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qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
qwest communications Q_4Q07_profile
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qwest communications Q_4Q07_profile

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  • 1. Qwest Communications International Inc. Historical Financial Information As of December 31, 2007
  • 2. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (Dollars in millions except per share amounts, shares in thousands) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Operating revenue........................................................... $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 3,463 $ 3,434 $ 3,435 $ 13,903 $ 13,923 $ 13,778 Operating expenses: Cost of sales (exclusive of depreciation and and amortization)..................................................... 1,440 1,432 1,512 1,452 1,418 1,394 1,382 1,414 1,317 1,310 1,313 1,317 5,836 5,608 5,257 Selling, general and administrative.............................. 1,035 1,047 1,016 1,049 1,013 969 1,014 994 998 1,004 1,323 981 4,147 3,990 4,306 Depreciation and amortization..................................... 774 765 768 758 691 693 691 695 612 615 619 613 3,065 2,770 2,459 3,249 3,244 3,296 3,259 3,122 3,056 3,087 3,103 2,927 2,929 3,255 2,911 13,048 12,368 12,022 Total operating expenses................................................. Other expense (income)—net: Interest expense on long-term borrowings and capital leases—net.................................................... 381 380 384 338 296 298 291 284 282 274 272 267 1,483 1,169 1,095 Loss (gain) on early retirement of debt—net .............. — 43 (11) 430 — (5) 9 1 — 22 — 4 462 5 26 Gain on sale of assets.................................................. (257) — — (6) — (3) — (65) — (1) — (6) (263) (68) (7) Other—net................................................................... 15 (30) (20) (32) (28) (9) (51) (20) (5) (7) (9) (1) (67) (108) (22) Total other expense (income)—net................................. 139 393 353 730 268 281 249 200 277 288 263 264 1,615 998 1,092 Income (loss) before income taxes and Cumulative effect of changes in accounting principles—net of taxes............................ 61 (167) (145) (509) 86 135 151 185 242 246 (84) 260 (760) 557 664 Income tax (expense) benefit ......................................... (4) 3 1 3 2 (18) 43 9 (2) — 2,149 106 3 36 2,253 Income (loss) before cumulative effect of changes in accounting principles—net of taxes......................... 57 (164) (144) (506) 88 117 194 194 240 246 2,065 366 (757) 593 2,917 Cumulative effect of changes in accounting principles—net of taxes............................ — — — (22) — — — — — — — — (22) — — Net income (loss) ........................................................... $ 57 $ (164) $ (144) $ (528) $ 88 $ 117 $ 194 $ 194 $ 240 $ 246 $ 2,065 $ 366 $ (779) $ 593 $ 2,917 Earnings per share: Basic............................................................................ $ 0.03 $ (0.09) $ (0.08) $ (0.28) $ 0.05 $ 0.06 $ 0.10 $ 0.10 $ 0.13 $ 0.13 $ 1.14 $ 0.20 $ (0.42) $ 0.31 $ 1.59 Diluted......................................................................... $ 0.03 $ (0.09) $ (0.08) $ (0.28) $ 0.05 $ 0.06 $ 0.09 $ 0.10 $ 0.12 $ 0.13 $ 1.08 $ 0.20 $ (0.42) $ 0.30 $ 1.52 Weighted average shares outstanding: Basic............................................................................ 1,816,758 1,823,338 1,843,715 1,861,684 1,874,313 1,882,398 1,901,372 1,900,925 1,864,951 1,841,295 1,818,683 1,792,953 1,836,374 1,889,857 1,829,244 Diluted......................................................................... 1,822,377 1,823,338 1,843,715 1,861,684 1,911,376 1,951,728 2,004,502 1,992,133 1,958,535 1,950,056 1,916,478 1,854,042 1,836,374 1,971,545 1,920,766
  • 3. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars in millions) 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 ASSETS Current assets: Cash and cash equivalents............................................ $ 1,406 $ 2,245 $ 2,311 $ 846 $ 610 $ 1,189 $ 962 $ 1,241 $ 887 $ 869 $ 1,119 $ 902 Short-term investments................................................. 966 634 580 101 130 205 218 248 242 240 — 79 Accounts receivable—net............................................ 1,603 1,566 1,595 1,525 1,541 1,477 1,718 1,600 1,510 1,497 1,586 1,576 Deferred income taxes.................................................. — 8 22 118 132 114 142 187 126 123 658 654 Prepaid expenses and other.......................................... 552 445 546 574 611 568 535 378 429 358 406 362 Total current assets.......................................................... 4,527 4,898 5,054 3,164 3,024 3,553 3,575 3,654 3,194 3,087 3,769 3,573 Property, plant and equipment—net................................ 16,459 16,101 15,812 15,568 15,273 15,016 14,828 14,579 14,274 14,076 13,849 13,671 Capitalized software—net............................................... 1,068 1,030 991 963 927 885 840 818 812 817 824 853 Deferred income taxes..................................................... 36 21 6 — — — — — 17 20 1,696 1,584 Prepaid pension............................................................... 