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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

---------------------

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-3040

QWEST CORPORATION

<Table>

COLORADO 84-0273800
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
</Table>

1801 CALIFORNIA STREET, DENVER, COLORADO 80202
(Address of principal executive offices and zip code)

TELEPHONE NUMBER (303) 992-1400
(Registrant's telephone number, including area code)

---------------------

THE REGISTRANT, A WHOLLY-OWNED SUBSIDIARY OF QWEST COMMUNICATIONS
INTERNATIONAL INC., MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)
(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED
DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]

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2

QWEST CORPORATION
FORM 10-Q

TABLE OF CONTENTS

<Table>
<Caption>
ITEM PAGE
- ---- ----

PART I -- FINANCIAL INFORMATION
1. Financial Statements
Condensed Consolidated Statements of Operations --
Three and six months ended June 30, 2001 and 2000........... 1
Condensed Consolidated Balance Sheets --
June 30, 2001 and December 31, 2000......................... 2
Condensed Consolidated Statements of Cash Flows --
Six months ended June 30, 2001 and 2000..................... 3
Notes to Condensed Consolidated Financial Statements........ 4
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 9

PART II -- OTHER INFORMATION
1. Legal Proceedings........................................... 15
6. Exhibits and Reports on Form 8-K............................ 15
Signature Page.............................................. 17
</Table>
3

QWEST CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS)
(UNAUDITED)

<Table>
<Caption>
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
---------------- ----------------
2001 2000 2001 2000
------ ------ ------ ------

Revenues:
Commercial services................................... $1,392 $1,198 $2,739 $2,363
Consumer and small business services.................. 1,504 1,463 3,000 2,892
Switched access services.............................. 268 361 544 718
------ ------ ------ ------
Total revenues................................ 3,164 3,022 6,283 5,973
Operating expenses:
Employee-related expenses............................. 664 803 1,444 1,601
Other operating expenses.............................. 701 736 1,406 1,513
Depreciation and amortization......................... 699 577 1,373 1,141
Depreciation adjustment for access lines returned to
service............................................ 222 -- 222 --
Merger-related and other one-time charges............. 23 116 137 120
------ ------ ------ ------
Total operating expenses...................... 2,309 2,232 4,582 4,375
------ ------ ------ ------
Operating income........................................ 855 790 1,701 1,598
Other expense (income) - net:
Interest expense - net................................ 152 125 299 244
Gain on sale of rural exchanges....................... (50) -- (50) --
Other (income) expense - net.......................... (2) 13 (10) 19
------ ------ ------ ------
Total other expense - net..................... 100 138 239 263
------ ------ ------ ------
Income before income taxes.............................. 755 652 1,462 1,335
Income tax provision.................................... 286 247 552 505
------ ------ ------ ------
Net income.............................................. $ 469 $ 405 $ 910 $ 830
====== ====== ====== ======
</Table>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

1
4

QWEST CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 138 $ 252
Accounts receivable - net................................. 2,141 1,816
Inventories and supplies.................................. 211 152
Prepaid and other......................................... 252 224
------- -------
Total current assets.............................. 2,742 2,444
Property, plant and equipment - net......................... 19,415 18,100
Other assets - net.......................................... 2,648 2,298
------- -------
Total assets...................................... $24,805 $22,842
======= =======

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Short-term borrowings..................................... $ 3,399 $ 2,491
Accounts payable.......................................... 1,794 1,727
Accrued expenses and other current liabilities............ 1,345 1,772
Advance billings and customer deposits.................... 371 383
------- -------
Total current liabilities......................... 6,909 6,373
Long-term borrowings........................................ 6,135 6,247
Post-retirement and other post-employment benefit
obligations............................................... 2,495 2,310
Deferred taxes, credits and other........................... 2,801 2,647
Contingencies (Note 5)
Stockholder's equity:
Common stock - one share without par value, owned by
parent................................................. 8,416 8,127
Accumulated deficit....................................... (1,950) (2,861)
Accumulated other comprehensive loss...................... (1) (1)
------- -------
Total stockholder's equity........................ 6,465 5,265
------- -------
Total liabilities and stockholder's equity........ $24,805 $22,842
======= =======
</Table>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

2
5

QWEST CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)

<Table>
<Caption>
SIX MONTHS
ENDED
JUNE 30,
----------------
2001 2000
------ ------

Cash provided by operating activities....................... $2,192 $2,026
------ ------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment............ (2,996) (2,588)
Other..................................................... (76) (35)
------ ------
Cash used for investing activities........................ (3,072) (2,623)
------ ------
FINANCING ACTIVITIES
Net proceeds from short-term borrowings................... 878 876
Proceeds from issuance of long-term borrowings............ -- 992
Repayments of long-term borrowings........................ (115) (270)
Dividends paid on common stock............................ -- (821)
Other..................................................... 3 --
------ ------
Cash provided by financing activities..................... 766 777
------ ------
CASH AND CASH EQUIVALENTS
Increase (decrease)....................................... (114) 180
Beginning balance......................................... 252 61
------ ------
Ending balance............................................ $ 138 $ 241
====== ======
</Table>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

