10-Q

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                        to

Commission File No. 001-15577

QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	84-1339282 (I.R.S. Employer Identification No.)
100 CenturyLink Drive, Monroe, Louisiana (Address of principal executive offices)	71203 (Zip Code)

(318) 388-9000
(Registrant's telephone number, including area code)

         THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF CENTURYLINK, INC., MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT.

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý    No o

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer ý
(Do not check if a smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes o    No ý

         On August 14, 2012, there were 1,000 shares of common stock outstanding.

TABLE OF CONTENTS

Part I.	Financial Information:
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	3
	Consolidated Balance Sheets (Unaudited)	4
	Consolidated Statements of Cash Flows (Unaudited)	5
	Consolidated Statements of Stockholder's Equity (Deficit) (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)*	7-29
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30-46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	46
Part II.	Other Information:
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	47-58
Item 6.	Exhibits	59
Signature		63

*

All references to "Notes" in this quarterly report refer to these Notes to Consolidated Financial Statements.

1

PART I—FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
OPERATING REVENUES
Operating revenues	$	2,736			5,461			2,763			2,846
Operating revenues—affiliates		100			214			6			—
Total operating revenues		2,836			5,675			2,769			2,846
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)		1,213			2,388			1,141			1,178
Selling, general and administrative		444			928			656			556
Operating expenses—affiliates		150			299			32			—
Depreciation and amortization		738			1,479			802			533
Total operating expenses		2,545			5,094			2,631			2,267
OPERATING INCOME		291			581			138			579
OTHER INCOME (EXPENSE)
Interest expense		(154	)		(324	)		(150	)		(227	)
Interest expense—affiliates		(30	)		(34	)		—			—
Net loss on early retirement of debt		(45	)		(37	)		(1	)		—
Other income		2			3			—			5
Total other income (expense)		(227	)		(392	)		(151	)		(222	)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE		64			189			(13	)		357
Income tax expense		27			75			—			146
NET INCOME (LOSS)	$	37			114			(13	)		211

See accompanying notes to consolidated financial statements.

2

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	Successor							Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
NET INCOME (LOSS)	$	37		114		(13	)		211
OTHER COMPREHENSIVE INCOME:
Defined benefit pension and post-retirement plans, net of $—, $—, $— and $4 tax		—		—		—			7
COMPREHENSIVE INCOME (LOSS)	$	37		114		(13	)		218

See accompanying notes to consolidated financial statements.

3

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	Successor
	June 30, 2012			December 31, 2011
	(Dollars in millions, except per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	41			48
Accounts receivable, less allowance of $77 and $62		1,220			1,201
Advances to affiliates		73			742
Deferred income taxes, net		553			559
Other		306			265
Total current assets		2,193			2,815
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment		11,030			10,679
Accumulated depreciation		(1,883	)		(1,218	)
Net property, plant and equipment		9,147			9,461
GOODWILL AND OTHER ASSETS
Goodwill		10,123			10,123
Customer relationships, net		6,300			6,788
Other intangible assets, net		1,422			1,587
Other		363			381
Total goodwill and other assets		18,208			18,879
TOTAL ASSETS	$	29,548			31,155
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	1,342			117
Accounts payable		736			973
Accounts payable—affiliates, net		—			394
Notes payable—affiliates		583			—
Dividends payable—CenturyLink, Inc.		750			200
Accrued expenses and other liabilities
Salaries and benefits		447			469
Income and other taxes		245			263
Interest		130			175
Other		143			104
Advance billings and customer deposits		411			400
Total current liabilities		4,787			3,095
LONG-TERM DEBT		9,436			12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124			3,198
Deferred income taxes, net		701			630
Other		698			777
Total deferred credits and other liabilities		4,523			4,605
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDER'S EQUITY
Common stock—$0.01 par value, 1,000 shares authorized, issued and owned by CenturyLink		—			—
Additional paid-in capital		12,273			12,273
Accumulated other comprehensive loss		(446	)		(446	)
Accumulated deficit		(1,025	)		(551	)
Total stockholder's equity		10,802			11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	29,548			31,155

See accompanying notes to consolidated financial statements.

4

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Successor						Predecessor
	Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
OPERATING ACTIVITIES
Net income (loss)	$	114			(13	)		211
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,479			802			533
Deferred income taxes		68			—			145
Provision for uncollectible accounts		53			21			19
Long-term debt (premium) discount amortization		(47	)		(66	)		6
Net loss on early retirement of debt		37			1			—
Changes in current assets and current liabilities:
Accounts receivable		(73	)		(15	)		61
Accounts payable		(76	)		(62	)		(71	)
Accounts receivable and payable—affiliates, net		(307	)		39			—
Accrued income and other taxes		(8	)		(61	)		31
Other current assets and other current liabilities, net		(27	)		30			(117	)
Changes in other noncurrent assets and liabilities		(139	)		21			(53	)
Other, net		4			3			12
Net cash provided by operating activities		1,078			700			777
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		(752	)		(347	)		(410	)
Changes in advances to affiliates		669			(511	)		—
Proceeds from sale of property		133			—			—
Other, net		—			2			2
Net cash provided by (used in) investing activities		50			(856	)		(408	)
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		897			643			—
Payments of long-term debt		(2,251	)		(851	)		(203	)
Early retirement of debt costs		(177	)		(13	)		—
Dividends paid		—			—			(141	)
Changes in notes payable—affiliates		583			—			—
Changes in accounts payable—affiliates		(187	)		—			—
Other, net		—			—			27
Net cash used in financing activities		(1,135	)		(221	)		(317	)
Net (decrease) increase in cash and cash equivalents		(7	)		(377	)		52
Cash and cash equivalents at beginning of period		48			424			372
Cash and cash equivalents at end of period	$	41			47			424

See accompanying notes to consolidated financial statements.

5

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (UNAUDITED)

	Successor						Predecessor
	Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
COMMON STOCK
Balance at beginning of period	$	—			—			18
Balance at end of period		—			—			18
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period		12,273			12,273			42,285
Share-based compensation and other, net		—			—			18
Balance at end of period		12,273			12,273			42,303
TREASURY STOCK
Balance at beginning of period		—			—			(157	)
Balance at end of period		—			—			(157	)
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period		(446	)		—			(376	)
Other comprehensive income		—			—			7
Balance at end of period		(446	)		—			(369	)
ACCUMULATED DEFICIT
Balance at beginning of period		(551	)		—			(43,425	)
Net income (loss)		114			(13	)		211
Dividends declared		—			—			(141	)
Dividends declared to CenturyLink, Inc.		(588	)		(28	)		—
Balance at end of period		(1,025	)		(41	)		(43,355	)
TOTAL STOCKHOLDER'S EQUITY (DEFICIT)	$	10,802			12,232			(1,560	)

See accompanying notes to consolidated financial statements.

6

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Unless the context requires otherwise, references in this report to "Qwest," "we," "us" and "our" refer to Qwest Communications International Inc. and its consolidated subsidiaries, references to "QCII" refer to Qwest Communications International Inc. on an unconsolidated, stand-alone basis and references to "CenturyLink" refer to our direct parent company, CenturyLink, Inc. and its consolidated subsidiaries.

(1) Basis of Presentation

        We are an integrated communications company engaged primarily in providing an array of communications services to our residential, business, governmental and wholesale customers. Our communications services include local and long-distance, network access, private line (including special access), broadband, data, managed hosting, wireless and video services. In certain local and regional markets, we also provide local access and fiber transport services to competitive local exchange carriers.

        We generate the majority of our revenues from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area.

        On April 1, 2011, we became a wholly owned subsidiary of CenturyLink, Inc. in a tax-free, stock-for-stock transaction. Although we have continued as a surviving corporation and legal entity since the acquisition, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and stockholder's equity (deficit) are presented for two periods: predecessor and successor, which relate to the period preceding the acquisition and the period succeeding the acquisition, respectively. On the date of the acquisition, April 1, 2011, our assets and liabilities were recognized at their fair value. This revaluation has been reflected in our financial statements and, therefore, has resulted in a new basis of accounting for the "successor period". This new basis of accounting means that our financial statements for the successor periods are not comparable to our financial statements relating to periods prior to the acquisition, including the predecessor period financial statements in this report.

        Our consolidated balance sheet as of the successor date of December 31, 2011, which was derived from our audited financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The results of operations for the first six months of the year are not indicative of the results of operations that might be expected for the entire year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.

        The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries over which we exercise control. All intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.

        We provide to our affiliates telecommunications services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services. We also purchase services from our affiliates including telecommunications services, marketing and employee-related support services. In the normal course of business, we transfer assets and liabilities to

7

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(1) Basis of Presentation (Continued)

and from CenturyLink and its affiliates based on their respective carrying values. We have recognized $38 million of non-cash dividends associated with asset transfers to CenturyLink during the successor six months ended June 30, 2012.

        Effective January 1, 2012, in connection with post-acquisition systems integration activities, we adopted the affiliate expense allocation methodology used by our parent. This methodology results in certain overhead costs incurred by us and by our parent that were previously assessed to us on a net basis now being assessed on a gross basis both to and from our parent, resulting in both higher affiliate revenues and expenses for us. We believe this change, resulting from systems integration activities, did not have a significant impact to our net income for the successor three and six months ended June 30, 2012.

        During the first quarter of 2012, in connection with post-acquisition systems integration activities, CenturyLink changed certain cash management processes applicable to us. Therefore, we now present the balances related to these cash management transactions on a net basis with our other affiliate transactions.

        Effective January 1, 2012, we changed our rates of capitalized labor as we transitioned certain legacy systems to the historical systems of our parent, CenturyLink. This transition resulted in an estimated $20 million to $30 million increase in the amount of labor capitalized as an asset compared to the amount that would have been capitalized if we had continued to use our legacy systems and a corresponding estimated $20 million to $30 million decrease in operating expenses for the successor six months ended June 30, 2012. This change is expected to result in an estimated operating expense reduction of approximately $30 million to $50 million for the successor year ending December 31, 2012. The reduction in expenses described above, net of tax, increased net income approximately $12 million to $18 million for the successor six months ended June 30, 2012 and is expected to increase net income by approximately $18 million to $30 million for the successor year ending December 31, 2012.

        Effective January 1, 2012, we changed our estimates of the economic lives of certain telecommunications equipment. These changes resulted in a decrease to depreciation expense of approximately $23 million and $46 million for the successor three and six months ended June 30, 2012, respectively, and are expected to result in decreased depreciation expense of approximately $92 million for the successor year ending December 31, 2012. This decrease in depreciation expense, net of tax, had the effect of increasing net income by approximately $15 million and $30 million for the successor three and six months ended June 30, 2012, respectively, and is expected to result in higher net income by approximately $60 million of the successor year ending December 31, 2012.

        On April 2, 2012, our subsidiary, Qwest Corporation ("QC"), sold an office building for net proceeds of $133 million. As part of the transaction, QC agreed to lease a portion of the building from the new owner. As a result, the $16 million gain from the sale was deferred and will be recognized as a reduction to rent expense over the 10 year lease term.

(2) Acquisition by CenturyLink

        On April 1, 2011, we became a wholly owned subsidiary of CenturyLink. Each share of our common stock outstanding immediately prior to the acquisition converted into the right to receive

8

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(2) Acquisition by CenturyLink (Continued)

0.1664 shares of CenturyLink common stock, with cash paid in lieu of fractional shares. The aggregate consideration of $12.273 billion was based on:

•

the 294 million shares of CenturyLink common stock issued to consummate the acquisition;

•

the closing stock price of CenturyLink common stock at March 31, 2011 of $41.55;

•

the estimated net value of the pre-combination portion of share-based compensation awards assumed by CenturyLink of $52 million (excluding the value of restricted stock included in the number of issued shares specified above); and

•

cash paid in lieu of the issuance of fractional shares of $5 million.

        Since April 1, 2011, our results of operations have been included in the consolidated results of operations of CenturyLink. CenturyLink has accounted for its acquisition of us under the acquisition method of accounting, which resulted in the assignment of the purchase price to the assets acquired and liabilities assumed based on their acquisition date fair values. In the first quarter of 2012, we completed our valuation of the assets acquired and liabilities assumed, along with the related allocations to goodwill and intangible assets.

        The aggregate consideration exceeded the aggregate estimated fair value of the assets acquired and liabilities assumed by $10.123 billion, which we have recognized as goodwill. This goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect to realize. None of the goodwill associated with this acquisition is deductible for income tax purposes.

        The following is our assignment of the aggregate consideration:

	April 1, 2011
	(Dollars in millions)
Cash, accounts receivable and other current assets*	$	2,121
Property, plant and equipment		9,529
Identifiable intangible assets:
Customer relationships		7,558
Capitalized software		1,702
Other		189
Other noncurrent assets		390
Current liabilities, excluding current maturities of long-term debt		(2,463	)
Current maturities of long-term debt		(2,422	)
Long-term debt		(10,253	)
Deferred credits and other liabilities		(4,201	)
Goodwill		10,123
Aggregate consideration	$	12,273

*

Includes estimated fair value of $1.194 billion for accounts receivable which had gross contractual value of $1.274 billion on April 1, 2011. The $80 million difference between the gross contractual value and the estimated fair value assigned represents our best estimate as of April 1, 2011 of contractual cash flows that would not be collected.

9

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(2) Acquisition by CenturyLink (Continued)

        During the first quarter of 2012, we retrospectively adjusted our previously reported preliminary assignment of the aggregate Qwest consideration for changes to our original estimates of the fair value of certain items at the acquisition date. These changes are the result of additional information obtained since the filing of our Form 10-K for the year ended December 31, 2011. Due to these revisions of our estimates, (i) identifiable intangible assets decreased due to a $67 million decrease in our customer relationships valuation, (ii) property, plant and equipment decreased by $25 million primarily from a revision to our valuation of our buildings, (iii) deferred credits and other liabilities decreased by $100 million primarily from a revision to one of our lease valuations and changes in tax liabilities, and (iv) current liabilities, excluding current maturities of long-term debt, increased by $35 million due to an addition to our accounts payable-affiliates, net to account for the difference in tax rates between CenturyLink and us at the acquisition date. Among other minor revisions, goodwill increased by $17 million as an offset to the above-mentioned changes. The depreciation and amortization expense impact of the adjustments to intangible assets and property, plant and equipment valuations did not result in a material change to previously-reported amounts.

Acquisition-Related Expenses

        We have incurred operating expenses related to CenturyLink's acquisition of us, which consist primarily of integration and severance expenses. The table below summarizes our acquisition-related expenses:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Acquisition-related expenses	$	3		29		127		3

(3) Goodwill, Customer Relationships and Other Intangible Assets

        Our goodwill, customer relationships and other intangible assets consisted of the following:

	Successor
	June 30, 2012		December 31, 2011
	(Dollars in millions)
Goodwill	$	10,123		10,123
Customer relationships, less accumulated amortization of $1,258 and $770	$	6,300		6,788
Other intangible assets subject to amortization
Capitalized software, less accumulated amortization of $556 and $354		1,329		1,460
Tradenames and patents, less accumulated amortization of $96 and $61		93		127
Total other intangible assets, net	$	1,422		1,587

10

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(3) Goodwill, Customer Relationships and Other Intangible Assets (Continued)

        We amortize customer relationships over estimated lives of 10 years, using either the sum-of-the-years-digits or straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to seven years and amortize our other intangible assets predominantly using the sum-of-the-years digits method over an estimated life of four years.

        The table below summarizes our amortization expense:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Amortization expense	$	364		727		399		58

(4) Long-Term Debt

        Long-term debt, including unamortized discounts and premiums, is as follows:

			Successor
	Interest Rates	Maturities	June 30, 2012			December 31, 2011
			(Dollars in millions)
Qwest Communications International Inc.
Senior notes	7.125% - 8.000%	2015 - 2018	$	1,350			2,650
Unamortized premiums				94			117
Qwest Capital Funding
Senior notes	6.500% - 7.750%	2018 - 2031		981			981
Unamortized premiums, net				27			28
Qwest Corporation
Senior notes(1)	6.500% - 8.375%	2013 - 2052		7,870			7,829
Capital lease and other obligations	Various	Various		137			176
Unamortized premiums, net				156			320
Qwest Communications Company, LLC
Capital lease and other obligations	Various	Various		163			195
Total long-term debt				10,778			12,296
Less current maturities				(1,342	)		(117	)
Long-term debt, excluding current maturities			$	9,436			12,179

(1)

The $750 million of Qwest Corporation Notes due 2013 are floating rate notes, with rates that reset every three months. As of the most recent measurement date of June 15, 2012, the rate for these notes was 3.718%, which is not included in the range of rates stated above.

11

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(4) Long-Term Debt (Continued)

New Issuances

        On June 25, 2012, QC issued $400 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $387 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after July 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        On April 2, 2012, QC issued $525 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $508 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after April 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        In connection with consummating the April 18, 2012 tender offer described below under "Repayments", QC borrowed from a CenturyLink affiliate approximately $583 million under a revolving promissory note, payable upon demand. The promissory note is unsecured and is pari passu to QC's Senior Notes.

Repayments

        On May 17, 2012, QCII redeemed $500 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

        On April 18, 2012, QC completed a cash tender offer to purchase a portion of its $811 million of 8.375% Notes due 2016 and its $400 million of 7.625% Notes due 2015. With respect to its 8.375% Notes due 2016, QC received and accepted tenders of approximately $575 million aggregate principal amount of these notes, or 71%, for $722 million including a premium, fees and accrued interest. With respect to its 7.625% Notes due 2015, QC received and accepted tenders of approximately $308 million aggregate principal amount of these notes, or 77%, for $369 million including a premium, fees and accrued interest. The completion of this tender offer resulted in a loss of $46 million.

        On March 1, 2012, QCII redeemed $800 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

Covenants

        As of the successor date of June 30, 2012, we believe we were in compliance with the provisions and covenants of our debt agreements.

Subsequent Event

        On July 20, 2012, QC redeemed all $484 million of its 7.5% Notes due 2023, which resulted in an immaterial loss.

(5) Severance and Leased Real Estate

        Periodically, we have implemented reductions in our workforce and have accrued liabilities for related severance costs. These workforce reductions resulted primarily from our integration plans related to CenturyLink's acquisition of us, increased competitive pressures and reduced workload demands due to the loss of access lines.

12

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(5) Severance and Leased Real Estate (Continued)

        We report severance liabilities within "accrued expenses and other liabilities—salaries and benefits" in our consolidated balance sheets and report severance expenses in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations.

        In periods prior to CenturyLink's acquisition of us, we had ceased using certain real estate that we were leasing under long-term operating leases. As of the April 1, 2011 acquisition date, we recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate for which we had ceased using, net of estimated sublease rentals. Our fair value estimates were determined using discounted cash flow methods. We recognize expense to reflect accretion of the discounted liabilities and periodically, we adjust the expense when our actual experience differs from our initial estimates. We report the current portion of liabilities for ceased-use real estate leases in "accrued expenses and other liabilities—other" and report the noncurrent portion in "deferred credits and other liabilities—other" in our consolidated balance sheets. We report the related expenses in "selling, general and administrative expenses" in our consolidated statements of operations.

        As of the successor dates of June 30, 2012 and December 31, 2011, the current portion of our leased real estate accrual was $32 million and $27 million, respectively, and the noncurrent portion was $115 million and $126 million, respectively. The remaining lease terms range from 0.1 years to 13.5 years, with a weighted average of 9.1 years.

        Changes in our accrued liabilities for severance expenses and leased real estate were as follows:

	Severance			Real Estate
	(Dollars in millions)
Balance at December 31, 2011 (Successor)	$	29			153
Accrued to expense		45			1
Payments, net		(22	)		(4	)
Reversals and adjustments		(3	)		—
Balance at March 31, 2012 (Successor)		49			150
Accrued to expense		13			2
Payments, net		(42	)		(5	)
Reversals and adjustments		—			—
Balance at June 30, 2012 (Successor)	$	20			147

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(6) Employee Benefits

        Net periodic pension (income) expense included the following components:

	Pension Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	15			29			13			14
Interest cost		97			196			108			104
Expected return on plan assets		(144	)		(288	)		(139	)		(133	)
Recognition of prior service cost		—			—			—			(6	)
Recognition of net actuarial loss		—			—			—			31
Net periodic pension (income) expense	$	(32	)		(63	)		(18	)		10

        Net periodic post-retirement benefit expense included the following components:

	Post-Retirement Benefit Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	2			4			1			2
Interest cost		37			73			41			41
Expected return on plan assets		(10	)		(21	)		(12	)		(13	)
Recognition of prior service cost		—			—			—			(24	)
Recognition of net actuarial loss		—			—			—			10
Net periodic post-retirement benefit expense	$	29			56			30			16

        We report net periodic pension (income) expense and net periodic post-retirement benefit expense in cost of services and products and selling, general and administrative expenses on our consolidated statements of operations.

(7) Fair Value Disclosure

        Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts receivable—affiliates, advances to affiliates, accounts payable, accounts payable—affiliates and long-term debt, excluding capital lease obligations. The carrying amounts of our cash and cash

14

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(7) Fair Value Disclosure (Continued)

equivalents, accounts receivable, accounts receivable—affiliates, advances to affiliates, accounts payable and accounts payable—affiliates approximate their fair values.

        Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used.

        We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on discounted future cash flows using current market interest rates.

        The three input levels in the hierarchy of fair value measurements are defined by the Financial Accounting Standards Board generally as follows:

Input Level		Description of Input
	Level 1	Observable inputs such as quoted market prices in active markets.
	Level 2	Inputs other than quoted prices in active markets that are either directly or indirectly observable.
	Level 3	Unobservable inputs in which little or no market data exists.

        The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease obligations, as well as the input levels used to determine the fair values:

			Successor
			June 30, 2012				December 31, 2011
	Input Level		Carrying Amount		Fair Value		Carrying Amount		Fair Value
			(Dollars in millions)
Liabilities—Long-term debt excluding capital lease obligations		2	$	10,478		10,772		11,925		12,052

(8) Products and Services Revenues

        We are an integrated communications company engaged primarily in providing an array of communications services, including local and long-distance, network access, private line (including special access), broadband, Ethernet, data, managed hosting, wireless and video services. We strive to maintain our customer relationships by, among other things, bundling our service offerings to provide our customers with a complete offering of integrated communications services. We categorize our products and services into the following four categories:

•

Strategic services, which include primarily private line (including special access), broadband, Multi-Protocol Label Switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), Ethernet, hosting, video (including resold satellite video services), voice over Internet Protocol ("VoIP") and Verizon Wireless services;

15

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(8) Products and Services Revenues (Continued)

•

Legacy services, which include primarily local, long-distance, integrated services digital network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), switched access and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);

•

Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customers; and

•

Affiliates and other services, which consist primarily of universal service funds ("USF") revenues and surcharges and services we provide to our affiliates. We provide to our affiliates telecommunications services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services and network support and technical services.

        During the first quarter of 2012, we reclassified certain prior period revenues between the aforementioned four categories to conform to the current period presentation.

        Since the April 1, 2011 closing of CenturyLink's acquisition of us, our operations have been integrated into and reported as part of the segments of CenturyLink. CenturyLink's chief operating decision maker ("CODM") has become our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we now have one reportable segment and have reclassified our prior period results to conform to our current view.

        Operating revenues for our products and services are summarized below:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Strategic services	$	1,235		2,457		1,194		1,200
Legacy services		1,227		2,484		1,333		1,400
Data integration		140		256		118		123
Affiliates and other services		234		478		124		123
Total operating revenues	$	2,836		5,675		2,769		2,846

        Affiliates and other services revenues include revenues from universal service funds which allow us to recover a portion of our costs under federal and state cost recovery mechanisms and certain surcharges to our customers, including billings for our required contributions to several USF programs. These surcharge billings to our customers are reflected on a gross basis in our statements of operations (included in both operating revenues and expenses). Because the amount of these recorded revenues and expenses offset each other, these surcharges do not impact our net income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(8) Products and Services Revenues (Continued)

        The table below presents the aggregate USF surcharges recognized on a gross basis:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
USF and surcharges included in operating revenues and expenses	$	103		203		92		96

(9) Commitments and Contingencies

        CenturyLink is involved in several legal proceedings to which we are not a party that, if resolved against CenturyLink, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of CenturyLink, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in CenturyLink's quarterly and annual reports filed with the SEC. Because we are not a party to the matters, we have not accrued any liabilities for such matters.

        In this section, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. Until and unless a class has been certified by the court, it has not been established that the named plaintiffs represent the class of plaintiffs they purport to represent.

        We have established accrued liabilities for the matters described below where losses are deemed probable and reasonably estimable.

        The terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law may obligate us to indemnify our former directors, officers or employees with respect to certain of the matters described below, and we have been advancing legal fees and costs to certain former directors, officers or employees in connection with certain matters described below.

KPNQwest Litigation/Investigation

        On September 29, 2010, the trustees in the Dutch bankruptcy proceeding for KPNQwest, N.V. (of which we were a major shareholder) filed a lawsuit in the District Court of Haarlem, the Netherlands, alleging tort and mismanagement claims under Dutch law. We and Koninklijke KPN N.V. ("KPN") are defendants in this lawsuit along with a number of former KPNQwest supervisory board members and a former officer of KPNQwest, some of whom were formerly affiliated with us. Plaintiffs allege, among other things, that defendants' actions were a cause of the bankruptcy of KPNQwest, and they seek damages for the bankruptcy deficit of KPNQwest, which is claimed to be approximately €4.2 billion (or approximately $5.3 billion based on the exchange rate on June 30, 2012), plus statutory interest. Two lawsuits asserting similar claims were previously filed against Qwest and others in federal courts in New Jersey in 2004 and Colorado in 2009; those courts dismissed the lawsuits without prejudice on the grounds that the claims should not be litigated in the United States.

        On September 13, 2006, Cargill Financial Markets, Plc and Citibank, N.A. filed a lawsuit in the District Court of Amsterdam, the Netherlands, against us, KPN, KPN Telecom B.V., and other former officers, employees or supervisory board members of KPNQwest, some of whom were formerly affiliated with us. The lawsuit alleges that defendants misrepresented KPNQwest's financial and

17

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(9) Commitments and Contingencies (Continued)

business condition in connection with the origination of a credit facility and wrongfully allowed KPNQwest to borrow funds under that facility. Plaintiffs allege damages of approximately €219 million (or approximately $275 million based on the exchange rate on June 30, 2012). On April 25, 2012, the court issued its judgment denying the claims asserted by Cargill and Citibank in their lawsuit. Cargill and Citibank are appealing that decision.

        We have not accrued a liability for the above matters. With regard to the trustees' action, it is premature to determine whether an accrual is warranted and, if so, a reasonable estimate of probable liability. We will continue to defend against the pending KPNQwest litigation matters vigorously.