1,187 1,182 1,172 1,165 1,147 1,129 1,111 1,311 1,320 1,329 1,338 1,672 Other................................................................................ 852 838 692 637 755 709 760 877 1,084 1,060 1,235 1,179 Total assets...................................................................... $ 24,129 $ 24,070 $ 23,727 $ 21,497 $ 21,126 $ 21,292 $ 21,114 $ 21,239 $ 20,701 $ 20,389 $ 22,711 $ 22,532 LIABILITIES AND STOCKHOLDERS' DEFICIT OR EQUITY Current liabilities: Current portion of long-term borrowings..................... $ 601 $ 261 $ 527 $ 512 $ 604 $ 2,683 $ 1,685 $ 1,686 $ 1,688 $ 1,304 $ 1,727 $ 601 Accounts payable......................................................... 1,169 1,146 1,295 1,294 1,079 1,041 1,030 992 893 917 942 1,008 Accrued expenses and other......................................... 1,647 1,617 1,775 1,796 1,642 1,762 1,807 1,861 1,440 1,519 1,983 1,999 Deferred revenue and advance billings........................ 642 626 635 633 622 609 622 621 613 610 603 601 Total current liabilities..................................................... 4,059 3,650 4,232 4,235 3,947 6,095 5,144 5,160 4,634 4,350 5,255 4,209 Long-term borrowings—net............................................ 16,691 17,287 16,702 14,968 14,834 12,693 13,228 13,206 13,199 13,207 12,779 13,650 Post-retirement and other post-employment benefit obligations........................................................ 3,452 3,466 3,457 3,459 3,441 3,439 3,436 2,366 2,364 2,346 2,325 2,188 Deferred revenue............................................................. 554 548 532 522 514 508 516 506 506 509 551 538 Other................................................................................ 1,937 1,782 1,520 1,530 1,450 1,383 1,366 1,446 1,532 1,533 1,510 1,384 Total liabilities................................................................. 26,693 26,733 26,443 24,714 24,186 24,118 23,690 22,684 22,235 21,945 22,420 21,969 Stockholders' deficit or equity: Preferred stock............................................................. — — — — — — — — — — — — Common stock.............................................................. 18 18 19 19 19 19 19 19 19 18 18 18 Additional paid-in capital............................................ 43,111 43,170 43,260 43,290 43,355 43,475 43,531 43,384 43,022 42,770 42,576 42,344 Treasury stock.............................................................. (20) (16) (17) (17) (17) (17) (18) (24) (28) (33) (51) (18) Accumulated deficit..................................................... (45,664) (45,828) (45,972) (46,500) (46,412) (46,295) (46,101) (45,907) (45,619) (45,373) (43,308) (43,084) Accumulated other comprehensive (loss) income....... (9) (7) (6) (9) (5) (8) (7) 1,083 1,072 1,062 1,056 1,303 Total stockholders' deficit or equity................................ (2,564) (2,663) (2,716) (3,217) (3,060) (2,826) (2,576) (1,445) (1,534) (1,556) 291 563 Total liabilities and stockholders' deficit or equity......... $ 24,129 $ 24,070 $ 23,727 $ 21,497 $ 21,126 $ 21,292 $ 21,114 $ 21,239 $ 20,701 $ 20,389 $ 22,711 $ 22,532
  • 4. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in millions) 3 Mos 6 Mos 9 Mos 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 Ended Ended Ended 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 Operating activities: Net income (loss)...................................................... $ 57 $ (107) $ (251) $ (779) $ 88 $ 205 $ 399 $ 593 $ 240 $ 486 $ 2,551 $ 2,917 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization............................... 774 1,539 2,307 3,065 691 1,384 2,075 2,770 612 1,227 1,846 2,459 Deferred income taxes............................................ — 2 (4) (5) (1) (2) (3) (5) — (2) (2,177) (2,283) Provision for bad debt—net................................... 57 110 137 173 44 71 108 155 43 80 124 173 Cumulative effect of changes in accounting principles—net of taxes....................................... — — — 22 — — — — — — — — Gain on sale of assets............................................. (257) (257) (257) (263) — (3) (3) (68) — — (1) (7) Loss (gain) on early retirement of debt—net.......... — 43 32 462 — (5) 4 5 — 22 22 26 Other non-cash charges—net................................. 1 7 17 37 16 34 38 57 14 20 43 68 Changes in operating assets and liabilities: Accounts receivable............................................... (66) (82) (138) (104) (60) (23) (294) (223) 47 23 (110) (142) Prepaid expenses and other current assets.............. 11 98 1 (8) (37) 28 50 168 (50) 22 (26) 11 Accounts payable and accrued expenses and other current liabilities........................................ (178) (258) 57 73 (368) (284) (236) (372) (584) (447) 21 23 Deferred revenue and advance billings................... (32) (54) (61) (73) (19) (38) (25) (33) (8) (8) 27 12 Other non-current assets and liabilities................... (24) (128) (252) (287) (214) (190) (184) (258) (46) (50) (194) (231) Cash provided by operating activities........................... 343 913 1,588 2,313 140 1,177 1,929 2,789 268 1,373 2,126 3,026 Investing activities: Expenditures for property, plant and equipment and capitalized software......................................... (313) (665) (1,110) (1,613) (390) (832) (1,226) (1,632) (318) (744) (1,164) (1,669) Proceeds from sale of property and equipment.......... 