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

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

FORM 10-Q

(Mark One)
[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 000-22609

QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

<Table>

DELAWARE 84-1339282
(State or other jurisdiction of (I.R.S. Employer
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)

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 [ ]

At July 31, 2001, 1,663,721,480 shares of common stock were outstanding.

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2

QWEST COMMUNICATIONS INTERNATIONAL INC.
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................................... 15
3. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 22
PART II -- OTHER INFORMATION
1. Legal Proceedings........................................... II-1
4. Submission of Matters to a Vote of Security Holders......... II-1
6. Exhibits and Reports on Form 8-K............................ II-3
Signature page.............................................. II-8
</Table>

i
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QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)

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

Revenues:
Commercial services................................. $ 2,898 $1,252 $ 5,647 $2,459
Consumer and small business services................ 1,708 1,506 3,392 2,972
Directory services.................................. 348 331 690 678
Switched access services............................ 268 361 544 718
------- ------ ------- ------
Total revenues.............................. 5,222 3,450 10,273 6,827
------- ------ ------- ------
Operating expenses:
Cost of services.................................... 1,850 830 3,646 1,695
Selling, general and administrative................. 1,343 1,061 2,601 2,066
Depreciation........................................ 865 600 1,697 1,186
Depreciation adjustment for access lines returned to
service.......................................... 222 -- 222 --
Goodwill and other intangible amortization.......... 392 -- 711 --
Merger-related and other one-time charges........... 415 291 624 306
------- ------ ------- ------
Total operating expenses.................... 5,087 2,782 9,501 5,253
------- ------ ------- ------
Operating income...................................... 135 668 772 1,574
Other expense (income) - net:
Interest expense - net.............................. 343 207 681 418
Investment write-downs.............................. 3,108 447 3,247 447
Decline in market value of financial instruments.... 23 192 -- 321
Gain on sale of rural exchanges..................... (50) -- (50) --
Gain on sale of investments......................... -- -- -- (79)
Other expense - net................................. 14 15 34 14
------- ------ ------- ------
Total other expense - net................... 3,438 861 3,912 1,121
------- ------ ------- ------
(Loss) income before income taxes and extraordinary
item................................................ (3,303) (193) (3,140) 453
Income tax provision (benefit)........................ 3 (72) 147 170
------- ------ ------- ------
(Loss) income before extraordinary item............... (3,306) (121) (3,287) 283
Extraordinary item - early retirement of debt, net of
tax................................................. -- -- (65) --
------- ------ ------- ------
Net (loss) income..................................... $(3,306) $ (121) $(3,352) $ 283
======= ====== ======= ======
Basic (loss) earnings per share:
(Loss) income before extraordinary item............. $ (1.99) $(0.14) $ (1.98) $ 0.32
Extraordinary item - early retirement of debt, net
of tax........................................... -- -- (0.04) --
------- ------ ------- ------
Basic (loss) earnings per share....................... $ (1.99) $(0.14) $ (2.02) $ 0.32
======= ====== ======= ======
Basic average shares outstanding...................... 1,661 887 1,659 882
======= ====== ======= ======
Diluted (loss) earnings per share:
(Loss) income before extraordinary item............. $ (1.99) $(0.14) $ (1.98) $ 0.32
Extraordinary item - early retirement of debt, net
of tax........................................... -- -- (0.04) --
------- ------ ------- ------
Diluted (loss) earnings per share..................... $ (1.99) $(0.14) $ (2.02) $ 0.32
======= ====== ======= ======
Diluted average shares outstanding.................... 1,661 887 1,659 895
======= ====== ======= ======
Dividends per share................................... $ 0.05 $ 0.00 $ 0.05 $ 0.31
======= ====== ======= ======
</Table>

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

1
4

QWEST COMMUNICATIONS INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT SHARE AND PER SHARE AMOUNTS)

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

ASSETS
Current assets:
Cash and cash equivalents................................. $ 516 $ 154
Accounts receivable - net................................. 4,842 4,235
Inventories and supplies.................................. 352 275
Prepaid and other......................................... 707 535
------- -------
Total current assets........................................ 6,417 5,199
Property, plant and equipment - net......................... 29,050 25,760
Goodwill and other intangible assets - net.................. 34,688 32,327
Investments................................................. 1,571 8,186
Other assets................................................ 2,180 2,029
------- -------
Total assets................................................ $73,906 $73,501
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current borrowings........................................ $ 5,859 $ 3,645
Accounts payable.......................................... 2,426 2,049
Accrued expenses and other current liabilities............ 3,272 3,806
Advance billings and customer deposits.................... 383 393
------- -------
Total current liabilities................................... 11,940 9,893
Long-term borrowings........................................ 17,575 15,421
Post-retirement and other post-employment benefit
obligations............................................... 2,927 2,735
Deferred taxes, credits and other........................... 4,178 4,148

Commitments and contingencies (Note 8)

Stockholders' equity:
Preferred stock - $1.00 par value, 200 million shares
authorized, none issued and outstanding................ -- --
Common stock - $0.01 par value, 5 billion shares
authorized, 1,685 million and 1,672 million issued,
1,663 million and 1,672 million outstanding............ 17 17
Additional paid-in capital................................ 41,740 41,289
Treasury stock............................................ (1,000) --
Retained (deficit) earnings............................... (3,411) 24
Accumulated other comprehensive loss...................... (60) (26)
------- -------
Total stockholders' equity.................................. 37,286 41,304
------- -------
Total liabilities and stockholders' equity.................. $73,906 $73,501
======= =======
</Table>

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

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QWEST COMMUNICATIONS INTERNATIONAL INC.

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

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

Cash provided by operating activities..................... $2,307 $1,799
------ ------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment............ (5,559) (2,702)
Proceeds from sale of equity securities................... -- 1,140
Cash acquired in connection with the Merger............... -- 407
Other..................................................... 91 (206)
------ ------
Cash used for investing activities........................ (5,468) (1,361)
------ ------
FINANCING ACTIVITIES
Net proceeds from current borrowings...................... 2,296 89
Proceeds from issuance of long-term borrowings -- net..... 3,238 992
Repayments of long-term borrowings........................ (1,102) (270)
Costs relating to the early retirement of debt............ (106) --
Proceeds from issuance of common stock.................... 280 115
Repurchase of stock....................................... (1,000) --
Dividends paid on common stock............................ (83) (542)
------ ------
Cash provided by financing activities..................... 3,523 384
------ ------
CASH AND CASH EQUIVALENTS
Increase.................................................. 362 822
Beginning balance......................................... 154 78
------ ------
Ending balance............................................ $ 516 $ 900
====== ======
</Table>

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

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QWEST COMMUNICATIONS INTERNATIONAL INC.

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

NOTE 1: BASIS OF PRESENTATION

The condensed consolidated interim financial statements are unaudited.
Qwest Communications International Inc. ("Qwest" or the "Company" or "we" or
"us" or "our") prepared these 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. In management's opinion, all adjustments
(consisting only of normal recurring adjustments) necessary to fairly present
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 Qwest's Annual Report on Form 10-K for the year
ended December 31, 2000. The 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.

Certain reclassifications have been made to previously reported balances to
conform with the current year presentation. Specifically, during the quarter
ended June 30, 2001, we refined the definitions and processes by which expenses
are classified as cost of services or selling, general and administrative
expenses. As a result, these costs have been reclassified from cost of services
to selling, general and administrative expenses for all periods presented. See
Qwest's Current Report on Form 8-K, filed July 20, 2001, for additional
information.

NOTE 2: MERGER WITH U S WEST

Final purchase price allocation. On June 30, 2000, Qwest completed its
acquisition (the "Merger") of U S WEST, Inc. ("U S WEST"). U S WEST was deemed
the accounting acquirer and its historical financial statements have been
carried forward as those of the combined company. In connection with the Merger,
each outstanding share of U S WEST common stock was converted into the right to
receive 1.72932 shares of Qwest common stock. In addition, all outstanding U S
WEST stock options were converted into options to acquire Qwest common stock.
All share and per share amounts have been restated to give retroactive effect to
the exchange ratio.

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 Qwest (prior to the Merger or "pre-Merger Qwest") the acquired entity. The
total value of the consideration was approximately $40.0 billion, which has been
allocated to the identifiable tangible and intangible assets of pre-Merger
Qwest. During the second quarter of 2001, we completed the allocation of the
purchase price to the acquired net assets of pre-Merger Qwest as follows:

<Table>
<Caption>
PRELIMINARY FINAL
PURCHASE PURCHASE
PRICE PRICE
ALLOCATION ADJUSTMENT ALLOCATION
(DOLLARS IN BILLIONS) ----------- ---------- ----------

Identified intangibles............................ $ 4.1 $ -- $ 4.1
Investment in KPNQwest, N.V. ..................... 7.9 (3.1) 4.8
Tangible assets and liabilities, net.............. 0.8 0.3 1.1
Deferred income taxes............................. (0.7) (0.1) (0.8)
Goodwill.......................................... 27.9 2.9 30.8
----- ----- -----
Purchase consideration............................ $40.0 $ -- $40.0
===== ===== =====
</Table>

The identifiable intangibles consist of the following (including related
amortization periods): $2.2 billion in product technology (10 years), $1.2
billion in customer relationships (10 years), $100 million in assembled

4
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

workforce (3 years) and $600 million in tradename value (40 years). There was no
change between the preliminary purchase price allocation of identifiable
intangibles and the final independent appraisal.

