UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

or

¨ 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	84-1339282
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1801 California Street, Denver, Colorado	80202
(Address of principal executive offices)	(Zip Code)

(303) 992-1400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨

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

On July 27, 2007, 1,827,863,021 shares of common stock were outstanding.

QWEST COMMUNICATIONS INTERNATIONAL INC.

FORM 10-Q

TABLE OF CONTENTS

Glossary of Terms		ii
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Operations—Three and six months ended June 30, 2007 and 2006 (unaudited)	1
	Condensed Consolidated Balance Sheets—June 30, 2007 and December 31, 2006 (unaudited)	2
	Condensed Consolidated Statements of Cash Flows—Six months ended June 30, 2007 and 2006 (unaudited)	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 4.	Submission of Matters to a Vote of Security Holders	53
Item 6.	Exhibits	54
Signature		61

GLOSSARY OF TERMS

Our industry uses many terms and acronyms that may not be familiar to you. To assist you in reading this document and other documents we file with the Securities and Exchange Commission, we have provided below definitions of some of these terms.

• Access Lines. Telephone lines reaching from the customer’s premises to a connection with the public switched telephone network. When we refer to our access lines we mean all our mass markets, wholesale and business access lines, including those used by us and our affiliates.

• Asynchronous Transfer Mode (ATM). A broadband, network transport service utilizing data switches that provides a fast, efficient way to move large quantities of information.

• Broadband services (previously referred to as high-speed Internet access). Services used to connect to the Internet and private networks. For Qwest, this technology allows our existing telephone lines to operate at higher speeds than dial-up access, thereby giving customers faster connections necessary to access data and video content.

• Competitive Local Exchange Carriers (CLECs). Telecommunications providers that compete with us in providing local voice and other services in our local service area.

• Data Integration. Voice and data telecommunications customer premises equipment and associated professional services. These services include network management, installation and maintenance of data equipment and building of proprietary fiber-optic broadband networks for our governmental and business customers.

• Dedicated Internet Access (DIA). Internet access ranging from 128 kilobits per second to 2.5 gigabits per second.

• Frame Relay. A high speed data switching technology primarily used to interconnect multiple local networks.

• Incumbent Local Exchange Carrier (ILEC). A traditional telecommunications provider, such as our subsidiary, Qwest Corporation, that, prior to the Telecommunications Act of 1996, had the exclusive right and responsibility for providing local telecommunications services in its local service area.

• Integrated Services Digital Network (ISDN). A telecommunications standard that uses digital transmission technology to support voice, video and data communications applications over regular telephone lines.

• InterLATA long-distance services. Telecommunications services, including “800” services, that cross LATA boundaries.

• Internet Dial Access. Provides ISPs and business customers with a comprehensive, reliable and cost-effective dial-up network infrastructure.

• Internet Protocol (IP). Those protocols that facilitate transferring information in packets of data and that enable each packet in a transmission to “tell” the data switches it encounters where it is headed and enables the computers on each end to confirm that message has been accurately transmitted and received.

• Internet Service Providers (ISPs). Businesses that provide Internet access to retail customers.

• IntraLATA long-distance services. These services include calls that terminate outside a customer’s local calling area but within the customer’s LATA, including wide area telecommunications service or “800” services for customers with geographically highly concentrated demand.

• Local Access Transport Area (LATA). A geographical area associated with the provision of telecommunications services by local exchange and long distance carriers. There are 163 LATAs in the United States, of which 27 are in our 14 state local service area.

ii

• Local Calling Area. A geographical area, usually smaller than a LATA, within which a customer can make telephone calls without incurring long-distance charges. Multiple local calling areas generally make up a LATA.

• Multi-Protocol Label Switching (MPLS). A standards-approved data networking technology, compatible with existing ATM and frame relay networks that can deliver the quality of service required to support real-time voice and video, as well as service level agreements that guarantee bandwidth. MPLS is deployed by many telecommunications providers and large enterprises for use in their own national networks.

• Private Line. Direct circuit or channel specifically dedicated to the use of an end-user organization for the purpose of directly connecting two or more sites.

• Public Switched Telephone Network (PSTN). The worldwide voice telephone network that is accessible to every person with a telephone equipped with dial tone.

• Unbundled Network Elements (UNEs). Discrete elements of our network that are sold or leased to competitive telecommunications providers and that may be combined to provide their retail telecommunications services.

• Virtual Private Network (VPN). A private network that operates securely within a public network (such as the Internet) by means of encrypting transmissions.

• Voice over Internet Protocol (VoIP). An application that provides real-time, two-way voice communication similar to our traditional voice that originates in the Internet protocol over a broadband connection and often terminates on the PSTN.

• Web Hosting. The providing of space, power, bandwidth and managed services in data centers.

• Wide Area Network (WAN). A communications network that covers a wide geographic area, such as a state or country. A WAN typically extends a local area network outside the building, over telephone common carrier lines to link to other local area networks in remote locations, such as branch offices or at-home workers and telecommuters.

iii

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended June 30,					Six Months Ended June 30,
	2007		2006			2007		2006
	(Dollars in millions except per share amounts, shares in thousands)
Operating revenue	$	3,463	$	3,472		$	6,909	$	6,948
Operating expenses:
Cost of sales (exclusive of depreciation and amortization)		1,310		1,394			2,627		2,812
Selling, general and administrative		1,004		969			2,002		1,982
Depreciation and amortization		615		693			1,227		1,384
Total operating expenses		2,929		3,056			5,856		6,178
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net		274		298			556		594
Other—net		14		(17	)		9		(45	)
Total other expense (income)—net		288		281			565		549
Income before income taxes		246		135			488		221
Income tax expense		—		18			2		16
Net income	$	246	$	117		$	486	$	205
Earnings per share:
Basic	$	0.13	$	0.06		$	0.26	$	0.11
Diluted	$	0.13	$	0.06		$	0.25	$	0.11
Weighted average shares outstanding:
Basic		1,841,295		1,882,398			1,853,058		1,878,378
Diluted		1,950,056		1,951,728			1,954,897		1,935,806

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2007			December 31, 2006
	(Dollars in millions, shares in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	869		$	1,241
Short-term investments		240			248
Accounts receivable—net of allowance of $142 and $146, respectively		1,497			1,600
Prepaid expenses and other		481			565
Total current assets		3,087			3,654
Property, plant and equipment—net		14,076			14,579
Capitalized software—net		817			818
Prepaid pension		1,329			1,311
Other		1,080			877
Total assets	$	20,389		$	21,239
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current portion of long-term borrowings	$	1,304		$	1,686
Accounts payable		918			997
Accrued expenses and other		1,518			1,856
Deferred revenue and advance billings		610			621
Total current liabilities		4,350			5,160
Long-term borrowings—net of unamortized debt discount of $196 and $209, respectively		13,207			13,206
Post-retirement and other post-employment benefit obligations		2,346			2,366
Deferred revenue		509			506
Other		1,533			1,446
Total liabilities		21,945			22,684
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock—$1.00 par value, 200 million shares authorized; none issued or outstanding		—			—
Common stock—$0.01 par value, 5 billion shares authorized; 1,839,459 and 1,902,642 shares issued, respectively		18			19
Additional paid-in capital		42,770			43,384
Treasury stock—3,046 and 1,993 shares, respectively (including 62 shares held in rabbi trust at both dates)		(33	)		(24	)
Accumulated deficit		(45,373	)		(45,907	)
Accumulated other comprehensive income		1,062			1,083
Total stockholders’ deficit		(1,556	)		(1,445	)
Total liabilities and stockholders’ deficit	$	20,389		$	21,239

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended June 30,
	2007			2006
	(Dollars in millions)
Operating activities:
Net income	$	486		$	205
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,227			1,384
Provision for bad debt—net		80			71
Other non-cash charges—net		40			24
Changes in operating assets and liabilities:
Accounts receivable		23			(23	)
Prepaid expenses and other current assets		22			28
Accounts payable and accrued expenses and other current liabilities		(447	)		(284	)
Deferred revenue and advance billings		(8	)		(38	)
Other non-current assets and liabilities		(50	)		(190	)
Cash provided by operating activities		1,373			1,177
Investing activities:
Expenditures for property, plant and equipment and capitalized software		(744	)		(832	)
Proceeds from sale of property and equipment		—			47
Proceeds from sale of investment securities		31			42
Purchases of investment securities		(24	)		(146	)
Other		9			—
Cash used for investing activities		(728	)		(889	)
Financing activities:
Proceeds from long-term borrowings		500			—
Repayments of long-term borrowings, including current maturities		(900	)		(47	)
Proceeds from issuances of common stock		66			102
Repurchases of common stock		(681	)		—
Other		(2	)		—
Cash (used for) provided by financing activities		(1,017	)		55
Cash and cash equivalents:
(Decrease) increase in cash and cash equivalents		(372	)		343
Beginning balance		1,241			846
Ending balance	$	869		$	1,189

The accompanying notes are an integral part of these condensed consolidated financial statements.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2007

(Unaudited)

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

Note 1: Basis of Presentation

These condensed consolidated interim financial statements are unaudited and are prepared in accordance with the instructions for Form 10-Q. In compliance with those instructions, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted.

In the opinion of management, these statements include all adjustments necessary to fairly present our condensed consolidated results of operations, financial position and cash flows as of June 30, 2007 and for all periods presented. These condensed 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, 2006. The condensed consolidated results of operations for the three and six months ended June 30, 2007 and the condensed consolidated statement of cash flows for the six months ended June 30, 2007 are not necessarily indicative of the results or cash flows expected for the full year.

Reclassifications

We periodically evaluate the appropriateness of classifications on our consolidated balance sheets. As a result of our most recent evaluation, we determined certain balances previously presented in other intangible assets were more appropriately classified as other non-current assets. This change resulted in a reclassification on our condensed consolidated balance sheets between capitalized software and other non-current assets of $73 million as of December 31, 2006. Certain other prior period balances have been reclassified to conform to the current period presentation.

Use of Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions made when accounting for items and matters such as, but not limited to, long-term contracts, customer retention patterns, allowance for bad debts, depreciation, amortization, asset valuations, internal labor capitalization rates, recoverability of assets (including deferred tax assets), impairment assessments, employee benefits, taxes, reserves and other provisions and contingencies are reasonable, based on information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. We also assess potential losses in relation to threatened or pending legal and tax matters. See Note 8—Commitments and Contingencies.

For matters not related to income taxes, if a loss is considered probable and the amount can be reasonably estimated, we recognize an expense for the estimated loss. If we have the potential to recover a portion of the estimated loss from a third party, we make a separate assessment of recoverability and reduce the estimated loss if recovery is also deemed probable.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

Effective January 1, 2007, our policy for accounting for income taxes changed upon adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). See Note 2—Income Taxes for further discussion.

Actual results could differ from our estimates.

USF, Gross Receipts Taxes and Other Surcharges

Our revenue and expenses include taxes and surcharges that we recognize on a gross basis of $100 million and $186 million for the three and six months ended June 30, 2007, respectively, and $110 million and $218 million for the three and six months ended June 30, 2006, respectively.

Depreciation and Amortization

Property, plant and equipment is shown net of accumulated depreciation on our condensed consolidated balance sheets. Accumulated depreciation was $32.353 billion and $31.795 billion as of June 30, 2007 and December 31, 2006, respectively.

Capitalized software is shown net of accumulated amortization on our condensed consolidated balance sheets. Accumulated amortization was $1.325 billion and $1.267 billion as of June 30, 2007 and December 31, 2006, respectively. Effective January 1, 2007, as a result of an internal study, we changed our estimates of the average economic lives for capitalized software from between four and five years to between four and seven years. For the three and six months ended June 30, 2007, amortization expense would have been higher by $30 million ($0.02 per basic and diluted share) and $60 million ($0.03 per basic and diluted share), respectively, had we not changed our estimates of the average economic lives.

Recently Adopted Accounting Pronouncements

Effective January 1, 2007, we adopted FIN 48. See Note 2—Income Taxes for additional information.

Effective January 1, 2007, we adopted FASB Statement of Financial Accounting Standard (“SFAS”) No. 156, “Accounting for Servicing of Financial Assets” (“SFAS No. 156”). SFAS No. 156 requires us to initially measure all separately recognized servicing assets and liabilities at fair value and permits, but does not require, the subsequent measurement of servicing assets and liabilities at fair value. The adoption of SFAS No. 156 has not had a material effect on our financial position or results of operations.

Recently Issued Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, “Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). Under SFAS No. 159, entities may choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. SFAS No. 159 also establishes recognition, presentation, and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS No. 159 is effective for us beginning January 1, 2008. At this time, we do not expect the adoption of this standard to have any impact on our financial position or results of operations.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which is effective for us beginning January 1, 2008 and provides a definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements for future transactions. We do not expect the adoption of this standard to have a material impact on our financial position or results of operations.

Note 2: Income Taxes

Effective January 1, 2007, we adopted FIN 48. The validity of any tax position is a matter of tax law, and generally there is no controversy about recognizing the benefit of a tax position in a company’s financial statements. The tax law is, however, subject to varied interpretations, and whether a tax position will ultimately be sustained may be uncertain. Prior to January 1, 2007, the impact of an uncertain tax position that did not create a difference between the financial statement basis and the tax basis of an asset or liability and that would have future tax consequences was included in our income tax provision if it was probable the position would be sustained upon audit. The benefit of any uncertain tax position that created a basis difference in an asset or liability was reflected in our tax provision if it was more likely than not that the position would be sustained upon audit. Prior to the adoption of FIN 48, we recognized interest expense based on our estimates of the ultimate outcomes of the uncertain tax positions. Under FIN 48, the impact of an uncertain tax position that is more likely than not of being sustained upon audit by the relevant taxing authority must be recognized at the largest amount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position in the aggregate has less than a 50% likelihood of being sustained. Also, under FIN 48, interest expense is recognized on the full amount of deferred benefits for uncertain tax positions.

On January 1, 2007, we recorded the following FIN 48 transition adjustments:

• $75 million decrease in our tax liabilities for uncertain tax positions;

• $27 million increase in interest accrued for uncertain tax positions;

• $119 million increase in our tax liabilities for uncertain tax positions and deferred tax assets to gross-up our balance sheet for the tax benefits of tax credit carryforwards and net operating losses (“NOLs”) that had previously been netted in our uncertain tax position liability; and

• $735 million increase in our deferred tax assets that was offset by a corresponding increase to our valuation allowance. See our discussion of the 2002-2003 IRS audit below for further information.

As of January 1, 2007, we had a total liability of $60 million for interest. During the three and six months ended June 30, 2007, we increased our liability for uncertain tax positions by $4 million and $8 million, respectively, as a result of additional interest accruals. In accordance with our accounting policy, both before and after adoption of FIN 48, interest expense and penalties related to income taxes are included in the other—net line of our condensed consolidated statements of operations. As of January 1, 2007, we had unrecognized tax benefits of $654 million. Our net deferred tax asset remains subject to a valuation allowance except for the tax credits and NOLs discussed above because we cannot currently conclude that it is more likely than not we will realize our net deferred tax assets. Any future adjustments to our uncertain tax position liability will result in an impact on our income tax provision and effective tax rate. As of January 1, 2007, approximately $108 million of the unrecognized tax benefits could affect our income tax provision and effective tax rate. As of June 30, 2007, our estimated NOLs totaled approximately $7.7 billion.

We are included in the coordinated industry case program of the Internal Revenue Service (“IRS”) and therefore the IRS examines all of our federal income tax returns. As of June 30, 2007, all of the federal income

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

tax returns we have filed since 1998 are still subject to adjustment upon audit. We also file combined income tax returns in many states, and these combined returns remain open for adjustments to our federal income tax returns. In addition, certain combined state income tax returns we have filed since 1994 are still open for state specific adjustments.

We have a tentative settlement with the IRS related to audits for the tax years 1998 through 2001. This settlement is subject to final calculation of our liability, our acceptance of the calculation and formal approval of the settlement by the IRS and the Joint Committee on Taxation of the U.S. Congress. If the settlement is effected in accordance with our expectations, we believe that it is reasonably possible that we could recognize up to $138 million of tax and interest benefits (including up to a $98 million increase in net income) and our total unrecognized tax benefits may decrease by approximately $221 million by December 31, 2007.

We are currently going through the appeals process with the IRS on its audit of our returns for 2002 and 2003. This appeal is primarily over deductions we reported totaling approximately $3 billion. Any significant changes to our expectations for this audit could result in significant changes to our deferred tax assets. However, any such changes that occur while we have a valuation allowance recorded would not significantly impact our net income, accumulated deficit or net deferred taxes.

Prior to 2006, we had a history of losses and we recognized a valuation allowance for our net deferred tax assets. We continue to monitor our cumulative net loss position and other evidence each quarter to determine the appropriateness of our valuation allowance. If we continue to generate income before income taxes in future periods, our conclusion about the realizability of our deferred tax assets and therefore the appropriateness of the valuation allowance could change in the near term and we could record a substantial gain in our consolidated statement of operations when that occurs.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

Note 3: Earnings Per Share

Basic earnings per share excludes dilution and is computed by dividing net income by the weighted average number of shares of common stock outstanding for the period. For purposes of this calculation, common stock outstanding does not include shares of restricted stock on which the restrictions have not yet lapsed. Diluted earnings per share reflects the potential dilution that could occur if certain outstanding stock options are exercised, the premium on convertible debt is converted into common stock and restrictions lapse on restricted stock awards.

