SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 24, 2001
QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE
----------------------------------------------
(State or other jurisdiction of incorporation)
000-22609 84-1339282
- --------------------------------------------------------------------------------
(Commission File Number) (IRS Employer Identification No.)
1801 California Street Denver, Colorado 80202
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-992-1400
--------------------
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On April 24, 2001, Qwest Communications International Inc. ("Qwest") reported
its financial results for the 1st quarter of 2001. A copy of the press release
announcing the same is attached as Exhibit 99.1 to this Current Report on Form
8-K.
On April 24, 2001, Qwest also hosted a conference call with media, analysts,
investors and other interested persons during which it discussed, among other
things, its business and operations, its announced financial results and its
expected financial results for future periods. As previously announced, the
webcast of the call (live and replay) is accessible on Qwest's website.
On the call Qwest announced the following (all numbers are approximate):
o Where applicable, information had been presented on a pro forma
normalized basis to exclude the revenue from Qwest's divested interLATA
business in its local service area, and charges from merger-related and
other one-time items. The merger related and non-recurring items
include severance costs, a write-down of investments and premiums paid
to retire high-yield notes.
o It expected that revenue would grow between 12% and 13% for the 2nd
quarter of 2001 over the 2nd quarter of 2000. It expected higher growth
rates in the subsequent quarters of 2001.
o It expected that revenue and EBITDA (earnings before interest, taxes,
depreciation and amortization) for 2001 would be within the previously
announced ranges. Its previous guidance was for revenues of $21.3
billion to $21.7 billion (a 12.5% to 14.5% increase over 2000) and
EBITDA of $8.5 billion to $8.7 billion (a 14.9% to 17.6% increase over
2000).
o Internet and data revenue, which grew 44% (for the 1st quarter of 2001
over the 1st quarter of 2000), constituted 25% of total revenues for
the 1st quarter of 2001.
o DSL customers grew by more than 125% in the 1st quarter of 2001 over
the 1st quarter of 2000. It expects to meet or exceed its target of
500,000 DSL customers at the end of 2001, an increase of 100% over
2000.
o It ended the 1st quarter of 2001 with 908,000 wireless customers
compared with 805,000 customers at the end of 2000. These results
reflect the termination by Qwest of 30,000 customers in its low-value,
pre-paid wireless business, and of 4,700 inactive wireless customers.
As previously announced, Qwest is cooperating with the Securities and
Exchange Commission in its inquiry regarding the number of wireless
customers. As previously announced, Qwest is targeting 1.6 million
wireless customers at the end of 2001.
o It was on track to meet previously announced targets of 15% to 17% CAGR
(compounded annual growth rate) for revenue and approximately 20% CAGR
for EBITDA from 2000 to 2005.
2
o While it was too early to provide guidance regarding expected results
for 2002, it expected that revenue growth in 2002 would be near 15%.
o It had a multi-year contract value backlog of $500 million for design
services.
o It expected that for the last three quarters of 2001, revenue growth
would come from the following areas:
o Broadband services and hosting (including professional services),
dedicated Internet access, storage and ASP -- $550 million to $600
million
o Data services including optical bandwidth, frame relay and ATM --
$750 million to $800 million
o Wireless services -- $300 million to $350 million
o All other services such as voice and directory revenues (including
the offset of declining switched access revenues) -- $300 million
to $350 million
o It was comfortable with prior guidance of EBITDA margins of just under
40% in 2001.
o It expected depreciation expense of $2.8 billion in 2000 to increase by
one-third in 2001.
o It expected interest and other expense (net of capitalized interest) of
$1.2 billion in 2000 to increase by 35% to 40% in 2001.
o It expected the number of diluted shares for 2001 to be about the same
level as 2000, or about 1.69 billion shares.
o It had diluted EPS (earnings per share) of $0.13 and cash EPS of $0.30
for the 1st quarter of 2001.
o As a result of increased discounts from suppliers and other procurement
synergies, among other things, it expects capital expenditures for 2001
of $9.2 billion, $300 million less than previous estimates. It also
expected that capital expenditures for 2002 would be several hundred
million dollars less than 2001 levels (in the $8.5 billion to $9
billion range).
o Qwest believes that capital expenditures are higher in 2001 than they
will be in future periods in part because of Qwest's efforts to seek
Section 271 approval to re-enter the interLATA business in its region.
It estimates that the Section 271 approval process resulted in
incremental capital and operating expenditures in 2000 of $550 million
and $475 million, respectively, and will result in incremental capital
and operating expenditures in 2001 of $550 million and $600 million,
respectively. It also estimates that more than 2,500 employees are
spending most of their time on the initiative. It expects that in
future periods the expenditures and employee time devoted to the
Section 271 approval process will decrease as Qwest receives approval
and scales back the approval activities.
o In response to a question about possible transactions, Qwest clarified
that it did not have any present intention to acquire a CLEC or to
acquire or sell any substantial number of access lines (other than
previously announced pending sales of access lines).
3
o It had a $430 million pre-tax charge for merger-related and one-time
items, including $209 million in merger-related items, mainly headcount
reductions, contract terminations and settlements and fixed asset
write-downs, $116 million in investment write-downs (including $90
million with respect to its investment in Advanced Radio Telecom)
partially offset by the gain on the Global Crossing derivative, and
$105 million in premiums paid for early retirement of higher interest
debt.
Qwest's press release attached as Exhibit 99.1 to this Current Report on Form
8-K includes pro forma normalized unaudited financial statements as well as
consolidated unaudited financial statements that do not give effect to the
exclusion of the merger-related and one-time items are attached as Exhibit 99.2
to this Current Report on Form 8-K. These consolidated financial statements do
not necessarily provide an accurate picture of the change in the business and
operations of Qwest for the relevant periods, because they exclude the results
of operations of Qwest (prior to the U S WEST acquisition) for all periods
before June 30, 2000, and include the effects of merger-related and one-time
items that do not necessarily reflect Qwest's expected operating results for
future periods.
FORWARD LOOKING STATEMENTS WARNING
This Current Report on Form 8-K contains 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,
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, Inc. timely or at all and difficulties in combining the
operations of Qwest and U S WEST. The information contained in this Current
Report on Form 8-K is a statement of Qwest's present intention and is based
upon, among other things, the existing regulatory environment, industry
conditions and market conditions and prices. Qwest may change its intentions, at
any time and without notice, based upon any changes in such factors, in Qwest's
assumptions or otherwise. This Current Report on Form 8-K includes 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.
4
By including any information in this Current Report on Form 8-K, Qwest does not
necessarily acknowledge that disclosure of such information is required by
Regulation FD or otherwise or that the information is material.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
Exhibit 99.1 Press release dated April 24, 2001.
5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Qwest has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
QWEST COMMUNICATIONS INTERNATIONAL INC.
DATE: April 24, 2001 By: /s/ YASH A. RANA
-----------------------------------------
Yash A. Rana
Associate General Counsel and
Assistant Secretary
6
EXHIBIT INDEX
Exhibit 99.1 Press release dated April 24, 2001.
7