Other Matters

        Several putative class actions relating to the installation of fiber-optic cable in certain rights-of-way were filed against Qwest on behalf of landowners on various dates and in various courts in Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana (in both Illinois and Indiana there is a federal and a state court case), Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. For the most part, the complaints challenge our right to install our fiber-optic cable in railroad rights-of-way. The complaints allege that the railroads own the right-of-way as an easement that did not include the right to permit us to install our fiber-optic cable in the right-of-way without the Plaintiffs' consent. Most of the actions purport to be brought on behalf of state-wide classes in the named Plaintiffs' respective states, although two of the currently pending actions purport to be brought on behalf of multi-state classes. Specifically, the Illinois state court action purports to be on behalf of landowners in Illinois, Iowa, Kentucky, Michigan, Minnesota, Nebraska, Ohio and Wisconsin, and the Indiana state court action purports to be on behalf of a national class of landowners. In general, the complaints seek damages on theories of trespass and unjust enrichment, as well as punitive damages. On July 18, 2008, a federal district court in Massachusetts entered an order preliminarily approving a settlement that would have resolved all of the claims now asserted in the actions described above, except the action pending in Tennessee. On December 9, 2009, the court denied final approval of the settlement on grounds that it lacked subject matter jurisdiction. The parties are now engaged in negotiating and finalizing settlements on a state-by-state basis, and have filed and received final approval of settlements in Alabama and Illinois federal court, and in Tennessee state court. Final approval also has been granted in federal court actions in Idaho, Montana and North Dakota, to which Qwest is not a party. We have accrued an amount that we believe is probable for these matters; however, the amount is not material to our financial statements.

Other

        From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to rate making, actions relating to employee claims, various tax issues, environmental law issues, occasional grievance hearings before labor regulatory agencies and miscellaneous third party tort actions. The outcome of these other proceedings is not predictable. However, we do not believe that the ultimate resolution of these other proceedings, after considering available insurance coverage, will have a material adverse effect on our financial position, results of operations or cash flows.

18

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(9) Commitments and Contingencies (Continued)

        On April 6, 2012, CenturyLink, Inc. increased the available borrowing capacity under its credit facility from $1.7 billion to $2.0 billion and extended the maturity to April 2017. Also, on April 18, 2012, CenturyLink, Inc. entered into a term loan in the amount of $440 million. Both of these obligations have been guaranteed by QCII and its wholly-owned subsidiary, Qwest Services Corporation ("QSC").

(10) Labor Union Contracts

        Over 50% of our employees are members of bargaining units represented by the Communications Workers of America and the International Brotherhood of Electrical Workers. Our current four-year collective bargaining agreements expire October 6, 2012.

(11) Dividends

        Effective June 30, 2012, our board of directors declared a dividend to our parent of $550 million. This dividend has been reflected on our balance sheet in "Dividends payable—CenturyLink, Inc."

(12) Financial Statements of Guarantors

        QCII and two of its subsidiaries, Qwest Capital Funding, Inc ("QCF") and QSC, guarantee the payment of certain of each other's registered debt securities. As of the successor date of June 30, 2012, each series of QCII's outstanding notes totaling approximately $1.4 billion in aggregate principal amount is guaranteed on a senior unsecured basis by QCF and QSC (the "QCII Guaranteed Notes"). These notes are guaranteed through their respective maturity dates, the latest of which is in April 2018. In addition, each series of QCF's outstanding notes totaling approximately $1 billion in aggregate principal amount is guaranteed on a senior unsecured basis by QCII (the "QCF Guaranteed Notes"). These notes are guaranteed through their respective maturity dates, the latest of which is in February 2031. The guarantees described above are full and unconditional and joint and several. A significant amount of QCII's and QSC's income and cash flow are generated by their subsidiaries. As a result, the funds necessary to meet their debt service or guarantee obligations are provided in large part by distributions or advances from their subsidiaries.

        The following information sets forth our condensed consolidating statements of operations, balance sheets and statements of cash flows for the periods indicated. The information for QCII is presented on a stand-alone basis, information for QSC and QCF is presented on a combined basis and information for all of our other non-guarantor subsidiaries is presented on a combined basis. Each entity's investments in its subsidiaries, if any, are presented under the equity method. The consolidating statements of operations and balance sheets include the effects of consolidating adjustments to our subsidiaries' tax provisions and the related income tax assets and liabilities in the QSC and QCII results. Both QSC and QCF are 100% owned by QCII, and QCF is a finance subsidiary of QCII. Other than as already described in this note, the accounting principles used to determine the amounts reported in this note are the same as those used in our consolidated financial statements.

        CenturyLink periodically restructures the internal capital structure of its subsidiaries, including QCII and its subsidiaries, based on the needs of its business.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Continued)

(12) Financial Statements of Guarantors (Continued)

Allocations among Affiliates

        We allocate the costs of shared services among our affiliates. These services include marketing and advertising, information technology, product and technical services as well as general support services. The allocation of these costs is based on estimated market values or fully distributed cost ("FDC"). Most of our affiliate services are priced by applying an FDC methodology. FDC rates are determined using salary rates, which include payroll taxes, employee benefits, facilities and overhead costs. Whenever possible, costs are directly assigned to the affiliate that uses the service. If costs cannot be directly assigned, they are allocated among all affiliates based on cost usage measures; or if no cost usage measure is available, these costs are allocated based on a general allocator. From time to time, we adjust the basis for allocating the costs of a shared service among our affiliates. Such changes in allocation methodologies are generally billed prospectively.

        Under our tax allocation policy, we treat our subsidiaries as if they were separate taxpayers. The policy requires that each subsidiary pay its tax liabilities in cash based on that subsidiary's separate return taxable income. To the extent a subsidiary has taxable losses, the subsidiary does not pay any amount and therefore retains the benefit of the losses. Subsidiaries are also included in the combined state tax returns we file and the same payment and allocation policy applies.

        Eligible employees of our subsidiaries participate in the QCII pension and non-qualified pension plan and may become eligible to participate in the post-retirement health care and life insurance, and other post-employment benefit plans sponsored by CenturyLink. The amounts contributed by our subsidiaries are not segregated or restricted to pay amounts due to their employees and may be used to provide benefits to our other employees or employees of other subsidiaries. We allocate the cost of pension, non-qualified pension, post-retirement health care and life insurance benefits and the associated obligations and assets to our subsidiaries and determine the subsidiaries' required contributions. The allocation is based upon demographics of each subsidiary's employees compared to all participants. In determining the allocated amounts, we make numerous assumptions. Changes in any of our assumptions could have a material impact on the expense allocated to our subsidiaries.

        During the first quarter of 2012, in connection with post-acquisition systems integration activities, CenturyLink changed certain cash management processes applicable to us. Therefore, we now present the balances related to these cash management transactions on a net basis with our other affiliate transactions.

20

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,736			—			2,736
Operating revenues—affiliates		—			1			100			(1	)		100
Total operating revenues		—			1			2,836			(1	)		2,836
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,213			—			1,213
Selling, general and administrative		1			1			442			—			444
Operating expenses—affiliates		—			—			151			(1	)		150
Depreciation and amortization		16			—			722			—			738
Total operating expenses		17			1			2,528			(1	)		2,545
OPERATING (LOSS) INCOME		(17	)		—			308			—			291
OTHER INCOME (EXPENSE)
Interest expense		(25	)		(16	)		(113	)		—			(154	)
Interest expense—affiliates		(21	)		(28	)		(8	)		27			(30	)
Interest income—affiliates		—			27			—			(27	)		—
Income from equity investments in subsidiaries		91			15			—			(106	)		—
Net loss on early retirement of debt		—			—			(45	)		—			(45	)
Other income (expense)		5			—			(3	)		—			2
Total other income (expense)		50			(2	)		(169	)		(106	)		(227	)
INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE		33			(2	)		139			(106	)		64
Income tax (benefit) expense		(4	)		(93	)		124			—			27
NET INCOME	$	37			91			15			(106	)		37
COMPREHENSIVE INCOME	$	37			91			15			(106	)		37

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

21

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			5,461			—			5,461
Operating revenues—affiliates		—			3			214			(3	)		214
Total operating revenues		—			3			5,675			(3	)		5,675
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			2,388			—			2,388
Selling, general and administrative		3			3			922			—			928
Operating expenses—affiliates		—			—			302			(3	)		299
Depreciation and amortization		34			—			1,445			—			1,479
Total operating expenses		37			3			5,057			(3	)		5,094
OPERATING (LOSS) INCOME		(37	)		—			618			—			581
OTHER INCOME (EXPENSE)
Interest expense		(64	)		(34	)		(226	)		—			(324	)
Interest expense—affiliates		(22	)		(54	)		(11	)		53			(34	)
Interest income—affiliates		—			53			—			(53	)		—
Income from equity investments in subsidiaries		217			60			—			(277	)		—
Net loss on early retirement of debt		—			—			(37	)		—			(37	)
Other income (expense)		13			—			(10	)		—			3
Total other income (expense)		144			25			(284	)		(277	)		(392	)
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		107			25			334			(277	)		189
Income tax (benefit) expense		(7	)		(192	)		274			—			75
NET INCOME	$	114			217			60			(277	)		114
COMPREHENSIVE INCOME	$	114			217			60			(277	)		114

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

22

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,763			—			2,763
Operating revenues—affiliates		—			3			15			(12	)		6
Total operating revenues		—			3			2,778			(12	)		2,769
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,141			—			1,141
Selling, general and administrative		5			3			648			—			656
Operating expenses—affiliates		—			—			44			(12	)		32
Depreciation and amortization		22			—			780			—			802
Total operating expenses		27			3			2,613			(12	)		2,631
OPERATING (LOSS) INCOME		(27	)		—			165			—			138
OTHER INCOME (EXPENSE)
Interest expense		(44	)		(18	)		(88	)		—			(150	)
Interest expense—affiliates		(4	)		(23	)		1			26			—
Interest income—affiliates		—			26			—			(26	)		—
Income from equity investments in subsidiaries		67			(52	)		—			(15	)		—
Net loss on early retirement of debt		—			—			(1	)		—			(1	)
Total other income (expense)		19			(67	)		(88	)		(15	)		(151	)
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		(8	)		(67	)		77			(15	)		(13	)
Income tax (benefit) expense		5			(131	)		126			—			—
NET (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)
COMPREHENSIVE (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

23

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,846			—			2,846
Operating revenues—affiliates		—			2			9			(11	)		—
Total operating revenues		—			2			2,855			(11	)		2,846
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,178			—			1,178
Selling, general and administrative		3			2			551			—			556
Operating expenses—affiliates		—			—			11			(11	)		—
Depreciation and amortization		—			—			533			—			533
Total operating expenses		3			2			2,273			(11	)		2,267
OPERATING (LOSS) INCOME		(3	)		—			582			—			579
OTHER INCOME (EXPENSE)
Interest expense		(56	)		(19	)		(152	)		—			(227	)
Interest expense—affiliates		(1	)		(26	)		(1	)		28			—
Interest income—affiliates		—			28			—			(28	)		—
Income from equity investments in subsidiaries		272			226			—			(498	)		—
Other income (expense)		—			(1	)		6			—			5
Total other income (expense)		215			208			(147	)		(498	)		(222	)
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)		212			208			435			(498	)		357
Income tax expense (benefit)		1			(64	)		209			—			146
NET INCOME	$	211			272			226			(498	)		211
COMPREHENSIVE INCOME	$	218			272			226			(498	)		218

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

24

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		27		14		—			41
Accounts receivable, less allowance		43		—		1,177		—			1,220
Accounts receivable—affiliates, net		—		1,109		1,208		(2,244	)		73
Notes receivable—affiliates		—		1,413		—		(1,413	)		—
Deferred income taxes, net		—		430		123		—			553
Other		23		—		283		—			306
Total current assets		66		2,979		2,805		(3,657	)		2,193
Net property, plant and equipment		—		—		9,147		—			9,147
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,300		—			6,300
Other intangible assets, net		92		—		1,330		—			1,422
Investments in subsidiaries		14,284		13,788		—		(28,072	)		—
Deferred income taxes, net		1,102		1,029		—		(2,131	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,777		76		957		(3,810	)		—
Other		40		7		316		—			363
TOTAL ASSETS	$	18,361		17,879		30,978		(37,670	)		29,548
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		1,342		—			1,342
Accounts payable		—		1		735		—			736
Accounts payable—affiliates, net		794		—		—		(794	)		—
Notes payable—affiliates		—		1,413		583		(1,413	)		583
Dividends payable—affiliates		750		750		700		(1,450	)		750
Accrued expenses and other liabilities		246		40		679		—			965
Advance billings and customers deposits		—		—		411		—			411
Total current liabilities		1,790		2,204		4,450		(3,657	)		4,787
LONG-TERM DEBT		1,444		1,008		6,984		—			9,436
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124		—		—		—			3,124
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,033		351		2,426		(3,810	)		—
Deferred income taxes, net		—		—		2,832		(2,131	)		701
Other		168		32		498		—			698
Total deferred credits and other liabilities		4,325		383		5,756		(5,941	)		4,523
STOCKHOLDER'S EQUITY		10,802		14,284		13,788		(28,072	)		10,802
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	18,361		17,879		30,978		(37,670	)		29,548

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

25

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		40		8		—			48
Accounts receivable, less allowance		15		2		1,184		—			1,201
Accounts receivable—affiliates, net		211		336		36		(583	)		—
Advances to affiliates		184		1,694		400		(1,536	)		742
Deferred income taxes, net		—		438		121		—			559
Other		—		19		259		(13	)		265
Total current assets		410		2,529		2,008		(2,132	)		2,815
Net property, plant and equipment		—		—		9,461		—			9,461
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,788		—			6,788
Other intangible assets, net		126		—		1,461		—			1,587
Investments in subsidiaries		14,856		13,999		—		(28,855	)		—
Deferred income taxes, net		1,102		1,390		117		(2,609	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,851		76		955		(3,882	)		—
Other		36		7		338		—			381
TOTAL ASSETS	$	19,381		18,001		31,251		(37,478	)		31,155
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		117		—			117
Current debt—affiliates		122		1,413		—		(1,535	)		—
Accounts payable		4		19		950		—			973
Accounts payable—affiliates, net		360		42		23		(31	)		394
Dividends payable—affiliates		200		—		310		(310	)		200
Accrued expenses and other liabilities		272		40		700		(1	)		1,011
Accrued expenses and other—affiliates		1		62		192		(255	)		—
Advance billings and customers deposits		—		—		400		—			400
Total current liabilities		959		1,576		2,692		(2,132	)		3,095
LONG-TERM DEBT		2,767		1,009		8,403		—			12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,198		—		—		—			3,198
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,031		344		2,507		(3,882	)		—
Deferred income taxes, net		—		223		3,016		(2,609	)		630
Other		150		31		596		—			777
Total deferred credits and other liabilities		4,379		598		6,119		(6,491	)		4,605
STOCKHOLDER'S EQUITY		11,276		14,818		14,037		(28,855	)		11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	19,381		18,001		31,251		(37,478	)		31,155

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

26

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash (used in) provided by operating activities	$	(415	)		(141	)		1,647			(13	)		1,078
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(752	)		—			(752	)
Changes in advances to affiliates		184			128			(1,422	)		1,779			669
Proceeds from sale of property		—			—			133			—			133
Net cash provided by (used in) investing activities		184			128			(2,041	)		1,779			50
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		—			—			897			—			897
Payments of long-term debt		(1,299	)		—			(952	)		—			(2,251	)
Early retirement of debt costs		(49	)		—			(128	)		—			(177	)
Notes payable—affiliates		—			—			583			—			583
Accounts Payable—affiliates		1,579			—			—			(1,766	)		(187	)
Net cash used in financing activities		231			—			400			(1,766	)		(1,135	)
Net (decrease) increase in cash and cash equivalents		—			(13	)		6			—			(7	)
Cash and cash equivalents at beginning of period		—			40			8			—			48
Cash and cash equivalents at end of the period	$	—			27			14			—			41

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

27

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	(76	)		213			563			—			700
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(347	)		—			(347	)
Cash infusion to subsidiaries		—			(168	)		—			168			—
Changes in advances to affiliates		—			(243	)		(272	)		4			(511	)
Dividends received from subsidiaries		—			120			—			(120	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			(291	)		(617	)		52			(856	)
FINANCING ACTIVITIES
Payments of long-term debt		—			—			(851	)		—			(851	)
Net proceeds from (repayments of) short-term affiliate debt		76			(72	)		—			(4	)		—
Net proceeds from issuance of long-term debt		—			—			643			—			643
Cash infusion from parent		—			—			168			(168	)		—
Dividends paid to parent		—			—			(120	)		120			—
Early retirement of debt costs		—			—			(13	)		—			(13	)
Net cash used in financing activities		76			(72	)		(173	)		(52	)		(221	)
Net increase in cash and cash equivalents		—			(150	)		(227	)		—			(377	)
Cash and cash equivalents at beginning of period		—			183			241			—			424
Cash and cash equivalents at end of the period	$	—			33			14			—			47

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

28

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	7			(62	)		828			4			777
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(410	)		—			(410	)
Changes in interest in investments managed by QSC		—			(3	)		3			—			—
Cash infusion to subsidiaries		—			(191	)		—			191			—
Changes in advances to affiliates		—			180			1			(181	)		—
Dividends received from subsidiaries		—			590			—			(590	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			576			(404	)		(580	)		(408	)
FINANCING ACTIVITIES
Payments of long-term debt		—			(179	)		(24	)		—			(203	)
Net proceeds from (repayments of) short-term affiliate debt		119			(300	)		—			181			—
Dividends paid		(141	)		—			—			—			(141	)
Cash infusion from parent		—			—			191			(191	)		—
Dividends paid to parent		—			—			(590	)		590			—
Other, net		15			—			16			(4	)		27
Net cash used in financing activities		(7	)		(479	)		(407	)		576			(317	)
Net increase in cash and cash equivalents		—			35			17			—			52
Cash and cash equivalents at beginning of period		—			148			224			—			372
Cash and cash equivalents at end of the period	$	—			183			241			—			424

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

29

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless the context requires otherwise, references in this report to "Qwest," "we," "us" and "our" refer to Qwest Communications International Inc. and its consolidated subsidiaries, references to "QCII" refer to Qwest Communications International Inc. on an unconsolidated, stand-alone basis and references to "CenturyLink" refer to our direct parent company, CenturyLink, Inc. and its consolidated subsidiaries.

All references to "Notes" in this Item 2 refer to the Notes to Consolidated Financial Statements included in Item 1 of this quarterly report.

        Certain statements in this report constitute forward-looking statements. See "Risk Factors" in Item 1A of Part II of this report for a discussion of certain risk factors applicable to our business, financial condition and results of operations.

Overview

        Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") included herein should be read in conjunction with MD&A and the other information included in our Annual Report on Form 10-K for the year ended December 31, 2011. The results of operations for the first six months of the year are not indicative of the results of operations that might be expected for the entire year.

        We are an integrated communications company engaged primarily in providing an array of communications services to our residential, business, governmental and wholesale customers. Our communications services include local and long-distance, network access, private line (including special access), broadband, data, managed hosting, wireless and video services. In certain local and regional markets, we also provide local access and fiber transport services to competitive local exchange carriers. We strive to maintain our customer relationships by, among other things, bundling our service offerings to provide our customers with a complete offering of integrated communications services.

        We generate the majority of our revenues from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area.

        As discussed in Note 2—Acquisition by CenturyLink, on April 1, 2011, we became a wholly owned subsidiary of CenturyLink in connection with a stock-for-stock acquisition. The aggregate consideration was approximately $12.273 billion, calculated in the manner described in Note 2—Acquisition by CenturyLink.

        Since April 1, 2011, our results of operations have been included in the consolidated results of operations of CenturyLink. CenturyLink has accounted for its acquisition of us under the acquisition method of accounting, which resulted in the assignment of the purchase price to the assets acquired and liabilities assumed based on estimates of their acquisition date fair values. The aggregate consideration exceeded the aggregate estimated fair value of the assets acquired and liabilities assumed by $10.123 billion, which we have recognized as goodwill. This goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect CenturyLink and its consolidated subsidiaries, including us, to realize. None of the goodwill associated with this acquisition is deductible for income tax purposes. The recognition of assets and liabilities at fair value is reflected in our financial statements and therefore has resulted in a new basis of accounting for the "successor period" beginning on April 1, 2011. This new basis of accounting means that our financial statements for the successor periods will not be comparable to our previously reported financial statements, including the predecessor period financial statements in this report.

30

        The discussion in MD&A of our performance for the six months ended June 30, 2011 is presented on a combined basis for the predecessor and successor periods in 2011. We believe this presentation allows the results of operations for this period to be more readily compared to the comparable six-month period in 2012.

        We have incurred operating expenses related to CenturyLink's acquisition of us, which consist primarily of integration and severance expenses. The table below summarizes our acquisition-related expenses:

	Successor						Predecessor		Combined
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011		Six Months Ended June 30, 2011
	(Dollars in millions)
Acquisition-related expenses	$	3		29		127		3		130

        CenturyLink has cash management arrangements between certain of its subsidiaries, including us, under which the majority of our cash balance is transferred on a daily basis to CenturyLink. We report the balance of these transfers on our balance sheet as advances to affiliates.

        Since the April 1, 2011 closing of CenturyLink's acquisition of us, our operations have been integrated into and reported as part of the segments of CenturyLink. CenturyLink's chief operating decision maker ("CODM") has become our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the Securities and Exchange Commission ("SEC"). Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we now have one reportable segment and we have reclassified our prior period results to conform to our current view.

        We currently categorize our products, services and revenues among the following four categories:

•

Strategic services, which include primarily private line (including special access), broadband, Multi-Protocol Label Switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), Ethernet, hosting, video (including resold satellite video services), voice over Internet Protocol ("VoIP") and Verizon Wireless services;

•

Legacy services, which include primarily local, long-distance, integrated services digital network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), switched access and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);

•

Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customers; and

•

Affiliates and other services, which consist primarily of universal service funds ("USF") revenues and surcharges and services we provide to our affiliates. We provide to our affiliates telecommunications services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services and network support and technical services.

        During the first quarter of 2012, we reclassified certain prior period revenues between the aforementioned four categories to conform to the current period presentation.

        As of the successor date of June 30, 2012, we served approximately 3.2 million broadband subscribers. As described below, during the second quarter of 2012, we updated our methodology for

31

counting broadband subscribers to include business and wholesale subscribers instead of only retail and small business subscribers. We also operated approximately 8.3 million access lines, which are telephone lines reaching from the customers' premises to a connection with the public switched telephone network. We count access lines when we install the service. Our methodology includes only those access lines that we use to provide services to external customers and excludes lines used solely by us and our affiliates. It also excludes unbundled loops and includes stand-alone broadband subscribers. Our methodology for counting our access lines may not be comparable to those of other companies.

        Our analysis presented below is organized to provide the information we believe will be useful for understanding the relevant trends affecting our business. This discussion should be read in conjunction with our consolidated financial statements and the notes thereto in Item 1 of this report.

Business Trends

        Our financial results were impacted by several significant trends, which are described below. We expect that these trends will continue to affect our results of operations, cash flows or financial position.

•

Strategic services.  We continue to see shifts in the makeup of our total revenues as customers move to strategic services, such as private line, broadband and video services, from legacy services, such as local and access services. Revenues from our strategic services represented 44% and 43% of our total revenues for the successor three months ended June 30, 2012 and 2011, respectively, and 43% of our total revenues for both the successor six months ended June 30, 2012 and the combined six months ended June 30, 2011, and we expect that this percentage will continue to grow. We continue to focus on increasing subscribers of our broadband services, particularly among consumer and small business customers. We believe that continually increasing connection speeds is important to remaining competitive in our industry. As a result, we continue to invest in our fiber to the node ("FTTN") deployment, which allows for the delivery of higher speed broadband services than would otherwise generally be available through a more traditional telecommunications network made up of only copper wires. In addition to our FTTN deployment, we continue to expand our product offerings, including Ethernet and MPLS, and enhance our marketing efforts as we compete in a mature market in which most consumers already have broadband services. While traditional broadband services are declining, they have been more than offset by growth in fiber based broadband services. We expect these efforts will improve our ability to compete and increase our broadband revenues. Another trend impacting our strategic services is the deployment of fiber-based special access services provided to wireless carriers, which in many cases replaces existing copper-based special access services. We ultimately believe the growth in fiber-based special access services provided to wireless carriers for backhaul will, over time, offset the decline in copper-based special access services provided to wireless carriers as they migrate to Ethernet services, although the timing and magnitude of this technological migration is uncertain.

•

Legacy services.  Revenues from our legacy services represented 43% and 48% of our total revenues for the successor three months ended June 30, 2012 and 2011, respectively, and 44% and 49% of our total revenues for the successor six months ended June 30, 2012 and the combined six months ended June 30, 2011, respectively, and we expect that this percentage will continue to decline. Our legacy services revenues have been, and we expect they will continue to be, adversely affected by access line losses. Intense competition and product substitution continue to drive our access line losses. For example, many consumers are replacing traditional voice telecommunications service with substitute services, including (i) cable and wireless voice services and (ii) electronic mail, texting and social networking services. We expect that these factors will continue to negatively impact our business. As a result of the expected loss of access

32

line revenues, we continue to offer service bundling and other product promotions to help mitigate this trend, as described below.

•

Data integration.  We expect both data integration revenue and the related costs will fluctuate from quarter to quarter as this offering tends to be more sensitive than others to changes in the economy and in spending trends of our federal government customers.

•

Service bundling and product promotions.  We offer our customers the ability to bundle multiple products and services. These customers can bundle local services with other services such as broadband, video, long-distance and wireless. While our video and wireless services are an important piece of our customer retention strategy, they do not significantly contribute to our strategic services revenues. However, we believe customers value the convenience of, and price discounts associated with, receiving multiple services through a single company. While bundle price discounts have resulted in lower average revenues for our individual products, we believe service bundles continue to positively impact our customer retention and our ability to compete with other telecommunications service providers. In addition to our bundle discounts, we also offer from time to time limited time promotions on our broadband service, which we believe further aids our ability to attract and retain customers and increase usage of our services.

•

Operating efficiencies.  We continue to evaluate our operating structure and focus. This involves balancing our workforce in response to our workload requirements, productivity improvements and changes in industry, competitive, technological and regulatory conditions.

•

Pension and post-retirement benefits expenses.  We are required to recognize in our consolidated financial statements certain expenses relating to our pension and post-retirement health care and life insurance benefits plans. These expenses are calculated based on several assumptions, including among other things discount rates and expected rates of return on plan assets that are generally set at December 31 of each year. Changes in these assumptions can cause significant changes in the combined net periodic benefits expenses we recognize. We allocate the expenses of these plans to certain of our other affiliates. The allocation of expenses is based upon the demographics of employees and retirees at our affiliates. Changes in our assumptions can cause significant changes in the net periodic pension and post-retirement benefits expenses we recognize.

•

Strategic capital investment.  Our capital expenditures continue to be focused on our strategic services such as broadband and the deployment of fiber to the tower ("FTTT"). FTTT is a type of telecommunications network consisting of fiber-optic cables that run from a wireless carrier's mobile telephone switching office to cellular towers to enable the delivery of higher bandwidth services supporting mobile technologies than would otherwise generally be available through a more traditional copper-based telecommunications network.

        While these trends are important to understanding and evaluating our financial results, the other transactions, additional events, uncertainties and trends discussed in "Risk Factors" in Item 1A of Part II of this report may also materially impact our business operations and financial results.

