EXHIBIT 99.1
Press release dated January 24, 2001.
RIDE THE LIGHT
QWEST
[LOGO OMITTED]
QWEST COMMUNICATIONS REPORTS STRONG FOURTH QUARTER AND FULL-YEAR 2000
RESULTS DRIVEN BY GROWTH IN INTERNET, DATA AND WIRELESS REVENUES
Quarterly Revenue Exceeds $5 Billion; Full-Year 2000 Pro Forma Revenue Grew
More Than 14 percent to $19 Billion; Revenue, EBITDA, and EPS Exceed Consensus
Estimates
Fourth Quarter Results Compared to Previous Year:
o EBITDA grew nearly 20 percent to $2 billion
o EBITDA margins increased 330 basis points
o Revenue grew 10% to more than $5 billion
o Internet and data services revenue grew by almost 40 percent,
representing more than 23 percent of total revenue
o Wireless revenue grew more than 90 percent
o EPS increased to $0.16 from $0.11
Full-Year Pro Forma 2000 Compared to Pro Forma 1999:
o EBITDA grew more than 17 percent to $7.4 billion
o Revenue grew more than 14 percent to $19 billion
o Commercial services revenue grew nearly 28 percent
o Wireless customers grew more than 73 percent to more than 805,000
o DSL customers grew more than 130 percent to 255,000
o EPS increased over 50 percent to $0.59 from $0.39
Operational Results:
o Exceeded year-end growth targets for DSL and wireless customers
o Achieved net reduction target of 4,500 jobs for the year
o Won more than $600 million in new contracted sales in business
markets in the quarter
o Reduced delayed local service orders to 850 at year-end, the
lowest level in six years
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DENVER, JANUARY 24, 2001 -- Qwest Communications International Inc. (NYSE: Q),
the broadband Internet communications company, today announced record revenue
and earnings before interest, taxes, depreciation and amortization (EBITDA) for
the fourth quarter and full-year 2000. Qwest has met or exceeded the consensus
of analysts' estimates for the 15th consecutive quarter.
"Results for the quarter demonstrate Qwest's strong position in the industry and
our ability to execute the business plan," said Joseph P. Nacchio, Qwest
chairman and CEO. "With the initial integration of the merger successfully
completed, we are on track to meet our expected growth rates."
Fourth quarter revenue of $5.02 billion was a 9.9 percent increase over pro
forma normalized fourth quarter 1999. The revenue growth was driven by strong
demand for Internet and data services, which increased by almost 40 percent in
the quarter. Wireless services revenue grew 90 percent in the quarter to almost
$150 million with more than 805,000 customers at year-end. Commercial services
revenue increased more than 19 percent, while consumer and small business
services generated revenue growth of more than five percent. Total 2000 pro
forma normalized revenue increased 14.2 percent to $18.95 billion from pro forma
normalized 1999 revenue of $16.59 billion. Internet and data services, a
high-growth segment for Qwest, grew more than 60 percent in 2000.
Fourth quarter EBITDA grew 19.7 percent to $1.99 billion as EBITDA margins
improved 330 basis points to 39.6 percent in the fourth quarter of 2000 from
36.3 percent in fourth quarter of 1999. The increase in EBITDA margins resulted
from an improved product mix, cost controls, network efficiencies and merger
synergies. Pro forma normalized 2000 EBITDA increased more than 17.3 percent to
$7.37 billion as EBITDA margins improved to 38.9 percent in 2000 from 37.9
percent in 1999. The EBITDA improvement was achieved despite significant
investments in growth areas such as hosting, local broadband access, Internet
and data services, and service improvements.
"We are extremely pleased with our strong operating and financial results for
the fourth quarter and full-year 2000," said Robert S. Woodruff, Qwest executive
vice president and CFO. "We achieved significant revenue and EBITDA growth while
integrating a large acquisition and investing for growth. We remain confident
that we will achieve our financial commitments for 2001 of $21.3 to $21.7
billion in revenue and $8.5 to $8.7 billion in EBITDA."
On a pro forma normalized basis and excluding non-recurring items, Qwest's
fourth quarter net earnings of $270 million grew by 43.6 percent over fourth
quarter 1999. Earnings per share (EPS) grew by 45.5 percent to $0.16 per diluted
share. For the year, net income of $1.00 billion increased 53.6 percent over
1999, while 2000 EPS of $0.59 per diluted share grew 51.3 percent over 1999 EPS
of $0.39 per diluted share. The non-recurring items are composed of
merger-related charges and gains and losses related to certain minority
investments and assets.