418 418 418 420 26 47 63 173 — — — 16 Proceeds from sale of investment securities............... 630 1,086 1,230 1,793 7 42 56 70 6 31 192 203 Purchase of investment securities.............................. (822) (912) (1,002) (1,086) (36) (146) (173) (217) — (24) (64) (64) Other......................................................................... 1 17 22 27 1 — (101) (94) 4 9 13 (87) Cash used for investing activities.................................. (86) (56) (442) (459) (392) (889) (1,381) (1,700) (308) (728) (1,023) (1,601) Financing activities: Proceeds from long-term borrowings........................ — 1,885 1,887 3,152 — — 600 600 — 500 500 500 Repayments of long-term borrowings, including current maturities.................................... (5) (1,550) (1,778) (4,716) (41) (47) (1,145) (1,180) (9) (900) (911) (1,176) Proceeds from issuances of common stock................ 3 7 10 39 57 102 150 205 34 66 96 113 Repurchases of common stock.................................. — — — — — — — (209) (393) (681) (925) (1,170) Other......................................................................... — (105) (105) (634) — — (37) (110) 54 (2) 15 (31) Cash (used for) provided by financing activities........... (2) 237 14 (2,159) 16 55 (432) (694) (314) (1,017) (1,225) (1,764) Cash and cash equivalents: Increase (decrease) in cash and cash equivalents....... 255 1,094 1,160 (305) (236) 343 116 395 (354) (372) (122) (339) Beginning balance..................................................... 1,151 1,151 1,151 1,151 846 846 846 846 1,241 1,241 1,241 1,241 Ending balance.......................................................... $ 1,406 $ 2,245 $ 2,311 $ 846 $ 610 $ 1,189 $ 962 $ 1,241 $ 887 $ 869 $ 1,119 $ 902
  • 5. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED DATA—TOTAL COMPANY (UNAUDITED) (Dollars in millions) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/30/07 2005 2006 2007 Operating revenue: Wireline services....................................................... $ 3,312 $ 3,329 $ 3,361 $ 3,333 $ 3,327 $ 3,320 $ 3,343 $ 3,338 $ 3,298 $ 3,314 $ 3,282 $ 3,288 $ 13,335 $ 13,328 $ 13,182 Wireless services....................................................... 126 132 131 138 139 142 135 141 139 139 144 138 527 557 560 Other services............................................................ 11 9 12 9 10 10 9 9 9 10 8 9 41 38 36 Total operating revenue................................................ 3,449 3,470 3,504 3,480 3,476 3,472 3,487 3,488 3,446 3,463 3,434 3,435 13,903 13,923 13,778 Segment expenses: Cost of sales (COS) (2): Facility costs.......................................................... 671 675 690 647 616 608 585 623 582 558 550 543 2,683 2,432 2,233 Network expenses.................................................. 67 59 71 69 52 62 69 69 52 65 65 63 266 252 245 Employee-related costs........................................... 409 387 404 387 396 388 397 392 379 366 368 352 1,587 1,573 1,465 Other non-employee related costs........................... 293 311 347 349 354 336 331 330 304 321 330 359 1,300 1,351 1,314 Total cost of sales...................................................... 1,440 1,432 1,512 1,452 1,418 1,394 1,382 1,414 1,317 1,310 1,313 1,317 5,836 5,608 5,257 Selling, general and administrative (SG&A) (2): Property and other taxes......................................... 96 109 97 41 87 70 94 62 88 97 79 82 353 313 346 Bad debt................................................................. 57 53 27 36 44 27 37 47 43 37 44 49 173 155 173 Realignment, severance and related costs............... 15 (1) 26 74 22 (2) 43 — (5) 8 12 15 114 63 30 Employee-related costs........................................... 407 410 401 405 401 405 407 426 394 390 378 373 1,623 1,639 1,535 Other non-employee related costs........................... 460 476 465 493 459 469 433 459 478 472 810 462 1,884 1,820 2,222 Total selling, general and administrative................... 1,035 1,047 1,016 1,049 1,013 969 1,014 994 998 1,004 1,323 981 4,147 3,990 4,306 Total Segment Expenses............................................... $ 2,475 $ 2,479 $ 2,528 $ 2,501 $ 2,431 $ 2,363 $ 2,396 $ 2,408 $ 2,315 $ 2,314 $ 2,636 $ 2,298 $ 9,983 $ 9,598 $ 9,563 Segment expenses as a percentage of revenue: COS.......................................................................... 42 % 41 % 43 % 42 % 41 % 40 % 40 % 41 % 38 % 38 % 38 % 38 % 42 % 40 % 38 % SG&A....................................................................... 30 % 30 % 29 % 30 % 29 % 28 % 29 % 28 % 29 % 29 % 39 % 29 % 30 % 29 % 31 % Capital expenditures (1)................................................ $ 313 $ 352 $ 445 $ 503 $ 390 $ 442 $ 394 $ 406 $ 318 $ 426 $ 420 $ 505 $ 1,613 $ 1,632 $ 1,669 Employees.................................................................... 40,683 40,303 39,977 39,641 39,127 39,315 39,163 38,383 38,011 37,585 37,026 36,843 39,641 38,383 36,843 (1) Capital expenditures exclude assets acquired through capital leases. (2) Certain prior period expense amounts have been reclassified to conform to current period presentation.
