-----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, Quf4IZ3kBVyZatnd8pCpIqhnjuf7xHtTbRbeY2DvdQ+vsmyHYHV34FcAPNaaqiS1 qBJ9ZQpLzdam6AdW567vow== /in/edgar/work/0001019056-00-000556/0001019056-00-000556.txt : 20001026 0001019056-00-000556.hdr.sgml : 20001026 ACCESSION NUMBER: 0001019056-00-000556 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001024 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001025 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: 8-K SEC ACT: SEC FILE NUMBER: 001-15577 FILM NUMBER: 745104 BUSINESS ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3032911400 MAIL ADDRESS: STREET 1: 1801 CALIFORNIA ST CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: QUEST COMMUNICATIONS INTERNATIONAL INC DATE OF NAME CHANGE: 19970416 8-K 1 0001.txt FORM 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 24, 2000 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.) 1801 California 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 On October 24, 2000, the Registrant reported its financial results for the third quarter of 2000. A copy of the press release announcing the same is attached as Exhibit 99.1 to this Current Report on Form 8-K. On October 24, 2000, the Registrant hosted a conference call with financial analysts and reporters during which it discussed its announced financial results and provided guidance regarding its expected results for future periods and the synergies it expects to achieve from its acquisition of U S WEST, Inc. ("U S WEST"). As previously announced, the webcast of the call (live and replay) is accessible on the Registrant's website. On the call the Registrant announced the following (all numbers are approximate): o It was raising guidance for sequential revenue growth (for the 4th quarter of 2000 over the 3rd quarter of 2000) to 4.5% to 5%, an increase from the 3.5% to 4% guidance given in September 2000. o It was comfortable with its previously announced guidance for revenues of $18.8 billion to $19.1 billion in 2000 and $21.3 billion to $21.7 billion in 2001. The 2000 revenue estimates include approximately $155 million in revenues divested in connection with the acquisition of U S WEST. o It was comfortable with its previously announced guidance for EBITDA (earnings before interest, taxes, depreciation and amortization) of $7.4 in 2000 and $8.5 billion to $8.7 billion in 2001. o It was on track to meet previously announced targets of 15% to 17% CAGR (compounded annual growth rate) for revenue and almost 20% CAGR for EBITDA from 2000 to 2005. o Internet and data revenue, which grew more than 50% (for the 3rd quarter of 2000 over the 3rd quarter of 1999) on a pro forma normalized basis, constituted almost 23% of total revenues for the 3rd quarter of 2000, putting it on line to meet previously announced guidance of 22% to 24% of total revenues for 2000 and ahead of the previously announced plan to reach 44% of total revenue by 2005. o While seasonality in its business might affect gross margins in any specific quarter, it expects the overall gross margin trend to improve, exceeding 65% by the end of 2001. o It expected SG&A (selling, general and administrative expenses) as a percentage of revenue to increase slightly as a result of increased investments in wireless, DSL and sales activities, partially offset by workforce reductions and scale and efficiency improvements. o It expected SG&A as a percentage of revenue to be 25% to 26% in 2001. 2 o It expected EBITDA margins to continue increasing to 40% in 2001. o It expected depreciation expense of $2.8 billion in 2000, increasing by one-third in 2001. o Its current intangibles allocation was: $35.9 billion of intangibles with a 40 year life; $3.4 billion of intangibles with a ten year life; and $100 million of intangibles with a three year life. It expected any changes going forward would be relatively minor. o It was comfortable with existing guidance on interest expense ($1.1 billion for 2000). o Because of non-deductible goodwill and intangible amortization, its effective tax rate was 54% for the 3rd quarter of 2000. Without giving effect to that item, the effective tax rate was 37.4%, which was an appropriate rate for planning purposes going forward. o It expected the number of diluted shares to increase by 3% in 2001 (as compared to 2000). o It was increasing guidance on EPS (earnings per share) to be $0.54 to $0.58 for 2000 (from previously announced guidance of $0.35 to $0.40), with cash EPS of about two times EPS. o It expected capital expenditure to be