The following is a reconciliation of the number of shares used in the basic and diluted earnings per share computations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
	(Dollars in millions except per share amounts, shares in thousands)
Net income	$	246	$	117	$	486	$	205
Basic weighted average shares outstanding		1,841,295		1,882,398		1,853,058		1,878,378
Dilutive effect of options with strike prices equal to or less than the average price of our common stock, calculated using the treasury stock method		21,302		29,171		21,679		28,166
Dilutive effect of the equity premium on convertible debt at the average price of our common stock		81,031		34,330		73,722		23,557
Dilutive effect of unvested restricted stock and other		6,428		5,829		6,438		5,705
Diluted weighted average shares outstanding		1,950,056		1,951,728		1,954,897		1,935,806
Earnings per share:
Basic	$	0.13	$	0.06	$	0.26	$	0.11
Diluted	$	0.13	$	0.06	$	0.25	$	0.11

The following is a summary of the securities that could potentially dilute basic earnings per share, but have been excluded from the computations of diluted earnings per share:

	Three Months Ended June 30,		Six Months Ended June 30,
	2007	2006	2007	2006
	(Shares in thousands)
Outstanding options to purchase common stock excluded because the strike prices of the options exceeded the average price of common stock during the period	31,620	44,459	31,641	44,518
Outstanding options to purchase common stock and unvested restricted stock excluded because the market-based vesting conditions have not been met	1,837	6,258	1,837	6,258
Other outstanding options to purchase common stock excluded because the impact would have been antidilutive	5,302	5,819	9,381	5,763

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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

Note 4: Borrowings

As of June 30, 2007 and December 31, 2006, our borrowings, net of discounts and premiums, consisted of the following:

	June 30,     2007		December 31, 2006
	(Dollars in millions)
Current borrowings:
Current portion of long-term notes	$	1,272	$	1,656
Current portion of capital lease and other obligations		32		30
Total current borrowings	$	1,304	$	1,686
Long-term borrowings:
Long-term notes	$	13,116	$	13,105
Long-term capital lease and other obligations		91		101
Total long-term borrowings	$	13,207	$	13,206

Borrowings classified as current are due and payable within 12 months from the applicable balance sheet date. The balance of the $1.265 billion of our 3.50% Convertible Senior Notes due 2025 was classified as a current obligation as of June 30, 2007 and December 31, 2006 because specified, market-based conversion provisions were met as of those dates. These market-based conversion provisions specify that, when our common stock has a closing price above $7.08 per share for 20 or more trading days during certain periods of 30 consecutive trading days, these notes become available for conversion for a specified period. As a result, these notes are classified as a current obligation. If our common stock does not maintain a closing price above $7.08 per share during certain subsequent periods, the notes would no longer be available for immediate conversion and the outstanding notes would be reclassified to long-term borrowings. These notes are registered securities and are freely tradable. As of June 30, 2007, the notes had a market price of $1,755 per $1,000 principal amount of notes, compared to an estimated conversion value of $1,643. The conversion value is calculated based on the specified conversion provisions using the closing prices of our common stock during the 20 trading days ended June 30, 2007.

On May 16, 2007, our wholly owned subsidiary, Qwest Corporation (“QC”), issued $500 million aggregate principal amount of notes that bear interest at 6.5% per year and are due in 2017. The notes are unsecured obligations of QC and rank equally in right of payment with all other unsecured and unsubordinated indebtedness of QC. The covenant and default terms are substantially the same as those associated with QC’s other long-term debt. QC plans to file an exchange offer registration statement with the Securities and Exchange Commission (“SEC”) for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 315 calendar days of the date of issuance of the original notes. If QC fails to file this registration statement or fails to satisfy other obligations under the registration rights agreement relating to the notes, QC will be required to pay additional interest on the notes at a rate of 25 basis points per year.

On June 4, 2007, QC redeemed $250 million aggregate principal amount of its 8⁷/₈% Debentures due June 1, 2031. The extinguishment resulted in a loss on early retirement of debt of $18 million.

Also on June 4, 2007, we redeemed $250 million aggregate principal amount of QCII’s Floating Rate Senior Notes due 2009. The extinguishment resulted in a loss on early retirement of debt of $4 million.

On June 7, 2007, QC redeemed $70 million aggregate principal amount of its 6.0% Notes due 2007.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

On June 15, 2007, our wholly owned subsidiary, Qwest Communications Corporation, repaid at maturity $314 million aggregate principal amount of its 7.25% Senior Notes due 2007.

Note 5: Restructuring

During 2004 and previous years, as part of our ongoing efforts to evaluate our operating costs, we established restructuring programs, which included workforce reductions, consolidation of excess facilities, and restructuring of certain business functions. As of June 30, 2007, the remaining restructuring reserve relates to leases for real estate that we ceased using in prior periods and consists of our estimates of amounts to be paid for these leases in excess of our estimates of any sublease revenue we may collect. We expect to use this reserve over the remaining lease terms, which range from 0.5 years to 18.5 years, with a weighted average of 12.1 years.

The remaining reserve balances are included on our condensed consolidated balance sheets in accrued expenses and other current liabilities for the current portion and other long-term liabilities for the long-term portion. The charges and reversals are included in our condensed consolidated statements of operations in selling, general and administrative expense. As of June 30, 2007 and December 31, 2006, our restructuring reserve was $323 million and $347 million, respectively. The amount included in current liabilities was $35 million and $37 million, respectively, and the long-term portion was $288 million and $310 million, respectively, as of those dates.

In the three months ended June 30, 2007 and 2006, we added no restructuring provisions to the reserves, we used $8 million and $31 million, respectively, and we reversed $0 million and $9 million, respectively. In the six months ended June 30, 2007 and 2006, we added $0 million and $11 million, respectively, of restructuring provisions to these reserves, we used $21 million and $46 million, respectively, and we reversed $3 million and $10 million, respectively.

Note 6: Employee Benefits

The components of the pension, non-qualified pension and post-retirement benefits expense for the three and six months ended June 30, 2007 and 2006 are detailed below:

	Three Months Ended June 30,
	Pension Expense						Non-Qualified Pension Expense				Post-Retirement Benefits Expense
	2007			2006			2007		2006		2007			2006
	(Dollars in millions)
Service cost	$	34		$	38		$	—	$	1	$	3		$	4
Interest cost		122			121			1		1		58			73
Expected return on plan assets		(166	)		(166	)		—		—		(33	)		(32	)
Amortization of transition asset		—			—			1		1		—			—
Amortization of prior service cost		(1	)		(2	)		—		—		(32	)		(21	)
Recognized net actuarial loss		16			27			—		—		6			10
Net expense included in net income	$	5		$	18		$	2	$	3	$	2		$	34

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

	Six Months Ended June 30,
	Pension Expense						Non-Qualified Pension Expense				Post-Retirement Benefits Expense
	2007			2006			2007		2006		2007			2006
	(Dollars in millions)
Service cost	$	68		$	75		$	1	$	2	$	6		$	7
Interest cost		245			241			2		2		116			146
Expected return on plan assets		(331	)		(331	)		—		—		(66	)		(64	)
Amortization of transition asset		—			—			1		1		—			—
Amortization of prior service cost		(2	)		(3	)		—		—		(64	)		(42	)
Recognized net actuarial loss		32			54			—		—		12			20
Net expense included in net income	$	12		$	36		$	4	$	5	$	4		$	67

The pension, non-qualified pension and post-retirement benefit expense is allocated between cost of sales and selling, general and administrative expense in our condensed consolidated statements of operations. The measurement date used to determine pension, non-qualified pension and other post-retirement healthcare and life insurance benefit measurements for the plans is December 31.

We recorded combined expense of $9 million and $55 million for the three months ended June 30, 2007 and 2006, respectively, and $20 million and $108 million for the six months ended June 30, 2007 and 2006, respectively. The expense decreased primarily as a result of benefit plan changes and net reduced costs associated with the recognition of actuarial losses from prior years. Effective January 1, 2007, changes to our benefit plans capped our levels of contributions for certain post-retirement healthcare benefits and reduced the post-retirement benefit under the life insurance plan, which decreased our liability substantially. Actuarial gains or losses reflect the differences between our actuarial assumptions and what actually occurred. The amortization of actuarial losses for this period was reduced primarily due to higher discount rates and higher than expected actual returns on pension assets.

For the three and six months ended June 30, 2007, accumulated other comprehensive income decreased $26 million and $52 million, respectively, for other post-retirement obligations—net of taxes and increased $15 million and $30 million, respectively, for pension—net of taxes.

Note 7: Segment Information

Our operating revenue is generated from our wireline services, wireless services and other services segments. Segment discussions reflect the way we currently report our operating results to our Chief Operating Decision Maker.

The accounting principles used to determine segment results are the same as those used in our condensed consolidated financial statements. Segment income consists of each segment’s revenue and expenses. Segment revenue is based on the types of products and services offered as described below. Wireline and wireless segment expenses include employee-related costs except for the combined cost of pension, non-qualified pension and post-retirement benefits, facility costs, network expenses and other non-employee related costs such as customer support, collections and telemarketing. We manage administrative services costs such as finance, information technology, real estate, legal, other marketing and advertising and human resources centrally; consequently, these costs are included in the other services segment. We evaluate depreciation, amortization, interest expense,

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For the Three and Six Months Ended June 30, 2007

interest income and other income (expense) on a total company basis. As a result, these items are not assigned to any segment. Similarly, we do not include impairment charges in the segment results. Therefore, the segment results presented below are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities during the periods presented.

We generate revenue from our wireline services, wireless services and other services as described below.

• Wireline services. The wireline services segment uses our network to provide voice services and data, Internet and video services to mass markets, business and wholesale customers. Our wireline services include:

• Voice services. Voice services include local voice services, long-distance voice services and access services. Local voice services include basic local exchange, switching and enhanced voice services. Local voice services also include network transport, billing services and providing access to our local network through our wholesale channel. Long-distance voice services include domestic and international long-distance services. Access services include fees we charge to other telecommunications providers to connect their customers and their networks to our network.

• Data, Internet and video services. We offer data and Internet services to our mass markets, business and wholesale customers. We also offer broadband services and video services, including cable-based video and resold satellite digital television, to our mass markets customers.

We offer our business and wholesale customers a variety of data and Internet products and services such as data integration, private line, MPLS-based services sold as iQ Networking^TM, web hosting, VoIP, ATM, frame relay, dedicated Internet access, VPN, ISDN and Internet dial-up access. We also include some traditional voice grade services with these services if they are bundled together in an end-to-end solution for the customer.

• Wireless services. We sell wireless products and services, including access to a nationwide wireless network, to mass markets and business customers, primarily within our local service area. We also offer an integrated service, which enables customers to use the same telephone number and voice mailbox for their wireless phone as for their home or business phone. Our wireless products and services are primarily marketed to consumers as part of our bundled offerings.

• Other services. Other services include the sublease of space in our office buildings, warehouses and other properties.

The revenue shown below for each segment is derived from transactions with external customers. Substantially all of our assets are in our wireline services and other services segments.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

Segment information for the three and six months ended June 30, 2007 and 2006 is summarized in the following table:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
	(Dollars in millions)
Operating revenue:
Wireline services	$	3,314		$	3,320		$	6,612		$	6,647
Wireless services		139			142			278			281
Other services		10			10			19			20
Total operating revenue	$	3,463		$	3,472		$	6,909		$	6,948
Operating expenses:
Wireline services	$	1,541		$	1,560		$	3,094		$	3,166
Wireless services		136			136			275			278
Other services		637			667			1,260			1,350
Total segment expenses	$	2,314		$	2,363		$	4,629		$	4,794
Segment income (loss):
Wireline services	$	1,773		$	1,760		$	3,518		$	3,481
Wireless services		3			6			3			3
Other services		(627	)		(657	)		(1,241	)		(1,330	)
Total segment income	$	1,149		$	1,109		$	2,280		$	2,154
Capital expenditures:
Wireline services	$	350		$	364		$	613		$	686
Wireless services		—			—			1			—
Other services		76			78			130			146
Total capital expenditures	$	426		$	442		$	744		$	832

The following table reconciles segment income to net income for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
	(Dollars in millions)
Total segment income	$	1,149		$	1,109		$	2,280		$	2,154
Depreciation and amortization		(615	)		(693	)		(1,227	)		(1,384	)
Total other expense—net		(288	)		(281	)		(565	)		(549	)
Income tax expense		—			(18	)		(2	)		(16	)
Net income	$	246		$	117		$	486		$	205

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

Revenue derived from external customers for the three and six months ended June 30, 2007 and 2006 is summarized in the following table:

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
	(Dollars in millions)
Operating revenue:
Wireline voice services	$	2,067	$	2,196	$	4,145	$	4,421
Wireline data, Internet and video services		1,247		1,124		2,467		2,226
Wireless services		139		142		278		281
Other services		10		10		19		20
Total operating revenue	$	3,463	$	3,472	$	6,909	$	6,948

We do not have any single customer that provides more than 10% of our total revenue derived from external customers. Substantially all of our revenue from external customers comes from customers located in the United States.

Note 8: Commitments and Contingencies

Throughout this note, 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. Settlement classes have been certified in connection with the settlements of certain of the putative class actions described below where the courts held that the named plaintiffs represented the settlement class they purported to represent. To the extent appropriate, we have provided reserves for each of the matters described below.

Settlement of Consolidated Securities Action

Twelve putative class actions purportedly brought on behalf of purchasers of our publicly traded securities between May 24, 1999 and February 14, 2002 were consolidated into a consolidated securities action pending in federal district court in Colorado against us and various other defendants. The first of these actions was filed on July 27, 2001. Plaintiffs alleged, among other things, that defendants issued false and misleading financial results and made false statements about our business and investments, including materially false statements in certain of our registration statements. The most recent complaint in this matter sought unspecified compensatory damages and other relief. However, counsel for plaintiffs indicated that the putative class would seek damages in the tens of billions of dollars.

In November 2005, we, certain other defendants, and the putative class representatives entered into and filed with the federal district court in Colorado a Stipulation of Partial Settlement that, if implemented, will settle the consolidated securities action against us and certain other defendants. No parties admit any wrongdoing as part of the settlement. Pursuant to the settlement, we have deposited approximately $400 million in cash into a settlement fund. Of this amount, $200 million was deposited in 2006, and the remaining $200 million (plus interest) was deposited in January 2007. In connection with the settlement, we received $10 million from Arthur Andersen LLP. As part of the settlement, the class representatives and the settlement class they represent are also releasing Arthur Andersen. If the settlement is not implemented, we will be repaid the $400 million plus interest, less certain expenses, and we will repay the $10 million to Arthur Andersen.

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For the Three and Six Months Ended June 30, 2007

If implemented, the settlement will resolve and release the individual claims of the class representatives and the claims of the settlement class they represent against us and all defendants except Joseph Nacchio, our former chief executive officer, and Robert Woodruff, our former chief financial officer. In September 2006, the federal district court in Colorado issued an order approving the proposed settlement on behalf of purchasers of our publicly traded securities between May 24, 1999 and July 28, 2002. Messrs. Nacchio and Woodruff have appealed that order to the United States Court of Appeals for the Tenth Circuit.

As noted below under “Remaining Securities Actions,” a number of persons, including certain large pension funds, were excluded from the settlement class at their request. Some of these funds have filed individual suits against us. We will continue to defend against such claims vigorously.

Remaining Securities Actions

The remaining securities actions described below present material and significant risks to us. The size, scope and nature of the restatements of our consolidated financial statements for 2001 and 2000, which are described in our previously issued consolidated financial statements for the year ended December 31, 2002, affect the risks presented by these actions, as these matters involve, among other things, our prior accounting practices and related disclosures. In addition to their allegations described below, plaintiffs in certain of the remaining securities actions have alleged our restatement of items in support of their claims. We can give no assurance as to the impacts on our financial results or financial condition that may ultimately result from these matters.

We have reserves recorded in our financial statements for the minimum estimated amount of loss we believe is probable with respect to the remaining securities actions as well as any additional actions that may be brought by parties that, as described below under “Remaining Securities Actions,” have opted out of the settlement of the consolidated securities action. We have recorded our estimate of the minimum liability for these matters because no estimate of probable loss for these matters is a better estimate than any other amount. We have settled the claims brought by certain parties that opted out of the consolidated securities action, and, although there is no certainty that these settlements are indicative of the terms of future settlements, we have taken these settlements into account when determining our estimate of the minimum liability for these matters. If the recorded reserves are insufficient to cover these matters, we will need to record additional charges to our consolidated statement of operations in future periods. The amount we have reserved for these matters is our estimate of the lowest end of the possible range of loss. The ultimate outcomes of these matters are still uncertain and the amount of loss we may ultimately incur could be substantially more than the reserves we have provided.

