:

Interest expense on long-term borrowings and capital leases—net

260 272 (4.4 )%

Other—net (9 ) 3 nm


Total other expense (income)—net 251 275 (8.7 )%


Income before income taxes 298 245 21.6 %

Income tax expense 92 95 (3.2 )%

Net income $ 206 $ 150 37.3 %


Earnings per common share:

Basic $ 0.12 $ 0.08 50.0 %

Diluted $ 0.12 $ 0.08 50.0 %


Weighted average common shares outstanding:

Basic 1,702,069 1,763,306 (3.5 )%

Diluted 1,706,822 1,769,165 (3.5 )%


nm—Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.


(1) We have reclassified certain prior year amounts to conform to the current quarter presentation.


(2) Effective January 1, 2009, we adopted FSP APB 14-1. The adoption of this FSP resulted in us retrospectively adjusting previously reported net income, interest expense on long-term borrowings and capital leases—net and income tax expense for all periods presented.


ATTACHMENT B


QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (1) (2)

(UNAUDITED)


March 31, December 31,

2009 2008

(Dollars in millions)


ASSETS


Current assets:

Cash and cash equivalents $ 541 $ 565

Other 2,326 2,405

Total current assets 2,867 2,970

Property, plant and equipment—net and other 16,844 17,171

Total assets $ 19,711 $ 20,141


LIABILITIES AND STOCKHOLDERS’ DEFICIT


Current liabilities:

Current portion of long-term borrowings $ 587 $ 820

Accounts payable and other 2,624 3,033

Total current liabilities 3,211 3,853

Long-term borrowings—net 12,755 12,735

Other 4,909 4,939

Total liabilities 20,875 21,527

Stockholders’ deficit (1,164 ) (1,386 )

Total liabilities and stockholders’ deficit $ 19,711 $ 20,141


(1) We have reclassified certain prior year amounts to conform to the current quarter presentation.


(2) Effective January 1, 2009, we adopted FSP APB 14-1. The adoption of this FSP resulted in us retrospectively adjusting previously reported long-term borrowings—net, other assets and liabilities and stockholders’ deficit for all periods presented.


ATTACHMENT C


QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


Three Months Ended

March 31,

2009 2008

(Dollars in millions)


Cash provided by operating activities $ 657 $ 388

Cash used for investing activities (336 ) (380 )

Cash used for financing activities (345 ) (276 )

Decrease in cash and cash equivalents $ (24 ) $ (268 )


ATTACHMENT D


QWEST COMMUNICATIONS INTERNATIONAL INC.

SELECTED CONSOLIDATED DATA (1)

(UNAUDITED)


Three Months Ended

March 31,

2009 2008 % Change

(Dollars in millions)

Operating revenue (2):


Total segment revenue $ 3,093 $ 3,318 (6.8 )%

Other revenue (primarily USF surcharges) 80 81 (1.2 )%

Total operating revenue $ 3,173 $ 3,399 (6.6 )%


Total segment results (2) (3):


Total segment revenue $ 3,093 $ 3,318 (6.8 )%

Total segment expenses 1,498 1,738 (13.8 )%

Total segment income $ 1,595 $ 1,580 0.9 %

Total segment margin percentage 51.6 % 47.6 %


Revenue, expenses, income and margin percentage by segment (2) (3):


Business markets:

Revenue:

Data and Internet services $ 660 $ 618 6.8 %

Voice services 357 374 (4.5 )%

Total revenue 1,017 992 2.5 %

Expenses:

Direct segment expenses 292 282 3.5 %

Assigned facility, network and other expenses 329 335 (1.8 )%

Total expenses 621 617 0.6 %

Income $ 396 $ 375 5.6 %

Margin percentage 38.9 % 37.8 %

Mass markets:

Revenue:

Data, Internet and video services $ 350 $ 333 5.1 %

Voice services 919 1,022 (10.1 )%

Wireless services 55 129 (57.4 )%

Total revenue 1,324 1,484 (10.8 )%

Expenses:

Direct segment expenses 288 354 (18.6 )%

Assigned facility, network and other expenses 312 409 (23.7 )%

Total expenses 600 763 (21.4 )%

Income $ 724 $ 721 0.4 %

Margin percentage 54.7 % 48.6 %

Wholesale markets:

Revenue:

Data and Internet services $ 353 $ 351 0.6 %

Voice services 399 491 (18.7 )%

Total revenue 752 842 (10.7 )%

Expenses:

Direct segment expenses 49 45 8.9 %

Assigned facility, network and other expenses 228 313 (27.2 )%

Total expenses 277 358 (22.6 )%

Income $ 475 $ 484 (1.9 )%

Margin percentage 63.2 % 57.5 %


March 31,

2009 2008 % Change

(Amounts in thousands, except for employees)

Operating metrics:


Total employees 32,838 36,519 (10.1 )%


Access lines:

Business markets 2,582 2,748 (6.0 )%

Mass markets 7,537 8,502 (11.4 )%

Wholesale markets (4)

1,103 1,247 (11.5 )%

Total access lines 11,222 12,497 (10.2 )%


Mass markets connections:

Access lines:

Consumer primary lines 5,765 6,539 (11.8 )%

Consumer additional lines 511 631 (19.0 )%

Small business lines 1,261 1,332 (5.3 )%

Total access lines 7,537 8,502 (11.4 )%

Other connections:

Broadband subscribers (5)

2,889 2,701 7.0 %

Video subscribers 832 690 20.6 %

Wireless subscribers (5)

747 816 (8.5 )%

Total other connections 4,468 4,207 6.2 %

Total mass markets connections 12,005 12,709 (5.5 )%


Three Months Ended

March 31,

2009 2008 % Change

Capital expenditures (in millions) (6):

$ 334 $ 416 (19.7 )%

Consumer ARPU (in dollars) (7):

$ 58 $ 55 5.5 %

Wholesale minutes of use from carriers and CLECs (in millions) 9,377 10,431 (10.1 )%


(1) We have reclassified certain prior year amounts to conform to the current quarter presentation.


(2) We centrally manage revenue from USF (Universal Service Fund) surcharges, consequently, it is not assigned to any of our segments.


(3) Segment margin percentage represents segment income as a percentage of segment revenue. Segment income is net of direct costs incurred by the segment, such as segment specific employee-costs, bad debt, equipment sales costs and other non-employee related costs. Additionally, we assign other expenses to the segments using an activity-based costing methodology. Assigned expenses include network expenses, facility costs, and various other costs.


(4) Wholesale markets access lines include UNE (Unbundled Network Elements) lines.


(5) Broadband and wireless subscribers include an immaterial amount of business markets customers.


(6) Capital expenditures exclude assets acquired through capital leases.


