-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K5GzE+//UAmWYDlC8usV0VDW0pV5hJIM0cY/f8dzgiIF7iRx9kPFhhjd29mXRCUw FpN4CKiwBzw+B4ADWZxdqA== 0000899733-98-000160.txt : 19981030 0000899733-98-000160.hdr.sgml : 19981030 ACCESSION NUMBER: 0000899733-98-000160 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981020 ITEM INFORMATION: FILED AS OF DATE: 19981029 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22609 FILM NUMBER: 98732930 BUSINESS ADDRESS: STREET 1: 1000 QUEST TOWER STREET 2: 555 SEVENTEENTH STREET CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032911400 MAIL ADDRESS: STREET 1: 100 QUEST TOWER STREET 2: 555 SEVENTEENTH STREET CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 8-K 1 10/20/98 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 20, 1998 QWEST COMMUNICATIONS INTERNATIONAL INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE ----------------- (State or other jurisdiction of incorporation) 000-22609 84-1339282 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) 1000 QWEST TOWER, 555 SEVENTEENTH STREET DENVER, COLORADO 80202 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 303-992-1400 ------------ NOT APPLICABLE ----------------------------------------------------------------- (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS The Registrant issued the press release attached as Exhibit 99.1 to this Current Report on Form 8-K on October 20, 1998 and the press release attached as Exhibit 99.2 to this Current Report on Form 8-K on October 27, 1998. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS Exhibit 99.1 Press release of the Registrant dated October 20, 1998. Exhibit 99.2 Press release of the Registrant dated October 27, 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ------------------ QWEST COMMUNICATIONS INTERNATIONAL INC. DATE: October 28, 1998 By: /s/ Robert Woodruff --------------------------------------- Robert Woodruff, Executive Vice President and Chief Financial Officer. EX-99.1 2 Exhibit 99.1 Press release of the Registrant dated October 20, 1998. FOR IMMEDIATE RELEASE Contact: For Investors: For Media: Lee Wolfe Tyler Gronbach 800-567-7296 703-363-4494 QWEST REPORTS THIRD QUARTER 1998 RESULTS Record Revenue and EBITDA with Strong, Double-digit Sequential Growth HIGHLIGHTS: >> Total revenue increased four-fold to $806.8 million >> Data services revenue grew 780 percent >> EBITDA increased 369 percent to $117.6 million DENVER, October 20, 1998 -- Qwest Communications (NASDAQ: QWST) today reported record third quarter 1998 results with strong growth in all business segments. For the three months ended September 30, 1998, total revenue was $806.8 million, a four-fold increase over the third quarter of 1997. During the quarter, communications services revenue grew eighteen-fold to $601.8 million, with data services revenue growth of 780 percent, over the prior year. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased four-fold to $117.6 million, up from $25.1 million as reported in the third quarter of the prior year. The company narrowed its net loss from $876.3 million, or ($3.62) per share reported in the second quarter of 1998, to a net loss of $5.0 million, or ($0.02) per share in the current quarter. Excluding one-time merger-related charges, the company posted a net loss of $15.6 million, or ($0.06) per share in the previous quarter. The company also said that results for the quarter exceeded the consensus of analysts' expectations. Commenting on the quarter, Qwest's President and CEO Joseph P. Nacchio said, "We're pleased with the strong operational and financial results achieved during the quarter. The customers, partners and strategic initiatives announced during the last 90 days epitomize Qwest's commitment to driving growth through the convergence of data, video and voice services." -more- Qwest Communications October 20, 1998 Page 2 Total revenue of $806.8 million grew 23 percent from $653.6 million in the third quarter of 1997, on a pro forma basis (reflecting the company's acquisitions for all previously reported periods). EBITDA in the quarter grew to $117.6 million, compared to $101.2 million in the previous year. Net loss for the quarter was ($0.02) per share, versus pro forma earnings per share of $0.03 a year ago, reflecting increased depreciation and interest expenses caused by the continued build out of the Qwest network and other investments in infrastructure to support the companies rapid growth. Total revenue grew sequentially by more than 16 percent to $806.8 million from $694.3 million in the second quarter of 1998, on a pro forma basis. Communications services revenue of $601.8 million was up over 11 percent from $540.4 million in the second quarter. The company generated double-digit sequential growth in each of the business, consumer and wholesale markets. Sequentially, EBITDA increased 76 percent from $66.7 million in the second quarter to $117.6 million. Strong growth in customer revenues enabled the company to narrow its loss from ($0.06) per share in the second quarter of 1998 (excluding one-time merger-related items), to ($0.02) per share in the quarter. "The financial results for the quarter reflect strong, double-digit sequential gains that were achieved in all areas of the business. While Qwest makes progress on its network construction, invests for future growth and successfully integrates its recent