3
6

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of
Qwest Corporation ("Qwest" or "we" or "us" or "our") and our wholly owned
subsidiaries. On June 30, 2000, Qwest Communications International Inc. ("QCII")
completed its acquisition (the "Merger") of our parent company, U S WEST, Inc.
("U S WEST"). Each outstanding share of U S WEST common stock was converted into
the right to receive 1.72932 shares of QCII common stock. In addition, all
outstanding U S WEST stock options were converted into options to acquire QCII
common stock. The Merger has been accounted for as a reverse acquisition under
the purchase method of accounting with U S WEST being deemed the accounting
acquirer and QCII the acquired entity. As U S WEST was deemed the accounting
acquirer, its historical financial statements have been carried forward as those
of the combined company. We are a wholly owned indirect subsidiary of QCII.

The condensed consolidated interim financial statements are unaudited. We
prepared the financial statements in accordance with the instructions for Form
10-Q. In compliance with those instructions, certain information and footnote
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted. We
made certain reclassifications to previously reported balances to conform with
the current year presentation. In management's opinion, all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the consolidated results of operations, financial position and cash flows as of
June 30, 2001 and for all periods presented were made. These financial
statements should be read in conjunction with the audited financial statements
incorporated by reference in our Annual Report on Form 10-K for the year ended
December 31, 2000. The condensed consolidated results of operations for the
three and six months ended June 30, 2001 are not necessarily indicative of the
results expected for the full year.

NOTE 2: MERGER-RELATED AND OTHER ONE-TIME CHARGES

For the three and six months ended June 30, 2001, we incurred the following
Merger-related and other one-time pre-tax charges totaling $23 million and $137
million, respectively.

<Table>
<Caption>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------- --------------
2001 2000 2001 2000
----- ----- ----- -----
(DOLLARS IN MILLIONS)

Contractual settlements and legal contingencies....... $(17) $ 54 $ 34 $ 54
Severance and headcount-related charges............... (8) 49 39 49
Other Merger-related and one-time charges............. 48 13 64 17
---- ---- ---- ----
Total Merger-related and other one-time
charges................................... $ 23 $116 $137 $120
==== ==== ==== ====
</Table>

The decreases in contract settlements and severance and headcount-related
charges for the three months ended June 30, 2001 were due to adjustments of
charges accrued in prior periods. The severance charge for the six months ended
June 30, 2001 covers a workforce reduction of approximately 2,400 employees who
were involuntarily terminated. For the three months ended June 30, 2001, the
severance and headcount-related charges were more than offset by the adjustments
of prior period charges described above. Other Merger-related and one-time
charges include professional fees, re-branding costs and other costs related to
the integration of U S WEST and QCII. Additionally, other Merger-related and
one-time charges include asset impairment charges of $20 million for the three
and six months ended June 30, 2001.

For the three and six months ended June 30, 2000, we incurred $116 million
and $120 million, respectively, in Merger-related charges. These primarily
consisted of contractual settlements, severance and headcount charges

4
7
QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE AND SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)

resulting from payments to employees who left the business upon the consummation
of the Merger and retention bonus payments that were subject to the successful
completion of the Merger.

A summary as of June 30, 2001 of Merger-related charges accrued at December
31, 2000 and subsequent provisions and charges against those accruals and
provisions follows:

<Table>
<Caption>
DECEMBER 31, JUNE 30,
2000 CURRENT CURRENT 2001
BALANCE PROVISION UTILIZATION BALANCE
------------ --------- ----------- --------
(DOLLARS IN MILLIONS)

Contractual settlements and legal
contingencies............................. $355 $ 34 $158 $231
Severance and headcount-related charges..... 100 48 81 67
Other Merger-related and one-time charges... 15 55 53 17
---- ---- ---- ----
Total Merger-related and other
one-time charges................ $470 $137 $292 $315
==== ==== ==== ====
</Table>

We do not foresee any additional Merger-related charges and anticipate that
the majority of the $315 million accrual at June 30, 2001, will be paid by the
end of the fiscal year. However, legal contingencies will be paid as the related
matters are resolved. When the matters are finalized, any differences between
amounts accrued and actual payments will be reflected in results of operations
as a charge or benefit.

NOTE 3: ACCESS LINES RETURNED TO SERVICE

During 1999 and 2000, U S WEST committed to sell approximately 800,000
access lines to third-party telecommunications service providers, including
approximately 570,000 access lines to Citizens Communications Company
("Citizens"). Because these access lines were "held for sale," we discontinued
recognizing depreciation expense on these assets and recorded these assets at
the lower of their cost or fair value, less estimated cost to sell.