Prior to the Merger, pre-Merger Qwest's investment in KPNQwest, N.V.
("KPNQwest") was approximately $552 million. The preliminary purchase price
allocation of $7.9 billion was based upon the publicly traded share price at the
date of the Merger and did not consider restrictions related to our investment
in KPNQwest. To properly value the investment, we obtained an independent
appraisal that was completed in June 2001. The appraisal resulted in a final
purchase price allocation of $4.8 billion, requiring an adjustment to the
preliminary purchase price allocation of $3.1 billion. The excess carrying value
of our investment in KPNQwest over our proportionate share of KPNQwest's net
equity will be amortized over 10 years.

At the time of the Merger, pre-Merger Qwest had net tangible assets with a
book value of approximately $3.0 billion. To properly record the fiber optic
network at fair value, we obtained an independent appraisal that was completed
in June 2001. The appraisal resulted in a reduction of property, plant and
equipment of approximately $1.1 billion. The reduction in carrying value was
principally due to declining replacement costs for fiber optic network assets.
There were no significant differences between the preliminary purchase price
allocation and the final appraised values for property, plant and equipment. The
remaining reduction in net tangible assets related principally to increased
liabilities associated with severance costs for pre-Merger Qwest employees,
costs to terminate redundant contracts, adjustments to the fair value of
pre-Merger Qwest's obligations and transaction costs incurred by Qwest (the
legal acquirer) to consummate the Merger. The preliminary allocation of purchase
price to net tangible assets has been adjusted upward by approximately $300
million based upon information obtained subsequent to the preliminary purchase
price allocation.

We recorded deferred income taxes in the purchase price allocation,
resulting from adjustments to the Company's tangible assets and liabilities and
from recording the identifiable intangible assets. Because of the tax-free
nature of the Merger, there was no corresponding increase in the tax basis of
those assets and liabilities.

The final purchase price allocation has resulted in goodwill of
approximately $30.8 billion which will be amortized on a straight-line basis
over 40 years.

The operating results of pre-Merger Qwest have been included in the
consolidated statement of operations from the Merger date (June 30, 2000). The
unaudited results of operations for the three and six months ended June 30, 2001
and the pro forma, unaudited results of operations for the three and six months
ended June 30, 2000 (as though the Merger had been completed as of the beginning
of 2000) are as follows (dollars in millions, except for per share amounts):

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

Revenues.................................. $ 5,222 $4,654 $10,273 $9,171
Net loss.................................. (3,306) (349) (3,352) (166)
Diluted loss per share.................... $ (1.99) $(0.21) $ (2.02) $(0.10)
</Table>

The pro forma results of operations for the three and six month periods
ended June 30, 2000, are not necessarily indicative of what the actual results
of operations might have been if the Merger had been effective at the beginning
of 2000.

Merger-related and other one-time charges. We consider only those costs
that are incremental and directly related to the Merger to be "Merger-related."
For the three and six months ended June 30, 2001, we incurred the following
Merger-related and other one-time charges totaling $415 million and $624
million, respectively.

5
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

Contractual settlements and legal contingencies....... $218 $ 53 $274 $ 53
Severance and headcount-related charges............... 84 226 199 236
Other Merger-related and one-time charges............. 113 12 151 17
---- ---- ---- ----
Total Merger-related and other one-time
charges................................... $415 $291 $624 $306
==== ==== ==== ====
</Table>

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
Qwest. Additionally, other Merger-related and one-time charges include asset
impairment charges of $31 million and $41 million for the three and six months
ended June 30, 2001, respectively. Since the Merger, we have reduced staffing
levels by approximately 12,700 employees and contractors.

For the three and six months ended June 30, 2000, we incurred $291 million
and $306 million, respectively in Merger-related costs. These primarily
consisted of severance and headcount charges 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 and other one-time
charges accrued at December 31, 2000 and subsequent provisions and charges
against those accruals and provisions follows:

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

Contractual settlements and legal
contingencies...................... $376 $274 $168 $482
Severance and headcount-related
charges............................ 130 199 213 116
Other Merger-related and one-time
charges............................ 17 151 145 23
---- ---- ---- ----
Total Merger-related and
other one-time charges... $523 $624 $526 $621
==== ==== ==== ====
</Table>

We do not foresee any additional Merger-related charges and anticipate that
the majority of the $621 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

6
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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: INVESTMENT WRITE-DOWNS AND DECLINE IN MARKET VALUE OF FINANCIAL
INSTRUMENTS

Investment write-downs. The following is a summary of the investment
write-downs recorded during the periods indicated.

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

KPNQwest investment................................ $3,048 $ -- $3,048 $ --
Lucent Technology, Inc. investment................. 36 -- 36 --
Other investment losses............................ 24 447 163 447
------ ---- ------ ----
Total investment write-downs....................... $3,108 $447 $3,247 $447
====== ==== ====== ====
</Table>

We review our portfolio of equity securities on a quarterly basis. Many
factors are considered in assessing whether a decline in value is other than
temporary, including, as may be appropriate:

- Earnings trends and asset quality

- Near term prospects and financial condition of the issuer

- Financial condition and prospects of the issuer's region and industry

- The cause and severity of the decline in market price

- Analysts recommendations and stock price projections

- The length of time market value was less than the carrying value

- Stock price volatility and near term potential for recovery

- Qwest's intent and ability to retain the investment

As a result of the review of our portfolio of equity securities for the
three months ended June 30, 2001, we recorded a charge of $3.1 billion to reduce
the carrying values of our investments to their estimated fair values.

KPNQwest equity investment. In March 1999, KPN Telecom B.V. ("KPN") and
pre-Merger Qwest formed a corporate joint venture ("KPNQwest"). The carrying
value of Qwest's investment in KPNQwest at the date of the Merger was $552
million. On June 30, 2000, our preliminary estimate of the value of our
investment in KPNQwest, was $7.9 billion, based upon the closing price of the
11% publicly traded minority stake of $39.625 per share on that date. However,
because our investment in KPNQwest is subject to a number of restrictions, the
fair value of our investment was ultimately determined by an independent
appraisal.

As part of the finalization of the purchase price allocation, we engaged an
independent appraiser to perform a valuation of our investment in KPNQwest as of
June 30, 2000. The appraisal was completed in June 2001, and indicated a fair
value for our investment in KPNQwest of $4.8 billion or $23.775 per share.

7
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At June 30, 2001, we evaluated our investment in KPNQwest and concluded
that the decline in fair value was other than temporary. Factors considered in
reaching this conclusion included the following, among others:

1. KPNQwest's stock price had remained at approximately $11 per share
throughout the second quarter. The period of time the market price was
below our carrying value of $23.775 per share and the severity of the
decline indicated that the decline had become other than temporary.

2. Analysts had released new recommendations during the quarter of their
stock price targets for KPNQwest which showed a significant decline from
the first quarter.

3. The European telecom sector had experienced a severe deterioration
during the quarter, including numerous bankruptcies, making the near
term prospects of KPNQwest's stock recovery less certain at June 30,
2001.

As a result of the evaluation of our investment in KPNQwest, we concluded
that the fair value of our investment at June 30, 2001, was $1.3 billion and
took a charge of $3.048 billion to reduce the carrying value to the estimated
fair value of the investment.

Other investments. During the three and six months ended June 30, 2001, we
concluded that several other investments in equity securities had experienced
declines in fair value that were other than temporary. These losses made up the
majority of our charges of $60 million and $199 million for the three months and
six months ended June 30, 2001, respectively.

Included in these charges for the three and six months ended June 30, 2001
was a charge for $36 million relating to our investment in Lucent Technology,
Inc. ("Lucent"). Although the market price for Lucent stock had declined below
our carrying value as of March 31, 2001, we concluded that insufficient evidence
existed to reach a conclusion that the decline was not temporary. Factors
considered in reaching that conclusion included Lucent's earnings trends,
financial health (including debt and analyst ratings), asset quality, executive
management changes, restructuring plans, large customer contract announcements
and actions taken to reduce headcount, capital and other expenditures. In
addition, we considered the potential acquisition of Lucent by a large, European
telecommunications equipment manufacturer.

At June 30, 2001, we again evaluated our investment in Lucent and concluded
that the decline in fair value was other than temporary. Factors considered in
reaching this conclusion included the following:

1. An additional three months of declines in the Lucent stock price.

2. The magnitude by which Lucent did not meet analysts' first quarter 2001
earnings estimates.

3. A decline in the number of analysts with buy recommendations.

4. The announced termination of merger discussions with the large European
telecommunications equipment manufacturer.

As a result of the evaluation of our investment in Lucent, we concluded
that the fair value of the investment at June 30, 2001 was $4.2 million and took
a charge of $36 million to reduce the investment from its carrying value to its
fair value.

For the three and six months ended June 30, 2000, we recorded charges of
$447 million associated with an other than temporary decline in our Global
Crossing Ltd. ("Global Crossing") investment.

Decline in market value of derivatives. We hold derivatives associated
with our previously-owned equity investment in Global Crossing. These
derivatives are recorded at market value with any change in market value taken
immediately to income. Due to a decline in the market value of the derivatives,
we recorded a charge of $23 million for the three months ended June 30, 2001.
There was no net charge for the six months ended June 30, 2001 as the loss in
the second quarter was fully offset by the gain in the first quarter of 2001.
For the three and six

8
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

months ended June 30, 2000, the charges were $192 million and $321 million,
respectively. The derivative contracts outstanding at June 30, 2001 will expire
in August 2001.

NOTE 5: WEIGHTED AVERAGE SHARES

The following table is a reconciliation of basic weighted average shares to
diluted weighted average shares. The 2000 shares have been adjusted to reflect
the conversion of the U S WEST shares into Qwest shares due to the Merger.

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

Basic weighted average shares outstanding............. 1,661 887 1,659 882
Dilutive effect of stock options...................... -- -- -- 13
----- --- ----- ---
Diluted weighted average shares outstanding........... 1,661 887 1,659 895
===== === ===== ===
</Table>

For the three and six months ended June 30, 2001, 125 million and 125
million options, respectively, were excluded from the earnings per share
computation solely because the effect was anti-dilutive. Anti-dilutive options
for the three months ended June 30, 2000 were 13 million.