  • 6. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED DATA—WIRELINE SERVICES SEGMENT (UNAUDITED) (Dollars in millions except ARPU amounts, operating statistics in thousands) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Wireline services revenue (1): Local voice................................................................ $ 1,581 $ 1,575 $ 1,544 $ 1,526 $ 1,520 $ 1,501 $ 1,466 $ 1,425 $ 1,394 $ 1,392 $ 1,362 $ 1,337 $ 6,226 $ 5,912 $ 5,485 Long-distance............................................................ 558 547 553 558 559 562 572 560 550 536 514 500 2,216 2,253 2,100 Access....................................................................... 161 182 159 162 146 133 139 132 134 139 127 124 664 550 524 Data, Internet and video............................................ 1,012 1,025 1,105 1,087 1,102 1,124 1,166 1,221 1,220 1,247 1,279 1,327 4,229 4,613 5,073 Total wireline services revenue..................................... 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 3,314 3,282 3,288 13,335 13,328 13,182 Wireline services expenses: Facility costs.............................................................. 595 596 615 572 545 534 511 548 507 482 475 470 2,378 2,138 1,934 Network expenses..................................................... 62 58 70 68 52 61 68 67 51 64 64 62 258 248 241 Bad debt.................................................................... 43 40 15 24 28 15 23 32 30 28 28 38 122 98 124 Realignment, severance and related costs.................. 6 4 3 22 2 1 40 2 1 4 8 14 35 45 27 Employee-related costs.............................................. 606 587 603 584 599 581 599 593 615 604 601 590 2,380 2,372 2,410 Other non-employee related costs.............................. 368 408 440 474 466 448 443 441 422 451 460 473 1,690 1,798 1,806 Total wireline services expenses................................... 1,680 1,693 1,746 1,744 1,692 1,640 1,684 1,683 1,626 1,633 1,636 1,647 6,863 6,699 6,542 Wireline services segment income................................ $ 1,632 $ 1,636 $ 1,615 $ 1,589 $ 1,635 $ 1,680 $ 1,659 $ 1,655 $ 1,672 $ 1,681 $ 1,646 $ 1,641 $ 6,472 $ 6,629 $ 6,640 Wireline services margin............................................. 49.3 % 49.1 % 48.1 % 47.7 % 49.1 % 50.6 % 49.6 % 49.6 % 50.7 % 50.7 % 50.2 % 49.9 % 48.5 % 49.7 % 50.4 % Capital expenditures—wireline services (2).................. $ 255 $ 252 $ 346 $ 394 $ 322 $ 364 $ 321 $ 307 $ 263 $ 350 $ 325 $ 367 $ 1,247 $ 1,314 $ 1,305
  • 7. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED DATA—WIRELINE SERVICES SEGMENT (CONTINUED) (UNAUDITED) (Dollars in millions except ARPU amounts, operating statistics in thousands) As of and Years Ended Three Months Ended December 31, Access lines (1): 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Business access lines: Retail lines............................................................. 3,084 3,041 3,023 2,979 2,969 2,931 2,909 2,878 2,853 2,830 2,817 2,803 2,979 2,878 2,803 Resold lines............................................................ 1,848 1,808 1,756 1,710 1,667 1,624 1,564 1,495 1,433 1,385 1,338 1,292 1,710 1,495 1,292 Total business access lines......................................... 4,932 4,849 4,779 4,689 4,636 4,555 4,473 4,373 4,286 4,215 4,155 4,095 4,689 4,373 4,095 Mass markets access lines: Consumer primary lines......................................... 8,107 7,974 7,916 7,851 7,749 7,592 7,454 7,333 7,200 7,015 6,860 6,705 7,851 7,333 6,705 Consumer additional lines...................................... 1,024 985 948 913 876 840 803 770 740 713 686 660 913 770 660 Small business lines............................................... 1,276 1,279 1,290 1,286 1,285 1,296 1,307 1,319 1,325 1,329 1,331 1,329 1,286 1,319 1,329 Total mass markets access lines................................ 10,407 10,238 10,154 10,050 9,910 9,728 9,564 9,422 9,265 9,057 8,877 8,694 10,050 9,422 8,694 Total access lines.......................................................... 15,339 15,087 14,933 14,739 14,546 14,283 14,037 13,795 13,551 13,272 13,032 12,789 14,739 13,795 12,789 In-Region long distance lines........................................ 4,590 4,631 4,705 4,778 4,824 4,840 4,900 4,920 4,924 4,884 4,871 4,810 4,778 4,920 4,810 Minutes of use from carriers and CLECS (in millions). 13,280 12,677 12,750 12,796 12,442 12,047 11,796 11,765 11,690 10,859 10,635 10,448 51,503 48,050 43,632 Mass markets retail connections: Mass markets access lines......................................... 10,407 10,238 10,154 10,050 9,910 9,728 9,564 9,422 9,265 9,057 8,877 8,694 10,050 9,422 8,694 Broadband subscribers (4)......................................... 