acquisitions, the company continues to realize improved EBITDA and revenue," said Robert Woodruff, Qwest's executive vice president and chief financial officer. Rapid Growth in Data Services The company expanded its data services presence with the introduction of its native IP network and new multimedia services. Domestic and international data revenue was up 50 percent from the same quarter of last year, while sequential data revenue posted even stronger gains, up nearly 20 percent from the previous quarter. The company's frame relay revenues grew more than 150 percent on an annual basis. All results reflected above are on a pro forma basis. Qwest also took an important step to augment its data services capability during the quarter by announcing that it will offer the world's first commercially available native IP OC-48 network service beginning next month. This network will offer customers virtually unlimited high-speed bandwidth to support a wide range of multimedia, e-commerce and data applications and a comprehensive package of service level agreements. -more- Qwest Communications October 20, 1998 Page 3 During the quarter, Qwest announced the signing of a definitive agreement to acquire Icon CMT Corp. The transaction, which will add $75 million in revenue and more than 400 IP data technicians and sales professionals, will further support Qwest's expansion into the Web hosting and Web enabling market. The acquisition will also help facilitate the creation of 10 new CyberCenters Qwest plans to open by the end of 1999. The acquisition is subject to certain shareholder and regulatory approvals. The company expects to close the transaction by the end of the year. Expanded Sales Channels To support the growing demand of data and Internet services, the company expanded its distribution channels through a strategic agreement with Netscape Communications Corporation. As part of the company's previously stated objective for continued growth and penetration into the multinational and Fortune 1000 business sectors, the company also created a National Accounts sales division during the quarter. Merger Integration/Synergies With respect to Qwest's acquisition of LCI, the company continues to expect that it will realize projected merger synergies and strategic objectives that were originally outlined when the transaction was announced. The financial results of the quarter already reflect the revenue and administrative cost synergies from the transaction. Since the close of the LCI transaction, the companies aligned their sales organizations, consolidated product portfolios, created a new product development process, and established a uniform sales incentive program. A common order entry/customer provisioning platform has also been implemented. Billing migration has been completed for private line services with scheduled completion for all services in early '99. In addition, a consolidated network plan has been created and is being implemented. Construction Services The company continued to make significant progress on the construction of its planned 18,449-mile nationwide network in the third quarter. To date, the company has secured 99.5 percent of its rights of way, commenced construction on 17,955 -more- Qwest Communications October 20, 1998 Page 4 miles of network, placed 16,100 route miles of conduit in the ground, installed 12,900 miles of fiber-optic cable and lit nearly 50 percent of the network. Continued progress on the completion of the network and recent higher-margin contracts with customers helped boost construction revenue to $205.0 million, up 33 percent from the second quarter of 1998. The Qwest Macro Capacity Fiber Network Qwest's planned domestic 18,449-mile network will serve over 130 cities, which represent approximately 80 percent of the data and voice traffic originating in the United States, upon its scheduled completion in the second quarter of 1999. To date, approximately 9,100 miles of the Qwest Macro Capacity Fiber Network are activated, and construction has commenced on 17,955 miles. Qwest's transcontinental segment extends from Los Angeles to Sacramento and across to New York. Additionally, Qwest owns transatlantic submarine capacity linking the United States to Europe and will jointly own a transpacific submarine cable system connecting the U.S. to the Pacific Rim. Qwest is also extending its network 1,400 miles into Mexico with completion slated for late 1998. The Qwest Macro Capacity Fiber network is designed with highly reliable and secure bi-directional, line switching OC-192 SONET ring architecture. Upon completion, the network will offer a self-healing system that provides the ultimate security and reliability by allowing instantaneous re-routing in the event of a fiber cut. This release may contain 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 Qwest with the SEC, 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, (a) failure by Qwest to construct the Qwest Network on schedule and on budget, (b) failure by Qwest to maintain all necessary rights-of-way, (c) intense competition in Qwest's communications services markets, (d) rapid and significant changes in technology and markets, (e) dependence on new product development, (f) operating and financial risks related to managing rapid growth, integrating acquired businesses, being highly leveraged and sustaining operating cash deficits and (g) adverse changes in the regulatory environment and (h) volatility of stock price. These cautionary statements should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by Qwest or persons acting on its behalf. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. This announcement is not an offer to sell or a solicitation to buy any securities of Qwest. The offering with respect to the proposed acquisition of Icon will be made only by the proxy statement/prospectus that will be distributed to stockholders of Icon in connection with their consideration of the transaction. The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries. # # # Attachment A QWEST COMMUNICATIONS INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Nine Months Ended September 30, 1998 and 1997 (In Millions, Except Per Share Information) (Unaudited)
Three Months Ended Nine Months Ended ----------------------------- ------------------------------- 1998 1997 1998 1997 ----------------------------- ------------------------------- Revenue: Communications services $ 601.8 $ 32.5 $ 884.2 $ 77.1 Construction services 205.0 156.5 493.4 413.2 -------------- ------------- -------------- -------------- Total revenue 806.8 189.0 1,377.6 490.3 -------------- ------------- -------------- -------------- Operating expenses: Access and network operations 371.6 25.0 556.1 61.8 Construction services 128.2 107.5 333.8 292.0 Selling, general and administrative - communications 178.7 24.3 312.3 105.6 Selling, general and administrative - construction 10.7 7.1 29.2 17.6 -------------- ------------- -------------- -------------- EBITDA 117.6 25.1 146.2 13.3 Depreciation and amortization 76.6 5.1 115.6 13.1 Merger related costs - - 880.5 - -------------- ------------- -------------- -------------- Earnings (loss) from operations 41.0 20.0 (849.9) 0.2 Interest expense and other, net 31.9 0.2 50.7 (4.3) -------------- ------------- -------------- -------------- Earnings (loss) before income taxes 9.1 19.8 (900.6) 4.5 Income tax expense (benefit) 14.1 7.0 (12.5) 2.2 -------------- ------------- -------------- -------------- Net earnings (loss) $ (5.0) $ 12.8 $ (888.1) $ 2.3 ============== ============= ============== ============== Net earnings (loss) per share - basic $ (0.02) $ 0.06 $ (3.42) $ 0.01 ============== ============= ============== ============== Net earnings (loss) per share - diluted $ (0.02) $ 0.06 $ (3.42) $ 0.01 ============== ============= ============== ============== Weighted average shares outstanding - basic 330.7 206.6 259.9 185.1 ============== ============= ============== ============== Weighted average shares outstanding - diluted 346.1 211.6 273.9 189.0 ============== ============= ============== ============== Earnings from operations before merger related charges $ 41.0 $ 20.0 $ 30.6 $ 0.2 ============== ============= ============== ============== Net earnings (loss) before merger related charges $ (5.0) $ 12.8 $ (28.2) $ 2.3 ============== ============= ============== ============== Net earnings (loss) per share before merger related charges $ (0.02) $ 0.06 $ (0.11) $ 0.01 ============== ============= ============== ==============
Attachment B QWEST COMMUNICATIONS INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Pro Forma For the Three and Nine Months Ended September 30, 1998 and 1997 (In Millions, Except Per Share Information) (Unaudited)
Pro Forma (1) Pro Forma (1) Three Months Ended Nine Months Ended ----------------------------- ------------------------------- 1998 1997 1998 1997 ----------------------------- ------------------------------- Revenue: Communications services $ 601.8 $ 497.1 $ 1,665.4 $ 1,377.5 Construction services 205.0 156.5 493.4 413.1 -------------- ------------- -------------- -------------- Total revenue 806.8 653.6 2,158.8 1,790.6 -------------- ------------- -------------- -------------- Operating expenses: Access and network operations 371.6 308.7 1,027.3 859.8 Construction services 128.2 109.4 333.8 292.0 Selling, general and administrative - communications 178.7 127.2 500.0 402.3 Selling, general and administrative - construction 10.7 7.1 29.2 17.6 -------------- ------------- -------------- -------------- EBITDA 117.6 101.2 268.5 218.9 Depreciation and amortization 76.6 60.3 205.1 170.8 -------------- ------------- -------------- -------------- Earnings from operations 41.0 40.9 63.4 48.1 Interest expense and other, net 31.9 9.7 64.5 19.8 -------------- ------------- -------------- -------------- Earnings (loss) before income taxes 9.1 31.2 (1.1) 28.3 Income tax expense (benefit) 14.1 22.5 30.0 41.3 -------------- ------------- -------------- -------------- Net earnings (loss) $ (5.0) $ 8.7 $ (31.1) $ (13.0) ============== ============= ============== ============== Net earnings (loss) per share - basic $ (0.02) $ 0.03 $ (0.09) $ (0.04) ============== ============= ============== ============== Net earnings (loss) per share - diluted $ (0.02) $ 0.03 $ (0.09) $ (0.04) ============== ============= ============== ============== Weighted average shares outstanding - basic 330.7 325.6 327.5 323.9 ============== ============= ============== ============== Weighted average shares outstanding - diluted 346.1 332.2 341.5 329.4 ============== ============= ============== ============== (1) Pro forma numbers reflect results as if each acquisition had been included from January 1, 1997 and exclude one-time merger related charges.
