Tony Davis - VP, IR Glen Post, III - President and CEO Stewart Ewing, Jr. - EVP, CFO and Assistant Secretary Karen Puckett - EVP and COO

David Barden - Bank of America Merrill Lynch Simon Flannery - Morgan Stanley Batya Levi - UBS Eric Pan - JP Morgan Mike McCormack - Jefferies Frank Louthan - Raymond James

Good day ladies and gentlemen and welcome to CenturyLink's Second Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Tony Davis, Vice President of Investor Relations. Mr. Davis, you may begin.

Thank you, Saeed. Good afternoon everyone and welcome to our call today to discuss CenturyLink's second quarter 2014 results released earlier this afternoon. The slide presentation we will be reviewing during the prepared remarks portion of today's call is available in the Investor Relations section of our corporate website at ir.centurylink.com. At the conclusion of our prepared remarks today, we will open the call for question-and-answers. Now turning to slide 2, you'll find our Safe Harbor language. We will be making certain forward-looking statements today, particularly as they pertain to guidance for third quarter 2014 and other outlooks in our business. We ask that you review our disclosure found on this slide as well as in our press release and in our SEC filings, which describe factors that could cause our actual results to differ materially from those projected by us in our forward-looking statements. We ask that you also note that our earnings release issued earlier this afternoon and the slide presentation and remarks made during this call contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available in our earnings release and on our web site at ir.centurylink.com. Now turning to slide 3; your host for today's call is Glen Post, Chief Executive Officer and President of CenturyLink. Joining Glen will be Stewart Ewing, CenturyLink's Chief Financial Officer and also available during the question-and-answer portion of today's call will be Karen Puckett, CenturyLink's Chief Operating Officer; Bill Cheek, President of Wholesale Operations; and Jeff Von Deylen, President of CenturyLink Technology Solutions. Our call today will be available for telephone replay through August 14, 2014, and the web cast replay of our call would be available through August 28, 2014. Anyone listening to a taped or web cast replay or reading a written transcript of this call should note that all information presented is current only as of August 6, 2014 and should be considered valid only as of this date, regardless of the date heard or viewed. As we move to slide 4, I'll turn the call over to Glen Post. Glen? Glen Post, III: Thank you, Tony. Good afternoon and thank you for joining us today. I am pleased with our strong financial performance for the second quarter, and we continue to effectively execute against our objectives and make investments that we believe will drive increased revenues. If you'll turn to slide 5, we achieved total operating revenue, operating cash flow and adjusted diluted earnings per share, all exceeded our guidance for the quarter. Our second quarter 2014, total operating revenues are $4.54 billion, increased by $16 million compared to the second quarter of 2013. This 0.4% revenue growth for the business, is a significant improvement from the 1.9% decline in year-over-year revenues in the second quarter 2013, and 1.2% decline in pro forma year-over-year revenues in the second quarter 2012. Data integration revenue is $20 million higher in the second quarter 2014, and in the second quarter 2013, primarily due to increased CPE or customer premise equipment sales. Core revenue, which represents strategic and legacy revenues combined, were $4.1 billion for the quarter, and was nearly flat from the year ago period. This comparison also represents a significant improvement from the 1.6% and 2.2% declines in year-over-year core revenues in second quarter 2013 and 2012 respectively. Now continuing to slide 6, I'd like to highlight the key drivers for this continued strong improvement on our revenue trend. The improvement in core revenues was driven by the combination of improved rate of growth in strategic revenue and lower rate of decline in legacy revenue. Business at core revenue grew sequentially and year-over-year, driven by business demand for high bandwidth data services and our bundled service offerings, combining network, CPE, software applications and managed services. We also continue to see good growth in Ethernet services from our fiber-to-the-tower investments in our wholesale business, as we meet the growing data transport needs of wireless carriers. However, wholesale revenue growth continues to be impacted by the migration of low speed data services to fiber-based Ethernet, as well as increased network grooming by wireless carriers. Managed hosting revenue including cloud were 9.6% year-over-year, while collocation revenue grew approximately 2%, resulting in total hosting revenue growth of 3.2% compared to the second quarter of 2013. Additionally, if you look at our combined business and hosting segment revenues, we have achieved year-over-year revenue growth for the last eight quarters. Consumer revenue grew year-over-year, fueled by continued strength in high speed internet and Prism TV customer growth, price increases and improved churn. Now turning to slide 