about $9 billion for 2000 and $9.5 billion in 2001, as previously announced. The pro forma normalized consolidated statements of operations of the Registrant for the years ended December 31, 1998 and December 31, 1999, and for each of the quarters ended March 31, 1999, June 30, 1999, September 30, 1999, December 31, 1999, March 31, 2000, June 30, 2000, and September 30, 2000, giving effect to the acquisition of U S WEST, are attached to this Current Report on Form 8-K as Exhibit 99.2. The Registrant also announced that it will be hosting a meeting with financial analysts from 8:00 A.M. to 3:30 P.M. on October 31, 2000. A webcast of the meeting (live and replay) will be accessible on its website at www.qwest.com/about/ir. FORWARD-LOOKING STATEMENT WARNING This Current Report on Form 8-K contains 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 Qwest and U S WEST with the SEC, 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 potential fluctuations in quarterly results, volatility of the Registrant's stock price, intense competition in the communications services market, changes in demand for the Registrant's products and services, dependence on new product development and 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, rapid and significant changes in technology and markets, adverse changes in the 3 regulatory or legislative environment affecting the Registrant's business and delays in the Registrant's ability to provide interLATA services within its 14-state local service territory, failure to maintain rights of way, and failure to achieve the projected synergies and financial results expected to result from the acquisition of U S WEST timely or at all and difficulties in combining the operations of Qwest and U S WEST. This Current Report on Form 8-K and the attachments may include analysts' estimates and other information prepared by third parties. The Registrant assumes no responsibility for any information prepared by third parties. The Registrant undertakes no obligation to update the information contained on its website or in this Current Report on Form 8-K, 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 contents of the Registrant's website shall not be deemed to be incorporated by reference into this Current Report on Form 8-K. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS Exhibit 99.1 Press release of the Registrant dated October 24, 2000. Exhibit 99.2 Pro forma, normalized consolidated statements of operations of the Registrant. 4 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 24, 2000 By: /s/ YASH A. RANA ------------------------------------------------- Yash A. Rana Associate General Counsel and Assistant Secretary 5 EXHIBIT INDEX Exhibit 99.1 Press release of the Registrant dated October 24, 2000. Exhibit 99.2 Pro forma, normalized consolidated statements of operations of the Registrant. 6 EX-99.1 2 0002.txt EXHIBIT 99.1 QWEST COMMUNICATIONS REPORTS STRONG THIRD QUARTER 2000 FINANCIAL RESULTS WHILE SUCCESSFULLY INTEGRATING $77 BILLION COMPANY REVENUE, EBITDA AND EPS EXCEEDED ANALYST EXPECTATIONS; QWEST ON TRACK TO ACHIEVE REVENUE, EBITDA AND EPS TARGETS FOR 2000; REVENUE GROWTH DRIVEN BY INTERNET, DATA SERVICES Third quarter highlights compared to previous year: o Total revenue grew on a normalized pro forma basis 12.4 percent to $4.77 billion, on track to meet or exceed 2000 revenue targets o Commercial services revenue grew by 24.3 percent, driven primarily by Internet and data services o Internet and data revenue grew more than 50 percent and now makes up nearly 23 percent of total revenue o Internet and data revenue growth represents two-thirds of Qwest total revenue growth o EBITDA grew by 14.3 percent, reflecting strong revenue growth and continued cost efficiencies, driving margins from 38.5 percent to 39.1 percent o Earnings Per Share (EPS) increased to 14 cents per share versus 12 cents a share a year ago, representing a 16.7 percent increase o The company eliminated 4,500 jobs in September, three months ahead of schedule o Five new CyberCentersSM opened this quarter o Delayed installations, total provisioning commitments, repair commitments and out-of-service results at the best levels in the last several years DENVER, OCTOBER 24, 2000 - Qwest Communications International Inc. (NYSE: Q), the broadband Internet communications company, today announced strong third quarter results produced while successfully integrating operations to create a $75 billion large cap growth company. Qwest completed its acquisition of U S WEST on