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Results of Operations

        The following table summarizes our results of operations:

	Successor									Predecessor			Combined
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011			Six Months Ended June 30, 2011
	(Dollars in millions)
Operating revenues	$	2,836			5,675			2,769			2,846			5,615
Operating expenses		2,545			5,094			2,631			2,267			4,898
Operating income		291			581			138			579			717
Other income (expense)		(227	)		(392	)		(151	)		(222	)		(373	)
Income tax expense		27			75			—			146			146
Net income (loss)	$	37			114			(13	)		211			198

        The following table summarizes certain of our operational metrics:

	Successor
	As of June 30, 2012		As of June 30, 2011		Increase/ (Decrease)			% Change
	(in thousands)
Broadband subscribers		3,248		3,101		147			5	%
Access lines		8,276		8,804		(528	)		(6	)%
Employees		25,600		27,600		(2,000	)		(7	)%

        During the second quarter of 2012, we updated our methodology for counting broadband subscribers to better align with the methodology used by our parent company, CenturyLink. We have restated our previously reported amounts to reflect this change.

        Our access line methodology includes only those access lines that we use to provide services to external customers and excludes lines used solely by us and our affiliates. Our methodology also excludes unbundled loops and includes stand-alone broadband subscribers.

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Operating Revenues

        The following tables summarize our operating revenues:

	Successor
	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Increase/ (Decrease)			% Change
	(Dollars in millions)
Strategic services	$	1,235		1,194		41			3	%
Legacy services		1,227		1,333		(106	)		(8	)%
Data integration		140		118		22			19	%
Affiliates and other services		234		124		110			89	%
Total operating revenues	$	2,836		2,769		67			2	%

									Increase/ (Decrease)
												% Change
	Successor				Predecessor		Combined
									Successor 2012 v Combined 2011			Successor 2012 v Combined 2011
	Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011		Six Months Ended June 30, 2011
	(Dollars in millions)
Strategic services	$	2,457		1,194		1,200		2,394		63			3	%
Legacy services		2,484		1,333		1,400		2,733		(249	)		(9	)%
Data integration		256		118		123		241		16			7	%
Affiliates and other services		478		124		123		247		230			93	%
Total operating revenues	$	5,675		2,769		2,846		5,615		60			1	%

Strategic Services

        Strategic services revenues increased in both of the comparative periods reflected in the tables above due to an increase in the volume of our Ethernet and MPLS services and higher broadband revenues resulting from increases in broadband customers and average broadband rates attributable to increased sales of higher speed broadband services. Our growth in revenues was partially offset by decreased sales volumes of our private line services.

Legacy Services

        Legacy services revenues decreased in both of the comparative periods as a result of lower local and long-distance services revenues due to access line loss and reduced access services usage related to the above-described competitive pressures and product substitution. Legacy services revenues also decreased in both of the comparative periods due to lower revenues from our traditional WAN services caused by customer migration, product substitution and increased competition. Part of the decrease in legacy services revenues for the successor six months ended June 30, 2012 compared to the combined six months ended June 30, 2011 is attributable to lower amortization of deferred revenue due to predecessor deferred installation and activation revenue being assigned no value at the acquisition date.

Data Integration

        Revenues from data integration increased in both of the comparative periods primarily due to increased equipment sales and professional services, including network management, security and integration of customer premises equipment.

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Affiliates and Other Services

        Affiliates and other services revenues increased in both of the comparative periods primarily due to a change in methodology effective January 1, 2012 that resulted in both higher affiliate revenues and expenses for us. See Note 1—Basis of Presentation. A portion of the increase in affiliates and other services revenues for the successor six months ended June 30, 2012 compared to the combined six months ended June 30, 2011 is attributable to telecommunications services we provided to affiliates since CenturyLink's April 1, 2011 acquisition of us.

Operating Expenses

        The following tables summarize our operating expenses:

	Successor
	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Increase/ (Decrease)			% Change
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	1,213		1,141		72			6	%
Selling, general and administrative		444		656		(212	)		(32	)%
Operating expenses—affiliates		150		32		118			nm
Depreciation and amortization		738		802		(64	)		(8	)%
Total operating expenses	$	2,545		2,631		(86	)		(3	)%

									Increase/ (Decrease)
												% Change
	Successor				Predecessor		Combined
									Successor 2012 v Combined 2011			Successor 2012 v Combined 2011
	Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011		Six Months Ended June 30, 2011
	(Dollars in millions)
Cost of services and products (exclusive of depreciation and amortization)	$	2,388		1,141		1,178		2,319		69			3	%
Selling, general and administrative		928		656		556		1,212		(284	)		(23	)%
Operating expenses—affiliates		299		32		—		32		267			nm
Depreciation and amortization		1,479		802		533		1,335		144			11	%
Total operating expenses	$	5,094		2,631		2,267		4,898		196			4	%

nm—Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.

        Effective January 1, 2012, we changed our rates of capitalized labor as we transitioned certain legacy systems to the historical systems of our parent, CenturyLink. This transition resulted in an estimated $20 million to $30 million increase in the amount of labor capitalized as an asset compared to the amount that would have been capitalized if we had continued to use our legacy systems and a corresponding estimated $20 million to $30 million decrease in operating expenses for the successor six months ended June 30, 2012. This change is expected to result in an estimated operating expense reduction of approximately $30 million to $50 million for the successor year ending December 31, 2012.

Cost of Services and Products (exclusive of depreciation and amortization)

        Cost of services and products (exclusive of depreciation and amortization) are expenses incurred in providing products and services to our customers. These expenses include: employee-related expenses

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directly attributable to operating and maintaining our network (such as salaries, wages, benefits and professional fees); facilities expenses (which are expenses we incur from using other carriers' networks to provide services to our customers); rents and utilities expenses; equipment sales expenses (such as data integration and modem expenses); costs for USF (which reflect our contributions to certain federal and state funds that are established to promote the availability of telecommunications services to all consumers at reasonable and affordable rates, among other things); and other expenses directly related to our network and hosting operations.

        These expenses increased in both of the comparative periods reflected in the tables above primarily due to increased customer premise equipment costs, professional fees, and USF contribution rates, as well as a paid time off accounting adjustment for our union employees.

Selling, General and Administrative

        Selling, general and administrative expenses are expenses incurred in selling products and services to our customers, corporate overhead and other operating expenses. These expenses include: employee-related expenses (such as salaries, wages, internal commissions, benefits and professional fees) directly attributable to selling products or services and employee-related expenses for administrative functions; marketing and advertising; taxes (such as property and other taxes) and fees; external commissions; bad debt expense; and other operating expenses.

        These expenses decreased in the six-month comparative periods reflected in the tables above primarily due to a decrease in acquisition-related expenses. The remainder of these decreases is also due to decreased pension expense, professional fees and marketing and advertising expense during both of the comparable periods presented.

Operating Expenses—Affiliates

        Effective January 1, 2012, in connection with post-acquisition systems integration activities, we adopted the affiliate expense allocation methodology used by our parent. This methodology results in certain overhead costs incurred by us and by our parent that were previously assessed to us on a net basis now being assessed on a gross basis both to and from our parent, resulting in both higher affiliate revenues and expenses for us. We believe this change, resulting from systems integration activities, did not have a significant impact to our net income for the successor three and six months ended June 30, 2012.

        Since CenturyLink's acquisition of us, we have incurred affiliates expenses related to our use of telecommunications services, marketing and employee related support services provided to us by CenturyLink and certain of its subsidiaries. A portion of the increase in operating expenses-affiliates for the successor six months ended June 30, 2012 compared to the combined six months ended June 30, 2011 is attributable to incurring these intercompany expenses for the entire 2012 period compared to only half of the 2011 period.

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Depreciation and Amortization

        The following tables provide detail regarding depreciation and amortization expense:

	Successor
	Three Months Ended June 30, 2012		Three Months Ended June 30, 2011		Increase/ (Decrease)			% Change
	(Dollars in millions)
Depreciation	$	374		403		(29	)		(7	)%
Amortization		364		399		(35	)		(9	)%
Total depreciation and amortization	$	738		802		(64	)		(8	)%

									Increase/ (Decrease)
												% Change
	Successor				Predecessor		Combined
									Successor 2012 v Combined 2011			Successor 2012 v Combined 2011
	Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011		Six Months Ended June 30, 2011
	(Dollars in millions)
Depreciation	$	752		403		475		878		(126	)		(14	)%
Amortization		727		399		58		457		270			59	%
Total depreciation and amortization	$	1,479		802		533		1,335		144			11	%

        In connection with us being acquired as of April 1, 2011, our property, plant and equipment was recognized at fair value, which reduced the recognized amounts of our net property, plant and equipment. This decrease in asset value resulted in $77 million lower depreciation expense for the successor six months ended June 30, 2012, as compared to the combined six months ended June 30, 2011. Effective January 1, 2012, we also changed our estimates of the economic lives of certain telecommunications equipment. These changes resulted in an additional decrease to depreciation expense of approximately $23 million and $46 million for the successor three and six months ended June 30, 2012, respectively.

        The accounting for CenturyLink's acquisition of us also resulted in additional amortizable intangible assets, which increased amortization expense approximately $261 million for the successor six months ended June 30, 2012, as compared to the combined six months ended June 30, 2011. In addition, our capitalized software was also recognized at fair value, which resulted in an increase of $59 million in amortization expense for the successor six months ended June 30, 2012, as compared to the combined six months ended June 30, 2011. These increases were offset by $54 million in lower amortization expense for the successor six months ended June 30, 2012 due to lower net investment in our capitalized software.

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Other Consolidated Results

        The following tables summarize our total other income (expense) and income tax expense:

	Successor
	Three Months Ended June 30, 2012			Three Months Ended June 30, 2011			Increase/ (Decrease)		% Change
	(Dollars in millions)
Interest expense	$	(154	)		(150	)		4		3	%
Interest expense—affiliates		(30	)		—			30		nm
Net loss on early retirement of debt		(45	)		(1	)		44		nm
Other income		2			—			2		nm
Total other income (expense)	$	(227	)		(151	)		76		50	%
Income tax expense	$	27			—			27		nm

													Increase/ (Decrease)
																% Change
	Successor						Predecessor			Combined
													Successor 2012 v Combined 2011			Successor 2012 v Combined 2011
	Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011			Six Months Ended June 30, 2011
	(Dollars in millions)
Interest expense	$	(324	)		(150	)		(227	)		(377	)		(53	)		(14	)%
Interest expense—affiliates		(34	)		—			—			—			34			nm
Net loss on early retirement of debt		(37	)		(1	)		—			(1	)		36			nm
Other income		3			—			5			5			(2	)		(40	)%
Total other income (expense)	$	(392	)		(151	)		(222	)		(373	)		19			5	%
Income tax expense	$	75			—			146			146			(71	)		(49	)%

nm—Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.

Interest Expense

        Interest expense during the successor three months ended June 30, 2012 compared to the successor three months ended June 30, 2011 remained relatively flat. Interest expense decreased $53 million during the successor six months ended June 30, 2012, compared to the combined six months ended June 30, 2011, primarily due to the a decrease in the interest rates of debt securities issued and those retired. This was partially offset by a reduction in the amount of debt premium amortization due to the retirement of several debt securities, which have carried premiums since CenturyLink's acquisition of us.

Interest Expense—Affiliates

        Interest expense increased during the successor three and six months ended June 30, 2012 primarily due to increased affiliate loan balances, which QCII used to retire several debt securities during the period. The increase is also due to CenturyLink's cash management arrangement between certain of its subsidiaries, including us, under which the majority of our cash balance is transferred on a daily basis to CenturyLink. We report the balance of these transfers on our balance sheet as advances to affiliates.

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Net Loss on Early Retirement of Debt

        During the second quarter of 2012, QCII redeemed $500 million of its 7.50% Notes due 2014, which resulted in an immaterial gain. During the second quarter of 2012, Qwest Corporation ("QC") completed a premium-priced cash tender offer to purchase a portion of its $811 million of 8.375% Notes due 2016 and its $400 million of 7.625% Notes due 2015. With respect to its 8.375% Notes due 2016, QC received and accepted tenders of approximately $575 million aggregate principal amount of these notes, or 71%, for $722 million including a premium, fees and accrued interest. With respect to its 7.625% Notes due 2015, QC received and accepted tenders of approximately $308 million aggregate principal amount of these notes, or 77%, for $369 million including a premium, fees and accrued interest. The completion of this tender offer resulted in a loss of $46 million.

        In the first quarter of 2012, QCII redeemed $800 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

Income Tax Expense

        Income tax expense for the successor six months ended June 30, 2012 was $75 million, or an effective tax rate of 39.7%, as compared to income tax expense for the combined six months ended June 30, 2011 of $146 million, or an effective tax rate of 42.4%.

Liquidity and Capital Resources

Overview

        We are a wholly owned subsidiary of CenturyLink. As such, factors relating to, or affecting, CenturyLink's liquidity and capital resources could have material impacts on us, including impacts on our credit ratings, our access to capital markets and changes in the financial market's perception of us.

        CenturyLink has cash management arrangements between certain of its subsidiaries that include lines of credit, affiliate obligations, capital contributions and dividends. As part of these cash management arrangements, affiliates provide lines of credit to certain other affiliates. Amounts outstanding under these lines of credit and intercompany obligations vary from time to time. Under these arrangements, the majority of our cash balance is advanced on a daily basis to CenturyLink. From time to time we may declare and pay dividends to CenturyLink, using cash repaid to us under these advances, which has the net effect of reducing the amount of these advances. Given our upgrade to an investment grade rating on April 1, 2011, our debt covenants do not currently limit the amount of dividends we can pay to CenturyLink. Given our cash management arrangement with CenturyLink and the resulting amounts due to us from CenturyLink, a significant component of our liquidity is dependent upon CenturyLink's ability to repay its obligation to us.

        As of the successor date of June 30, 2012, we had a working capital deficit of $2.6 billion, reflecting current liabilities of $4.8 billion and current assets of $2.2 billion, compared to a working capital deficit of $280 million as of the successor date of December 31, 2011. The change in our working capital position is primarily due to a $1.2 billion increase in current maturities of long-term debt due to our anticipation of retiring $484 million aggregate principal amount of QC debt on July 20, 2012 (discussed below). The change in our working capital position is also due to a $669 million reduction in the amounts owed to us by our affiliates during the first half of 2012.

Debt and Other Financing Arrangements

        Subject to market conditions, from time to time we expect to continue to issue debt securities through QC to refinance its maturing debt. The availability, interest rate and other terms of any new borrowings will depend on the ratings assigned QC by the three major credit rating agencies, among other factors.

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        On July 20, 2012, QC redeemed all $484 million of its 7.5% Notes due 2023, which resulted in an immaterial loss.

        On June 25, 2012, QC issued $400 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $387 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after July 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        On May 17, 2012, QCII redeemed $500 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

        On April 18, 2012, QC completed a cash tender offer to purchase a portion of its $811 million of 8.375% Notes due 2016 and its $400 million of 7.625% Notes due 2015. With respect to its 8.375% Notes due 2016, QC received and accepted tenders of approximately $575 million aggregate principal amount of these notes, or 71%, for $722 million including a premium, fees and accrued interest. With respect to its 7.625% Notes due 2015, QC received and accepted tenders of approximately $308 million aggregate principal amount of these notes, or 77%, for $369 million including a premium, fees and accrued interest. The completion of this tender offer resulted in a loss of $46 million. In connection with consummating this tender offer, QC borrowed from a CenturyLink affiliate approximately $583 million under a revolving promissory note, payable upon demand. The promissory note is unsecured and is pari passu to QC's Senior Notes.

        On April 2, 2012, QC issued $525 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $508 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after April 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        On March 1, 2012, QCII redeemed $800 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

        On April 6, 2012, CenturyLink amended and restated its $1.7 billion revolving credit facility to increase the aggregate principal amount available to $2.0 billion and to extend the maturity date to April 2017. This amended credit facility (the "Credit Facility") has 18 lenders, with commitments ranging from $2.5 million to $177 million and allows CenturyLink to obtain revolving loans and to issue up to $400 million of letters of credit, which will reduce the amount available for other extensions of credit. Interest will be assessed on future borrowings using either LIBOR or the base rate (as defined in the Credit Facility) plus an applicable margin between 1.25% and 2.25% per annum for LIBOR loans and 0.25% and 1.25% per annum for base rate loans depending on our then current senior unsecured long-term debt rating. CenturyLink's obligations under the Credit Facility are guaranteed by QCII and its wholly-owned subsidiary, Qwest Services Corporation ("QSC"). As of the successor date of June 30, 2012, there was $250 million in borrowings and zero in letters of credit outstanding under the Credit Facility. CenturyLink also maintains a separate letter of credit arrangement with a financial institution to which we have access.

        On April 18, 2012, CenturyLink, Inc. entered into a term loan in the amount of $440 million, which has been guaranteed by QCII and its wholly-owned subsidiary, QSC.

        As of the successor date of June 30, 2012, we believe we were in compliance with the provisions and covenants of our debt agreements.

Capital Expenditures

        We incur capital expenditures on an ongoing basis in order to enhance and modernize our networks, compete effectively in our markets and expand our service offerings. We evaluate capital expenditure projects based on a variety of factors, including expected strategic impacts (such as

41

forecasted revenue growth or productivity, expense and service impacts) and our expected return on investment. The amount of capital investment is influenced by, among other things, demand for our services and products, cash generated by operating activities and regulatory considerations. Our 2012 capital expenditures will be determined in part by the strategic initiatives of our parent, CenturyLink.

        Our capital expenditures continue to be focused on primarily our broadband services. Throughout 2012, we anticipate that our fiber investment, which includes FTTT, will be slightly lower to that spent in 2011. FTTT is a type of telecommunications network consisting of fiber-optic cables that run from a wireless carrier's mobile telephone switching office to cellular towers to enable the delivery of higher bandwidth services supporting mobile technologies than would otherwise generally be available through a more traditional copper-based telecommunications network.

        CenturyLink has agreed to accept approximately $35 million of the $90 million available to it from Phase 1 of the Federal Communications Commission's ("FCC") Connect America Fund ("CAF") established by Congress to help telecommunications carriers defray the cost of providing broadband access to remote customers. Of the $35 million, QC will receive approximately $30 million and intends to use the funds to deploy broadband service for up to 39,000 homes in unserved rural areas principally in Colorado, Minnesota, New Mexico and Washington. CenturyLink has determined that restrictions on the use of these funds have made acceptance of additional CAF funds uneconomical. CenturyLink has, however, filed with the FCC a waiver application, which, if granted, would allow QC to deploy broadband services with CAF funds to approximately 56,000 more homes in high-cost unserved areas in its markets.

Pension and Post-retirement Benefit Obligations

        We are subject to material obligations under our existing defined benefit pension and other post-retirement benefit plans. The accounting funding status of our plans is measured annually at December 31. As of the successor date of December 31, 2011, the accounting unfunded status of our pension and other post-retirement benefit obligations was $650 million and $2.7 billion, respectively. See Note 8—Employee Benefits of our Form 10-K for the year ended December 31, 2011 for additional information about our pension and other post-retirement benefit arrangements.

        Benefits paid by our qualified pension plan are paid through a trust and contributions required to be made to the trust are governed by the Employee Retirement Income Security Act of 1974, as amended. On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act ("MAP-21") was signed into law. This legislation contains pension-related provisions which, among other things, provide near-term relief from the impact of recent low interest rates on pension funding requirements and an increase in the premiums paid to the Pension Benefit Guaranty Corporation ("PBGC"). Under MAP-21, companies will be permitted to calculate their pension obligations based on 25-year historic average rates, which exceed the two-year average rates being used prior to the legislation. Consequently, this legislation will lower the amount of required pension plan contributions. This relief is available commencing in 2012, but gradually decreases each year through 2016, at which time the reduced level of relief is frozen with respect to future years. Based on several assumptions, we have projected that this relief will reduce our pension plan funding requirements over the next five years by approximately $600 million, which will correspondingly enhance our cash flows over this period. The legislation will not, however, affect pension liabilities recorded on our financial statements under generally accepted accounting principles and, consequently, the near-term funding relief could increase our future pension plan contributions in later years. Partially, offsetting this benefit, MAP-21 provides for an annual increase beginning in 2013 to both the fixed premiums, based on plan participants, and the variable premiums, based on unfunded vested benefits, paid to PBGC. Based on various assumptions, we estimate that our premiums payable to PBGC over the next five years will increase by $38 million as a result of the new legislation. The actual amount of required contributions to our plans, and premiums paid to PBGC, will depend on earnings on plan investments, prevailing interest and

42

discount rates, demographic experience, changes in plan benefits and any further changes in funding laws and regulations.

        Certain of our post-retirement health care and life insurance benefits plans are unfunded. A trust holds assets that are used to help cover the health care costs of certain retirees. As of December 31, 2011, the fair value of the trust assets was $643 million; however, a portion of these assets is comprised of investments with restricted liquidity. We estimate that the more liquid assets in the trust will be adequate to provide continuing reimbursements for covered post-retirement health care costs for approximately four years, based on current circumstances. Thereafter, covered benefits will be paid either directly by us or from the trust as the remaining assets become liquid. This projected four year period could be substantially shorter or longer depending on changes in projected health care costs, returns on plan assets, the timing of maturities of illiquid plan assets and future changes in benefits.

        Our estimated annual long-term rate of return on the pension and post-retirement plans trust assets is 7.5% based on the assets currently held; however, actual returns could vary widely in any given year.

Historical Information

        The following table summarizes our cash flow activities:

													Increase/ (Decrease)
	Successor						Predecessor			Combined
													Successor 2012 v Combined 2011
	Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011			Six Months Ended June 30, 2011
	(Dollars in millions)
Net cash provided by operating activities	$	1,078			700			777			1,477			(399	)
Net cash provided by (used in) investing activities		50			(856	)		(408	)		(1,264	)		1,314
Net cash used in financing activities		(1,135	)		(221	)		(317	)		(538	)		597

        Net cash provided by operating activities decreased primarily due to the repayment to our parent for pension plan contributions they made on our behalf in December 2011. For additional information about our operating results, see "Results of Operations" above.

        Net cash provided by investing activities increased in the successor six months ended June 30, 2012 primarily due to changes in advances to affiliates. During the successor six months ended June 30, 2012, we received $669 million from our affiliates compared to $511 million we advanced to our affiliates during the combined six months ended June 30, 2011. The increase in cash provided by investing activities is also due to $133 million of proceeds from the sale of property during the successor six months ended June 30, 2012.

        Net cash used in financing activities increased in the successor six months ended June 30, 2012 primarily due to $1.2 billion of additional payments of long-term debt and $164 million of additional early retirement of debt costs compared to the combined six months ended June 30, 2011. These increases were offset by $583 million provided by notes payable to our affiliates, as well as a $254 million increase in the net proceeds from the issuance of debt securities.

Certain Matters Related to CenturyLink's Acquisition of Us

        Effective after CenturyLink's acquisition of us, we are included in the consolidated federal income tax return of CenturyLink. CenturyLink is in the process of developing a post-acquisition intercompany agreement for allocation of consolidated income tax liabilities. We will continue to account for income

43

tax expense on a stand-alone basis. We are also included in certain combined state tax returns filed by CenturyLink and the same accounting will apply.

        As of the successor date of June 30, 2012, we paid certain costs that were associated with CenturyLink's acquisition of us. These costs include compensation costs comprised of retention bonuses and severance. The final amounts and timing of the compensation costs to be paid is partially dependent upon personnel decisions that continue to be made as part of the continuing integration process. These amounts may be material.

        In accounting for CenturyLink's acquisition of us, we recognized our debt securities at their estimated fair values, which totaled $12.292 billion as of April 1, 2011. Our acquisition date fair value estimates were based primarily on quoted market prices in active markets and other observable inputs where quoted market prices were not available. The fair value of our debt securities exceeded their stated principal balances on the acquisition date by $693 million, which we recorded as premium.

        The table below summarizes the premiums recognized as a reduction to interest expense or extinguished during the periods indicated:

	Successor
	Six Months Ended June 30, 2012		Nine Months Ended December 31, 2011		Total Since Acquisition
	(Dollars in millions)
Amortized	$	48		154		202
Extinguished(1)		140		58		198
Total premiums recognized	$	188		212		400

(1)

See "Debt and Other Financing Arrangements" for more information.

        The remaining premium of $293 million as of the successor date of June 30, 2012 will reduce interest expense in future periods, unless otherwise extinguished.

Other Matters

        We also are involved in various legal proceedings that could have a material adverse effect on our financial position. See Note 9—Commitment and Contingencies for the current status of such legal proceedings.

Off-Balance Sheet Arrangements

        We have no special purpose or limited purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support and we do not engage in leasing, hedging, or other similar activities that expose us to any significant liabilities that are not (i) reflected on the face of the consolidated financial statements or (ii) discussed under the heading "Market Risk" below. There were no substantial changes to our off-balance sheet arrangements or contractual obligations in the successor six months ended June 30, 2012, when compared to the disclosures provided in our Annual Report on Form 10-K for the year ended December 31, 2011.

Market Risk

        We are exposed to market risk from changes in interest rates on our variable rate long-term debt obligations. We seek to maintain a favorable mix of fixed and variable rate debt in an effort to limit interest costs and cash flow volatility resulting from changes in rates.

        From time to time, we have used derivative instruments to (i) lock-in or swap our exposure to changing or variable interest rates for fixed interest rates or (ii) to swap obligations to pay fixed

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interest rates for variable interest rates. As of the successor date of June 30, 2012, we had no such instruments outstanding.

        There were no material changes to market risks arising from changes in interest rates for the successor six months ended June 30, 2012, when compared to the disclosures provided in our Annual Report on Form 10-K for the year ended December 31, 2011.

Other Information

        Our website is the same as that of our parent company, CenturyLink, which is www.centurylink.com. We routinely post important investor information in the "Investor Relations" section of our website at ir.centurylink.com. The information contained on, or that may be accessed through, our website is not part of this quarterly report. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports in the "Investor Relations" section of our website (ir.centurylink.com) under the heading "SEC Filings." These reports are available on our website as soon as reasonably practicable after we electronically file them with the SEC.