Attachment C QWEST COMMUNICATIONS INTERNATIONAL INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As of September 30, 1998 and December 31, 1997 (In Millions)
1998 1997 ---------------- ----------------- ASSETS Cash $ 225.4 $ 379.8 Other current assets 903.0 344.1 ---------------- ----------------- Total current assets 1,128.4 723.9 Property and equipment, net 2,043.9 614.6 Excess of cost over net assets acquired 3,215.4 21.2 Other, net 327.6 38.4 ---------------- ----------------- TOTAL ASSETS $ 6,715.3 $ 1,398.1 ================ ================= LIABILITIES AND STOCKHOLDERS' EQUITY Total current liabilities $ 1,179.8 $ 315.4 Long-term debt and capital lease obligations 1,387.1 630.5 Other long-term liabilities 461.9 70.5 Total stockholders' equity 3,686.5 381.7 ---------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,715.3 $ 1,398.1 ================ =================
EX-99.2 3 Exhibit 99.2 Press release of the Registrant dated October 27, 1998. FOR IMMEDIATE RELEASE Contacts: Media Contact: Investor Contact: Qwest Communications Qwest Communications Christy Weiner Lee Wolfe (303) 992-2085 (877) 877-QWST christine.weiner@qwest.net IR@qwest.net QWEST ANNOUNCES $750 MILLION SENIOR NOTES OFFERING DENVER, October 27, 1998 - Qwest Communications International Inc. (Nasdaq: QWST) today announced that it has agreed to sell $750 million aggregate principal amount of 7.5 percent ten year Senior Notes due 2008. Gross proceeds from the sales of the notes will total approximately $741 million. The offering is expected to close on November 4, 1998. Proceeds of the notes sale will be used primarily to fund the continued deployment of Qwest's Macro CapacitySM Fiber Network, market share initiatives in traditional telecommunications segments, and the expansion of Qwest's data strategy. This strategy includes the Company's deployment of its IP backbone and product development initiatives including the establishment of web hosting CyberCenters and the development of e-commerce solutions. Additionally, the proceeds will be used to expand unique distribution channels. "We are experiencing strong growth across all aspects of our business and we are delighted with the market's continued positive perception of Qwest," said Robert Woodruff, executive vice president and chief financial officer, Qwest Communications. "With this debt issue, we've taken advantage of the improvement in the capital markets, helping us to secure valuable investment capability. Resources from this transaction will allow us to continue our rapid growth across all aspects of the business." The notes to be sold have not been registered under the Securities Act of 1933 and may not be offered or sold in the U.S. absent registration or an applicable exemption from registration requirements. The Qwest Macro Capacity Fiber Network Qwest's planned domestic 18,449-mile network will serve over 130 cities, which represent approximately 80 percent of the data and voice traffic originating in the United States, upon its scheduled completion in the second quarter of 1999. To date, approximately 9,100 miles of the Qwest Macro Capacity Fiber Network are activated, and construction has commenced on 17,955 miles. Qwest's transcontinental segment extends from Los Angeles to Sacramento and across to New York. Additionally, Qwest owns transatlantic submarine capacity linking the United States to Europe and will jointly own a transpacific submarine cable system connecting the U.S. to the Pacific Rim. Qwest is also extending its network 1,400 miles into Mexico with completion slated for late 1998. The Qwest Macro Capacity Fiber Network is designed with highly reliable and secure bi-directional, line switching OC-192 SONET ring architecture. Upon completion, the network will offer a self-healing system that provides the ultimate security and reliability by allowing instantaneous rerouting in the event of a fiber cut. About Qwest Qwest Communications International Inc. (NASDAQ: QWST) is a multimedia communications company and one of the fastest growing companies in America today. Headquartered in Denver, Colorado, Qwest has approximately 6,000 employees and over 80 sales offices worldwide. With its world-class data and multimedia network, marketing expertise, and customer care and billing systems, Qwest is delivering high-quality data, video and voice connectivity securely and reliably to customers around the world. Further information is available at www.qwest.net. # # # This release may contain 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 Qwest with the SEC, 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, (a) failure by Qwest to construct the Qwest Network on schedule and on budget, (b) failure by Qwest to maintain all necessary rights-of-way, (c) intense competition in Qwest's communications services markets, (d) rapid and significant changes in technology and markets, (e) dependence on new product development, (f) operating and financial risks related to managing rapid growth, integrating acquired businesses, being highly leveraged and sustaining operating cash deficits and (g) adverse changes in the regulatory environment. These cautionary statements should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by Qwest or persons acting on its behalf. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries. -----END PRIVACY-ENHANCED MESSAGE-----