On July 20, 2001, we terminated our agreement with Citizens under which the
majority of the remaining access lines were to have been sold and ceased
actively marketing the remaining lines. As a result, the remaining access lines
were reclassified as being "held for use" as of June 30, 2001. The access lines
were measured individually at the lower of their (a) carrying value before they
were classified as held for sale, adjusted for any depreciation (amortization)
expense or impairment losses that would have been recognized had the assets been
continuously classified as held and used, or (b) their fair value at June 30,
2001. The required adjustments to the carrying value of the individual access
lines are included in income from continuing operations for the three and six
months ended June 30, 2001. This resulted in a charge to depreciation of $222
million.

In April 2001, we sold approximately 38,000 access lines resulting in a
gain for the three and six months ended June 30, 2001 of $50 million.

NOTE 4: SEGMENT INFORMATION

We operate in three segments: retail services, wholesale services and
network services. The retail services segment provides local telephone services,
long-distance services, wireless services and data services. The wholesale
services segment provides exchange access services that connect customers to the
facilities of interexchange carriers ("IXCs") and interconnection to our
telecommunications network to competitive local exchange carriers ("CLECs"). The
network services segment provides access to our telecommunications network,
including our information technologies, primarily to our retail services and
wholesale services segments. We provide our services to more than 25 million
residential and business customers in Arizona,

5
8
QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE AND SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)

Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota,
Oregon, South Dakota, Utah, Washington and Wyoming (our "local service area").

Following is a breakout of our segments, which we extracted from the
financial statements of QCII. Certain revenue and expenses of QCII are included
in the segment data, which we eliminated in the reconciling items column.
Additionally, because significant expenses of operating the retail services and
wholesale services segments are not allocated to such segments for decision
making purposes, management does not believe the segment margins are
representative of the actual operating results of the segments for Qwest. The
margin for the retail services and wholesale services segments excludes network
and corporate expenses. The margin for the network services segment excludes
corporate expenses. The "other" category includes unallocated corporate expenses
and revenues. Asset information by segment is not provided to our chief
operating decision-maker. The communications and related services column
represents the total of the retail services, wholesale services and network
services segments.

<Table>
<Caption>
TOTAL
COMMUNICATIONS
RETAIL WHOLESALE NETWORK AND RELATED RECONCILING CONSOLIDATED
SERVICES SERVICES SERVICES SERVICES OTHER ITEMS TOTAL
-------- --------- -------- -------------- ----- ----------- ------------
(DOLLARS IN MILLIONS)

THREE MONTHS ENDED
JUNE 30, 2001
Operating revenues......... $4,075 $763 $ 28 $4,866 $ 8 $(1,710) $3,164
Margin(1).................. 3,121 635 (1,705) 2,051 (247) (5) 1,799
Capital expenditures....... 83 -- 2,502 2,585 29 (1,194) 1,420
2000
Operating revenues......... 2,380 790 57 3,227 -- (205) 3,022
Margin(1).................. 1,510 578 (672) 1,416 (23) 90 1,483
Capital expenditures....... 175 58 1,180 1,413 -- (54) 1,359
</Table>

SIX MONTHS ENDED
JUNE 30, 2001
Operating revenues......... $7,940 $1,515 $ 84 $9,539 $ 44 $(3,300) $6,283
Margin(1).................. 6,074 1,260 (3,243) 4,091 (504) (154) 3,433
Capital expenditures....... 245 -- 5,289 5,534 23 (2,561) 2,996
2000
Operating revenues......... 4,680 1,518 115 6,313 -- (340) 5,973
Margin(1).................. 2,978 1,160 (1,333) 2,805 (93) 147 2,859
Capital expenditures....... 329 82 2,268 2,679 -- (91) 2,588
</Table>

6
9
QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE AND SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)

A reconciliation from segment margin to income before income taxes follows:

<Table>
<Caption>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------- ----------------
2001 2000 2001 2000
------ ------ ------ ------
(DOLLARS IN MILLIONS)

Segment margin.......................................... $1,799 $1,483 $3,433 $2,859
Depreciation and amortization........................... 699 577 1,373 1,141
Depreciation adjustment for access lines returned to
service............................................... 222 -- 222 --
Merger-related and other one-time charges............... 23 116 137 120
Other expense-net....................................... 100 138 239 263
------ ------ ------ ------
Income before income taxes.............................. $ 755 $ 652 $1,462 $1,335
====== ====== ====== ======
</Table>

- ---------------
(1) Segment margin represents total revenues less employee-related expenses and
other operating expenses. Segment margin does not represent cash flow for
the periods presented and should not be considered as an alternative to net
earnings as an indicator of our operating performance or as an alternative
to cash flows as a source of liquidity, and may not be comparable with
segment margin as defined by other companies.

NOTE 5: CONTINGENCIES

Through June 2001, seven purported class action complaints have been filed
in various state courts against us and U S WEST on behalf of customers in the
states of Arizona, Colorado, Minnesota, New Mexico, Oregon, Utah and Washington.
The complaints allege, among other things, that from 1993 to the present, U S
WEST, in violation of alleged statutory and common law obligations, willfully
delayed the provision of local telephone service to the purported class members.
The complaints also allege that U S WEST misrepresented the date on which such
local telephone service was to be provided to the purported class members. The
complaints seek compensatory damages for purported class members, disgorgement
of profits and punitive damages. The parties have signed agreements to settle
the complaints. As of June 2001, the settlements have been approved by all of
the courts.