In addition to historical information, this MD&A includes certain forward-looking statements that are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the timing, success and overall effects of competition from a wide variety of competitive providers; the risks inherent in rapid technological change; the effects of ongoing changes in the regulation of the communications industry (including those arising out of the Federal Communications Commission's October 27, 2011 order regarding intercarrier compensation and the USF, among other things); our ability to effectively adjust to changes in the communications industry and changes in the composition of our markets and product mix caused by CenturyLink's recent acquisitions of Savvis, us and Embarq; CenturyLink's ability to successfully integrate the operations of Savvis and us into its operations, including the possibility that the anticipated benefits from these acquisitions cannot be fully realized in a timely manner or at all, or that integrating the acquired operations will be more difficult, disruptive or costly than anticipated; CenturyLink's and our ability to use net operating loss carryovers in projected amounts; CenturyLink's ability to effectively manage its expansion opportunities, including retaining and hiring key personnel; possible changes in the demand for, or pricing of, our products and services; our ability to successfully introduce new product or service offerings on a timely and cost-effective basis; our continued access to credit markets on favorable terms; our ability to collect our receivables from financially troubled communications companies; any adverse developments in legal proceedings involving CenturyLink or us; unanticipated increases or other changes in our future cash requirements, whether caused by unanticipated increases in capital expenditures, increases in CenturyLink's or our pension funding requirements or otherwise; our ability to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; the effects of adverse weather; other risks referenced from time to time in this report (including in "Risk Factors" in Item 1A of Part II of this report) or other of our filings with the SEC; and the effects of more general factors such as changes in interest rates, in tax rates, in accounting policies or practices, in operating, medical, pension or administrative costs, in general market, labor or economic conditions, or in legislation, regulation or public policy. You should be aware that new factors may emerge from time to time and it is not possible for us to identify all such factors nor can we predict the impact of each such factor on the business or the extent to which any one or more factors may cause actual results to differ from those reflected in any forward-looking statements. You are further cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to update any of our forward-looking statements for any reason.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We have omitted this information pursuant to General Instruction H(2).

ITEM 4.    CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

        The effectiveness of our or any system of disclosure controls and procedures is subject to certain limitations, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events and the inability to eliminate misconduct completely. As a result, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. By their nature, our or any system of disclosure controls and procedures can provide only reasonable assurance regarding management's control objectives.

        Glen F. Post, III, the Chief Executive Officer of CenturyLink and us, and R. Stewart Ewing, Jr., the Chief Financial Officer of CenturyLink and us, have evaluated the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the "Exchange Act") as of June 30, 2012. Based on that evaluation, Messrs. Post and Ewing concluded that our disclosure controls and procedures are designed, and are effective, to provide reasonable assurance that the information required to be disclosed by us in the reports that we file under the Exchange Act is timely recorded, processed, summarized and reported and to ensure that information required to be disclosed in the reports that we file or furnish under the Exchange Act is accumulated and communicated to our management, including Messrs. Post and Ewing, in a manner that allows timely decisions regarding required disclosure.

        There were no changes in our internal control over financial reporting during the second quarter of 2012 that materially affected, or that we believe is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

        The information contained in Note 9—Commitments and Contingencies included in Item 1 of Part I of this report is incorporated herein by reference.

ITEM 1A.    RISK FACTORS

        Any of the following risks could materially and adversely affect our business, financial condition, results of operations, liquidity or prospects. The risks described below are not the only risks facing us. Please be aware that additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also materially and adversely affect our business operations.

Risks Affecting Our Business

Increasing competition, including product substitution, continues to cause access line losses, which has adversely affected and could continue to adversely affect our operating results and financial condition.

        We compete in a rapidly evolving and highly competitive market, and we expect competition to continue to intensify. We are facing greater competition from cable companies, wireless providers, broadband companies, resellers and sales agents and facilities-based providers using their own networks as well as those leasing parts of our network. In addition, regulatory developments over the past several years have generally increased competitive pressures on our business. Due to some of these and other factors, we continue to lose access lines.

        Some of our current and potential competitors (i) offer a more comprehensive range of communications products and services, (ii) have market presence, engineering and technical capabilities, and financial and other resources greater than ours, (iii) own larger and more diverse networks, (iv) conduct operations or raise capital at a lower cost than us, (v) are subject to less regulation, (vi) offer greater online content or (vii) have substantially stronger brand names. Consequently, these competitors may be better equipped to charge lower prices for their products and services, to provide more attractive offerings, to develop and expand their communications and network infrastructures more quickly, to adapt more swiftly to new or emerging technologies and changes in customer requirements, and to devote greater resources to the marketing and sale of their products and services.

        Competition could adversely impact us in several ways, including (i) the loss of customers and market share, (ii) the possibility of customers reducing their usage of our services or shifting to less profitable services, (iii) reduced traffic on our networks, (iv) our need to expend substantial time or money on new capital improvement projects, (v) our need to lower prices or increase marketing expenses to remain competitive and (vi) our inability to diversify by successfully offering new products or services.

        We are continually taking steps to respond to these competitive pressures, but these efforts may not be successful. Our operating results and financial condition would be adversely affected if these initiatives are unsuccessful or insufficient and if we otherwise are unable to sufficiently stem or offset our continuing access line losses and our revenue declines significantly without corresponding cost reductions. If this occurred, our ability to service debt and pay other obligations would also be adversely affected.

Our legacy services continue to generate declining revenues, and our efforts to offset these declines may not be successful.

        The telephone industry has experienced a decline in access lines and network access revenues, which, coupled with the other changes resulting from competitive, technological and regulatory

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developments, continue to place downward pressure on the revenues we generate from our legacy services.

        We have taken a variety of steps to counter these declines, including:

•

an increased focus on selling a broader range of strategic services, including broadband, video (including resold satellite video services) and wireless voice services provided by Verizon Wireless; and

•

greater use of service bundles.

        However, some of these strategic services generate lower profit margins than our traditional services, and some can be expected to experience slowing growth as increasing numbers of our existing or potential customers subscribe to these newer products. Moreover, we cannot assure you that the revenues generated from our new offerings will offset revenue losses associated from reduced sales of our legacy products. Similarly, we cannot assure you that our new service offerings will be as successful as anticipated. In addition, our reliance on services provided by others could constrain our flexibility, as described further below.

Unfavorable general economic conditions could negatively impact our operating results and financial condition.

        Unfavorable general economic conditions, including the unstable economy and the current credit market environment, could negatively affect our business. Worldwide economic growth has been sluggish since 2008, and many experts believe that a confluence of factors in the United States, Europe and developing countries may result in a prolonged period of economic downturn, slow growth or economic uncertainty. While it is difficult to predict the ultimate impact of these general economic conditions, these conditions could adversely affect the affordability of and consumer demand for some of our products and services and could cause customers to shift to lower priced products and services or to delay or forgo purchases of our products and services. Any one or more of these circumstances could cause our revenues to continue declining. Also, our customers may encounter financial hardships or may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us. In addition, as discussed below, unstable economic and credit markets may preclude us from refinancing maturing debt at terms that are as favorable as those from which we previously benefited, at terms that are acceptable to us or at all. For these reasons, among others, if the current economic conditions persist or decline, this could adversely affect our operating results and financial condition, as well as our ability to raise capital.

We may need to defend ourselves against claims that we infringe upon others' intellectual property rights, or may need to seek third-party licenses to expand our product offerings.

        From time to time, we receive notices from third parties or are named in lawsuits filed by third parties claiming we have infringed or are infringing upon their intellectual property rights. We may receive similar notices or be involved in similar lawsuits in the future. Responding to these claims may require us to expend significant time and money defending our use of affected technology, may require us to enter into licensing agreements requiring royalty payments that we would not otherwise have to pay or may require us to pay damages. If we are required to take one or more of these actions, our profit margins may decline. In addition, in responding to these claims, we may be required to stop selling or redesign one or more of our products or services, which could significantly and adversely affect the way we conduct business.

        Similarly, from time to time, we may need to obtain the right to use certain patents or other intellectual property from third parties to be able to offer new products and services. If we cannot

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license or otherwise obtain rights to use any required technology from a third party on reasonable terms, our ability to offer new products and services may be restricted, made more costly or delayed.

Our reseller and sales agency arrangements expose us to a number of risks, one or more of which may adversely affect our business and operating results.

        We rely on reseller and sales agency arrangements with other companies to provide some of the services that we sell to our customers, including video services and wireless products and services. If we fail to extend or renegotiate these arrangements as they expire from time to time or if these other companies fail to fulfill their contractual obligations to us or our customers, we may have difficulty finding alternative arrangements and our customers may experience disruptions to their services. In addition, as a reseller or sales agent, we do not control the availability, retail price, design, function, quality, reliability, customer service or branding of these products and services, nor do we directly control all of the marketing and promotion of these products and services. To the extent that these other companies make decisions that negatively impact our ability to market and sell their products and services, our business plans and goals and our reputation could be negatively impacted. If these reseller and sales agency arrangements are unsuccessful due to one or more of these risks, our business and operating results may be adversely affected.

We could be harmed by security breaches, damages or other significant disruptions or failures of our networks, IT infrastructure or related systems, or of those we operate for certain of our customers.

        To be successful, we will need to continue providing our customers with a high capacity, reliable and secure network. We face the risk, as does any company, of a security breach, whether through cyber attack, malware, computer viruses, sabotage, or other significant disruption of our IT infrastructure and related systems (including our billing systems). As a communications and IT company, we face an added risk of a security breach or other significant disruption of our public networks or IT infrastructure and related systems that we develop, install, operate and maintain for certain of our business and governmental customers. Moreover, as a communications and IT company, we face a heightened risk of a security breach or disruption from unauthorized access to our and our customers' proprietary or classified information on our public networks or internal systems or the systems that we operate and maintain for certain of our customers.

        Although we make significant efforts to maintain the security and integrity of these types of information and systems, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures.

        Additional risks to our network and infrastructure include:

•

power losses or physical damage, whether caused by fire, adverse weather conditions, terrorism or otherwise;

•

capacity limitations;

•

software and hardware defects or malfunctions;

•

programming, processing and other human error; and

•

other disruptions that are beyond our control.

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        Network disruptions, security breaches and other significant failures of the above-described systems could:

•

disrupt the proper functioning of these networks and systems and therefore our operations or those of certain of our customers;

•

result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours, our customers or our customers' end users, including trade secrets, which others could use for competitive, disruptive, destructive or otherwise harmful purposes and outcomes;

•

require significant management attention or financial resources to remedy the damages that result or to change our systems;

•

subject us to claims for contract breach, damages, credits, fines, penalties, termination or other remedies, particularly with respect to service standards set by state regulatory commissions; or

•

result in a loss of business, damage our reputation among our customers and the public generally, subject us to additional regulatory scrutiny or expose us to litigation.

        Likewise, our ability to expand and update our information technology infrastructure in response to our growth and changing needs is important to the continued implementation of our new service offering initiatives. Our inability to expand or upgrade our technology infrastructure could have adverse consequences, which could include the delayed implementation of new service offerings, increased acquisition integration costs, service or billing interruptions, and the diversion of development resources.

        Any or all of the foregoing developments could have a negative impact on our results of operations, financial condition and cash flows.

Rapid changes in technology and markets could require substantial expenditure of financial and other resources in excess of contemplated levels, and any inability to respond to those changes could reduce our market share and adversely affect our operating results and financial condition.

        The communications industry is experiencing significant technological changes, many of which are reducing demand for our traditional voice services or are enabling our current customers to reduce or bypass use of our networks. Technological change could also require us to expend capital or other resources in excess of currently contemplated levels, or to forego the development or provision of products or services that others can provide more efficiently. If we are not able to develop new products and services to keep pace with technological advances, or if those products and services are not widely accepted by customers, our ability to compete could be adversely affected and our market share could decline. Any inability to keep up with changes in technology and markets could also adversely affect our operating results and financial condition, as well as our ability to service debt and pay other obligations.

Consolidation among other participants in the telecommunications industry may allow our competitors to compete more effectively against us, which could adversely affect our operating results and financial condition.

        The telecommunications industry has experienced substantial consolidation over the last 10-15 years, and some of our competitors have combined with other telecommunications providers, resulting in competitors that are larger, have more financial and business resources, and have broader service offerings. Further consolidation could increase competitive pressures, and could adversely affect our operating results and financial condition, as well as our ability to service debt and pay other obligations.

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We have a significant amount of goodwill on our balance sheet. If our goodwill becomes impaired, we may be required to record a significant charge to earnings and reduce our stockholder's equity.

        Under generally accepted accounting principles, goodwill is reviewed for impairment on an annual basis or more frequently whenever events or circumstances indicate that its carrying value may not be recoverable. If our goodwill is determined to be impaired in the future, we may be required to record a significant, non-cash charge to earnings during the period in which the impairment is determined.

We rely on a limited number of key suppliers, vendors, landlords and other third parties to operate our business.

        We depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure. Our local exchange carrier networks consist of central office and remote sites, all with advanced digital switches. If any of these suppliers experience interruptions or other problems delivering or servicing these network components on a timely basis, our operations could suffer significantly. To the extent that proprietary technology of a supplier is an integral component of our network, we may have limited flexibility to purchase key network components from alternative suppliers. Similarly, our data center operations are materially reliant on leasing significant amounts of space from landlords and substantial amounts of power from utility companies, and being able to renew these arrangements from time to time on favorable terms. In addition, we rely on a limited number of software vendors to support our business management systems. In the event it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement supplies, services, space or utilities on economically attractive terms, on a timely basis, or at all, which could increase costs or cause disruptions in our services.

Portions of our property, plant and equipment are located on property owned by third parties.

        Over the past few years, certain utilities, cooperatives and municipalities in certain of the states in which we operate have requested significant rate increases for attaching our plant to their facilities. To the extent that these entities are successful in increasing the amount we pay for these attachments, our future operating costs will increase.

        In addition, we rely on rights-of-way, colocation agreements and other authorizations granted by governmental bodies and other third parties to locate our cable, conduit and other network equipment on their respective properties. If any of these authorizations terminate or lapse, our operations could be adversely affected.

We depend on key members of our senior management team.

        Our success depends largely on the skills, experience and performance of a limited number of senior officers. Competition for senior management in our industry is intense and we may have difficulty retaining our current senior officers or attracting new ones in the event of terminations or resignations. For a discussion of similar retention concerns relating to our recent mergers, please see the risks described below under the heading "Risks Relating to Our Recent Acquisitions."

As a holding company, we rely on payments from our operating companies to meet our obligations.

        As a holding company, substantially all of our income and operating cash flow is dependent upon the earnings of our subsidiaries and their distribution of those earnings to us in the form of dividends, loans or other payments. As a result, we rely upon our subsidiaries to generate the funds necessary to meet our obligations, including the payment of amounts owed under our long-term debt. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts owed by us or, subject to limited exceptions for tax-sharing, to make any funds available to us to repay our obligations, whether by dividends, loans or other payments. Certain of our subsidiaries may be

51

restricted under loan agreements or regulatory orders from transferring funds to us, including certain restrictions on the amount of dividends that may be paid to us. Moreover, our rights to receive assets of any subsidiary upon its liquidation or reorganization will be effectively subordinated to the claims of creditors of that subsidiary, including trade creditors. The notes to our consolidated financial statements included in this report describe these matters in additional detail.

Risks Relating to our Recent Acquisition

We may be unable to integrate successfully the Legacy CenturyLink and Qwest businesses and realize the anticipated benefits of the acquisition.

        CenturyLink's acquisition of us involved the combination of two companies which previously operated as independent public companies. We have devoted, and will continue to devote, significant management attention and resources to integrating the business practices and operations of Legacy CenturyLink and Qwest. We may encounter difficulties in the integration process, including the following:

•

the inability to successfully combine our businesses in a manner that permits the combined company to achieve the cost savings and operating synergies anticipated to result from the acquisition, either due to technological challenges, personnel shortages, strikes or otherwise, any of which would result in the anticipated benefits of the acquisition not being realized partly or wholly in the time frame currently anticipated or at all;

•

lost sales as a result of customers of either of the two companies deciding not to do business with the combined company;

•

the complexities associated with managing the combined businesses out of several different locations and integrating personnel from the two companies, while at the same time attempting to provide consistent, high quality products and services under a unified culture;

•

the additional complexities of combining two companies with different histories, regulatory restrictions, sales forces, marketing strategies, product markets and customer bases;

•

the failure to retain key employees, some of whom could be critical to integrating the companies;

•

potential unknown liabilities and unforeseen increased expenses or regulatory conditions associated with the acquisition; and

•

performance shortfalls at one or both of the two companies as a result of the diversion of management's attention caused by integrating the companies' operations.

        For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our products, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the acquisition, or could otherwise adversely affect our business and financial results.

We cannot assure you whether, when or in what amounts we will be able to use our net operating losses.

        At December 31, 2011, we had approximately $6.3 billion of federal net operating losses, or NOLs. These NOLs can be used to offset our future federal taxable income.

        CenturyLink's acquisition of us caused an "ownership change" under federal tax laws relating to the use of NOLs. As a result, these laws could limit CenturyLink's ability to use our NOLs and certain other deferred tax attributes to reduce future federal taxable income. We expect to use substantially all

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of these NOLs and certain other deferred tax attributes. However, if CenturyLink is unable to realize these benefits, its future income tax payments would be higher than expected, which would adversely affect its financial results and liquidity. As a wholly owned subsidiary of CenturyLink, our financial results and liquidity could be similarly affected.

Risks Relating to Legal and Regulatory Matters

Any adverse outcome of the KPNQwest litigation, or other material litigation of CenturyLink could have a material adverse impact on our financial condition and operating results, on the trading price of our debt securities and on our ability to access the capital markets.

        As described in Note 9—Commitments and Contingencies to our consolidated financial statements in Item 1 of Part I of this report and Item 1of Part I of CenturyLink's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, CenturyLink and us are involved in several legal proceedings that, if resolved against them or us, could have a material adverse effect on their, as well as our, business and financial condition. These matters include certain KPNQwest matters, which present material and significant risks to us. In the aggregate, the plaintiffs in the KPNQwest matters seek billions of euros (equating to billions of dollars) in damages. We continue to defend against these matters vigorously and are currently unable to provide any estimate as to the timing of their resolution.

        We can give no assurance as to the impacts on our financial results or financial condition that may ultimately result from these matters. The ultimate outcomes of these matters are still uncertain, and substantial settlements or judgments in these matters could have a significant impact on us. The magnitude of such settlements or judgments resulting from these matters could materially and adversely affect our financial condition and ability to meet our debt obligations, potentially impacting our credit ratings, our ability to access capital markets and our compliance with debt covenants. In addition, the magnitude of any such settlements or judgments may cause us to draw down significantly on our cash balances, which might force us to obtain additional financing or explore other methods to generate cash. Such methods could include issuing additional debt securities or selling assets.

        There are other material proceedings pending against CenturyLink and us, as described in Note 9—Commitments and Contingencies to our consolidated financial statements in Item 1of Part I of this report, and Item 1of Part I of CenturyLink's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. Depending on their outcome, any of these matters could have a material adverse effect on our financial position or operating results. We can give you no assurances as to the impact of these matters on our operating results or financial condition.

We operate in a highly regulated industry and are therefore exposed to restrictions on our manner of doing business and a variety of claims relating to such regulation.

        General.    We are subject to significant regulation by the Federal Communications Commission ("FCC"), which regulates interstate communications, and state utility commissions, which regulate intrastate communications. Generally, we must obtain and maintain certificates of authority from the FCC and regulatory bodies in most states where we offer regulated services, and we are subject to numerous, and often quite detailed, requirements and interpretations under federal, state and local laws, rules and regulations. Accordingly, we cannot ensure that we are always considered to be in compliance with all these requirements at any single point in time. The agencies responsible for the enforcement of these laws, rules and regulations may initiate inquiries or actions based on customer complaints or on their own initiative.

        Regulation of the telecommunications industry is changing rapidly, and the regulatory environment varies substantially from jurisdiction to jurisdiction. Notwithstanding a recent movement towards alternative regulation, a substantial portion of our local voice services revenue remains subject to FCC and state utility commission pricing regulation, which periodically exposes us to pricing or earnings

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disputes and could expose us to unanticipated price declines. Interexchange carriers have filed complaints in various forums requesting reductions in our access rates. In addition, several long distance providers are disputing amounts owed to us for carrying VoIP traffic, or traffic they claim to be VoIP traffic, and are refusing to pay such amounts. There can be no assurance that future regulatory, judicial or legislative activities will not have a material adverse effect on our operations, or that regulators or third parties will not raise material issues with regard to our compliance or noncompliance with applicable regulations.

        Risks associated with recent changes in federal regulation.    On October 27, 2011, the FCC adopted the Connect America and Intercarrier Compensation Reform order ("CAF order") intended to reform the existing regulatory regime to recognize ongoing shifts to new technologies, including VoIP, and gradually re-direct universal service funding to foster nationwide broadband coverage. This initial ruling provides for a multi-year transition over the next decade as intercarrier compensation charges are reduced, universal service funding is explicitly targeted to broadband deployment, and subscriber line charges paid by end user customers are gradually increased. These changes will substantially increase the pace of reductions in the amount of switched access revenues we receive with respect to some of our various services, while creating opportunities for increases in federal USF and retail revenue streams. The ultimate effect of this order on communications companies is largely dependent on future FCC proceedings designed to implement the order, the most significant of which are scheduled to be determined in 2012 and 2013. Several judicial challenges to the CAF order are pending and additional future challenges are possible, any of which could alter or delay the FCC's proposed changes. In addition, based on the outcome of the FCC proceedings, various state commissions may consider changes to their universal service funds or intrastate access rates. For these reasons, we cannot predict the ultimate impact of these proceedings at this time.

        Under other pending proceedings, the FCC may implement changes in the regulation or pricing of special access services, any of which could adversely affect our operations or financial results.

        Risks posed by costs of regulatory compliance.    Regulations continue to create significant compliance costs for us. Challenges to our tariffs by regulators or third parties or delays in obtaining certifications and regulatory approvals could cause us to incur substantial legal and administrative expenses, and, if successful, such challenges could adversely affect the rates that we are able to charge our customers. Our business also may be impacted by legislation and regulation imposing new or greater obligations related to regulations or laws related to broadband deployment, bolstering homeland security, increasing disaster recovery requirements, minimizing environmental impacts, enhancing privacy, or addressing other issues that impact our business, including the Communications Assistance for Law Enforcement Act (which requires communications carriers to ensure that their equipment, facilities, and services are able to facilitate authorized electronic surveillance), and laws governing local number portability and customer proprietary network information requirements. We expect our compliance costs to increase if future laws or regulations continue to increase our obligations to assist other governmental agencies.

        Risks posed by other regulations.    All of our operations are also subject to a variety of environmental, safety, health and other governmental regulations. We monitor our compliance with federal, state and local regulations governing the management, discharge and disposal of hazardous and environmentally sensitive materials. Although we believe that we are in compliance with these regulations, our management, discharge or disposal of hazardous and environmentally sensitive materials might expose us to claims or actions that could have a material adverse effect on our business, financial condition and operating results.

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Regulatory changes in the communications industry could adversely affect our business by facilitating greater competition against us.

        Beginning in 1996, Congress and the FCC have taken several steps that have resulted in increased competition among communications service providers. Many of the FCC's regulations remain subject to judicial review and additional rulemakings, thus making it difficult to predict what effect any changes in interpretation of the Telecommunications Act of 1996 may ultimately have on us and our competitors. We could be adversely affected by programs or initiatives recently undertaken by Congress or the FCC, including (i) the federal broadband stimulus projects authorized by Congress in 2009; (ii) the FCC's 2010 National Broadband Plan; (iii) new "network neutrality" rules; (iv) the proposed broadband "Connect America" replacement support fund, and (v) the FCC's above-described October 27, 2011 order.

We may be liable for the material that content providers distribute over our network.

        The law relating to the liability of private network operators for information carried on, stored or disseminated through their networks is still unsettled. As such, we could be exposed to legal claims relating to content disseminated on our networks. Claims could challenge the accuracy of materials on our network, or could involve matters such as defamation, invasion of privacy or copyright infringement. If we need to take costly measures to reduce our exposure to these risks, or are required to defend ourselves against such claims, our financial results could be negatively affected.

We are subject to significant regulations that limit our flexibility.

        As a diversified full service incumbent local exchange carrier ("ILEC"), we have traditionally been subject to significant regulation that does not apply to many of our competitors. This regulation imposes substantial compliance costs on us and restricts our ability to change rates, to compete and to respond rapidly to changing industry conditions. As our business becomes increasingly competitive, regulatory disparities between us and our competitors could impede our ability to compete.

We are subject to franchising requirements that could impede our expansion opportunities.

        We may be required to obtain from municipal authorities operating franchises to install or expand facilities. Some of these franchises may require us to pay franchise fees. These franchising requirements generally apply to our fiber transport and competitive local exchange carrier ("CLEC") operations. These requirements could delay us in expanding our operations or increase the costs of providing these services.

We are exposed to risks arising out of recent legislation affecting U.S. public companies.

        Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and related regulations implemented by the SEC, the New York Stock Exchange and the Public Company Accounting Oversight Board, are increasing legal and financial compliance costs and making some activities more time consuming. Any future failure to successfully or timely complete annual assessments of our internal controls required by Section 404 of the Sarbanes-Oxley Act could subject us to sanctions or investigation by regulatory authorities. Any such action could adversely affect our financial results or investors' confidence in us.

        For a more thorough discussion of the regulatory issues that may affect our business, see Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2011.

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Risks Affecting our Liquidity

CenturyLink's and our high debt levels pose risks to our viability and may make us more vulnerable to adverse economic and competitive conditions, as well as other adverse developments.

        Our parent, CenturyLink, and we continue to carry significant debt. As of June 30, 2012, our consolidated debt was approximately $10.8 billion, which was included in CenturyLink's consolidated debt of approximately $21.6 billion as of that date. Approximately $3.0 billion of CenturyLink's debt securities, which includes approximately $1.9 billion of our debt securities, come due over the next three years. While we currently believe CenturyLink and we will have the financial resources to meet or refinance our obligations when they come due, we cannot fully anticipate our future condition or that of CenturyLink, the credit markets or the economy generally. We may have unexpected expenses and liabilities, and we may have limited access to financing.

        We expect to periodically require financing to meet our debt obligations as they come due. Due to the unstable economy and the current credit market environment, we may not be able to refinance maturing debt at terms that are as favorable as those from which we previously benefited, at terms that are acceptable to us or at all. We may also need to obtain additional financing or investigate other methods to generate cash (such as further cost reductions or the sale of assets) if revenues and cash provided by operations decline, if economic conditions weaken, if competitive pressures increase, if we are required to contribute a material amount of cash to our collective pension plans, if we are required to begin to pay other post-retirement benefits significantly earlier than is anticipated, if CenturyLink or we become subject to significant judgments or settlements in one or more of the matters discussed in Note 9—Commitments and Contingencies to our consolidated financial statements in Item 1 of Part I of this report or Item 1 of Part I in CenturyLink's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. We can give no assurance that this additional financing will be available on terms that are acceptable to us or at all. If we are able to obtain additional financing, our credit ratings could be adversely affected, which could further raise our borrowing costs and further limit our future access to capital and our ability to satisfy our debt obligations.

        Our significant levels of debt can adversely affect us in several other respects, including (i) exposing us to the risk of credit rating downgrades, which would raise our borrowing costs, (ii) hindering our flexibility to plan for or react to changing market, industry or economic conditions, (iii) limiting our ability to access the capital markets, (iv) limiting the amount of free cash flow available for future operations, acquisitions, dividends, or other uses, (v) making us more vulnerable to economic or industry downturns, including interest rate increases, and (vi) placing us at a competitive disadvantage compared to less leveraged competitors.

        Certain of our debt issues have cross payment default or cross acceleration provisions. When present, these provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. Any such event could adversely affect our ability to conduct business or access the capital markets and could adversely impact our credit ratings. See "Liquidity and Capital Resources" in Item 2 of Part I of this report for additional information about CenturyLink's credit facility.