NOTE 6: SEGMENT INFORMATION

We operate in four segments: retail services, wholesale services, network
services and directory 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. The directory services
segment publishes White and Yellow Pages telephone directories and provides
electronic directory and other information services. We provide the majority of
our services to more than 25 million residential and business customers in
Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New Mexico, North
Dakota, Oregon, South Dakota, Utah, Washington and Wyoming (our "local service
area").

9
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QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Following is a breakout of our segments. The accounting principles used are
the same as those used in the condensed consolidated financial statements. The
"other" category includes unallocated corporate expenses and revenues. We
internally track, separately, only the assets of our directory services segment
and all remaining assets are included as a reconciling item. Reconciling items
also includes other adjustments.

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

THREE MONTHS ENDED JUNE
30,
2001
External revenues...... $4,075 $763 $ 28 $4,866 $ 348 $ 8 $ -- $ 5,222
EBITDA(1).............. 3,121 635 (1,705) 2,051 225 (247) -- 2,029
Assets................. -- -- -- -- 1,678 -- 72,228 73,906
Capital expenditures... 83 -- 2,502 2,585 2 29 -- 2,616
2000
External revenues...... 2,380 790 57 3,227 332 (109) -- 3,450
EBITDA(1).............. 1,510 578 (672) 1,416 166 (23) -- 1,559
Assets................. -- -- -- -- 741 -- 69,107 69,848
Capital expenditures... 175 58 1,180 1,413 12 -- -- 1,425
</Table>

SIX MONTHS ENDED
JUNE 30,
2001
External revenues...... $7,940 $1,515 $ 84 $9,539 $ 690 $ 44 $ -- $10,273
EBITDA(1).............. 6,074 1,260 (3,243) 4,091 439 (504) -- 4,026
Assets................. -- -- -- -- 1,678 -- 72,228 73,906
Capital expenditures... 245 -- 5,289 5,534 2 23 -- 5,559
2000
External revenues...... 4,680 1,518 115 6,313 678 (164) -- 6,827
EBITDA(1).............. 2,978 1,160 (1,333) 2,805 356 (95) -- 3,066
Assets................. -- -- -- -- 741 -- 69,107 69,848
Capital expenditures... 329 82 2,268 2,679 23 -- -- 2,702
</Table>

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

(1) Earnings before interest, income taxes, depreciation and amortization
("EBITDA") does not include non-recurring and non-operating items such as
Merger-related and other one-time charges, investment write-downs,
gains/losses on the sale of investments, declines in the market value of
financial instruments and gains on sales of rural exchanges. EBITDA does not
represent cash flow for the periods presented and should not be considered
as an alternative to net (loss) earnings as an indicator of operating
performance or as an alternative to cash flows as a source of liquidity, and
may not be comparable with EBITDA as defined by other companies.

10
13
QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation from Segment EBITDA to (loss) earnings before income taxes
and extraordinary item follows:

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

Segment EBITDA................................ $ 2,029 $1,559 $ 4,026 $3,066
Less:
Depreciation and amortization............... 1,479 600 2,630 1,186
Merger-related and other one-time charges... 415 291 624 306
Other expense -- net........................ 3,438 861 3,912 1,121
------- ------ ------- ------
(Loss) earnings before income taxes and
extraordinary item.......................... $(3,303) $ (193) $(3,140) $ 453
======= ====== ======= ======
</Table>

NOTE 7: OTHER COMPREHENSIVE (LOSS) INCOME

Comprehensive (loss) income for the three and six months ended June 30,
2001 and 2000 are as follows:

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

Net (loss) income................................ $(3,306) $(121) $(3,352) $283
Other comprehensive (loss) income:
Net unrealized gains (losses) on
available-for-sale marketable securities, net
of deferred taxes.............................. 23 62 21 (60)
Foreign currency translation..................... (17) -- (54) --
------- ----- ------- ----
Comprehensive (loss) income...................... $(3,300) $ (59) $(3,385) $223
======= ===== ======= ====
</Table>

Net unrealized gains for the quarters ended June 30, 2001 and 2000 were net
of deferred tax expenses of $16 million and $39 million, respectively. Net
unrealized gains and losses for the six months ended June 30, 2001 and 2000 were
net of deferred tax expenses (benefits) of $13 million and ($40) million,
respectively.

Embedded in net unrealized gains and losses on available-for-sale
marketable securities are reclassification adjustments. Reclassification
adjustments are comprised of amounts that have been removed from comprehensive
income and recognized in income or loss from operations in the condensed
consolidated statement of operations during the periods cited below. For the
three and six months ended June 30, 2001, unrealized gains and losses on
marketable securities included reclassification adjustments of $27 million of
losses (net of deferred tax benefits of $17 million) and $36 million of losses
(net of deferred tax benefits of $23 million), respectively, pertaining to other
than temporary impairments of our investments in certain marketable equity
securities.

For the three and six months ended June 30, 2000, unrealized gains (losses)
on marketable securities include reclassification adjustments of $49 million
(net of deferred tax expenses of $30 million) pertaining to realized gains from
the sale of securities.

NOTE 8: COMMITMENTS AND CONTINGENCIES

COMMITMENTS

Minimum Usage Requirements. We have agreements with IXCs and third party
vendors that require us to maintain minimum monthly and/or annual billings based
on usage. We believe that we will meet substantially all minimum usage
commitments. Where requirements have not been met, we have recorded appropriate
charges.

11
14
QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

We have reflected in our financial statements the financial impact of all
current, unmet minimum usage requirements.

CONTINGENCIES

In January 2001, an amended purported class action complaint was filed in
Denver District Court against us and certain current and former officers and
directors on behalf of stockholders of U S WEST. The complaint alleges that we
have a duty to pay a quarterly dividend to U S WEST stockholders of record as of
June 30, 2000. Plaintiffs further claim that the defendants' efforts to close
the Merger in advance of the record date and the defendants' failure to pay the
dividend breaches fiduciary duties owed to stockholders of U S WEST. In June
2000, the court rejected the plaintiffs' motion for a temporary restraining
order attempting to prevent the closing of the Merger. We have filed a motion to
dismiss the complaint, which is pending.

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.

In April 1999, CSX Transportation, Inc. filed a complaint in federal
district court in Jacksonville, Florida against us claiming breach of a 1995
contract. Discovery in the case is ongoing, and trial is scheduled to commence
in October 2001.

Through June 2001, several purported class actions have been filed in
various courts against us on behalf of landowners in California, Colorado,
Georgia, Illinois, Indiana, Kansas, Louisiana, Mississippi, Missouri, Oregon,
South Carolina, Tennessee and Texas. The complaints challenge our right to
install our fiber optic cable network in railroad rights-of-way and in
California, Colorado, Illinois, South Carolina and Texas, also challenged our
right to install fiber optic cable in utility and pipeline rights of way. The
complaints allege that the railroads, utilities and pipeline companies own a
limited property right-of-way that did not include the right to permit us to
install our fiber optic cable network on the plaintiffs' property. The Indiana
action purports to be on behalf of a national class of landowners adjacent to
railroad rights-of-way over which our network passes. The California, Colorado,
Georgia, Kansas, Louisiana, Mississippi, Missouri, Oregon, Tennessee and Texas
actions purport to be on behalf of a class of such landowners in California,
Colorado, Georgia, Kansas, Louisiana, Mississippi, Missouri, Oregon, Tennessee
and Texas, respectively. The Illinois action purports to be on behalf of
landowners adjacent to railroad rights-of-way over which our network passes in
Illinois, Iowa, Kentucky, Michigan, Minnesota, Nebraska, Ohio and Wisconsin. The
South Carolina action purports to be on behalf of landowners adjacent to
railroad rights-of-way over which our network passes in Georgia, North Carolina,
South Carolina and Virginia. The complaints seek damages on theories of trespass
and unjust enrichment, as well as punitive damages. None of the complaints have
been certified by a court as an appropriate state-wide or national class action.
In Tennessee, the court certified a class of a small number of counties, and
that ruling is on appeal. We have received, and may in the future receive,
additional claims and demands that may be based on similar or different legal
theories.

From March 2, 2000 to March 9, 2000, five purported class action complaints
were filed against us in state court in Delaware on behalf of Qwest
stockholders. The complaints allege that we and our directors breached our
fiduciary duty by entering into the Merger and by agreeing not to solicit
alternative transactions. Since the filing of the complaints, there has been no
discovery or other activity in the cases.

12
15
QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

On March 17, 2000 and March 20, 2000, two class action complaints were
filed in federal district court in Delaware against Qwest and Joseph Nacchio on
behalf of U S WEST stockholders. The complaints allege, among other things, that
Qwest and Mr. Nacchio made material false statements regarding our intent to
solicit an alternative transaction to the U S WEST Merger. Since the filing of
the complaints, there has been no discovery or other activity in the cases.

In 1999, twelve purported class action complaints were filed against U S
WEST and its directors on behalf of U S WEST stockholders. Each of the
complaints allege that the defendants breached their fiduciary duties to the
class members by entering into a merger agreement with Global Crossing thereby
refusing to seek all bona fide offers for U S WEST and refusing to consider an
acquisition proposal from Qwest. Since the filing of the complaints, there has
been no discovery or other activity in the cases.

