-----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, Dik3OzHlMLGtyb1Flnn9oHH7RsSyAz5nZcIpD2/yXiiPFum5fsI7MQp+Or+wkuyp 4IHzmjM7AV4eWJK3DsV/SQ== /in/edgar/work/20000628/0000927356-00-001336/0000927356-00-001336.txt : 20000920 0000927356-00-001336.hdr.sgml : 20000920 ACCESSION NUMBER: 0000927356-00-001336 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QWEST COMMUNICATIONS INTERNATIONAL INC CENTRAL INDEX KEY: 0001037949 STANDARD INDUSTRIAL CLASSIFICATION: [4813 ] IRS NUMBER: 841339282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-15577 FILM NUMBER: 662926 BUSINESS ADDRESS: STREET 1: 700 QWEST TOWER STREET 2: 555 SEVENTEENTH STREET CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032911400 MAIL ADDRESS: STREET 1: 700 QWEST 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 11-K 1 0001.txt FORM 11-K FOR PERIOD ENDING 12/31/1999 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM 11-K ANNUAL REPORT ____________________ Pursuant to Section 15(d) of the Securities Exchange Act of 1934 ____________________ For the Period from January 1, 1999 to December 31, 1999 _____________________ QWEST COMMUNICATIONS 401(k) SAVINGS PLAN Commission File No. 000-22609 ______________________ QWEST COMMUNICATIONS INTERNATIONAL INC. 700 Qwest Tower 555 Seventeenth Street Denver, Colorado 80202 (Name of issuer of securities held pursuant to the plan and address of its principal executive office) ================================================================================ QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ---------------------------------------- INDEX TO FINANCIAL STATEMENTS AND --------------------------------- SUPPLEMENTAL SCHEDULE ---------------------
Page(s) ------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS: Statements of Net Assets Available for Plan Benefits as of December 31, 1999 and January 1, 1999 (Plan Inception) 2 Statement of Changes in Net Assets Available for Plan Benefits for the Period from January 1, 1999 (Plan Inception) to December 31, 1999 3 NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE 4-8 SUPPLEMENTAL SCHEDULE: Schedule I--Schedule of Assets Held for Investment Purposes as of December 31, 1999 9-11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Participants and Plan Administrative Committee of the Qwest Communications 401(k) Savings Plan: We have audited the accompanying statements of net assets available for plan benefits of the QWEST COMMUNICATIONS 401(k) SAVINGS PLAN (the "Plan") as of December 31, 1999 and January 1, 1999 (Plan Inception), and the related statement of changes in net assets available for plan benefits for the period from January 1, 1999 (Plan Inception) to December 31, 1999. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1999 and January 1, 1999 (Plan Inception), and the changes in net assets available for benefits for the period from January 1, 1999 (Plan Inception) to December 31, 1999, in conformity with accounting principles generally accepted in the United States. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP Denver, Colorado, June 26, 2000. -1- QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ---------------------------------------- STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS ---------------------------------------------------- AS OF DECEMBER 31, 1999 AND JANUARY 1, 1999 (PLAN INCEPTION) ------------------------------------------------------------
December 31, January 1, 1999 1999 ------------ --------- INVESTMENTS (Notes 2 and 3): Cash $ 5,680 $ - Money market fund 147,017 - Mutual funds 34,141,190 - Collective trusts 13,972,580 - Common stock 420,510 - Employer stock 40,089,418 - Participant loans 1,948,306 - ----------- --------- Total investments 90,724,701 - RECEIVABLES: Loan repayments 22,331 - Participant contributions 574,379 - Employer contributions 145,171 - ----------- --------- Total receivables 741,881 - ACCRUED INCOME 6,524 - CASH OVERDRAFT PAYABLE (670,525) - ----------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $90,802,581 $ - =========== =========
The accompanying notes are an integral part of these statements. -2- QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ---------------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS -------------------------------------------------------------- FOR THE PERIOD FROM JANUARY 1, 1999 (PLAN INCEPTION) ----------------------------------------------------- TO DECEMBER 31, 1999 --------------------
ADDITIONS TO NET ASSETS ATTRIBUTED TO: Contributions- Participant $19,695,543 Employer 4,487,021 Rollovers 8,500,709 Investment income- Interest and dividends 1,120,581 Net appreciation in fair value of investments (Note 3) 4,553,605 Other 31,233 ----------- Total additions 38,388,692 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Distributions to participants (8,350,203) Administrative fees and investment expenses (8,640) ----------- Total deductions (8,358,843) MERGERS INTO THE PLAN (Note 1) 60,772,732 ----------- Net increase 90,802,581 NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of period - ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of period $90,802,581 ===========