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COMMERCIAL, CONSUMER AND SMALL BUSINESS MARKETS
Qwest continued to penetrate business accounts with its portfolio of broadband
Internet applications and services. Global business markets won more than $600
million in new contracted sales during the quarter. Approximately 60 percent of
the sales were for Internet and data services, and nearly 45 percent of the $600
million were from large national and global customers. Some of the large
contract wins were with major financial, government and technology
organizations, including Citibank and Fleet Securities, and major hosting sales
to the bureaus of the U.S. Department of Treasury, including the IRS, U.S.
Customs, and the U.S. Mint.
Qwest signed ground-breaking wholesale agreements with McLeodUSA and Eschelon
Telecom for voice and data services totalling nearly $750 million, significantly
expanding competition within the 14-states where Qwest provides local service.
In addition, Cable & Wireless signed a multi-year agreement valued at more than
$100 million for high-speed network capacity.
By year-end, 25 percent of Qwest's local residential customers had subscribed to
a bundle of communications services. Qwest added 730,000 customers to its
CustomChoice(sm) package, featuring a home phone line with a choice of 19
calling features, and now has more than 2 million customers using the service.
In addition, more than 121,000 customers now subscribe to Qwest's Total
Package(sm), a bundle of wireless, wireline and Internet services.
Qwest wireless customers totaled more than 805,000 compared with a target of
800,000 customers by the end of 2000. In addition, 28 percent of all wireless
sales are now sold as part of a bundle.
INTERNET AND DATA SERVICES
Internet and data revenues for the fourth quarter 2000 grew approximately 40
percent over the fourth quarter of 1999. The company saw strong demand for
Internet access, hosting, digital subscriber line (DSL), virtual private
network, frame relay, ATM and professional services. Internet and data services
revenue represented 70 percent of Qwest's total revenue growth in the quarter.
Qwest introduced e-Solutions(sm), a suite of business services that may be
customized to provide companies of all sizes the tools and expertise to use the
Internet to streamline their business operations and conduct e-commerce.
Qwest ended 2000 with more than 255,000 DSL customers, more than double the
previous year and exceeding the company's year-end target of 250,000. Qwest
expects to double the number of DSL customers to 500,000 by the end of 2001.
Qwest leads the industry with 846 DSL customers per central office with
DSL-equipped facilities. About 85 percent of DSL customers install the service
themselves without requiring a technician.
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Qwest activated CyberCenters(sm) in Seattle, Sterling, VA and Sacramento in the
fourth quarter, meeting its target of 14 centers in 2000. The company plans to
open an additional 10 centers by the end of 2001.
Qwest has completed local fiber networks in 11 markets and has introduced
end-to-end broadband services to business customers, including Internet access,
application hosting, integration of local area networks and long distance
services. Qwest is on track to complete the remaining 14 local networks by the
end of 2001.
Qwest Interactive, a professional services division, has developed more than
1,500 advanced Internet applications for customers such as Procter & Gamble,
GlaxoSmithKline (GSK.com), MySmart.com, VisualPlex (funded by Bausch & Lomb) and
Swissotel.
SERVICE AND COMPETITION
During the quarter, Qwest continued to see positive results from initiatives to
improve service and promote competition to meet state regulatory requirements
and to re-enter the long distance business in its 14-state local service area.
In Qwest's local service area, service improvements for 2000 include:
o Reduced delayed local service orders to 850, the lowest level in six years;
o Nearly 98 percent of the more than 18 million installation commitments were
met when promised to the customer - the best results in the last five
years;
o About 95 percent of total repair commitments were met on time as promised -
the best results since 1996;
o More than 80 percent of service outages were repaired in less than 24 hours
- up from 63 percent a year ago - the best customer service results since
1995.
Qwest took new steps to open its markets to competition, including announcing
the industry's first permanent agreements for sharing its phone lines with four
companies to broaden the availability of high-speed Internet and broadband
services in its local service area. The line-sharing agreements with Contact
Communications, MULTIBAND Communications Inc., New Edge Networks and NorthPoint
Communications Inc. replace interim agreements Qwest signed with the four
companies last April. The terms of these four permanent line-sharing agreements
are available to all competitors. In addition, wholesale agreements with
competitors McLeodUSA and Eschelon Telecom furthered Qwest's efforts to promote
competition in its 14-state local service area.