From time to time we receive complaints and become subject to
investigations regarding tariffs, "slamming" (the practice of changing
long-distance carriers without the customer's consent) and other matters. In
2000, the California Public Utilities Commission opened an investigation
relating to certain slamming complaints. An administrative hearing was held in
May 2001, and we are awaiting a recommendation from the administrative law
judge. A purported class action complaint was filed in federal court in
Connecticut containing slamming allegations. The Attorney General of Connecticut
has also filed a similar complaint in state court in Connecticut. We continue to
analyze regulatory and governmental requirements and may modify our practices as
a result. We may receive complaints or become subject to investigations in the
future. Such complaints or investigations could result in the imposition of
certain fines and other penalties or awards of damages.

We are currently in the process of attempting to resolve various billing,
reimbursement and other commercial disputes with Touch America, Inc. arising
under agreements entered into for the sale of our interLATA (local access
transport area) business in our local service area to Touch America, Inc. on
June 30, 2000.

We have been named as a defendant in various other litigation matters. We
intend to vigorously defend these outstanding claims.

We have provided for these 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 9: SUBSEQUENT EVENTS

Completion of New Debt Offering. On July 30, 2001, we issued $3.75 billion
in long-term borrowings. The borrowings were comprised of the following: $1.25
billion face value with a coupon rate of 5.875% and a three-year maturity, $2
billion face value with a coupon rate of 7.00% and an eight-year maturity and
$500 million face value with a coupon rate of 7.625% and a twenty-year maturity.
We received cash proceeds (after underwriting fees and other issuance costs) of
$3.709 billion that we used to repay existing borrowings.

NOTE 10: NEW ACCOUNTING STANDARDS

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.

13
16
QWEST COMMUNICATIONS INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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 value 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. We currently estimate the adoption of
SFAS No. 142 will reduce our amortization expense by approximately $850-$950
million annually, beginning January 1, 2002. No determination has been made at
this time of the potential impairment, if any, to be recorded at the time of
adoption.

In June 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.

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17

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
Communications International Inc.'s ("Qwest" or the "Company" 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;

- 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. ("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. We do not
undertake any obligation to review or confirm analyst's expectations or
estimates or to release publicly

15
18

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.

MERGER WITH U S WEST

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 Qwest 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. In connection with the Merger, each outstanding share of U S
WEST common stock was converted into the right to receive 1.72932 shares of
Qwest common stock. In addition, all outstanding U S WEST stock options were
converted into options to acquire Qwest common stock. All share and per share
amounts have been restated to give retroactive effect to the exchange ratio.

The results of operations for Qwest (the acquired entity for accounting
purposes) before the Merger ("pre-Merger Qwest") with U S WEST, are not
reflected in the accompanying condensed consolidated statements of operations.
However, due to the significance of the Merger, the comparison of 2001 to 2000
results in Management's Discussion and Analysis of Financial Condition and
Results of Operations will be based upon the 2001 financial statements prepared
in accordance with generally accepted accounting principles ("GAAP") (referred
to "As Reported") and the 2000 pro forma financial statements. The 2000 pro
forma financial statements were prepared as if the Merger occurred on January 1,
2000 and the financial statements of pre-Merger Qwest and U S WEST were combined
as of that date. These financial statements have been adjusted to reflect the
elimination of pre-Merger Qwest's in-region long-distance activity, the
inclusion of interest expense on pre-Merger Qwest borrowings and the
amortization of intangible assets arising out of the Merger. The pro forma
results of operations for the three and six month periods ended June 30, 2000,
are not necessarily indicative of what the actual results of operations might
have been if the Merger had been effective at the beginning of 2000.

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19

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

Revenues:
Commercial services............... $ 2,898 $ 2,287 $ 611 26.7% $ 5,647 $4,460 $ 1,187 26.6%
Consumer and small business
services........................ 1,708 1,675 33 2.0 3,392 3,315 77 2.3
Directory services................ 348 331 17 5.1 690 678 12 1.8
Switched access services.......... 268 361 (93) (25.8) 544 718 (174) (24.2)
------- ------- ------- ------ ------- ------ ------- --------
Total revenues............. 5,222 4,654 568 12.2 10,273 9,171 1,102 12.0
------- ------- ------- ------ ------- ------ ------- --------
Operating expenses:
Cost of services.................. 1,850 1,516 334 22.0 3,646 3,019 627 20.8
Selling, general and
administrative.................. 1,343 1,344 (1) (0.1) 2,601 2,634 (33) (1.3)
------- ------- ------- ------ ------- ------ ------- --------
EBITDA............................ 2,029 1,794 235 13.1 4,026 3,518 508 14.4
------- ------- ------- ------ ------- ------ ------- --------
Depreciation...................... 865 650 215 33.1 1,697 1,275 422 33.1
Depreciation adjustment for access
lines returned to service....... 222 -- 222 -- 222 -- 222 --
Amortization...................... 392 317 75 23.7 711 634 77 12.1
Merger-related and other one-time
charges......................... 415 357 58 16.2 624 393 231 58.8
------- ------- ------- ------ ------- ------ ------- --------
Total operating expenses... 5,087 4,184 903 21.6 9,501 7,955 1,546 19.4
------- ------- ------- ------ ------- ------ ------- --------
Operating income.................... 135 470 (335) (71.3) 772 1,216 (444) (36.5)
Other expense (income)-net:
Interest expense-net.............. 343 244 99 40.6 681 492 189 38.4
Investment write-downs............ 3,108 447 2,661 595.3 3,247 447 2,800 626.4
Decline in market value of
financial instruments........... 23 192 (169) (88.0) -- 321 (321) (100.0)
Gain on sale of rural exchanges... (50) -- (50) -- (50) -- (50) --
Gain on sale of investments....... -- (38) 38 (100.0) -- (122) 122 (100.0)
Other expense (income)-net........ 14 14 -- -- 34 19 15 78.9
------- ------- ------- ------ ------- ------ ------- --------
Total other expense-net.... 3,438 859 2,579 300.2 3,912 1,157 2,755 238.1
------- ------- ------- ------ ------- ------ ------- --------
(Loss) income before income taxes
and extraordinary item............ (3,303) (389) (2,914) (749.1) (3,140) 59 (3,199) (5,422.0)
Income tax provision (benefit)...... 3 (40) 43 (107.5) 147 225 (78) (34.7)
------- ------- ------- ------ ------- ------ ------- --------
Loss before extraordinary item...... (3,306) (349) (2,957) (847.3) (3,287) (166) (3,121) (1,880.1)
Extraordinary item -- early
retirement of debt, net of tax.... -- -- -- -- (65) -- (65) --
------- ------- ------- ------ ------- ------ ------- --------
Net loss............................ $(3,306) $ (349) $(2,957) (847.3)% $(3,352) $ (166) $(3,186) (1,919.3)%
======= ======= ======= ====== ======= ====== ======= ========
</Table>

RESULTS OF OPERATIONS

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

REVENUES

Total Revenues. Total revenues for the three months and six months ended
June 30, 2001 were $5.222 billion and $10.273 billion, respectively,
representing increases of $568 million or 12.2% and $1.102 billion or 12.0%,
respectively over the same periods in 2000. Major contributors to the growth for
the three and six months ended June 30, 2001 over the three and six months ended
June 30, 2000 were sales of Internet Protocol ("IP"), data and wireless products
and services. As compared to 2000, IP and data services revenues increased by
41% and 42% during the three and six months ended June 30, 2001 driven largely
by sales of optical capacity, private lines, digital subscriber lines ("DSL"),
dedicated internet access ("DIA") and web hosting. We believe revenues from data
products and services will account for an increasingly larger portion of our
revenues in future periods.

Wireless products and services revenue in the three and six month periods
ended June 30, 2001 grew by almost 51% and 48% respectively, over the three and
six month periods ended June 30, 2000. Average revenue
17
20

per user increased to $52 from $50 in the first quarter of 2001 as we focused on
high-value customers and exited the low-usage, pre-paid business.

Commercial Services Revenues. Commercial services revenues are derived
from sales of IP, data, voice and wireless products and services provided to
both retail and wholesale business customers. The increases over the prior
periods in commercial services revenues for the three and six months ended June
30, 2001 were 26.7% and 26.6%, respectively, primarily attributable to growth in
our IP and data services (DIA, virtual private network, Internet dial access,
optical private lines, ATM and frame relay). During the three and six month
periods ended June 30, 2001, we recognized $430 million and $857 million,
respectively, in optical capacity sales under indefeasible right of use ("IRU")
agreements versus $197 million and $416 million, respectively, for the
comparable periods in 2000. Certain rule-making bodies, such as the Emerging
Issues Task Force, are currently discussing matters which may impact the
accounting for sale-type leases. We actively monitor these rule-making
activities and evaluate their impact on our current accounting practices.

Consumer and Small Business Services Revenues. Consumer and small business
services revenues are derived from sales of IP, 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 months and six
months ended June 30, 2001 over comparable periods in 2000, were principally
attributable to sales of wireless services and products and data services
partially offset by a decline in out-of-region consumer long-distance. Sales of
bundled packages (which include the phone line, calling features and/or wireless
services) to our small business and consumer customers for these periods also
contributed to the revenue growth.

Directory Services Revenues. Directory services revenues are derived
primarily from selling advertising in our published directories. Directory
services revenues increased 5.1% for the three months ended June 30, 2001 and
1.8% for the six months ended June 30, primarily due to a change in the mix and
length of directories published and increased advertising rates as compared to
the same periods in the prior year.

Switched Access Services Revenues. Switched access services revenues are
derived from inter- and intrastate 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 same periods in 2000, were
principally attributable to increased competition and federal access reform that
reduced the rates we are able to collect for switched access services. We
believe revenues from switched access services will continue to be negatively
impacted by federal access reform.

