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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 020549
---------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
<Table>
QWEST COMMUNICATIONS QWEST CAPITAL
INTERNATIONAL INC. FUNDING, INC.
(Exact name of each registrant as specified in its charter)
</Table>
<Table>
DELAWARE 4811 COLORADO
(State or other jurisdiction of (Primary Standard Industrial (State or other jurisdiction of
incorporation or organization) Classification Code Number) incorporation or organization)
84-1339282 84-1028672
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
</Table>
1801 CALIFORNIA STREET
DENVER, COLORADO 80202
(303) 992-1400
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Both Registrants' Principal Executive Offices)
ROBIN R. SZELIGA
EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER
QWEST COMMUNICATIONS INTERNATIONAL INC.
1801 CALIFORNIA STREET
DENVER, COLORADO 80202
(303) 992-1400
(Name, Address, Including Zip Code, and Telephone Number of Agent for Service
for Both Registrants)
---------------------
COPIES TO:
RICHARD A. BOEHMER, ESQ.
STEVEN L. GROSSMAN, ESQ.
O'MELVENY & MYERS LLP
400 SOUTH HOPE STREET, 15TH FLOOR
LOS ANGELES, CALIFORNIA 90071
(213) 430-6000
---------------------
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE(1)
---------------------------------------------------------------------------------------------------------------------------------
5 7/8% Notes due 2004................ $1,250,000,000 100% $1,250,000,000 $312,500
---------------------------------------------------------------------------------------------------------------------------------
Guarantees constituting guarantees of
the 5 7/8% Notes by Qwest.......... * * * *
---------------------------------------------------------------------------------------------------------------------------------
7% Notes due 2009.................... $2,000,000,000 100% $2,000,000,000 $500,000
---------------------------------------------------------------------------------------------------------------------------------
Guarantees constituting guarantees of
the 7% Notes by Qwest.............. * * * *
---------------------------------------------------------------------------------------------------------------------------------
7 5/8% Notes due 2021................ $500,000,000 100% $500,000,000 $125,000
---------------------------------------------------------------------------------------------------------------------------------
Guarantees constituting guarantees of
the 7 5/8% Notes by Qwest.......... * * * *
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(f) of the Securities Act of 1933, as amended.
* No separate consideration will be received for the Guarantees.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8 OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8, MAY DETERMINE.
--------------------------------------------------------------------------------
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 30, 2001
PROSPECTUS
(QWEST LOGO)
QWEST CAPITAL FUNDING, INC.
OFFER TO EXCHANGE ALL OF OUR OUTSTANDING
$1,250,000,000 5 7/8% NOTES DUE 2004
AND
$2,000,000,000 7% NOTES DUE 2009
AND
$500,000,000 7 5/8% NOTES DUE 2021, RESPECTIVELY,
FOR
$1,250,000,000 5 7/8% NOTES DUE 2004
AND
$2,000,000,000 7% NOTES DUE 2009
AND
$500,000,000 7 5/8% NOTES DUE 2021
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY,
AND INTEREST ON THE NEW 5 7/8% NOTES, ON THE NEW 7% NOTES
AND ON THE NEW 7 5/8% NOTES
IS UNCONDITIONALLY
GUARANTEED
BY
QWEST COMMUNICATIONS INTERNATIONAL INC. ("QWEST")
---------------------
Qwest Capital Funding, Inc. (the "Company" or "Capital Funding," which may
be referred to as "we," "us," or "our") hereby offers, upon the terms and
subject to the conditions set forth in this prospectus and the accompanying
letter of transmittal (which together constitute the "exchange offer"), (i) to
exchange up to $1,250,000,000 aggregate principal amount of our new 5 7/8% Notes
due 2004 (the "new 5 7/8% Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like principal
amount of our outstanding 5 7/8% Notes due 2004 (the "old 5 7/8% Notes" and
collectively with the new 5 7/8% Notes, the "5 7/8% Notes"), which have not been
so registered, (ii) to exchange up to $2,000,000,000 aggregate principal amount
of our new 7% Notes due 2009 (the "new 7% Notes"), which have been registered
under the Securities Act, for a like principal amount of our outstanding 7%
Notes due 2009 (the "old 7% Notes" and collectively with the new 7% Notes, the
"7% Notes"), which have not been so registered, and (iii) to exchange up to
$500,000,000 aggregate principal amount of our new 7 5/8% Notes due 2021 (the
"new 7 5/8% Notes"), which have been registered under the Securities Act, for a
like principal amount of our outstanding 7 5/8% Notes due 2021 (the "old 7 5/8%
Notes" and collectively with the new 7 5/8% Notes, the "7 5/8% Notes"), which
have not been so registered. The terms of the new 5 7/8% Notes, of the new 7%
Notes, and of the new 7 5/8% Notes (collectively, the "new Notes") are identical
in all material respects to the old 5 7/8% Notes, the old 7% Notes, and the old
7 5/8% Notes (collectively, the "old Notes"), respectively, except for the
absence of certain transfer restrictions relating to the old Notes. The new
Notes will evidence the same indebtedness as the old Notes, and will be issued
pursuant to, and entitled to the benefits of, the same Indenture that governs
the old Notes.