Various other litigation matters have been filed against us. We intend to
vigorously defend these outstanding claims.

We have provided for the above matters in our condensed consolidated
financial statements as of June 30, 2001. We do not expect any material adverse
impacts in excess of such provision as a result of the ultimate resolution of
these matters.

NOTE 6: NEW ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations." This pronouncement eliminated the use of the "pooling of
interests" method of accounting for all mergers and acquisitions. As a result,
all mergers and acquisitions will be accounted for using the "purchase" method
of accounting. SFAS No. 141 is effective for all mergers and acquisitions
initiated after June 30, 2001. Adoption of this pronouncement has no impact on
our results from operations or our financial position.

7
10
QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
THREE AND SIX MONTHS ENDED JUNE 30, 2001
(UNAUDITED)

acquired outside of a business combination will be initially recorded at their
fair value. If the intangible asset has a finite useful life, it will be
amortized over that life. Intangible assets with an indefinite life are not
amortized. Both types of intangible assets will be reviewed annually for
impairment and a loss recorded when the asset's carrying amount exceeds its
value. Goodwill will be treated similar to an intangible asset with an
indefinite life. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001. The adoption of SFAS No. 142 will have no impact on our
consolidated financial results.

In June of 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement deals with the costs of closing
facilities and removing assets. SFAS No. 143 requires entities to record the
fair value of a legal liability for an asset retirement obligation in the period
it is incurred. This cost is initially capitalized and amortized over the
remaining life of the underlying asset. Once the obligation is ultimately
settled, any difference between the final cost and the recorded liability is
recognized as a gain or loss on disposition. SFAS No. 143 is effective for years
beginning after June 15, 2002. We are currently evaluating the impact this
pronouncement will have on our future consolidated financial results.

8
11

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or incorporates by reference "forward-looking
statements," as that term is used in federal securities laws, about Qwest
Corporation ("Qwest" or "us" or "we" or "our") financial condition, results of
operations and business. These statements include, among others:

- statements concerning the benefits that we expect will result from our
business activities and certain transactions we have completed, such as
increased revenues, decreased expenses and avoided expenses and
expenditures, and

- statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts.

These statements may be made expressly in this document or may be
incorporated by reference to other documents we will file with the Securities
and Exchange Commission ("SEC"). You can find many of these statements by
looking for words such as "believes," "expects," "anticipates," "estimates," or
similar expressions used in this report or incorporated by reference in this
report.

These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause our actual results to be materially different
from any future results expressed or implied by us in those statements.

The most important factors that could prevent us from achieving our stated
goals include, but are not limited to, the following:

- intense competition in the markets in which we compete;

- changes in demand for our 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;

- delays in Qwest's ability to provide interLATA services within its
14-state local service area; and

- failure to achieve the projected synergies and financial results expected
to result from the acquisition of U S WEST, Inc. ("U S WEST"), by Qwest
on June 30, 2000 (the "Merger"), and difficulties in combining the
operations of Qwest and U S WEST, which could affect our revenues, levels
of expenses and operating results.

Because these statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. We caution you not to place undue reliance on the
statements, which speak only as of the date of this report.

Further, the information contained in this document is a statement of our
present intention and is based upon, among other things, the existing regulatory
environment, industry conditions, market conditions and prices, the economy in
general and our assumptions. We may change our intentions, at any time and
without notice, based upon any changes in such factors, in our assumptions or
otherwise.

The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that Qwest or persons acting on our behalf may issue.

9
12

We do not undertake any obligation to review or confirm analyst's expectations
or estimates or to release publicly any revisions to any forward-looking
statements to reflect events or circumstances after the date of this report or
to reflect the occurrence of unanticipated events. In addition, we make no
representation with respect to any materials available on the Internet,
including materials available on our website.

RESULTS OF OPERATIONS

Three and Six Months Ended June 30, 2001 Compared with 2000

Certain non-recurring items impacted net income during the three and six
months ended June 30, 2001 and June 30, 2000. Results of operations for the
three and six months ended June 30, 2001 and 2000 excluding the effects of these
items are as follows:

<Table>
<Caption>
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30, JUNE 30,
-------------- ----------------
2001 2000 2001 2000
----- ----- ------- -----
(DOLLARS IN MILLIONS)

Net income.................................................. $469 $405 $ 910 $830
Non-recurring items......................................... 120 71 190 73
---- ---- ------ ----
Adjusted net income......................................... $589 $476 $1,100 $903
==== ==== ====== ====
</Table>

Non-recurring items in 2001 and 2000 include:

- an after-tax charge of $14 million and $71 million ($23 million and $116
million, pre-tax, respectively) for the three months ended June 30, 2001
and 2000, respectively, for Merger-related and other one-time charges

- an after-tax charge of $84 million and $73 million ($137 million and $120
million, pre-tax, respectively) for the six months ended June 30, 2001
and 2000, respectively, for Merger-related and other one-time charges

- an after-tax charge of $136 million ($222 million, pre-tax) for the three
and six months ended June 30, 2001 for depreciation associated with
access lines returned to service

- an after-tax gain of $30 million ($50 million, pre-tax) for the three and
six months ended June 30, 2001 for the sale of access lines.

