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qwest communications Q Statistical Profile 4Q 05

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    qwest communications Q Statistical Profile 4Q 05 qwest communications Q Statistical Profile 4Q 05 Presentation Transcript

    • Qwest Communications International Inc. Historical Financial Information As of December 31, 2005
    • QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in millions, except per share amounts) Years Ended (Unaudited) Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Operating revenue $3,624 $3,596 $3,570 $3,498 $3,481 $3,442 $3,449 $3,437 $3,449 $3,470 $3,504 $3,480 $14,288 $13,809 $13,903 Operating expenses: Cost of sales (exclusive of depreciation and amortization) 1,475 1,475 1,962 1,543 1,454 1,486 1,548 1,402 1,439 1,434 1,512 1,451 6,455 5,890 5,836 Selling, general and administrative 1,182 1,155 1,105 1,248 1,154 1,486 1,261 1,070 1,036 1,045 1,016 1,050 4,690 4,971 4,147 Depreciation and amortization 784 789 796 798 777 784 779 783 774 765 768 758 3,167 3,123 3,065 Asset impairment charges — — 230 — — 43 34 36 — — — — 230 113 — Total operating expenses 3,441 3,419 4,093 3,589 3,385 3,799 3,622 3,291 3,249 3,244 3,296 3,259 14,542 14,097 13,048 Other expense—net: Interest expense—net 440 444 437 436 397 394 374 366 381 380 384 338 1,757 1,531 1,483 Other (income) expense—net (61) (63) (18) (37) 12 (111) 40 (54) (242) 13 (31) 392 (179) (113) 132 Total other expense—net 379 381 419 399 409 283 414 312 139 393 353 730 1,578 1,418 1,615 (Loss) income before income taxes, discontinued operations and cumulative effect of changes in accounting principles (196) (204) (942) (490) (313) (640) (587) (166) 61 (167) (145) (509) (1,832) (1,706) (760) Income tax benefit (expense) 76 79 256 108 3 (136) 18 27 (4) 3 1 3 519 (88) 3 (Loss) income from continuing operations (120) (125) (686) (382) (310) (776) (569) (139) 57 (164) (144) (506) (1,313) (1,794) (757) Income from and gain on sale of discontinued operations—net 66 61 2,517 (25) — — — — — — — — 2,619 — — (Loss) income before cumulative effect of changes in accounting principles (54) (64) 1,831 (407) (310) (776) (569) (139) 57 (164) (144) (506) 1,306 (1,794) (757) Cumulative effect of changes in accounting principles—net 206 — — — — — — — — — — (22) 206 — (22) Net income (loss) $152 $(64) $1,831 $(407) $(310) $(776) $(569) $(139) $57 $(164) $(144) $(528) $1,512 $(1,794) $(779) Basic income (loss) per share $0.09 $(0.04) $1.05 $(0.23) $(0.17) $(0.43) $(0.31) $(0.08) $0.03 $(0.09) $(0.08) $(0.28) $0.87 $(1.00) $(0.42) Basic weighted average shares outstanding 1,707 1,734 1,747 1,767 1,773 1,801 1,815 1,816 1,817 1,823 1,844 1,862 1,739 1,801 1,836 Diluted income (loss) per share $0.09 $(0.04) $1.05 $(0.23) $(0.17) $(0.43) $(0.31) $(0.08) $0.03 $(0.09) $(0.08) $(0.28) $0.87 $(1.00) $(0.42) Diluted weighted average shares outstanding 1,707 1,734 1,747 1,767 1,773 1,801 1,815 1,816 1,822 1,823 1,844 1,862 1,739 1,801 1,836
    • QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited) 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 ASSETS Current assets: Cash and cash equivalents $1,366 $1,353 $1,184 $1,314 $1,151 $1,406 $2,245 $2,311 $846 Short-term investments 564 702 423 598 764 966 634 580 101 Accounts receivable—net 1,962 1,743 1,742 1,700 1,594 1,603 1,566 1,595 1,525 Prepaid expenses and other assets 651 583 737 634 709 552 453 568 692 Total current assets 4,543 4,381 4,086 4,246 4,218 4,527 4,898 5,054 3,164 Property, plant and equipment—net 18,149 17,806 17,495 17,255 16,853 16,459 16,101 15,812 15,568 Capitalized software and other intangible assets—net 1,549 1,532 1,346 1,216 1,179 1,112 1,073 1,035 1,007 Prepaid pension and other assets 2,102 2,077 2,179 2,209 2,074 2,031 1,998 1,826 1,758 Total assets $26,343 $25,796 $25,106 $24,926 $24,324 $24,129 $24,070 $23,727 $21,497 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current borrowings $1,869 $996 $836 $652 $596 $601 $261 $527 $512 Accounts payable 810 873 719 863 731 705 714 740 773 Accrued expenses and other current liabilities 2,275 2,084 2,361 2,547 2,290 2,111 2,049 2,330 2,317 Deferred revenue and advance billings 721 717 725 693 669 642 626 635 633 Total current liabilities 5,675 4,670 4,641 4,755 4,286 4,059 3,650 4,232 4,235 Long-term borrowings—net 15,639 16,544 16,407 16,545 16,690 16,691 17,287 16,702 14,968 Post-retirement and other post-employment benefit obligations 3,357 3,370 3,419 3,442 3,428 3,452 3,466 3,457 3,459 Deferred revenue 762 702 565 571 559 554 548 532 522 Other long-term liabilities 1,926 1,761 1,983 2,090 1,973 1,937 1,782 1,520 1,530 Total liabilities 27,359 27,047 27,015 27,403 26,936 26,693 26,733 26,443 24,714 Stockholders' deficit: Preferred stock — — — — — — — — — Common stock 18 18 18 18 18 18 18 19 19 Additional paid-in capital 42,925 42,989 43,106 43,107 43,111 43,111 43,170 43,260 43,290 Treasury stock (15) (21) (20) (20) (20) (20) (16) (17) (17) Accumulated deficit (43,927) (44,237) (45,013) (45,582) (45,721) (45,664) (45,828) (45,972) (46,500) Accumulated other comprehensive loss (17) — — — — (9) (7) (6) (9) Total stockholders' deficit (1,016) (1,251) (1,909) (2,477) (2,612) (2,564) (2,663) (2,716) (3,217) Total liabilities and stockholders' deficit $26,343 $25,796 $25,106 $24,926 $24,324 $24,129 $24,070 $23,727 $21,497
    • QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in millions) (Unaudited) 12 Mos 3 Mos 6 Mos 9 Mos 12 Mos 3 Mos 6 Mos 9 Mos 12 Mos Ended Ended Ended Ended Ended Ended Ended Ended Ended 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 OPERATING ACTIVITIES Net income (loss) $1,512 $(310) $(1,086) $(1,655) $(1,794) $57 $(107) $(251) $(779) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Income from and gain on sale of discontinued operations—net of taxes (2,619) — — — — — — — — Depreciation and amortization 3,167 777 1,562 2,341 3,123 774 1,539 2,307 3,065 Provision for bad debts—net 304 93 106 145 194 57 110 137 173 Cumulative effect of changes in accounting principles—net of taxes (206) — — — — — — — 22 Asset impairment charges 230 — 43 77 113 — — — — Gain on sale of assets — (1) — — (8) (257) (257) (257) (263) Deferred income taxes (532) 1 3 5 7 — 2 (4) (5) (Gain) loss on early retirement of debt—net (38) 15 (5) 1 1 — 43 32 462 Other non-cash chrages—net 212 61 81 84 91 1 7 17 37 Changes in operating assets and liabilities: Accounts receivable 78 126 110 113 170 (66) (82) (138) (104) Prepaid expenses and other current assets 65 24 15 57 (20) 11 98 1 (8) Accounts payable and accrued expenses (126) (128) 1 317 (80) (178) (258) 57 73 Deferred revenue and advance billings (247) (64) (193) (219) (255) (32) (54) (61) (73) Other non-current assets and liabilities 375 (34) 207 343 306 (24) (128) (252) (287) Cash provided by operating activities 2,175 560 844 1,609 1,848 343 913 1,588 2,313 INVESTING ACTIVITIES Expenditures for property, pland and equipment and intangible assets (2,088) (455) (941) (1,359) (1,731) (313) (665) (1,110) (1,613) Proceeds from sale of property, plant and equipment 7 — 5 15 48 418 418 418 420 Proceeds from sale of investment securities 13 216 986 1,164 1,922 630 1,086 1,230 1,793 Purchase of investment sercurities (601) (351) (929) (1,269) (2,137) (822) (912) (1,002) (1,086) Other (61) (4) 5 5 (7) 1 17 22 27 Cash used for investing activities (2,730) (594) (874) (1,444) (1,905) (86) (56) (442) (459) FINANCING ACTIVITIES Proceeds from long-term borrowings 1,729 1,765 1,766 2,334 2,601 — 1,885 1,887 3,152 Repayments of long-term borrowings, including current maturities (5,792) (1,686) (1,862) (2,482) (2,714) (5) (1,550) (1,778) (4,716) Repayments of short-term debt (750) — — — — — — — — Proceeds from issuance of common and treasury stock — 1 4 5 10 3 7 10 39 Early retirement of debt costs — (19) (19) (24) — — (74) (74) (567) Debt issuance costs (43) (40) (41) (50) (55) — (31) (31) (67) Cash (used for) provided by financing activities (4,856) 21 (152) (217) (158) (2) 237 14 (2,159) CASH AND CASH EQUIVALENTS (Decrease) increase in cash and cash equivalents (5,411) (13) (182) (52) (215) 255 1,094 1,160 (305) Net cash generated by discontinued operations 234 — — — — — — — — Proceeds from sale of directory publishing business 4,290 — — — — — — — — Beginning balance 2,253 1,366 1,366 1,366 1,366 1,151 1,151 1,151 1,151 Ending balance $1,366 $1,353 $1,184 $1,314 $1,151 $1,406 $2,245 $2,311 $846
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS (Dollars in millions) Years Ended (Unaudited) Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Operating revenue Wireline services $3,459 $3,433 $3,405 $3,350 $3,341 $3,303 $3,308 $3,303 $3,312 $3,329 $3,361 $3,333 $13,647 $13,255 $13,335 Wireless services 152 155 153 138 127 130 133 124 126 132 131 138 598 514 527 Other services 13 8 12 10 13 9 8 10 11 9 12 9 43 40 41 Total operating revenue 3,624 3,596 3,570 3,498 3,481 3,442 3,449 3,437 3,449 3,470 3,504 3,480 14,288 13,809 13,903 Cost of sales (COS): Facility costs 698 686 1,135 701 659 676 745 648 674 677 692 649 3,220 2,728 2,692 Network expenses 68 70 81 82 57 66 73 66 66 59 72 69 301 262 266 Employee-related costs 433 439 468 464 450 437 429 390 410 388 405 390 1,804 1,706 1,593 Other non-employee related costs 276 280 278 296 288 307 301 298 289 310 343 343 1,130 1,194 1,285 Total cost of sales 1,475 1,475 1,962 1,543 1,454 1,486 1,548 1,402 1,439 1,434 1,512 1,451 6,455 5,890 5,836 Selling, general and administrative (SG&A): Property and other taxes 126 115 114 97 81 115 112 78 99 111 100 43 452 386 353 Bad debt 100 72 70 62 93 13 39 49 57 53 27 36 304 194 173 Restructuring, realignment and severance related costs 13 16 37 46 15 132 5 59 15 (1) 26 74 112 211 114 Employee-related costs 485 472 429 415 469 434 413 413 407 410 401 405 1,801 1,729 1,623 Other non-employee related costs 458 480 455 628 496 792 692 471 458 472 462 492 2,021 2,451 1,884 Total selling, general and administrative 1,182 1,155 1,105 1,248 1,154 1,486 1,261 1,070 1,036 1,045 1,016 1,050 4,690 4,971 4,147 Subtotal COS + SG&A 2,657 2,630 3,067 2,791 2,608 2,972 2,809 2,472 2,475 2,479 2,528 2,501 11,145 10,861 9,983 $429 $505 $539 $615 $455 $486 $418 $372 $313 $352 $445 $503 $2,088 $1,731 $1,613 Capital expenditures(1) Employees 48,340 47,675 46,701 46,876 45,893 45,166 42,682 41,401 40,613 40,187 39,767 39,348 46,876 41,401 39,348 (1) Capital expenditures represent cash only portion, thus it excludes non-cash items such as capital lease acquisitions.