The accompanying notes are an integral part of this statement. -3- QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ---------------------------------------- NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE ------------------------------------------------------- AS OF DECEMBER 31, 1999 AND JANUARY 1, 1999 (PLAN INCEPTION) ------------------------------------------------------------ 1. DESCRIPTION OF PLAN: -------------------- The following description of the Qwest Communications 401(k) Savings Plan (the "Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. General - ------- The Plan was established effective January 1, 1999 by Qwest Communications International Inc. ("Qwest" or the "Company"). The Plan is a defined contribution plan which covers substantially all employees of Qwest and certain affiliated entities who meet the eligibility requirements, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty Corporation. Mergers into the Plan - --------------------- Effective May 1, 1999, the Qwest Communications International Inc. 401(k) Plan ("Old Qwest Plan"), the LCI International 401(k) Savings Plan ("LCI Plan"), the U.S. Long Distance Corp. 401(k) Retirement Plan ("USLD Plan"), the Supernet, Inc. 401(k) Profit Sharing Plan ("Supernet Plan") and the Lightwave Spectrum, Inc. 401(k) Plan ("Lightwave Plan"), collectively known as the "Predecessor Plans," merged into the Plan. These mergers are shown in the accompanying statement of changes in net assets available for plan benefits as "Mergers into the Plan" and the related assets transferred totaled $60,772,732. Trust - ----- Trustee and recordkeeping services are performed by Merrill Lynch Trust Company FSB ("Merrill Lynch"). Plan assets are held under a trust agreement (the "Trust") maintained by Merrill Lynch (the "Trustee"). Eligibility - ----------- All employees of the Company and certain affiliated entities are eligible for the Plan (except for collectively bargained employees, non-resident aliens, leased employees and independent contractors) upon meeting the eligibility requirements. Employees are eligible to make salary deferral contributions to the Plan on the first day of the payroll period after their first regular paycheck. Upon completion of one year of service, as defined by the Plan document, employees are eligible to participate in the Company's matching contributions. Employees who were eligible to participate in the Predecessor Plans as of December 31, 1998 were automatically eligible for the Plan on January 1, 1999. -4- Contributions - ------------- Participant Salary Deferral Contributions Participants may elect to contribute to the Plan on a pre-tax basis from 1% to 18% of their eligible compensation, as defined by the Plan document. Participant pre-tax contributions are limited to comply with statutory regulations ($10,000 in 1999). Company Matching Contributions The Company matching contribution, if any, as authorized by the Company, for a Plan year is equal to 100% of a participant's salary deferral contribution, up to a maximum of 3% of a participant's eligible compensation. The Company may make its contributions in cash or in stock, as the Company determines in its sole discretion. For 1999, the Company match was 3% and made in cash or stock (for portion participant directed to Employer stock) of $4,487,021. Rollover Contributions The Plan provides that the Trustee may accept from a participant a contribution representing distributions from another plan which meets the requirements of the Internal Revenue Code (the "IRC"), as further described in the Plan document. Such "rollover contributions" are fully vested and are not subject to or affected in any way by the maximum annual contribution limitation. Total annual additions under the Plan and all other plans sponsored by the Company are limited to the lesser of 25% of eligible compensation, as defined, or $30,000. Annual additions are defined as the participant's contributions and the Company's matching contributions. Vesting - ------- Participants are fully vested in their accounts. Approximately $40,000 of forfeitures were transferred from the Predecessor Plans upon the merger. These will be used to offset future Company contributions as allowed by the Plan document. Participant Accounts - -------------------- Each participant's account is credited with the participant's contributions and the Company matching contributions, if any. Separate accounts are maintained for each participant. Participants' accounts are adjusted daily to reflect unrealized appreciation or depreciation of investments, income, gains or losses on disposition of assets and any other investment transactions. Payment of Benefits - ------------------- Upon retirement, termination of employment or death, each participant or beneficiary is entitled to receive amounts in accordance with the terms and conditions of the Plan. Participants may also make certain in-service voluntary withdrawals and hardship withdrawals if certain criteria are met. Benefit payments are lump sum distributions. Certain other benefit distribution options are allowed as protected benefits from the Predecessor Plans, as further discussed in the Plan document. -5- Investment Options - ------------------ A participant may direct their account to any of twenty-three investment mutual fund options offered by Merrill Lynch, including investments in Qwest Common Stock. In addition, employees may invest in the Merrill Lynch Self-Directed Brokerage