1,122 1,190 1,340 1,480 1,678 1,798 1,973 2,138 2,305 2,405 2,516 2,611 1,480 2,138 2,611 Video subscribers (4)................................................ 96 115 143 172 210 249 338 411 491 554 605 649 172 411 649 Wireless subscribers.................................................. 743 744 748 770 784 777 781 801 812 807 819 824 770 801 824 Total mass markets retail connections.......................... 12,368 12,287 12,385 12,472 12,582 12,552 12,656 12,772 12,873 12,823 12,817 12,778 12,472 12,772 12,778 Consumer ARPU (3).................................................... $ 46 $ 46 $ 47 $ 48 $ 49 $ 49 $ 50 $ 51 $ 52 $ 53 $ 55 $ 55 $ 46 $ 50 $ 54 Broadband services: Subscribers................................................................ 1,122 1,190 1,340 1,480 1,678 1,798 1,973 2,138 2,305 2,405 2,516 2,611 1,480 2,138 2,611 Qualified households/business (in millions).............. 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 (1) Certain prior period revenue and access line amounts have been reclassified to conform to the current period presentation. Resold lines include UNE lines and public payphone lines. (2) Capital expenditures exclude assets acquired through capital leases. (3) Consumer ARPU (Average Revenue Per Unit) is measured as consumer wireline revenue in the period divided by the average number of primary access lines for the period. We believe this metric can be a useful measure of the revenue performance of our consumer business within our mass markets channel on a per-customer basis. We use ARPU internally to assess the revenue performance of our consumer business within our mass markets channel and the impact on this business of periodic customer initiatives and product roll-outs. ARPU is not a measure determined in accordance with accounting principles generally accepted in the United States of America, or GAAP and should not be considered as a substitute for our wireline services segment revenue or any other measure determined in accordance with GAAP. (4) Broadband and video subscribers include certain business customers.
  • 8. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED DATA—WIRELESS SERVICES SEGMENT (UNAUDITED) (Dollars in millions except ARPU amounts, subscribers in thousands) As of and Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/30/07 2005 2006 2007 Wireless services revenue (1)........................................ $ 126 $ 132 $ 131 $ 138 $ 139 $ 142 $ 135 $ 141 $ 139 $ 139 $ 144 $ 138 $ 527 $ 557 $ 560 Wireless services expenses: Facility costs.............................................................. 76 79 75 75 71 74 74 75 75 76 75 73 305 294 299 Wireless equipment................................................... 26 28 25 28 30 26 28 27 25 25 26 28 107 111 104 Bad debt.................................................................... 14 14 12 11 12 12 14 15 13 9 12 12 51 53 46 Employee-related costs.............................................. 15 12 12 12 12 12 13 13 14 12 17 13 51 50 56 Other non-employee related costs.............................. 38 22 23 22 18 14 20 19 14 18 15 18 105 71 65 Total wireless services expenses................................... 169 155 147 148 143 138 149 149 141 140 145 144 619 579 570 Wireless services segment income................................ $ (43) $ (23) $ (16) $ (10) $ (4) $ 4$ (14) $ (8) $ (2) $ (1) $ (1) $ (6) $ (92) $ (22) $ (10) Wireless services margin............................................. (34.1)% (17.4)% (12.2)% (7.2)% (2.9)% 2.8 % (10.4)% (5.7)% (1.4)% (0.7)% (0.7)% (4.3)% (17.5)% (3.9)% (1.8)% Capital expenditures—wireless services (2).................. $ 1 $ 1 $ — $ — $ — $ — $ — $ 1 $ 1 $ — $ 1 $ — $ 2 $ 1 $ 2 OPERATING STATISTICS As of and Years Ended As of andThree Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/30/07 2005 2006 2007 Subscribers................................................................... 743 744 748 770 784 777 781 801 812 807 819 824 770 801 824 ARPU (3)..................................................................... $ 46 $ 50 $ 51 $ 51 $ 50 $ 52 $ 49 $ 50 $ 50 $ 51 $ 49 $ 49 $ 50 $ 50 $ 49 (1) Certain prior period revenue amounts have been reclassified to conform to the current period presentation. (2) Capital expenditures exclude assets acquired through capital leases. (3) Wireless ARPU (Average Revenue Per Unit) is measured as the recurring portion of our wireless service 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 of 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 services segment revenue or any other measure determined in accordance with GAAP. Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.