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—WIRELINE SERVICES SEGMENT (Dollars in millions, operating statistics in thousands, except ARPU amounts) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Wireline services revenue Local voice $1,877 $1,843 $1,804 $1,739 $1,716 $1,663 $1,645 $1,622 $1,608 $1,606 $1,577 $1,557 $7,263 $6,646 $6,348 Long-distance 446 467 468 483 500 492 550 546 558 547 559 567 1,864 2,088 2,231 Access 196 181 191 187 179 179 169 162 160 181 158 161 755 689 660 Data and Internet 940 942 942 941 946 969 944 973 986 995 1,067 1,048 3,765 3,832 4,096 Total wireline services revenue 3,459 3,433 3,405 3,350 3,341 3,303 3,308 3,303 3,312 3,329 3,361 3,333 13,647 13,255 13,335 Wireline services expenses Facility costs 686 671 1,126 695 652 660 698 574 597 599 616 574 3,178 2,584 2,386 Network expenses 58 62 74 73 53 61 67 61 62 58 70 68 267 242 258 Bad debt 79 61 60 50 75 8 30 44 43 40 15 24 250 157 122 Restructuring, realignment and severance related costs — 1 — 66 5 81 4 12 6 4 2 21 67 102 33 Employee-related costs 675 664 668 666 677 652 644 622 610 591 607 589 2,673 2,595 2,397 Other non-employee related costs 342 344 324 381 344 334 313 322 324 332 369 379 1,391 1,313 1,404 Total wireline services expenses 1,840 1,803 2,252 1,931 1,806 1,796 1,756 1,635 1,642 1,624 1,679 1,655 7,826 6,993 6,600 Wireline services segment income $1,619 $1,630 $1,153 $1,419 $1,535 $1,507 $1,552 $1,668 $1,670 $1,705 $1,682 $1,678 $5,821 $6,262 $6,735 Wireline services margin 46.8% 47.5% 33.9% 42.4% 45.9% 45.6% 46.9% 50.5% 50.4% 51.2% 50.0% 50.3% 42.7% 47.2% 50.5% Capital expenditures—wireline services $333 $392 $404 $433 $376 $384 $326 $265 $255 $253 $345 $395 $1,562 $1,351 $1,248 OPERATING STATISTICS As of and for the As of and for the Three Months Ended Years Ended December 31, Access lines 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 12/31/03 12/31/04 12/31/05 (1) Business Retail business(2) 4,854 4,751 4,677 2,748 2,670 2,634 2,613 2,562 2,515 2,459 2,435 2,376 2,748 2,562 2,376 Resold 1,218 1,373 1,539 1,688 1,786 1,901 1,907 1,879 1,848 1,808 1,756 1,710 1,688 1,879 1,710 Total business 6,072 6,124 6,216 4,436 4,456 4,535 4,520 4,441 4,363 4,267 4,191 4,086 4,436 4,441 4,086 Mass markets Primary 9,150 8,952 8,805 8,637 8,539 8,321 8,234 8,184 8,107 7,974 7,916 7,851 8,637 8,184 7,851 Add 1,518 1,428 1,333 1,274 1,205 1,150 1,101 1,063 1,024 985 948 913 1,274 1,063 913 Total retail residential 10,668 10,380 10,138 9,911 9,744 9,471 9,335 9,247 9,131 8,959 8,864 8,764 9,911 9,247 8,764 Small business(2) — — — 1,862 1,850 1,833 1,825 1,834 1,845 1,861 1,878 1,889 1,862 1,834 1,889 Total Mass markets 10,668 10,380 10,138 11,773 11,594 11,304 11,160 11,081 10,976 10,820 10,742 10,653 11,773 11,081 10,653 Total access lines 16,740 16,504 16,354 16,209 16,050 15,839 15,680 15,522 15,339 15,087 14,933 14,739 16,209 15,522 14,739 UNE-P 533 675 813 948 1,043 1,168 1,176 1,151 1,137 1,077 997 953 948 1,151 953 Mass markets retail connections 10,668 10,380 10,138 11,773 11,594 11,304 11,160 11,081 10,976 10,820 10,742 10,653 11,773 11,081 10,653 Mass markets access lines 551 560 592 638 744 853 956 1,037 1,122 1,190 1,340 1,480 638 1,037 1,480 High-speed Internet subscribers — — — 11 13 14 18 28 43 63 98 128 11 28 128 Video subscribers 11,219 10,940 10,730 12,422 12,351 12,171 12,134 12,146 12,141 12,073 12,180 12,261 12,422 12,146 12,261 Total mass markets retail connections Voice grade equivalents 65,035 65,553 67,412 68,462 71,393 74,014 75,786 79,234 83,272 84,937 95,302 104,063 68,462 79,234 104,063 In-Region long distance lines 543 1,130 1,698 2,164 3,344 4,071 4,385 4,508 4,590 4,631 4,705 4,778 2,164 4,508 4,778 High-speed Internet subscribers 551 