June 30. Results exceeded the consensus of analysts' expectations for revenues, earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per share for the quarter. This is the fourteenth consecutive quarter that the company has met or exceeded analyst expectations. "Our results for the quarter reflect Qwest's continued execution and ability to exploit revenue opportunities in key sectors of our industry," said Joseph P. Nacchio, Qwest's chairman and CEO. "I'm proud of the Qwest team for producing these results while in the middle of a complex merger." Total revenue of $4.77 billion was a 12.4 percent increase versus pro-forma normalized 1999 third quarter revenue of $4.24 billion. Total revenue was driven by Internet and data services growth of more than 50 percent, which comprised more than two-thirds of the total revenue increase for the quarter. Commercial revenues grew in excess of 24 percent driven by strength in Internet and data services, which now represent nearly 23 percent of the company's total revenue. Consumer and small business revenues grew 6.5 percent during the same period, reflecting the company's success in bundling products and selling wireless and DSL services. These sales were partially offset by the ongoing pivot away from lower margin out-of-region switched long distance services. Third quarter EBITDA of $1.86 billion represents annual growth of 14.3 percent as revenue growth continues to outpace expense increases, resulting in margin improvement from 38.5 percent in the third quarter of 1999 to 39.1 percent this quarter. Qwest remains on track to achieve its 2000 revenue target of $18.8 to $19.1 billion and $7.4 billion of EBITDA. "We are very pleased with these strong financial results for the quarter. Internet and data services continued to drive revenue growth," said Robert S. Woodruff, Qwest executive vice president and CFO. "We are well positioned to attain our long term revenue, EBITDA and EPS targets." Excluding non-recurring items, the company's third quarter net earnings grew by 18.5 percent to $231 million. EPS was $0.14 per diluted share, an increase of 16.7 percent from third quarter of 1999. Included in the non-recurring items are merger-related and other one-time pre-tax charges totaling $1.03 billion and other non-operating income of $272 million from net realized gains on investments and asset sales. Including the non-recurring items, the company reported a loss of $0.15 per share for third quarter 2000. Synergy teams continued to eliminate duplication in the organization and centralize work functions to improve operations and the delivery of services to customers. Approximately 4,500 non-customer facing jobs were eliminated by the end of the third quarter. COMMERCIAL, SMALL BUSINESS AND CONSUMER MARKETS Qwest continued to aggressively drive initiatives designed to promote growth in its Internet and data businesses, including integrating Qwest and U S WEST operations into Qwest Global Business and focusing all of the IP networking functions into a single team within Qwest Internet Solutions to drive faster product and service responses to customer requirements. Qwest continued to penetrate national and global accounts with its portfolio of broadband Internet applications and services and recorded more than $450 million of new contracted revenue during the quarter. More than 40 percent of the contracts awarded during the third quarter were from large, multinational and U.S.-based companies including, a $27 million, three-year agreement with Cox Enterprises, Inc., one of the nation's leading media and automotive re-marketing companies. The agreement is an extension of an existing two-year relationship between the two companies and calls for Qwest to deliver a wide variety of Internet, data and communications services. 2 Qwest Cyber.Solutions (QCS) was awarded a multi-year, multimillion dollar contract from Mitsubishi Silicon America (MSA) to provide Application Service Provider (ASP) solutions that improve Mitsubishi's enterprise resource planning activities, particularly in the areas of business data warehousing and production planning. QCS also announced an $18 million, five-year ASP contract with Redback Networks Inc. for enterprise resource planning, customer relationship management and manufacturing operations. In the third quarter, Qwest Wireless added 38,000 customers and is on track to meet its year-end target of 800,000 subscribers. Qwest also expanded the penetration of bundled services, reaching two million residential customers for