OPERATING EXPENSES

Cost of services. Cost of services, as a percent of revenues, increased
from 32.6% for the three months ended June 30, 2000 to 35.4% for the three
months ended June 30, 2001. For the six months ended June 30, 2001, cost of
services, as a percent of revenues, increased to 35.5% versus 32.9% for the
comparable period in 2000. The increases in cost of services for the three and
six months ended June 30, 2001 were primarily attributable to a shift in our
product mix to higher growth services, increases in our access expenses, costs
associated with the sales of data and wireless products and services, expenses
associated with improving local service and costs related to the re-entry into
the long-distance business in our 14-state local service area. Partially
offsetting this growth were decreased costs related to a reduction in the number
of employees and contractors and other savings generated through tighter cost
controls and operational efficiencies. Since June 30, 2000, we have reduced our
contractors by 3,300.

Selling, general and administrative. Selling, general and administrative
expenses, as a percentage of revenues, decreased from 28.9% for the three months
ended June 30, 2000, to 25.7% for the three months ended June 30, 2001. For the
six months ended June 30, 2001, selling, general and administrative expenses, as
a percentage of revenue decreased to 25.3% as compared to 28.7% for the six
months ended June 30, 2000. The percentage decreases were primarily attributable
to the reduction in employee headcount, lower taxes (other than income taxes)
and an increase in the pension credit (net of other post-retirement benefits).

Selling, general and administrative expenses for the three months ended
June 30, 2001, were relatively flat when compared to the same period of 2000. We
held selling, general and administrative expenses flat primarily

18
21

due to the reduction in headcount, lower taxes (other than income taxes), a
higher pension credit (net of other post-retirement benefits) and lower
commissions due to changes in our commission compensation plan. Offsetting these
expense savings were increases in uncollectible expenses, professional fees and
occupancy costs relating to the opening of several new CyberCenters. For the six
months ended June 30, 2001, selling, general and administrative expenses dropped
from the same period in 2000 primarily because of the decreases in employee
headcount, lower taxes (other than income taxes), higher pension credit (net of
other post-retirement benefits) and lower commissions due to changes in our
commission compensation plan. Since June 30, 2000, we have reduced our employee
headcount by almost 9,400, a portion of which also impacts cost of services.
Partially offsetting these decreases were increases in uncollectible expenses,
professional fees and increases in occupancy costs relating to the opening of
several new CyberCenters.

For the three months ended June 30, 2001, results include a pension credit,
net of other post-retirement expenses, of $85 million ($51 million after-tax or
$0.03 per diluted share) compared to $80 million ($46 million after-tax or $0.03
per pro forma diluted share) for the three months ended June 30, 2000. For the
six months ended June 30, 2001, results include a pension credit, net of
post-retirement expenses, of $170 million ($104 million after-tax or $0.06 per
diluted share) compared to $141 million ($86 million after-tax or $0.05 per pro
forma diluted share) for the same period in 2000.

Depreciation. The increases in depreciation expense for the three and six
month periods ended June 30, 2001 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. We continue to invest
in our network and service platforms to support re-entry into the long-distance
business in our local service area, meet increased customer demand and make
service improvements.

Goodwill and other intangible amortization. Amortization expense is
directly attributable to goodwill and other intangibles recorded as a result of
the Merger. The final purchase price allocation to identifiable intangible
assets and goodwill was $4.1 billion and $30.8 billion, respectively.
Additionally, $4.8 billion was allocated to our investment in KPNQwest, N.V.
("KPNQwest"), which created an excess carrying value of $4.2 billion that was
being amortized over 10 years at June 30, 2001. The average amortization period
for all identifiable intangibles, the excess basis in KPNQwest and goodwill was
25 years. Following the final allocation of our purchase price and the $3.048
billion write down of our investment in KPNQwest on June 30, 2001, amortization
of intangible assets will be reduced by approximately $84 million per quarter
starting July 1, 2001.

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 charges
totaling $415 million and $624 million, respectively. We consider only those
costs that are incremental and directly related to the Merger to be
Merger-related. For the quarter ended June 30, 2001, the Merger-related costs
include $218 million of contract settlements and legal contingencies, $84
million of severance and headcount-related charges and $113 million of other
Merger-related and one-time charges. For the six months ended June 30, 2001, the
charge includes $274 million of contract settlements and legal contingencies,
$199 million of severance and headcount-related charges and $151 million of
other Merger-related and one-time charges. Other Merger-related and one-time
charges include professional fees,
19
22

re-branding costs and other integration-related costs. Additionally, other
Merger-related and one-time charges include asset impairment charges of $31
million and $41 million for the three and six months ended June 30, 2001,
respectively.

Since the Merger, we have reduced staffing levels by approximately 12,700
employees and contractors. The severance charge for the six months ended June
30, 2001 relates to approximately 3,400 employees who were involuntarily
terminated.

Other expense (income)-net. Interest expense was $343 million and $681
million for the three and six months ended June 30, 2001, respectively, compared
to $244 million and $492 million for the three and six months ended June 30,
2000. The increases in interest expense were primarily attributable to increased
borrowings required to fund the capital improvements to our network and the
repurchase of shares from BellSouth Corporation ("BellSouth").

We follow a process of reviewing our portfolio of equity securities on a
quarterly basis. We evaluate for an other than temporary decline when the
carrying value of an investment exceeds its fair value. For a further discussion
of the factors we use to determine the fair value of our equity investments, see
Note 4 to the condensed consolidated financial statements.

For the three months ended June 30, 2001, we recorded a write-down of
$3.048 billion on our investment in KPNQwest, $60 million in other unrealized
investment losses and a $23 million decline in the fair value of our derivative
financial instruments. The six month period ended June 30, 2001, showed the same
$3.048 billion write-down on KPNQwest and $199 million in other unrealized
investment losses. The $3.1 billion write-down on our investment in KPNQwest and
other marketable equity securities represents a non-cash charge against
earnings. At June 30, 2001, subsequent to the charge for other than temporary
declines in fair value, these investments had a carrying value of $1.3 billion
for KPNQwest and $15 million for our portfolio of other marketable securities.

A decline of $192 million in the fair value of our derivative financial
instruments and a write-down of $447 million of our investment in Global
Crossing Ltd. ("Global Crossing") was reported in the quarter ended June 30,
2000. For the six months ended June 30, 2000, we recorded a $321 million decline
in the market value of our derivative financial instruments and the $447 million
write-down of our Global Crossing investment. These were offset somewhat by the
gains on the sales of various marketable equity securities of $38 million and
$122 million for the three and six months ended June 30, 2000, respectively.

During the second quarter of 2001, we completed a sale of approximately
38,000 access lines in Utah resulting in a gain of $50 million.

Other expenses include losses from our investments accounted for under the
equity method and regulatory interest expense.

Provision for income taxes. The overall effective tax rate for all periods
presented were impacted by the non-deductible goodwill and KPNQwest excess basis
amortization, KPNQwest investment write-down, foreign losses associated with our
investment in KPNQwest and certain Merger-related costs. Adjusting for these
items, the effective tax rates for the three months ended June 30, 2001 and June
30, 2000 were 46.4% and 33.8%, respectively. For the six months ended June 30,
2001 and June 30, 2000, the effective tax rates after adjustment for the items
discussed above, were 37.1% and 38.5%, respectively. The changes in these
adjusted effective tax rates were due to miscellaneous permanent differences and
tax credits.

Extraordinary item -- early retirement of debt. During the six months
ended June 30, 2001, we completed a tender offer to buy back certain outstanding
debt. In the tender, we repurchased approximately $995 million in principal
($1.2 billion in face value) of outstanding debt. As a result of the repurchase,
we incurred a pre-tax charge of $106 million ($65 million after tax) in premium
payments.

Net loss. Net loss for the three months ended June 30, 2001 was $3.306
billion compared to a net loss of $349 million in the second quarter of 2000.
Net loss increased from $166 million in the first six months of 2000 to $3.352
billion during the same period in 2001. These increases in net loss were
primarily due to the write-down of our investment in KPNQwest. Other
contributors to the higher loss were Merger-related costs, the one-
20
23

time depreciation charge to return access lines to service, depreciation driven
by the continued investment in our network and increases in interest expense.

LIQUIDITY AND CAPITAL RESOURCES

The liquidity and capital resources analysis is based upon As Reported
results. Consequently, operating, investing and financing activities for the six
months ended June 30, 2001 as compared to the six months ended June 30, 2000,
were impacted significantly by the Merger.

Operating Activities. Cash provided by operations increased to $2.307
billion for the six months ended June 30, 2001 from $1.799 billion for the same
period in 2000. The change was primarily due to the growth in net income after
adjusting for depreciation, amortization and the write-down of our KPNQwest
investment.

Investing Activities. Capital expenditures were $5.559 billion for the six
months ended June 30, 2001 and $2.702 billion for the six months ended June 30,
2000. Capital expenditures have been, and continue to be, focused on the
modernization and expansion of our telecommunications network, expansion of our
wireless, local broadband, Internet and data communications networks,
construction of CyberCenters in major markets, re-entry into the long-distance
business in our local service area and service improvements. Our capital
expenditures through June 30, 2001 represent almost 65% of our expected capital
spending for the year. The heavier capital costs in the first half of the year
are primarily attributable to spending on capital associated with our re-entry
into the long-distance business in our local service area and infrastructure
built to meet demand. Included in our expenditures for property, plant and
equipment are cash expenditures for optical capacity purchase agreements. These
agreements provide us with the right, among other things, to network capacity
provided by major carriers on specific routes at current market rates for
periods of 20 to 25 years. Several of these carriers have also acquired optical
capacity from us, principally in the United States, during the first and second
quarters in separate cash transactions at fair market rates. These transactions
are accounted for separately as purchases of property, plant and equipment used
in our operations and as sales of inventory. Property, plant and equipment
increased by approximately $200 million and $450 million due to these purchases
during the three and six month periods ended June 30, 2001, respectively.
Revenue recognized on these sales was $280 million and $540 million for the
three and six month periods ended June 30, 2001, respectively.