560 592 638 744 853 956 1,037 1,122 1,190 1,340 1,480 638 1,037 1,480 Consumer ARPU(3) $42.81 $42.32 $43.21 $42.88 $43.51 $42.94 $43.29 $45.19 $45.87 $46.31 $46.70 $47.74 $42.94 $43.55 $46.38 (1) Access line classification was modified during the fourth quarter of 2005 to align our revenue channels. Resold lines includes UNE-P lines, unbundled loops, resale lines and public pay phone lines. Business retail access lines at December 31, 2005 reflect a decline of 32,000 lines in the fourth quarter related to affiliate disconnects and 23,000 line and 21,000 line disconnects in the first quarter and second quarter of 2005, respectively, related to UUNet. (2) Retail business access lines as of March 31, 2003, June 30, 2003 and September 30, 2003 include small business access lines, which were reported separately beginning 12/31/03. (3) Consumer ARPU (Average Revenue Per Unit) is measured as consumer revenue in the period divided by the average number of primary access lines for the period. ARPU is not a measure determined in accordance with GAAP and should not be considered as a substitute for our wireline services segment revenue or any other measure determined in accordance with GAAP.
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—WIRELESS SERVICES SEGMENT (Dollars in millions, operating statistics in thousands, except ARPU amounts) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Wireless services revenue $152 $155 $153 $138 $127 $130 $133 $124 $126 $132 $131 $138 $598 $514 $527 Wireless services expenses Facility costs 11 15 8 6 9 13 47 74 76 79 75 75 40 143 305 Wireless equipment 22 27 28 21 21 29 38 29 26 28 25 28 98 117 107 Bad debt 21 10 10 9 9 6 9 5 14 14 12 11 50 29 51 Employee-related costs 8 8 7 6 7 7 9 11 13 9 8 9 29 34 39 Other non-employee related costs 36 27 36 35 35 49 46 48 35 20 20 21 134 178 96 Total wireless services expenses 98 87 89 77 81 104 149 167 164 150 140 144 351 501 598 Wireless services segment income $54 $68 $64 $61 $46 $26 $(16) $(43) $(38) $(18) $(9) $(6) $247 $13 $(71) Wireless services margin 35.5% 43.9% 41.8% 44.2% 36.2% 20.0% -12.0% -34.7% -30.2% -13.6% -6.9% -4.3% 41.3% 2.5% -13.5% Capital expenditures—wireless services $11 $ — $ — $2 $ — $1 $2 $2 $1 $1 $ — $ — $13 $5 $2 OPERATING STATISTICS As of and for the As of and for the Three Months Ended Years Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 12/31/03 12/31/04 12/31/05 Subscribers 988 954 912 871 816 814 778 754 743 744 748 770 871 754 770 ARPU $43 $43 $44 $45 $43 $46 $47 $46 $46 $50 $51 $51 $44 $45 $49
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—OTHER SERVICES SEGMENT (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Other services revenue $13 $8 $12 $10 $13 $9 $8 $10 $11 $9 $12 $9 $43 $40 $41 Other services expenses Property and other taxes 125 115 114 97 81 114 112 78 98 111 100 42 451 385 351 Real estate costs 108 107 102 117 112 101 105 97 105 99 110 108 434 415 422 Restructuring, realignment and severance related costs 13 15 36 (19) 10 51 1 45 7 (5) 25 53 45 107 80 Employee-related costs 235 240 222 208 235 212 189 171 196 199 191 198 905 807 784 Other non-employee related costs(1) 238 263 252 380 283 594 497 279 263 301 283 301 1,133 1,653 1,148 Total other services expenses 719 740 726 783 721 1,072 904 670 669 705 709 702 2,968 3,367 2,785 Other services segment income $(706) $(732) $(714) $(773) $(708) $(1,063) $(896) $(660) $(658) $(696) $(697) $(693) $(2,925) $(3,327) $(2,744) Capital expenditures—other services $85 $113 $136 $179 $79 $101 $90 $105 $57 $98 $100 $108 $513 $375 $363 (1) Certain immaterial expenses for facility costs, bad debt, and network expenses in the other services segment are recorded in other non-employee related costs.