  • 9. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED DATA—OTHER SERVICES SEGMENT (UNAUDITED) (Dollars in millions) As of and Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Other services revenue (1)............................................ $ 11 $ 9 $ 12 $ 9 $ 10 $ 10 $ 9 $ 9 $ 9 $ 10 $ 8 $ 9 $ 41 $ 38 $ 36 Other services expenses: Property and other taxes............................................ 97 108 96 40 86 70 94 61 88 96 79 81 341 311 344 Real estate costs........................................................ 107 101 113 110 112 107 113 112 111 111 113 108 431 444 443 Realignment, severance and related costs.................. 7 (5) 23 52 20 (3) 3 (1) (6) 2 4 1 77 19 1 Employee-related costs.............................................. 195 198 190 196 186 200 192 212 144 140 128 122 779 790 534 Other non-employee related costs (2)........................ 220 229 213 211 192 211 161 192 211 192 531 195 873 756 1,129 Total other services expenses........................................ 626 631 635 609 596 585 563 576 548 541 855 507 2,501 2,320 2,451 Other services segment income..................................... $ (615) $ (622) $ (623) $ (600) $ (586) $ (575) $ (554) $ (567) $ (539) $ (531) $ (847) $ (498) $ (2,460) $ (2,282) $ (2,415) Capital expenditures—other services (3)...................... $ 57 $ 99 $ 99 $ 109 $ 68 $ 78 $ 73 $ 98 $ 54 $ 76 $ 94 $ 138 $ 364 $ 317 $ 362 (1) Certain prior period revenue amounts have been reclassified to conform to the current period presentation. (2) Certain immaterial expenses for facility costs, bad debt, and network expenses in other services segment are recorded in other non-employee related expenses. (3) Capital expenditures exclude assets acquired through capital leases.
  • 10. QWEST COMMUNICATIONS INTERNATIONAL INC. SEGMENT REVENUE INCLUDING CUSTOMER CHANNEL WITHIN WIRELINE SERVICES (UNAUDITED) (Dollars in millions) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Operating revenue (1): Wireline services revenue: Voice services: Local voice: Business................................................................ $ 321 $ 322 $ 324 $ 312 $ 316 $ 310 $ 306 $ 299 $ 284 $ 290 $ 284 $ 282 $ 1,279 $ 1,231 $ 1,140 Mass markets........................................................ 1,062 1,058 1,037 1,034 1,027 1,016 991 965 951 946 929 910 4,191 3,999 3,736 Wholesale.............................................................. 198 195 183 180 177 175 169 161 159 156 149 145 756 682 609 Total local voice....................................................... 1,581 1,575 1,544 1,526 1,520 1,501 1,466 1,425 1,394 1,392 1,362 1,337 6,226 5,912 5,485 Long-distance: Business................................................................ 146 145 138 138 144 139 138 133 137 133 132 132 567 554 534 Mass markets........................................................ 135 133 142 152 155 161 162 162 162 166 162 161 562 640 651 Wholesale.............................................................. 277 269 273 268 260 262 272 265 251 237 220 207 1,087 1,059 915 Total long-distance................................................... 558 547 553 558 559 562 572 560 550 536 514 500 2,216 2,253 2,100 Access services......................................................... 161 182 159 162 146 133 139 132 134 139 127 124 664 550 524 Total voice services..................................................... 2,300 2,304 2,256 2,246 2,225 2,196 2,177 2,117 2,078 2,067 2,003 1,961 9,106 8,715 8,109 Data, Internet and video: Business.................................................................... 540 561 621 585 584 581 582 594 579 587 603 639 2,307 2,341 2,408 Mass markets............................................................ 143 146 160 173 190 205 224 251 276 289 304 316 622 870 1,185 Wholesale................................................................. 329 318 324 329 328 338 360 376 365 371 372 372 1,300 1,402 1,480 Total data, Internet and video...................................... 1,012 1,025 1,105 1,087 1,102 1,124 1,166 1,221 1,220 1,247 1,279 1,327 4,229 4,613 5,073 Total wireline services revenue....................................... 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 3,314 3,282 3,288 13,335 13,328 13,182 Wireless services revenue............................................... 126 132 131 138 139 142 135 141 139 139 144 138 527 557 560 Other services revenue.................................................... 11 9 12 9 10 10 9 9 9 10 8 9 41 38 36 Total operating revenue.................................................. $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 3,463 $ 3,434 $ 3,435 $ 13,903 $ 13,923 $ 13,778 Operating revenue (1): Wireline services revenue: Business....................................................................... $ 1,008 $ 1,029 $ 1,084 $ 1,036 $ 1,044 $ 1,030 $ 1,026 $ 1,026 $ 1,000 $ 1,010 $ 1,019 $ 1,053 $ 4,157 $ 4,126 $ 4,082 Mass markets............................................................... 1,342 1,339 1,341 1,361 1,373 1,383 1,378 1,379 1,390 1,402 1,396 1,388 5,383 5,513 5,576 Wholesale.................................................................... 962 961 936 936 910 907 939 933 908 902 867 847 3,795 3,689 3,524 Total wireline services revenue....................................... 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 3,314 3,282 3,288 13,335 13,328 13,182 Wireless services revenue............................................... 126 132 131 138 139 142 135 141 139 139 144 138 527 557 560 Other services revenue.................................................... 11 9 12 9 10 10 9 9 9 10 8 9 41 38 36 Total operating revenue.................................................. $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 3,463 $ 3,434 $ 3,435 $ 13,903 $ 13,923 $ 13,778 (1) Certain prior period revenue amounts have been reclassified to conform to the current period presentation.