the multi-feature Custom Choice package. Additionally, among the top 10 percent of residential customers, average monthly revenue per customer has increased from $68 in April 1998 to $105 at the end of September 2000. INTERNET AND DATA SERVICES Qwest announced in the quarter the opening of five new CyberCenters in Atlanta; Columbus, Ohio; Denver; Miami; and Tampa, Fla. With the addition of these key Web-hosting facilities, Qwest now operates a total of 14 CyberCenters nationwide. The company plans to open an additional 10 centers by the end of 2001 for a total of 24 CyberCenters. Strong market demand for Internet and data networks fueled growth in excess of 50% for Qwest's dedicated Internet access, hosting, DSL, virtual private network, frame relay, ATM and Internet professional services. Qwest continued to expand its presence in local markets by offering end-to-end high-speed broadband services, including DSL Internet access, to businesses in California and Texas. New Qwest Local Broadband services are now available in Sacramento, San Francisco, San Jose, Los Angeles, Orange County and San Diego in California, and four Texas markets beginning tomorrow. Qwest plans to expand its local broadband services to 11 markets by year-end. Qwest is building local fiber rings in 25 major metropolitan markets outside the 14 states where it provides local service. Customers will have direct, high-speed connections, from 256k to OC-192, to Qwest's global broadband Internet network. Qwest delivered early on its commitment to offer DSL high-speed Internet service in 72 markets in 14 western states by the end of 2000 by reaching that number in the third quarter. Qwest added an additional 38,000 subscribers during the quarter and now has 213,000 DSL subscribers - an increase of more than 166 percent over the same period in 1999 - and is on track for its target of 250,000 subscribers by year-end 2000. Qwest Digital Media (QDM), a subsidiary that provides end-to-end digital multimedia services via broadband distribution, was launched in September. CEO David Woodrow, former executive vice president at Cox Communications Inc., is pioneering the storage, management and delivery of digital content, particularly the convergence of traditional and digital media. QDM is the only company offering media providers a complete portfolio of managed content services, including Webcasting and video on demand. 3 SERVICE AND COMPETITION During the quarter, Qwest implemented several new initiatives to promote competition, improve customer service and streamline the company to focus on the successful delivery of key products and services, particularly in the 14 states where Qwest provides local telephone service. Early service improvement results include: o September levels of delayed installations were the second lowest in the last seven years and 67 percent below what they were a year ago; o Total provisioning commitments were met 97.6 percent of the time, which is the best result in five years; o Year-to-date repair commitments are the best they have been in five years; o Out-of-service results are at an all-time best performance level, putting Qwest at or near the top in the industry for residential results. To quickly open local markets, comply with the Telecommunications Act of 1996 and achieve long distance reentry, Qwest launched initiatives for CLECs (Competitive Local Exchange Carriers) that will speed the deployment of services and increase the efficiency of their networks. The initiatives include: CLEC-to-CLEC connections for mutually exchanging local traffic; allowing collocation of high-speed packet data switches in Qwest central offices; offering CLECs the option of pre-ordering unbundled dedicated interoffice transport; offering a single point of interconnection per Local Access Transport Area (LATA); offering CLECs a 90 day collocation interval and the ability to reserve collocation space. INTERNATIONAL Ross B. Lau was named in the quarter to be Qwest president of international business. Lau, based in Hong Kong, is leading Qwest's global expansion efforts into new markets, including Japan and the Pacific Rim countries. Lau was with Nortel Networks Limited, where he was president and chief operating officer for service provider solutions in Asia. Qwest announced in the quarter that its European joint venture, KPNQwest, opened its first Mega-CyberCenters(TM) to provide European firms with access to state-of-the-art hosting and co-location services with superior bandwidth speeds. The new 108,000 square-foot Munich facility is directly connected to KPNQwest's 12,500 mile EuroRings(TM) macro-capacity fiber-optic network. It is the largest facility of its type in Germany and was built on time and on budget. ABOUT QWEST Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband Internet-based data, voice and image communications for businesses and consumers. The Qwest Macro Capacity(R) Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 104,000 miles globally. For more information, please visit the Qwest web site at www.qwest.com. # # # 4 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 and U S WEST, Inc. 