We continue to defend against the remaining securities actions vigorously and are currently unable to provide any estimate as to the timing of the resolution of these actions. Settlements or judgments in several of these actions substantially in excess of our recorded reserves could have a significant impact on us. The magnitude of such settlements or judgments resulting from these actions 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 securities or selling assets.

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 and employees with respect to certain liabilities, and we have been advancing legal fees and costs to many current and former directors, officers and employees in connection with the securities actions and certain other matters.

We are a defendant in the securities actions described below. At their request, plaintiffs in these actions were excluded from the settlement class of the consolidated securities action. As a result, their claims were not

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For the Three and Six Months Ended June 30, 2007

released by the district court’s order approving the settlement of the consolidated securities action. These plaintiffs have variously alleged, among other things, that we and others violated federal and state securities laws, engaged in fraud, civil conspiracy and negligent misrepresentation, and breached fiduciary duties owed to investors by issuing false and misleading financial reports and statements, falsely inflating revenue and decreasing expenses, creating false perceptions of revenue and growth prospects and/or employing improper accounting practices. Other defendants in one or more of these actions include former directors, officers and employees of Qwest, Arthur Andersen LLP, certain investment banks and others. Plaintiffs variously seek, among other things, compensatory and punitive damages, restitution, equitable and declaratory relief, pre-judgment interest, costs and attorneys’ fees.

Together, the parties to these lawsuits contend that they have incurred losses resulting from their investments in our securities in excess of $840 million; they have also asserted claims for punitive damages and interest, in addition to claims to recover their alleged losses.

Plaintiff(s)	Date Filed	Court Where Action Is Pending
State of New Jersey (Treasury Department, Division of Investment)	November 27, 2002	New Jersey Superior Court, Mercer County
State Universities Retirement System of Illinois	January 10, 2003	Circuit Court of Cook County, Illinois
Shriners Hospitals for Children	March 22, 2004 October 31, 2006	Federal District Court in Colorado
New York State Common Retirement Fund	April 18, 2006	Federal District Court in Colorado
San Francisco Employees Retirement System	April 18, 2006	Federal District Court in Colorado
Fire and Police Pension Association of Colorado	April 18, 2006	Federal District Court in Colorado
Commonwealth of Pennsylvania Public School Employees’ Retirement System	May 1, 2006	Federal District Court in Colorado
Merrill Lynch Investment Master Basic Value Trust Fund, et al.	June 21, 2006	Federal District Court in Colorado
Denver Employees Retirement Plan	August 7, 2006	Federal District Court in Colorado
FTWF Franklin Mutual Beacon Fund, et al.	October 17, 2006	Superior Court, State of California, County of San Francisco

We have settled the lawsuits of certain other parties that were excluded from the settlement class of the consolidated securities action.

At their request, other persons (including large pension funds) who have not yet filed suit were also excluded from the settlement class. As a result, their claims will not be released by the order approving the settlement of the consolidated securities action even if that order is affirmed on appeal. We expect that some of these other persons will file actions against us if we are unable to resolve those matters amicably. In the aggregate, the persons who have requested exclusion from the settlement class, excluding those listed in the table above and those whose claims have been settled, contend that they have incurred losses resulting from their investments in our securities of approximately $1.15 billion, which does not include any claims for punitive damages or interest. Due to the fact that many of the persons who requested exclusion from the settlement class have not filed lawsuits, it is difficult to evaluate the claims that they may assert. Regardless, we will vigorously defend against any such claims.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

A putative class action purportedly brought on behalf of purchasers of our stock between June 28, 2000 and June 27, 2002 and owners of U S WEST, Inc. stock on June 28, 2000 is pending in Colorado in the District Court for the County of Boulder. This action was filed on June 27, 2002. Plaintiffs allege, among other things, that we and other defendants issued false and misleading statements and engaged in improper accounting practices in order to accomplish the U S WEST/Qwest merger, to make us appear successful and to inflate the value of our stock. Plaintiffs seek unspecified monetary damages, disgorgement of illegal gains and other relief.

KPNQwest Litigation/Investigation

As previously disclosed, we and the other defendants settled a putative class action filed against us and others on behalf of certain purchasers of publicly traded securities of KPNQwest, N.V. (of which we were a major shareholder). The most recent complaint alleged that, among other things, defendants engaged in a fraudulent scheme and deceptive course of business in order to inflate KPNQwest’s revenue and the value of KPNQwest securities. At their request, certain individuals and entities were excluded from the settlement class. As a result, their claims were not released by the court order approving the settlement. Some of these individuals and entities have already filed actions against us, as described below, and we are vigorously defending against these claims. We expect that at least some of the other persons who were excluded from the settlement class will also pursue actions against us if we are unable to resolve their claims amicably. In the aggregate, those who were excluded from the settlement class currently contend that they have incurred losses of at least $76 million resulting from their investments in KPNQwest securities during the settlement class period, which does not include any claims for punitive damages or interest. The amount of these alleged losses may increase or decrease in the future as we learn more about the potential claims of those who opted out of the settlement class. Due to the fact that some of them have not filed lawsuits, it is difficult to evaluate the claims that they may assert. Regardless, we will vigorously defend against any such claims.

On October 31, 2002, Richard and Marcia Grand, co-trustees of the R.M. Grand Revocable Living Trust, dated January 25, 1991, filed a lawsuit in Arizona Superior Court which, as amended, alleges, among other things, that the defendants violated state and federal securities laws and breached their fiduciary duty in connection with investments by plaintiffs in securities of KPNQwest. We are a defendant in this lawsuit along with Qwest B.V. (one of our subsidiaries), Joseph Nacchio and John McMaster, the former President and Chief Executive Officer of KPNQwest. Plaintiffs claim to have lost approximately $10 million in their investments in KPNQwest. The superior court granted defendants’ motion for partial summary judgment with respect to a substantial portion of plaintiffs’ claims and the remainder of plaintiffs’ claims were dismissed without prejudice. Plaintiffs appealed the summary judgment order to the Arizona Court of Appeals, which affirmed in part and reversed in part the superior court’s decision. We are seeking review by the Arizona Supreme Court of that portion of the Court of Appeals’ decision that reversed the superior court’s decision.

On June 25, 2004, the trustees in the Dutch bankruptcy proceeding for KPNQwest filed a lawsuit in the federal district court for the District of New Jersey alleging violations of the Racketeer Influenced and Corrupt Organizations Act, and breach of fiduciary duty and mismanagement under Dutch law. We are a defendant in this lawsuit along with Joseph Nacchio, Robert S. Woodruff and John McMaster. 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 of approximately $2.4 billion. Plaintiffs also seek treble damages as well as an award of plaintiffs’ attorneys’ fees and costs. On October 17, 2006, the court issued an order granting defendants’ motion to dismiss the lawsuit, concluding that the dispute should not be adjudicated in the United States. Plaintiffs have appealed this decision to the United States Court of Appeals for the Third Circuit.

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For the Three and Six Months Ended June 30, 2007

On June 17, 2005, Appaloosa Investment Limited Partnership I, Palomino Fund Ltd., and Appaloosa Management L.P. filed a lawsuit in the federal district court for the Southern District of New York against us, Joseph Nacchio, John McMaster and Koninklijke KPN N.V., or KPN. The amended complaint alleges that defendants violated federal securities laws in connection with the purchase by plaintiffs of certain KPNQwest debt securities. Plaintiffs seek compensatory damages, as well as an award of plaintiffs’ attorneys’ fees and costs.

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 Telecom B.V., KPN, Joseph Nacchio, John McMaster, and other former employees or supervisory board members of us, KPNQwest, or KPN. 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 $295 million based on the exchange rate on June 30, 2007).

On August 23, 2005, the Dutch Shareholders Association (Vereniging van Effectenbezitters, or VEB) filed a petition for inquiry with the Enterprise Chamber of the Amsterdam Court of Appeals, located in The Netherlands, with regard to KPNQwest. VEB sought an inquiry into the policies and course of business at KPNQwest that are alleged to have caused the bankruptcy of KPNQwest in May 2002, and an investigation into alleged mismanagement of KPNQwest by its executive management, supervisory board members, joint venture entities (us and KPN), and KPNQwest’s outside auditors and accountants. On December 28, 2006, the Enterprise Chamber ordered an inquiry into the management and conduct of affairs of KPNQwest for the period January 1 through May 23, 2002. We and others have appealed that order to The Netherlands Supreme Court.

Purporting to speak for an unspecified number of shareholders, VEB also sought exclusion from the settlement class in the settlements of the KPNQwest putative securities class action described above. The information that VEB provided in support of its request for exclusion did not indicate the losses claimed to have been sustained by VEB or the unspecified shareholders that VEB purports to represent, and thus those claims are not included in the approximately $76 million of losses claimed by those who requested exclusion from the settlement class, as described above. In view of these and other deficiencies in VEB’s request for exclusion, VEB was not excluded from the settlement class. We can provide no assurance, however, that our settlement will be enforced against VEB or the shareholders it purports to represent if VEB or such shareholders were to bring claims against us in The Netherlands.

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 us on behalf of landowners on various dates and in various courts in California, Colorado, Georgia, Illinois, Indiana, Kansas, Massachusetts, Mississippi, Missouri, Oregon, South Carolina, Tennessee and Texas. For the most part, the complaints challenge our right to install our fiber optic cable in railroad rights-of-way. Complaints in Colorado, Illinois and Texas, also challenge our right to install fiber optic cable in utility and pipeline rights-of-way. The complaints allege that the railroads, utilities and pipeline companies 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 actions (California, Colorado, Georgia, Kansas, Mississippi, Missouri, Oregon, South Carolina, Tennessee and Texas) purport to be brought on behalf of state-wide classes in the named plaintiffs’ respective states. The Massachusetts action purports to be on behalf of state-wide classes in all states (other than Indiana, Louisiana and Tennessee) in which Qwest has fiber optic cable in railroad rights-of-way, and also on behalf of two classes of landowners whose properties adjoin railroad rights-of-way

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For the Three and Six Months Ended June 30, 2007

originally derived from federal land grants. Several actions purport to be brought on behalf of multi-state classes. The Illinois state court action purports to be on behalf of landowners in Illinois, Iowa, Kentucky, Michigan, Minnesota, Nebraska, Ohio and Wisconsin. The Illinois federal court action purports to be on behalf of landowners in Arkansas, California, Florida, Illinois, Indiana, Missouri, Nevada, New Mexico, Montana and Oregon. The Indiana action purports to be on behalf of a national class of landowners adjacent to railroad rights-of-way over which our network passes. The complaints seek damages on theories of trespass and unjust enrichment, as well as punitive damages.

On September 1, 2006, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a lawsuit in Federal District Court in Delaware against us (including a number of our subsidiaries). The lawsuit alleges infringement by us of 24 patents. The lawsuit also names as defendants a number of other entities that are unrelated to us. Katz is also involved in numerous other cases against unrelated entities. These cases have been consolidated before the United States District Court for the Central District of California for coordinated pretrial proceedings. Although the complaint against us is vague, it generally alleges infringement based on our use of interactive voice response systems to automate processing of customer calls to us. Katz seeks unspecified damages, trebling of damages based on alleged willful infringement, attorney’s fees and injunctive relief. We will vigorously defend against this action.

A putative class action purportedly filed on behalf of certain of our retirees was brought against us and certain other defendants in Federal District Court in Colorado in connection with our decision to reduce life insurance benefits for these retirees to a flat $10,000 benefit. The action was filed on March 30, 2007. The plaintiffs allege, among other things, that we and other defendants were obligated to continue their life insurance benefits at the levels in place before we decided to reduce them. Plaintiffs seek restoration of life insurance benefits to previous levels and certain equitable relief. We believe that our reduction of life insurance benefits was permissible under applicable law and plan documents and will vigorously defend against this action.

We have tax related matters pending against us, certain of which are before the Appeals Office of the IRS. In addition, 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. Generally, we have not provided for liabilities of former affiliated members or for claims they have asserted or may assert against us. We believe we have adequately provided for these tax-related matters. If the recorded reserves for these tax-related matters are insufficient, we may need to record additional amounts in future periods.

Note 9: Financial Statements of Guarantors

QCII and two of its subsidiaries, Qwest Capital Funding, Inc. (“QCF”) and Qwest Services Corporation (“QSC”), guarantee certain of each other’s registered debt securities. QCII has outstanding a total of $2.325 billion aggregate principal amount of senior notes that were issued in February 2004 and June 2005 and that are guaranteed by QCF and QSC (the “QCII Guaranteed Notes”). Each series of QCF’s outstanding notes totaling approximately $2.9 billion in aggregate principal amount (the “QCF Guaranteed Notes”) is guaranteed on a senior unsecured basis by QCII. The guarantees 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, funds necessary to meet their debt service or guarantee obligations are provided in large part by distributions or advances from their subsidiaries.

19

QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Three and Six Months Ended June 30, 2007

The following information sets forth our condensed consolidating statements of operations for the three and six months ended June 30, 2007 and 2006, our condensed consolidating balance sheets as of June 30, 2007 and December 31, 2006, and our condensed consolidating statements of cash flows for the six months ended June 30, 2007 and 2006. The information for QCII, QSC and QCF is presented for each entity on a stand-alone basis, including that entity’s investments in all of its subsidiaries, if any, under the equity method. The condensed 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. The direct subsidiaries of QCII that are not guarantors of the QCII Guaranteed Notes are presented on a combined basis. The subsidiaries of QSC that are not guarantors of the QCII Guaranteed Notes are presented on a combined basis. Both QSC and QCF are 100% owned by 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 condensed consolidated financial statements.

In February 2007, the Federal Communications Commission issued an order that freed us from some regulatory obligations under the Telecommunications Act of 1996. Among other things, the order gives us more flexibility to integrate our local and long-distance operations, including the operations of our subsidiaries that provide shared services to our two main operating companies. In light of this order and consistent with our continuing strategy to streamline and simplify our corporate structure to gain operational efficiencies, we may engage in mergers, dissolutions and operational consolidations affecting one or more of our subsidiaries. We do not expect these changes to adversely affect our consolidated financial condition or results of operations or the financial condition or results of operations for any of the entities presented in this note. However, in future periods the financial statements of certain subsidiaries as presented in this note may be substantially different from the financial statements we have historically presented in this note.

20

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2007

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Operating revenue:
Operating revenue	$	—		$	—		$	—		$	3		$	3,460		$	—		$	3,463
Operating revenue—affiliates		—			351			—			12			31			(394	)		—
Total operating revenue		—			351			—			15			3,491			(394	)		3,463
Operating expenses:
Cost of sales (exclusive of depreciation and amortization)		—			308			—			—			1,301			(299	)		1,310
Cost of sales—affiliates		—			44			—			—			20			(64	)		—
Selling, general and administrative		15			—			—			15			675			299			1,004
Selling, general and administrative—affiliates		—			—			—			—			330			(330	)		—
Depreciation and amortization		—			1			—			—			614			—			615
Total operating expenses		15			353			—			15			2,940			(394	)		2,929
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net		67			—			53			—			154			—			274
Interest expense—affiliates		3			—			25			—			182			(210	)		—
Interest income—affiliates		—			(25	)		(184	)		(2	)		1			210			—
Other—net		2			(9	)		—			—			21			—			14
(Income) loss from equity investments in subsidiaries		(292	)		39			—			—			—			253			—
Total other expense (income)—net		(220	)		5			(106	)		(2	)		358			253			288
Income (loss) before income taxes		205			(7	)		106			2			193			(253	)		246
Income tax benefit (expense)		41			232			(41	)		—			(232	)		—			—
Net income (loss)	$	246		$	225		$	65		$	2		$	(39	)	$	(253	)	$	246

(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

THREE MONTHS ENDED JUNE 30, 2006

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Operating revenue:
Operating revenue	$	—		$	—		$	—		$	2		$	3,470		$	—		$	3,472
Operating revenue—affiliates		—			339			—			15			30			(384	)		—
Total operating revenue		—			339			—			17			3,500			(384	)		3,472
Operating expenses:
Cost of sales (exclusive of depreciation and amortization)		—			289			—			—			1,384			(279	)		1,394
Cost of sales—affiliates		—			45			—			—			26			(71	)		—
Selling, general and administrative		16			—			—			13			660			280			969
Selling, general and administrative—affiliates		—			—			—			—			314			(314	)		—
Depreciation and amortization		—			—			—			—			693			—			693
Total operating expenses		16			334			—			13			3,077			(384	)		3,056
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net		68			2			63			—			165			—			298
Interest expense—affiliates		3			—			115			—			295			(413	)		—
Interest income—affiliates		—			(115	)		(297	)		(1	)		—			413			—
Other—net		(1	)		3			(5	)		(1	)		(13	)		—			(17	)
(Income) loss from equity investments in subsidiaries		(154	)		172			—			—			—			(18	)		—
Total other expense (income)—net		(84	)		62			(124	)		(2	)		447			(18	)		281
Income (loss) before income taxes		68			(57	)		124			6			(24	)		18			135
Income tax benefit (expense)		49			131			(47	)		(3	)		(148	)		—			(18	)
Net income (loss)	$	117		$	74		$	77		$	3		$	(172	)	$	18		$	117