Adjusted net income for the three and six months ended June 30, 2001
increased $113 million or 23.7% and $197 million or 21.8%, respectively, over
the same periods for 2000. The increases were primarily due to revenue growth
associated with increased demand for our wireless and data services, lower
employee benefit costs, such as pension and post-retirement, and cost savings
associated with synergies generated by the Merger. Partially offsetting these
items were higher operating costs driven by growth initiatives and higher
depreciation associated with the continued investment in our network facilities.

10
13

The following sections provide a more detailed discussion of the changes in
revenues and expenses.

<Table>
<Caption>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------------------- ---------------------------------------
2001 2000 INCREASE (DECREASE) 2001 2000 INCREASE (DECREASE)
------ ------ -------- ---------- ------ ------ -------- ----------
(DOLLARS IN MILLIONS)

Revenues:
Commercial services......................... $1,392 $1,198 $ 194 16.2% $2,739 $2,363 $ 376 15.9%
Consumer and small business services........ 1,504 1,463 41 2.8 3,000 2,892 108 3.7
Switched access services.................... 268 361 (93) (25.8) 544 718 (174) (24.2)
------ ------ ----- ------ ------ ------ ----- ------
Total revenues........................ 3,164 3,022 142 4.7 6,283 5,973 310 5.2
------ ------ ----- ------ ------ ------ ----- ------
Operating expenses:
Employee-related expenses................... 664 803 (139) (17.3) 1,444 1,601 (157) (9.8)
Other operating expenses.................... 701 736 (35) (4.8) 1,406 1,513 (107) (7.1)
Depreciation and amortization............... 699 577 122 21.1 1,373 1,141 232 20.3
Depreciation adjustment for access lines
returned to service....................... 222 -- 222 -- 222 -- 222 --
Merger-related and other one-time charges... 23 116 (93) (80.2) 137 120 17 14.2
------ ------ ----- ------ ------ ------ ----- ------
Total operating expenses.............. 2,309 2,232 77 3.4 4,582 4,375 207 4.7
------ ------ ----- ------ ------ ------ ----- ------
Operating income.............................. 855 790 65 8.2 1,701 1,598 103 6.4
Other expense-(income) net:
Interest expense-net........................ 152 125 27 21.6 299 244 55 22.5
Other (income) expense-net.................. (52) 13 (65) (500.0) (60) 19 (79) (415.8)
------ ------ ----- ------ ------ ------ ----- ------
Total other expense-net............... 100 138 (38) (27.5) 239 263 (24) (9.1)
------ ------ ----- ------ ------ ------ ----- ------
Income before income taxes.................... 755 652 103 15.8 1,462 1,335 127 9.5
Income tax provision.......................... 286 247 39 15.8 552 505 47 9.3
------ ------ ----- ------ ------ ------ ----- ------
Net income.................................... $ 469 $ 405 $ 64 15.8% $ 910 $ 830 $ 80 9.6%
====== ====== ===== ====== ====== ====== ===== ======
</Table>

REVENUES

Commercial services revenues are derived from sales of Internet, data,
voice and wireless products and services to both retail and wholesale business
customers. The increases in commercial services revenues for the three and six
months ended June 30, 2001 versus the same periods in 2000 were primarily
attributable to growth in sales of data products and services such as private
line and digital subscriber line services. We believe revenues from data
products and services will account for an increasingly larger portion of
commercial services revenue in future periods.

Consumer and small business services revenues are derived from sales of
Internet, data, voice and wireless products and services to the consumer and
small business markets. The increases in consumer and small business services
revenues for the three and six months ended June 30, 2001 as compared to the
same periods in 2000, were primarily attributable to growth in revenues from the
increased sales of wireless services and products. In both the three and six
months ended June 30, 2001, data services revenue also continued to increase
when compared to the three and six months ended June 30, 2000. For the three
months ended June 30, 2001 versus the three months ended June 30, 2000,
reductions in intraLATA toll revenue caused by increased competition offset some
of the overall increase in consumer and small business services revenue.

Switched access services revenues are derived from inter- and intra-state
switched access from interexchange carriers ("IXCs"). The decreases in switched
access services revenues for the three and six months ended June 30, 2001 as
compared to the three and six months ended June 30, 2000, were principally
attributable to increased competition and federal access reform that reduced the
rates we are able to collect for the switched access services. We believe
revenues from switched access services will continue to be negatively impacted
by federal access reform.

OPERATING EXPENSES

Employee-related expenses. Employee-related expenses include salaries and
wages, benefits, payroll taxes and contract labor.