7, we continue to transform our company from a provider of traditional network communications, to an integrated provider of IP-enabled network, cloud hosting and IT services, and we are refining our focus and executing on several strategic priorities. We believe these priorities are key to successfully navigating the continued transformation of our company, and driving long term profitable growth and value for our shareholders. Now the first of these, is to grow business network solutions. We expect to continue to focus on driving growth from high bandwidth data services, including MPLS, Ethernet, Wavelength and voice-over-IP or VoIP services, by providing reliable connectivity to meet the growing bandwidth needs of our business customers. In the second quarter, we experienced continuous strength in sales for high bandwidth data services. Also as announced yesterday, we are expanding gigabit service to business customers in select locations in 16 cities through our fiber network, providing symmetrical broadband speeds up to 1 gigabit. This expansion provides an increased addressable market opportunity for our business sales teams, and ultra fast Ethernet quality speeds to our customers, live into cloud-enablement of their businesses. We also believe our targeted marketing approach, sales programs and continued expansion of our sales team, as well as continued enhancement of our product portfolio, positions us well to drive revenue growth. For example, we are seeing continued strong sales results associated with our launch of Managed Office, a solution that integrates network, voice-over-IP, email and other key business applications for our business customers. And although slowing somewhat from the levels of last years, we continued our fiber deployment to wireless towers, to capture the growing demand from wireless carriers or data backhaul. During the second quarter, we completed fiber to 500 towers for a total of near 19,700 total fiber builds. With respect to our cloud and hosting business, we believe we have the right assets to meet the growing demand for cloud hosting and collocation services we achieved from businesses ranging from small to global in scale. These assets, coupled with our robust network capabilities, enable our sales teams to build integrated hosting and network solutions that meet the customers' needs, and lower their operating costs, while better enabling them to focus on our core businesses. We continue to enhance our hosting and cloud services platform during the second quarter, with the launch of our Advanced CenturyLink Cloud technology to our Toronto data center, bringing our total 12 nodes, with the new technology. Additionally, interest eh second quarter, we opened a new data center in Minneapolis, offering collocation, cloud and managed hosting services connected to CenturyLink's IP backbone and global data center footprint. We are further enhancing our ability to compete in the growth of hosting services of building and leveraging our broad IP capabilities to offer mid to large enterprise customers, and a complete portfolio of IP, cloud enablement consulting services. We have strong public cloud products, but we are fully aware that there is strong competition in this space. We do believe though, that we are well positioned to compete and win in the hybrid cloud market, as we offer the full range of network, cloud, managed hosting, collocation and IP services that we believe our customers want and need. We are rapidly expanding and enhancing our capabilities for the managed hosting cloud space as well. Continuing on to slide 8; in the consumer segment, we continue to see good results from those markets, where we have deployed higher bandwidth in IPTV services. For example, since our limited gigabit service deployment in Omaha, the results continue to exceed our expectation in the consumer market, and we are seeing good results in the small and medium business space as well. Yesterday, along with our gigabit service inspection of our businesses, we also announced that the availability of gigabit service to residential customers in select locations in nine cities, includes some of our larger markets, like Minneapolis, St. Paul, Denver, Seattle, Las Vegas and Portland. We also expect to continue to invest in our Prism TV capabilities, we plan to add approximately 300,000 Prism TV addressable homes in 2014. We continue to monitor the success of Prism TV in our current markets, and will consider further expansion in the months ahead. Finally, we are focused on driving improved operating efficiency through a number of methods, including network simplification and rationalization that should improve our NDN provisioning time and help drive standardization. Also, we are focusing on process automation improvement through applications and work tools that better drive lower operating costs, and that we expect to improve sales efficiency. We continue to modernize our network replacing ATM with IP technology, which enables higher bandwidth -- broadband speeds for customers, while adding network capacity to our growing customer base. Since January, we have added over 2 terabytes to our IP backbone, bringing our total capacity to 18 terabytes per second. And we have continued to manage expenses related to legacy service about aligning our expenses, and reduced