(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

SIX MONTHS ENDED JUNE 30, 2007

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Operating revenue:
Operating revenue	$	—		$	—		$	—		$	6		$	6,903		$	—		$	6,909
Operating revenue—affiliates		—			676			—			17			63			(756	)		—
Total operating revenue		—			676			—			23			6,966			(756	)		6,909
Operating expenses:
Cost of sales (exclusive of depreciation and amortization)		—			596			—			—			2,608			(577	)		2,627
Cost of sales—affiliates		—			80			—			—			43			(123	)		—
Selling, general and administrative		67			—			—			25			1,333			577			2,002
Selling, general and administrative—affiliates		—			—			—			—			633			(633	)		—
Depreciation and amortization		—			2			—			—			1,225			—			1,227
Total operating expenses		67			678			—			25			5,842			(756	)		5,856
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net		136			—			106			—			314			—			556
Interest expense—affiliates		6			—			41			—			361			(408	)		—
Interest income—affiliates		—			(41	)		(365	)		(3	)		1			408			—
Other—net		2			(11	)		—			—			18			—			9
(Income) loss from equity investments in subsidiaries		(614	)		35			—			—			—			579			—
Total other expense (income)—net		(470	)		(17	)		(218	)		(3	)		694			579			565
Income (loss) before income taxes		403			15			218			1			430			(579	)		488
Income tax benefit (expense)		83			463			(83	)		—			(465	)		—			(2	)
Net income (loss)	$	486		$	478		$	135		$	1		$	(35	)	$	(579	)	$	486

(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

SIX MONTHS ENDED JUNE 30, 2006

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Operating revenue:
Operating revenue	$	—		$	—		$	—		$	5		$	6,943		$	—		$	6,948
Operating revenue—affiliates		—			676			—			24			60			(760	)		—
Total operating revenue		—			676			—			29			7,003			(760	)		6,948
Operating expenses:
Cost of sales (exclusive of depreciation and amortization)		—			588			—			—			2,792			(568	)		2,812
Cost of sales—affiliates		—			84			—			—			47			(131	)		—
Selling, general and administrative		28			—			—			25			1,361			568			1,982
Selling, general and administrative—affiliates		—			—			—			—			629			(629	)		—
Depreciation and amortization		—			1			—			—			1,383			—			1,384
Total operating expenses		28			673			—			25			6,212			(760	)		6,178
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net		136			4			127			—			327			—			594
Interest expense—affiliates		6			—			218			—			576			(800	)		—
Interest income—affiliates		—			(218	)		(580	)		(2	)		—			800			—
Other—net		(2	)		(14	)		(5	)		(2	)		(22	)		—			(45	)
(Income) loss from equity investments in subsidiaries		(280	)		405			—			—			—			(125	)		—
Total other expense (income)—net		(140	)		177			(240	)		(4	)		881			(125	)		549
Income (loss) before income taxes		112			(174	)		240			8			(90	)		125			221
Income tax benefit (expense)		93			300			(91	)		(3	)		(315	)		—			(16	)
Net income (loss)	$	205		$	126		$	149		$	5		$	(405	)	$	125		$	205

(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.

CONDENSED CONSOLIDATING BALANCE SHEETS

JUNE 30, 2007

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)		QCII Subsidiary Non- Guarantors		QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	102		$	293		$	—	$	—	$	474		$	—		$	869
Short-term investments		32			92			—		—		116			—			240
Accounts receivable—net		19			10			—		2		1,466			—			1,497
Accounts receivable—affiliates		271			402			60		2		25			(760	)		—
Current tax receivable		—			22			5		1		—			(28	)		—
Notes receivable—affiliates		—			1,684			9,735		99		—			(11,518	)		—
Deferred income taxes		—			—			6		—		173			(56	)		123
Prepaid expenses and other		—			27			—		6		341			(16	)		358
Total current assets		424			2,530			9,806		110		2,595			(12,378	)		3,087
Property, plant and equipment—net		—			8			—		—		14,068			—			14,076
Capitalized software—net		—			—			—		—		817			—			817
Investments in subsidiaries		1,093			(7,217	)		—		—		—			6,124			—
Deferred income taxes		—			1,506			29		10		—			(1,525	)		20
Prepaid pension		1,329			—			—		—		—			—			1,329
Prepaid pension—affiliates		3,173			115			—		—		1,010			(4,298	)		—
Other		585			8			11		5		451			—			1,060
Total assets	$	6,604		$	(3,050	)	$	9,846	$	125	$	18,941		$	(12,077	)	$	20,389
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current portion of long-term borrowings	$	1,272		$	—		$	—	$	—	$	32		$	—		$	1,304
Current borrowings—affiliates		99			—			1,684		—		9,735			(11,518	)		—
Accounts payable		4			50			—		3		861			—			918
Accounts payable—affiliates		26			21			—		—		186			(233	)		—
Accrued expenses and other		350			117			82		—		914			—			1,463
Accrued expenses and other—affiliates		—			60			9		—		458			(527	)		—
Current taxes payable		6			—			—		—		77			(28	)		55
Deferred income taxes		6			50			—		—		—			(56	)		—
Deferred revenue and advance billings		—			—			—		16		610			(16	)		610
Total current liabilities		1,763			298			1,775		19		12,873			(12,378	)		4,350
Long-term borrowings—net		2,340			—			2,916		—		7,951			—			13,207
Post-retirement and other post-employment benefit obligations		2,346			—			—		—		—			—			2,346
Deferred income taxes		37			—			2		—		1,486			(1,525	)		—
Deferred revenue		—			—			—		—		509			—			509
Other		550			139			—		79		765			—			1,533
Other long-term liabilities primarily related to post-retirement and other post-employment benefits—affiliates		1,124			600			—		—		2,574			(4,298	)		—
Total liabilities		8,160			1,037			4,693		98		26,158			(18,201	)		21,945
Stockholders’ (deficit) equity		(1,556	)		(4,087	)		5,153		27		(7,217	)		6,124			(1,556	)
Total liabilities and stockholders’ equity (deficit)	$	6,604		$	(3,050	)	$	9,846	$	125	$	18,941		$	(12,077	)	$	20,389

(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.

CONDENSED CONSOLIDATING BALANCE SHEETS

DECEMBER 31, 2006

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)		QCII Subsidiary Non- Guarantors		QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	900		$	—	$	—	$	341		$	—		$	1,241
Short-term investments		—			193			—		—		55			—			248
Accounts receivable—net		17			14			—		2		1,567			—			1,600
Accounts receivable—affiliates		232			437			62		18		35			(784	)		—
Current tax receivable		—			22			7		—		—			(29	)		—
Notes receivable—affiliates		—			457			9,746		93		—			(10,296	)		—
Deferred income taxes		—			6			6		—		181			(6	)		187
Prepaid expenses and other		—			58			—		9		345			(34	)		378
Total current assets		249			2,087			9,821		122		2,524			(11,149	)		3,654
Property, plant and equipment—net		—			9			—		—		14,570			—			14,579
Capitalized software—net		—			—			—		—		818			—			818
Investments in subsidiaries		1,743			(7,361	)		—		—		—			5,618			—
Deferred income taxes		—			1,512			33		10		—			(1,555	)		—
Prepaid pension		1,311			—			—		—		—			—			1,311
Prepaid pension—affiliates		3,245			117			—		—		1,019			(4,381	)		—
Other		416			10			12		6		433			—			877
Total assets	$	6,964		$	(3,626	)	$	9,866	$	138	$	19,364		$	(11,467	)	$	21,239
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Current portion of long-term borrowings	$	1,272		$	—		$	—	$	—	$	414		$	—		$	1,686
Current borrowings—affiliates		146			—			457		—		9,693			(10,296	)		—
Accounts payable		—			53			—		3		941			—			997
Accounts payable—affiliates		28			40			—		—		228			(296	)		—
Accrued expenses and other		505			186			80		—		1,032			—			1,803
Accrued expenses and other—affiliates		—			24			3		—		461			(488	)		—
Current taxes payable		8			—			—		—		74			(29	)		53
Deferred income taxes		6			—			—		—		—			(6	)		—
Deferred revenue and advance billings		—			—			—		34		621			(34	)		621
Total current liabilities		1,965			303			540		37		13,464			(11,149	)		5,160
Long-term borrowings—net		2,586			—			2,916		—		7,704			—			13,206
Post-retirement and other post-employment benefit obligations		2,366			—			—		—		—			—			2,366
Deferred income taxes		41			—			2		—		1,673			(1,555	)		161
Deferred revenue		—			—			—		—		506			—			506
Other		315			142			—		75		753			—			1,285
Other long-term liabilities primarily related to post-retirement and other post-employment benefits—affiliates		1,136			620			—		—		2,625			(4,381	)		—
Total liabilities		8,409			1,065			3,458		112		26,725			(17,085	)		22,684
Stockholders’ (deficit) equity		(1,445	)		(4,691	)		6,408		26		(7,361	)		5,618			(1,445	)
Total liabilities and stockholders’ equity (deficit)	$	6,964		$	(3,626	)	$	9,866	$	138	$	19,364		$	(11,467	)	$	21,239

(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.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW

SIX MONTHS ENDED JUNE 30, 2007

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Cash (used for) provided by operating activities	$	(344	)	$	709		$	152		$	6		$	845		$	5		$	1,373
Investing Activities:
Expenditures for property, plant and equipment and capitalized software		—			(1	)		—			—			(743	)		—			(744	)
Proceeds from sale of investment securities		—			31			—			—			—			—			31
Purchases of investment securities		—			(24	)		—			—			—			—			(24	)
Net (purchases of) proceeds from investments managed by QSC		(32	)		94			—			—			(62	)		—			—
Cash infusion to subsidiaries		—			(1,390	)		—			—			—			1,390			—
Net (increase) decrease in short-term affiliate loans		—			(1,227	)		11			(6	)		—			1,222			—
Dividends received from subsidiaries		1,390			1,200			—			—			—			(2,590	)		—
Other		—			—			—			—			9			—			9
Cash provided by (used for) investing activities		1,358			(1,317	)		11			(6	)		(796	)		22			(728	)
Financing activities:
Proceeds from long-term borrowings		—			—			—			—			500			—			500
Repayments of long-term borrowings, including current maturities		(250	)		—			—			—			(650	)		—			(900	)
Net (repayments of) proceeds from short-term affiliate borrowings		(47	)		—			1,227			—			42			(1,222	)		—
Proceeds from issuances of common stock		66			—			—			—			—			—			66
Repurchases of common stock		(681	)		—			—			—			—			—			(681	)
Equity infusion from parent		—			—			—			—			1,390			(1,390	)		—
Dividends paid to parent		—			—			(1,390	)		—			(1,200	)		2,590			—
Other		—			1			—			—			2			(5	)		(2	)
Cash (used for) provided by financing activities		(912	)		1			(163	)		—			84			(27	)		(1,017	)
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents		102			(607	)		—			—			133			—			(372	)
Beginning balance		—			900			—			—			341			—			1,241
Ending balance	$	102		$	293		$	—		$	—		$	474		$	—		$	869

(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.

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QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOW

SIX MONTHS ENDED JUNE 30, 2006

(UNAUDITED)

	QCII(1)			QSC(2)			QCF(3)			QCII Subsidiary Non- Guarantors			QSC Subsidiary Non- Guarantors			Eliminations			QCII Consolidated
	(Dollars in millions)
Cash (used for) provided by operating activities	$	(189	)	$	836		$	142		$	12		$	360		$	16		$	1,177
Investing Activities:
Expenditures for property, plant and equipment and capitalized software		—			(3	)		—			—			(829	)		—			(832	)
Proceeds from sales of property and equipment		—			—			—			—			47			—			47
Proceeds from sales of investment securities		—			42			—			—			—			—			42
Purchases of investment securities		—			(146	)		—			—			—			—			(146	)
Net proceeds from (purchases of) investments managed by QSC		9			(5	)		—			—			(4	)		—			—
Net (increase) decrease in short-term affiliate loans		—			(1,188	)		(1,330	)		(12	)		—			2,530			—
Dividends received from subsidiaries		—			916			—			—			—			(916	)		—
Cash provided by (used for) investing activities		9			(384	)		(1,330	)		(12	)		(786	)		1,614			(889	)
Financing activities:
Repayments of long-term borrowings, including current maturities		(33	)		—			—			—			(14	)		—			(47	)
Net proceeds from short-term affiliate borrowings		28			—			1,188			—			1,314			(2,530	)		—
Proceeds from issuances of common and treasury stock		102			—			—			—			—			—			102
Dividends paid to parent		—			—			—			—			(916	)		916			—
Other		16			—			—			—			—			(16	)		—
Cash provided by (used for) financing activities		113			—			1,188			—			384			(1,630	)		55
Cash and cash equivalents:
(Decrease) increase in cash and cash equivalents		(67	)		452			—			—			(42	)		—			343
Beginning balance		67			563			—			—			216			—			846
Ending balance	$	—		$	1,015		$	—		$	—		$	174		$	—		$	1,189

(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.

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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,” the “Company” and “our” refer to Qwest Communications International Inc. and its consolidated subsidiaries, and references in this report to “QCII” refer to Qwest Communications International Inc. on an unconsolidated, stand-alone basis.

Certain statements set forth below under this caption constitute forward-looking statements. See “Special Note Regarding Forward-Looking Statements” at the end of this Item 2 for additional factors relating to such statements, and 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.

Business Overview and Presentation

We provide voice, data and video services nationwide and globally. We continue to generate the majority of our revenue from services provided within our local service area, which consists of the 14-state region of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming.

Our analysis presented below is organized to provide the information we believe will be useful for understanding the relevant trends going forward. However, this discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto in Item 1 of Part I of this report.

Our operating revenue is generated from our wireline, wireless and other services segments. An overview of our segment results is provided in Note 7—Segment Information to our condensed consolidated financial statements in Item 1 of Part I of this report. Segment discussions reflect the way we currently report our operating results to our Chief Operating Decision Maker, or CODM. These discussions include revenue results for each of our customer channels within the wireline services segment: mass markets, business and wholesale. Segment results presented in this item and in Note 7—Segment Information to our condensed consolidated financial statements in Item 1 of Part I of this report are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities during the periods presented.

We have reclassified certain prior period revenue, expense and access line amounts to conform to the current period presentation.

Business Trends

Our financial results continue to be impacted by several significant trends, which are described below:

• Data, Internet and video growth. Revenue from data, Internet and video services currently represents 36% of our total revenue and continues to grow. At the same time, our customers continue to shift away from traditional data, Internet and video products to more advanced technologies. Our results reflect our continued focus on these more-advanced, high-growth products including broadband services, private line, MPLS-based services sold as iQ Networking™, VoIP and video. The revenue increases from these high-growth products have outpaced declines in revenue from traditional data, Internet and video services including ATM, frame relay, DIA, VPN and Internet dial-up access.

We continue to focus our efforts on improving penetration of broadband services, and broadband subscribers continue to grow as customers migrate from dial-up connections to higher speed connections. We reached 2.4 million subscribers as of June 30, 2007 compared to 1.8 million as of the same date in 2006. We expect growth in broadband subscribers to continue, even though we expect to face continuing competition for these subscribers. In addition, we believe the ability to continually

29

increase connection speeds is competitively important. As such, we continue to invest in increasing our available connection speeds in order to meet customer demand.

• Access line losses. Our revenue has been, and we expect it will continue to be, adversely affected by access line losses. Increased competition, including product substitution, continues to be the primary reason for our access line losses. For example, consumers are substituting cable, wireless and VoIP for traditional telecommunications services, which has increased the number and type of competitors within our industry and has decreased our market share. In addition, consolidation in the telecommunications industry continues to impact our revenue. Product bundling, as described below, has been one of our responses to access line losses.

• Product bundling. We believe customers value the convenience and price discounts associated with receiving multiple services from a single provider. Accordingly, we promote product bundles through our marketing and advertising efforts. Product bundles represent combinations of products and services, such as local and long-distance (marketed as “digital voice”), broadband, video and wireless for our mass markets customers. As a result of these offerings, our sales of bundled products have increased. While bundle discounts have resulted in lower average revenue for our individual products, we believe product bundles positively impact customer retention and revenue per customer.

• Variable expenses. Expenses associated with products and services such as wireless, long-distance and certain data, Internet and video services tend to be more variable in nature than expenses associated with our traditional telecommunications services such as local voice. As our revenue mix shifts away from traditional telecommunications services, our expense structure becomes more variable in nature. We expect this shift, combined with regulatory and market pricing forces, will continue to partially offset other cost saving initiatives.

• Facility costs. Facility costs are third-party telecommunications expenses we incur by using other carriers’ networks to provide services to our customers. Facility costs do not always change proportionally with revenue fluctuations. However, we continue to reduce costs in this area through our ongoing initiatives to optimize the cost structure associated with our usage of other carriers’ services.

• Operational efficiencies. We continue to evaluate our operating structure and focus. In some cases, this involves adjusting our workforce in response to changes in the telecommunications industry, regulatory changes and productivity improvements. Through targeted restructuring plans in prior years, focused improvements in operational efficiency, process improvements through automation and normal employee attrition, we have reduced our workforce and employee-related costs while achieving operational goals.

While these trends are important to understanding and evaluating our financial results, the other transactions, events 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.