  • 11. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL DATA—SPECIAL ITEMS (UNAUDITED) (Dollars in millions) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/30/07 2005 2006 2007 Special items (1): Operating expenses: Legal reserve (SG&A)............................................... $ —$ — $ —$ —$ —$ — $ —$ — $ (40) $ — $ (353) $ — $ —$ —$ (393) Realignment, severance and related costs (SG&A).... (15) 1 (26) (74) (22) — (43) — — — — — (114) (65) — Subtotal operating expenses.......................................... (15) 1 (26) (74) (22) — (43) — (40) — (353) — (114) (65) (393) Other (expense) income—net: (Loss) gain on debt extinguishment........................... — (43) 11 (430) — — — — — — — — (462) — — Gain on sale of assets................................................ 257 — — 6 — — — 64 — — — — 263 64 — Tax sharing settlement (Other—net).......................... — — — — — — 53 — — — — — — 53 — Subtotal other (expense) income—net.......................... 257 (43) 11 (424) — — 53 64 — — — — (199) 117 — Income tax sharing settlement...................................... — — — — — — 39 — — — — — — 39 — Reversal of income tax valuation allowance................. — — — — — — — — — — 2,174 — — — 2,174 Cumulative effect of changes in accounting principles—net of taxes........................... — — — (22) — — — — — — — — (22) — — Total special items—(charges) benefits........................ $ 242 $ (42) $ (15) $ (520) $ (22) $ — $ 49 $ 64 $ (40) $ — $ 1,821 $ — $ (335) $ 91 $ 1,781 (1) Effective for the quarter ended June 30, 2006, special items will only be identified herein when they are considered to be material. Although certain costs associated with the items described above continue to be incurred, they are not considered to be material and, therefore, are not detailed above.
  • 12. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—EBITDA—AS ADJUSTED (UNAUDITED) (Dollars in millions) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 EBITDA—as adjusted (1):........................................... $ 989 $ 990 $ 1,002 $ 1,053 $ 1,067 $ 1,109 $ 1,134 $ 1,080 $ 1,171 $ 1,149 $ 1,151 $ 1,137 $ 4,034 $ 4,390 $ 4,608 Less: Legal reserve.................................................... — — — — — — — — (40) — (353) — — — (393) Less: Realignment, severance and related costs........................................................... (15) 1 (26) (74) (22) — (43) — — — — — (114) (65) — EBITDA (1):................................................................ $ 974 $ 991 $ 976 $ 979 $ 1,045 $ 1,109 $ 1,091 $ 1,080 $ 1,131 $ 1,149 $ 798 $ 1,137 $ 3,920 $ 4,325 $ 4,215 Depreciation and amortization................................... (774) (765) (768) (758) (691) (693) (691) (695) (612) (615) (619) (613) (3,065) (2,770) (2,459) Total other expense (income)—net............................ (139) (393) (353) (730) (268) (281) (249) (200) (277) (288) (263) (264) (1,615) (998) (1,092) Income tax benefit (expense)..................................... (4) 3 1 3 2 (18) 43 9 (2) — 2,149 106 3 36 2,253 Cumulative effect of changes in accounting principles—net of taxes........................ — — — (22) — — — — — — — — (22) — — Net income (loss)...................................................... $ 57 $ (164) $ (144) $ (528) $ 88 $ 117 $ 194 $ 194 $ 240 $ 246 $ 2,065 $ 366 $ (779) $ 593 $ 2,917 EBITDA margin—as adjusted (1): EBITDA—as adjusted :............................................. $ 989 $ 990 $ 1,002 $ 1,053 $ 1,067 $ 1,109 $ 1,134 $ 1,080 $ 1,171 $ 1,149 $ 1,151 $ 1,137 $ 4,034 $ 4,390 $ 4,608 Divided by total operating revenue............................ $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 3,463 $ 3,434 $ 3,435 $ 13,903 $ 13,923 $ 13,778 28.7 % 28.5 % 28.6 % 30.3 % 30.7 % 31.9 % 32.5 % 31.0 % 34.0 % 33.2 % 33.5 % 33.1 % 29.0 % 31.5 % 33.4 % EBITDA margin........................................................ EBITDA margin (1): EBITDA.................................................................... $ 974 $ 991 $ 976 $ 979 $ 1,045 $ 1,109 $ 1,091 $ 1,080 $ 1,131 $ 1,149 $ 798 $ 1,137 $ 3,920 $ 4,325 $ 4,215 Divided by total operating revenue............................ $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 3,463 $ 3,434 $ 3,435 $ 13,903 $ 13,923 $ 13,778 28.2 % 28.6 % 27.9 % 28.1 % 30.1 % 31.9 % 31.3 % 31.0 % 32.8 % 33.2 % 23.2 % 33.1 % 28.2 % 31.1 % 30.6 % EBITDA margin........................................................ (1) EBITDA, EBITDA margin, EBITDA—as adjusted and EBITDA margin—as adjusted 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.