We may be unable to significantly reduce the substantial capital requirements or operating expenses necessary to continue to operate our business, which may in turn affect our operating results.

        The industry in which we operate is capital intensive, and we anticipate that our capital requirements will continue to be significant in the coming years. Although we have reduced our operating expenses over the past few years, we may be unable to further significantly reduce these costs, even if revenues in some areas of our business are decreasing. While we believe that our planned level of capital expenditures will meet both our maintenance and our core growth requirements going forward, this may not be the case if circumstances underlying our expectations change.

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Adverse changes in the value of assets or obligations associated with our qualified pension plan could negatively impact our liquidity.

        The funded status of our qualified pension plan is the difference between the value of plan assets and the benefit obligation. The accounting unfunded status of our qualified pension plan was $627 million as of December 31, 2011. Adverse changes in interest rates or market conditions, among other assumptions and factors, could cause a significant increase in our benefit obligation or a significant decrease in the value of plan assets. These adverse changes could require us to contribute a material amount of cash to our pension plan or could accelerate the timing of required cash payments. Based on current laws and circumstances, (i) we will not be required to make a cash contribution to this plan in 2012 and (ii) we do not expect we will be required to make a contribution in 2013. The amount of required contributions to our plan in 2013 and beyond will depend on earnings on plan investments, prevailing interest and discount rates, demographic experience, changes in plan benefits and changes in funding laws and regulations. Any future material cash contributions could have a negative impact on our liquidity by reducing our cash flows.

Our debt agreements and the debt agreements of CenturyLink and its other subsidiaries allow us to incur significantly more debt, which could exacerbate the other risks described in this report.

        The terms of our debt instruments and the debt instruments of CenturyLink and its other subsidiaries permit additional indebtedness. Additional debt may be necessary for many reasons, including to adequately respond to competition, to comply with regulatory requirements related to our service obligations or for financial reasons alone. Incremental borrowings on terms that impose additional financial risks could exacerbate the other risks described in this report.

CenturyLink and QC plan to access the public debt markets, and we cannot assure you that these markets will remain free of disruptions.

        CenturyLink has a significant amount of indebtedness that it intends to refinance over the next several years, principally it expects through the issuance of debt securities of CenturyLink, QC or both. CenturyLink's ability to arrange additional financing will depend on, among other factors, the financial position and performance of CenturyLink and QC, as well as prevailing market conditions and other factors beyond its control. Prevailing market conditions could be adversely affected by the ongoing disruptions in the European sovereign debt markets, the failure of the United States to reduce its deficit in amounts deemed to be sufficient, possible further downgrades in the credit ratings of the U.S. debt, contractions or limited growth in the economy or other similar adverse economic developments in the U.S. or abroad. As a result, CenturyLink cannot assure you that it will be able to obtain additional financing on terms acceptable to us or at all. Any such failure to obtain additional financing could jeopardize its and our ability to repay, refinance or reduce debt obligations.

Other Risks

If we fail to extend or renegotiate our collective bargaining agreements with our labor unions as they expire from time to time, or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed.

        As of June 30, 2012, we had approximately 26,000 employees, of which approximately 13,000, or 50%, were members of either the International Brotherhood of Electrical Workers ("IBEW") or the Communications Workers of America ("CWA"). From time to time, our labor agreements with these unions lapse, and we typically negotiate the terms of new agreements. Our current four-year agreements with the IBEW and CWA will expire October 6, 2012. We cannot predict the outcome of these negotiations.

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        We may be unable to reach new agreements, and union employees may engage in strikes, work slowdowns or other labor actions, which could materially disrupt our ability to provide services and result in increased cost to us. In addition, new labor agreements may impose significant new costs on us, which could impair our financial condition or results of operations in the future. To the extent they contain benefit provisions, these agreements also limit our flexibility to change benefits in response to industry or competitive changes. In particular, the post-employment benefits provided under these agreements cause us to incur costs not faced by many of our competitors, which could ultimately hinder our competitive position.

We regularly transfer our cash to CenturyLink, which exposes us to certain risks.

        Under our cash management arrangement with CenturyLink, we regularly transfer our cash to CenturyLink, which we recognize on our balance sheet as advances to affiliates. Although CenturyLink periodically repays these advances to fund our cash requirements throughout the year, at any given point in time CenturyLink may owe us a substantial sum under this arrangement. Accordingly, developments that adversely impact CenturyLink could adversely impact our ability to collect these advances.

If conditions or assumptions differ from the judgments, assumptions or estimates used in our critical accounting policies, the accuracy of our financial statements and related disclosures could be affected.

        The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes. Our critical accounting policies, which are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that are considered "critical" because they require judgments, assumptions and estimates that materially impact our consolidated financial statements and related disclosures. As a result, if future events or assumptions differ significantly from the judgments, assumptions and estimates in our critical accounting policies, these events or assumptions could have a material impact on our consolidated financial statements and related disclosures.

Tax audits or changes in tax laws could adversely affect us.

        For periods after the April 1, 2011 closing of CenturyLink's acquisition of us, we are included in the consolidated federal income tax return of CenturyLink. As such, we could be severally liable for tax examinations and adjustments attributable to other members of the CenturyLink affiliated group. Significant taxpayers (such as QCII for periods prior to the CenturyLink acquisition and CenturyLink for periods after the CenturyLink acquisition) are subject to frequent and regular audits by the Internal Revenue Service as well as state and local tax authorities. These audits could subject us to tax liabilities if adverse positions are taken by these tax authorities.

        Tax sharing agreements have been executed between us and previous affiliates, and we believe the liabilities, if any, arising from adjustments to previously filed returns would be borne by the affiliated group member determined to have a deficiency under the terms and conditions of such agreements and applicable tax law. We have not generally provided for liabilities attributable to former affiliated companies or for claims they have asserted or may assert against us.

        We believe that we have adequately provided for tax contingencies. However, our tax audits and examinations may result in tax liabilities that differ materially from those that we have recognized in our consolidated financial statements. Because the ultimate outcomes of all of these matters are uncertain, we can give no assurance as to whether an adverse result from one or more of them will have a material effect on our financial results.

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ITEM 6.    EXHIBITS

        Exhibits identified in parentheses below are on file with the SEC and are incorporated herein by reference. All other exhibits are provided as part of this electronic submission.(1)

Exhibit Number		Description
	2.1	Agreement and Plan of Merger, dated as of April 21, 2010, by and among Qwest Communications International Inc., CenturyLink, Inc. and SB44 Acquisition Company (incorporated by reference to Exhibit 2.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on April 22, 2010).
	3.1	Amended and Restated Certificate of Incorporation of Qwest Communications International Inc. (incorporated by reference to Exhibit 3.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on April 5, 2011).
	3.2	Bylaws of Qwest Communications International Inc. (incorporated by reference to Exhibit 3.2 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on April 5, 2011).
	4.1	Indenture, dated as of April 15, 1990, by and between The Mountain States Telephone and Telegraph Company (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.2 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).
		a.	First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.3 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).
	4.2	Indenture, dated as of April 15, 1990, by and between Northwestern Bell Telephone Company (predecessor to Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.5(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended March 31, 2012 (File No. 001-07784) filed with the Securities and Exchange Commission on May 10, 2012).
		a.	First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. (currently named Qwest Corporation) and The First National Bank of Chicago (incorporated by reference to Exhibit 4.3 of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 2002 (File No. 001-03040) filed with the Securities and Exchange Commission on January 13, 2004).

(1)

Certain of the items in Sections 4.1 through 4.7 (i) omit supplemental indentures or other instruments governing debt that has been retired, or (ii) refer to trustees who may have been replaced, acquired or affected by similar changes. In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, copies of certain instruments defining the rights of holders of certain of our long-term debt are not filed herewith. Pursuant to this regulation, we hereby agree to furnish a copy of any such instrument to the SEC upon request.

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Exhibit Number		Description
	4.3	Indenture, dated as of June 29, 1998, by and among U S WEST Capital Funding, Inc. (currently named Qwest Capital Funding, Inc.), U S WEST, Inc. (predecessor to Qwest Communications International Inc.) and The First National Bank of Chicago, as trustee (incorporated by reference to Exhibit 4(a) of U S WEST, Inc.'s Current Report on Form 8-K (File No. 001-14087) filed with the Securities and Exchange Commission on November 18, 1998).
		a.	First Supplemental Indenture, dated as of June 30, 2000, by and among U S WEST Capital Funding, Inc. (currently named Qwest Capital Funding, Inc.), U S WEST, Inc. (predecessor to Qwest Communications International Inc.) and Bank One Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.10 of Qwest Communications International Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2000 (File No. 001-15577) filed with the Securities and Exchange Commission on August 11, 2000).
	4.4	Indenture, dated as of November 4, 1998, by and between Qwest Communications International Inc. and Bankers Trust Company (incorporated by reference to Exhibit 4.1(e) of Qwest Communications International Inc.'s Registration Statement on Form S-4 (File No. 333-71603) filed with the Securities and Exchange Commission on February 2, 1999).
	4.5	Indenture, dated as of November 27, 1998, by and between Qwest Communications International Inc. and Bankers Trust Company (incorporated by reference to Exhibit 4.1(d) of Qwest Communications International Inc.'s Registration Statement on Form S-4 (File No. 333-71603) filed with the Securities and Exchange Commission on February 2, 1999).
	4.6	Indenture, dated as of October 15, 1999, by and between U S West Communications, Inc. (currently named Qwest Corporation) and Bank One Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4(b) of Qwest Corporation's Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 001-03040) filed with the Securities and Exchange Commission on March 3, 2000).
		a.	First Supplemental Indenture, dated as of August 19, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.22 of Qwest Communications International Inc.'s Quarterly Report on Form 10-Q for the period ended September 30, 2004 (File No. 001-15577) filed with the Securities and Exchange Commission on November 5, 2004).
		b.	Third Supplemental Indenture, dated as of June 17, 2005, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.2 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on June 23, 2005).
		c.	Fourth Supplemental Indenture, dated as of August 8, 2006, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on August 8, 2006).
		d.	Fifth Supplemental Indenture, dated as of May 16, 2007, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on May 18, 2007).

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Exhibit Number		Description
		e.	Sixth Supplemental Indenture, dated as of April 13, 2009, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on April 13, 2009).
		f.	Seventh Supplemental Indenture, dated as of June 8, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.8 of Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on June 7, 2011).
		g.	Eighth Supplemental Indenture, dated as of September 21, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.9 of Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on September 20, 2011).
		h.	Ninth Supplemental Indenture, dated as of October 4, 2011, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Corporation's Current Report on Form 8-K (File No. 001-03040) filed with the Securities and Exchange Commission on October 4, 2011).
		i.	Tenth Supplemental Indenture, dated as of April 2, 2012, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on March 30, 2012).
		j.	Eleventh Supplemental Indenture, dated as of June 25, 2012, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporation's Form 8-A (File No. 001-03040) filed with the Securities and Exchange Commission on June 22, 2012).
	4.7	Indenture, dated as of February 5, 2004, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and J.P. Morgan Trust Company, National Association (incorporated by reference to 4.17 of Qwest Communications International Inc.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 001-15577) filed with the Securities and Exchange Commission on March 11, 2004).
		a.	First Supplemental Indenture, dated as of June 17, 2005, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on June 23, 2005).
		b.	Third Supplemental Indenture, dated as of September 17, 2009, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on September 21, 2009).

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Exhibit Number		Description
		c.	Fourth Supplemental Indenture, dated as of January 12, 2010, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on January 13, 2010).
	4.8	Revolving Promissory Note, dated as of April 18, 2012, pursuant to which Qwest Corporation may borrow from an affiliate of CenturyLink, Inc. up to $1.0 billion on a revolving basis (incorporated by reference to Exhibit 4.7(b) of CenturyLink, Inc.'s Quarterly Report on Form 10-Q for the period ended June 30, 2012 (File No 001-07784) filed with the Securities and Exchange Commission on August 9, 2012).
	10.1	Registration Rights Agreement, dated as of September 17, 2009, by and among Qwest Communications International Inc. and the initial purchasers listed therein (incorporated by reference to Exhibit 10.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed on September 21, 2009).
	10.2	Registration Rights Agreement, dated as of January 12, 2010, among Qwest Communications International Inc. and the initial purchasers listed therein (incorporated by reference to Exhibit 10.1 of Qwest Communications International Inc.'s Current Report on Form 8-K (File No. 001-15577) filed with the Securities and Exchange Commission on January 13, 2010).
	31.1*	Certification of the Chief Executive Officer of CenturyLink, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2*	Certification of the Chief Financial Officer of CenturyLink, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32*	Certification of the Chief Executive Officer and Chief Financial Officer of CenturyLink, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101*	Financial statements from the Quarterly Report on Form 10-Q of Qwest Communications International Inc. for the period ended June 30, 2012, formatted in XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholder's Equity (Deficit) and (vi) the Notes to the Consolidated Financial Statements.

*

Exhibit filed herewith.

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SIGNATURE

        Pursuant to the requirements of Section 13 or 15(d) 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 on August 14, 2012.

QWEST COMMUNICATIONS INTERNATIONAL INC., A DELAWARE CORPORATION
By:	/s/ DAVID D. COLE David D. Cole Senior Vice President, Controller and Operations Support (Chief Accounting Officer)

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EX-31.1

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Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Glen F. Post, III, Chief Executive Officer and President, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Qwest Communications International Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors:

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2012

/s/ GLEN F. POST, III

Glen F. Post, III

Chief Executive Officer and President

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Exhibit 31.1

EX-31.2

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Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, R. Stewart Ewing, Jr., Executive Vice President, Chief Financial Officer and Assistant Secretary, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Qwest Communications International Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)

evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors:

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2012

/s/ R. STEWART EWING, JR.

R. Stewart Ewing, Jr.

Executive Vice President, Chief Financial Officer and Assistant Secretary

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Exhibit 31.2

EX-32

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Exhibit 32

Chief Executive Officer and Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Each of the undersigned, acting in his capacity as the Chief Executive Officer or Chief Financial Officer of Qwest Communications International Inc. ("Qwest"), certifies that, to his knowledge, the Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 of Qwest fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Qwest as of the dates and for the periods covered by such report.

        A signed original of this statement has been provided to Qwest and will be retained by Qwest and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 14, 2012	By:	/s/ GLEN F. POST, III Glen F. Post, III Chief Executive Officer and President
Dated: August 14, 2012	By:	/s/ R. STEWART EWING, JR. R. Stewart Ewing, Jr. Executive Vice President, Chief Financial Officer and Assistant Secretary

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Exhibit 32

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Commitments and Contingencies (Details)	1 Months Ended		6 Months Ended	1 Months Ended
	Jun. 30, 2012 KPNQwest, N.V. tort and mismanagement claims under Dutch law USD ($)	Sep. 30, 2010 KPNQwest, N.V. tort and mismanagement claims under Dutch law EUR (€)	Jun. 30, 2012 KPNQwest, N.V. tort and mismanagement claims, federal courts in New Jersey and Colorado item	Jun. 30, 2012 Cargill Financial Markets, Plc and Citibank, N.A. USD ($)	Sep. 30, 2006 Cargill Financial Markets, Plc and Citibank, N.A. EUR (€)	Jun. 30, 2012 Fiber-optic cable installation item	Apr. 06, 2012 Term loan guaranteed CenturyLink, Inc. Credit facility USD ($)	Apr. 05, 2012 Term loan guaranteed CenturyLink, Inc. Credit facility USD ($)	Apr. 18, 2012 Term loan guaranteed CenturyLink, Inc. Term loan USD ($)
Commitments and Contingencies
Damages sought by plaintiff	$ 275,000,000	€ 4,200,000,000		$ 5,300,000,000	€ 219,000,000
Number of lawsuits previously filed and dismissed			2
Number of lawsuits previously filed						2
Maximum borrowing capacity							2,000,000,000	1,700,000,000
Amount guaranteed									$ 440,000,000

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Goodwill, Customer Relationships and Other Intangible Assets (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended				6 Months Ended	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Customer relationships Y	Dec. 31, 2011 Customer relationships	Jun. 30, 2012 Capitalized software Y	Dec. 31, 2011 Capitalized software	Jun. 30, 2012 Tradename and patent	Dec. 31, 2011 Tradename and patent	Jun. 30, 2012 Other intangible assets Y	Mar. 31, 2011 Predecessor
Goodwill, Customer Relationships and Other Intangible Assets
Goodwill	$ 10,123		$ 10,123	$ 10,123
Goodwill, Customer Relationships and Other Intangible Assets
Customer relationships, net	6,300		6,300	6,788	6,300	6,788
Other intangible assets subject to amortization	1,422		1,422	1,587			1,329	1,460	93	127
Accumulated amortization amount					1,258	770	556	354	96	61
Other intangible assets subject to amortization
Estimated life (in years)					10						4
Estimated life, maximum (in years)							7
Amortization expense	$ 364	$ 399	$ 727									$ 58

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Employee Benefits (Tables)

6 Months Ended

Jun. 30, 2012

Pension Plan

Employee Benefits

Schedule of components of net periodic pension (income) and post-retirement benefit expense

	Pension Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	15			29			13			14
Interest cost		97			196			108			104
Expected return on plan assets		(144	)		(288	)		(139	)		(133	)
Recognition of prior service cost		—			—			—			(6	)
Recognition of net actuarial loss		—			—			—			31
Net periodic pension (income) expense	$	(32	)		(63	)		(18	)		10

Post-Retirement Benefit Plan

Employee Benefits

Schedule of components of net periodic pension (income) and post-retirement benefit expense

	Post-Retirement Benefit Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	2			4			1			2
Interest cost		37			73			41			41
Expected return on plan assets		(10	)		(21	)		(12	)		(13	)
Recognition of prior service cost		—			—			—			(24	)
Recognition of net actuarial loss		—			—			—			10
Net periodic post-retirement benefit expense	$	29			56			30			16

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Financial Statements of Guarantors (Details) (USD $) In Billions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 item
Financial Statements of Guarantors
Number of subsidiaries providing guarantees	2
QSC and QCF
Financial Statements of Guarantors
Ownership percentage	100.00%
QSC and QCF | Payment guarantees | QCII Guaranteed Notes
Financial Statements of Guarantors
Guaranteed principal outstanding debt instrument	1.4
QCII | Payment guarantees | QCF Guaranteed Notes
Financial Statements of Guarantors
Guaranteed principal outstanding debt instrument	1.0

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Fair Value Disclosure (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Input Level 2, Fair Value
Liabilities
Long-term debt excluding capital lease obligations	$ 10,772	$ 12,052
Carrying Amount
Liabilities
Long-term debt excluding capital lease obligations	$ 10,478	$ 11,925

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation

Basis of Presentation

(1) Basis of Presentation

        We are an integrated communications company engaged primarily in providing an array of communications services to our residential, business, governmental and wholesale customers. Our communications services include local and long-distance, network access, private line (including special access), broadband, data, managed hosting, wireless and video services. In certain local and regional markets, we also provide local access and fiber transport services to competitive local exchange carriers.

        We generate the majority of our revenues from services provided in the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming. We refer to this region as our local service area.

        On April 1, 2011, we became a wholly owned subsidiary of CenturyLink, Inc. in a tax-free, stock-for-stock transaction. Although we have continued as a surviving corporation and legal entity since the acquisition, the accompanying consolidated statements of operations, comprehensive income (loss), cash flows and stockholder's equity (deficit) are presented for two periods: predecessor and successor, which relate to the period preceding the acquisition and the period succeeding the acquisition, respectively. On the date of the acquisition, April 1, 2011, our assets and liabilities were recognized at their fair value. This revaluation has been reflected in our financial statements and, therefore, has resulted in a new basis of accounting for the "successor period". This new basis of accounting means that our financial statements for the successor periods are not comparable to our financial statements relating to periods prior to the acquisition, including the predecessor period financial statements in this report.

        Our consolidated balance sheet as of the successor date of December 31, 2011, which was derived from our audited financial statements, and our unaudited interim consolidated financial statements provided herein have been prepared in accordance with the instructions for Form 10-Q. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission ("SEC"); however, in our opinion, the disclosures made are adequate to make the information presented not misleading. We believe that these consolidated financial statements include all normal recurring adjustments necessary to fairly present the results for the interim periods. The results of operations for the first six months of the year are not indicative of the results of operations that might be expected for the entire year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011.

        The accompanying consolidated financial statements include our accounts and the accounts of our subsidiaries over which we exercise control. All intercompany amounts and transactions with our consolidated subsidiaries have been eliminated.

        We provide to our affiliates telecommunications services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services. We also purchase services from our affiliates including telecommunications services, marketing and employee-related support services. In the normal course of business, we transfer assets and liabilities to and from CenturyLink and its affiliates based on their respective carrying values. We have recognized $38 million of non-cash dividends associated with asset transfers to CenturyLink during the successor six months ended June 30, 2012.

        Effective January 1, 2012, in connection with post-acquisition systems integration activities, we adopted the affiliate expense allocation methodology used by our parent. This methodology results in certain overhead costs incurred by us and by our parent that were previously assessed to us on a net basis now being assessed on a gross basis both to and from our parent, resulting in both higher affiliate revenues and expenses for us. We believe this change, resulting from systems integration activities, did not have a significant impact to our net income for the successor three and six months ended June 30, 2012.

        During the first quarter of 2012, in connection with post-acquisition systems integration activities, CenturyLink changed certain cash management processes applicable to us. Therefore, we now present the balances related to these cash management transactions on a net basis with our other affiliate transactions.

        Effective January 1, 2012, we changed our rates of capitalized labor as we transitioned certain legacy systems to the historical systems of our parent, CenturyLink. This transition resulted in an estimated $20 million to $30 million increase in the amount of labor capitalized as an asset compared to the amount that would have been capitalized if we had continued to use our legacy systems and a corresponding estimated $20 million to $30 million decrease in operating expenses for the successor six months ended June 30, 2012. This change is expected to result in an estimated operating expense reduction of approximately $30 million to $50 million for the successor year ending December 31, 2012. The reduction in expenses described above, net of tax, increased net income approximately $12 million to $18 million for the successor six months ended June 30, 2012 and is expected to increase net income by approximately $18 million to $30 million for the successor year ending December 31, 2012.

        Effective January 1, 2012, we changed our estimates of the economic lives of certain telecommunications equipment. These changes resulted in a decrease to depreciation expense of approximately $23 million and $46 million for the successor three and six months ended June 30, 2012, respectively, and are expected to result in decreased depreciation expense of approximately $92 million for the successor year ending December 31, 2012. This decrease in depreciation expense, net of tax, had the effect of increasing net income by approximately $15 million and $30 million for the successor three and six months ended June 30, 2012, respectively, and is expected to result in higher net income by approximately $60 million of the successor year ending December 31, 2012.

        On April 2, 2012, our subsidiary, Qwest Corporation ("QC"), sold an office building for net proceeds of $133 million. As part of the transaction, QC agreed to lease a portion of the building from the new owner. As a result, the $16 million gain from the sale was deferred and will be recognized as a reduction to rent expense over the 10 year lease term.

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Financial Statements of Guarantors (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2012 QCII	Jun. 30, 2011 QCII	Jun. 30, 2012 QCII	Jun. 30, 2012 QSC and QCF	Jun. 30, 2011 QSC and QCF	Jun. 30, 2012 QSC and QCF	Jun. 30, 2012 Subsidiaries Non-Guarantors	Jun. 30, 2011 Subsidiaries Non-Guarantors	Jun. 30, 2012 Subsidiaries Non-Guarantors	Jun. 30, 2012 Eliminations	Jun. 30, 2011 Eliminations	Jun. 30, 2012 Eliminations	Mar. 31, 2011 Predecessor	Mar. 31, 2011 Predecessor QCII	Mar. 31, 2011 Predecessor QSC and QCF	Mar. 31, 2011 Predecessor Subsidiaries Non-Guarantors	Mar. 31, 2011 Predecessor Eliminations
OPERATING REVENUES
Operating revenues	$ 2,736	$ 2,763	$ 5,461							$ 2,736	$ 2,763	$ 5,461				$ 2,846			$ 2,846
Operating revenues-affiliates	100	6	214				1	3	3	100	15	214	(1)	(12)	(3)			2	9	(11)
Total operating revenues	2,836	2,769	5,675				1	3	3	2,836	2,778	5,675	(1)	(12)	(3)	2,846		2	2,855	(11)
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)	1,213	1,141	2,388							1,213	1,141	2,388				1,178			1,178
Selling, general and administrative	444	656	928	1	5	3	1	3	3	442	648	922				556	3	2	551
Operating expenses-affiliates	150	32	299							151	44	302	(1)	(12)	(3)				11	(11)
Depreciation and amortization	738	802	1,479	16	22	34				722	780	1,445				533			533
Total operating expenses	2,545	2,631	5,094	17	27	37	1	3	3	2,528	2,613	5,057	(1)	(12)	(3)	2,267	3	2	2,273	(11)
OPERATING (LOSS) INCOME	291	138	581	(17)	(27)	(37)				308	165	618				579	(3)		582
OTHER INCOME (EXPENSE)
Interest expense	(154)	(150)	(324)	(25)	(44)	(64)	(16)	(18)	(34)	(113)	(88)	(226)				(227)	(56)	(19)	(152)
Interest expense-affiliates	(30)		(34)	(21)	(4)	(22)	(28)	(23)	(54)	(8)	1	(11)	27	26	53		(1)	(26)	(1)	28
Interest income-affiliates							27	26	53				(27)	(26)	(53)			28		(28)
Income (loss) from equity investments in subsidiaries				91	67	217	15	(52)	60				(106)	(15)	(277)		272	226		(498)
Net loss on early retirement of debt	(45)	(1)	(37)							(45)	(1)	(37)
Other income	2		3	5		13				(3)		(10)				5		(1)	6
Total other income (expense)	(227)	(151)	(392)	50	19	144	(2)	(67)	25	(169)	(88)	(284)	(106)	(15)	(277)	(222)	215	208	(147)	(498)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE	64	(13)	189	33	(8)	107	(2)	(67)	25	139	77	334	(106)	(15)	(277)	357	212	208	435	(498)
Income tax expense	27		75	(4)	5	(7)	(93)	(131)	(192)	124	126	274				146	1	(64)	209
NET INCOME (LOSS)	37	(13)	114	37	(13)	114	91	64	217	15	(49)	60	(106)	(15)	(277)	211	211	272	226	(498)
COMPREHENSIVE INCOME	$ 37	$ (13)	$ 114	$ 37	$ (13)	$ 114	$ 91	$ 64	$ 217	$ 15	$ (49)	$ 60	$ (106)	$ (15)	$ (277)	$ 218	$ 218	$ 272	$ 226	$ (498)

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Basis of Presentation (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Basis of Presentation
Number of states in which service is provided	14
CenturyLink, Inc.
Basis of Presentation
Non-cash dividends recognized	$ 38

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Financial Statements of Guarantors (Tables)