(7) Consumer ARPU (Average Revenue Per Unit) is measured as consumer revenue, which includes revenue from data, Internet and video services and voice services in the period divided by the average number of primary access lines for the period. We believe this metric can be a useful measure of the revenue performance of our consumer business within our mass markets segment on a per-customer basis. We use ARPU internally to assess the revenue performance of our consumer business within our mass markets segment and the impact on this business of periodic customer initiatives and product roll-outs. ARPU is not a measure determined in accordance with accounting principles generally accepted in the United States of America, or GAAP, and should not be considered as a substitute for our mass markets segment revenue or any other measure determined in accordance with GAAP.


ATTACHMENT E


QWEST COMMUNICATIONS INTERNATIONAL INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1)

(UNAUDITED)


Three Months Ended Year Ended

March 31, December 31,

2009 2008 2008


(Dollars in millions)


Operating revenue $ 3,173 $ 3,399 $ 13,475

Cost of sales (exclusive of depreciation and amortization) (928 ) (1,181 ) (4,585 )

Selling expenses (548 ) (550 ) (2,208 )

General, administrative and other operating expenses (575 ) (572 ) (2,231 )

EBITDA (2)

$ 1,122 $ 1,096 $ 4,451


EBITDA—as adjusted (3):

$ 1,145 $ 1,141 $ 4,547

Less: Legal reserve — — (40 )

Less: Property tax settlement — — 40

Less: Realignment, severance and related costs (23 ) (45 ) (96 )


EBITDA (2):

1,122 1,096 4,451

Depreciation and amortization (573 ) (576 ) (2,354 )

Total other (expense) income—net (251 ) (275 ) (1,046 )

Income tax expense (92 ) (95 ) (399 )

Net income $ 206 $ 150 $ 652


EBITDA margin percentage—as adjusted (3):


EBITDA—as adjusted $ 1,145 $ 1,141 $ 4,547

Divided by total operating revenue $ 3,173 $ 3,399 $ 13,475

EBITDA margin percentage—as adjusted 36.1 % 33.6 % 33.7 %


EBITDA margin percentage (2):


EBITDA $ 1,122 $ 1,096 $ 4,451

Divided by total operating revenue $ 3,173 $ 3,399 $ 13,475

EBITDA margin percentage 35.4 % 32.2 % 33.0 %


Free cash flow from operations (4):


Cash provided by operating activities $ 657 $ 388 $ 2,931

Less: expenditures for property, plant and equipment and capitalized software

(334 ) (416 ) (1,777 )

Free cash flow from operations 323 (28 ) 1,154

Add: certain one-time settlement payments 16 84 285

Adjusted free cash flow from operations $ 339 $ 56 $ 1,439


March 31, December 31,

2009 2008

(Dollars in millions)

Net debt (5):


Current portion of long-term borrowings $ 587 $ 820

Long-term borrowings—net 12,755 12,735

Total borrowings—net 13,342 13,555

Less: cash and cash equivalents (541 ) (565 )

Net debt $ 12,801 $ 12,990


Ratio of net debt to EBITDA—as adjusted (6):


Total net debt $ 12,801 $ 12,990

Divided by EBITDA—as adjusted $ 4,551 $ 4,547

Ratio of net debt to EBITDA—as adjusted 2.8 2.9


(1) We have reclassified certain prior year amounts to conform to the current quarter presentation. Effective January 1, 2009, we adopted FSP APB 14-1. The adoption of this FSP resulted in us retrospectively adjusting previously reported net income and long-term borrowings—net for all periods presented.


(2) EBITDA and EBITDA margin percentage are non-GAAP financial measures. Other companies may calculate these measures (or similarly titled measures) differently. We believe these measures provide useful information to investors in evaluating our capital-intensive business because they reflect our operating performance before the impacts of non-cash items and are indicators of our ability to service debt, pay taxes and fund discretionary spending such as capital expenditures. Management also uses EBITDA for a number of purposes, including setting targets for compensation and assessing the performance of our operations.


(3) EBITDA—as adjusted and EBITDA margin percentage—as adjusted are non-GAAP financial measures that reflect our operating performance before the impacts of certain non-cash items and after removing the effects of items that we believe are not representative of our core ongoing telecommunications operations, such as severance charges, restructuring charges and charges for securities-related litigation. We provide this information to supplement our GAAP financial measures because we believe that investors commonly use this information to analyze the results of our core operations, to identify financial trends in these results and to compare our operating performance to that of our competitors. Management also uses these measures for a number of purposes, including setting targets for compensation and assessing the performance of our operations.


(4) Free cash flow and adjusted free cash flow from operations are non-GAAP financial measures that indicate cash generated by our business after operating expenses, capital expenditures, interest expense and income tax expense/benefit. We believe these measures provide useful information to our investors for purposes of evaluating our ability to satisfy our debt and other mandatory payment obligations and because they reflect cash flows available for financing activities and voluntary debt repayment. This is of particular relevance for our business given our significant debt balance. We also use free cash flow and adjusted free cash flow from operations internally for a variety of purposes, including setting targets for compensation and budgeting our cash needs. These measures are not determined in accordance with GAAP and should not be considered as a substitute for “income before income taxes” or “cash provided by operating activities” or any other measure determined in accordance with GAAP. Due to the forward-looking nature of expected free cash flow amounts for 2009, information to reconcile this non-GAAP financial measure is not available at this time.


(5) Net debt is a non-GAAP financial measure that we calculate as our total borrowings (current plus long-term) less our cash and cash equivalents. We believe net debt is helpful in analyzing our leverage, and management uses this measure in making decisions regarding potential financings. Net debt is not a measure determined in accordance with GAAP and should not be considered as a substitute for “current portion of long-term borrowings” or “long-term borrowings” or any other measure determined in accordance with GAAP.


(6) The ratio of net debt to EBITDA—as adjusted is a non-GAAP financial measure that we calculate as net debt divided by a rolling four quarters of EBITDA—as adjusted. Other companies may calculate this measure differently. We believe this measure provides useful information to our investors about our debt level relative to our performance and about our ability to meet our financial obligations.


Contact:

Qwest Communications International Inc.

Media Contact:

Diane Reberger, 303-992-1662

Diane.Reberger@Qwest.com

or

Investor Contact:

Kurt Fawkes, 303-992-0029

Kurt.Fawkes@Qwest.com

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TDA SEEKS TO EXPAND BROADBAND CONNECTIVITY, CREATE ECONOMIC DEVELOPMENT

COMMISSIONER TODD STAPLES 1-800-TELL-TDAF

TEXAS DEPARTMENT OF AGRICULTURE www.TexasAgriculture.gov

For Immediate Release: Contacts: Bryan Black

4/28/09 Veronica Obregon

(512) 463-7664


TDA SEEKS TO EXPAND BROADBAND CONNECTIVITY,

CREATE ECONOMIC DEVELOPMENT


Agency releases Request For Information to enhance broadband services


AUSTIN — The Texas Department of Agriculture is partnering with the Public Utility Commission and other agencies to gather information from broadband providers in an effort to extend broadband connectivity to all areas of Texas.