In April 2001, we sold approximately 38,000 access lines resulting in a
gain of $50 million and generating cash proceeds of $91 million.

Future cash needs could be impacted with the pursuit of new business
opportunities, including the acceleration of the deployment of additional and/or
advanced new services to customers, such as broadband data, wireless and video
services. In addition, the expansion and upgrades of our network and the
construction of CyberCenters could effect our future cash requirements. We
expect that such cash needs, if any, will be funded through operations, the sale
of assets and, when necessary, the issuance of debt.

Financing Activities. Cash provided by financing activities was $3.523
billion and $384 million for the six months ended June 30, 2001 and 2000,
respectively. In 2001, we increased our commercial paper balances to finance the
acquisition of telecommunications equipment for the upgrade and expansion of our
network. Long-term borrowings increased during 2001 to refinance maturing
commercial paper obligations. During the six months ended June 30, 2001 we
reacquired 22.22 million shares of our common stock from BellSouth for $1.0
billion.

In March 2001, we completed a cash tender offer to buy back certain
outstanding debt. In the tender offer, we repurchased approximately $995 million
in principal ($1.2 billion in face value) of outstanding debt. As a result of
the repurchase, we incurred $106 million ($65 million after tax) in premium
payments.

On May 2, 2001, our Board of Directors approved a dividend of five cents
per share on our common stock which was paid to stockholders of record as of the
close of business on June 1, 2001 in satisfaction of any prior statement by us
in connection with or following the Merger regarding the payment or declaration
of dividends. As a result, dividends of $83 million were paid on common stock
for the three and six months ended June 30, 2001 compared to $542 million in the
comparable 2000 periods. The decline was due to a change in the dividend policy
after the Merger.
21
24

We maintain commercial paper programs to finance purchases of
telecommunications equipment. As of June 30, 2001, we had a $4.0 billion
syndicated credit facility to support our commercial paper programs. The
syndicated credit facility matures on May 3, 2002.

Subsequent to June 30, 2001, we issued $3.75 billion in long-term
borrowings. The borrowings were comprised of the following: $1.25 billion face
value with a coupon rate of 5.875% and a three-year maturity, $2 billion face
value with a coupon rate of 7.00% and an eight-year maturity and $500 million
face value with a coupon rate of 7.625% and a twenty-year maturity. We received
cash proceeds (after underwriting fees and other issuance costs) of $3.709
billion that we used to repay existing borrowings.

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. 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 value 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. We currently
estimate the adoption of SFAS No. 142 will reduce our amortization expense by
approximately $850-$950 million annually beginning January 1, 2002. No
determination has been made at this time of the potential impairment, if any, to
be recorded at the time of adoption.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks arising from changes in interest rates. The
objective of our interest rate risk management program is to manage the level
and volatility of our interest expense. We may employ derivative financial
instruments to manage our interest rate risk exposure. We may also employ
financial derivatives to hedge foreign currency exposures associated with
particular debt.

As of June 30, 2001 and December 31, 2000, approximately $4.5 billion and
$2.4 billion, respectively, of floating-rate debt was exposed to changes in
interest rates. This exposure is linked to commercial paper and London Interbank
Offered Rates ("LIBOR") rates. A hypothetical increase of one-percentage point
in commercial paper and LIBOR rates would increase annual pre-tax interest
expense by $45 million. As of June 30, 2001 and December 31, 2000, we also had
approximately $1.3 billion of long-term fixed rate debt obligations maturing in
the following 12 months. Any new debt obtained to refinance this debt would be
exposed to changes in interest rates. A hypothetical 10% change in the interest
rates on this debt would not have had a material effect on our earnings.

As of June 30, 2001 and December 31, 2000, we had entered into
cross-currency swaps with notional amounts of $133 million. The cross-currency
swaps hedge our exposure to movements in the Swiss Franc to the U. S. dollar
exchange rate. The effect of the cross-currency swap is to synthetically
transform the Swiss Franc borrowings into $84 million and $93 million of U. S.
dollar borrowings at June 30, 2001 and December 31, 2000, respectively. Any
foreign exchange gains (losses) on the cross-currency swaps would be offset by
foreign exchange losses (gains) on the Swiss Franc debt obligations. The Swiss
Franc borrowings mature in November 2001.

As of June 30, 2001 and December 31, 2000, we had entered into equity swaps
with notional amounts of $259 million and $761 million relating to the sale of 8
million and 24 million shares, respectively, of Global Crossing common stock we
previously owned. Of the 24 million shares subject to equity swaps, one-third
matured in February 2001 and one-third matured in May 2001, leaving equity swaps
on 8 million shares. In connection with the remaining equity swaps, we have
equity collars on 4 million shares. The equity collars restrict the magnitude of
any gains or losses generated by the equity swaps on the collared shares. A
hypothetical 10% reduction in the market price of Global Crossing common shares,
based upon the market price of $8.64 at June 30, 2001, would not have had a
material effect on our earnings. The remaining equity swaps will mature in
August 2001.

We currently hold 200 million shares of stock in KPNQwest. At June 30, 2001
and December 31, 2000, the 11% minority stake in KPNQwest was trading at $11.11
and $18.94 per share, respectively. The carrying value of our KPNQwest
investment was approximately $6.67 per share at June 30, 2001. The per share
value of our investment in KPNQwest may be less than the publicly traded
minority stake because of the size of our holdings and the restrictions on the
marketability of our shares. Given the foregoing, a hypothetical 10% decline in
the public trading price of KPNQwest at June 30, 2001, could decrease our
investment value by approximately $100 million.

Equity investments in other publicly traded companies consists of the
following (dollars in millions):

<Table>
<Caption>
JUNE 30, 2001 DECEMBER 31, 2000
- ------------------------------------------- -------------------------------------------
UNREALIZED UNREALIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE COST GAINS LOSSES FAIR VALUE
- ---- ---------- ---------- ---------- ---- ---------- ---------- ----------

$111.. $3 $(99) $15 $90 $30 $(62) $58
==== == ==== === === === ==== ===
</Table>

The estimated potential loss in fair value resulting from a hypothetical
10% decrease in the June 30, 2001 prices quoted by stock exchanges would
decrease the fair value of our other equity investments by $2 million.

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

23
26

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 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.

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.

CONTINGENCIES

We have certain pending regulatory actions. See Note 8 to the condensed
consolidated financial statements.
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PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In July and August 2001, three purported class action complaints were filed
in the federal district court in Colorado against Qwest, its Chairman and Chief
Executive Officer Joseph P. Nacchio and its Chief Financial Officer Robin R.
Szeliga. On behalf of purchasers of Qwests' publicly traded stock between March
22, 2001 and July 23, 2001. The complaints allege, among other things, that
Qwest, Mr. Nacchio and Ms. Szeliga made material false statements regarding the
results of operations for the quarter ended March 31, 2001 in violation of
sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and that, during
the above period, the individual defendants sold shares of Qwest common stock.
The complaints allege that Qwest's first quarter 2001 results and the statements
regarding those results were false and misleading due to Qwest's alleged
improper valuation of KPNQwest in violation of generally accepted accounting
principles, and due to the following alleged facts which the plaintiffs' claim
were undisclosed: (1) first quarter earnings were better than expected because
of a change in the discount rate used to calculate Qwest's pension obligations;
(2) Qwest failed to properly "write-down" the value of its holdings in KPNQwest;
(3) Qwest's aggressive use of capitalization to classify interest and software
development costs as assets rather than expenses increased first quarter
earnings; and (4) Qwest's selling, general and administrative expenses were 22%
of sales, not due to tight expense controls but to improper classification of
selling, general and administrative expenses as cost of sales. The complaints
seek unspecified compensatory damages and other relief. Since the filing of the
complaints, there has been no discovery or other activity in these cases.

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 8: "Commitments and Contingencies" -- to the
condensed consolidated financial statements.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its annual meeting of stockholders (the "Annual Meeting")
on May 2, 2001. There were 1,649,490,762 shares of Common Stock of the Company
that could be voted at the meeting, and 87.0%, or 1,435,857,927 shares, of
Common Stock were represented at the meeting, in person or by proxy, which
constituted a quorum. At the meeting, the following items and their results were
submitted to a vote of the Stockholders of the Company:

(1) Election of five Class I Directors who were nominated to serve on the
Board of Directors for a term of three years expiring at our Annual
Meeting in the year 2004 and until the director's successor has been
duly elected and qualified, or until the earlier of the director's
death, resignation or retirement. The votes cast were as follows:

<Table>
<Caption>
VOTES FOR VOTES WITHHELD
--------- --------------

Thomas J. Donohue........................................ 1,398,460,031 37,397,896
Jordan L. Haines......................................... 1,398,329,099 37,528,828
Peter S. Hellman......................................... 1,399,795,279 36,062,648
Vinod Khosla............................................. 1,398,714,117 37,143,810
Marilyn Carlson Nelson................................... 1,398,618,162 37,239,765
</Table>

(2) Ratification of the amendment to our Employee Stock Purchase Plan to
increase the number of shares authorized under the Employee Stock
Purchase Plan from 1,520,000 to 7 million. The votes cast were as
follows:

<Table>
<Caption>
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON VOTES
- --------- ------------- --------------- ----------------

1,381,694,706 42,268,665 11,894,556 0
</Table>

II-1
28

(3) Shareowner proposal requesting that we seek advance shareowner approval
of future severance arrangements with our executive officers that
provide for more generous pay-outs than to our other managers. The
votes cast on this shareowner proposal were as follows:

<Table>
<Caption>
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON VOTES
- --------- ------------- --------------- ----------------

317,213,772 898,620,121 16,840,555 203,183,479
</Table>

(4) Shareowner proposal requesting that we disregard the effects of
accounting rule income, particularly pension credits, when determining
performance-based compensation for our executive officers. The votes
cast on this shareowner proposal were as follows:

<Table>
<Caption>
VOTES FOR VOTES AGAINST VOTES ABSTAINED BROKER NON VOTES
- --------- ------------- --------------- ----------------

185,921,085 1,024,370,769 22,382,594 203,183,479
</Table>

II-2
29

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits filed for Qwest through the filing of this Form 10-Q.