Results of Operations

Overview

We generate revenue from our wireline services, wireless services and other services as described below.

• Wireline services. The wireline services segment uses our network to provide voice services and data, Internet and video services to our mass markets, business and wholesale customers. Our wireline services include:

• Voice services. Voice services include local voice services, long-distance voice services and access services. Local voice services include basic local exchange, switching and enhanced voice services. Local voice services also include network transport, billing services and providing access to our local network through our wholesale channel. Long-distance voice services include

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domestic and international long-distance services. Access services include fees charged to other telecommunications providers to connect their customers and their networks to our network.

• Data, Internet and video services. Data, Internet and video services represent our fastest growing source of revenue. We offer data and Internet services to our mass markets, business and wholesale customers. We also offer broadband services and video services, including cable-based video and resold satellite digital television, to our mass markets customers.

We offer our suite of growth products and services (such as data integration, private line, iQ Networking^™, web hosting and VoIP) and traditional products and services (such as ATM, frame relay, DIA, VPN, ISDN and Internet dial-up access) primarily to our business and wholesale customers. We also include some traditional voice grade services with these services if they are bundled together in an end-to-end solution for the customer.

• Wireless services. We sell wireless products and services, including access to a nationwide wireless network, to mass markets and business customers, primarily within our local service area. We also offer an integrated service, which enables customers to use the same telephone number and voice mailbox for their wireless phone as for their home or business phone. Our wireless products and services are primarily marketed to consumers as part of our bundled offerings.

• Other services. Other services include the sublease of space in our office buildings, warehouses and other properties.

Depending on the products or services purchased, a customer may pay an up-front or monthly fee, a usage charge or a combination of these.

The following table summarizes our results of operations for the three and six months ended June 30, 2007 and 2006 and the number of employees as of June 30, 2007 and 2006:

	Three Months Ended June 30,									Six Months Ended June 30,
	2007		2006		Increase/ (Decrease)			% Change		2007		2006		Increase/ (Decrease)			% Change
	(Dollars in millions except per share amounts)
Operating revenue	$	3,463	$	3,472	$	(9	)	—	%	$	6,909	$	6,948	$	(39	)	(1	)%
Operating expenses		2,929		3,056		(127	)	(4	)%		5,856		6,178		(322	)	(5	)%
Other expense—net		288		281		7		2	%		565		549		16		3	%
Income before income taxes		246		135		111		82	%		488		221		267		121	%
Income tax expense		—		18		(18	)	nm			2		16		(14	)	(88	)%
Net income	$	246	$	117	$	129		110	%	$	486	$	205	$	281		137	%
Earnings per share:
Basic	$	0.13	$	0.06	$	0.07		117	%	$	0.26	$	0.11	$	0.15		136	%
Diluted	$	0.13	$	0.06	$	0.07		117	%	$	0.25	$	0.11	$	0.14		127	%
Employees (as of June 30)											37,585		39,315		(1,730	)	(4	)%

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

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Operating Revenue

The following table compares our operating revenue by segment, including the detail by customer channels within our wireline services segment, for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,									Six Months Ended June 30,
	2007		2006		Increase/  (Decrease)			% Change		2007		2006		Increase/  (Decrease)			% Change
	(Dollars in millions)
Wireline services revenue:
Voice services:
Local voice services:
Mass markets	$	947	$	1,017	$	(70	)	(7	)%	$	1,899	$	2,046	$	(147	)	(7	)%
Business		289		309		(20	)	(6	)%		572		623		(51	)	(8	)%
Wholesale		156		175		(19	)	(11	)%		315		352		(37	)	(11	)%
Total local voice services		1,392		1,501		(109	)	(7	)%		2,786		3,021		(235	)	(8	)%
Long-distance services:
Mass markets		166		161		5		3	%		329		316		13		4	%
Business		133		139		(6	)	(4	)%		270		283		(13	)	(5	)%
Wholesale		237		262		(25	)	(10	)%		487		522		(35	)	(7	)%
Total long-distance services		536		562		(26	)	(5	)%		1,086		1,121		(35	)	(3	)%
Access services		139		133		6		5	%		273		279		(6	)	(2	)%
Total voice services		2,067		2,196		(129	)	(6	)%		4,145		4,421		(276	)	(6	)%
Data, Internet and video services:
Mass markets		291		206		85		41	%		569		397		172		43	%
Business		586		581		5		1	%		1,165		1,164		1		—	%
Wholesale		370		337		33		10	%		733		665		68		10	%
Total data, Internet and video services		1,247		1,124		123		11	%		2,467		2,226		241		11	%
Total wireline services revenue		3,314		3,320		(6	)	—	%		6,612		6,647		(35	)	(1	)%
Wireless services revenue		139		142		(3	)	(2	)%		278		281		(3	)	(1	)%
Other services revenue		10		10		—		—	%		19		20		(1	)	(5	)%
Total operating revenue	$	3,463	$	3,472	$	(9	)	—	%	$	6,909	$	6,948	$	(39	)	(1	)%

Wireline Services Revenue

Voice Services

Local voice services. Local voice services revenue decreased primarily due to access line losses as a result of the competitive pressures described in “Business Trends” above. Mass markets and business local voice services revenue were impacted by these competitive pressures as customers disconnected primary and additional lines. Additionally, lower Universal Service Fund, or USF, revenue caused combined mass markets and business local voice services revenue to decline by $10 million and $33 million for the three and six months ended June 30, 2007, respectively, compared to the same periods of 2006. The decrease in USF revenue (and corresponding decrease in USF charges) was primarily due to the elimination of the USF assessment on certain products in late 2006. Wholesale local services revenue continued to be affected by a declining demand for UNEs.

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The following table summarizes our access lines by customer channel as of June 30, 2007 and 2006:

	As of June 30,
	2007	2006	Increase/ (Decrease)		% Change
	(in thousands)
Mass markets	9,070	9,739	(669	)	(7	)%
Business	2,817	2,920	(103	)	(4	)%
Wholesale	1,385	1,624	(239	)	(15	)%
Total access lines	13,272	14,283	(1,011	)	(7	)%

Long-distance services. The decrease in business long-distance services revenue was primarily due to decreased rates, partially offset by increased volumes. In addition, wholesale long-distance revenue decreased primarily as a result of declining volumes due in part to industry consolidation, partially offset by increased rates. These decreases in our business and wholesale channels were partially offset by an increase in mass markets long-distance services revenue as more customers subscribed to our fixed fee based offerings, which are included in certain product bundles.

Access services. Access services revenue increased for the three months ended June 30, 2007 compared to the same period of 2006 primarily due to net favorable settlements of customer billing disputes, partially offset by decreased volumes. Access services revenue decreased for the six months ended June 30, 2007 compared to the same period of 2006 primarily due to an 8% decline in volumes and, to a lesser extent, a decline in rates, partially offset by net favorable settlements. The decline in access services volumes was due to a decline in long-distance usage as well as mass markets and business access line losses.

Data, Internet and Video Services

The increase in data, Internet and video services revenue in our mass markets channel was primarily due to an increase in broadband subscribers of approximately 34% as of June 30, 2007 compared to June 30, 2006 and, to a lesser extent, increases in satellite video subscribers. The growth in broadband services revenue resulted from continued increased penetration as customers migrated from dial-up connections and from customers upgrading to higher speed plans.

Data and Internet services revenue in our business channel remained essentially flat. Growth in our private line and iQ Networking™ was offset by a decline in traditional data services including frame relay, DIA, VPN and Internet dial-up access. Internet dial-up access services declined as we de-emphasized these services due to advances in technology and the continuing margin decline on these services.

The increase in data and Internet services revenue in our wholesale channel was primarily due to growth in our long-distance VoIP and private line services. Our long-distance VoIP revenue increased as customers migrated to an integrated data technology, which allows them to maintain a single network. Additionally, our private line revenue increased primarily due to volume growth.

Wireless Services Revenue

Wireless services revenue decreased primarily due to lower handset revenue resulting from fewer handsets sold.

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Operating Expenses

The following table provides further detail regarding our operating expenses for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,										Six Months Ended June 30,
	2007		2006			Increase/ (Decrease)			% Change		2007		2006		Increase/ (Decrease)			% Change
	(Dollars in millions)
Cost of sales:
Facility costs	$	558	$	608		$	(50	)	(8	)%	$	1,140	$	1,224	$	(84	)	(7	)%
Network expenses		65		62			3		5	%		117		114		3		3	%
Employee-related costs		366		388			(22	)	(6	)%		745		784		(39	)	(5	)%
Other non-employee related costs		321		336			(15	)	(4	)%		625		690		(65	)	(9	)%
Total cost of sales		1,310		1,394			(84	)	(6	)%		2,627		2,812		(185	)	(7	)%
Selling, general and administrative:
Property and other taxes		99		72			27		38	%		189		160		29		18	%
Bad debt		37		27			10		37	%		80		71		9		13	%
Restructuring, realignment and severance		8		(2	)		10		nm			3		20		(17	)	(85	)%
Employee-related costs		390		405			(15	)	(4	)%		784		806		(22	)	(3	)%
Other non-employee related costs		470		467			3		1	%		946		925		21		2	%
Total selling, general and administrative		1,004		969			35		4	%		2,002		1,982		20		1	%
Depreciation and amortization		615		693			(78	)	(11	)%		1,227		1,384		(157	)	(11	)%
Total operating expenses	$	2,929	$	3,056		$	(127	)	(4	)%	$	5,856	$	6,178	$	(322	)	(5	)%

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

Cost of Sales (exclusive of depreciation and amortization)

Cost of sales includes costs incurred in the process of providing products and services to our customers. This includes employee-related costs (such as salaries, wages and benefits directly attributable to providing products or services), network expenses, facility costs and other non-employee related costs (such as real estate, USF charges, call termination fees, materials and supplies, contracted engineering services and the cost of data integration and wireless handsets).

Cost of sales as a percentage of revenue decreased to 38% from 40% for each of the three and six months ended June 30, 2007 compared to the same periods of 2006.

Our facility costs decreased primarily due to lower volumes related to a decrease in wholesale long-distance services, lower costs associated with the de-emphasis of our Internet dial-up services business and ongoing initiatives to optimize the cost structure associated with our usage of other carriers’ services. These decreases were partially offset by higher rates.

Employee-related costs decreased due to employee reductions and lower employee benefit costs primarily as a result of benefit plan changes effective in 2007 and net reduced costs associated with the recognition of actuarial losses from prior years. These decreases were partially offset by additional maintenance work.

Other non-employee related costs decreased primarily due to lower USF charges largely related to the elimination of the USF assessment on certain products and decreased wireless equipment costs due to fewer

34

handsets sold. In addition, lower fees associated with providing Internet content and related services contributed to the decrease.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include employee-related costs (such as salaries, wages and benefits not directly attributable to products or services and sales commissions), restructuring, realignment and severance, bad debt, property and other taxes and other non-employee related costs (such as real estate, marketing and advertising, professional service fees, computer systems support and litigation related charges).

SG&A expenses as a percentage of revenue increased to 29% from 28% for the three months ended June 30, 2007 compared to the same period of 2006 and remained flat at 29% for the six months ended June 30, 2007 and 2006.

Property and other taxes increased for the three and six months ended June 30, 2007 compared to the same periods of 2006 primarily due to a one-time $21 million reduction in our estimated sales tax obligations in the second quarter of 2006. Absent this one-time reduction in 2006, we would expect property and other taxes to increase in 2007 due to changes in our assessed values of property.

Bad debt expense increased primarily due to a reduction of our reserve balance in the second quarter of 2006. The reduction to the reserve balance reflected improvements in collections and aging of customer accounts over several months prior to June 30, 2006. Absent this reserve adjustment in the second quarter of 2006, bad debt expense would have been relatively flat for both the three and six month periods of 2007 compared to the same periods of 2006.

The changes in restructuring, realignment and severance expenses were primarily due to the following items:

• a credit in the first quarter of 2007 resulting from greater success in subleasing real estate than we anticipated when we ceased using the facilities;

• a credit in the second quarter of 2006 related to a favorable early termination of a real estate lease;

• a charge in the first quarter of 2006 associated with the retirement of leasehold improvements; and

• a decrease in severance for the six months ended June 30, 2007.

Employee-related costs decreased due to employee reductions and lower employee benefit costs primarily as a result of benefit plan changes effective in 2007 and net reduced costs associated with the recognition of actuarial losses from prior years. These decreases were partially offset by higher commission costs primarily related to an increased sales force and changes in commission structure.

Other non-employee related costs increased for the six months ended June 30, 2007 compared to the same period of 2006 primarily due to a $40 million charge in the first quarter of 2007 for securities litigation compared to a $15 million charge in the second quarter of 2006 for a regulatory matter.

Pension and Post-Retirement Benefits

Our results include the combined cost of our pension, non-qualified pension and post-retirement healthcare and life insurance plans. The combined expense of the benefit plans is allocated to cost of sales and SG&A expense. The expense is a function of the amount of benefits earned, interest on projected benefit obligations, amortization of costs and credits from prior benefit changes and the expected return on the assets held in the various plans.

We recorded combined expense of $9 million and $20 million for the three and six months ended June 30, 2007, respectively, compared to $55 million and $108 million for the three and six months ended June 30, 2006,

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respectively. The expense decreased primarily as a result of benefit plan changes and net reduced costs associated with the recognition of actuarial losses from prior years. Effective January 1, 2007, changes to our benefit plans capped our levels of contributions for certain post-retirement healthcare benefits and reduced the post-retirement benefit under the life insurance plan, which decreased our liability substantially. Actuarial gains or losses reflect the differences between our actuarial assumptions and what actually occurred. The amortization of actuarial losses for this period was reduced primarily due to higher discount rates and higher than expected actual returns on pension assets.

For additional information on our pension and post-retirement plans, see Note 6—Employee Benefits to our condensed consolidated financial statements in Item 1 of Part I of this report.

Operating Expenses by Segment

Wireline and wireless segment expenses include employee-related costs except for the combined cost of pension, non-qualified pension and post-retirement benefits, facility costs, network expenses and other non-employee related costs such as customer support, collections and telemarketing. We manage administrative services costs such as finance, information technology, real estate, legal, other marketing and advertising and human resources centrally; consequently, these costs are included in the other services segment. We evaluate depreciation, amortization, interest expense, interest income and other income (expense) on a total company basis. As a result, these charges are not assigned to any segment. Similarly, we do not include impairment charges in the segment results. Therefore, the segment results presented below are not necessarily indicative of the results of operations these segments would have achieved had they operated as stand-alone entities. Our CODM regularly reviews the results of operations at a segment level to evaluate the performance of each segment and to allocate resources.

Wireline Services Segment Expenses

The following table provides detail regarding our wireline services segment for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,									Six Months Ended June 30,
	2007		2006		Increase/ (Decrease)			% Change		2007		2006		Increase/ (Decrease)			% Change
	(Dollars in millions)
Wireline services expenses:
Facility costs	$	482	$	534	$	(52	)	(10	)%	$	989	$	1,079	$	(90	)	(8	)%
Network expenses		64		61		3		5	%		115		113		2		2	%
Bad debt		28		15		13		87	%		58		43		15		35	%
Restructuring, realignment and severance		4		1		3		nm			5		3		2		67	%
Employee-related costs		600		577		23		4	%		1,211		1,173		38		3	%
Other non-employee related costs		363		372		(9	)	(2	)%		716		755		(39	)	(5	)%
Total wireline services expenses	$	1,541	$	1,560	$	(19	)	(1	)%	$	3,094	$	3,166	$	(72	)	(2	)%

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

Facility costs decreased due to lower volumes related to a decrease in wholesale long-distance services, lower costs associated with the de-emphasis of our Internet dial-up services business and ongoing initiatives to optimize the cost structure associated with our usage of other carriers’ services. These decreases were partially offset by higher rates.

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Bad debt expense increased primarily due to a reduction of our reserve balance in the second quarter of 2006. The reduction to the reserve balance reflected improvements in collections and aging of customer accounts over several months prior to June 30, 2006. Absent this reserve adjustment in the second quarter of 2006, bad debt expense would have been relatively flat for both the three and six month periods of 2007 compared to the same periods of 2006.

Employee-related costs increased due to additional maintenance work and higher commission costs primarily related to an increased sales force and changes in commission structure, partially offset by employee reductions.

Other non-employee related costs decreased primarily due to lower USF charges largely related to the elimination of the USF assessment on certain products in late 2006.

Wireless Services Segment Expenses

The following table provides detail regarding our wireless services segment for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,									Six Months Ended June 30,
	2007		2006		Increase/ (Decrease)			% Change		2007		2006		Increase/ (Decrease)			% Change
	(Dollars in millions)
Wireless services expenses:
Facility costs	$	76	$	74	$	2		3	%	$	151	$	145	$	6		4	%
Wireless equipment costs		25		26		(1	)	(4	)%		50		56		(6	)	(11	)%
Bad debt		9		12		(3	)	(25	)%		22		24		(2	)	(8	)%
Employee-related costs		12		12		—		—	%		26		24		2		8	%
Other non-employee related costs		14		12		2		17	%		26		29		(3	)	(10	)%
Total wireless services expenses	$	136	$	136	$	—		—	%	$	275	$	278	$	(3	)	(1	)%

Facility costs increased due to increased subscriber usage of higher-cost data services.

