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): January 29, 2002
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
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Not applicable
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(Former name or former address, if changed since last report)
ITEM 5. Other Events.
On January 29, 2002, Qwest Communications International Inc. ("Qwest") announced
its financial results for the 4th quarter of 2001 and for the full year 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 January 29, 2002, Qwest also hosted a conference call with media, analysts,
investors, and other interested persons during which it discussed its financial
results and related matters. As previously announced, the webcast of the call
(live and replay) is accessible on Qwest's website.
On the call or in this Current Report on Form 8-K Qwest announced the following
(all numbers are approximate):
o It believed the weakness in the economy within its 14-state local service
region was greater and might last longer than it had previously
anticipated, but that recent economic data and internal sales activity
suggested that the regional economy might be reaching the bottom . It
believed that the regional economy had lagged the national economy into the
downturn and would likely lag the national economy out of the downturn.
o It believed 2002 was a transition year during which Qwest would focus on
executing on its plans, including, among others, growing recurring
revenues, containing costs related to personnel and its network, improving
asset utilization, reducing capital expenditures, growing margins, growing
its market share of enterprise customers, continue sales of bundles or
packages to consumers and small businesses, reduce difficulties in
coordinating the migration of DSL customers, and receiving Section 271
approval. It said that its performance in 2002 would be subject to these
and other risk factors and assumptions.
o It expected its results in 2002 would be at or near the low end of prior
guidance. That guidance was for reported revenue in the range of $19.4 to
$19.8 billion and earnings before interest, taxes, depreciation and
amortization ("EBITDA") in the range of $7.1 to $7.3 billion. Owing to the
changed economic conditions and seasonality of its business, among other
things, it expected its results for the first quarter of 2002 would be
lighter than those for the rest of 2002, and could be as weak as or weaker
than those for the fourth quarter of 2001.
o It expected 2002 EBITDA would benefit from previously announced personnel
reductions of 7,000 employees yielding $400 to $500 million in savings,
recurring revenue growth that would add $400 million of EBITDA, and network
cost reductions of $400 to $500 million.
o It expected bad debt expense for 2002 would trend towards more historical
levels of 2.5% of revenue versus the 3.2% of revenue in 2001.
o It was working with Microsoft Corporation to address difficulties in
coordinating migration of DSL customers, but had not resolved these
difficulties. It was targeting as many as 200,000 to 250,000 net additional
DSL subscribers at the end of 2002 as compared with 2001.
o It was committed to the health of its balance sheet and would take steps to
de-lever it. While it intended to maintain its current credit ratings, it
did not expect to attempt to improve its current credit rating.
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o It said that those steps include, among others, issuing equity-based
securities, sales of assets or of securities associated with those assets,
including, among others, wireless, access lines, directories, its
applications service provider business and other non-core assets. It
expected it would have a more firm view of these actions in about a month
and would announce any transactions as appropriate. While it had not made
any decisions, it had identified specific options and was working towards
making decisions. It expected these issuances and sales could generate
proceeds of up to $1.5 to $2 billion. Among the factors it might consider
in making decisions would be timing, net proceeds to Qwest after
considering taxes, governmental conditions, regulatory environment in any
affected jurisdiction, and other aspects of any transaction (including any
counter-party). Qwest cautions that some transactions could be subject to
the approval of federal or state regulatory authorities and that any
approvals, if granted, could be subject to conditions that could adversely
affect the benefits to Qwest of completing the transactions and could be
otherwise burdensome. The conditions could include, but are not necessarily
limited to, requirements that Qwest apply a portion of the proceeds for
additional investments in certain states or to reduce charges in such
states. The amounts of such investments or rate reductions could be
significant and uneconomic. In addition, with respect to any sale of
certain of the access lines, depending upon the number of access lines and
purchasers, the purchasers may become subject to additional regulatory
requirements, including but not limited to those imposed upon incumbent
local exchange carriers, which could limit the number of potential
purchasers or the price any purchasers might be willing to pay. With
respect to the sale of securities, it would also consider the amount of
equity credit such a security would receive.
o It expected its total debt in 2002 would peak at just over $25 billion and
it would end 2002 with total debt of $24.9 billion, before giving effect to
proceeds from any transactions to de-lever its balance sheet.
o It said that based on its records, it was owed $7 million by Global
Crossing Ltd. It expected that, based upon its current understanding of the
situation, its on-going exposure as a result of Global Crossing's
bankruptcy was limited to payments of $7 million per month for services. It
believed it could terminate provision of services if it did not receive
payment.
Forward Looking Statements Warning
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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 Communications International Inc. (together with its
affiliates, "Qwest", "we" or "us") 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 but not limited to: potential fluctuations in quarterly
results; volatility of Qwest's stock price; intense competition in the markets
in which we compete; changes in demand for our products and services; the
duration and extent of the current economic downturn, including its effect on
our customers and suppliers; adverse economic conditions in the markets served
by us or by companies in which we have substantial investments; 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
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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 our business, delays in our ability to provide interLATA services
within our 14-state local service area; 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, and difficulties in combining the
operations of the combined company. The information contained in this Current
Report on Form 8-K is a statement of Qwest's present intention, belief or
expectation and is based upon, among other things, the existing regulatory
environment, industry conditions, market conditions and prices, the economy in
general and Qwest's assumptions. Qwest may change its intention, belief or
expectation, 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.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 99.1 Press Release dated January 29, 2002.
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: January 29, 2002 By: /s/ YASH A. RANA
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Yash A. Rana
Vice President
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EXHIBIT INDEX
Exhibit 99.1 Press Release dated January 29, 2002
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