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

(2.1) -- Separation Agreement, dated June 5,1998, between U S
WEST, Inc. (renamed "MediaOne Group, Inc.") ("MediaOne
Group") and USW-C, Inc (renamed U S WEST, Inc.) ("U S
WEST"), (incorporated by reference to U S WEST's Current
Report on Form 8-K/A dated June 26, 1998, File No.
1-14087).
(2.2) -- Amendment to the Separation Agreement between MediaOne
Group and U S WEST dated June 12, 1998 (incorporated by
reference to U S WEST's Annual Report on Form 10-K/A for
the year ended December 31, 1998, File No. 1-14087).
(3.1) -- Amended and Restated Certificate of Incorporation of
Qwest (incorporated by reference to Qwest's Registration
Statement on Form S-4/A, File No. 333-81149, filed
September 17, 1999).
(3.2) -- Amended and Restated Bylaws of Qwest.
(4.1)*** -- Indenture, dated as of October 15, 1997, with Bankers
Trust Company (including form of Qwest's 9.47% Senior
Discount Notes due 2007 and 9.47% Series B Senior
Discount Notes due 2007 as an exhibit thereto).
(4.2)**** -- Indenture dated, as of August 28, 1997, with Bankers
Trust Company (including form of Qwest's 10 7/8% Series B
Senior Discount Notes due 2007 as an exhibit thereto).
(4.3)**** -- Indenture dated as of January 29, 1998 with Bankers Trust
Company (including form of Qwest's 8.29% Senior Discount
Notes due 2008 and 8.29% Series B Senior Discount Notes
due 2008 as an exhibit thereto).
(4.4) -- Indenture, dated as of November 4, 1998, with Bankers
Trust Company (including form of Qwest's 7.50% Senior
Discount Notes due 2008 and 7.50% Series B Senior
Discount Notes due 2008 as an exhibit thereto)
(incorporated by reference to Qwest's Registration
Statement on Form S-4 , File No. 333-71603, filed
February 2, 1999).
(4.5) -- Indenture, dated as of November 27, 1998, with Bankers
Trust Company (including form of Qwest's 7.25% Senior
Discount Notes due 2008 and 7.25% Series B Senior
Discount Notes due 2008 as an exhibit thereto)
(incorporated by reference to Qwest's Registration
Statement on Form S-4, File No. 333-71603, filed February
2, 1999).
(4.6) -- Registration Agreement, dated November 27, 1998, with
Salomon Brothers Inc. relating to Qwest's 7.25% Senior
Discount Notes due 2008 (incorporated by reference to
Qwest's Registration Statement on Form S-4, File No.
333-71603, filed February 2, 1999).
(4.7) -- Indenture, dated as of June 23, 1997, between LCI
International, Inc. and First Trust National Association,
as trustee, providing for the issuance of Senior Debt
Securities, including Resolutions of the Pricing
Committee of the Board of Directors establishing the
terms of the 7.25% Senior Notes due June 15, 2007
(incorporated by reference to Exhibit 4(c) in LCI's
Current Report on Form 8-K, dated June 23, 1997).
(4.8) -- Registration Rights Agreement, dated August 20, 1999,
between U S WEST Capital Funding, Inc., U S WEST, Inc.,
J.P. Morgan Securities, Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated (incorporated by reference to
U S WEST's Form S-4 Registration Statement, File No.
333-92523, filed December 10, 1999).
(4.9) -- Indenture, dated as of June 29, 1998, by and among U S
WEST Capital Funding, Inc., U S WEST, Inc., and The First
National Bank of Chicago (now known as Bank One Trust
Company, National Association), as Trustee (incorporated
by reference to U S WEST's Current Report on Form 8-K,
dated November 18, 1998, File No. 1-14087).
</Table>

II-3
30

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

(4.10) -- First Supplemental Indenture, dated as of June 30, 2000,
by and among U S WEST Capital Funding, Inc., U S WEST,
Inc., Qwest Communications International Inc., and Bank
One Trust Company, as Trustee (incorporated by reference
to Qwest's quarterly report on Form 10-Q for the quarter
ended June 30, 2000).
(4.11) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of January 29, 1998 with
Bankers Trust Company (including form of Qwest's 8.29%
Senior Discount Notes due 2008 and 8.29% Series B Senior
Discount Notes due 2008 as an exhibit thereto)
(incorporated by reference to Qwest's quarterly report on
Form 10-Q for the quarter ended March 31, 2001).
(4.12) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of October 15, 1997 with
Bankers Trust Company (including form of Qwest's 9.47%
Senior Discount Notes due 2007 and 9.47% Series B Senior
Discount Notes due 2007 as an exhibit thereto)
(incorporated by reference to Qwest's quarterly report on
Form 10-Q for the quarter ended March 31, 2001).
(4.13) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of August 28, 1997 with
Bankers Trust Company (including form of Qwest's 10 7/8%
Series B Senior Discount Notes due 2007 as an exhibit
thereto) (incorporated by reference to Qwest's quarterly
report on Form 10-Q for the quarter ended March 31,
2001).
(10.1)** -- Growth Share Plan, as amended, effective October 1,
1996.*
(10.2) -- Equity Incentive Plan, as amended (incorporated by
reference from Exhibit A to Qwest's definitive proxy
statement on Schedule 14A, filed March 17, 2000).*
(10.3) -- Qwest Communications International Inc. Employee Stock
Purchase Plan. (incorporated by reference to Qwest's 2001
Proxy Statement for the Annual Meeting of Stockholders).*
(10.4) -- Qwest Communications International Inc. Deferred
Compensation Plan (incorporated by reference to Qwest's
Annual Report on Form 10-K for the year ended December
31, 1998).*
(10.5)**** -- Equity Compensation Plan for Non-Employee Directors.*
(10.6) -- Qwest Communications International Inc. 401-K Plan
(incorporated by reference to Qwest's Annual Report on
Form 10-K for the year ended December 31, 1998).*
(10.7)** -- Employment Agreement dated December 21, 1996 with Joseph
P. Nacchio.*
(10.8)**** -- Growth Share Plan Agreement with Joseph P. Nacchio,
effective January 1, 1997, and Amendment thereto.*
(10.9)**** -- Non-Qualified Stock Option Agreement with Joseph P.
Nacchio, effective June 23, 1997.*
(10.11) -- Employment Agreement dated October 6,1998 with Drake S.
Tempest (incorporated by reference to Qwest's Annual
Report on Form 10-K for the year ended December 31,
2000).*
(10.13) -- Employment Agreement dated October 6,1998 with Afshin
Mohebbi (incorporated by reference to Qwest's Annual
Report on Form 10-K for the year ended December 31,
2000).*
(10.14)**** -- Employment Agreement dated October 8, 1997 with Lewis O.
Wilks.*
(10.15)**# -- IRU Agreement dated as of October 18, 1996 with Frontier
Communications International Inc.
(10.16)**# -- IRU Agreement dated as of February 26, 1996 with WorldCom
Network Services, Inc.
</Table>

II-4
31

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

(10.17)**# -- IRU Agreement dated as of May 2, 1997 with GTE.
(10.20) -- Registration Rights Agreement, dated as of April 18,
1999, with Anschutz Company and Anschutz Family
Investment Company LLC (incorporated by reference to
Qwest's Current Report on Form 8-K/A, filed April 28,
1999).
(10.21) -- Common Stock Purchase Agreement, dated as of April 19,
1999, with BellSouth Enterprises, Inc. (incorporated by
reference to Qwest's Current Report on Form 8-K/A, filed
April 28, 1999).
(10.22) -- Registration Rights Agreement, dated as of April 19,
1999, with BellSouth Enterprises, Inc. (incorporated by
reference to Qwest's Current Report on Form 8-K/A, filed
April 28, 1999).
(10.23) -- Securities Purchase Agreement dated January 16, 2001 with
BellSouth Corporation (incorporated by reference to
Qwest's Annual Report on Form 10-K for the year ended
December 31, 2000).
(10.24) -- Purchase Agreement by and among Qwest, Slingshot
Networks, LLC and Anschutz Digital Media, Inc., dated
September 26, 1999 (incorporated by reference to Qwest's
quarterly report on Form 10-Q for the quarter ended
September 30, 1999).
(10.25) -- Unit Purchase Agreement, dated June 21, 2000, by and
among U.S. Telesource, Inc. and Anschutz Digital Media,
Inc. (incorporated by reference to Qwest's quarterly
report on form 10-Q for the quarter ended June 30, 2000).
(10.26) -- Second Amended and Restated Operating Agreement of
Slingshot Networks, LLC entered into as of June 21, 2000
between Anschutz Digital Media, Inc. and U.S. Telesource,
Inc. (incorporated by reference to Qwest's quarterly
report on Form 10-Q for the quarter ended June 30, 2000).
(10.27) -- Employee Matters Agreement between MediaOne Group and U S
WEST, dated June 5, 1998 (incorporated by reference to U
S WEST's Current Report on Form 8-K/A, dated June 26,
1998, File No. 1-14087).
(10.28) -- Tax Sharing Agreement between MediaOne Group and U S
WEST, dated June 5, 1998 (incorporated by reference to U
S WEST's Current Report on Form 8-K/A, dated June 26,
1998, File No. 1-14087).
(10.29) -- 360-Day $4.0 billion Credit Agreement, dated as of May 5,
2000, among U S WEST, Inc., U S WEST Capital Funding,
Inc., U S WEST Communications, Inc., the banks listed
therein, and Morgan Guaranty Trust Company of New York,
as administrative agent (incorporated by reference to U S
WEST's quarterly report on Form 10-Q for the quarter
ended March 31, 2000).
(10.30) -- Purchase Agreement, dated July 3, 2000, among Qwest
Capital Funding, Inc., Qwest Communications International
Inc. and Salomon Smith Barney Inc. (incorporated by
reference to Qwest's quarterly report on Form 10-Q for
the quarter ended June 30, 2000).
(10.31) -- Purchase Agreement, dated August 16, 2000, among Qwest
Capital Funding, Inc., Qwest Communications International
Inc., Salomon Smith Barney Inc. and Lehman Brothers Inc.
as Representatives of the several initial purchasers
listed therein (incorporated by reference to Qwest's
quarterly report on Form 10-Q for the quarter ended
September 30, 2000).
</Table>