“New communication technologies are shrinking our world, and it is essential we make sure Texans don’t miss out on these new tech tools,” Commissioner Todd Staples said. “Expanding broadband service is key to creating opportunities and efficiencies for all Texans, from private citizens and businesses to healthcare and education.”

“We are happy to be working with the Agriculture Department on this broadband project,” Barry Smitherman, chairman of the Public Utility Commission, said. “It is an important opportunity to bring broadband service to areas that do not have this valuable service today.”

TDA is seeking information from qualified contractors in preparation for the release of federal funding to enhance access to broadband. The department will take input on strategies to identify and extend service to areas of the state that are underserved or unserved by broadband providers. Interested parties may access the Request For Information (RFI) by going to this Web site. The deadline for submitting responses to the RFI is May 15.


The mapping initiative, and related deployment projects, may be implemented through the Broadband Data Improvement Act of 2008, or the Reinvestment Act: Broadband Technology Opportunities Program.


For more information on the Request For Information, please contact Rick Rhodes at (512) 463-7577 or by e-mail at Rick.Rhodes@TexasAgriculture.gov.


###


All TDA press releases are also available via the Internet at www.TexasAgriculture.gov/newsroom

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Edgeware Partners with Avtrex to Bring Ad-Insertion and Trick Play Capabilities to Web TV

Edgeware, the provider of revolutionary server systems for network deployed on-demand TV, and Avtrex, a leading supplier of client software for set top boxes and connected TVs, today announced their partnership to provide full interoperability for video services delivered over the Internet including, ad-insertion and trick play capabilities.


The combined Edgeware-Avtrex offering enables operators and content rights owners to quickly build a solution to deliver premium, on-demand video and TV over the open Internet where the highest Quality of Service (QoS) is necessary.


Edgeware and Avtrex’s combined solution provides a true DVD-like experience with support for full interactivity including multi-speed fast-forward and rewind. Edgeware servers store only the file encoded at the normal speed to deliver trick play video ‘on-the-fly’ when requested by each Avtrex client. The partnership also enables advertising-funded business models via support for dynamic playlists. Adverts personalized to individual consumers’ interests and needs can be inserted at appropriate places in the featured content. Pre-roll, post-roll and interstitial insertions are all supported with full trick-play functionality.


“For Internet TV and video services to move from the PC to the TV, they need to meet the expectations of a premium content service,” said Joachim Roos, founder and CEO of Edgeware. “Working with Avtrex, we can deliver a cost efficient and scalable end–to-end solution including targeted advertizing and full interactivity, based on standard protocols”.


Through the partnership, broadcast content is recorded in the network by Edgeware servers and delivered using open Internet protocols to set top boxes and connected televisions running Avtrex client software. Even in congested networks where TCP re-transmission is required, each Edgeware server can deliver unique streams to over 32,000 Avtrex clients at the same time. The servers consume just 85W of power, 1U rack space and require virtually no maintenance. Operational costs are dramatically reduced enabling caching of premium content at the edge and avoiding expensive core network and backhaul upgrades for Web TV deployment.


The Avtrex client software, whether in a set top box or installed directly in a network-connected television, provides sophisticated buffer management which ensures smooth operation over the Web despite varying network conditions. A development platform enables simple porting of services to new client devices and all major encryption systems for content rights protection are supported. Depending on the video rights available, delivery of content to multiple devices in a home network is also supported through the Avtrex Home Server functionality.


”Edgeware’s servers, which already provided a revolutionary solution to operational cost of IPTV and video-on-demand implementations, have allowed Avtrex to create a superior user experience, while satisfying the demanding requirements of system operators and content owners with regard to content security and monetization,” said Steve Francis, CEO of Avtrex.


The two companies will be showing a full demonstration of the solution at the Edgeware’s NAB booth C1657.


About Edgeware

Edgeware is the supplier of revolutionary server systems for on-demand TV, setting new industry standards for video streaming over IP. Edgeware enables Video On-Demand (VoD), Time Shifted TV, Web TV and Ad-insertion services, with unmatched scalability and at the lowest investment and operational cost on the market.


In 2006 Edgeware pioneered using flash memory by launching a fully solid state flash memory based network appliance, for truly distributed deployment. By combining solid-state flash memory and hardware accelerated streaming, Edgeware offers the most integrated, reliable and power efficient appliances in the industry. The systems solution includes dynamic asset propagation and management to enable highly scalable and resilient architectures with central clusters in combination with caches distributed deep into the network. Caching popular content close to the viewers means substantial savings on network infrastructure and shortened time to market. Edgeware´s server systems have been deployed around the globe by leading Telcos and cable MSOs, and more recently by over the top service providers.


The company is headquartered in Stockholm, Sweden, with a U.S.-based office in San Jose, California.


www.edgeware.tv


About Avtrex

Avtrex, Inc, is a Silicon Valley-based start-up focused on advanced technologies for digital video recording, digital television, and home media distribution. Avtrex is a provider of embedded software whose customers are leading innovators in consumer electronics and digital entertainment. Avtrex is privately held, founded in 2001 by a team that has been working together for more than a decade. More information about Avtrex is available at www.avtrex.com.


###

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Altitude Telecom Chooses Ekinops for its Converged Ethernet and TDM Optical Transport Network

Ekinops 360 platform delivers on the “pay-as-you-grow” promise

PARIS, April 28, 2009 – Ekinops, a leading provider of next generation multi-protocol, multi-reach optical transport, and aggregation solutions, for metro, regional, and long haul networks, contributed to the deployment of the Altitude Telecom high-capacity, regional optical network between Paris and northwestern France.


The phased project involved construction of a converged TDM and Ethernet 10G DWDM optical backbone using the Ekinops 360 platform.


Altitude Telecom is a full-service operator offering voice, data, and Internet services. Thanks to the success of the new Altitude Telecom Data Center, the carrier was looking to increase the capacity of its network. The Ekinops 360 platform offered Altitude Telecom a cost-effective means to extend its network.


“We needed a robust and flexible technology for our core network and for interconnecting with other service providers,” noted Bertrand Lebarbier, Executive Director of Altitude Telecom. “The Ekinops solution was selected for its flexibility, reliability and its upgradability. We also liked the small footprint and low power consumption. It will significantly reduce our OPEX.”