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 potential fluctuations in quarterly results, dependence on new product development, rapid technological and market change, failure to maintain rights of way, financial risk management and future growth subject to risks, adverse changes in the regulatory or legislative environment, and failure to achieve the synergies and financial results expected from the acquisition of U S WEST. This release may also include analysts' estimates and other information prepared by third parties. Qwest assumes no responsibility for any information prepared by third parties. Qwest undertakes no obligation to update the information contained on its website or in this release, 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, and CyberCenter is a service mark of, Qwest Communications International Inc. in the U.S. and certain other countries. Contacts: Tyler Gronbach Qwest Media Relations (303) 992-2155 tyler.gronbach@qwest.com Matt Barkett Qwest Media Relations (303) 992-2085 matt.barkett@qwest.com Lee Wolfe Qwest Investor Relations (800) 567-7296 ir@qwest.com 5
Attachment A QWEST COMMUNICATIONS INTERNATIONAL INC. CONSOLIDATED PRO FORMA STATEMENTS OF INCOME (1)(2) (UNAUDITED) Quarter Ended Nine Months Ended September 30, September 30, In millions, except -------------------------- % ------------------------ % per share amounts 2000 1999 Change 2000 1999 Change - ---------------------------------------- ------------ ----------- ------------- ---------- --------- -------- OPERATING REVENUES Commercial services $ 2,421 $ 1,948 24.3 $ 6,881 $ 5,254 31.0 Consumer and small business services 1,694 1,591 6.5 5,009 4,665 7.4 Directory services 351 336 4.5 1,029 981 4.9 Switched access services 299 365 (18.1) 1,017 1,127 (9.8) ----------- ----------- ---------- --------- Total operating revenues 4,765 4,240 12.4 13,936 12,027 15.9 OPERATING EXPENSES Cost of sales 1,703 1,554 9.6 4,974 4,271 16.5 Selling, general and administrative 1,198 1,055 13.6 3,580 3,133 14.3 ----------- ----------- ---------- --------- EBITDA 1,864 1,631 14.3 5,382 4,623 16.4 Depreciation 727 632 15.0 2,002 1,881 6.4 Goodwill and other intangible amortization 317 317 - 951 951 - ----------- ----------- ---------- --------- Operating income 820 682 20.2 2,429 1,791 35.6 OTHER EXPENSE Interest expense 314 246 27.6 807 633 27.5 Other expense (income)-net 5 (16) (131.3) 24 8 200.0 ----------- ----------- ---------- --------- Total other expense-net 319 230 38.7 831 641 29.6 ----------- ----------- ---------- --------- Income before income taxes 501 452 10.8 1,598 1,150 39.0 Income tax provision 270 257 5.1 873 690 26.5 ----------- ----------- ---------- --------- NET INCOME $ 231 $ 195 18.5 $ 725 $ 460 57.6 =========== =========== ========== ========= Basic earnings per share $ 0.14 $ 0.12 16.7 $ 0.44 $ 0.29 51.7 =========== =========== ========== ========= Basic average shares outstanding 1,662 1,619 2.7 1,644 1,593 3.2 =========== =========== ========== ========= Diluted earnings per share $ 0.14 $ 0.12 16.7 $ 0.43 $ 0.28 53.6 =========== =========== ========== ========= Diluted average shares outstanding 1,695 1,658 2.2 1,686 1,637 3.0 =========== =========== ========== ========= Diluted cash earnings per share $ 0.30 $ 0.29 3.4 $ 0.93 $ 0.79 17.7 =========== =========== ========== =========