We will accept for exchange any and all old Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on , 2001 unless
extended. The exchange offer is not conditioned upon any principal amount of the
old 5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes being tendered for
exchange pursuant to the exchange offer. The exchange offer is subject to
certain other customary conditions. See "The Exchange Offer -- Conditions of the
Exchange Offer." We will not receive any proceeds from the exchange offer.
We do not intend to list the new 5 7/8% Notes, the new 7% Notes, or the new
7 5/8% Notes on any securities exchange. Therefore no active public market for
the new 5 7/8% Notes, the new 7% Notes or the new 7 5/8% Notes is anticipated.
You should carefully review the Risk Factors on page 6 of this Prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2001.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
-----
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE............ (ii)
WHERE YOU CAN FIND MORE INFORMATION......................... (iii)
PROSPECTUS SUMMARY.......................................... 1
RISK FACTORS................................................ 6
THE EXCHANGE OFFER.......................................... 7
CAPITALIZATION OF QWEST COMMUNICATIONS INTERNATIONAL
INC. ..................................................... 15
RATIO OF EARNINGS TO FIXED CHARGES.......................... 15
DESCRIPTION OF NEW NOTES.................................... 16
REGISTRATION RIGHTS......................................... 24
CERTAIN U.S. FEDERAL TAX CONSIDERATIONS..................... 27
PLAN OF DISTRIBUTION........................................ 30
LEGAL MATTERS............................................... 31
EXPERTS..................................................... 31
</Table>
FORWARD-LOOKING INFORMATION MAY PROVE INACCURATE
This prospectus contains or incorporates by reference financial
projections, synergy estimates and other "forward-looking statements" as that
term is used in federal securities laws about Qwest's and our financial
condition results of operations and business. These statements include, among
others:
- statements concerning the benefits that Qwest expects will result from
its business activities and certain transactions Qwest has completed,
such as increased revenues, decreased expenses and avoided expenses and
expenditures; and
- statements of Qwest's expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts.
These statements may be made expressly in this prospectus, or may be
incorporated by reference to other documents filed with the Securities and
Exchange Commission (the "SEC"). You can find many of these statements by
looking for words such as "believes," "expects," "anticipates," "estimates," or
similar expressions used in this prospectus or incorporated by reference in this
prospectus.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause Qwest's and our actual results to be materially
different from any future results expressed or implied by Qwest and us in those
statements. The risks and uncertainties include those risks, uncertainties and
risk factors identified, among other places, under "Risk Factors" and under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the documents incorporated by reference in this prospects.
The most important facts that could prevent Qwest and us from achieving our
stated goals include, but are not limited to, the following:
- intense competition in the communications services market;
- changes in demand for Qwest's products and services;
- dependence on new product development and acceleration of the deployment
of advanced new services, such as broadband data, wireless and video
services, which could require substantial expenditure of financial and
other resources in excess of contemplated levels;
- rapid and significant changes in technology and markets;
- higher than anticipated employee levels, capital expenditures and
operating expenses;
- adverse changes in the regulatory or legislative environment affecting
Qwest's business and delays in Qwest's ability to provide interLATA
long-distance services in its 14-state local service territory;
- failure to maintain rights of way; and
- failure to achieve the projected synergies and financial results expected
to result from the acquisition of U S WEST, Inc., ("Old U S WEST"), by
Qwest on June 30, 2000 (the "Merger"), timely or at all, and difficulties
in combining the operations of Qwest and Old U S WEST, which could affect
our revenues, levels of expenses and operating results.
Because the statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the
forward-looking statements. Qwest and we caution you not to place undue reliance
on the statements, which speak only as of the date of this prospectus or, in the
case of documents incorporated by reference, the date of the document.
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 we or persons acting on their or our behalf may issue.