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Employee-related expenses decreased for the three and six months ended June
30, 2001 as compared to the same periods in 2000, primarily due to employee
reductions and improvements in benefit-related costs. Improvements in
benefit-related costs are attributable to favorable returns on pension plan
assets as well as changes in employee benefits. For the six months ended June
30, 2001 and 2000, pension credits, net of other post-retirement benefits, of
$139 million and $133 million, respectively, were recorded. The decrease in
employee-related expenses associated with headcount reductions has been
partially offset by the need to increase employee levels in the growth sectors
of our business, primarily wireless and data communications. Additionally,
increased commitments towards improving customer service, including responding
to requests for installation and repair services, have resulted in the hiring of
additional employees in these areas.

Other operating expenses. Other operating expenses include access charges
paid to carriers for the routing of local and long-distance traffic through
their facilities, taxes other than income tax, and other selling and general and
administrative costs. The decreases in other operating expenses for the three
and six months ended June 30, 2001 as compared to the three and six months ended
June 30, 2000, were primarily attributable to cost savings generated by the
Merger such as the closure of redundant facilities and operational synergies and
a drop in our tax (other than income tax) obligations. Offsetting some of the
decreases were increases in our access expenses and costs associated with the
sales of data and wireless products and services.

Depreciation and amortization expense. The increases in depreciation and
amortization expense for the three and six months ended June 30, 2001 as
compared to the same periods in 2000, were primarily attributable to a one-time
charge for access lines returned to service and higher overall property, plant
and equipment balances resulting from continued investment in our network.

On July 20, 2001, we terminated our agreement with Citizens under which the
majority of the remaining access lines were to have been sold and ceased
actively marketing the remaining lines. As a result, the remaining access lines
were reclassified as being "held for use" as of June 30, 2001. The access lines
were measured individually at the lower of their (a) carrying amount before they
were classified as held for sale, adjusted for any depreciation (amortization)
expense or impairment losses that would have been recognized had the assets been
continuously classified as held and used, or (b) their fair value at June 30,
2001. The required adjustments to the carrying amount of the individual access
lines are included in income from continuing operations for the three and six
months ended June 30, 2001. This resulted in a charge to depreciation of $222
million.

Merger-related and other one-time charges. For the three and six months
ended June 30, 2001, we incurred Merger-related and other one-time pre-tax
charges totaling $23 million and $137 million, respectively. The charge for the
three months ended June 30, 2001 includes $20 million in asset impairment
charges and $28 million of other Merger-related and one-time charges. Contract
settlements and severance and headcount-related charges reflected net reductions
in costs for the current quarter of $17 million and $8 million, respectively, as
the adjustments of charges accrued in prior periods more than offset current
charges. For the six months ended June 30, 2001, Merger-related and other
one-time pre-tax charges includes $34 million in contract settlements, $39
million of severance and headcount-related charges, $20 million in asset
impairment charges and $44 million of other Merger-related and one-time charges.
The severance charge for the six months ended June 30, 2001 covers a workforce
reduction of approximately 2,400 employees who were involuntarily terminated.
Other Merger-related and one-time charges include professional fees, re-branding
costs and other costs related to the integration of U S WEST and QCII.

Other expense-net. Interest expense increased $27 million and $55 million
for the three and six months ended June 30, 2001, respectively, over the same
periods in 2000. The increases were due to higher average debt balances to fund
growth initiatives and network capital expenditures. For the three and six
months ended June 30, 2001, we recognized a $50 million gain on the sale of
approximately 38,000 access lines in Utah. The remaining change for the three
months ended June 30, 2001 was primarily attributable to a reduction in
regulatory interest
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expense. For the six months ended June 30, 2001, a decrease in regulatory
interest expense and interest income on a federal income tax refund accounted
for the remainder of the change.

Provision for income taxes. The effective tax rates for the three and six
months ended June 30, 2001 of 37.9% were consistent with the 37.8% rates for the
three and six months ended June 30, 2000.

RECENT REGULATORY DEVELOPMENTS

As a general matter, we are subject to substantial regulation, including
requirements and restrictions arising under the Telecommunication Act of 1996
(the "Act") and state utility laws, and the rules and policies of the Federal
Communications Commission ("FCC"), state Public Utility Commissions ("PUCs") and
other governmental entities. This regulation, among other matters, currently
prohibits us (with certain exceptions) from providing retail or wholesale
interLATA telecommunications services within our 14-state local service area,
and governs the terms and conditions under which we provide services to our
customers (including competing competitive local exchange carriers ("CLECs") and
IXCs in our local service area).

Interconnection. The FCC is continuing to interpret the obligations of
incumbent local exchange carriers ("ILECs") under the Act to interconnect their
networks with, and make unbundled network elements available to, CLECs. These
decisions establish our obligations in our local service area and our rights
when we compete outside of our local service area. In addition, the United
States Supreme Court is now considering an appeal from a ruling of the Eighth
Circuit Court of Appeals that the FCC's rules for the pricing of interconnection
and unbundled network elements by ILECs unlawfully preclude ILECs from
recovering their actual costs as required by the Act.