6 Months Ended

Jun. 30, 2012

Financial Statements of Guarantors

Schedule of CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,736			—			2,736
Operating revenues—affiliates		—			1			100			(1	)		100
Total operating revenues		—			1			2,836			(1	)		2,836
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,213			—			1,213
Selling, general and administrative		1			1			442			—			444
Operating expenses—affiliates		—			—			151			(1	)		150
Depreciation and amortization		16			—			722			—			738
Total operating expenses		17			1			2,528			(1	)		2,545
OPERATING (LOSS) INCOME		(17	)		—			308			—			291
OTHER INCOME (EXPENSE)
Interest expense		(25	)		(16	)		(113	)		—			(154	)
Interest expense—affiliates		(21	)		(28	)		(8	)		27			(30	)
Interest income—affiliates		—			27			—			(27	)		—
Income from equity investments in subsidiaries		91			15			—			(106	)		—
Net loss on early retirement of debt		—			—			(45	)		—			(45	)
Other income (expense)		5			—			(3	)		—			2
Total other income (expense)		50			(2	)		(169	)		(106	)		(227	)
INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE		33			(2	)		139			(106	)		64
Income tax (benefit) expense		(4	)		(93	)		124			—			27
NET INCOME	$	37			91			15			(106	)		37
COMPREHENSIVE INCOME	$	37			91			15			(106	)		37

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			5,461			—			5,461
Operating revenues—affiliates		—			3			214			(3	)		214
Total operating revenues		—			3			5,675			(3	)		5,675
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			2,388			—			2,388
Selling, general and administrative		3			3			922			—			928
Operating expenses—affiliates		—			—			302			(3	)		299
Depreciation and amortization		34			—			1,445			—			1,479
Total operating expenses		37			3			5,057			(3	)		5,094
OPERATING (LOSS) INCOME		(37	)		—			618			—			581
OTHER INCOME (EXPENSE)
Interest expense		(64	)		(34	)		(226	)		—			(324	)
Interest expense—affiliates		(22	)		(54	)		(11	)		53			(34	)
Interest income—affiliates		—			53			—			(53	)		—
Income from equity investments in subsidiaries		217			60			—			(277	)		—
Net loss on early retirement of debt		—			—			(37	)		—			(37	)
Other income (expense)		13			—			(10	)		—			3
Total other income (expense)		144			25			(284	)		(277	)		(392	)
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		107			25			334			(277	)		189
Income tax (benefit) expense		(7	)		(192	)		274			—			75
NET INCOME	$	114			217			60			(277	)		114
COMPREHENSIVE INCOME	$	114			217			60			(277	)		114

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,763			—			2,763
Operating revenues—affiliates		—			3			15			(12	)		6
Total operating revenues		—			3			2,778			(12	)		2,769
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,141			—			1,141
Selling, general and administrative		5			3			648			—			656
Operating expenses—affiliates		—			—			44			(12	)		32
Depreciation and amortization		22			—			780			—			802
Total operating expenses		27			3			2,613			(12	)		2,631
OPERATING (LOSS) INCOME		(27	)		—			165			—			138
OTHER INCOME (EXPENSE)
Interest expense		(44	)		(18	)		(88	)		—			(150	)
Interest expense—affiliates		(4	)		(23	)		1			26			—
Interest income—affiliates		—			26			—			(26	)		—
Income from equity investments in subsidiaries		67			(52	)		—			(15	)		—
Net loss on early retirement of debt		—			—			(1	)		—			(1	)
Total other income (expense)		19			(67	)		(88	)		(15	)		(151	)
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		(8	)		(67	)		77			(15	)		(13	)
Income tax (benefit) expense		5			(131	)		126			—			—
NET (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)
COMPREHENSIVE (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,846			—			2,846
Operating revenues—affiliates		—			2			9			(11	)		—
Total operating revenues		—			2			2,855			(11	)		2,846
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,178			—			1,178
Selling, general and administrative		3			2			551			—			556
Operating expenses—affiliates		—			—			11			(11	)		—
Depreciation and amortization		—			—			533			—			533
Total operating expenses		3			2			2,273			(11	)		2,267
OPERATING (LOSS) INCOME		(3	)		—			582			—			579
OTHER INCOME (EXPENSE)
Interest expense		(56	)		(19	)		(152	)		—			(227	)
Interest expense—affiliates		(1	)		(26	)		(1	)		28			—
Interest income—affiliates		—			28			—			(28	)		—
Income from equity investments in subsidiaries		272			226			—			(498	)		—
Other income (expense)		—			(1	)		6			—			5
Total other income (expense)		215			208			(147	)		(498	)		(222	)
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)		212			208			435			(498	)		357
Income tax expense (benefit)		1			(64	)		209			—			146
NET INCOME	$	211			272			226			(498	)		211
COMPREHENSIVE INCOME	$	218			272			226			(498	)		218

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

Schedule of CONDENSED CONSOLIDATING BALANCE SHEETS

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		27		14		—			41
Accounts receivable, less allowance		43		—		1,177		—			1,220
Accounts receivable—affiliates, net		—		1,109		1,208		(2,244	)		73
Notes receivable—affiliates		—		1,413		—		(1,413	)		—
Deferred income taxes, net		—		430		123		—			553
Other		23		—		283		—			306
Total current assets		66		2,979		2,805		(3,657	)		2,193
Net property, plant and equipment		—		—		9,147		—			9,147
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,300		—			6,300
Other intangible assets, net		92		—		1,330		—			1,422
Investments in subsidiaries		14,284		13,788		—		(28,072	)		—
Deferred income taxes, net		1,102		1,029		—		(2,131	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,777		76		957		(3,810	)		—
Other		40		7		316		—			363
TOTAL ASSETS	$	18,361		17,879		30,978		(37,670	)		29,548
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		1,342		—			1,342
Accounts payable		—		1		735		—			736
Accounts payable—affiliates, net		794		—		—		(794	)		—
Notes payable—affiliates		—		1,413		583		(1,413	)		583
Dividends payable—affiliates		750		750		700		(1,450	)		750
Accrued expenses and other liabilities		246		40		679		—			965
Advance billings and customers deposits		—		—		411		—			411
Total current liabilities		1,790		2,204		4,450		(3,657	)		4,787
LONG-TERM DEBT		1,444		1,008		6,984		—			9,436
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124		—		—		—			3,124
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,033		351		2,426		(3,810	)		—
Deferred income taxes, net		—		—		2,832		(2,131	)		701
Other		168		32		498		—			698
Total deferred credits and other liabilities		4,325		383		5,756		(5,941	)		4,523
STOCKHOLDER'S EQUITY		10,802		14,284		13,788		(28,072	)		10,802
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	18,361		17,879		30,978		(37,670	)		29,548

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		40		8		—			48
Accounts receivable, less allowance		15		2		1,184		—			1,201
Accounts receivable—affiliates, net		211		336		36		(583	)		—
Advances to affiliates		184		1,694		400		(1,536	)		742
Deferred income taxes, net		—		438		121		—			559
Other		—		19		259		(13	)		265
Total current assets		410		2,529		2,008		(2,132	)		2,815
Net property, plant and equipment		—		—		9,461		—			9,461
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,788		—			6,788
Other intangible assets, net		126		—		1,461		—			1,587
Investments in subsidiaries		14,856		13,999		—		(28,855	)		—
Deferred income taxes, net		1,102		1,390		117		(2,609	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,851		76		955		(3,882	)		—
Other		36		7		338		—			381
TOTAL ASSETS	$	19,381		18,001		31,251		(37,478	)		31,155
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		117		—			117
Current debt—affiliates		122		1,413		—		(1,535	)		—
Accounts payable		4		19		950		—			973
Accounts payable—affiliates, net		360		42		23		(31	)		394
Dividends payable—affiliates		200		—		310		(310	)		200
Accrued expenses and other liabilities		272		40		700		(1	)		1,011
Accrued expenses and other—affiliates		1		62		192		(255	)		—
Advance billings and customers deposits		—		—		400		—			400
Total current liabilities		959		1,576		2,692		(2,132	)		3,095
LONG-TERM DEBT		2,767		1,009		8,403		—			12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,198		—		—		—			3,198
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,031		344		2,507		(3,882	)		—
Deferred income taxes, net		—		223		3,016		(2,609	)		630
Other		150		31		596		—			777
Total deferred credits and other liabilities		4,379		598		6,119		(6,491	)		4,605
STOCKHOLDER'S EQUITY		11,276		14,818		14,037		(28,855	)		11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	19,381		18,001		31,251		(37,478	)		31,155

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

Schedule of CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash (used in) provided by operating activities	$	(415	)		(141	)		1,647			(13	)		1,078
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(752	)		—			(752	)
Changes in advances to affiliates		184			128			(1,422	)		1,779			669
Proceeds from sale of property		—			—			133			—			133
Net cash provided by (used in) investing activities		184			128			(2,041	)		1,779			50
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		—			—			897			—			897
Payments of long-term debt		(1,299	)		—			(952	)		—			(2,251	)
Early retirement of debt costs		(49	)		—			(128	)		—			(177	)
Notes payable—affiliates		—			—			583			—			583
Accounts Payable—affiliates		1,579			—			—			(1,766	)		(187	)
Net cash used in financing activities		231			—			400			(1,766	)		(1,135	)
Net (decrease) increase in cash and cash equivalents		—			(13	)		6			—			(7	)
Cash and cash equivalents at beginning of period		—			40			8			—			48
Cash and cash equivalents at end of the period	$	—			27			14			—			41

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	(76	)		213			563			—			700
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(347	)		—			(347	)
Cash infusion to subsidiaries		—			(168	)		—			168			—
Changes in advances to affiliates		—			(243	)		(272	)		4			(511	)
Dividends received from subsidiaries		—			120			—			(120	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			(291	)		(617	)		52			(856	)
FINANCING ACTIVITIES
Payments of long-term debt		—			—			(851	)		—			(851	)
Net proceeds from (repayments of) short-term affiliate debt		76			(72	)		—			(4	)		—
Net proceeds from issuance of long-term debt		—			—			643			—			643
Cash infusion from parent		—			—			168			(168	)		—
Dividends paid to parent		—			—			(120	)		120			—
Early retirement of debt costs		—			—			(13	)		—			(13	)
Net cash used in financing activities		76			(72	)		(173	)		(52	)		(221	)
Net increase in cash and cash equivalents		—			(150	)		(227	)		—			(377	)
Cash and cash equivalents at beginning of period		—			183			241			—			424
Cash and cash equivalents at end of the period	$	—			33			14			—			47

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	7			(62	)		828			4			777
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(410	)		—			(410	)
Changes in interest in investments managed by QSC		—			(3	)		3			—			—
Cash infusion to subsidiaries		—			(191	)		—			191			—
Changes in advances to affiliates		—			180			1			(181	)		—
Dividends received from subsidiaries		—			590			—			(590	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			576			(404	)		(580	)		(408	)
FINANCING ACTIVITIES
Payments of long-term debt		—			(179	)		(24	)		—			(203	)
Net proceeds from (repayments of) short-term affiliate debt		119			(300	)		—			181			—
Dividends paid		(141	)		—			—			—			(141	)
Cash infusion from parent		—			—			191			(191	)		—
Dividends paid to parent		—			—			(590	)		590			—
Other, net		15			—			16			(4	)		27
Net cash used in financing activities		(7	)		(479	)		(407	)		576			(317	)
Net increase in cash and cash equivalents		—			35			17			—			52
Cash and cash equivalents at beginning of period		—			148			224			—			372
Cash and cash equivalents at end of the period	$	—			183			241			—			424

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

XML

Financial Statements of Guarantors (Details 3) (USD $) In Millions, unless otherwise specified	Aug. 13, 2012	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011
CURRENT ASSETS
Cash and cash equivalents		$ 41	$ 48	$ 47	$ 424
Accounts receivable, less allowance		1,220	1,201
Advances to affiliates		73	742
Deferred income taxes, net		553	559
Other		306	265
Total current assets		2,193	2,815
Net property, plant and equipment		9,147	9,461
Goodwill		10,123	10,123
Customer relationships, net		6,300	6,788
Other intangible assets, net		1,422	1,587
Other		363	381
TOTAL ASSETS		29,548	31,155
CURRENT LIABILITIES
Current maturities of long-term debt		1,342	117
Accounts payable		736	973
Accounts payable-affiliates, net			394
Notes payable-affiliates		583
Dividends payable - affiliates	550	750	200
Accrued expenses and other liabilities		965	1,011
Advance billings and customer deposits		411	400
Total current liabilities		4,787	3,095
LONG-TERM DEBT		9,436	12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124	3,198
Deferred income taxes, net		701	630
Other		698	777
Total deferred credits and other liabilities		4,523	4,605
Stockholders' equity		10,802	11,276	12,232
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY		29,548	31,155
QCII
CURRENT ASSETS
Accounts receivable, less allowance		43	15
Accounts receivable-affiliates, net			211
Advances to affiliates			184
Other		23
Total current assets		66	410
Other intangible assets, net		92	126
Investments in subsidiaries		14,284	14,856
Deferred income taxes, net		1,102	1,102
Prepaid pension, post-retirement and other post-employment benefits-affiliate		2,777	2,851
Other		40	36
TOTAL ASSETS		18,361	19,381
CURRENT LIABILITIES
Current debt-affiliates			122
Accounts payable			4
Accounts payable-affiliates, net		794	360
Dividends payable - affiliates		750	200
Accrued expenses and other liabilities		246	272
Accrued expenses and other-affiliates			1
Total current liabilities		1,790	959
LONG-TERM DEBT		1,444	2,767
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124	3,198
Pension, post-retirement and other post-employment benefits obligations and other-affiliates		1,033	1,031
Other		168	150
Total deferred credits and other liabilities		4,325	4,379
Stockholders' equity		10,802	11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY		18,361	19,381
QSC and QCF
CURRENT ASSETS
Cash and cash equivalents		27	40	33	183
Accounts receivable, less allowance			2
Accounts receivable-affiliates, net		1,109	336
Notes receivable-affiliates		1,413
Advances to affiliates			1,694
Deferred income taxes, net		430	438
Other			19
Total current assets		2,979	2,529
Investments in subsidiaries		13,788	13,999
Deferred income taxes, net		1,029	1,390
Prepaid pension, post-retirement and other post-employment benefits-affiliate		76	76
Other		7	7
TOTAL ASSETS		17,879	18,001
CURRENT LIABILITIES
Current debt-affiliates			1,413
Accounts payable		1	19
Accounts payable-affiliates, net			42
Notes payable-affiliates		1,413
Dividends payable - affiliates		750
Accrued expenses and other liabilities		40	40
Accrued expenses and other-affiliates			62
Total current liabilities		2,204	1,576
LONG-TERM DEBT		1,008	1,009
DEFERRED CREDITS AND OTHER LIABILITIES
Pension, post-retirement and other post-employment benefits obligations and other-affiliates		351	344
Deferred income taxes, net			223
Other		32	31
Total deferred credits and other liabilities		383	598
Stockholders' equity		14,284	14,818
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY		17,879	18,001
Subsidiaries Non-Guarantors
CURRENT ASSETS
Cash and cash equivalents		14	8	14	241
Accounts receivable, less allowance		1,177	1,184
Accounts receivable-affiliates, net		1,208	36
Advances to affiliates			400
Deferred income taxes, net		123	121
Other		283	259
Total current assets		2,805	2,008
Net property, plant and equipment		9,147	9,461
Goodwill		10,123	10,123
Customer relationships, net		6,300	6,788
Other intangible assets, net		1,330	1,461
Deferred income taxes, net			117
Prepaid pension, post-retirement and other post-employment benefits-affiliate		957	955
Other		316	338
TOTAL ASSETS		30,978	31,251
CURRENT LIABILITIES
Current maturities of long-term debt		1,342	117
Accounts payable		735	950
Accounts payable-affiliates, net			23
Notes payable-affiliates		583
Dividends payable - affiliates		700	310
Accrued expenses and other liabilities		679	700
Accrued expenses and other-affiliates			192
Advance billings and customer deposits		411	400
Total current liabilities		4,450	2,692
LONG-TERM DEBT		6,984	8,403
DEFERRED CREDITS AND OTHER LIABILITIES
Pension, post-retirement and other post-employment benefits obligations and other-affiliates		2,426	2,507
Deferred income taxes, net		2,832	3,016
Other		498	596
Total deferred credits and other liabilities		5,756	6,119
Stockholders' equity		13,788	14,037
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY		30,978	31,251
Eliminations
CURRENT ASSETS
Accounts receivable-affiliates, net		(2,244)	(583)
Notes receivable-affiliates		(1,413)
Advances to affiliates			(1,536)
Other			(13)
Total current assets		(3,657)	(2,132)
Investments in subsidiaries		(28,072)	(28,855)
Deferred income taxes, net		(2,131)	(2,609)
Prepaid pension, post-retirement and other post-employment benefits-affiliate		(3,810)	(3,882)
TOTAL ASSETS		(37,670)	(37,478)
CURRENT LIABILITIES
Current debt-affiliates			(1,535)
Accounts payable-affiliates, net		(794)	(31)
Notes payable-affiliates		(1,413)
Dividends payable - affiliates		(1,450)	(310)
Accrued expenses and other liabilities			(1)
Accrued expenses and other-affiliates			(255)
Total current liabilities		(3,657)	(2,132)
DEFERRED CREDITS AND OTHER LIABILITIES
Pension, post-retirement and other post-employment benefits obligations and other-affiliates		(3,810)	(3,882)
Deferred income taxes, net		(2,131)	(2,609)
Total deferred credits and other liabilities		(5,941)	(6,491)
Stockholders' equity		(28,072)	(28,855)
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY		$ (37,670)	$ (37,478)

XML

Basis of Presentation (Details 2) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended			12 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2012 Change in estimates of capitalized labor Adjustments Minimum	Jun. 30, 2012 Change in estimates of capitalized labor Adjustments Maximum	Dec. 31, 2012 Change in estimates of capitalized labor Expected Minimum	Dec. 31, 2012 Change in estimates of capitalized labor Expected Maximum	Jun. 30, 2012 Change in estimates of economic lives Adjustments	Jun. 30, 2012 Change in estimates of economic lives Adjustments	Dec. 31, 2012 Change in estimates of economic lives Expected
Change in accounting estimates
Amount of labor capitalized as an asset				$ 20	$ 30
Operating expenses	(2,545)	(2,631)	(5,094)	20	30	30	50
Depreciation expense								(23)	(46)	(92)
Net income (loss)	$ 37	$ (13)	$ 114	$ 12	$ 18	$ 18	$ 30	$ 15	$ 30	$ 60

XML

Basis of Presentation (Details 3) (Qwest Corporation, Office building, USD $) In Millions, unless otherwise specified	1 Months Ended	6 Months Ended
	Apr. 30, 2012	Jun. 30, 2012 item
Qwest Corporation | Office building
Basis of Presentation
Proceeds from sale of office building	$ 133
Amount of gain from sale of office building deferred		$ 16
Lease term (in years)		10

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) (USD $) In Millions, unless otherwise specified	Total	ADDITIONAL PAID-IN CAPITAL	ACCUMULATED OTHER COMPREHENSIVE LOSS	ACCUMULATED DEFICIT	Predecessor	Predecessor COMMON STOCK	Predecessor ADDITIONAL PAID-IN CAPITAL	Predecessor TREASURY STOCK	Predecessor ACCUMULATED OTHER COMPREHENSIVE LOSS	Predecessor ACCUMULATED DEFICIT
Balance at Dec. 31, 2010						$ 18	$ 42,285	$ (157)	$ (376)	$ (43,425)
Increase (Decrease) in Stockholder's Equity
Share-based compensation and other, net							18
Other comprehensive income									7
Net income (loss)					211					211
Dividends declared										(141)
Balance at Mar. 31, 2011		12,273			(1,560)	18	42,303	(157)	(369)	(43,355)
Increase (Decrease) in Stockholder's Equity
Net income (loss)	(13)			(13)
Dividends declared to CenturyLink, Inc.				(28)
Balance at Jun. 30, 2011	12,232	12,273		(41)
Balance at Dec. 31, 2011	11,276	12,273	(446)	(551)
Increase (Decrease) in Stockholder's Equity
Net income (loss)	114			114
Dividends declared	(550)
Dividends declared to CenturyLink, Inc.				(588)
Balance at Jun. 30, 2012	$ 10,802	$ 12,273	$ (446)	$ (1,025)

XML

Acquisition by CenturyLink (Details) (CenturyLink, Inc., USD $) In Millions, except Share data, unless otherwise specified		1 Months Ended	3 Months Ended		6 Months Ended					1 Months Ended			3 Months Ended
	Mar. 31, 2011	Apr. 30, 2011 Acquisition of Qwest	Jun. 30, 2012 Acquisition of Qwest	Jun. 30, 2011 Acquisition of Qwest	Jun. 30, 2012 Acquisition of Qwest	Apr. 02, 2011 Acquisition of Qwest	Apr. 02, 2011 Acquisition of Qwest Customer relationships	Apr. 02, 2011 Acquisition of Qwest Capitalized software	Apr. 02, 2011 Acquisition of Qwest Other intangibles	Apr. 30, 2011 Acquisition of Qwest Restrospective adjustments Change in purchase price allocation item	Apr. 02, 2011 Acquisition of Qwest Restrospective adjustments Change in purchase price allocation	Apr. 02, 2011 Acquisition of Qwest Restrospective adjustments Customer relationships Change in purchase price allocation	Mar. 31, 2011 Acquisition of Qwest Predecessor
Acquisition by CenturyLink
Number of CenturyLink shares that shareholders received for each share of common stock owned						0.1664
Number of shares of common stock issued to consummate acquisition		294,000,000
Closing stock price used to value shares issued for acquisition (in dollars per share)	$ 41.55
Estimated net value of pre-combination portion of share-based compensation awards assumed by acquiring entity						$ 52
Cash payments						5
Assignment of the aggregate consideration
Cash, accounts receivable and other current assets						2,121
Property, plant and equipment						9,529					(25)
Identifiable intangible assets							7,558	1,702	189			(67)
Other noncurrent assets						390
Current liabilities, excluding current maturities of long-term debt						(2,463)					(35)
Current maturities of long-term debt						(2,422)
Long-term debt						(10,253)
Deferred credits and other liabilities						(4,201)					100
Number of lease valuations for which revisions were made										1
Goodwill						10,123					17
Aggregate consideration						12,273
Fair value assigned to accounts receivable						1,194
Accounts receivable gross contractual value						1,274
Best estimate of contractual cash flows that would not be collected						80
Expenses related to acquisition
Acquisition related expenses			$ 3	$ 127	$ 29								$ 3

XML

Labor Union Contracts (Details)	6 Months Ended
	Jun. 30, 2012
Minimum
Labor Union Contracts
Percentage of employees who are members of various bargaining units	50.00%
Employees covered under collective bargaining agreements | Work force concentration
Labor Union Contracts
Collective bargaining agreements, term (in years)	4

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Mar. 31, 2011 Predecessor
OPERATING REVENUES
Operating revenues	$ 2,736	$ 2,763	$ 5,461	$ 2,846
Operating revenues-affiliates	100	6	214
Total operating revenues	2,836	2,769	5,675	2,846
OPERATING EXPENSES
Cost of services and products (exclusive of depreciation and amortization)	1,213	1,141	2,388	1,178
Selling, general and administrative	444	656	928	556
Operating expenses-affiliates	150	32	299
Depreciation and amortization	738	802	1,479	533
Total operating expenses	2,545	2,631	5,094	2,267
OPERATING INCOME	291	138	581	579
OTHER INCOME (EXPENSE)
Interest expense	(154)	(150)	(324)	(227)
Interest expense-affiliates	(30)		(34)
Net loss on early retirement of debt	(45)	(1)	(37)
Other income	2		3	5
Total other income (expense)	(227)	(151)	(392)	(222)
INCOME (LOSS) BEFORE INCOME TAX EXPENSE	64	(13)	189	357
Income tax expense	27		75	146
NET INCOME (LOSS)	$ 37	$ (13)	$ 114	$ 211

XML

Financial Statements of Guarantors (Details 4) (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011 QCII	Jun. 30, 2012 QCII	Jun. 30, 2011 QSC and QCF	Jun. 30, 2012 QSC and QCF	Jun. 30, 2012 Subsidiaries Non-Guarantors	Jun. 30, 2011 Subsidiaries Non-Guarantors	Jun. 30, 2012 Subsidiaries Non-Guarantors	Jun. 30, 2011 Eliminations	Jun. 30, 2012 Eliminations	Mar. 31, 2011 Predecessor	Mar. 31, 2011 Predecessor QCII	Mar. 31, 2011 Predecessor QSC and QCF	Mar. 31, 2011 Predecessor Subsidiaries Non-Guarantors	Mar. 31, 2011 Predecessor Eliminations
Financial Statements of Guarantors
Net cash (used in) provided by operating activities	$ 700	$ 1,078	$ (76)	$ (415)	$ 213	$ (141)		$ 563	$ 1,647		$ (13)	$ 777	$ 7	$ (62)	$ 828	$ 4
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software	(347)	(752)						(347)	(752)			(410)			(410)
Changes in interest in investments managed by QSC														(3)	3
Cash infusion to subsidiaries					(168)					168				(191)		191
Changes in advances to affiliates	(511)	669		184	(243)	128		(272)	(1,422)	4	1,779			180	1	(181)
Proceeds from sale of property		133							133
Dividends received from subsidiaries					120					(120)				590		(590)
Other, net	2							2				2			2
Net cash provided by (used in) investing activities	(856)	50		184	(291)	128		(617)	(2,041)	52	1,779	(408)		576	(404)	(580)
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt	643	897						643	897
Payments of long-term debt	(851)	(2,251)		(1,299)				(851)	(952)			(203)		(179)	(24)
Early retirement of debt costs	(13)	(177)		(49)			(13)	(13)	(128)
Notes payable-affiliates		583							583
Accounts payable-affiliates		(187)		1,579							(1,766)
Dividends paid to parent								(120)		120					(590)	590
Net proceeds from (repayments of) short-term affiliate debt			76		(72)					(4)			119	(300)		181
Dividends paid												(141)	(141)
Cash infusion from parent								168		(168)					191	(191)
Other, net												27	15		16	(4)
Net cash used in financing activities	(221)	(1,135)	76	231	(72)			(173)	400	(52)	(1,766)	(317)	(7)	(479)	(407)	576
Net (decrease) increase in cash and cash equivalents	(377)	(7)			(150)	(13)		(227)	6			52		35	17
Cash and cash equivalents at beginning of period	424	48			183	40		241	8			372		148	224
Cash and cash equivalents at end of period	$ 47	$ 41			$ 33	$ 27	$ 14	$ 14	$ 14			$ 424		$ 183	$ 241

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance (in dollars)	$ 77	$ 62
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	1,000	1,000
Common stock, shares issued and owned by CenturyLink	1,000	1,000