(1) The consolidated pro forma statements give retroactive effect as though the acquisition of U S WEST, Inc. by Qwest Communications International Inc. (the "Merger") had occurred as of the beginning of the periods presented. Shares outstanding and earnings per share have been restated to give retroactive effect to the exchange ratio effected in the Merger. In addition, results have been adjusted to eliminate the impacts of non-recurring items, such as merger costs, asset write-offs and impairments, gains/losses on the sale of investments and fixed assets, change in the market value of investments, one-time litigation charges, elimination of in-region long-distance activity and elimination of Qwest construction activity. The results have also been adjusted to reflect the change in accounting principle to recognize revenue and expenses for directory publishing under the "point of publication method" from the "amortization method" as if the change in accounting principle had been adopted as of January 1, 1999. The Merger has been accounted for as a purchase transaction. The purchase price allocation is preliminary and is subject to change. Accordingly, net earnings and earnings per share are subject to change. Certain reclassifications have been made to prior periods to conform to the current presentation. (2) Diluted cash earnings per share represent diluted earnings per share adjusted to add back the after- tax amortization of goodwill and other intangible assets resulting from the Merger. 6 Attachment B QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, IN MILLIONS 2000 2000 - ------------------------------------------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 417 $ 900 Accounts receivable - net 4,236 3,832 Inventories and supplies 252 322 Prepaid and other 841 750 ------------ ------------ Total current assets 5,746 5,804 Property, plant and equipment - net 23,840 23,627 Goodwill and intangibles - net 39,748 36,941 Other assets - net 2,754 3,476 ------------ ------------ Total assets $ 72,088 $ 69,848 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term debt $ 2,795 $ 4,736 Accounts payable 1,842 1,820 Accrued expenses and other current liabilities 4,086 2,741 Advance billings and deposits 377 414 ------------ ------------ Total current liabilities 9,100 9,711 Long-term debt 15,560 13,429 Postretirement and other postemployment benefit obligations 2,668 2,823 Deferred taxes, credits and other 3,468 2,495 Stockholders' equity 41,292 41,390 ------------ ------------ Total liabilities and stockholders' equity $ 72,088 $ 69,848 ============ ============ 7
Attachment C QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED CONSOLIDATED DATA 1999-2000 As of and for the Quarter Ended September 30, --------------------------------------- % 2000 1999 Change ----------------- ----------------- ---------------- DSL (in 14 state region): Subscribers (thousands) 213 80 166.3% DSL Equipped Central Offices 285 237 20.3% Subscribers per Equipped Central Office 748 338 121.3% Wireless/PCS Revenues (millions)(1) $121 $65 86.2% Subscribers (thousands) 691 344 100.9% ARPU (dollars) $55 $58 (5.2%) Penetration 4.22% 2.50% 68.8% Capital Expenditures (millions)(2) $2,079 $1,474 41.0% Voice Grade Equivalent Access Lines (000): Business 26,970 20,257 33.1% Consumer 12,576 12,070 4.2% ---------------- ---------------- -------------- Total Voice Grade Equivalent 39,546 32,327 22.3% ================ ================ ============== Nine months ended September 30, --------------------------------------- % 2000 1999 Change ----------------- ----------------- ---------------- (1) Revenues (millions) $346 $158 119.0% (2) Capital Expenditures (millions) $6,751 $4,006 68.5%
8 EX-99.2 3 0003.txt EXHIBIT 99.2 Attachment A QWEST COMMUNICATIONS INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS PRO FORMA AND NORMALIZED (1) (In millions, except per share information) (Unaudited) Years Ended --------------------------- December 31, December 31, ------------ ------------ 1999 1998 ------------ ------------ Revenue: Commercial $7,388 $4,852 Consumer and small business 6,284 5,921 Directory 1,436 1,349 Switched access 1,486 1,614 ------------ ------------ Total revenue 16,594 13,736 Cost of sales 5,906 4,442 Selling, general and administrative 4,406 3,866 ------------ ------------ EBITDA 6,282 5,428 Depreciation 2,539 2,315 Goodwill and intangibles amortization 1,268 1,350 ------------ ------------ Earnings from operations 2,475 1,763 Interest expense and other, net 884 830 ------------ ------------ Earnings before income taxes 1,591 933 Income tax expense 943 866 ------------ ------------ Net earnings $648 $67 ============ ============ Diluted earnings per share $0.39 $0.04 ============ ============ Diluted cash earnings per share (2) $1.07 $0.90 ============ ============ Diluted weighted average shares outstanding 1,645 1,572 ============ ============ (1) Please see footnote on Attachment B. (2) Diluted cash earnings per share represent diluted earnings per share adjusted to add back the after- tax amortization of goodwill and other intangible assets resulting from the Merger.