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SEGMENT REVENUE INCLUDING CUSTOMER CHANNEL WITHIN WIRELINE SERVICES (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Wireline services revenue Voice services Local voice: Business $309 $307 $299 $289 $291 $280 $288 $281 $268 $271 $275 $260 $1,204 $1,140 $1,074 Mass markets 1,373 1,329 1,303 1,253 1,231 1,179 1,160 1,153 1,144 1,143 1,121 1,119 5,258 4,723 4,527 Wholesale 195 207 202 197 194 204 197 188 196 192 181 178 801 783 747 Total local voice 1,877 1,843 1,804 1,739 1,716 1,663 1,645 1,622 1,608 1,606 1,577 1,557 7,263 6,646 6,348 Long-distance: Business 109 106 111 104 113 112 119 106 114 114 109 110 430 450 447 Mass markets 139 142 144 144 145 144 155 163 168 165 172 181 569 607 686 Wholesale 198 219 213 235 242 236 276 277 276 268 278 276 865 1,031 1,098 Total long-distance 446 467 468 483 500 492 550 546 558 547 559 567 1,864 2,088 2,231 Access services 196 181 191 187 179 179 169 162 160 181 158 161 755 689 660 Total voice services 2,519 2,491 2,463 2,409 2,395 2,334 2,364 2,330 2,326 2,334 2,294 2,285 9,882 9,423 9,239 Data and Internet: Business 455 468 489 476 490 492 482 498 489 505 565 527 1,888 1,962 2,086 Mass markets 139 136 138 143 141 144 141 160 173 177 190 205 556 586 745 Wholesale 346 338 315 322 315 333 321 315 324 313 312 316 1,321 1,284 1,265 Total data and Internet 940 942 942 941 946 969 944 973 986 995 1,067 1,048 3,765 3,832 4,096 Total wireline services revenue 3,459 3,433 3,405 3,350 3,341 3,303 3,308 3,303 3,312 3,329 3,361 3,333 13,647 13,255 13,335 Wireless services revenue 152 155 153 138 127 130 133 124 126 132 131 138 598 514 527 Other services revenue 13 8 12 10 13 9 8 10 11 9 12 9 43 40 41 Total operating revenue $3,624 $3,596 $3,570 $3,498 $3,481 $3,442 $3,449 $3,437 $3,449 $3,470 $3,504 $3,480 $14,288 $13,809 $13,903 Operating revenue Wireline services revenue Business $874 $882 $900 $870 $895 $885 $890 $886 $871 $890 $949 $897 $3,526 $3,556 $3,607 Mass markets 1,655 1,611 1,588 1,543 1,519 1,469 1,458 1,480 1,487 1,487 1,485 1,507 6,397 5,926 5,966 Wholesale 930 940 917 937 927 949 960 937 954 952 927 929 3,724 3,773 3,762 Total wireline services revenue 3,459 3,433 3,405 3,350 3,341 3,303 3,308 3,303 3,312 3,329 3,361 3,333 13,647 13,255 13,335 Wireless services revenue 152 155 153 138 127 130 133 124 126 132 131 138 598 514 527 Other services revenue 13 8 12 10 13 9 8 10 11 9 12 9 43 40 41 Total operating revenue $3,624 $3,596 $3,570 $3,498 $3,481 $3,442 $3,449 $3,437 $3,449 $3,470 $3,504 $3,480 $14,288 $13,809 $13,903
    • QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL DATA—SPECIAL ITEMS (Dollars in millions) (Unaudited) Three Months Ended 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 SPECIAL ITEMS: Operating expenses: Bankruptcy settlements (SG&A) $ — $ — $ — $ — $ — $52 $ — $ — $ — $ — $ — $ — Legal reserve (SG&A) — — — (100) — (318) (250) — — — — — Restructuring, realignment and severance related costs (SG&A) (13) (16) (37) (46) (15) (132) (5) (59) (15) 1 (26) (74) Settlements (COGS) — — (393) — — — — — — — — — OPEB - Medicare one-time benefit (COGS and SG&A) — — — — — — 16 — — — — — Asset impairment charges — — (230) — — (43) (34) (36) — — — — Subtotal operating expenses (13) (16) (660) (146) (15) (441) (273) (95) (15) 1 (26) (74) Other expense—net: Gain on agreement terminations (Other expense—net) — — — — — 70 — — — — — — Gain (loss) on debt extinguishment (Other expense—net) 21 8 15 (6) (13) 20 (6) — — (43) 11 (430) Gain on sale of assets (Other expense—net) — — — — 1 — — 7 257 — — 6 Tax penalty adjustment (Other expense—net) — — — — — — (36) 36 — — — — Subtotal other expense—net 21 8 15 (6) (12) 90 (42) 43 257 (43) 11 (424) Income tax (expense) benefit: Change in the valuation allowance against deferred tax assets (Income tax) — — — — — (140) 16 — — — — — Other special items (expense): Cumulative effect of changes in accounting principles—net (206) — — — — — — — — — — (22) Total special items—(charges)/benefits $(198) $(8) $(645) $(152) $(27) $(491) $(299) $(52) $242 $(42) $(15) $(520)
    • QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—EBITDA (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 EBITDA—as adjusted: (1) EBITDA—as adjusted $980 $982 $933 $853 $888 $868 $879 $1,024 $989 $990 $1,002 $1,053 $3,748 $3,659 $4,034 Less: Restructuring, realignment and severance related costs (13) (16) (37) (46) (15) (132) (5) (59) (15) 1 (26) (74) (112) (211) (114) Less: Asset impairment charges — — (230) — — (43) (34) (36) — — — — (230) (113) — Less: Special items — — (393) (100) — (266) (234) — — — — — (493) (500) — EBITDA: (1) EBITDA $967 $966 $273 $707 $873 $427 $606 $929 $974 $991 $976 $979 $2,913 $2,835 $3,920 Depreciation and amortization (784) (789) (796) (798) (777) (784) (779) (783) (774) (765) (768) (758) (3,167) (3,123) (3,065) Total other expense—net (379) (381) (419) (399) (409) (283) (414) (312) (139) (393) (353) (730) (1,578) (1,418) (1,615) Income tax benefit (expense) 76 79 256 108 3 (136) 18 27 (4) 3 1 3 519 (88) 3 Discontinued operations—net 66 61 2,517 (25) — — — — — — — — 2,619 — — Cumulative effect of accounting changes - net 206 — — — — — — — — — — (22) 206 — (22) Net income (loss) $152 $(64) $1,831 $(407) $(310) $(776) $(569) $(139) $57 $(164) $(144) $(528) $1,512 $(1,794) $(779) EBITDA Margin: (1) EBITDA $967 $966 $273 $707 $873 $427 $606 $929 $974 $991 $976 $979 $2,913 $2,835 $3,920 Operating revenue $3,624 $3,596 $3,570 $3,498 $3,481 $3,442 $3,449 $3,437 $3,449 $3,470 $3,504 $3,480 $14,288 $13,809 $13,903 EBITDA margin (EBITDA divided by operating revenue) 26.7% 26.9% 7.6% 20.2% 25.1% 12.4% 17.6% 27.0% 28.2% 28.6% 27.9% 28.1% 20.4% 20.5% 28.2% EBITDA—as adjusted: (1) EBITDA—as adjusted $980 $982 $933 $853 $888 $868 $879 $1,024 $989 $990 $1,002 $1,053 $3,748 $3,659 $4,034 Operating revenue $3,624 $3,596 $3,570 $3,498 $3,481 $3,442 $3,449 $3,437 $3,449 $3,470 $3,504 $3,480 $14,288 $13,809 $13,903 EBITDA margin—as adjusted 27.0% 27.3% 26.1% 24.4% 25.5% 25.2% 25.5% 29.8% 28.7% 28.5% 28.6% 30.3% 26.2% 26.5% 29.0% (EBITDA—as adjusted divided by operating revenue) (1) EBITDA and EBITDA Margin are non-GAAP financial measures. Other companies may calculate these measures (or similarly titled measures) differently. We believe these measures provide useful information to investors in evaluating our capital-intensive business because they reflect our operating performance before the impacts of non-cash items and are indicators of our ability to service debt, pay taxes and fund discretionary spending such as capital expenditures. Management also uses EBITDA for a number of purposes, including setting targets for compensation and assessing the performance of our operations. Due to the significance of the GAAP components excluded, EBITDA and EBITDA Margin should not be considered in isolation or as an alternative to net income or loss or any other operating or liquidity performance measure prescribed by generally accepted accounting principles in the United States of America (GAAP).
    • QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—NET DEBT (Dollars in millions) (Unaudited) 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 Net Debt: (1) Current borrowings $1,869 $996 $836 $652 $596 $601 $261 $527 $512 Long-term borrowings—net 15,639 16,544 16,407 16,545 16,690 16,691 17,287 16,702 14,968 Total borrowings—net 17,508 17,540 17,243 17,197 17,286 17,292 17,548 17,229 15,480 Less: Cash and cash equivalents (1,366) (1,353) (1,184) (1,314) (1,151) (1,406) (2,245) (2,311) (846) Less: Short-term investments (564) (702) (423) (598) (764) (966) (634) (580) (101) Less: Long-term investments (30) (35) (124) (105) (45) (36) (1) (1) — Net Debt $15,548 $15,450 $15,512 $15,180 $15,326 $14,884 $14,668 $14,337 $14,533
    • (1) Net Debt is a non-GAAP financial measure that we calculate as our total borrowings (current plus long-term) less our cash, cash equivalents and short and long-term investments. We believe net debt is helpful in analyzing our leverage, and management uses this measure in making decisions regarding potential financings. Net debt is not a measure determined in accordance with GAAP and should not be considered as a substitute for “current borrowings”, “long-term borrowings” or any other measure prescribed by generally accepted accounting principles in the United States of America (GAAP).
    • QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—FREE CASH FLOW FROM OPERATIONS (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 2003 2004 2005 Free Cash Flow from Operations: (1) Cash provided by operating activities $789 $438 $603 $345 $560 $284 $765 $239 $343 $570 $675 $725 $2,175 $1,848 $2,313 Less: expenditures for property, plant and equipment (429) (505) (539) (615) (455) (486) (418) (372) (313) (352) (445) (503) (2,088) (1,731) (1,613) Free Cash Flow from Operations 360 (67) 64 (270) 105 (202) 347 (133) 30 218 230 222 87 117 700 Add: One time settlement payments — — — — — — — 311 — — — 204 - 311 204 Free Cash Flow from Operations—as adjusted $360 $(67) $64 $(270) $105 $(202) $347 $178 $30 $218 $230 $426 $87 $428 $904 (1) Free cash flow from operations is a non-GAAP financial measure that indicates cash generated by our business after operating expenses, capital expenditures and interest expense. We believe this measure provides useful information to our investors for purposes of evaluating our ability to satisfy our debt and other mandatory payment obligations and because it reflects cash flows available for financing activities, voluntary debt repayment and to strengthen our balance sheet. This is of particular relevance for our business given our highly leveraged position. We also use free cash flow from operations internally for a variety of purposes, including setting targets for compensation and budgeting our cash needs. Free cash flow from operations is not a measure determined in accordance with GAAP and should not be considered as a substitute for “operating income” or “net cash flow from operating activities” or any other measure determined in accordance with GAAP.
    • QWEST COMMUNICATIONS INTERNATIONAL INC. WIRELESS SERVICES ARPU RECONCILIATION (Dollars in millions, subscribers in in thousands, and ARPU amounts in dollars) (Unaudited) Three Months Ended 3/31/03 6/30/03 9/30/03 12/31/03 3/31/04 6/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 ARPU is calculated as follows: Total quarterly wireless services revenue $152 $155 $153 $138 $127 $130 $133 $124 $126 $132 $131 $138 Less: quarterly non-recurring revenue (21) (27) (29) (17) (18) (19) (21) (19) (23) (21) (17) (22) Quarterly recurring revenue $131 $128 $124 $121 $109 $111 $112 $105 $103 $111 $114 $116 Average monthly recurring revenue $44 $43 $41 $40 $36 $37 $37 $35 $34 $37 $38 $39 Divided by quarterly average wireless subscribers 1,015 980 934 893 838 814 797 767 745 743 745 759 Wireless services ARPU $43 $43 $44 $45 $43 $46 $47 $46 $46 $50 $51 $51 ARPU (Average Revenue Per Unit) is measured as the recurring portion of our wireless services revenue stream attributed to subscribing customers (plus certain activation fees) divided by the average number of subscribers for the period. We believe this metric can be a useful measure of the revenue performance of our wireless business on a per-customer basis. We use ARPU internally to assess the revenue performance of our wireless business and the impact on this business periodic customer initiatives and product roll-outs. ARPU is not a measure determined in accordance with GAAP and should not be considered as a substitute for our wireless segment revenue or any other measure determined in accordance with generally accepted accounting principles in the United States of America (GAAP). Beginning in 2004, Wireless services ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.