revenues in that sector. Lastly, we have laid the foundation to migrate our internal IP operations to our cloud platform by investing in virtualization. Since 2011, we have consolidated our internal IT operations for more than 10 data centers to four data centers. We are also using a Cloud First approach to rapidly deploy the same innovative platform, infrastructure and software to service solutions across to internal IP operations that we are selling through our cloud and IP hosting customers. We are on track to have 90% of all new and strategic internal IT applications in the cloud by the end of 2015. Overall, I am pleased with the strong results for the quarter. We remain focused across all operating segments from offering our customers high value products and service solutions, along with the high quality customer experience we believe brings loyalty and improves customer attention. And we continue to invest to drive growth in our business. With that I will turn the call over to Stewart for an in-depth look at our financial results and third quarter guidance. Stewart? Stewart Ewing, Jr.: Thank you, Glen. I will spend the next few minutes reviewing the financial highlights from the second quarter, and then conclude my remarks with an overview of the third quarter 2014 guidance, we had included in our earnings issued earlier this afternoon. Beginning on slide 10, I'd like to review some highlights from a strong second quarter results. I will be reviewing the results excluding special items as outlined in the earnings release, and associated financial schedules. As Glen mentioned earlier, we generated strong operating revenues and cash flows in the quarter. Operating revenues were $4.54 billion on a consolidated basis, and a 0.4% increase from second quarter 2013 operating revenues. Core revenue, defined as strategic revenue plus legacy revenue, was $4.1 billion for the second quarter, nearly flat from the year ago period. Strategic revenues grew 5.1% year-over-year, and now represent 51% of our total revenues, compared to 48% a year ago. Strategic products, such as high speed internet, high bandwidth data services, Prism TV, and managed hosting services continues to drive this growth. Additionally, customer growth was solid, as we added approximately 16,000 Prism TV customers during the second quarter. Due to typical seasonality, high speed internet customers declined 2,100 in the quarter, which was better than the loss of approximately 8.400 customers in second quarter of 2013. We generated strong operating cash flow of approximately $1.81 billion for the second quarter and achieved an operating cash flow margin of 39.9%. The year-over-year decrease in operating cash flow and operating cash flow margin, was primarily driven by higher customer premise equipment sales, expenses related to the growth of Prism TV, a higher USF contribution factor, and the continued decline in legacy revenues. Additionally, we generated $677 million of free cash flow during the quarter, which is defined as operating cash flow less cash paid per taxes, interest and capital expenditures, and additional adjustments to other income. As strong cash flows continue to provide us the financial strength and flexibility, to meet our business objectives and drive long term shareholder value. We continue to expect our dividend payout ratio for full year 2014 to be approximately 45%. Adjusted diluted earnings per share for the second quarter was $0.72, including approximately $0.03 of favorable one time items. If you exclude these items, we still exceeded our adjusted diluted EPS guidance for the quarter. As we have discussed on prior earnings calls, adjusted diluted EPS excludes special items and certain non-cash purchase accounting adjustments, as outlined in our press release, and associated supplemented financial schedules. We are pleased to announce the completion of our $2 billion stock repurchase program authorized by our board in mid-February 2013. Although the program was originally slated for a two-year completion timeframe, we executed opportunistically and repurchased 59.5 million shares in less than 18 months. Also during the quarter, we commenced the $1 billion follow-on program authorized by our Board earlier this year. Across both programs, we have repurchased 4.5 million shares for an investment of $160 million during the second quarter, of which 1.2 million shares were under the $1 billion follow-on program. From the end of the quarter through yesterday, we have repurchased an additional 1.4 million shares for approximately $52 million. We expect to continue our opportunistic approach to repurchasing shares under the current $1 billion authorization. Now turning to slide 11; the $16 million or 0.004% increase in second quarter 2014 operating revenues compared to second quarter 2013 was primarily a result of growth in strategic and data integration revenues, that was partially offset by lower legacy revenues, due to access line losses and lower minutes of use. The growth in our strategic revenues is primarily driven by strength in high speed internet, high bandwidth data services, Prism TV and hosting services. Although legacy revenues continue to decline, the decline in the second quarter 2014 was approximately 25% lower than the second quarter revenue decline a year ago. Data integration