“The Ekinops platform provides the ideal ‘pay as you grow’ architecture, allowing Altitude Telecom to invest in its network incrementally when the services growth justifies it,” explains Didier Brédy, Ekinops CEO.


The new infrastructure was deployed in several phases. In 2007, Ekinops was able to implement the first phase in less than a month, compared with the industry typical two-to-four-month implementation timeline.


“We are proud to work with a service provider as renowned as Altitude Telecom and to have won in 2008 the extension to this new converged network,” adds Brédy. “Our optical transport solutions enable telecommunications carriers to seamlessly migrate their legacy networks toward a new generation of converged, flexible, multi-protocol and ‘green’ DWDM networks.”


Among the deployment challenges was Altitude Telecom’s need for high bandwidth in a number of point-to-point links, most of which exceeded 150 kilometers (about 95 miles). The Ekinops 360, which enables optical links of several hundred kilometers without in-line amplification, was an ideal solution for this architecture. It allowed for minimal upfront cost and lower ongoing cost due to the elimination of the inline amplification sites.


Ekinops’ advanced DynaFEC (Dynamic Forward Error Correction) and DynaMux (Dynamic Multiplexing) technologies also allow for reduced initial cost. DynaFEC, a leading FEC technology, uses software techniques to eliminate errors and push longer distances rather than using more expensive optics to achieve the required distances. DynaMux allows for the multiplexing of any mix of service types over a single wavelength, reducing the required number of wavelengths in converged networks.


In addition, Altitude Telecom was looking for equipment that took up minimal space and utilized minimal power in each of its network sites. The Ekinops 360 platform is amongst the lowest power consuming systems in the industry.


About Ekinops

Ekinops is a leading designer and supplier of next generation optical transport equipment for service providers and enterprise customers. The Ekinops 360 Dynamic, Multi-Reach Transport System provides DWDM and CWDM on a single platform that addresses Metro, Regional, and Long Haul applications. The Ekinops 360 system relies on the innovative, programmable Ekinops T-Chip® (TRANSPORT ON-A-CHIP TECHNOLOGY) that enables Fast, Flexible, and Cost-effective service delivery for building high speed optical networks. Using the Ekinops 360 carrier-grade system, operators can increase transport capacity of their networks – CWDM, DWDM, Ethernet, ESCON, Fiber Channel, SONET/SDH, and uncompressed video (HD-SDI, SD-SDI, ASI) – through the industry’s most efficient aggregation of services. The company is headquartered in Lannion, France, with offices in Europe, the USA and Asia. For more information, visit Ekinops at www.ekinops.net


About Altitude Telecom

Altitude Telecom is a full telecommunications operator experts in IP. Altitude Telecom provides companies with voice, data and Internet solutions, anywhere in France. Altitude Telecom relies on strong technology knowledge in the telecommunication industry and offers services to several large enterprises and administration: VPN IP MPLS, VoIP, Internet access, hosting and fixed/mobile convergence. For more information, please visit www.altitudetelecom.fr


Press contacts:

Ekinops

Dominique Arestan

darestan@ekinops.net

Tel. direct : +33 (0)1 49 97 04 03

Mobile : +33 (0)6 42 10 95 05


Altitude Télécom

Maïté Sommervogel

maite.sommervogel@altitudetelecom.fr

Tel. direct : +33 (0)2 76 51 12 10

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Business Transformation Takes Forumville Center Stage at Management World 2009

Forumville Highlights Business Transformation at TM Forum’s Management World 2009


Innovative Business Solutions Drive Communications Service Provider Success


MORRISTOWN, NJ, April 28, 2009 –TM Forum, the world’s premier industry group focused on business effectiveness for the communications and media sectors, revealed today the ground-breaking business transformation solutions that will be demonstrated in the exclusive Forumville innovation zone at the Forum’s flagship Management World conference (4-8 May 2009, Nice, France).


Business Transformation is one of six key strategies to combat the economic downturn and prepare the industry for the future. In a world where communications service providers face the continual challenge of maintaining profitability for increasingly competitive and diverse services, TM Forum is leading the way in improving business effectiveness. Through leadership and collaboration, the Forum is delivering the standards and best practices that underpin automation, reduce OpEx and customer churn, and allow service providers to adapt to new business models.


According to Martin Creaner, President and COO, TM Forum, “Forumville brings together leading industry experts in a series of live Technology Catalyst and Content Encounter demos, providing examples of the innovation and rapid solution development only possible through collaboration. Together with business and technical presentations focused on implementation of TM Forum standards, Forumville will offer conference delegates a one-stop-shop for essential transformation tools.”


Business Transformation — Tuning Business for the Road Ahead

The Business Transformation innovation area looks at the big picture of how the TM Forum best practices, business programs, and executive communities can help businesses become more efficient, automated, agile, and customer-centric. Visitors will see how TM Forum Solution Frameworks have already helped hundreds of companies around the world save millions of dollars by shortening return on development investment, getting new services to market faster and driving down operational costs through a multitude of business process and IT transformation projects.


One of the highlights of the Business Transformation zone is TM Forum’s Business Benchmarking Program, which boasts more than 100 service provider participants. The program allows service providers to assess metrics, ranging from operations to finance, and to see how they compare to best in class providers around the world. The data support business decision-making — a crucial need as companies undergo massive operational transformations to support new converged, media-rich services, reduce costs, and provide outstanding customer experience with low levels of customer churn.

The Business Transformation zone will also feature a defense industry Technology Catalyst demonstration on Managing Future Satellite Communications. The Catalyst focuses on operational agility and the real-time management of complex space networks. The defense industry is transforming its management strategies using TM Forum-based standards to create a solution framework that manages across operator boundaries.


As Service Providers implement business transformation projects, one of the complex issues they face is how to migrate key customer data and other records into their new systems. The data must be verified, rationalized, cleansed, formatted and then moved. The Application Data Migration Technology Catalyst addresses the industry challenges resulting from current migration practices and strategies to overcome those challenges. It demonstrates the principles and recommendations using a real-world case study.


Forumville will include two theaters, offering in-depth technology demonstrations, case studies of real-world implementations, and educational presentations. Attendees will also receive free registration to the Forum’s new online community, where members can connect to their peers and gain access to the latest industry topics and thought leadership.


The strategies and tactics unveiled in Forumville will be mirrored throughout the Management World 2009 conference, which opens with an impressive keynote lineup on Wednesday, May 6. “Forumville, along with the entire Management World conference this year, focuses on the strategies and tactics service providers need to embrace to survive. The current economic situation presents an opportunity for service providers to transform themselves to support the new business models that will prove to be essential to future growth and profitability for service providers,” added Creaner.


