SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): July 20, 2001
QWEST COMMUNICATIONS INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
000-22609 84-1339282
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(Commission File Number) (IRS Employer Identification No.)
1801 California Street Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-992-1400
Not applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
Following the merger of U S WEST, Inc. ("U S WEST") with and into Qwest
Communications International Inc. ("Qwest") on June 30, 2000 (the "Merger"),
Qwest adopted the income statement line presentation that had been used by Qwest
prior to the Merger. This presentation separated cost of services ("COS") from
selling, general and administrative ("SG&A") costs. Prior to the Merger, U S
WEST did not report COS and SG&A separately and its systems did not categorize
costs in this manner. As a result, for the quarters since the Merger, Qwest has
made a reasonable allocation of these costs between the two expense categories,
and has periodically refined its methodology.
For 2001, Qwest built functionality into its systems that allowed tracking with
a greater level of accounting detail. This improved detail allows for a more
accurate breakout of expenses that are included in the COS and SG&A lines on the
income statement. The previous process did not provide significant detail with
regard to the classification of expenses, which resulted in an understatement of
SG&A and a corresponding overstatement of COS.
As a result of these enhancements, Qwest has restated COS and SG&A as set forth
below to allow for meaningful comparison to future periods. This
reclassification between expense line items has no impact on Qwest's revenue,
earnings before interest, taxes, depreciation and amortization ("EBITDA") or
earnings per share. The schedules below reflect the impact of the adjustment on:
1) Qwest's financial statements prepared in accordance with generally accepted
accounting principles ("GAAP") and filed with the Securities and Exchange
Commission ("SEC"); and 2) the pro forma normalized view of operating results.
SEC or GAAP Basis:
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The following schedule details the impact of the adjustment mentioned above on
prior quarters presented on the same basis as used for SEC reporting (i.e.,
GAAP). For the year ended December 31, 2000, the amounts reflect the results of
operations for (i) U S WEST from January 1, 2000 through June 29, 2000 and (ii)
the merged Qwest entity from June 30, 2000 through the end of the year.
(Dollars in millions) 1Q00 2Q00 3Q00 4Q00 Total 2000 1Q01
---- ---- ---- ---- ---------- ----
COS-SEC Reported $986 $961 $1,703 $1,783 $5,433 $1,900
Adjustment (121) (131) (145) (113) (510) (104)
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COS-Adjusted $865 $830 $1,558 $1,670 $4,923 $1,796
GM%-SEC Reported 70.8% 72.1% 64.3% 64.5% 67.3% 62.4%
GM%-Adjusted 74.4% 75.9% 67.3% 66.7% 70.4% 64.4%
SG&A-SEC Reported $883 $930 $1,198 $1,249 $4,260 $1,154
Adjustment 121 131 145 113 510 104
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SG&A-Adjusted $1,004 $1,061 $1,343 $1,362 $4,770 $1,258
SG&A%-SEC Reported 26.1% 27.0% 25.1% 24.9% 25.6% 22.8%
SG&A%-Adjusted 29.7% 30.8% 28.2% 27.1% 28.7% 24.9%
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Pro Forma Normalized Basis:
The following unaudited consolidated pro forma income statement data is
presented assuming the Merger had been completed on January 1, 2000 and has been
adjusted to eliminate the impacts of non-recurring items such as Merger-related
and one-time items, as well as in-region long-distance activity. For more
information on these items, please refer to the Form 10-K that Qwest filed with
the SEC on March 16, 2001.
(Dollars in millions) 1Q00 2Q00 3Q00 4Q00 Total 2000 1Q01
---- ---- ---- ---- ---------- ----
COS-Pro forma $1,624 $1,647 $1,703 $1,783 $6,757 $1,900
Adjustment (121) (131) (145) (113) (510) (104)
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COS-Adjusted $1,503 $1,516 $1,558 $1,670 $6,247 $1,796
GM%-Pro forma 64.0% 64.6% 64.3% 64.5% 64.4% 62.4%
GM%-Adjusted 66.7% 67.4% 67.3% 66.7% 67.0% 64.4%
SG&A-Pro forma $1,169 $1,213 $1,198 $1,249 $4,829 $1,154
Adjustment 121 131 145 113 510 104
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SG&A-Adjusted $1,290 $1,344 $1,343 $1,362 $5,339 $1,258
SG&A%-Pro forma 25.9% 26.1% 25.1% 24.9% 25.5% 22.8%
SG&A%-Adjusted 28.6% 28.9% 28.2% 27.1% 28.2% 24.9%
Forward Looking Statements Warning
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This Current Report on Form 8-K 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, 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, conditions in the industry and
economy generally 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.
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
applicable law or that the information is material.
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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: July 20, 2001 By: /s/ Yash Rana
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Yash Rana
Vice President
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