revenues were higher year-over-year, due to increased CPE sales. Now turning to slide 12, I will discuss each of our operating segments, beginning first with the consumer segment. Consumer generated $1.5 billion in operating revenues, which grew slightly from second quarter 2013. Strategic revenues in this segment grew 8.6% year-over-year to $709 million, driven by growth in high speed internet and Prism TV customers, price increases and improved churn. Legacy revenues for the segment declined 6% from second quarter 2013, as access line and long distance revenue declines, were partially offset by select price increases. The comparable year-over-year decline in second quarter 2013 was 9.3%. So a decline in legacy revenues of 9.3% second quarter a year ago, versus a 6% second quarter this year. Our operating expenses increased 4.4% compared to the same period a year ago, primarily driven by higher Prism TV costs. Moving to slide 13, our business segment generated more than $1.56 billion in operating revenues during the second quarter, which increased $39 million or 2.6% from the same period a year ago. Second quarter strategic revenues for the segment increased by 7.8% to $663 million from second quarter a year ago, driven primarily by strength in high bandwidth services such as MPLS, Ethernet and Wavelength. We continue to generate solid growth across the enterprise customer mix, and we continue to see an opportunity for further investment in the small and midsized business space, to improve our market share and drive further growth. Legacy revenues for the segment declined 3.9% from second quarter 2013, due primarily to continuing decline in access lines. Data integration revenues grew 12% in second quarter 2014, compared to second quarter a year ago, driven by higher CPE sales. Total business segment expenses were up 6.6%, primarily driven by higher CPE costs and facility costs associated with the MPLS product growth, along with higher employee related expenses. The segment margin of 37.9% declined from 40.2% a year ago, this decrease was primarily due to the higher costs I just mentioned, along with the continued decline in business segment legacy revenue. Now turning to slide 14, our wholesale segment generated $866 million in operating revenues, a decline of 4.8% from second quarter of 2013. Strategic revenues for wholesale were $568 million, nearly flat with the second quarter 2013, as growth in Ethernet services and wireless bandwidth expansion was offset by DS1 disconnect. Legacy revenues declined by 12.1% to $298 million, reflecting the continued decline in access and long distance minutes of use, and the implementation of lower access rights, under the KF order. Operating expenses for the quarter declined $18 million or 6% compared to the same period a year ago, driven by lower employee related and facility costs. Now moving to slide 15 and our hosting segment, which includes all managed hosting, cloud services, collocation and hosting related network services revenue. This segment generated $358 million in operating revenues, representing an increase of 3.2% from second quarter 2013. Year-over-year managed hosting revenues including cloud grew 9.6%, while collocation growth of nearly 2% was impacted by customer churn and price erosion. Hosting operating expenses increased 3.9%, primarily due to higher employee costs. Second quarter segment margin for hosting was 26.3%, an improvement from 22.6% in first quarter 2014. We anticipate further segment margin improvement for hosting in the last half of the year. Over time, we expect long term improvement in both revenue and margin trends across the hosting segment, and we continue to leverage these assets, to drive additional revenue, through cross-selling opportunities in our other segments. Now turning to slide 16, and our third quarter 2014 guidance. For the third quarter 2014, we project total operating revenues of $4.47 billion to $4.52 billion; core revenues of $4.06 billion to $4.11 billion and operating cash flow between $1.72 billion and $1.77 billion. Adjusted diluted EPS is expected to range from $0.58 to $0.63. We expect third quarter 2014 revenues and operating cash flow to be lower than second quarter 2014, primarily due to continued decline of legacy revenues, and increased operating expenses related to the normal seasonality of outside plant, maintenance and utility costs. We expect $20 million to $30 million of higher seasonal, outside plant, maintenance and utility costs in third quarter versus second quarter. We also anticipate an additional $0.02 to $0.03 per share impact in third quarter, due to increased depreciation related to capital investment made during the first half of the year. Finally, as I mentioned earlier, there were approximately $0.03 per share of favorable one time items in second quarter, which will not occur in third quarter, including approximately $0.015 of operating expenses, and $0.015 related to the adjusted effective tax rate and interest expense. So we got a benefit in the second quarter of $0.03 that will not reoccur again in the third quarter. Our full year 2014 guidance remains unchanged, from that provided on our February earnings call. This concludes our prepared remarks for today. So at this time, I will ask the operator to provide instructions for the Q&A portion of the call.