  • 13. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—NET DEBT (UNAUDITED) (Dollars in millions) 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 Net Debt (1): Current borrowings........................................................ $ 601 $ 261 $ 527 $ 512 $ 604 $ 2,683 $ 1,685 $ 1,686 $ 1,688 $ 1,304 $ 1,727 $ 601 Long-term borrowings—net.......................................... 16,691 17,287 16,702 14,968 14,834 12,693 13,228 13,206 13,199 13,207 12,779 13,650 Total borrowings—net................................................... 17,292 17,548 17,229 15,480 15,438 15,376 14,913 14,892 14,887 14,511 14,506 14,251 Less: cash and cash equivalents .................................... (1,406) (2,245) (2,311) (846) (610) (1,189) (962) (1,241) (887) (869) (1,119) (902) Less: short-term investments.......................................... (966) (634) (580) (101) (130) (205) (218) (248) (242) (240) — (79) Less: long-term investments........................................... (36) (1) (1) — — — — — — — (119) (126) Net debt.......................................................................... $ 14,884 $ 14,668 $ 14,337 $ 14,533 $ 14,698 $ 13,982 $ 13,733 $ 13,403 $ 13,758 $ 13,402 $ 13,268 $ 13,144 (1) Net debt is a non-GAAP financial measure that we calculate as our total borrowings (current plus long-term) less our cash and 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 quot;current borrowings,quot; quot;long-term borrowingsquot; or any other measure determined in accordance with GAAP.
  • 14. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—FREE CASH FLOW FROM OPERATIONS (UNAUDITED) (Dollars in millions) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 Free cash flow from operations (1): Cash provided by operating activities........................ $ 343 $ 570 $ 675 $ 725 $ 140 $ 1,037 $ 752 $ 860 $ 268 $ 1,105 $ 753 $ 900 $ 2,313 $ 2,789 $ 3,026 Less: Expenditures for property, plant and equipment and capitalized software................. (313) (352) (445) (503) (390) (442) (394) (406) (318) (426) (420) (505) (1,613) (1,632) (1,669) Free cash flow from operations................................. 30 218 230 222 (250) 595 358 454 (50) 679 333 395 700 1,157 1,357 Add: certain one-time settlements.............................. — — — 204 100 — — 140 200 — — 245 204 240 445 Adjusted free cash flow from operations................... $ 30 $ 218 $ 230 $ 426 $ (150) $ 595 $ 358 $ 594 $ 150 $ 679 $ 333 $ 640 $ 904 $ 1,397 $ 1,802 (1) Free cash flow and adjusted free cash flow from operations are non-Gaap financial measures that indicates cash generated by our business after operating expenses, capital expenditures and interest expense. We believe these measures provide useful information to our investors for purposes of evaluating our ability to satisfy our debt and other mandatory payment obligations and because they reflect 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 significant debt balance. We also use free cash flow and adjusted free cash flow from operations internally for a variety of purposes, including setting targets for compensation and budgeting our cash needs. These measures are not determined in accordance with GAAP and should not be considered as a substitute for quot;operating incomequot; or quot;net cash provided by operating activitiesquot; or any other measure determined in accordance with GAAP. Due to the forward- looking nature of expected free cash flow amounts for 2007, information to reconcile this non-GAAP financial measure is not available at this time.
  • 15. QWEST COMMUNICATIONS INTERNATIONAL INC. WIRELESS SERVICES ARPU RECONCILIATION (UNAUDITED) (Dollars in millions, subscribers in in thousands, and ARPU amounts in dollars) As of and Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 6/30/07 9/30/07 12/31/07 2005 2006 2007 ARPU is calculated as follows (1): Total quarterly wireless services revenue................... $ 126 $ 132 $ 131 $ 138 $ 139 $ 142 $ 135 $ 141 $ 139 $ 139 $ 144 $ 138 $ 527 $ 557 $ 560 Less: quarterly non-recurring revenue........................ (23) (21) (17) (22) (22) (20) (20) (22) (19) (17) (24) (18) (83) (84) (78) Quarterly recurring revenue....................................... $ 103 $ 111 $ 114 $ 116 $ 117 $ 122 $ 115 $ 119 $ 120 $ 122 $ 120 $ 120 $ 444 $ 473 $ 482 Average monthly recurring revenue.............................. $ 34 $ 37 $ 38 $ 39 $ 39 $ 41 $ 38 $ 40 $ 40 $ 41 $ 40 $ 40 $ 37 $ 39 $ 40 Divided by quarterly average wireless subscribers........ 745 743 745 759 778 782 775 790 805 809 817 822 748 781 813 Wireless services ARPU............................................... $ 46 $ 50 $ 51 $ 51 $ 50 $ 52 $ 49 $ 50 $ 50 $ 51 $ 49 $ 49 $ 49 $ 50 $ 49 (1) Wireless ARPU (Average Revenue Per Unit) is measured as the recurring portion of our wireless service 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 of 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 services segment revenue or any other measure determined in accordance with GAAP. Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.

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