The full conference agenda, keynote and speaker details, as well as information surrounding certified training courses available in Nice are available now at http://www.tmforum.org/ManagementWorld2009/


Press and analysts are invited to contact Geoff Devlin, gdevlin@tmforum.org, to apply for press access to the conference.


To learn more please visit www.tmforum.org http://www.tmforum.org


About TM Forum

With more than 700 member companies in 75 countries, TM Forum is the world’s leading industry association focused on improving business effectiveness for service providers and their suppliers. Serving the information, communications and entertainment industries, the Forum provides practical solutions, guidance and leadership to transform the way that digital services are created, delivered and charged. Members include the world’s largest service providers, cable and network operators, software suppliers, equipment suppliers and systems integrators.


TM Forum provides a wide range of information and support to help its members reduce the costs and risks associated with creating and delivering profitable services. These include industry research and benchmarks, technology roadmaps, best practice guidebooks, software standards and interfaces, as well as certified training, conferences and publications. The Forum also provides its member community with extensive marketing and networking opportunities, enabling business with new customers and partners.


Subscribe to TM Forum

TM Forum Newsletters

TM Forum Press Releases

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Tellabs Reports First-Quarter 2009 Revenue of $362 Million

Tellabs Reports First-Quarter 2009 Revenue of $362 Million


Company improving gross profit margins, generating cash and investing in the future


NAPERVILLE, Ill., April 28 /PRNewswire-FirstCall/ — Tellabs’ first-quarter 2009 revenue totaled $362 million, compared with $464 million in the first quarter of 2008.


Tellabs earned $7 million or 2 cents per share on a GAAP (U.S. generally accepted accounting principles) basis, compared with $17 million or 4 cents per share in the year-ago quarter.


On a non-GAAP basis, Tellabs earned $22 million or 6 cents per share, compared with $32 million or 8 cents per share in the year-ago quarter. Non-GAAP results exclude pretax charges of $18 million, which includes $5 million or 0.9 cents per share in equity-based compensation expense.


GAAP gross profit margins were 44.2% in the first quarter of 2009, higher than in any quarter since the third quarter of 2006. The company generated $44 million in cash from operations and increased its cash and cash equivalents to $1.18 billion. Tellabs continues to invest in the future: research and development spending amounted to 19% of revenue in the quarter.


“Tellabs continues to focus on improving profitability - both our customers’ and our own - by helping customers generate new revenues, reduce capital expenses and cut operating expenses,” said Rob Pullen, Tellabs president and chief executive officer. “During the first quarter, we gained new customers for our innovative growth products, including our dynamic optical networking and data products. Data products continue to be our fastest-growing product category: first-quarter data revenue grew 45% compared with the year-ago quarter. We are successfully transitioning to growth products while improving gross profit margins, generating cash and investing in the future.”


For the first quarter of 2009, broadband segment revenue was $178 million, transport segment revenue was $130 million and services segment revenue was $54 million. More detailed information, including year-over-year segment comparisons, can be found in the Results of Operations section of this news release.


Second-Quarter 2009 Guidance - The following statements are based on current expectations and involve risks and uncertainties, some of which are set forth below. Compared with the first quarter of 2009, Tellabs expects second-quarter revenue to be flat to up by a high-single-digit percentage. Non-GAAP gross margin is expected to be flat, plus or minus a point or two, as a result of product mix. Non-GAAP operating expense is expected to continue on a downward trajectory in the second quarter. Non-GAAP gross margin excludes about $1 million, and non-GAAP operating expense excludes about $5 million, in equity-based compensation expense.


Simultaneous Webcast and Teleconference Replay - Tellabs will host an investor teleconference at 7:30 a.m. Central Daylight Time today to discuss its first-quarter 2009 results and provide its outlook for the second quarter of 2009. Internet users can hear a simultaneous webcast of the teleconference at www.tellabs.com; click on the webcast icon. A taped replay of the call will be available beginning at approximately 10:30 a.m. Central Daylight Time today, until midnight Central Daylight Time on Thursday, April 30, at 800-642-1687. (Outside the United States, call 706-645-9291.) When prompted, enter the Tellabs conference ID number: 94429696. A podcast of the call will be available at www.tellabs.com/news/feeds/ later today.


About Tellabs - Tellabs helps customers succeed through innovation. That’s why 41 of the top 50 global telecom service providers choose our mobile backhaul, optical networking and business services solutions. We help telecom service providers, independent operating companies, MSO/cable TV companies, enterprises and government agencies get ahead by adding revenue, reducing expenses and optimizing networks. With wireless and wireline networks in more than 90 countries, we enrich people’s lives by innovating the way the world connectsâ„¢. Tellabs (Nasdaq: TLAB) is part of the NASDAQ Global Select Market, Ocean Tomo 300â„¢ Patent Index, the S&P 500 and several corporate responsibility indexes including FTSE4Good and eight KLD indexes. www.tellabs.com


Forward-Looking Statements - This news release, which includes the Results of Operations discussion that follows, contains forward-looking statements, including but not limited to the second-quarter 2009 guidance and cost savings information contained in this release, that involve risks and uncertainties. Actual results may differ from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the competitive landscape, including pricing and margin pressures, the response of customers and competitors, industry consolidation, the introduction of new products, the entrance into new markets, the ability to secure necessary resources, the ability to realize anticipated savings under our cost-reduction initiatives, and overall negative economic conditions generally and disruptions in credit and capital markets, including specific impacts of these conditions on the telecommunications industry. In light of these factors investors are advised not to rely on forward-looking statements in deciding whether to buy, sell or hold the company’s securities. The company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after today or to reflect the occurrence of

unanticipated events.


Tellabs® and the Tellabs logo are trademarks of Tellabs or its affiliates in the United States and/or other countries. Any other company or product names mentioned herein may be trademarks of their respective companies.


TELLABS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


First Quarter

————-

4/3/09 3/28/08

—— ——-

In millions, except per-share data

Revenue

Products $308.0 $408.0

Services 53.7 56.1

—- —-

Total revenue 361.7 464.1

—– —–


Cost of Revenue

Products 166.5 242.8

Services 35.4 43.4

—- —-

Total cost of revenue 201.9 286.2

—– —–


Gross Profit 159.8 177.9


Gross profit as a percentage of revenue 44.2% 38.3%


Gross profit as a percentage of revenue -

products 45.9% 40.5%

Gross profit as a percentage of revenue -

services 34.1% 22.6%


Operating Expenses

Research and development 69.5 80.7

Sales and marketing 42.4 43.4

General and administrative 26.4 26.1

Intangible asset amortization 6.0 5.6

Restructuring and other charges 6.7 8.7

— —

Total operating expenses 151.0 164.5

—– —–


Operating Earnings 8.8 13.4


Other Income

Interest income, net 5.2 9.9

Other (expense) income, net (0.5) 0.6

—- —

Total other income 4.7 10.5

— —-


Earnings Before Income Tax 13.5 23.9

Income tax expense (7.0) (7.3)

—- —-

Net Earnings $6.5 $16.6

==== =====


Net Earnings Per Share

Basic $0.02 $0.04

===== =====

Diluted $0.02 $0.04

===== =====


Weighted Average Shares Outstanding

Basic 395.8 407.9

===== =====

Diluted 396.6 408.9

===== =====


TELLABS, INC.