(Operator Instructions). And our first question comes from David Barden from Bank of America. Your line is open. Please go ahead, sir. David Barden - Bank of America Merrill Lynch: Hey guys. Thanks for taking the questions. First, I guess I have to ask the obligatory question on kind of your reaction to the Windstream PLR announcement. What they are planning on doing in terms of separating the company into two parts, and how they use that to kind of finesse the dividend cut into the business and kind of -- if you could kind of walk us through what you have thought along these lines, and what you're thinking now that Windstream has a PLR in the world, it will be helpful. And then second, there is a lots of math we can start doing on the guidance, but maybe Stewart, just focusing on the revenue guidance, if I look at the third quarter guidance, do the math on the full year and implied fourth quarter revenue guidance, it implies -- at the midpoint, something like a $80 million stepdown in revenues from 3Q, 4Q, which based on the last eight quarters, seems like pretty unlikely. So, you're steering towards the high end of the revenue guidance at the moment. Could you talk a little bit about what are kind of the focus issues for getting there, and is it possible that we are actually going to see revenue growth this year, rather than next? Thanks. Glen Post, III: So David first, reaction to the Windstream announcement. We see a lot of opportunity to create value for shareholders by operating our assets as we do today, and we complete -- we are pleased with our continued trend for revenue stability. However, we continually evaluate the best ways to deliver long term shareholder value, and as such, we will monitor the Windstream restructuring process as it moves forward. So we will just monitor as they move first quarter, and evaluate it over time, as opposed to the short time period we have had, since its end market reaction that we have had, since they announced. Stewart Ewing, Jr.: So the -- from a standpoint of the revenue guidance and -- we would expect to be towards the top end of the revenue guidance that we gave for the full year. In fact, if you look at all of the guidance that we gave related to full year, which we gave early February, we would expect to be at the upper end of that guidance or in the at least the top half of that guidance. For each item, with the exception of our operating cash flow, and basically, the operating cash flow we would expect to be more towards the midpoint, the reason being, expenses really related to the higher revenue than we expected, primarily expenses related to the CPE and Prism TV content costs. David Barden - Bank of America Merrill Lynch: Perfect, thank you. And if I could just ask one more clarification Stewart, just on the number, you talked about the $0.015 benefit to the operating expense items, which I guess would be about $8.5 million in after taxes, maybe $12 million before taxes, could you talk about where that shook out in the numbers we saw this quarter? Stewart Ewing, Jr.: Yeah, probably a penny of it was due to ad valorem tax true-ups in operating expenses, and the other $0.05 really related to employee benefits. David Barden - Bank of America Merrill Lynch: Perfect. All right thanks guys.

Thank you. And our next question comes from Simon Flannery from Morgan Stanley. Your line is open. Please go ahead. Simon Flannery - Morgan Stanley: Thanks very much. Good evening. We are seeing a number of transactions in this space, including in the CLEC space and the data center space over the last few weeks. Can you just comment on -- I am sure you looked at some of those, how you're thinking about M&A right now, and your various parameters there, as you think about deploying capital organically, versus acquisition? And you expanded your 1 gigabit footprint. Can you give us a little bit more color around the scale of that? Any CapEx implications and what was really the trigger that got you comfortable with moving forward around the business model for that? Thank you. Glen Post, III: Simon, regarding M&A, and how we look at that. First of all, we believe the investment we are making in the business today, are really positioning us well to compete and drive revenue growth. As we have discussed today and have seen in our numbers, then join the strategic service products we have developed and are selling and growing well and moving towards revenue stability. We are obviously monitoring and dealing with the industry's consolidation activity and look at numerous opportunities throughout the year. As I have said, we are open to that. We think there are opportunities that could create growth and drive value for shareholders. But as I said before, our preference for inorganic growth would be, for opportunities that fit well with our strategic priorities. Those that can enhance our revenue and cash flow trajectory in particular. We have considered investments that would enhance our broadband offering for business or consumers or both. We look at opportunities that would improve our metro fiber capability, and opportunities to invest -- for investments that would expand our data hosting capabilities. And we think all three of these could drive growth. But whatever those opportunities are, we will continue that and [indiscernible] over the last year to use our disciplined approach to these opportunities, which in our view, requires several things. First of all, the right strategic fit, especially the ability to improve our growth profile. Secondly, we have to see free cash flow accretion within a reasonable period of time, and then a clear path