Attachment B QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS PRO FORMA AND NORMALIZED (1) (In millions, except per share information) (Unaudited) Three Months Ended ------------------------------------------------------------------------------------------ September 30, June 30, March 31, December 31, September 30, June 30, March 31, 2000 2000 2000 1999 1999 1999 1999 ------------- --------- --------- ------------ ------------- -------- --------- Revenue: Commercial $2,421 $2,287 $2,173 $2,134 $1,948 $1,697 $1,609 Consumer and small business 1,694 1,675 1,640 1,619 1,591 1,550 1,524 Directory 351 331 347 455 336 319 326 Switched access 299 361 357 359 365 381 381 --------- --------- --------- --------- --------- --------- --------- Total revenue 4,765 4,654 4,517 4,567 4,240 3,947 3,840 Cost of sales 1,703 1,647 1,624 1,635 1,554 1,389 1,328 Selling, general and administrative 1,198 1,213 1,169 1,273 1,055 1,039 1,039 --------- --------- --------- --------- --------- --------- --------- EBITDA 1,864 1,794 1,724 1,659 1,631 1,519 1,473 Depreciation 727 650 625 658 632 611 638 Goodwill and intangibles amortization 317 317 317 317 317 317 317 --------- --------- --------- --------- --------- --------- --------- Earnings from operations 820 827 782 684 682 591 518 Interest expense and other, net 319 259 253 243 230 222 189 --------- --------- --------- --------- --------- --------- --------- Earnings before income taxes 501 568 529 441 452 369 329 Income tax expense 270 313 290 253 257 225 208 --------- --------- --------- --------- --------- --------- --------- Net earnings $231 $255 $239 $188 $195 $144 $121 ========= ========= ========= ========= ========= ========= ========= Diluted earnings per share $0.14 $0.15 $0.14 $0.11 $0.12 $0.09 $0.07 ========= ========= ========= ========= ========= ========= ========= Diluted cash earnings per share (2) $0.30 $0.32 $0.31 $0.28 $0.29 $0.26 $0.25 ========= ========= ========= ========= ========= ========= ========= Diluted weighted average shares outstanding 1,695 1,684 1,679 1,670 1,658 1,636 1,616 ========= ========= ========= ========= ========= ========= =========
(1) The consolidated pro forma statements give retroactive effect as though the acquisition of U S WEST, Inc. by Qwest Communications International Inc. (the "Merger") had occurred as of the beginning of the periods presented. Shares outstanding and earnings per share have been restated to give retroactive effect to the exchange ratio effected in the Merger. In addition, results have been adjusted to eliminate the impacts of non-recurring items, such as merger costs, asset write-offs and impairments, gains/losses on the sale of investments and fixed assets, change in the market value of investments, one-time litigation charges, elimination of in-region long-distance activity and elimination of Qwest construction activity. The results have also been adjusted to reflect the change in accounting principle to recognize revenue and expenses for directory publishing under the "point of publication method" from the "amortization method" as if the change in accounting principle had been adopted as of January 1, 1999. The Merger has been accounted for as a purchase transaction. The purchase price allocation is preliminary and is subject to change. Accordingly, net earnings and earnings per share are subject to change. Certain reclassifications have been made to prior periods to conform to the current presentation. (2) Diluted cash earnings per share represent diluted earnings per share adjusted to add back the after- tax amortization of goodwill and other intangible assets resulting from the Merger. -----END PRIVACY-ENHANCED MESSAGE-----