CONSOLIDATED BALANCE SHEETS


4/3/09 1/2/09

—— ——

In millions, except share data Unaudited

———

Assets

Current Assets

Cash and cash equivalents $226.2 $376.1

Investments in marketable securities 958.1 776.0

—– —–

Total cash, cash equivalents and marketable

securities 1,184.3 1,152.1


Other marketable securities 191.8 179.1

Accounts receivable, net of allowances of $1.5 and

$1.4 320.1 332.7

Inventories

Raw materials 37.4 34.2

Work in process 9.0 13.9

Finished goods 124.4 128.8

—– —–

Total inventories 170.8 176.9

Income taxes 38.7 38.7

Miscellaneous receivables and other current

assets 53.4 56.3

—- —-

Total Current Assets 1,959.1 1,935.8


Property, Plant and Equipment

Land 20.8 21.1

Buildings and improvements 197.9 201.6

Equipment 405.5 420.0

—– —–

Total property, plant and equipment 624.2 642.7

Accumulated depreciation (358.3) (364.4)

—— ——

Property, plant and equipment, net 265.9 278.3

Goodwill 122.2 122.4

Intangible Assets, Net of Amortization 38.2 44.2

Other Assets 122.1 127.5

—– —–

Total Assets $2,507.5 $2,508.2

======== ========


Liabilities and Stockholders’ Equity

Current Liabilities

Accounts payable $72.9 $84.1

Accrued compensation 50.0 60.7

Restructuring and other charges 15.3 17.7

Income taxes 71.2 73.0

Stock loan 191.8 179.1

Deferred revenue 43.7 34.6

Other accrued liabilities 96.4 91.4

—- —-

Total Current Liabilities 541.3 540.6


Long-Term Restructuring Liabilities 10.7 13.3

Income Taxes 59.8 59.7

Other Long-Term Liabilities 47.8 48.1


Stockholders’ Equity

Preferred stock: authorized 5,000,000 shares of

$0.01 par value; no shares issued and

outstanding - -

Common stock: authorized 1,000,000,000 shares of

$0.01 par value; 495,851,232 and 495,757,314

shares issued 5.0 5.0

Additional paid-in capital 1,491.4 1,485.9

Treasury stock, at cost: 100,123,599 and

100,088,341 shares (952.6) (952.4)

Retained earnings 1,189.7 1,183.2

Accumulated other comprehensive income 114.4 124.8

—– —–

Total Stockholders’ Equity 1,847.9 1,846.5

——- ——-

Total Liabilities and Stockholders’ Equity $2,507.5 $2,508.2

======== ========


TELLABS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


First Quarter

————-

4/3/09 3/28/08

—— ——-

In millions

Operating Activities

Net earnings $6.5 $16.6

Adjustments to reconcile net earnings to net cash

provided by operating activities:

Depreciation and amortization 18.8 21.8

Loss on disposal of property, plant and

equipment 0.2 0.2

Equity-based compensation 5.5 8.0

Deferred income taxes 4.0 (4.0)

Restructuring and other charges 6.7 8.7

Other-than-temporary impairment charges on

investments - 1.4

Net changes in assets and liabilities:

Accounts receivable 6.6 24.2

Inventories 5.2 9.7

Miscellaneous receivables and other current

assets 2.3 2.8

Other assets 1.1 18.9

Accounts payable (8.8) (16.4)

Restructuring and other charges (6.8) (4.9)

Deferred revenue 9.1 5.8

Other accrued liabilities (4.4) (8.0)

Income taxes (3.3) 0.7

Other long-term liabilities 1.4 (2.6)

— —-

Net Cash Provided by Operating Activities 44.1 82.9

—- —-


Investing Activities

Capital expenditures (7.6) (7.1)

Proceeds on disposals of property, plant and

equipment 0.2 0.1

Payments for purchases of investments (416.5) (482.3)

Proceeds from sales and maturities of investments 233.7 506.3

—– —–

Net Cash (Used for) Provided by Investing Activities (190.2) 17.0

—— —-


Financing Activities

Proceeds from issuance of common stock under stock

plans - 0.4

Repurchase of common stock (0.2) (142.1)

—- ——

Net Cash Used for Financing Activities (0.2) (141.7)

—- ——


Effect of Exchange Rate Changes on Cash (3.6) 0.9

—- —

Net Decrease in Cash and Cash Equivalents (149.9) (40.9)

Cash and Cash Equivalents - Beginning of Year 376.1 213.0

—– —–

Cash and Cash Equivalents - End of Period $226.2 $172.1

====== ======


RESULTS OF OPERATIONS

For the first quarter of 2009, revenue was $361.7 million, compared with $464.1 million in the first quarter of 2008, as we saw revenue declines in all three segments.


Consolidated gross margin in the first quarter was 44.2%, up 5.9 percentage points from 38.3% in the first quarter of 2008. The increase in consolidated gross product margin was driven by the higher level of data revenue, which grew 45.2% year-over-year, margin improvements associated with our access and optical networking products, and improved services gross margin.


Operating expenses in the first quarter of 2009, including $6.0 million in intangible amortization and $6.7 million in restructuring and other charges, were $151.0 million, down $13.5 million from $164.5 million in the first quarter of 2008.


Net earnings for the first quarter of 2009, driven by the lower level of revenue, were $6.5 million or $0.02 per share (basic and diluted), compared with $16.6 million or $0.04 per share (basic and diluted) for the same period of 2008.


Revenue (in millions)


First Quarter

2009 2008 Change

Products $308.0 $408.0 (24.5%)

Services 53.7 56.1 (4.3%)

Total revenue $361.7 $464.1 (22.1%)


Revenue declined in the Products and Services segments. In the Broadband product segment, increased revenue from data products was offset by lower access and managed access revenue. In the Transport product segment, the revenue decline was driven primarily by lower revenue from digital cross-connect and optical networking systems. In the Services segment, the revenue decline was primarily driven by a lower level of deployment revenue.