to creating value for shareholders. So those makes the three criteria we use, and we look at every opportunity that comes our way within that framework, and we think there are potential deals out there, but nothing that we talk about right now. Simon Flannery - Morgan Stanley: Thank you. And on the 1-gig product? Glen Post, III: The 1-gig expansion, we expect to do that within our current budget, first of all, within the $30 billion [ph] or so budget we have. So we do not expect the budget expansion for that. Secondly, we believe that 1-gig, just taking the fiber, the home and fiber of these businesses, somewhat future proofs accompanying our operations, and we think -- we have looked at, compare that to fiber-to-the-node, and we believe that in some of these cities that we are in, that we can drive greater growth, greater consistency of growth throughout this -- through the 1-gig product, versus some of the fiber-to-the-node of what we have done previously. So that's how we are considering this, and we have had really good success in the markets we have entered with our gig product. So we expect to continue to expand, and not only that, we are starting this investment with going to the business, by taking fiber and the gig service to our business customers throughout these markets. And going from there into offering our prism service in these residential areas, as we can take the fiber network, build sort of the gig network we are building for the businesses, and take it through these residential areas to drive our fiber products. So we are seeing good growth there as well, as we have talked about today already. Simon Flannery - Morgan Stanley: Thank you.

Thank you. And our next question comes from Batya Levi from UBS. Your line is open. Please go ahead. Batya Levi - UBS: Great, thank you. Maybe a follow-up on the CapEx question. Can you provide a little bit color on the breakdown, which projects do you think will come off the CapEx budget this year, and how much do you expect to spend on fiber next year? And how should we think about further IPTV investments? Thank you. Stewart Ewing, Jr.: So Batya, if you think about our capital budget for this year, what we expect to spend in 2014, which again includes the markets, spending for the markets that Glen just discussed. About half of our capital budget is really what we would consider to be revenue enablement. Its associated with the Ethernet, EPLS and enablement, our cloud hosting, high speed internet enablement, so that would be the category this would fall in. About 28% of our capital budget is what we'd consider to be success-based, which really is the -- just success based sales of fiber-to-the-tower, our national sales, set-top boxes, things like that, and then about 22% of the $3 billion is what we consider maintenance CapEx, which basically just keeps the likes of it. Batya Levi - UBS: And IPTV going forward? Glen Post, III: We would expect -- I mean our capital budget for next year, we would expect it to be within the $3 billion range, plus or minus $100 million or so, probably. Batya Levi - UBS: Okay. Thank you.

Thank you. And our next question comes from Phil Cusick from JP Morgan. Eric Pan - JP Morgan: Hi. This is Eric in for Phil. You guys have seen good growth last couple of quarters in strategic services, what's driving that momentum? Is it your salesforce becoming more effective, or are you seeing a pickup in business spending? Are you selling to new customers or existing customers for the most part? Glen Post, III: Phil, I think I will ask Karen to address that.

First off, it is the demand for bandwidth products like MPLS, Ethernet has been very good growth for us. We continue to, I think, take share there, relative to a large global account, as well as enterprise. So I would say, that would be the key. Sales organization continued to perform. Our run rate continued to improve. We had stretched targets on this year and are hitting those. And then our Managed Office managed services, we are seeing -- very pleased with our follow [ph] in terms of just IT organizations, heads of businesses, really very curious and willing to outsource more of their IT and infrastructure services. And so we are well positioned, we believe there. Eric Pan - JP Morgan: Okay, great. And then operating expenses were higher probably to CPE. How much of the growth in strategic revenues are coming from CPE sales, versus data and managed services? And how should we think about that elevated level of operating expenses going forward? Stewart Ewing, Jr.: So about $29 million over what we had expected to be -- operating expenses to be for the quarter, where CPE expenses in excess of what we had anticipated, that were driven by the higher sales and higher revenue. Glen Post, III: I'd just add Stewart, expense levels, we are seeing drive most of our expenses, our strategic service such as rollout of Prism, turning a lot of our expense growth, as well as other strategic services, have you looked at the -- well the really expense growth coming from outside of CPE and just the sales and marketing and cost of [indiscernible] services. Eric Pan - JP Morgan: Should we expect this level to remain high going forward? Stewart Ewing, Jr.: Yes. I mean, as our revenue grows with the strategic products, especially the Prism TV products and some of the out of market, MPLS networks that we are selling, where we have third party costs associated with the last mile, the margins on that revenue is going to be lower than margins on the legacy revenue. So the expenses would grow over time, as the revenue grows. Eric Pan - JP Morgan: Great. Thank you very much.