Wireless equipment costs decreased slightly for the three months ended June 30, 2007 compared to 2006 due to fewer handsets sold, partially offset by higher average cost per handset as we introduced new, higher-cost units in the quarter. Wireless equipment costs decreased for the six months ended June 30, 2007 compared to 2006 due to fewer handsets sold and lower average cost per handset for the six month period.

Bad debt expense decreased due to improved collections resulting from changes in wireless credit policies.

Other non-employee related costs increased for the three months ended June 30, 2007 compared to the same period of 2006 primarily due to increased professional services related to customer payment processing and marketing and advertising expenses. Other non-employee related costs decreased for the six months ended June 30, 2007 compared to the same period of 2006 primarily due to decreased professional services in our wireless repair centers that were outsourced in 2006, but were provided by employees in 2007.

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Other Services Segment Expenses

The following table provides detail regarding our other services segment for the three and six months ended June 30, 2007 and 2006:

	Three Months Ended June 30,										Six Months Ended June 30,
	2007		2006			Increase/  (Decrease)			% Change		2007			2006		Increase/  (Decrease)			% Change
	(Dollars in millions)
Other services expenses:
Property and other taxes	$	98	$	72		$	26		36	%	$	188		$	160	$	28		18	%
Real estate costs		109		105			4		4	%		218			215		3		1	%
Restructuring, realignment and severance		2		(3	)		5		nm			(4	)		17		(21	)	nm
Employee-related costs		144		204			(60	)	(29	)%		292			393		(101	)	(26	)%
Other non-employee related costs		284		289			(5	)	(2	)%		566			565		1		—	%
Total other services expenses	$	637	$	667		$	(30	)	(4	)%	$	1,260		$	1,350	$	(90	)	(7	)%

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

Property and other taxes increased for the three and six months ended June 30, 2007 compared to the same periods of 2006 primarily due to a one-time $21 million reduction in our estimated sales tax obligations in the second quarter of 2006. Absent this one-time reduction in 2006, we would expect property and other taxes to increase in 2007 due to changes in our assessed values of property.

The changes in restructuring, realignment and severance expenses were primarily due to the following items:

• a credit in the first quarter of 2007 resulting from greater success in subleasing real estate than we anticipated when we ceased using the facilities;

• a credit in the second quarter of 2006 related to a favorable early termination of a real estate lease;

• a charge in the first quarter of 2006 associated with the retirement of leasehold improvements; and

• a decrease in severance for the six months ended June 30, 2007.

Employee-related costs decreased due to lower employee benefit costs primarily as a result of benefit plan changes effective in 2007 and net reduced costs associated with the recognition of actuarial losses from prior years.

Non-Segment Operating Expenses—Depreciation and Amortization

Depreciation expense decreased due to lower capital expenditures and the changing mix of our investment in property, plant and equipment since 2002. If our capital investment program remains approximately the same and we do not significantly decrease our estimates of the useful lives of our assets, we expect that our depreciation expense will continue to decrease.

Amortization expense decreased due to the change in our estimate of average economic lives in January 2007 and lower capital spending on software related assets since 2001. Amortization expense would have been $30 million and $60 million higher for the three and six months ended June 30, 2007, respectively, had we not changed our estimates of the average economic lives to better reflect the expected future use of the software.

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Other Consolidated Results

The following table provides detail regarding other expense (income)—net and income tax expense:

	Three Months Ended June 30,											Six Months Ended June 30,
	2007			2006			Increase/ (Decrease)			% Change		2007			2006			Increase/ (Decrease)			% Change
	(Dollars in millions)
Other expense (income)—net:
Interest expense on long-term borrowings and capital leases—net	$	274		$	298		$	(24	)	(8	)%	$	556		$	594		$	(38	)	(6	)%
Loss (gain) on early retirement of debt—net		22			(5	)		27		nm			22			(5	)		27		nm
Other—net		(8	)		(12	)		4		(33	)%		(13	)		(40	)		27		(68	)%
Total other expense (income)—net	$	288		$	281		$	7		2	%	$	565		$	549		$	16		3	%
Income tax expense	$	—		$	18		$	(18	)	nm		$	2		$	16		$	(14	)	(88	)%

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

Other Expense (Income)—Net

Interest expense on long-term borrowings and capital leases—net decreased due to lower total borrowings, resulting from the repayment of $485 million of notes that matured in the third quarter of 2006.

In the second quarter of 2007, we recorded a $22 million loss on early retirement of debt. In the second quarter of 2006, our debt-for-equity exchanges resulted in a gain of $6 million, which was partially offset by losses on the retirement of certain other debt.

Other—net includes, among other things, interest income and other interest expense (such as interest on income taxes). The increase in other—net for the six months ended June 30, 2007 compared to the same period of 2006 was primarily due to the recognition of a gain on a customer’s abandonment of an indefeasible right of use and other non-recurring items in the first quarter of 2006.

Income Tax Expense

Prior to 2006, we had a history of losses and we recognized a valuation allowance for our net deferred tax assets. We continue to monitor our cumulative net loss position and other evidence each quarter to determine the appropriateness of our valuation allowance. If we continue to generate income before income taxes in future periods, our conclusion about the realizability of our deferred tax assets and therefore the appropriateness of the valuation allowance could change in the near term and we could record a substantial gain in our consolidated statement of operations when that occurs.

We increased our uncertain tax position liability for certain federal and state income tax issues by $1 million in the first quarter of 2007 and $16 million in the second quarter of 2006.

We have a tentative settlement with the IRS related to audits for the tax years 1998 through 2001. This settlement is subject to final calculation of our liability, our acceptance of the calculation and formal approval of the settlement by the IRS and the Joint Committee on Taxation of the U.S. Congress. If the settlement is effected in accordance with our expectations, we believe that it is reasonably possible that we could recognize up to $138 million of tax and interest benefits (including up to a $98 million increase in net income) and our total unrecognized tax benefits may decrease by approximately $221 million by December 31, 2007.

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Liquidity and Capital Resources

Near-Term View

Our working capital deficit, or the amount by which our current liabilities exceed our current assets, was $1.263 billion and $1.506 billion as of June 30, 2007 and December 31, 2006, respectively. Our working capital deficit decreased $243 million primarily due to earnings before depreciation and amortization and proceeds from the issuance of long-term debt, partially offset by capital expenditures, repurchases of our common stock and the early retirement of debt.

We expect our 2007 capital expenditures to approximate our 2006 level, with the majority being used in our wireline services segment.

The $1.265 billion of our 3.50% Convertible Senior Notes due 2025 (the “3.50% Convertible Senior Notes”) was classified as a current obligation because specified, market-based conversion provisions were met as of June 30, 2007 and December 31, 2006. As such, the holders of these notes have the right to convert the notes and receive from us (i) cash for the principal value of notes and (ii) shares of our common stock in accordance with the terms of the notes. These market-based conversion provisions specify that, when our common stock has a closing price above $7.08 per share for 20 or more trading days during certain periods of 30 consecutive trading days, these notes become available for conversion for a specified period. As a result, these notes are classified as a current obligation. These notes are registered securities and are freely tradable. As of June 30, 2007, the notes had a market price of $1,755 per $1,000 principal amount of notes, compared to an estimated conversion value of $1,643. Therefore, we do not anticipate holders will make such an election because the market price of these notes is currently above the estimated conversion value.

We believe that our cash on hand together with our short-term investments, our currently undrawn credit facility described below and our cash flows from operations should be sufficient to meet our cash needs through the next 12 months. However, if we become subject to significant judgments, settlements and/or tax payments, as further discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report, we could be required to make significant payments that may cause us to draw down significantly on our cash balances. The magnitude of any settlements or judgments resulting from these actions 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.

To the extent that our EBITDA (earnings before interest, taxes, depreciation and amortization as defined in our debt covenants) is reduced by cash judgments, settlements and/or tax payments, our debt to consolidated EBITDA ratios under certain debt agreements will be adversely affected. This could reduce our liquidity and flexibility due to potential restrictions on drawing on our line of credit and potential restrictions on incurring additional debt under certain provisions of our debt agreements.

We have $850 million available to us under a revolving credit facility (referred to as the Credit Facility), which is currently undrawn and which expires in October 2010. The Credit Facility contains various limitations, including a restriction on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report. The Credit Facility is guaranteed by our wholly owned subsidiary, Qwest Services Corporation, and is secured by a senior lien on the stock of its wholly owned subsidiary, Qwest Corporation (“QC”).

The wireline services segment provides 96% of our total operating revenue with the balance attributed to our wireless services and other services segments. The wireline services segment also provides all of the consolidated cash flows from operations. Cash flows used in operations of our wireless services segment are not expected to be significant in the near term. Cash flows used in operations of our other services segment are significant; however, we expect that the cash flows provided by the wireline services segment will be sufficient to fund these operations in the near term.

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On October 4, 2006, our Board of Directors approved a stock repurchase program for up to $2 billion of our common stock over two years. It is our intention to fully achieve this plan over this period, while reviewing, on a regular basis, opportunities to enhance shareholder returns. For the three and six months ended June 30, 2007, we repurchased 31 million and 80 million shares, respectively, of our common stock under this program at a weighted average price per share of $9.35 and $8.70, respectively. As of June 30, 2007, we had repurchased a total of $905 million of common stock under this program; thus $1.095 billion remained available for stock repurchases.

We continue to look for opportunities to improve our capital structure by reducing debt and interest expense. We expect that at any time we deem conditions favorable we will attempt to improve our capital structure by accessing debt or other markets in a manner designed to create positive economic value.

Long-Term View

We have historically operated with a working capital deficit as a result of our significant debt and it is likely that we will operate with a working capital deficit in the future. We believe that cash provided by operations and our currently undrawn Credit Facility, combined with our current cash position and continued access to capital markets to refinance our current portion of debt, should allow us to meet our cash requirements for the foreseeable future.

We may periodically need to obtain financing in order to meet our debt obligations as they come due. 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 revenue and cash provided by operations decline, if economic conditions weaken, if competitive pressures increase or if we become subject to significant judgments, settlements and/or tax payments as further discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report. In the event of an adverse outcome in one or more of these matters, we could be required to make significant payments that may cause us to draw down significantly on our cash balances. The magnitude of any settlements or judgments resulting from these actions 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.

The Credit Facility makes available to us $850 million of additional credit subject to certain restrictions as described below and is currently undrawn. This facility has a cross payment default provision, and this facility and certain other debt issues also have cross acceleration provisions. When present, such provisions could have a wider impact on liquidity than might otherwise arise from a default or acceleration of a single debt instrument. These provisions generally provide that a cross default under these debt instruments could occur if:

• we fail to pay any indebtedness when due in an aggregate principal amount greater than $100 million;

• any indebtedness is accelerated in an aggregate principal amount greater than $100 million; or

• judicial proceedings are commenced to foreclose on any of our assets that secure indebtedness in an aggregate principal amount greater than $100 million.

Upon such a cross default, the creditors of a material amount of our debt may elect to declare that a default has occurred under their debt instruments and to accelerate the principal amounts due such creditors. Cross acceleration provisions are similar to cross default provisions, but permit a default in a second debt instrument to be declared only if in addition to a default occurring under the first debt instrument, the indebtedness due under the first debt instrument is actually accelerated. In addition, the Credit Facility contains various limitations, including a restriction on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report.

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Historical View

The following table summarizes cash flow activities for the six months ended June 30, 2007 and 2006:

	Six Months Ended June 30,
	2007			2006		Increase/ (Decrease)			% Change
	(Dollars in millions)
Cash flows:
Provided by operating activities	$	1,373		$	1,177	$	196		17	%
Used for investing activities		728			889		(161	)	(18	)%
(Used for) provided by financing activities		(1,017	)		55		(1,072	)	nm

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

Operating Activities

Cash provided by operating activities increased primarily due to: payments on unconditional purchase obligations in 2006; improved cash collections; and lower payments for interest, marketing and advertising, and employee-related costs resulting from fewer employees. These cash flow improvements were partially offset by $200 million of payments related to the settlement of the consolidated securities action in the first quarter of 2007 compared to $100 million in payments related to this settlement in the first quarter of 2006.

Investing Activities

Cash used for investing activities decreased primarily due to lower capital expenditures resulting from a change in the timing of spending initiatives. However, as discussed above under the heading “Near-Term View,” we expect our 2007 capital expenditures to approximate our 2006 level. In addition, we purchased fewer investment securities in 2007.

Financing Activities

During the second quarter of 2007, we took the following measures to improve our capital structure:

• On May 16, 2007, QC issued $500 million aggregate principal amount of notes that bear interest at 6.5% per year and are due in 2017. The net proceeds of approximately $493 million from the issuance have been or will be used for general corporate purposes, including repayment of indebtedness and funding and refinancing investments in our telecommunications assets;

• On June 4, 2007, QC redeemed $250 million aggregate principal amount of its 8 ⁷ /8% Debentures due June 1, 2031;

• On June 4, 2007, we redeemed $250 million aggregate principal amount of QCII’s Floating Rate Senior Notes due 2009;

• On June 7, 2007, QC redeemed $70 million aggregate principal amount of its 6.0% Notes due 2007; and

• On June 15, 2007, our wholly owned subsidiary, Qwest Communications Corporation, repaid at maturity $314 million aggregate principal amount of its 7.25% Senior Notes due 2007.

For the six months ended June 30, 2007, we paid approximately $700 million for purchases of our common stock under our stock repurchase program.

Letters of Credit

We maintain letter of credit arrangements with various financial institutions for up to $130 million. As of June 30, 2007, we had outstanding letters of credit of approximately $106 million.

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Credit Ratings

The table below summarizes our long-term debt ratings as of June 30, 2007:

	Moody’s	S&P	Fitch
Corporate rating/Sr. Implied rating	Ba2	BB	NR
Qwest Corporation	Ba1	BBB-	BBB-
Qwest Capital Funding, Inc.	B1	B+	BB
Qwest Communications International Inc.*	Ba3/B1	B+	BB+/BB

NR = Not rated.

* = QCII notes have various ratings.

On June 7, 2007, S&P raised its rating for QC from BB+ to BBB-, reflecting the only change in the credit ratings above since December 31, 2006.

Debt ratings by the various rating agencies reflect each agency’s opinion of the ability of the issuers to repay debt obligations as they come due. In general, lower ratings result in higher borrowing costs and/or impaired ability to borrow. A security rating is not a recommendation to buy, sell, or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization.

Given our current credit ratings, as noted above, our ability to raise additional capital under acceptable terms and conditions may be negatively impacted.

Risk Management

We are exposed to market risks arising from changes in interest rates. The objective of our interest rate risk management program is to manage the level and volatility of our interest expense. We may employ derivative financial instruments to manage our interest rate risk exposure.

Approximately $1.25 billion and $1.5 billion of floating-rate debt was exposed to changes in interest rates as of June 30, 2007 and December 31, 2006, respectively. This exposure is linked to LIBOR. A hypothetical increase of 100 basis points in LIBOR would not have had a material effect on pre-tax interest expense for the six months ended June 30, 2007.

Our 3.50% Convertible Senior Notes were classified as current as of June 30, 2007 and December 31, 2006 because specified, market-based conversion provisions were met as of those dates. As such, the holders of these notes have the right to convert the notes and receive from us (i) cash for the principal value of notes and (ii) shares of our common stock in accordance with the terms of the notes. Although holders of these notes have the right to convert in the near term, we do not anticipate holders will make such an election because the market price of these notes is currently above the estimated conversion value. In the unlikely event that holders of a substantial amount of these notes did elect to convert, we might choose to borrow additional amounts, which would expose us to changes in interest rates. A hypothetical increase of 100 basis points in the interest rates on any refinancing of the convertible notes would not have a material effect on our earnings.

As of June 30, 2007, we had $749 million invested in highly liquid instruments and $240 million invested in auction rate securities. As interest rates change, so will the interest income derived from these instruments. Assuming that these investment balances were to remain constant, a hypothetical decrease of 100 basis points in interest rates would not have a material effect on our earnings.

Off-Balance Sheet Arrangements

There were no substantial changes to our off-balance sheet arrangements or contractual commitments in the six months ended June 30, 2007, when compared to the disclosures provided in our Annual Report on Form 10-K for the year ended December 31, 2006 (our “2006 Form 10-K”).

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Critical Accounting Policies and Estimates

In our 2006 Form 10-K, we identified certain policies and estimates as critical to our business operations and the understanding of our past or present results of operations. These policies and estimates are considered critical because they had a material impact, or they have the potential to have a material impact, on our financial statements and because they require significant judgments, assumptions or estimates. Our preparation of financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period.

In adopting Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), effective January 1, 2007, we changed our methodology for estimating our potential liability for income tax positions for which we are uncertain regardless of whether taxing authorities will challenge our interpretation of the income tax laws. Previously, we recorded a liability computed at the statutory income tax rate if we determined that (i) we did not believe that we are more likely than not to prevail on an uncertainty related to the timing of recognition for an item, or (ii) we did not believe that it is probable that we will prevail and the uncertainty is not related to the timing of recognition. However, under FIN 48 we do not recognize any benefit in our financial statements for any uncertain income tax position if we believe the position in the aggregate has less than a 50% likelihood of being sustained. If we believe that there is greater than 50% likelihood that the position will be sustained, we recognize a benefit in our financial statements equal to the largest amount that we believe is more likely than not to be sustained upon audit.