On a geographic basis, revenue in North America (United States and Canada) was $247.0 million in the first quarter of 2009, down 29.3% from the year-ago quarter. Revenue outside North America was $114.7 million in the first quarter of 2009, compared with $114.6 million in the year-ago quarter.


Gross Margin


First Quarter

2009 2008 % Point

Change

Products 45.9% 40.5% 5.4

Services 34.1% 22.6% 11.5

Consolidated 44.2% 38.3% 5.9


The increase in product gross margin between the first quarter of 2008 and the first quarter of 2009 was driven primarily by the higher level of data revenue and improved margins on access and optical networking products. The increase in services gross margin during the same period reflects improved gross margins for deployment services.


Operating Expenses (in millions)


First Quarter Percent of

Revenue

2009 2008 Change 2009 2008

Research and development $69.5 $80.7 ($11.2) 19.2% 17.4%

Sales and marketing 42.4 43.4 (1.0) 11.7% 9.4%

General and administrative 26.4 26.1 0.3 7.3% 5.6%

Subtotal 138.3 150.2 (11.9) 38.2% 32.4%


Intangible asset

amortization 6.0 5.6 0.4

Restructuring and other

charges 6.7 8.7 (2.0)

Total operating expenses $151.0 $164.5 ($13.5)


The decline in operating expenses was driven primarily by lower research and development expenses. Restructuring and other charges of $6.7 million in the first quarter 2009 primarily reflect severance, facility- and asset-related charges.


Other Income (in millions)


First Quarter

2009 2008 Change

Interest income, net $5.2 $9.9 ($4.7)

Other (expense)

income, net (0.5) 0.6 (1.1)

Total other income $4.7 $10.5 ($5.8)


Interest income, net, was lower in the first quarter of 2009 versus the comparable period in 2008. Market interest rates declined during 2008 and remained low in the first quarter of 2009. In the first quarter of 2009, 90% of our portfolio was allocated to governments and government agencies, as compared with 68% in the first quarter of 2008.


Income Taxes

For the first quarter of 2009, we recorded tax expense of $7.0 million at an effective tax rate of 51.9%, compared with a tax expense of $7.3 million at an effective tax rate of 30.5% for the first quarter of 2008. The increase in our rate reflects the absence of a tax benefit on domestic losses (due to the valuation allowance established against our domestic deferred tax assets) and normal tax rates on our international earnings.


Segments


Segment Revenue (in millions)


First Quarter

2009 2008 Change

Broadband $178.3 $202.1 (11.8%)

Transport 129.7 205.9 (37.0%)

Services 53.7 56.1 (4.3%)

Total revenue $361.7 $464.1 (22.1%)


Segment Profit* (in millions)


First Quarter

2009 2008 Change

Broadband $34.3 $8.7 294.3%

Transport 39.8 79.2 (49.7%)

Services 19.0 13.7 38.7%

Total segment profit $93.1 $101.6 (8.4%)


*We define segment profit as gross profit less research and development expenses. Segment profit excludes sales and marketing expenses, general and administrative expenses, the amortization of intangibles, restructuring and other charges, and the impact of equity-based compensation (which contains restricted stock and performance stock units granted after June 30, 2006, and stock options).


Broadband


Revenue: Broadband revenue between the first quarter of 2008 and the first quarter of 2009 was driven by increased data revenue that was offset by lower access and managed access revenue. Data product revenue grew 45.2% between the first quarter of 2008 and the first quarter of 2009. Revenue benefited primarily from the continuing rollout of our next-generation wireless backhaul solution in multiple geographic regions. Access revenue will likely continue to decline as several key customers are transitioning to alternative network architectures. The decline in managed access revenue was driven by lower revenue from the Tellabs® 6300 SDH transport revenue, as we completed the initial stages of a large build-out in the EMEA region, and lower overall revenue from the Tellabs® 8100 managed access system.


Segment Profit: Broadband segment profit grew $25.6 million, driven by higher revenue from data products, margin improvements associated with access products, and reduced research and development expenses.


Transport


Revenue: The decline in Transport revenue between the first quarter of 2008 and the first quarter of 2009 was driven primarily by lower revenue from digital cross-connect and optical networking systems. The decline in digital cross-connect system revenue reflects lower spending from North American customers; the decline in optical networking revenue reflects the completion of the initial stages of a large build-out in North America during 2008.


During the first quarter of 2009, Tellabs 5500 digital cross-connect product revenue from new systems, system expansions and system upgrades were approximately 19% of the total, compared with 44% in the first quarter of 2008. The remaining balances consisted of port-card growth on the installed base.


Segment Profit: The decline in Transport segment profit was driven by the lower level of digital cross-connect system revenue.


Services


Revenue: The decline in Services segment revenue from the first quarter of 2008 to the first quarter of 2009 was driven by lower revenue from deployment services, which was associated with the lower level of product revenue.


Segment Profit: The increase in Services segment profit reflects improved gross margins for deployment services.


Financial Condition, Liquidity and Capital Resources

Our principal source of liquidity remained our cash, cash equivalents and marketable securities of $1,184.3 million as of April 3, 2009, which increased by $32.2 million since year-end 2008. The increase in cash, cash equivalents and marketable securities for the quarter reflects $44.1 million in cash generated from operating activities, partially offset by cash used for capital expenditures.


Substantially all of our investments are backed by governments or government agencies and are highly liquid instruments. We may rebalance our portfolio from time to time, which may affect the duration, credit structure and future income of our investments.


During the first quarter of 2009, we repurchased approximately 4,000 shares of our common stock at a cost of $17,000 under previously announced share repurchase programs. We provide no assurance that we will continue our repurchase activity and we may change our repurchase activity in the future. We cannot estimate the timing of any such change or the impact on our cash, cash equivalents and marketable securities.


Based on historical performance and current forecasts, we believe the company’s cash, cash equivalents and marketable securities will satisfy working capital needs, capital expenditures and other liquidity requirements related to existing operations for the next 12 months. Future available sources of working capital, including cash, cash equivalents, and marketable securities, cash generated from future operations, short-term or long-term financing, equity offerings or any combination of these sources, should allow us to meet our long-term liquidity needs. Our current policy is to use our liquidity, financial strength and stability to fund business operations, to expand business, potentially through acquisitions, or to repurchase our common stock.


TELLABS, INC.