II-5
32

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

(10.32) -- Registration Rights Agreement, dated August 16, 2000,
among Qwest Capital Funding, Inc., Qwest Communications
International Inc., Salomon Smith Barney Inc. and Lehman
Brothers Inc. as Representatives of the several initial
purchasers listed therein (incorporated by reference to
Qwest's quarterly report on Form 10-Q for the quarter
ended September 30, 2000).
(10.33) -- Purchase Agreement, dated February 7, 2001, among Qwest
Capital Funding, Inc., Qwest Communications International
Inc., Banc of America Securities LLC and Chase Securities
Inc. as Representatives of the several initial purchasers
listed therein (incorporated by reference to Qwest's
Annual Report on Form 10-K for the year ended December
31, 2000).
(10.34) -- Registration Rights Agreement, dated February 14, 2001,
among Qwest Capital Funding, Inc., Qwest Communications
International Inc., Banc of America Securities LLC and
Chase Securities Inc. as Representatives of the several
initial purchasers listed therein (incorporated by
reference to Qwest's Annual Report on Form 10-K for the
year ended December 31, 2000).
(10.35) -- 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.
(incorporated by reference to U S WEST's Current Report
on Form 8-K, dated June 17, 1999, File No. 1-14087).
(10.36) -- Qwest Communications International Inc., Deferred
Compensation Plan for Nonemployee Directors, effective as
of July 1, 2000 (incorporated by reference to Qwest's
Annual Report on Form 10-K for the year ended December
31, 2000).*
(10.37) -- Amended and Restated Qwest Digital Media, LLC Growth
Share Plan (as of June 1, 2000) (incorporated by
reference to Qwest's Annual Report on Form 10-K for the
year ended December 31, 2000).*
(10.38) -- 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
Qwest's quarterly report on Form 10-Q for the quarter
ended March 31, 2001).
10.39 -- Purchase Agreement, dated July 25, 2001, among Qwest
Capital Funding, Inc., Qwest Communications International
Inc., Lehman Brothers Inc. and MERRILL LYNCH & CO., INC.
as Representatives of the several initial purchasers
listed therein.
10.40 -- Registration Rights Agreement, dated July 30, 2001, among
Qwest Capital Funding, Inc., Qwest Communications
International Inc., Lehman Brothers Inc. and MERRILL
LYNCH & CO., INC. as Representatives of the several
initial purchasers listed therein.
(99.1) -- Annual Report on Form 11-K for the U S WEST Savings
Plan/ESOP for the year ended December 31, 1999
(incorporated by reference to U S WEST's Annual Report on
Form 10-K, File No. 1-14087, Paper Copy (P)).
(99.2) -- Annual Report on Form 11-K for the Qwest Communications
International Inc. 401K Plan for the year ended December
31, 2000 (incorporated by reference to Qwest's Annual
Report on Form 10-K, File No. 000-22609).
(99.3) -- Annual Report on Form 11-K for the U S WEST Savings
Plan/ESOP for the year ended December 31, 2000
(incorporated by reference to Qwest Communications
International Inc.'s Annual Report on Form 10-K, File No.
000-22609, Paper Copy (P)).
</Table>

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

( ) Previously filed.

II-6
33

* Executive Compensation Plans and Arrangements.

** Incorporated by reference in Form S-1 as declared effective on June 23,
1997 (File No. 333-25391).

*** Incorporated by reference to exhibit 4.1 in Form S-4 as declared effective
on January 5, 1998 (File No. 333-42847).

**** Incorporated by reference in Qwest's Form 10-K for the year ended December
31, 1997.

# Portions have been omitted pursuant to a request for confidential
treatment.

(b) Reports on Form 8-K:

(i) On April 5, 2001, Qwest filed a report on Form 8-K regarding its
intention not to acquire Winstar Communications, Inc.

(ii) On April 25, 2001, Qwest filed a report on Form 8-K regarding its
2001 first quarter results of operations.

(iii) On April 27, 2001, Qwest filed a report on Form 8-K regarding
its strategic alliance with Microsoft Corporation.

(iv) On May 17, 2001, Qwest filed a report on Form 8-K regarding its
chief executive officer's structured daily stock sales program.

(v) On June 5, 2001, Qwest filed a report on Form 8-K regarding a
speech by its chief executive officer.

(vi) On June 8, 2001, Qwest filed a report on Form 8-K regarding the
filing of Form 144 by its chief executive officer for the sale of stock.

(vii) On June 20, 2001, Qwest filed a report on Form 8-K regarding its
analysts conference.

(viii) On June 21, 2001, Qwest filed a report on Form 8-K regarding
its response to a Morgan Stanley equity research report.

II-7
34

SIGNATURE

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 COMMUNICATIONS INTERNATIONAL INC.

By: /s/ ROBIN R. SZELIGA
-------------------------------------
Robin R. Szeliga
Executive Vice President -- Finance
and
Chief Financial Officer

August 14, 2001

II-8
35

EXHIBIT INDEX

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

(4.10) -- First Supplemental Indenture, dated as of June 30, 2000,
by and among U S WEST Capital Funding, Inc., U S WEST,
Inc., Qwest Communications International Inc., and Bank
One Trust Company, as Trustee (incorporated by reference
to Qwest's quarterly report on Form 10-Q for the quarter
ended June 30, 2000).
(4.11) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of January 29, 1998 with
Bankers Trust Company (including form of Qwest's 8.29%
Senior Discount Notes due 2008 and 8.29% Series B Senior
Discount Notes due 2008 as an exhibit thereto)
(incorporated by reference to Qwest's quarterly report on
Form 10-Q for the quarter ended March 31, 2001).
(4.12) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of October 15, 1997 with
Bankers Trust Company (including form of Qwest's 9.47%
Senior Discount Notes due 2007 and 9.47% Series B Senior
Discount Notes due 2007 as an exhibit thereto)
(incorporated by reference to Qwest's quarterly report on
Form 10-Q for the quarter ended March 31, 2001).
(4.13) -- First Supplemental Indenture, dated as of February 16,
2001, to the Indenture dated as of August 28, 1997 with
Bankers Trust Company (including form of Qwest's 10 7/8%
Series B Senior Discount Notes due 2007 as an exhibit
thereto) (incorporated by reference to Qwest's quarterly
report on Form 10-Q for the quarter ended March 31,
2001).
(10.1)** -- Growth Share Plan, as amended, effective October 1,
1996.*
(10.2) -- Equity Incentive Plan, as amended (incorporated by
reference from Exhibit A to Qwest's definitive proxy
statement on Schedule 14A, filed March 17, 2000).*
(10.3) -- Qwest Communications International Inc. Employee Stock
Purchase Plan. (incorporated by reference to Qwest's 2001
Proxy Statement for the Annual Meeting of Stockholders).*
(10.4) -- Qwest Communications International Inc. Deferred
Compensation Plan (incorporated by reference to Qwest's
Annual Report on Form 10-K for the year ended December
31, 1998).*
(10.5)**** -- Equity Compensation Plan for Non-Employee Directors.*
(10.6) -- Qwest Communications International Inc. 401-K Plan
(incorporated by reference to Qwest's Annual Report on
Form 10-K for the year ended December 31, 1998).*
(10.7)** -- Employment Agreement dated December 21, 1996 with Joseph
P. Nacchio.*
(10.8)**** -- Growth Share Plan Agreement with Joseph P. Nacchio,
effective January 1, 1997, and Amendment thereto.*
(10.9)**** -- Non-Qualified Stock Option Agreement with Joseph P.
Nacchio, effective June 23, 1997.*
(10.11) -- Employment Agreement dated October 6, 1998 with Drake S.
Tempest (incorporated by reference to Qwest's Annual
Report on Form 10-K for the year ended December 31,
2000).*
(10.13) -- Employment Agreement dated October 6, 1998 with Afshin
Mohebbi (incorporated by reference to Qwest's Annual
Report on Form 10-K for the year ended December 31,
2000).*
(10.14)**** -- Employment Agreement dated October 8, 1997 with Lewis O.
Wilks.*
(10.15)**# -- IRU Agreement dated as of October 18, 1996 with Frontier
Communications International Inc.
(10.16)**# -- IRU Agreement dated as of February 26, 1996 with WorldCom
Network Services, Inc.
</Table>
37

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

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

( ) Previously filed.
39

* Executive Compensation Plans and Arrangements.

** Incorporated by reference in Form S-1 as declared effective on June 23,
1997 (File No. 333-25391).

*** Incorporated by reference to exhibit 4.1 in Form S-4 as declared effective
on January 5, 1998 (File No. 333-42847).

**** Incorporated by reference in Qwest's Form 10-K for the year ended December
31, 1997.

# Portions have been omitted pursuant to a request for confidential
treatment.