The tax law is subject to varied interpretations, and we have taken positions related to certain matters where the law is subject to interpretation and where substantial amounts of income tax benefits have been recorded in our financial statements. As new interpretations of the relevant tax laws are promulgated and as we discuss our interpretations with taxing authorities, we may in the future change our assessments of the likelihood of sustainability or of the amounts that may or may not be sustained upon audit. And as our assessments change, the impact to our financial statements could be material. We believe that the estimates, judgments and assumptions made when accounting for these matters are reasonable, based on information available at the time they are made. However, there can be no assurance that actual results will not differ from those estimates.

Special Note Regarding Forward-Looking Statements

This Form 10-Q contains or incorporates by reference forward-looking statements about our financial condition, results of operations and business. These statements include, among others:

• statements concerning the benefits that we expect will result from our business activities and certain transactions we have completed, such as increased revenue, decreased expenses and avoided expenses and expenditures; and

• statements of our expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts.

These statements may be made expressly in this document or may be incorporated by reference to other documents we have filed or will file with the SEC. You can find many of these statements by looking for words such as “may,” “would,” “could,” “should,” “plan,” “believes,” “expects,” “anticipates,” “estimates,” or similar expressions used in this document or in documents incorporated by reference in this document.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by us in those statements. Some of these risks are described in “Risk Factors” in Item 1A of Part II of this report.

These risk factors should be considered in connection with any written or oral forward-looking statements that we or persons acting on our behalf may issue. Given these uncertainties, we caution investors not to unduly

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rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Further, the information about our intentions contained in this document is a statement of our intentions as of the date of this document and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and our assumptions as of such date. We may change our intentions, at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under the caption “Risk Management” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2 of Part I of this report is incorporated herein by reference.

ITEM 4. 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.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we 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, 2007. On the basis of this review, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting that occurred in the second quarter of 2007 that materially affected, or are 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 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report is incorporated herein by reference.

Department of Justice Investigation

On July 9, 2002, we were informed by the U.S. Attorney’s Office for the District of Colorado of a criminal investigation of our business. We believe the U.S. Attorney’s Office has investigated various matters that include transactions related to the various adjustments and restatements described in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002, transactions between us and certain of our vendors and certain investments in the securities of those vendors by individuals associated with us, and certain prior disclosures made by us. We believe that the U.S. Attorney's Office's investigation of us is complete.

ITEM 1A. RISK FACTORS

Risks Affecting Our Business

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

We compete in a rapidly evolving and highly competitive market, and we expect competition to continue to intensify. We are facing greater competition in our core local business from cable companies, wireless providers (including ourselves), facilities-based providers using their own networks as well as those leasing parts of our network, and resellers. As a reseller of wireless services, we face risks that facility-based wireless providers do not have. In addition, regulatory developments over the past few years have generally increased competitive pressures on our business. Due to some of these and other factors, we continue to lose access lines.

We are consistently evaluating our responses to these competitive pressures. Our recent responses include product bundling and packaging, our “digital voice” advertising campaign and focusing on customer service. However, we may not be successful in these efforts. We may not have sufficient resources to distinguish our service levels from those of our competitors, and we may not be successful in integrating our product offerings, especially products for which we act as a reseller, such as wireless services and satellite video services. Even if we are successful, these initiatives may not be sufficient to offset our continuing loss of access lines. If these initiatives are unsuccessful or insufficient and our revenue declines significantly without corresponding cost reductions, this will cause a significant deterioration to our results of operations and financial condition and adversely affect our ability to service debt, pay other obligations, or enhance shareholder returns.

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

The telecommunications industry is experiencing an ongoing trend towards consolidation, and several of our competitors have consolidated with other telecommunications providers. This trend results in competitors that are larger and better financed and affords our competitors increased resources and greater geographical reach, thereby enabling those competitors to compete more effectively against us. We have begun to experience and expect further increased pressures as a result of this trend and in turn have been and may continue to be forced to respond with lower profit margin product offerings and pricing plans in an effort to retain and attract customers. These pressures could adversely affect our operating results and financial performance.

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.

The telecommunications industry is experiencing significant technological changes, and our ability to execute our business plans and compete depends upon our ability to develop and deploy new products and

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services, such as broadband data, wireless, video and VoIP services. The development and deployment of new products and services could also require substantial expenditure of financial and other resources in excess of contemplated levels. 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 the trading price of our securities and our ability to service our debt.

Third parties may claim we infringe upon their intellectual property rights and defending against these claims could adversely affect our profit margins and our ability to conduct business.

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 royalty or licensing agreements on less favorable terms than we could otherwise obtain 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.

Risks Relating to Legal and Regulatory Matters

Any adverse outcome of the material matters pending against us, which include the remaining securities actions and the KPNQwest litigation, could have a material adverse impact on our financial condition and operating results, on the trading price of our debt and equity securities and on our ability to access the capital markets.

As described in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report, the remaining securities actions and the KPNQwest litigation present material and significant risks to us. In the aggregate, the plaintiffs in the remaining securities actions and the KPNQwest litigation, as well as persons who, at their request, were excluded from the settlement class in the consolidated securities action, seek billions of dollars in damages. In addition, the outcome of one or more of these matters could have a negative impact on the outcomes of the other actions. Further, the size, scope and nature of the restatements of our consolidated financial statements for 2001 and 2000, which are described in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2002, affect the risks presented by many of these matters as they involve, among other things, our prior accounting practices and related disclosures. Plaintiffs in certain of the remaining securities actions have alleged our restatement of items in support of their claims. We continue to defend against the remaining securities actions and the KPNQwest litigation 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. With respect to the remaining securities actions and any additional actions that may be brought by parties who, at their request, were excluded from the settlement class in the consolidated securities action but who have not yet filed suit, we have recorded reserves in our financial statements for the minimum estimated amount of loss we believe is probable. However, the ultimate outcomes of those claims are still uncertain, and the amount of loss we ultimately incur could be substantially more than the reserves we have provided. If the recorded reserves are insufficient, we will need to record additional charges to our consolidated statement of operations in future periods. In addition, settlements or judgments in several of these actions substantially in excess of our recorded reserves 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 securities or selling assets.

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Further, there are other material proceedings pending against us as described in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report that, depending on their outcome, may have a material adverse effect on our financial position. Thus, we can give no assurances as to the impacts on our financial results or financial condition as a result of these matters.

Civil actions against our former officers and employees could reduce investor confidence and cause the trading price of our securities to decline.

As a result of our past accounting issues, investor confidence in us has suffered and could suffer further. Although we have consummated a settlement with the SEC concerning its investigation of us, in March 2005, the SEC filed suit against our former chief executive officer, Joseph Nacchio, and other former officers and employees. Further, in December 2005, a criminal indictment was filed against Mr. Nacchio charging him with 42 counts of insider trading.

A trial took place in March and April 2007 in connection with the criminal insider trading charges against Mr. Nacchio. Mr. Nacchio was convicted on 19 of 42 counts. In July 2007, Mr. Nacchio was sentenced to six years’ incarceration, fined $19 million and ordered to forfeit $52 million. A trial could also take place in the pending SEC lawsuit against Mr. Nacchio and others. Evidence introduced at such trial and in other matters may result in further scrutiny of us. The existence of this heightened scrutiny could adversely affect investor confidence and cause the trading price of our securities to decline.

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.

Our operations are subject to significant federal regulation, including the Communications Act of 1934, as modified by the Telecommunications Act of 1996, or the Telecommunications Act, and the Federal Communications Commission, or FCC, regulations thereunder. We are also subject to the applicable laws and regulations of various states, including regulation by public utility commissions, or PUCs, and other state agencies. Federal laws and FCC regulations generally apply to regulated interstate telecommunications (including international telecommunications that originate or terminate in the United States), while state regulatory authorities generally have jurisdiction over regulated telecommunications services that are intrastate in nature. The local competition aspects of the Telecommunications Act are subject to FCC rulemaking, but the state regulatory authorities play a significant role in implementing those FCC rules. Generally, we must obtain and maintain certificates of authority from regulatory bodies in most states where we offer regulated services and must obtain prior regulatory approval of rates, terms and conditions for our intrastate services, where required. Our businesses are subject to numerous, and often quite detailed, requirements under federal, state and local laws, rules and regulations. Accordingly, we cannot ensure that we are always 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 their own perceptions of our conduct, or based on customer complaints.

Regulation of the telecommunications industry is changing rapidly, and the regulatory environment varies substantially from state to state. A number of state legislatures and state PUCs have adopted reduced or modified forms of regulation for retail services. This is generally beneficial to us because it reduces regulatory costs and regulatory filing and reporting requirements. These changes also generally allow more flexibility for new product introduction and enhance our ability to respond to competition. At the same time, some of the changes, occurring at both the state and federal level, may have the potential effect of reducing some regulatory protections, including having FCC-approved tariffs that include rates, terms and conditions. These changes may necessitate the need for customer-specific contracts to address matters previously covered in our tariffs. Despite these regulatory changes, a substantial portion of our local voice services revenue remains subject to FCC and state PUC pricing regulation, which could expose us to unanticipated price declines. 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.

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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 discharge and disposal of hazardous and environmentally sensitive materials, including the emission of electromagnetic radiation. Although we believe that we are in compliance with such regulations, any such discharge, disposal or emission might expose us to claims or actions that could have a material adverse effect on our business, financial condition and operating results.

Risks Affecting Our Liquidity

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.

We continue to carry significant debt. As of June 30, 2007, our consolidated debt was approximately $14.5 billion. Approximately $2.1 billion of our debt obligations comes due over the next three years. In addition, holders of the $1.265 billion of our 3.50% Convertible Senior Notes may elect to convert the principal of their notes into cash during periods when specified, market-based conversion requirements are met. However, we do not anticipate holders will make such an election because the market price of these notes is currently above the estimated conversion value. While we currently believe we will have the financial resources to meet our obligations when they come due, we cannot anticipate what our future condition will be. We may have unexpected costs and liabilities and we may have limited access to financing. In addition, on October 4, 2006, our Board of Directors approved a stock repurchase program for up to $2 billion of our common stock over two years. Cash used by us in connection with any purchases of our common stock would not be available for other purposes, including the repayment of debt.

We may periodically need to obtain financing in order to meet our debt obligations as they come due. 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 revenue and cash provided by operations decline, if economic conditions weaken, if competitive pressures increase or if we become subject to significant judgments, settlements and/or tax payments as further discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in Item 2 of Part I of this report. We can give no assurance that this additional financing will be available on terms that are acceptable. Also, we may be impacted by factors relating to or affecting our liquidity and capital resources due to perception in the market, impacts on our credit ratings or provisions in our financing agreements that may restrict our flexibility under certain conditions.

Our $850 million revolving credit facility (referred to as the Credit Facility), which is currently undrawn, has a cross payment default provision, and the Credit Facility and certain of our other debt issues have 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. In addition, the Credit Facility contains various limitations, including a restriction on using any proceeds from the facility to pay settlements or judgments relating to the securities actions discussed in Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report.

Our high debt levels could adversely impact our credit ratings. Additionally, the degree to which we are leveraged may have other important limiting consequences, including the following:

• placing us at a competitive disadvantage as compared with our less leveraged competitors;

• making us more vulnerable to downturns in general economic conditions or in any of our businesses;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

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• impairing our ability to obtain additional financing in the future for working capital, capital expenditures or general corporate purposes.

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 as such we anticipate that our capital requirements will continue to be significant in the coming years. Although we have reduced our capital expenditures and operating expenses over the past few years, we may be unable to further significantly reduce these costs, even if revenue in some areas of our business is decreasing. While we believe that our current 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.

Declines in the value of qualified pension plan assets, or unfavorable changes in laws or regulations that govern pension plan funding, could require us to provide significant amounts of funding for our qualified pension plan.

While we do not expect to be required to make material cash contributions to our qualified defined benefit pension plan in the near term based upon current actuarial analyses and forecasts, a significant decline in the value of qualified pension plan assets in the future or unfavorable changes in laws or regulations that govern pension plan funding could materially change the timing and amount of required pension funding. As a result, we may be required to fund our qualified defined benefit pension plan with cash from operations, perhaps by a material amount.

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

The terms of our debt instruments permit us to incur 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 or borrowings at maturity on terms that impose additional financial risks to our various efforts to improve our financial condition and results of operations could exacerbate the other risks described in this report.

If we pursue and are involved in any business combinations, our financial condition could be adversely affected.

On a regular and ongoing basis, we review and evaluate other businesses and opportunities for business combinations that would be strategically beneficial. As a result, we may be involved in negotiations or discussions that, if they were to result in a transaction, could have a material effect on our financial condition (including short-term or long-term liquidity) or short-term or long-term results of operations.

Should we make an error in judgment when identifying an acquisition candidate, or should we fail to successfully integrate acquired operations, we will likely fail to realize the benefits we intended to derive from the acquisition and may suffer other adverse consequences. Acquisitions involve a number of other risks, including:

• incurrence of substantial transaction costs;

• diversion of management’s attention from operating our existing business;

• charges to earnings in the event of any write-down or write-off of goodwill recorded in connection with acquisitions;

• depletion of our cash resources or incurrence of additional indebtedness to fund acquisitions;

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• an adverse impact on our tax position;

• assumption of liabilities of an acquired business (including unforeseen liabilities); and

• imposition of additional regulatory obligations by federal or state regulators.

We can give no assurance that we will be able to successfully complete and integrate strategic acquisitions.

Other Risks Relating to Qwest

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 accounting principles generally accepted in the United States, or GAAP, 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 our 2006 Form 10-K and under the heading “Critical Accounting Policies and Estimates” in Item 2 of Part I of this report, 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.

Taxing authorities may determine we owe additional taxes relating to various matters, which could adversely affect our financial results.

As a significant taxpayer, we are subject to frequent and regular audits from the Internal Revenue Service, or IRS, as well as from state and local tax authorities. These audits could subject us to risks due to adverse positions that may be taken by these tax authorities. See Note 8—Commitments and Contingencies to our condensed consolidated financial statements in Item 1 of Part I of this report for examples of legal proceedings involving some of these adverse positions. In June 2006, we received notices of proposed adjustments on several significant issues for the 2002-2003 audit cycle, including a proposed adjustment disallowing a loss we recognized relating to the sale of our DEX directory publishing business. There is no assurance that we and the IRS will reach settlements on any of these issues or that, if we do reach settlements, the terms will be favorable to us.

Because prior to 1999 we were a member of affiliated groups filing consolidated U.S. federal income tax returns, we could be severally liable for tax examinations and adjustments not directly applicable to current members of the Qwest affiliated group. 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. Generally, we have not provided for liabilities of former affiliated members or for claims they have asserted or may assert against us.

While we believe our tax reserves adequately provide for the associated tax contingencies, our tax audits and examinations may result in tax liabilities that differ materially from those we have recorded in our condensed consolidated financial statements. Also, the ultimate outcomes of all of these matters are uncertain, and 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 or our net operating loss carryforwards.

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.

We are a party to collective bargaining agreements with our labor unions, which represent a significant number of our employees. In August 2005, we reached agreements with the Communications Workers of

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America and the International Brotherhood of Electrical Workers on three-year labor agreements. Each of these agreements was ratified by union members and expires on August 16, 2008. Although we believe that our relations with our employees are satisfactory, no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire from time to time. The impact of future negotiations, including changes in wages and benefit levels, could have a material impact on our financial results. Also, if we fail to extend or renegotiate our collective bargaining agreements, if disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage, we could incur higher ongoing labor costs or experience a significant disruption of operations, which could have a material adverse effect on our business.

The trading price of our securities could be volatile.

The capital markets often experience extreme price and volume fluctuations. The overall market and the trading price of our securities may fluctuate greatly. The trading price of our securities may be significantly affected by various factors, including:

• quarterly fluctuations in our operating results;

• changes in investors’ and analysts’ perception of the business risks and conditions of our business;

• broader market fluctuations;

• general economic or political conditions;

• acquisitions and financings including the issuance of substantial number of shares of our common stock as consideration in acquisitions;

• the high concentration of shares owned by a few investors;

• sale of a substantial number of shares held by the existing shareholders in the public market, including shares issued upon exercise of outstanding options or upon the conversion of our convertible notes; and

• general conditions in the telecommunications industry.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table contains information about repurchases of our common stock during the second quarter of 2007:

	(a) Total Number of Shares Purchased(1)	(b) Average Price Paid Per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	(d) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
Period
April 2007	14,384,310	$	8.92	14,383,100	$	1,256,356,756
May 2007	5,872,112	$	9.87	5,872,112	$	1,198,401,966
June 2007	10,757,044	$	9.64	10,753,617	$	1,094,751,609
Total	31,013,466			31,008,829

(1) In April and June 2007, amounts include 1,210 shares and 3,427 shares of common stock, respectively, delivered to us as payment of withholding taxes due on the vesting of restricted stock issued under our Equity Incentive Plan.