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Severance and Leased Real Estate (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended					6 Months Ended
	Jun. 30, 2012 Severance	Mar. 31, 2012 Severance	Jun. 30, 2012 Acquisition of Qwest Leased real estate	Mar. 31, 2012 Acquisition of Qwest Leased real estate	Dec. 31, 2011 Acquisition of Qwest Leased real estate	Jun. 30, 2012 Acquisition of Qwest Ceased-use leased real estate accrual Leased real estate Minimum Y	Jun. 30, 2012 Acquisition of Qwest Ceased-use leased real estate accrual Leased real estate Maximum Y	Jun. 30, 2012 Acquisition of Qwest Ceased-use leased real estate accrual Leased real estate Weighted average Y
Severance and Leased Real Estate
Current portion of leased real estate accrual			$ 32		$ 27
Noncurrent portion of leased real estate accrual			115		126
Remaining lease terms (in years)						0.1	13.5	9.1
Changes in the entity's accrued liabilities for severance expenses and leased real estate
Balance at the beginning of the period	49	29	150	153
Accrued to expense	13	45	2	1
Payments, net	(42)	(22)	(5)	(4)
Reversals and adjustments		(3)
Balance at the end of period	$ 20	$ 49	$ 147	$ 150

XML

Goodwill, Customer Relationships and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Goodwill, Customer Relationships and Other Intangible Assets

Schedule of goodwill, customer relationships and other intangible assets

	Successor
	June 30, 2012		December 31, 2011
	(Dollars in millions)
Goodwill	$	10,123		10,123
Customer relationships, less accumulated amortization of $1,258 and $770	$	6,300		6,788
Other intangible assets subject to amortization
Capitalized software, less accumulated amortization of $556 and $354		1,329		1,460
Tradenames and patents, less accumulated amortization of $96 and $61		93		127
Total other intangible assets, net	$	1,422		1,587

Summary of amortization expense

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Amortization expense	$	364		727		399		58

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Employee Benefits (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended	3 Months Ended			6 Months Ended	3 Months Ended
	Jun. 30, 2012 Pension Plan	Jun. 30, 2011 Pension Plan	Jun. 30, 2012 Pension Plan	Mar. 31, 2011 Pension Plan Predecessor	Jun. 30, 2012 Post-Retirement Benefit Plan	Jun. 30, 2011 Post-Retirement Benefit Plan	Jun. 30, 2012 Post-Retirement Benefit Plan	Mar. 31, 2011 Post-Retirement Benefit Plan Predecessor
Components of net periodic benefit (income) expense
Service cost	$ 15	$ 13	$ 29	$ 14	$ 2	$ 1	$ 4	$ 2
Interest cost	97	108	196	104	37	41	73	41
Expected return on plan assets	(144)	(139)	(288)	(133)	(10)	(12)	(21)	(13)
Recognition of prior service cost				(6)				(24)
Recognition of net actuarial loss				31				10
Net periodic pension (income) expense and post-retirement benefit expense	$ (32)	$ (18)	$ (63)	$ 10	$ 29	$ 30	$ 56	$ 16

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Severance and Leased Real Estate (Tables)

6 Months Ended

Jun. 30, 2012

Severance and Leased Real Estate

Schedule of changes in accrued liabilities for severance expenses and leased real estate

	Severance			Real Estate
	(Dollars in millions)
Balance at December 31, 2011 (Successor)	$	29			153
Accrued to expense		45			1
Payments, net		(22	)		(4	)
Reversals and adjustments		(3	)		—
Balance at March 31, 2012 (Successor)		49			150
Accrued to expense		13			2
Payments, net		(42	)		(5	)
Reversals and adjustments		—			—
Balance at June 30, 2012 (Successor)	$	20			147

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	3 Months Ended	6 Months Ended	3 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Mar. 31, 2011 Predecessor
OPERATING ACTIVITIES
Net income (loss)	$ (13)	$ 114	$ 211
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	802	1,479	533
Deferred income taxes		68	145
Provision for uncollectible accounts	21	53	19
Long-term debt (premium) discount amortization	(66)	(47)	6
Net loss on early retirement of debt	1	37
Changes in current assets and current liabilities:
Accounts receivable	(15)	(73)	61
Accounts payable	(62)	(76)	(71)
Accounts receivable and payable-affiliates, net	39	(307)
Accrued income and other taxes	(61)	(8)	31
Other current assets and other current liabilities, net	30	(27)	(117)
Changes in other noncurrent assets and liabilities	21	(139)	(53)
Other, net	3	4	12
Net cash provided by operating activities	700	1,078	777
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software	(347)	(752)	(410)
Changes in advances to affiliates	(511)	669
Proceeds from sale of property		133
Other, net	2		2
Net cash provided by (used in) investing activities	(856)	50	(408)
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt	643	897
Payments of long-term debt	(851)	(2,251)	(203)
Early retirement of debt costs	(13)	(177)
Dividends paid			(141)
Changes in notes payable-affiliates		583
Changes in accounts payable-affiliates		(187)
Other, net			27
Net cash used in financing activities	(221)	(1,135)	(317)
Net (decrease) increase in cash and cash equivalents	(377)	(7)	52
Cash and cash equivalents at beginning of period	424	48	372
Cash and cash equivalents at end of period	$ 47	$ 41	$ 424

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2011 Predecessor
NET INCOME (LOSS)	$ 211
OTHER COMPREHENSIVE INCOME:
Defined benefit pension and post-retirement plans, net of $-, $-, $- and $4 tax	7
COMPREHENSIVE INCOME (LOSS)	$ 218

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies

Commitments and Contingencies

(9) Commitments and Contingencies

        CenturyLink is involved in several legal proceedings to which we are not a party that, if resolved against CenturyLink, could have a material adverse effect on its business and financial condition. As a wholly owned subsidiary of CenturyLink, our business and financial condition could be similarly affected. You can find descriptions of these legal proceedings in CenturyLink's quarterly and annual reports filed with the SEC. Because we are not a party to the matters, we have not accrued any liabilities for such matters.

        In this section, when we refer to a class action as "putative" it is because a class has been alleged, but not certified in that matter. Until and unless a class has been certified by the court, it has not been established that the named plaintiffs represent the class of plaintiffs they purport to represent.

        We have established accrued liabilities for the matters described below where losses are deemed probable and reasonably estimable.

        The terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law may obligate us to indemnify our former directors, officers or employees with respect to certain of the matters described below, and we have been advancing legal fees and costs to certain former directors, officers or employees in connection with certain matters described below.

KPNQwest Litigation/Investigation

        On September 29, 2010, the trustees in the Dutch bankruptcy proceeding for KPNQwest, N.V. (of which we were a major shareholder) filed a lawsuit in the District Court of Haarlem, the Netherlands, alleging tort and mismanagement claims under Dutch law. We and Koninklijke KPN N.V. ("KPN") are defendants in this lawsuit along with a number of former KPNQwest supervisory board members and a former officer of KPNQwest, some of whom were formerly affiliated with us. Plaintiffs allege, among other things, that defendants' actions were a cause of the bankruptcy of KPNQwest, and they seek damages for the bankruptcy deficit of KPNQwest, which is claimed to be approximately €4.2 billion (or approximately $5.3 billion based on the exchange rate on June 30, 2012), plus statutory interest. Two lawsuits asserting similar claims were previously filed against Qwest and others in federal courts in New Jersey in 2004 and Colorado in 2009; those courts dismissed the lawsuits without prejudice on the grounds that the claims should not be litigated in the United States.

        On September 13, 2006, Cargill Financial Markets, Plc and Citibank, N.A. filed a lawsuit in the District Court of Amsterdam, the Netherlands, against us, KPN, KPN Telecom B.V., and other former officers, employees or supervisory board members of KPNQwest, some of whom were formerly affiliated with us. The lawsuit alleges that defendants misrepresented KPNQwest's financial and business condition in connection with the origination of a credit facility and wrongfully allowed KPNQwest to borrow funds under that facility. Plaintiffs allege damages of approximately €219 million (or approximately $275 million based on the exchange rate on June 30, 2012). On April 25, 2012, the court issued its judgment denying the claims asserted by Cargill and Citibank in their lawsuit. Cargill and Citibank are appealing that decision.

        We have not accrued a liability for the above matters. With regard to the trustees' action, it is premature to determine whether an accrual is warranted and, if so, a reasonable estimate of probable liability. We will continue to defend against the pending KPNQwest litigation matters vigorously.

Other Matters

        Several putative class actions relating to the installation of fiber-optic cable in certain rights-of-way were filed against Qwest on behalf of landowners on various dates and in various courts in Alabama, Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Indiana (in both Illinois and Indiana there is a federal and a state court case), Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. For the most part, the complaints challenge our right to install our fiber-optic cable in railroad rights-of-way. The complaints allege that the railroads own the right-of-way as an easement that did not include the right to permit us to install our fiber-optic cable in the right-of-way without the Plaintiffs' consent. Most of the actions purport to be brought on behalf of state-wide classes in the named Plaintiffs' respective states, although two of the currently pending actions purport to be brought on behalf of multi-state classes. Specifically, the Illinois state court action purports to be on behalf of landowners in Illinois, Iowa, Kentucky, Michigan, Minnesota, Nebraska, Ohio and Wisconsin, and the Indiana state court action purports to be on behalf of a national class of landowners. In general, the complaints seek damages on theories of trespass and unjust enrichment, as well as punitive damages. On July 18, 2008, a federal district court in Massachusetts entered an order preliminarily approving a settlement that would have resolved all of the claims now asserted in the actions described above, except the action pending in Tennessee. On December 9, 2009, the court denied final approval of the settlement on grounds that it lacked subject matter jurisdiction. The parties are now engaged in negotiating and finalizing settlements on a state-by-state basis, and have filed and received final approval of settlements in Alabama and Illinois federal court, and in Tennessee state court. Final approval also has been granted in federal court actions in Idaho, Montana and North Dakota, to which Qwest is not a party. We have accrued an amount that we believe is probable for these matters; however, the amount is not material to our financial statements.

Other

        From time to time, we are involved in other proceedings incidental to our business, including patent infringement allegations, administrative hearings of state public utility commissions relating primarily to rate making, actions relating to employee claims, various tax issues, environmental law issues, occasional grievance hearings before labor regulatory agencies and miscellaneous third party tort actions. The outcome of these other proceedings is not predictable. However, we do not believe that the ultimate resolution of these other proceedings, after considering available insurance coverage, will have a material adverse effect on our financial position, results of operations or cash flows.

        On April 6, 2012, CenturyLink, Inc. increased the available borrowing capacity under its credit facility from $1.7 billion to $2.0 billion and extended the maturity to April 2017. Also, on April 18, 2012, CenturyLink, Inc. entered into a term loan in the amount of $440 million. Both of these obligations have been guaranteed by QCII and its wholly-owned subsidiary, Qwest Services Corporation ("QSC").

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document And Entity Information
Entity Registrant Name	QWEST COMMUNICATIONS INTERNATIONAL INC
Entity Central Index Key	0001037949
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		1,000
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

XML

Labor Union Contracts

6 Months Ended

Jun. 30, 2012

Labor Union Contracts

Labor Union Contracts

(10) Labor Union Contracts

        Over 50% of our employees are members of bargaining units represented by the Communications Workers of America and the International Brotherhood of Electrical Workers. Our current four-year collective bargaining agreements expire October 6, 2012.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) (Predecessor, USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2011
Predecessor
Defined benefit pension and post-retirement plans, tax	$ 4

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Long-Term Debt

6 Months Ended

Jun. 30, 2012

Long-Term Debt

Long-Term Debt

(4) Long-Term Debt

        Long-term debt, including unamortized discounts and premiums, is as follows:

			Successor
	Interest Rates	Maturities	June 30, 2012			December 31, 2011
			(Dollars in millions)
Qwest Communications International Inc.
Senior notes	7.125% - 8.000%	2015 - 2018	$	1,350			2,650
Unamortized premiums				94			117
Qwest Capital Funding
Senior notes	6.500% - 7.750%	2018 - 2031		981			981
Unamortized premiums, net				27			28
Qwest Corporation
Senior notes(1)	6.500% - 8.375%	2013 - 2052		7,870			7,829
Capital lease and other obligations	Various	Various		137			176
Unamortized premiums, net				156			320
Qwest Communications Company, LLC
Capital lease and other obligations	Various	Various		163			195
Total long-term debt				10,778			12,296
Less current maturities				(1,342	)		(117	)
Long-term debt, excluding current maturities			$	9,436			12,179

(1)

The $750 million of Qwest Corporation Notes due 2013 are floating rate notes, with rates that reset every three months. As of the most recent measurement date of June 15, 2012, the rate for these notes was 3.718%, which is not included in the range of rates stated above.

New Issuances

        On June 25, 2012, QC issued $400 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $387 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after July 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        On April 2, 2012, QC issued $525 million aggregate principal amount of 7.00% Notes due 2052 in exchange for net proceeds, after deducting underwriting discounts and expenses, of $508 million. The notes are unsecured obligations and may be redeemed, in whole or in part, on or after April 1, 2017 at a redemption price equal to 100% of the principal amount redeemed plus accrued interest.

        In connection with consummating the April 18, 2012 tender offer described below under "Repayments", QC borrowed from a CenturyLink affiliate approximately $583 million under a revolving promissory note, payable upon demand. The promissory note is unsecured and is pari passu to QC's Senior Notes.

Repayments

        On May 17, 2012, QCII redeemed $500 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

        On April 18, 2012, QC completed a cash tender offer to purchase a portion of its $811 million of 8.375% Notes due 2016 and its $400 million of 7.625% Notes due 2015. With respect to its 8.375% Notes due 2016, QC received and accepted tenders of approximately $575 million aggregate principal amount of these notes, or 71%, for $722 million including a premium, fees and accrued interest. With respect to its 7.625% Notes due 2015, QC received and accepted tenders of approximately $308 million aggregate principal amount of these notes, or 77%, for $369 million including a premium, fees and accrued interest. The completion of this tender offer resulted in a loss of $46 million.

        On March 1, 2012, QCII redeemed $800 million of its 7.50% Notes due 2014, which resulted in an immaterial gain.

Covenants

        As of the successor date of June 30, 2012, we believe we were in compliance with the provisions and covenants of our debt agreements.

Subsequent Event

        On July 20, 2012, QC redeemed all $484 million of its 7.5% Notes due 2023, which resulted in an immaterial loss.

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Goodwill, Customer Relationships and Other Intangible Assets

6 Months Ended

Jun. 30, 2012

Goodwill, Customer Relationships and Other Intangible Assets

Goodwill, Customer Relationships and Other Intangible Assets

(3) Goodwill, Customer Relationships and Other Intangible Assets

        Our goodwill, customer relationships and other intangible assets consisted of the following:

	Successor
	June 30, 2012		December 31, 2011
	(Dollars in millions)
Goodwill	$	10,123		10,123
Customer relationships, less accumulated amortization of $1,258 and $770	$	6,300		6,788
Other intangible assets subject to amortization
Capitalized software, less accumulated amortization of $556 and $354		1,329		1,460
Tradenames and patents, less accumulated amortization of $96 and $61		93		127
Total other intangible assets, net	$	1,422		1,587

        We amortize customer relationships over estimated lives of 10 years, using either the sum-of-the-years-digits or straight-line methods, depending on the type of customer. We amortize capitalized software using the straight-line method over estimated lives ranging up to seven years and amortize our other intangible assets predominantly using the sum-of-the-years digits method over an estimated life of four years.

        The table below summarizes our amortization expense:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Amortization expense	$	364		727		399		58

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Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2012

Long-Term Debt

Schedule of long-term debt, including unamortized discounts and premiums

			Successor
	Interest Rates	Maturities	June 30, 2012			December 31, 2011
			(Dollars in millions)
Qwest Communications International Inc.
Senior notes	7.125% - 8.000%	2015 - 2018	$	1,350			2,650
Unamortized premiums				94			117
Qwest Capital Funding
Senior notes	6.500% - 7.750%	2018 - 2031		981			981
Unamortized premiums, net				27			28
Qwest Corporation
Senior notes(1)	6.500% - 8.375%	2013 - 2052		7,870			7,829
Capital lease and other obligations	Various	Various		137			176
Unamortized premiums, net				156			320
Qwest Communications Company, LLC
Capital lease and other obligations	Various	Various		163			195
Total long-term debt				10,778			12,296
Less current maturities				(1,342	)		(117	)
Long-term debt, excluding current maturities			$	9,436			12,179

(1)

The $750 million of Qwest Corporation Notes due 2013 are floating rate notes, with rates that reset every three months. As of the most recent measurement date of June 15, 2012, the rate for these notes was 3.718%, which is not included in the range of rates stated above.

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Dividends

6 Months Ended

Jun. 30, 2012

Dividends

Dividends

(11) Dividends

        Effective June 30, 2012, our board of directors declared a dividend to our parent of $550 million. This dividend has been reflected on our balance sheet in "Dividends payable—CenturyLink, Inc."

XML

Fair Value Disclosure

6 Months Ended

Jun. 30, 2012

Fair Value Disclosure

Fair Value Disclosure

(7) Fair Value Disclosure

        Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts receivable—affiliates, advances to affiliates, accounts payable, accounts payable—affiliates and long-term debt, excluding capital lease obligations. The carrying amounts of our cash and cash equivalents, accounts receivable, accounts receivable—affiliates, advances to affiliates, accounts payable and accounts payable—affiliates approximate their fair values.

        Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable parties who are willing and able to transact for an asset or liability at the measurement date. We use valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value and then we rank the estimated values based on the reliability of the inputs used.

        We determined the fair values of our long-term debt, including the current portion, based on quoted market prices where available or, if not available, based on discounted future cash flows using current market interest rates.

        The three input levels in the hierarchy of fair value measurements are defined by the Financial Accounting Standards Board generally as follows:

Input Level		Description of Input
	Level 1	Observable inputs such as quoted market prices in active markets.
	Level 2	Inputs other than quoted prices in active markets that are either directly or indirectly observable.
	Level 3	Unobservable inputs in which little or no market data exists.

        The following table presents the carrying amounts and estimated fair values of our long-term debt, excluding capital lease obligations, as well as the input levels used to determine the fair values:

			Successor
			June 30, 2012				December 31, 2011
	Input Level		Carrying Amount		Fair Value		Carrying Amount		Fair Value
			(Dollars in millions)
Liabilities—Long-term debt excluding capital lease obligations		2	$	10,478		10,772		11,925		12,052

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Severance and Leased Real Estate

6 Months Ended

Jun. 30, 2012

Severance and Leased Real Estate

Severance and Leased Real Estate

(5) Severance and Leased Real Estate

        Periodically, we have implemented reductions in our workforce and have accrued liabilities for related severance costs. These workforce reductions resulted primarily from our integration plans related to CenturyLink's acquisition of us, increased competitive pressures and reduced workload demands due to the loss of access lines.

        We report severance liabilities within "accrued expenses and other liabilities—salaries and benefits" in our consolidated balance sheets and report severance expenses in cost of services and products and selling, general and administrative expenses in our consolidated statements of operations.

        In periods prior to CenturyLink's acquisition of us, we had ceased using certain real estate that we were leasing under long-term operating leases. As of the April 1, 2011 acquisition date, we recognized liabilities to reflect our estimates of the fair values of the existing lease obligations for real estate for which we had ceased using, net of estimated sublease rentals. Our fair value estimates were determined using discounted cash flow methods. We recognize expense to reflect accretion of the discounted liabilities and periodically, we adjust the expense when our actual experience differs from our initial estimates. We report the current portion of liabilities for ceased-use real estate leases in "accrued expenses and other liabilities—other" and report the noncurrent portion in "deferred credits and other liabilities—other" in our consolidated balance sheets. We report the related expenses in "selling, general and administrative expenses" in our consolidated statements of operations.

        As of the successor dates of June 30, 2012 and December 31, 2011, the current portion of our leased real estate accrual was $32 million and $27 million, respectively, and the noncurrent portion was $115 million and $126 million, respectively. The remaining lease terms range from 0.1 years to 13.5 years, with a weighted average of 9.1 years.

        Changes in our accrued liabilities for severance expenses and leased real estate were as follows:

	Severance			Real Estate
	(Dollars in millions)
Balance at December 31, 2011 (Successor)	$	29			153
Accrued to expense		45			1
Payments, net		(22	)		(4	)
Reversals and adjustments		(3	)		—
Balance at March 31, 2012 (Successor)		49			150
Accrued to expense		13			2
Payments, net		(42	)		(5	)
Reversals and adjustments		—			—
Balance at June 30, 2012 (Successor)	$	20			147

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Employee Benefits

6 Months Ended

Jun. 30, 2012

Employee Benefits

Employee Benefits

(6) Employee Benefits

        Net periodic pension (income) expense included the following components:

	Pension Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	15			29			13			14
Interest cost		97			196			108			104
Expected return on plan assets		(144	)		(288	)		(139	)		(133	)
Recognition of prior service cost		—			—			—			(6	)
Recognition of net actuarial loss		—			—			—			31
Net periodic pension (income) expense	$	(32	)		(63	)		(18	)		10

        Net periodic post-retirement benefit expense included the following components:

	Post-Retirement Benefit Plan
	Successor									Predecessor
	Three Months Ended June 30, 2012			Six Months Ended June 30, 2012			Three Months Ended June 30, 2011			Three Months Ended March 31, 2011
	(Dollars in millions)
Service cost	$	2			4			1			2
Interest cost		37			73			41			41
Expected return on plan assets		(10	)		(21	)		(12	)		(13	)
Recognition of prior service cost		—			—			—			(24	)
Recognition of net actuarial loss		—			—			—			10
Net periodic post-retirement benefit expense	$	29			56			30			16

        We report net periodic pension (income) expense and net periodic post-retirement benefit expense in cost of services and products and selling, general and administrative expenses on our consolidated statements of operations.

XML

Products and Services Revenues

6 Months Ended

Jun. 30, 2012

Products and Services Revenues

Products and Services Revenues

(8) Products and Services Revenues

        We are an integrated communications company engaged primarily in providing an array of communications services, including local and long-distance, network access, private line (including special access), broadband, Ethernet, data, managed hosting, wireless and video services. We strive to maintain our customer relationships by, among other things, bundling our service offerings to provide our customers with a complete offering of integrated communications services. We categorize our products and services into the following four categories:

• •

  Strategic services, which include primarily private line (including special access), broadband, Multi-Protocol Label Switching ("MPLS") (which is a data networking technology that can deliver the quality of service required to support real-time voice and video), Ethernet, hosting, video (including resold satellite video services), voice over Internet Protocol ("VoIP") and Verizon Wireless services;

  •

  Legacy services, which include primarily local, long-distance, integrated services digital network ("ISDN") (which uses regular telephone lines to support voice, video and data applications), switched access and traditional wide area network ("WAN") services (which allows a local communications network to link to networks in remote locations);

  •

  Data integration, which includes the sale of telecommunications equipment located on customers' premises and related professional services, such as network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our government and business customers; and

  •

  Affiliates and other services, which consist primarily of universal service funds ("USF") revenues and surcharges and services we provide to our affiliates. We provide to our affiliates telecommunications services that we also provide to external customers. In addition, we provide to our affiliates computer system development and support services and network support and technical services.

        During the first quarter of 2012, we reclassified certain prior period revenues between the aforementioned four categories to conform to the current period presentation.

        Since the April 1, 2011 closing of CenturyLink's acquisition of us, our operations have been integrated into and reported as part of the segments of CenturyLink. CenturyLink's chief operating decision maker ("CODM") has become our CODM, but reviews our financial information on an aggregate basis only in connection with our quarterly and annual reports that we file with the SEC. Consequently, we do not provide our discrete financial information to the CODM on a regular basis. As such, we believe we now have one reportable segment and have reclassified our prior period results to conform to our current view.

        Operating revenues for our products and services are summarized below:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Strategic services	$	1,235		2,457		1,194		1,200
Legacy services		1,227		2,484		1,333		1,400
Data integration		140		256		118		123
Affiliates and other services		234		478		124		123
Total operating revenues	$	2,836		5,675		2,769		2,846

        Affiliates and other services revenues include revenues from universal service funds which allow us to recover a portion of our costs under federal and state cost recovery mechanisms and certain surcharges to our customers, including billings for our required contributions to several USF programs. These surcharge billings to our customers are reflected on a gross basis in our statements of operations (included in both operating revenues and expenses). Because the amount of these recorded revenues and expenses offset each other, these surcharges do not impact our net income.

        The table below presents the aggregate USF surcharges recognized on a gross basis:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
USF and surcharges included in operating revenues and expenses	$	103		203		92		96

XML

Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended																						6 Months Ended	1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended		6 Months Ended			1 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Qwest Communications International Inc.	Dec. 31, 2011 Qwest Communications International Inc.	Jun. 30, 2012 Qwest Corporation	Dec. 31, 2011 Qwest Corporation	Jun. 30, 2012 Senior notes Qwest Communications International Inc.	Dec. 31, 2011 Senior notes Qwest Communications International Inc.	Jun. 30, 2012 Senior notes Qwest Communications International Inc. Minimum	Jun. 30, 2012 Senior notes Qwest Communications International Inc. Maximum	Jun. 30, 2012 Senior notes Qwest Capital Funding	Dec. 31, 2011 Senior notes Qwest Capital Funding	Jun. 30, 2012 Senior notes Qwest Capital Funding Minimum	Jun. 30, 2012 Senior notes Qwest Capital Funding Maximum	Jun. 30, 2012 Senior notes Qwest Corporation	Dec. 31, 2011 Senior notes Qwest Corporation	Jun. 30, 2012 Senior notes Qwest Corporation Minimum	Jun. 30, 2012 Senior notes Qwest Corporation Maximum	Jun. 30, 2012 Capital lease and other obligations Qwest Corporation	Dec. 31, 2011 Capital lease and other obligations Qwest Corporation	Jun. 30, 2012 Capital lease and other obligations Qwest Communications Company, LLC	Dec. 31, 2011 Capital lease and other obligations Qwest Communications Company, LLC	Jun. 30, 2012 Floating rate notes due 2013 Qwest Corporation	May 31, 2012 7.5% Notes due 2014 Qwest Communications International Inc.	May 17, 2012 7.5% Notes due 2014 Qwest Communications International Inc.	Mar. 31, 2012 7.5% Notes due February 15, 2014 Qwest Communications International Inc.	Mar. 02, 2012 7.5% Notes due February 15, 2014 Qwest Communications International Inc.	Apr. 30, 2012 8.375% Notes due 2016 Qwest Corporation	Apr. 18, 2012 8.375% Notes due 2016 Qwest Corporation	Apr. 30, 2012 7.625% Notes due 2015 Qwest Corporation	Apr. 18, 2012 7.625% Notes due 2015 Qwest Corporation	Jun. 30, 2012 7.00% Notes due 2052 Qwest Corporation	Apr. 30, 2012 7.00% Notes due 2052 Qwest Corporation	Jun. 30, 2012 7.00% Notes due 2052 Qwest Corporation	Apr. 02, 2012 7.00% Notes due 2052 Qwest Corporation	Jun. 30, 2012 7.5% Notes due 2023	Jul. 31, 2012 7.5% Notes due 2023 Subsequent Event	Apr. 30, 2012 Revolving promissory note Qwest Corporation CenturyLink, Inc.
Long-term Debt
Interest Rates (as a percent)											7.125%	8.00%			6.50%	7.75%			6.50%	8.375%							7.50%		7.50%		8.375%		7.625%				7.00%	7.50%
Unamortized premiums, net							$ 156	$ 320	$ 94	$ 117			$ 27	$ 28
Total long-term debt	10,778		10,778	12,296					1,350	2,650			981	981			7,870	7,829			137	176	163	195
Less current maturities	(1,342)		(1,342)	(117)
Long-term debt, excluding current maturities	9,436		9,436	12,179	1,444	2,767
Principal amount																									750						811		400
Period to reset interest rate (in months)																									3 months
Interest rate as of remeasurement date																									3.718%
Principal amount of notes issued																																		400	525					583
Net proceeds from issuance of debt																																		387	508
Repayment of notes																										500		800											484
Redemption price as a percentage of principal amount of notes plus accrued and unpaid interest																										100.00%										100.00%
Principal amount of notes for which cash tender offers are received and accepted																														575		308
Percentage of principal amount of notes for which tender offer was received and accepted																														71.00%		77.00%
Amount for which cash tender offer is received and accepted																														722		369
Net loss on early retirement of debt	$ 45	$ 1	$ 37																													$ 46

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Acquisition by CenturyLink (Tables)

6 Months Ended

Jun. 30, 2012

Acquisition by CenturyLink

Schedule of preliminary assignment of the aggregate consideration

	April 1, 2011
	(Dollars in millions)
Cash, accounts receivable and other current assets*	$	2,121
Property, plant and equipment		9,529
Identifiable intangible assets:
Customer relationships		7,558
Capitalized software		1,702
Other		189
Other noncurrent assets		390
Current liabilities, excluding current maturities of long-term debt		(2,463	)
Current maturities of long-term debt		(2,422	)
Long-term debt		(10,253	)
Deferred credits and other liabilities		(4,201	)
Goodwill		10,123
Aggregate consideration	$	12,273

*

Includes estimated fair value of $1.194 billion for accounts receivable which had gross contractual value of $1.274 billion on April 1, 2011. The $80 million difference between the gross contractual value and the estimated fair value assigned represents our best estimate as of April 1, 2011 of contractual cash flows that would not be collected.