RECONCILIATION OF NON-GAAP ADJUSTMENTS (1)

(Unaudited)


First Quarter 2009 First Quarter 2008

—————— ——————-

In millions, except As Adjust- Non- As Adjust- Non-

per-share data Reported ments GAAP Reported ments GAAP

——– ——- —- ——– ——- —-


Revenue

Products $308.0 $- $308.0 $408.0 $- $408.0

Services 53.7 - 53.7 56.1 - 56.1

—- — —- —- — —-

Total

revenue 361.7 - 361.7 464.1 - 464.1

—– — —– —– — —–


Cost of Revenue

Products (a) 166.5 (0.4) 166.1 242.8 (0.7) 242.1

Services (a) 35.4 (0.7) 34.7 43.4 (1.0) 42.4

—- —- —- —- —- —-

Total cost

of revenue 201.9 (1.1) 200.8 286.2 (1.7) 284.5

—– —- —– —– —- —–


Gross Profit 159.8 1.1 160.9 177.9 1.7 179.6


Gross profit as a

percentage of

revenue 44.2% 0.3% 44.5% 38.3% 0.4% 38.7%


Gross profit as a

percentage of

revenue -products 45.9% 0.2% 46.1% 40.5% 0.2% 40.7%

Gross profit as a

percentage of

revenue -services 34.1% 1.3% 35.4% 22.6% 1.8% 24.4%


Operating Expenses

Research and

development (a) 69.5 (1.7) 67.8 80.7 (2.7) 78.0

Sales and

marketing (a) 42.4 (1.1) 41.3 43.4 (1.6) 41.8

General and

administrative (a) 26.4 (1.5) 24.9 26.1 (2.0) 24.1

Intangible

asset

amortization (b) 6.0 (6.0) - 5.6 (5.6) -

Restructuring

and other

charges (c) 6.7 (6.7) - 8.7 (8.7) -

— —- — — —- —

Total

operating

expenses 151.0 (17.0) 134.0 164.5 (20.6) 143.9

—– —– —– —– —– —–


Operating

Earnings 8.8 18.1 26.9 13.4 22.3 35.7


Other Income

Interest income,

net 5.2 - 5.2 9.9 - 9.9

Other (expense)

income, net (d) (0.5) - (0.5) 0.6 0.3 0.9

—- — —- — — —

Total other

income 4.7 - 4.7 10.5 0.3 10.8

— — — —- — —-


Earnings Before

Income Tax 13.5 18.1 31.6 23.9 22.6 46.5

Income tax expense (e) (7.0) (2.3) (9.3) (7.3) (7.6) (14.9)

—- —- —- —- —- —–

Net Earnings $6.5 $15.8 $22.3 $16.6 $15.0 $31.6

==== ===== ===== ===== ===== =====


Net Earnings Per

Share

Basic $0.02 $0.04 $0.06 $0.04 $0.04 $0.08

===== ===== ===== ===== ===== =====

Diluted $0.02 $0.04 $0.06 $0.04 $0.04 $0.08

===== ===== ===== ===== ===== =====


Weighted Average

Shares Outstanding

Basic 395.8 395.8 395.8 407.9 407.9 407.9

===== ===== ===== ===== ===== =====

Diluted 396.6 396.6 396.6 408.9 408.9 408.9

===== ===== ===== ===== ===== =====


(1) Reconciliation of non-GAAP Adjustments

In addition to reporting financial results in accordance with U.S.

generally accepted accounting principles (GAAP), Tellabs, Inc. has

provided non-GAAP financial measures as additional information for

its operating results. These measures have not been prepared in

accordance with GAAP and may be different from measures used by other

companies. Whenever we use non-GAAP financial measures, we designate

these measures, which exclude the effect of certain charges, as

“adjusted” and provide a reconciliation of non-GAAP financial measures

to the most closely applicable GAAP financial measure. The non-GAAP

financial measures eliminate certain items of expenses and losses

from cost of revenue, operating expenses, other income and expenses,

and income taxes. Management believes that this presentation allows

investors to better evaluate the current operational and financial

performance of our business and facilitate comparisons to historical

results of operations. Management uses these measures for reviewing

our financial results and for business planning and performance.

Management discloses this information publicly along with a

reconciliation of the comparable GAAP amounts, to provide access

to the detail and general nature of adjustments made to GAAP financial

results. While some of these excluded items have been periodically

reported in our statements of operations, including significant

restructuring and other charges, their occurrence in future periods

depends on future business and economic factors, among other evaluation

criteria, and the occurrence of such events and factors may frequently

be beyond the control of management.


(a) The adjustments to cost of revenue, research and development,

sales and marketing, and general and administrative expenses for

the first quarter of 2009 and the first quarter of 2008 reflect

equity-based compensation expense. We began to include equity-based

compensation expense in our GAAP operating results in accordance

with Statement of Financial Accounting Standards (SFAS) 123( R ),

Share-Based Payment in January 2006. Because of varying available

valuation methodologies, subjective assumptions, and the variety of

award types, which affect the calculations of equity-based compensation,

we believe that the exclusion of equity-based compensation expense allows

for more accurate comparisons of our operating results to our peer

companies. In addition, we believe this non-cash GAAP measure is not

indicative of our core operating performance.


(b) We exclude amortization of intangible assets resulting from

acquisitions to evaluate our continuing operational performance.

The amortization of purchased intangible assets associated with

acquisitions results in our recording expense in our GAAP financial

statements that were already expensed by the acquired company before

the acquisition and for which we have not expended cash. We believe

this GAAP measure is not indicative of our core operating performance.

Accordingly, we analyze the performance of our operations without

regard to such expenses.


(c) We exclude restructuring and other charges because we believe that

they are not related directly to the underlying performance of our

core business operations. Restructuring and other charges result from

events which arise from unforeseen circumstances that often occur

outside of the ordinary course of continuing operations. Although

these events are reflected in our GAAP financials, these unique

transactions may limit the comparability of our on-going operations

with prior and future periods.


(d) The $0.3 million adjustment to Other (expense) income, net in

the first quarter of 2008 reflects a $0.6 million write-down of a

long-term equity investment in a start-up technology company offset

by a $0.3 million gain on a sale of a long-term equity investment

in a start-up technology company. We exclude write-downs and gains

on sales of long-term equity investments in partnerships and

start-up technology companies because we believe that they are not

related directly to the underlying performance of our working capital

assets.


(e) We calculate a separate tax expense and effective tax rate for

GAAP and for non-GAAP purposes. The tax adjustment reflects the

difference between these computations, and takes into account the

impact of (i) the effect on our global effective tax rate of adjusting

pretax earnings in multiple jurisdictions at differing tax rates; and

(ii) the valuation allowance maintained against our domestic deferred

tax assets, which is included in our GAAP expense but excluded

from our non-GAAP expense.


NOTE TO EDITORS: The complete text of this release is available at www.tellabs.com/news/2009/1q09.pdf


CONTACT: Media, George Stenitzer, +1-630-798-3800, george.stenitzer@tellabs.com, or Investors, Tom Scottino, +1-630-798-3602, tom.scottino@tellabs.com, both of Tellabs

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