(2) In October 2006, our Board of Directors approved a stock repurchase program for up to $2 billion of our common stock over two years. As of June 30, 2007, we had repurchased a total of $905 million of common stock under this program.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

We held our 2007 Annual Meeting of Stockholders on May 23, 2007. At the meeting, stockholders present in person or by proxy voted on the following matters.

1. The election of 12 directors to our Board of Directors to hold office until the annual meeting of stockholders in 2008 and until their successors are elected and qualified

	Votes For	Votes Against	Votes Abstained
Linda G. Alvarado	1,614,730,797	51,669,313	15,473,383
Charles L. Biggs	1,637,533,193	28,034,222	16,307,078
K. Dane Brooksher	1,629,778,492	35,531,446	16,564,556
Peter S. Hellman	1,622,756,670	42,772,837	16,344,987
R. David Hoover	1,480,597,820	184,571,979	16,704,694
Patrick J. Martin	1,649,045,505	16,356,146	16,472,639
Caroline Matthews	1,649,093,510	16,715,378	16,065,605
Wayne W. Murdy	1,641,102,590	24,173,566	16,598,337
Richard C. Notebaert	1,642,149,978	26,480,382	13,244,132
Frank P. Popoff	1,638,628,464	27,020,207	16,225,677
James A. Unruh	1,630,527,814	42,523,726	8,822,952
Anthony Welters	1,644,559,393	20,760,256	16,554,667

2. Ratification of the appointment of KPMG LLP as our independent auditor for 2007

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
1,642,327,908	27,729,643	11,816,941	N/A

3. Approval of our amended and restated Equity Incentive Plan

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
1,010,118,584	494,412,970	14,731,863	162,611,077

4. A stockholder proposal requesting that our Board of Directors establish a policy whereby at least 75% of future equity compensation awarded to senior executives be performance-based and the related performance metrics be disclosed to stockholders

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
261,928,051	1,238,010,638	19,323,271	162,612,534

5. A stockholder proposal requesting that our Board of Directors establish a policy that stockholders have the opportunity at each annual meeting to vote on an advisory resolution proposed by management to ratify certain compensation of our named executive officers

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
298,051,563	1,010,982,979	210,226,502	162,613,450

6. A stockholder proposal requesting that we seek stockholder approval of certain benefits for senior executives under our non-qualified pension plan or any supplemental executive retirement plan

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
480,513,833	1,027,169,374	11,580,032	162,611,255

7. A stockholder proposal requesting that our Board of Directors establish a policy of separating the roles of Chairman and Chief Executive Officer whenever possible

Votes For	Votes Against	Votes Abstained	Broker Non-Votes
265,598,407	1,239,781,383	13,884,125	162,610,579

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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.

Exhibit Number	Description
(3.1)	Restated Certificate of Incorporation of Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Registration Statement on Form S-4/A, filed September 17, 1999, File No. 333-81149).
(3.2)	Certificate of Amendment of Restated Certificate of Incorporation of Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, File No. 001-15577).
(3.3)	Amended and Restated Bylaws of Qwest Communications International Inc., adopted as of July 1, 2002 and amended as of May 25, 2004 and December 14, 2006 (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on December 18, 2006, File No. 001-15577).
(4.1)	Indenture, dated as of April 15, 1990, by and between Mountain States Telephone and Telegraph Company and The First National Bank of Chicago (incorporated by reference to Qwest Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-03040).
(4.2)	First Supplemental Indenture, dated as of April 16, 1991, by and between U S WEST Communications, Inc. and The First National Bank of Chicago (incorporated by reference to Qwest Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-03040).
(4.3)	Indenture, dated as of November 4, 1998, with Bankers Trust Company (including form of Qwest Communications International Inc.’s 7.50% Senior Discount Notes due 2008 and 7.50% Series B Senior Discount Notes due 2008 as an exhibit thereto) (incorporated by reference to Qwest Communications International Inc.’s Registration Statement on Form S-4, filed February 2, 1999, File No. 333-71603).
(4.4)	Indenture, dated as of November 27, 1998, with Bankers Trust Company (including form of Qwest Communications International Inc.’s 7.25% Senior Discount Notes due 2008 and 7.25% Series B Senior Discount Notes due 2008 as an exhibit thereto) (incorporated by reference to Qwest Communications International Inc.’s Registration Statement on Form S-4, filed February 2, 1999, File No. 333-71603).
(4.5)	Indenture, dated as of June 23, 1997, between LCI International, Inc. and First Trust National Association, as trustee, providing for the issuance of Senior Debt Securities, including Resolutions of the Pricing Committee of the Board of Directors establishing the terms of the 7.25% Senior Notes due June 15, 2007 (incorporated by reference to LCI’s Current Report on Form 8-K, dated June 23, 1997, File No. 001-12683).
(4.6)	Indenture, dated as of June 29, 1998, by and among U S WEST Capital Funding, Inc., U S WEST, Inc., and The First National Bank of Chicago (now known as Bank One Trust Company, N. A.), as trustee (incorporated by reference to U S WEST’s Current Report on Form 8-K, dated November 18, 1998, File No. 001-14087).
(4.7)	Indenture, dated as of October 15, 1999, by and between Qwest Corporation and Bank One Trust Company, N.A., as trustee (incorporated by reference to Qwest Corporation’s Annual Report on Form 10-K for the year ended December 31, 1999, File No. 001-03040).

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Exhibit Number	Description
(4.8)	First Supplemental Indenture, dated as of June 30, 2000, by and among U S WEST Capital Funding, Inc., U S WEST, Inc., Qwest Communications International Inc., and Bank One Trust Company, as trustee (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, File No. 001-15577).
(4.9)	Officer’s Certificate of Qwest Corporation, dated March 12, 2002 (including forms of 8 7/8% notes due March 15, 2012) (incorporated by reference to Qwest Corporation’s Form S-4, File No. 333-115119).
(4.10)	Indenture, dated as of December 26, 2002, between Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and Bank One Trust Company, N.A., as trustee (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on January 10, 2003, File No. 001-15577).
(4.11)	First Supplemental Indenture, dated as of December 26, 2002, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), supplementing the Indenture, dated as of November 4, 1998, with Bankers Trust Company (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003, as originally filed on March 11, 2004, File No. 001-15577).
(4.12)	First Supplemental Indenture, dated as of December 26, 2002, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), supplementing the Indenture, dated as of November 27, 1998, with Bankers Trust Company (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003, as originally filed on March 11, 2004, File No. 001-15577).
(4.13)	Second Supplemental Indenture, dated as of December 4, 2003, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and Bank One Trust Company, N.A. (as successor in interest to Bankers Trust Company), supplementing the Indenture, dated as of November 4, 1998, with Bankers Trust Company (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003, as originally filed on March 11, 2004, File No. 001-15577).
(4.14)	Second Supplemental Indenture, dated as of December 4, 2003, by and among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and Bank One Trust Company, N.A. (as successor in interest to Bankers Trust Company), supplementing the Indenture, dated as of November 27, 1998, with Bankers Trust Company (incorporated by reference to Qwest’s Annual Report on Form 10-K for the year ended December 31, 2003, as originally filed on March 11, 2004, File No. 001- 15577).
(4.15)	Indenture, dated as of February 5, 2004, among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and J.P. Morgan Trust Company (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003, as originally filed on March 11, 2004, File No. 001-15577).
(4.16)	First Supplemental Indenture, dated as of August 19, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).
(4.17)	Second Supplemental Indenture, dated November 23, 2004, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Corporation’s Current Report on Form 8-K filed on November 23, 2004, File No. 001-03040).

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Exhibit Number	Description
(4.18)	First Supplemental Indenture, dated June 17, 2005, among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on June 23, 2005, File No. 001-15577).
(4.19)	Third Supplemental Indenture, dated as of June 17, 2005, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on June 23, 2005, File No. 001-15577).
(4.20)	Second Supplemental Indenture, dated June 23, 2005, among Qwest Communications International Inc., Qwest Services Corporation, Qwest Capital Funding, Inc. and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on June 23, 2005, File No. 001-15577).
(4.21)	Indenture, dated as of November 8, 2005, by and between Qwest Communications International Inc. and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on November 14, 2005, File No. 001-15577).
(4.22)	First Supplemental Indenture, dated as of November 8, 2005, by and between Qwest Communications International Inc. and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on November 14, 2005, File No. 001-15577).
(4.23)	First Supplemental Indenture, dated as of November 16, 2005, by and among Qwest Services Corporation, Qwest Communications International Inc., Qwest Capital Funding, Inc. and J.P. Morgan Trust Company, N.A. as successor to Bank One Trust Company, N.A. (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on November 21, 2005, File No. 001-15577).
(4.24)	Fourth Supplemental Indenture, dated August 8, 2006, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on August 8, 2006, File No. 001-15577).
(4.25)	Fifth Supplemental Indenture, dated May 16, 2007, by and between Qwest Corporation and U.S. Bank National Association (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on May 18, 2007, File No. 001-15577).
(10.1)	Equity Incentive Plan, as amended and restated (incorporated by reference to Qwest Communications International Inc.’s Proxy Statement for the 2007 Annual Meeting of Stockholders, File No. 001-15577).*
(10.2)	Forms of option and restricted stock agreements used under Equity Incentive Plan, as amended and restated (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on October 24, 2005, Annual Report on Form 10-K for the year ended December 31, 2005, Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and Annual Report on Form 10-K for the year ended December 31, 2006, File No. 001-15577).*
(10.3)	Employee Stock Purchase Plan (incorporated by reference to Qwest Communications International Inc.’s Proxy Statement for the 2003 Annual Meeting of Stockholders, File No. 001-15577).*
(10.4)	Nonqualified Employee Stock Purchase Plan (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-15577).*
(10.5)	Deferred Compensation Plan (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 1998, File No. 000- 22609).*

56

Exhibit Number	Description
(10.6)	Equity Compensation Plan for Non-Employee Directors (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997, File No. 000-22609).*
(10.7)	Deferred Compensation Plan for Nonemployee Directors, as amended and restated (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on December 16, 2005, File No. 001-15577).*
(10.8)	Qwest Savings & Investment Plan, as amended and restated (incorporated by reference to Qwest Communications International Inc.’s Form S-8 filed on January 15, 2004, File No. 333-11923).*
(10.9)	2007 Qwest Management Bonus Plan Summary (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on December 18, 2006, File No. 001-15577).*
(10.10)	Summary Sheet Describing the Compensation Package for Qwest Communications International Inc.’s Non-employee Directors (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2006, File No. 001-15577).*
(10.11)	Registration Rights Agreement, dated as of April 18, 1999, with Anschutz Company and Anschutz Family Investment Company LLC (incorporated by reference to Qwest’s Current Report on Form 8-K/A, filed April 28, 1999, File No. 000-22609).
(10.12)	Employee Matters Agreement between MediaOne Group and U S WEST, dated June 5, 1998 (incorporated by reference to U S WEST’s Current Report on Form 8- K/A, dated June 26, 1998, File No. 001-14087).
(10.13)	Tax Sharing Agreement between MediaOne Group and U S WEST, dated June 5, 1998 (incorporated by reference to U S WEST’s Current Report on Form 8-K/A, dated June 26, 1998, File No. 001-14087).
(10.14)	Registration Rights Agreement, dated August 8, 2006, among Qwest Corporation and the initial purchasers listed therein (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on August 8, 2006, File No. 001-15577).
(10.15)	Registration Rights Agreement, dated May 16, 2007, among Qwest Corporation and the initial purchasers listed therein (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on May 18, 2007, File No. 001-15577).
(10.16)	Amended and Restated Employment Agreement, dated August 19, 2004, by and between Richard C. Notebaert and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).*
(10.17)	Amendment to Amended and Restated Employment Agreement, dated October 21, 2005, by and between Richard C. Notebaert and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on October 24, 2005, File No. 001-15577).*
(10.18)	Form of Amendment to Amended and Restated Employment Agreement by and between Qwest Services Corporation and Richard C. Notebaert (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on December 16, 2005, File No. 001-15577).*
(10.19)	Amendment to Amended and Restated Employment Agreement, dated as of February 16, 2006, by and between Richard C. Notebaert and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 17, 2006, File No. 001-15577).*

57

Exhibit Number	Description
(10.20)	Amendment to Amended and Restated Employment Agreement, dated as of February 26, 2007, by and between Richard C. Notebaert and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 28, 2007, File No. 001-15577).*
(10.21)	Agreement, dated as of February 16, 2006, by and between Richard C. Notebaert and Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 17, 2006, File No. 001-15577).*
(10.22)	Agreement, dated as of February 26, 2007, by and between Richard C. Notebaert and Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 28, 2007, File No. 001-15577).*
(10.23)	Aircraft Time Sharing Agreement, dated February 14, 2006, by and between Qwest Business Resources, Inc. and Richard C. Notebaert (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005, File No. 001-15577).
(10.24)	Letter Agreement, dated March 2, 2007, by and between John W. Richardson and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on March 7, 2007, File No. 001-15577).*
(10.25)	Severance Agreement, dated as of April 1, 2007, by and between John W. Richardson and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on March 7, 2007, File No. 001-15577).*
(10.26)	Agreement, dated as of March 7, 2007, by and between John W. Richardson and Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on March 7, 2007, File No. 001-15577).*
(10.27)	Aircraft Time Sharing Agreement, dated March 22, 2007, by and between Qwest Business Resources, Inc. and John W. Richardson (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, File No. 001-15577).
(10.28)	Severance Agreement, dated July 21, 2003, by and between Qwest Services Corporation and Richard N. Baer (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-15577).*
(10.29)	Severance Agreement, dated September 8, 2003, by and between Qwest Services Corporation and Paula Kruger (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 001-15577).*
(10.30)	Letter Agreement, dated August 19, 2004, by and between Qwest Services Corporation and Paula Kruger (incorporated by reference to Qwest’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).*
(10.31)	Severance Agreement, dated April 4, 2005, by and between Qwest Services Corporation and Thomas E. Richards (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, File No. 001-15577).*
(10.32)	Form of Amendment to Severance Agreement between Qwest Services Corporation and each of Richard N. Baer, Paula Kruger and Thomas E. Richards (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on December 16, 2005, File No. 001-15577).*

58

Exhibit Number	Description
(10.33)	Amended and Restated Employment Agreement, dated August 19, 2004, by and between Oren G. Shaffer and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).*
(10.34)	Amendment to Amended and Restated Employment Agreement, dated October 21, 2005, by and between Oren G. Shaffer and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K filed on October 24, 2005, File No. 001-15577).*
(10.35)	Form of Amendment to Amended and Restated Employment Agreement by and between Qwest Services Corporation and Oren G. Shaffer (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on December 16, 2005, File No. 001-15577).*
(10.36)	Amendment to Amended and Restated Employment Agreement, dated as of February 16, 2006, by and between Oren G. Shaffer and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 17, 2006, File No. 001-15577).*
(10.37)	Amendment to Amended and Restated Employment Agreement, dated as of March 23, 2007, by and between Oren G. Shaffer and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on March 23, 2007, File No. 001-15577).*
(10.38)	Agreement, dated as of February 16, 2006, by and between Oren G. Shaffer and Qwest Communications International Inc. (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K, filed on February 17, 2006, File No. 001-15577).*
(10.39)	Aircraft Time Sharing Agreement, dated February 14, 2006, by and between Qwest Business Resources, Inc. and Oren G. Shaffer (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005, File No. 001-15577).
(10.40)	Amended and Restated Employment Agreement, dated August 19, 2004 by and between Barry K. Allen and Qwest Services Corporation (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 001-15577).*
(10.41)	Aircraft Time Sharing Agreement, dated February 14, 2006, by and between Qwest Business Resources, Inc. and Barry Allen (incorporated by reference to Qwest Communications International Inc.’s Annual Report on Form 10-K for the year ended December 31, 2005, File No. 001-15577).
(10.42)	Private Label PCS Services Agreement between Sprint Spectrum L.P. and Qwest Wireless LLC dated August 3, 2003 (incorporated by reference to Qwest Communications International Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 1-15577).†
(10.43)	Stipulation of Partial Settlement, dated as of November 21, 2005, by and among Qwest Communications International Inc., the other settling defendants, and the Lead Plaintiffs in In re Qwest Communications International Inc. Securities Litigation on behalf of themselves and each of the class members (incorporated by reference to Qwest Communications International Inc.’s Current Report on Form 8-K/A filed on December 6, 2005, File No. 001-15577).
12	Calculation of Ratio of Earnings to Fixed Charges.
31.1	Chief Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Chief Financial Officer Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

59

Exhibit Number	Description
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Quarterly Operating Revenue.
99.2	Quarterly Condensed Consolidated Statement of Operations.

(  ) Previously filed.

* Executive Compensation Plans and Arrangements.

† Confidential treatment has been granted by the SEC for certain provisions. Omitted material for which confidential treatment has been requested has been filed separately with the SEC.

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.

60

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

QWEST COMMUNICATIONS INTERNATIONAL INC.
By:	/S/    JOHN W. RICHARDSON
	John W. Richardson Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer and Duly Authorized Officer)

August 1, 2007

61