Schedule of acquisition related expenses

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Acquisition-related expenses	$	3		29		127		3

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Fair Value Disclosure (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Disclosure

Schedule of the three input levels in the hierarchy of fair value measurements

Input Level		Description of Input
	Level 1	Observable inputs such as quoted market prices in active markets.
	Level 2	Inputs other than quoted prices in active markets that are either directly or indirectly observable.
	Level 3	Unobservable inputs in which little or no market data exists.

Schedule of carrying amounts and estimated fair values of long-term debt, excluding capital lease obligations, and input levels to determine fair values

			Successor
			June 30, 2012				December 31, 2011
	Input Level		Carrying Amount		Fair Value		Carrying Amount		Fair Value
			(Dollars in millions)
Liabilities—Long-term debt excluding capital lease obligations		2	$	10,478		10,772		11,925		12,052

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Dividends (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Dividends
Dividend declared	$ 550

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 41	$ 48
Accounts receivable, less allowance of $77 and $62	1,220	1,201
Advances to affiliates	73	742
Deferred income taxes, net	553	559
Other	306	265
Total current assets	2,193	2,815
NET PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment	11,030	10,679
Accumulated depreciation	(1,883)	(1,218)
Net property, plant and equipment	9,147	9,461
GOODWILL AND OTHER ASSETS
Goodwill	10,123	10,123
Customer relationships, net	6,300	6,788
Other intangible assets, net	1,422	1,587
Other	363	381
Total goodwill and other assets	18,208	18,879
TOTAL ASSETS	29,548	31,155
CURRENT LIABILITIES
Current maturities of long-term debt	1,342	117
Accounts payable	736	973
Accounts payable-affiliates, net		394
Notes payable-affiliates	583
Dividends payable-CenturyLink, Inc.	750	200
Accrued expenses and other liabilities
Salaries and benefits	447	469
Income and other taxes	245	263
Interest	130	175
Other	143	104
Advance billings and customer deposits	411	400
Total current liabilities	4,787	3,095
LONG-TERM DEBT	9,436	12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net	3,124	3,198
Deferred income taxes, net	701	630
Other	698	777
Total deferred credits and other liabilities	4,523	4,605
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDER'S EQUITY
Common stock-$0.01 par value, 1,000 shares authorized, issued and owned by CenturyLink
Additional paid-in capital	12,273	12,273
Accumulated other comprehensive loss	(446)	(446)
Accumulated deficit	(1,025)	(551)
Total stockholder's equity	10,802	11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$ 29,548	$ 31,155

XML

Acquisition by CenturyLink

6 Months Ended

Jun. 30, 2012

Acquisition by CenturyLink

Acquisition by CenturyLink

(2) Acquisition by CenturyLink

        On April 1, 2011, we became a wholly owned subsidiary of CenturyLink. Each share of our common stock outstanding immediately prior to the acquisition converted into the right to receive 0.1664 shares of CenturyLink common stock, with cash paid in lieu of fractional shares. The aggregate consideration of $12.273 billion was based on:

• •

  the 294 million shares of CenturyLink common stock issued to consummate the acquisition;

  •

  the closing stock price of CenturyLink common stock at March 31, 2011 of $41.55;

  •

  the estimated net value of the pre-combination portion of share-based compensation awards assumed by CenturyLink of $52 million (excluding the value of restricted stock included in the number of issued shares specified above); and

  •

  cash paid in lieu of the issuance of fractional shares of $5 million.

        Since April 1, 2011, our results of operations have been included in the consolidated results of operations of CenturyLink. CenturyLink has accounted for its acquisition of us under the acquisition method of accounting, which resulted in the assignment of the purchase price to the assets acquired and liabilities assumed based on their acquisition date fair values. In the first quarter of 2012, we completed our valuation of the assets acquired and liabilities assumed, along with the related allocations to goodwill and intangible assets.

        The aggregate consideration exceeded the aggregate estimated fair value of the assets acquired and liabilities assumed by $10.123 billion, which we have recognized as goodwill. This goodwill is attributable to strategic benefits, including enhanced financial and operational scale, market diversification and leveraged combined networks that we expect to realize. None of the goodwill associated with this acquisition is deductible for income tax purposes.

        The following is our assignment of the aggregate consideration:

	April 1, 2011
	(Dollars in millions)
Cash, accounts receivable and other current assets*	$	2,121
Property, plant and equipment		9,529
Identifiable intangible assets:
Customer relationships		7,558
Capitalized software		1,702
Other		189
Other noncurrent assets		390
Current liabilities, excluding current maturities of long-term debt		(2,463	)
Current maturities of long-term debt		(2,422	)
Long-term debt		(10,253	)
Deferred credits and other liabilities		(4,201	)
Goodwill		10,123
Aggregate consideration	$	12,273

*

Includes estimated fair value of $1.194 billion for accounts receivable which had gross contractual value of $1.274 billion on April 1, 2011. The $80 million difference between the gross contractual value and the estimated fair value assigned represents our best estimate as of April 1, 2011 of contractual cash flows that would not be collected.

        During the first quarter of 2012, we retrospectively adjusted our previously reported preliminary assignment of the aggregate Qwest consideration for changes to our original estimates of the fair value of certain items at the acquisition date. These changes are the result of additional information obtained since the filing of our Form 10-K for the year ended December 31, 2011. Due to these revisions of our estimates, (i) identifiable intangible assets decreased due to a $67 million decrease in our customer relationships valuation, (ii) property, plant and equipment decreased by $25 million primarily from a revision to our valuation of our buildings, (iii) deferred credits and other liabilities decreased by $100 million primarily from a revision to one of our lease valuations and changes in tax liabilities, and (iv) current liabilities, excluding current maturities of long-term debt, increased by $35 million due to an addition to our accounts payable-affiliates, net to account for the difference in tax rates between CenturyLink and us at the acquisition date. Among other minor revisions, goodwill increased by $17 million as an offset to the above-mentioned changes. The depreciation and amortization expense impact of the adjustments to intangible assets and property, plant and equipment valuations did not result in a material change to previously-reported amounts.

Acquisition-Related Expenses

        We have incurred operating expenses related to CenturyLink's acquisition of us, which consist primarily of integration and severance expenses. The table below summarizes our acquisition-related expenses:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Acquisition-related expenses	$	3		29		127		3

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Products and Services Revenues (Tables)

6 Months Ended

Jun. 30, 2012

Products and Services Revenues

Schedule of operating revenues by products and services

:

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
Strategic services	$	1,235		2,457		1,194		1,200
Legacy services		1,227		2,484		1,333		1,400
Data integration		140		256		118		123
Affiliates and other services		234		478		124		123
Total operating revenues	$	2,836		5,675		2,769		2,846

Schedule of aggregate USF surcharges recognized on a gross basis

	Successor						Predecessor
	Three Months Ended June 30, 2012		Six Months Ended June 30, 2012		Three Months Ended June 30, 2011		Three Months Ended March 31, 2011
	(Dollars in millions)
USF and surcharges included in operating revenues and expenses	$	103		203		92		96

XML

Products and Services Revenues (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended		6 Months Ended	3 Months Ended
	Jun. 30, 2012	Mar. 31, 2012 item	Jun. 30, 2011	Jun. 30, 2012 item	Jun. 30, 2012 Strategic services	Jun. 30, 2011 Strategic services	Jun. 30, 2012 Strategic services	Jun. 30, 2012 Legacy services	Jun. 30, 2011 Legacy services	Jun. 30, 2012 Legacy services	Jun. 30, 2012 Data integration	Jun. 30, 2011 Data integration	Jun. 30, 2012 Data integration	Jun. 30, 2012 Affiliates and other services	Jun. 30, 2011 Affiliates and other services	Jun. 30, 2012 Affiliates and other services	Mar. 31, 2011 Predecessor	Mar. 31, 2011 Predecessor Strategic services	Mar. 31, 2011 Predecessor Legacy services	Mar. 31, 2011 Predecessor Data integration	Mar. 31, 2011 Predecessor Affiliates and other services
Products and Services Revenues
Number of categories of products and services				4
Number of categories into which prior period revenues are classified		4
Number of reportable segments				1
Products and Services Revenues
Total operating revenues	$ 2,836		$ 2,769	$ 5,675	$ 1,235	$ 1,194	$ 2,457	$ 1,227	$ 1,333	$ 2,484	$ 140	$ 118	$ 256	$ 234	$ 124	$ 478	$ 2,846	$ 1,200	$ 1,400	$ 123	$ 123
USF and surcharges included in operating revenues and expenses	$ 103		$ 92	$ 203													$ 96

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Financial Statements of Guarantors

6 Months Ended

Jun. 30, 2012

Financial Statements of Guarantors

Financial Statements of Guarantors

(12) Financial Statements of Guarantors

        QCII and two of its subsidiaries, Qwest Capital Funding, Inc ("QCF") and QSC, guarantee the payment of certain of each other's registered debt securities. As of the successor date of June 30, 2012, each series of QCII's outstanding notes totaling approximately $1.4 billion in aggregate principal amount is guaranteed on a senior unsecured basis by QCF and QSC (the "QCII Guaranteed Notes"). These notes are guaranteed through their respective maturity dates, the latest of which is in April 2018. In addition, each series of QCF's outstanding notes totaling approximately $1 billion in aggregate principal amount is guaranteed on a senior unsecured basis by QCII (the "QCF Guaranteed Notes"). These notes are guaranteed through their respective maturity dates, the latest of which is in February 2031. The guarantees described above are full and unconditional and joint and several. A significant amount of QCII's and QSC's income and cash flow are generated by their subsidiaries. As a result, the funds necessary to meet their debt service or guarantee obligations are provided in large part by distributions or advances from their subsidiaries.

        The following information sets forth our condensed consolidating statements of operations, balance sheets and statements of cash flows for the periods indicated. The information for QCII is presented on a stand-alone basis, information for QSC and QCF is presented on a combined basis and information for all of our other non-guarantor subsidiaries is presented on a combined basis. Each entity's investments in its subsidiaries, if any, are presented under the equity method. The consolidating statements of operations and balance sheets include the effects of consolidating adjustments to our subsidiaries' tax provisions and the related income tax assets and liabilities in the QSC and QCII results. Both QSC and QCF are 100% owned by QCII, and QCF is a finance subsidiary of QCII. Other than as already described in this note, the accounting principles used to determine the amounts reported in this note are the same as those used in our consolidated financial statements.

        CenturyLink periodically restructures the internal capital structure of its subsidiaries, including QCII and its subsidiaries, based on the needs of its business.

Allocations among Affiliates

        We allocate the costs of shared services among our affiliates. These services include marketing and advertising, information technology, product and technical services as well as general support services. The allocation of these costs is based on estimated market values or fully distributed cost ("FDC"). Most of our affiliate services are priced by applying an FDC methodology. FDC rates are determined using salary rates, which include payroll taxes, employee benefits, facilities and overhead costs. Whenever possible, costs are directly assigned to the affiliate that uses the service. If costs cannot be directly assigned, they are allocated among all affiliates based on cost usage measures; or if no cost usage measure is available, these costs are allocated based on a general allocator. From time to time, we adjust the basis for allocating the costs of a shared service among our affiliates. Such changes in allocation methodologies are generally billed prospectively.

        Under our tax allocation policy, we treat our subsidiaries as if they were separate taxpayers. The policy requires that each subsidiary pay its tax liabilities in cash based on that subsidiary's separate return taxable income. To the extent a subsidiary has taxable losses, the subsidiary does not pay any amount and therefore retains the benefit of the losses. Subsidiaries are also included in the combined state tax returns we file and the same payment and allocation policy applies.

        Eligible employees of our subsidiaries participate in the QCII pension and non-qualified pension plan and may become eligible to participate in the post-retirement health care and life insurance, and other post-employment benefit plans sponsored by CenturyLink. The amounts contributed by our subsidiaries are not segregated or restricted to pay amounts due to their employees and may be used to provide benefits to our other employees or employees of other subsidiaries. We allocate the cost of pension, non-qualified pension, post-retirement health care and life insurance benefits and the associated obligations and assets to our subsidiaries and determine the subsidiaries' required contributions. The allocation is based upon demographics of each subsidiary's employees compared to all participants. In determining the allocated amounts, we make numerous assumptions. Changes in any of our assumptions could have a material impact on the expense allocated to our subsidiaries.

        During the first quarter of 2012, in connection with post-acquisition systems integration activities, CenturyLink changed certain cash management processes applicable to us. Therefore, we now present the balances related to these cash management transactions on a net basis with our other affiliate transactions.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,736			—			2,736
Operating revenues—affiliates		—			1			100			(1	)		100
Total operating revenues		—			1			2,836			(1	)		2,836
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,213			—			1,213
Selling, general and administrative		1			1			442			—			444
Operating expenses—affiliates		—			—			151			(1	)		150
Depreciation and amortization		16			—			722			—			738
Total operating expenses		17			1			2,528			(1	)		2,545
OPERATING (LOSS) INCOME		(17	)		—			308			—			291
OTHER INCOME (EXPENSE)
Interest expense		(25	)		(16	)		(113	)		—			(154	)
Interest expense—affiliates		(21	)		(28	)		(8	)		27			(30	)
Interest income—affiliates		—			27			—			(27	)		—
Income from equity investments in subsidiaries		91			15			—			(106	)		—
Net loss on early retirement of debt		—			—			(45	)		—			(45	)
Other income (expense)		5			—			(3	)		—			2
Total other income (expense)		50			(2	)		(169	)		(106	)		(227	)
INCOME (LOSS) BEFORE INCOME TAX (BENEFIT) EXPENSE		33			(2	)		139			(106	)		64
Income tax (benefit) expense		(4	)		(93	)		124			—			27
NET INCOME	$	37			91			15			(106	)		37
COMPREHENSIVE INCOME	$	37			91			15			(106	)		37

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			5,461			—			5,461
Operating revenues—affiliates		—			3			214			(3	)		214
Total operating revenues		—			3			5,675			(3	)		5,675
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			2,388			—			2,388
Selling, general and administrative		3			3			922			—			928
Operating expenses—affiliates		—			—			302			(3	)		299
Depreciation and amortization		34			—			1,445			—			1,479
Total operating expenses		37			3			5,057			(3	)		5,094
OPERATING (LOSS) INCOME		(37	)		—			618			—			581
OTHER INCOME (EXPENSE)
Interest expense		(64	)		(34	)		(226	)		—			(324	)
Interest expense—affiliates		(22	)		(54	)		(11	)		53			(34	)
Interest income—affiliates		—			53			—			(53	)		—
Income from equity investments in subsidiaries		217			60			—			(277	)		—
Net loss on early retirement of debt		—			—			(37	)		—			(37	)
Other income (expense)		13			—			(10	)		—			3
Total other income (expense)		144			25			(284	)		(277	)		(392	)
INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		107			25			334			(277	)		189
Income tax (benefit) expense		(7	)		(192	)		274			—			75
NET INCOME	$	114			217			60			(277	)		114
COMPREHENSIVE INCOME	$	114			217			60			(277	)		114

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,763			—			2,763
Operating revenues—affiliates		—			3			15			(12	)		6
Total operating revenues		—			3			2,778			(12	)		2,769
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,141			—			1,141
Selling, general and administrative		5			3			648			—			656
Operating expenses—affiliates		—			—			44			(12	)		32
Depreciation and amortization		22			—			780			—			802
Total operating expenses		27			3			2,613			(12	)		2,631
OPERATING (LOSS) INCOME		(27	)		—			165			—			138
OTHER INCOME (EXPENSE)
Interest expense		(44	)		(18	)		(88	)		—			(150	)
Interest expense—affiliates		(4	)		(23	)		1			26			—
Interest income—affiliates		—			26			—			(26	)		—
Income from equity investments in subsidiaries		67			(52	)		—			(15	)		—
Net loss on early retirement of debt		—			—			(1	)		—			(1	)
Total other income (expense)		19			(67	)		(88	)		(15	)		(151	)
(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) EXPENSE		(8	)		(67	)		77			(15	)		(13	)
Income tax (benefit) expense		5			(131	)		126			—			—
NET (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)
COMPREHENSIVE (LOSS) INCOME	$	(13	)		64			(49	)		(15	)		(13	)

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
OPERATING REVENUES:
Operating revenues	$	—			—			2,846			—			2,846
Operating revenues—affiliates		—			2			9			(11	)		—
Total operating revenues		—			2			2,855			(11	)		2,846
OPERATING EXPENSES:
Cost of services and products (exclusive of depreciation and amortization)		—			—			1,178			—			1,178
Selling, general and administrative		3			2			551			—			556
Operating expenses—affiliates		—			—			11			(11	)		—
Depreciation and amortization		—			—			533			—			533
Total operating expenses		3			2			2,273			(11	)		2,267
OPERATING (LOSS) INCOME		(3	)		—			582			—			579
OTHER INCOME (EXPENSE)
Interest expense		(56	)		(19	)		(152	)		—			(227	)
Interest expense—affiliates		(1	)		(26	)		(1	)		28			—
Interest income—affiliates		—			28			—			(28	)		—
Income from equity investments in subsidiaries		272			226			—			(498	)		—
Other income (expense)		—			(1	)		6			—			5
Total other income (expense)		215			208			(147	)		(498	)		(222	)
INCOME BEFORE INCOME TAX EXPENSE (BENEFIT)		212			208			435			(498	)		357
Income tax expense (benefit)		1			(64	)		209			—			146
NET INCOME	$	211			272			226			(498	)		211
COMPREHENSIVE INCOME	$	218			272			226			(498	)		218

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		27		14		—			41
Accounts receivable, less allowance		43		—		1,177		—			1,220
Accounts receivable—affiliates, net		—		1,109		1,208		(2,244	)		73
Notes receivable—affiliates		—		1,413		—		(1,413	)		—
Deferred income taxes, net		—		430		123		—			553
Other		23		—		283		—			306
Total current assets		66		2,979		2,805		(3,657	)		2,193
Net property, plant and equipment		—		—		9,147		—			9,147
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,300		—			6,300
Other intangible assets, net		92		—		1,330		—			1,422
Investments in subsidiaries		14,284		13,788		—		(28,072	)		—
Deferred income taxes, net		1,102		1,029		—		(2,131	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,777		76		957		(3,810	)		—
Other		40		7		316		—			363
TOTAL ASSETS	$	18,361		17,879		30,978		(37,670	)		29,548
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		1,342		—			1,342
Accounts payable		—		1		735		—			736
Accounts payable—affiliates, net		794		—		—		(794	)		—
Notes payable—affiliates		—		1,413		583		(1,413	)		583
Dividends payable—affiliates		750		750		700		(1,450	)		750
Accrued expenses and other liabilities		246		40		679		—			965
Advance billings and customers deposits		—		—		411		—			411
Total current liabilities		1,790		2,204		4,450		(3,657	)		4,787
LONG-TERM DEBT		1,444		1,008		6,984		—			9,436
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,124		—		—		—			3,124
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,033		351		2,426		(3,810	)		—
Deferred income taxes, net		—		—		2,832		(2,131	)		701
Other		168		32		498		—			698
Total deferred credits and other liabilities		4,325		383		5,756		(5,941	)		4,523
STOCKHOLDER'S EQUITY		10,802		14,284		13,788		(28,072	)		10,802
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	18,361		17,879		30,978		(37,670	)		29,548

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)		QSC(2) & QCF(3)		Subsidiary Non-Guarantors		Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	—		40		8		—			48
Accounts receivable, less allowance		15		2		1,184		—			1,201
Accounts receivable—affiliates, net		211		336		36		(583	)		—
Advances to affiliates		184		1,694		400		(1,536	)		742
Deferred income taxes, net		—		438		121		—			559
Other		—		19		259		(13	)		265
Total current assets		410		2,529		2,008		(2,132	)		2,815
Net property, plant and equipment		—		—		9,461		—			9,461
Goodwill		—		—		10,123		—			10,123
Customer relationships, net		—		—		6,788		—			6,788
Other intangible assets, net		126		—		1,461		—			1,587
Investments in subsidiaries		14,856		13,999		—		(28,855	)		—
Deferred income taxes, net		1,102		1,390		117		(2,609	)		—
Prepaid pension, post-retirement and other post-employment benefits—affiliate		2,851		76		955		(3,882	)		—
Other		36		7		338		—			381
TOTAL ASSETS	$	19,381		18,001		31,251		(37,478	)		31,155
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt	$	—		—		117		—			117
Current debt—affiliates		122		1,413		—		(1,535	)		—
Accounts payable		4		19		950		—			973
Accounts payable—affiliates, net		360		42		23		(31	)		394
Dividends payable—affiliates		200		—		310		(310	)		200
Accrued expenses and other liabilities		272		40		700		(1	)		1,011
Accrued expenses and other—affiliates		1		62		192		(255	)		—
Advance billings and customers deposits		—		—		400		—			400
Total current liabilities		959		1,576		2,692		(2,132	)		3,095
LONG-TERM DEBT		2,767		1,009		8,403		—			12,179
DEFERRED CREDITS AND OTHER LIABILITIES
Benefit plan obligations, net		3,198		—		—		—			3,198
Pension, post-retirement and other post-employment benefits obligations and other—affiliates		1,031		344		2,507		(3,882	)		—
Deferred income taxes, net		—		223		3,016		(2,609	)		630
Other		150		31		596		—			777
Total deferred credits and other liabilities		4,379		598		6,119		(6,491	)		4,605
STOCKHOLDER'S EQUITY		11,276		14,818		14,037		(28,855	)		11,276
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY	$	19,381		18,001		31,251		(37,478	)		31,155

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2012
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash (used in) provided by operating activities	$	(415	)		(141	)		1,647			(13	)		1,078
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(752	)		—			(752	)
Changes in advances to affiliates		184			128			(1,422	)		1,779			669
Proceeds from sale of property		—			—			133			—			133
Net cash provided by (used in) investing activities		184			128			(2,041	)		1,779			50
FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt		—			—			897			—			897
Payments of long-term debt		(1,299	)		—			(952	)		—			(2,251	)
Early retirement of debt costs		(49	)		—			(128	)		—			(177	)
Notes payable—affiliates		—			—			583			—			583
Accounts Payable—affiliates		1,579			—			—			(1,766	)		(187	)
Net cash used in financing activities		231			—			400			(1,766	)		(1,135	)
Net (decrease) increase in cash and cash equivalents		—			(13	)		6			—			(7	)
Cash and cash equivalents at beginning of period		—			40			8			—			48
Cash and cash equivalents at end of the period	$	—			27			14			—			41

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2011
SUCCESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	(76	)		213			563			—			700
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(347	)		—			(347	)
Cash infusion to subsidiaries		—			(168	)		—			168			—
Changes in advances to affiliates		—			(243	)		(272	)		4			(511	)
Dividends received from subsidiaries		—			120			—			(120	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			(291	)		(617	)		52			(856	)
FINANCING ACTIVITIES
Payments of long-term debt		—			—			(851	)		—			(851	)
Net proceeds from (repayments of) short-term affiliate debt		76			(72	)		—			(4	)		—
Net proceeds from issuance of long-term debt		—			—			643			—			643
Cash infusion from parent		—			—			168			(168	)		—
Dividends paid to parent		—			—			(120	)		120			—
Early retirement of debt costs		—			—			(13	)		—			(13	)
Net cash used in financing activities		76			(72	)		(173	)		(52	)		(221	)
Net increase in cash and cash equivalents		—			(150	)		(227	)		—			(377	)
Cash and cash equivalents at beginning of period		—			183			241			—			424
Cash and cash equivalents at end of the period	$	—			33			14			—			47

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2011
PREDECESSOR
(UNAUDITED)

	QCII(1)			QSC(2) & QCF(3)			Subsidiary Non-Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Net cash provided by (used in) operating activities	$	7			(62	)		828			4			777
INVESTING ACTIVITIES
Payments for property, plant and equipment and capitalized software		—			—			(410	)		—			(410	)
Changes in interest in investments managed by QSC		—			(3	)		3			—			—
Cash infusion to subsidiaries		—			(191	)		—			191			—
Changes in advances to affiliates		—			180			1			(181	)		—
Dividends received from subsidiaries		—			590			—			(590	)		—
Other, net		—			—			2			—			2
Net cash provided by (used in) investing activities		—			576			(404	)		(580	)		(408	)
FINANCING ACTIVITIES
Payments of long-term debt		—			(179	)		(24	)		—			(203	)
Net proceeds from (repayments of) short-term affiliate debt		119			(300	)		—			181			—
Dividends paid		(141	)		—			—			—			(141	)
Cash infusion from parent		—			—			191			(191	)		—
Dividends paid to parent		—			—			(590	)		590			—
Other, net		15			—			16			(4	)		27
Net cash used in financing activities		(7	)		(479	)		(407	)		576			(317	)
Net increase in cash and cash equivalents		—			35			17			—			52
Cash and cash equivalents at beginning of period		—			148			224			—			372
Cash and cash equivalents at end of the period	$	—			183			241			—			424

(1)

QCII is the issuer of the QCII Guaranteed Notes and is a guarantor of the QCF Guaranteed Notes.

(2)

QSC is a guarantor of the QCII Guaranteed Notes.

(3)

QCF is the issuer of the QCF Guaranteed Notes and is a guarantor of the QCII Guaranteed Notes.