Account. Participants may change their investment options at any time. Loans - ----- Participants may borrow from their fund accounts a minimum of $500 up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Participants may have no more than one loan outstanding at any time. The maximum loan term is 60 months unless it is for the purchase of a primary residence in which case the maximum loan term is 180 months. The loans are secured by the balance in the participant's account and earn interest equal to the prime rate charged by a bank selected by the Company on the last day of the calendar quarter preceding the date of the loan plus one percentage point. Principal and interest are paid through payroll deductions. Voting - ------ All shares of Qwest Common Stock credited to participants' accounts are voted by the participants in accordance with the Plan's provisions. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ------------------------------------------- Basis of Accounting - ------------------- The accompanying financial statements are prepared on the accrual basis of accounting. The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires the Plan's management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Valuation of Investments - ------------------------ Investments in mutual funds, collective trusts other than noted below, common stock and employer stock are valued at fair value based on quoted market prices. Participant loans, money market funds and cash are valued at cost which approximate fair value. The Merrill Lynch Retirement Preservation Trust invests in guaranteed investment contracts, bank investment contracts and synthetic guaranteed investment contracts. These contracts are carried in the trust fund's audited financial statements at cost plus accrued interest, which approximates fair market value. The investment in the trust fund in the accompanying financial statements is valued at the Plan's proportionate interest in the fund as of the financial statement date. Interest rates earned on the investment change daily. The average yield for the period ended December 31, 1999 was 5.90%. The crediting interest rate as of December 31, 1999 and January 1, 1999 was approximately 5.92% and 6.58%, respectively. -6- Income Recognition - ------------------ In the statement of changes in net assets available for plan benefits, the net appreciation in the fair value of investments consists of realized gains and the unrealized appreciation on those investments. Interest income is recorded on the accrual basis and dividends are recorded on the ex-dividend date. Purchases and sales of securities are recorded on a trade date basis. Payment of Benefits - ------------------- Benefits are recorded when paid. Administrative Fees and Investment Expenses - ------------------------------------------- The Plan may pay certain expenses of the Plan as described in the Plan document. The Plan paid $8,640 of trust investment expenses for the period ended December 31, 1999. The Company paid all other administrative costs of the Plan for the period ended December 31, 1999. 3. INVESTMENTS: ------------ The fair market value of individual investments that represents 5% or more of the Plan's net assets as of December 31, 1999 are as follows:
Shares or Fair Units Value --------- ----------- Qwest Common Stock 932,312 $40,089,418 Merrill Lynch Equity Index Trust 95,060 9,620,120 Massachusetts Investors Trust 457,493 9,584,485 Class A PIMCO Total Return Fund Class A 603,224 5,971,918 PIMCO Mid-Cap Growth Fund Class A 395,351 10,196,092
During the period ended December 31, 1999, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $4,553,605 as follows:
Mutual funds $1,519,561 Collective trusts 941,875 Common stock 98,745 Employer stock 1,993,424 --------- $4,553,605 =========
4. PLAN TERMINATION: ----------------- The Company has the right under the Plan to discontinue contributions at any time, and to terminate the Plan subject to the provisions of ERISA. -7- 5. TAX STATUS: ----------- The Plan has applied for a determination letter from the Internal Revenue Service ("IRS"). The Plan administrator believes that the Plan is designed and being operated in compliance with the applicable requirements of the IRC and therefore tax-exempt. 6. RELATED PARTY TRANSACTIONS: --------------------------- Certain Plan investments are shares of Qwest Communications International Inc. common stock and investments managed by Merrill Lynch, which qualify as related party transactions. 7. RISKS AND UNCERTAINTIES: ------------------------ The Plan provides for various investment options in money market funds, mutual funds, collective trusts, common stock and Employer stock. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect participant's account balances and amounts reported in the statements of net assets available for plan benefits. 8. MERGER AGREEMENT: ----------------- In July 1999, Qwest entered into a definitive merger agreement with U S WEST Inc. ("U S WEST"). The Boards of Directors and stockholders of both Qwest and US WEST have approved the proposed merger. The merger is subject to federal and state regulatory approvals and other customary closing conditions. Closing of the merger is expected in July 2000. The effect this will have on the Plan has not yet been determined. -8- SCHEDULE I Page 1 of 3 QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ----------------------------------------- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ----------------------------------------------- AS OF DECEMBER 31, 1999 ----------------------- EIN #04 -8141739 ---------------- FORM 5500 - SCHEDULE H - ITEM 4i --------------------------------