Qwest believes that with these actions and significant improvements in its
operational readiness it will be able to apply to the Federal Communications
Commission (FCC) for approval to re-enter the long distance business in one of
the states in its local service area by this summer. The company expects to
submit applications to the FCC for several other states by the end of 2001.
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INTERNATIONAL
In the quarter, Qwest announced the opening of its Asia Pacific headquarters in
Hong Kong under the direction of Ross Lau, president of Qwest's international
business. In addition, Qwest named Kimiaki Ueno president of Qwest Japan.
ABOUT QWEST
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable,
scalable and secure broadband Internet-based data, voice and image
communications for businesses and consumers. The Qwest Macro Capacity(R) Fiber
Network, designed with the newest optical networking equipment for speed and
efficiency, spans more than 104,000 miles globally. For more information, please
visit the Qwest web site at www.qwest.com.
# # #
This release may contain projections and other forward-looking statements that
involve risks and uncertainties. These statements may differ materially from
actual future events or results. Readers are referred to the documents filed by
Qwest with the Securities and Exchange Commission, specifically the most recent
reports which identify important risk factors that could cause actual results to
differ from those contained in the forward-looking statements, including
potential fluctuations in quarterly results, volatility of Qwest's stock price,
intense competition in the communications services market, changes in demand for
Qwest's products and services, dependence on new product development and
acceleration of the deployment of advanced new services, such as broadband data,
wireless and video services, which could require substantial expenditure of
financial and other resources in excess of contemplated levels, higher than
anticipated employee levels, capital expenditures and operating expenses, rapid
and significant changes in technology and markets, adverse changes in the
regulatory or legislative environment affecting Qwest's business and delays in
Qwest's ability to provide interLATA services within its 14-state local service
territory, failure to maintain rights of way, and failure to achieve the
projected synergies and financial results expected to result from the
acquisition of U S WEST timely or at all and difficulties in combining the
operations of Qwest and U S WEST. This release may include analysts' estimates
and other information prepared by third parties for which Qwest assumes no
responsibility. Qwest undertakes no 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
hereof or to reflect the occurrence of unanticipated events.
The Qwest logo is a registered trademark of, and CyberCenter is a service mark
of, Qwest Communications International Inc. in the U.S. and certain other
countries.
Contacts: MEDIA CONTACT: INVESTOR CONTACT:
-------------- -----------------
Matt Barkett Lee Wolfe
303-992-2085 800-567-7296
matt.barkett@qwest.com IR@qwest.com
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Attachment A
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME (1)(2)
(UNAUDITED)
Three Months Ended Twelve Months Ended
December 31, December 31,
In millions, except ------------------------ % ------------------------ %
per share amounts 2000 1999 Change 2000 1999 Change
- ------------------------------------ ---------- ---------- ---------- ---------- ---------- ----------
OPERATING REVENUES
Commercial services $ 2,544 $ 2,134 19.2 $ 9,425 $ 7,388 27.6
Consumer and small business services 1,706 1,619 5.4 6,715 6,284 6.9
Directory services 501 455 10.1 1,530 1,436 6.6
Switched access services 267 359 (25.6) 1,284 1,486 (13.6)
---------- ---------- ---------- ----------
Total operating revenues 5,018 4,567 9.9 18,954 16,594 14.2
OPERATING EXPENSES
Cost of sales 1,783 1,635 9.1 6,757 5,906 14.4
Selling, general and administrative 1,249 1,273 (1.9) 4,829 4,406 9.6
---------- ---------- ---------- ----------
EBITDA 1,986 1,659 19.7 7,368 6,282 17.3
Depreciation 793 658 20.5 2,795 2,539 10.1
Goodwill and other intangible
amortization 319 317 0.6 1,270 1,268 0.2
---------- ---------- ---------- ----------
Operating income 874 684 27.8 3,303 2,475 33.5
OTHER EXPENSE
Interest expense 309 254 21.7 1,116 887 25.8
Other expense (income)-net 19 (11) 272.7 43 (3) 1,533.3
---------- ---------- ---------- ----------
Total other expense-net 328 243 35.0 1,159 884 31.1
---------- ---------- ---------- ----------
Income before income taxes 546 441 23.8 2,144 1,591 34.8