Access Pricing. The FCC has initiated a number of proceedings that directly
affect the rates and charges for access services that we sold or purchased. It
is expected that these proceedings and related implementation of resulting FCC
decisions will continue through 2002.

On May 31, 2000, the FCC adopted the access reform and universal service
plan developed by the Coalition for Affordable Local and Long-Distance Service
("CALLS"). The adoption of the CALLS proposal resolved many outstanding issues
before the FCC including: the court remand of the 6.5% productivity factor; the
treatment of implicit universal service support; the treatment of low-volume
long-distance users; and the next scheduled price cap review. The CALLS plan has
a five year life and provides for the following: elimination of the residential
presubscribed interexchange carrier charge; increases in subscriber line
charges; reductions in switched access usage rates; the removal of certain
implicit universal service support from access charges and direct recovery from
end users; and commitments from participating IXCs to pass through access charge
reductions to end users. We have opted into the five-year CALLS plan.

Advanced Telecommunications Services. On two separate occasions the FCC has
ruled that advanced services provided by an ILEC are covered by those provisions
of the Act that govern telephone exchange and exchange access services. We have
challenged this finding, contending that advanced services fit within neither
category and are not properly treated as exchange services. On April 20, 2001,
the Court of Appeals vacated and remanded to the FCC its classification of
DS2-based advanced services.

InterLATA Long-Distance Entry. Several Regional Bell Operating Companies
("RBOCs") have filed for entry into the interLATA long-distance business.
Although many of these applications have been supported by state PUCs, the FCC
had rejected all applications until December 1999. As of June 30, 2001,
long-distance authority has been granted in the states of New York, Kansas,
Oklahoma, Texas, Massachusetts and Connecticut.

We filed applications with all of our local service area state PUCs for
support of our planned applications to the FCC for authority to enter the
interLATA long-distance business. Workshops and related proceedings are underway
at the state level to evaluate our satisfaction of requirements under the Act
that must be met in order for an RBOC to obtain long-distance authority. We have
agreed to test operational support systems on a regional basis in thirteen
states, and testing of those systems began in March 2001. Testing in Arizona is
being conducted separately, and began in February 2001. We expect to file FCC
applications for at least one state by the end of 2001 with the remaining
applications to be filed with the FCC at the end of 2001 or in early 2002.

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Reciprocal Compensation for Internet Service Providers ("ISPs"). On April
27, 2001, the FCC issued an Order with regard to Intercarrier Compensation for
ISP bound traffic. The Order required carriers serving ISP bound traffic to
reduce reciprocal compensation rates over a 36 month period beginning with an
initial reduction to $0.0015 per minute of use and ending with a rate of $0.0007
per minute of use. In addition, a cap was placed on the number of minutes of use
on which the terminating carrier may charge such rates. This reduction will
lower costs that Qwest pays CLECs for delivering such traffic to other carriers.

NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement establishes
accounting and reporting standards for derivative instruments and hedging
activities. SFAS No. 133 requires, among other things, that all derivative
instruments be recognized at fair value as assets or liabilities in the
consolidated balance sheets and changes in fair value generally be recognized
currently in earnings unless specific hedge accounting criteria are met. The
adoption of SFAS No. 133 on January 1, 2001 did not have a material impact on
our consolidated financial results.

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." This
statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishment of liabilities. SFAS No. 140
requires that after a transfer of financial assets, an entity continues to
recognize the financial and servicing assets it controls and the liabilities it
has incurred and does not recognize those financial and servicing assets when
control has been surrendered and the liability has been extinguished. SFAS No.
140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. Adoption of SFAS
No. 140 did not have a material impact on our consolidated financial results.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations." This
pronouncement eliminated the use of the "pooling of interests" method of
accounting for all mergers and acquisitions. As a result, all mergers and
acquisitions will be accounted for using the "purchase" method of accounting.
SFAS No. 141 is effective for all mergers and acquisitions initiated after June
30, 2001. Adoption of this pronouncement has no impact on our results from
operations or our financial position.

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." This statement addresses financial accounting and reporting for
intangible assets (excluding goodwill) acquired individually or with a group of
other assets at the time of their acquisition. It also addresses financial
accounting and reporting for goodwill and other intangible assets subsequent to
their acquisition. Intangible assets (excluding goodwill) acquired outside of a
business combination will be initially recorded at their fair value. If the
intangible asset has a finite useful life, it will be amortized over that life.
Intangible assets with an indefinite life are not amortized. Both types of
intangible assets will be reviewed annually for impairment and a loss recorded
when the asset's carrying amount exceeds its value. Goodwill will be treated
similar to an intangible asset with an indefinite life. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. The adoption of
SFAS No. 142 will have no impact on our consolidated financial results.

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PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On July 23, 2001, we filed a demand for arbitration against Citizens
Communications alleging that it breached Agreements for Purchase and Sale of
Telephone Exchanges dated as of June 16, 1999, between Citizens Utilities
Company and U S WEST Communications, Inc., with respect to the purchase and sale
of exchanges in Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska and
Wyoming. The demand for arbitration was filed after Citizens Communications
failed to close the exchange sales in violation of the terms of the Purchase
Agreements.