Name of Issue, Borrower, Shares or Current Lessor or Similar Party Description of Investment Units Value - ----------------------------------------- ---------------------------- ------------- ------------ Cash Cash 5,680 $ 5,680 Qwest Common Stock* Employer Stock 932,312 40,089,418 Billing Concepts Corp. Common Stock Common Stock 30,195 196,264 Yahoo Inc. Common Stock Common Stock 270 116,825 Juno Online Services Inc. Common Stock Common Stock 1,150 40,825 Broadvision Inc. Common Stock Common Stock 35 5,952 Qualcomm Inc. Common Stock Common Stock 40 7,045 Amgen Inc. Common Stock Common Stock 100 6,006 Citigroup Inc. Common Stock Common Stock 100 5,568 Enron Corp. Common Stock Common Stock 150 6,656 Home Depot Inc. Common Stock Common Stock 75 5,156 Sun Microsystems, Inc. Common Stock Common Stock 110 8,517 Texas Instruments Inc. Common Stock Common Stock 5 483 Coca-Cola Company Common Stock Common Stock 100 5,825 Merck & Company Inc. Common Stock Common Stock 100 6,718 Charles Schwab Corp. Common Stock Common Stock 200 7,650 Orbital Sciences Corp. Common Stock Common Stock 55 1,020 Merrill Lynch Small Cap Index Fund* Collective Trust 1,145 16,998 Merrill Lynch Equity Index Trust* Collective Trust 95,060 9,620,120 Merrill Lynch Retirement Preservation Trust* Collective Trust 4,335,462 4,335,462 Seligman Communications and Information Fund Mutual Fund 14,199 670,908 Calvert Social Investments Fund Balanced Portfolio Mutual Fund 286 9,249 MFS Global Total Return Fund Class A Mutual Fund 3,743 52,183
* Party-in-interest (Note 6). The accompanying notes are an integral part of this schedule. -9- SCHEDULE I Page 2 of 3 QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ----------------------------------------- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ----------------------------------------------- AS OF DECEMBER 31, 1999 ----------------------- EIN #04 -8141739 ---------------- FORM 5500 - SCHEDULE H - ITEM 4i --------------------------------
Name of Issue, Borrower, Shares or Current Lessor or Similar Party Description of Investment Units Value - -------------------------- --------------------------- ------------- ------------ Pioneer Europe Fund Class A Mutual Fund 1,110 $ 42,142 Templeton Developing Markets Class A Mutual Fund 3,727 58,173 MFS Massachusetts Investors Growth Stock Fund Class A Mutual Fund 24,367 495,418 Massachusetts Investors Trust Class A Mutual Fund 457,493 9,584,485 Davis New York Venture Fund Class A Mutual Fund 3,642 104,751 Managers International Equity Fund Class A Mutual Fund 264 15,468 GAM International Fund Mutual Fund 89,975 2,893,594 Class A Franklin Small Cap Growth Fund Class A Mutual Fund 4,090 180,510 Davis Series Financial Fund Class A Mutual Fund 1,655 48,119 Pioneer Growth Shares Fund Class A Mutual Fund 11,282 227,439 Davis Real Estate Fund Class A Mutual Fund 242 4,429 PIMCO High Yield Fund Class A Mutual Fund 2,656 28,362 PIMCO Total Return Fund Class A Mutual Fund 603,224 5,971,918 PIMCO Mid-Cap Growth Fund Class A Mutual Fund 395,351 10,196,092 MFS Total Return Fund Mutual Fund 251,208 3,486,762 Merrill Lynch Healthcare Fund Class A* Mutual Fund 10,004 62,124 State Street Research Alpha Fund Class A Mutual Fund 176 2,460
* Party-in-interest (Note 6). The accompanying notes are an integral part of this schedule. -10- SCHEDULE I Page 3 of 3 QWEST COMMUNICATIONS 401(k) SAVINGS PLAN ----------------------------------------- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ----------------------------------------------- AS OF DECEMBER 31, 1999 ----------------------- EIN #04 -8141739 ---------------- FORM 5500 - SCHEDULE H - ITEM 4i --------------------------------
Name of Issue, Borrower, Shares or Current Lessor or Similar Party Description of Investment Units Value - --------------------------------------- ----------------------------- ------------ ------------ CMA Money Fund * Money Market Fund 147,017 $ 147,017 PIMCO Innovation Fund Class C Mutual Fund 66 4,129 Healthcare Series 5 Fund Mutual Fund 2,335 2,475 Participant Loans Interest rates ranging from 8.75% to 9.50% 1,948,306 1,948,306 ----------- Total Investments $90,724,701 ===========
* Party-in-interest (Note 6). The accompanying notes are an integral part of this schedule. -11- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. QWEST COMMUNICATIONS 401(K) SAVINGS PLAN By: /s/ Robert S. Woodruff ------------------------------------------------- Robert S. Woodruff Executive Vice President - Finance Chief Financial Officer, and Treasurer Date: June 28, 2000 EX-23.2 2 0002.txt CONSENT OF ARTHUR ANSERSEN LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report on the financial statements of Qwest Communications 401(k) Savings Plan dated June 26, 2000, included in this Form 11-K, into the Company's previously filed Registration Statements on Form S-8 (File Nos. 333-47349, 333-56323 and 333-84877). /s/ Arthur Andersen LLP Denver, Colorado, June 26, 2000. -----END PRIVACY-ENHANCED MESSAGE-----