Income tax provision 276 253 9.1 1,149 943 21.9
---------- ---------- ---------- ----------
NET INCOME $ 270 $ 188 43.6 $ 995 $ 648 53.6
========== ========== ========== ==========
Basic earnings per share $ 0.16 $ 0.12 33.3 $ 0.60 $ 0.41 46.3
========== ========== ========== ==========
Basic average shares outstanding 1,670 1,623 2.9 1,650 1,600 3.1
========== ========== ========== ==========
Diluted earnings per share $ 0.16 $ 0.11 45.5 $ 0.59 $ 0.39 51.3
========== ========== ========== ==========
Diluted average shares outstanding 1,695 1,670 1.5 1,688 1,645 2.6
========== ========== ========== ==========
Diluted cash earnings per share $ 0.32 $ 0.28 14.3 $ 1.25 $ 1.08 15.7
========== ========== ========== ==========
(1) The consolidated pro forma statements give retroactive effect as though the
acquisition of U S WEST, Inc. by Qwest Communications International Inc. (the
"Merger") had occurred as of January 1, 1999. Shares outstanding and earnings
per share have been restated to give retroactive effect to the exchange ratio
effected in the Merger. In addition, results have been adjusted to eliminate the
impacts of non-recurring items, such as merger costs, asset write-offs and
impairments, gains/losses on the sale of investments and fixed assets, change in
the market value of investments, equity gains/losses on the KPNQwest investment,
one-time litigation charges, elimination of in-region long-distance activity and
elimination of Qwest construction activity. The results have also been adjusted
to reflect the change in accounting principle to recognize revenue and expenses
for directory publishing under the "point of publication method" from the
"amortization method" as if the change in accounting principle had been adopted
as of January 1, 1999. The Merger has been accounted for as a purchase
transaction. The purchase price allocation is preliminary and is subject to
change. Accordingly, net earnings and earnings per share are subject to change.
Certain reclassifications have been made to prior periods to conform to the
current presentation.
(2) Diluted cash earnings per share represent diluted earnings per share
adjusted to add back the after-tax amortization of goodwill and other intangible
assets resulting from the Merger.
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Attachment B
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
December 31, June 30,
In millions 2000 2000
- ----------------------------------------------- ---------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 154 $ 900
Accounts receivable - net 4,235 3,832
Inventories and supplies 275 322
Prepaid and other 712 750
---------- ----------
Total current assets 5,376 5,804
Property, plant and equipment - net 25,583 23,627
Investments 913 1,767
Goodwill and intangibles - net 39,600 36,941
Other assets - net 2,029 1,709
---------- ----------
Total assets $ 73,501 $ 69,848
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 3,645 $ 4,736
Accounts payable 2,049 1,820
Accrued expenses and other current liabilities 4,329 2,741
Advance billings and deposits 393 414
---------- ----------
Total current liabilities 10,416 9,711
Long-term debt 15,421 13,429
Postretirement and other postemployment
benefit obligations 2,735 2,823
Deferred taxes, credits and other 3,549 2,495
Stockholders' equity 41,380 41,390
---------- ----------
Total liabilities and
Stockholders' equity $ 73,501 $ 69,848
========== ==========
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Attachment C
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
1999-2000
As of and for the
Three Months Ended
December 31,
----------------------- %
2000 1999 Change
---------- ---------- ----------
DSL (in 14 state region):
Subscribers (thousands) 255 110 131.8%
DSL Equipped Central Offices 302 244 23.8%
Subscribers per Equipped Central Office 846 451 87.6%
Wireless/PCS:
Revenues (millions) (1) $ 149 $ 78 91.0%
Subscribers (thousands) 805 466 73%
ARPU (dollars) $ 56 $ 55 1.8%
Penetration 4.89% 3.22% 51.9%
Capital Expenditures (millions) (2) $ 2,236 $ 2,112 5.9%
Access Lines (thousands):
Business 6,154 5,821 5.7%
Consumer 11,974 11,966 0.1%
---------- ---------- ----------
Total Access Lines 18,128 17,787 1.9%
========== ========== ==========
Voice Grade Equivalent Access Lines
(thousands):
Business 29,183 22,369 30.5%
Consumer 12,678 12,259 3.4%
---------- ---------- ----------
Total Voice Grade Equivalents 41,861 34,628 20.9%
========== ========== ==========
Twelve Months Ended
December 31,
----------------------- %
2000 1999 Change
---------- ---------- ----------
(1) Wireless/PCS Revenues (millions) $ 495 $ 236 109.8%
(2) Capital Expenditures (millions) $ 8,987 $ 6,118 46.9%
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