For a discussion of other claims and proceedings arising in the ordinary
course of business, see Note 5: "Contingencies" -- to the condensed consolidated
financial statements.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibits identified in parentheses below, on file with the United States
Securities and Exchange Commission, are incorporated herein by reference as
exhibits hereto. All other exhibits are provided as part of this electronic
submission.

<Table>
<Caption>
EXHIBIT
NUMBER
- -------

(2.1) -- Reorganization and Divestiture Agreement, dated as of
November 1, 1983, between American Telephone and
Telegraph Company, U S WEST Inc., and certain of their
affiliated companies, including The Mountain States
Telephone and Telegraph Company, Northwestern Bell
Telephone Company, Pacific Northwest Bell Telephone
Company and NewVector Communications, Inc. (Exhibit 10a
to Form 10-K for the period ended December 31, 1983, File
No. 1-3040).
(2.2) -- Articles of Merger including the Plan of Merger between
The Mountain States Telephone and Telegraph Company
(renamed U S West Communications, Inc.) and Northwestern
Bell Telephone Company. (Incorporated herein by this
reference to Exhibit 2a to Form SE filed on January 8,
1991, File No. 1-3040).
(2.3) -- Articles of Merger including the Plan of Merger between
The Mountain States Telephone and Telegraph Company
(renamed U S WEST Communications, Inc.) and Pacific
Northwest Bell Telephone Company. (Incorporated herein by
this reference to Exhibit 2b to Form SE filed on January
8, 1991, File No. 1-3040).
(3.1) -- Amended Articles of Incorporation of the Registrant filed
with the Secretary of State of Colorado on July 6, 2000,
evidencing change of Registrant's name from U S WEST
Communications, Inc. to Qwest Corporation (incorporated
by reference to Qwest Corporation's quarterly report on
Form 10-Q for the quarter ended June 30, 2000).
(3.2) -- Restated Articles of Incorporation of the Registrant.
(Incorporated herein by this reference to Exhibit 3a to
Form 10-K filed on April 13, 1998, File No. 1-3040.)
(3.3) -- Bylaws of the Registrant, as amended. (Incorporated
herein by this reference to Exhibit 3b to Form 10-K filed
on April 13, 1998, File No. 1-3040.)
(4.1) -- No instrument which defines the rights of holders of long
and intermediate term debt of the Registrant is filed
herewith pursuant to Regulation S-K, Item 601(b) (4)
(iii) (A). Pursuant to this regulation, the Registrant
hereby agrees to furnish a copy of any such instrument to
the SEC upon request.
(4.2) -- Indenture, dated as of October 15, 1999, by and between U
S WEST Communications, Inc. and Bank One Trust Company,
NA, as Trustee (Exhibit 4b to Form 10-K for the period
ended December 31, 1999, File No. 1-3040).
</Table>

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<Table>
<Caption>
EXHIBIT
NUMBER
- -------

(10.1) -- Form of Agreement for Purchase and Sale of Telephone
Exchanges, dated as of June 16, 1999, between Citizens
Utilities Company and U S WEST Communications, Inc.
(Exhibit 99-B to Form 8-K dated June 16, 1999, File No.
1-3040).
(10.4) -- 364-Day $4.0 billion Credit Agreement, dated as of May 5,
2000, among U S WEST Capital Funding, Inc., the Company
and U S WEST, Inc., the banks listed therein and Morgan
Guaranty Trust Company of New York, as administrative
agent (Exhibit 10-L to Form 10-Q for the period ended
March 31, 2000, File No. 1-3040).
(10.5) -- Purchase Agreement, dated as of June 5, 2000, among U S
WEST Communications, Inc. and Lehman Brothers Inc.,
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Banc of America Securities LLC, and
J.P. Morgan Securities Inc. as Representatives of the
Initial Purchasers listed therein (Exhibit 1.A to Form
S-4 filed October 11, 2000).
(10.6) -- Registration Rights Agreement, dated as of June 5, 2000,
among U S WEST Communications, Inc. and the Initial
Purchasers listed therein (Exhibit 4.A to Form S-4 filed
October 11, 2000).
(10.7) -- 364-Day $4.0 billion Credit Agreement, dated as of May 4,
2001, among Qwest Capital Funding, Inc., Qwest
Corporation, Qwest Communications International Inc., the
banks listed therein and Bank of America, N.A., as
administrative agent (incorporated by reference to
Exhibit 10.38 to Qwest Communications International
Inc.'s quarterly report on Form 10-Q for the period ended
March 31, 2001).
</Table>

- ---------------
( ) Previously filed.

(b) Reports on Form 8-K filed during the second quarter of 2001.

(i) Qwest has not filed a Form 8-K during the period.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Qwest Corporation

By: /s/ MARK A. SCHUMACHER
------------------------------------
Mark A. Schumacher
Controller

August 14, 2001