Acquisition of Savvis

6 Months Ended

Jun. 30, 2011

Acquisition of Savvis.

Acquisition of Savvis

(3)   Acquisition of Savvis

        On July 15, 2011, we acquired all outstanding common stock of SAVVIS, Inc. ("Savvis"), a provider of managed hosting and colocation services. We believe this acquisition enhances our ability to be an information technology partner with our existing business customers and strengthens our opportunities to acquire new business customers in the future. The consideration for this acquisition included $1.732 billion in cash payments and 14.313 million shares of CenturyLink common stock (valued at $552 million based on the $38.54 closing price of our stock on July 14, 2011) issued to Savvis stockholders at closing. Our final determination of aggregate consideration also will include the estimated fair value of the pre-combination portion of certain assumed share-based compensation awards.

        Upon closing of the acquisition, we also paid $547 million to retire certain pre-existing Savvis debt and accrued interest, and paid related transaction costs totaling $15 million. The cash payments required on or about the closing date were funded using existing cash balances, which included the net proceeds from the issuance of senior notes with an aggregate principal amount of $2.000 billion (see Note 5—Long-term Debt and Credit Facilities for additional information about our senior notes).

        Savvis' operating results will be included in our consolidated results of operations beginning July 15, 2011. The assets acquired and liabilities assumed will be recognized at their estimated acquisition date fair values. The estimation of such fair values and the related estimation of lives of depreciable tangible assets and amortizable intangible assets will require significant judgment. Due to the timing of the Savvis acquisition, the initial accounting for this acquisition is incomplete as of the date of issuance of these financial statements. Consequently, preliminary estimates of certain components of acquisition consideration and the fair values of assets acquired and liabilities assumed cannot be made with reasonable accuracy, and at this time it is not practicable to provide supplemental pro forma information as if the Savvis acquisition had occurred as of January 1, 2010. We expect to finalize our determinations of aggregate consideration and our acquisition date fair value estimates no later than the second quarter of 2012.