Thank you. And our next question comes from Mike McCormack from Jefferies. Your line is open. Please go ahead. Mike McCormack - Jefferies: Hey guys, thanks. Stewart, maybe just expand upon that last comment, because it looks like the revenue offset sort of getting to your flattish-type year-over-year growth. At an almost equal decline in legacy as improvement in strategic and EBITDA was down only about $25 million year-over-year, just trying to get a sense? I know, you're just talking about the significant margin differences in those revenue streams. It would appear, based upon the EBITDA decline that the incremental margins might be a little bit tighter than we thought. Alternatively, SG&A might be the driver there. I am trying to get a sense for what kind of pressure we can see downward on SG&A as we go forward? Thanks. Stewart Ewing, Jr.: Mike. I think its more the mixed CPE revenue and the growth that we have seen there over a year ago, or over the last year, is really driving the expense growth that you're seeing there and the margin pressure. Mike McCormack - Jefferies: Okay. And just secondly on the working capital side, it looks like you had a bit of a headwind in the quarter. Is that just the timing difference that will even out as the year goes on? Stewart Ewing, Jr.: Yes, it is. Mike McCormack - Jefferies: Okay. Thanks guys.

Thank you. And our next question comes from Frank Louthan from Raymond James. Your line is open. Please go ahead. Frank Louthan - Raymond James: Great. Thank you. So looking at some of the improvements and the declines in the legacy revenue, can you give us some color on that, as just of a shrinking base there, is it something else you're doing? And then also on the cost side, you mentioned sort of managing some of the costs in that business? What sort of specific tactics are you doing to take the costs out of that part of the business? Glen Post, III: So Frank, on the revenue side, so the second quarter -- as the first quarter benefited, the second quarter also benefited from some price increases that we did in the third quarter a year ago, on some of the legacy products. So we will cycle through that, after the second quarter of this year. And the comps will be a little bit tougher in the third quarter. Additionally, we did some price increases early part of this year too, that benefited second quarter as well. So I think that's what you are seeing -- that's helping the revenue decline on legacy. Additionally, our access point loss related to our customer loss, right, continues to decline somewhat. Stewart Ewing, Jr.: On the cost side, we are doing continual cost improvement programs and we talked about some of those on our network. We are going to replace ATM with IP technology. We have consolidated data centers in the last year, since it -- which are impacted by the legacy revenue losses. We are removing more of the cloud type IT services that's reducing our costs as well. So we have done a lot of these things that are going over that desk, where we are specifically targeting, especially areas that are cost drivers in the legacy area. Frank Louthan - Raymond James: Thanks. Just a follow-up. Are there any other sort of cost increases you might be able to push through on some of those legacy products that have relatively reasonable -- reasonably favorable impacts on the churn, relative to some other things, or any sort of caps induced, or authorized price increases that we might be able to expect over the next 12 months? Glen Post, III: So product was the access rate reductions, that went into effect July 1st. We expect to really pretty much be able to offset that through additional arc that we will charge our customers, which effectively is a price increase to the customers, and we are also looking at some of our other products too, that we could potentially tweak prices on a little bit in the latter half of the year. But nothing significant. Frank Louthan - Raymond James: Okay. Thanks.

Thank you. And I am showing no further questions at this time. I would like to hand the conference back over to Mr. Glen Post for any closing remarks. Glen Post, III: Thank you, Saeed. Overall, we are well pleased with our second quarter operating and financial results, and seeing improvement especially in our revenue trend. We believe the investments in our business continue to transform our company and position us to effectively compete in the marketplace and drive revenue growth from our strategic products and services in the months and years ahead. Thank you for joining our call today and we look forward to speaking with you in the coming weeks.

Ladies and gentlemen, thank you for participating in today's conference. This includes our program for today. You may all disconnect and have a wonderful day. Thank you.