Neither Qwest nor we undertake any obligation to review or confirm analysts'
expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date of
this prospectus or to reflect the occurrence of unanticipated events.
ii
WHERE YOU CAN FIND MORE INFORMATION
Qwest files and Old U S WEST filed annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any
document Qwest and Old U S WEST filed at the SEC's public reference facilities
in Washington, D.C., New York, New York, and Chicago, Illinois. For further
information on the public reference rooms, please call the SEC at
1-800-SEC-0330. Qwest's and Old U S WEST's SEC filings are also available to the
public from the SEC's web site at www.sec.gov. In addition, their SEC filings
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
Qwest and we incorporate by reference into this prospectus the documents
listed below and any future filings (including filings made after the date of
this prospectus, but before the registration statement becomes effective) made
by Qwest with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
- Qwest's Annual Report on Form 10-K for the year ended December 31, 2000
(as amended by Form 10-K/A filed August 20, 2001);
- Qwest's Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001 and June 30, 2001; and
- Qwest's Current Reports on Form 8-K filed January 25, 2001, February 27,
2001, March 15, 2001, March 22, 2001, March 29, 2001, April 5, 2001,
April 25, 2001, April 27, 2001, May 17, 2001, June 5, 2001 (as amended by
Form 8-K/A filed June 5, 2001), June 8, 2001, June 20, 2001, June 21,
2001, July 20, 2001, July 26, 2001 (as amended by Form 8-K/A filed July
26, 2001), August 7, 2001 (as amended by Form 8-K/A filed August 13,
2001) and September 10, 2001.
You may obtain documents incorporated by reference in this prospectus at no
cost by requesting them in writing from Qwest at the following address:
Corporate Secretary
Qwest Communications International Inc.
1801 California Street, Suite 3800
Denver, Colorado 80202
(303) 992-1400
If you would like to request documents from us, please do so by
, 2001 to receive them before the exchange offer expires.
Any statement contained in this prospectus or in a document incorporated or
deemed to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein or therein, or in any other subsequently filed document that
also is or is deemed to be incorporated herein or therein by reference, modifies
or supersedes such statement. Any such statement so modified or superseded will
not be deemed to constitute a part of this prospectus except as so modified or
superseded.
You should rely only on the information in this prospectus or incorporated
by reference in this prospectus. We have not authorized anyone to provide you
with different information. We are not making any offer of these debt securities
in any state where the offer is not permitted. You should not assume that the
information contained in this prospectus is accurate as of any date other than
the date on the front page of this prospectus. Separate financial statements of
Capital Funding are not publicly available.
iii
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the detailed information and
financial statements appearing elsewhere in this prospectus. Certain capitalized
terms used herein are defined elsewhere in this prospectus.
WHO WE ARE
We are a wholly owned subsidiary of Qwest. We provide financing to Qwest
and its affiliates by issuing debt guaranteed by Qwest. We are a Colorado
corporation and our principal executive offices are located at 1801 California
Street, Denver, Colorado 80202, Suite 3800, telephone number (303) 992-1400.
Qwest is an international leader in broadband Internet communications and
application services to over 29 million customers. Qwest has over 3 million
fiber miles and over 100,000 route miles. Qwest provides Internet-based data,
image and voice communications, Digital Subscriber Line (DSL) services and long-
distance services internationally, and wireless, local communications and
directory services in 14 western states of the United States.
The Merger accelerated Qwest's strategy of becoming a premier end-to-end
international provider of advanced broadband Internet-based communications and
enables Qwest to extend its broadband Internet leadership position to more
business and retail customers throughout the world. The Merger also brings about
significant economies of scale and revenue opportunities, while providing
meaningful cost savings attained through the avoidance or elimination of
duplicate operating costs and capital expenditures.
Qwest is a Delaware corporation incorporated on February 18, 1997. Its
principal executive offices are located at 1801 California Street, Denver,
Colorado 80202, Suite 3800, and its telephone number is (303) 992-1400. For
additional information about Qwest, please refer to the documents we have
incorporated by reference. See "WHERE YOU CAN FIND MORE INFORMATION."
CREDIT RATINGS
Standard & Poor's Ratings Services, Moody's Investor Services, Inc., and
Fitch Investor Services, Inc. rate our commercial paper at A-2, P-2, and F2,
respectively, and our long-term senior unsecured debt at BBB+, Baa1 and BBB+,
respectively.
Standard & Poor's, Moody's and Fitch rate the long-term debt of Qwest at
BBB+, Baa1 and BBB+, respectively.
THE EXCHANGE OFFER
On July 30, 2001, we issued $1,250,000,000 aggregate principal amount of
5 7/8% Notes due 2004, $2,000,000,000 aggregate principal amount of 7% Notes due
2009 and $500,000,000 aggregate principal amount of 7 5/8% Notes due 2021, to
certain initial purchasers in a transaction exempt from the registration
requirements of the Securities Act. The terms of the new Notes and the old Notes
are substantially identical in all material respects, except that the new Notes
will be freely transferable by the holders, except as otherwise provided in this
prospectus. The old Notes and the new Notes are sometimes collectively referred
to as the "Notes."
We are offering to exchange $1,000 principal amount of new 5 7/8% Notes for
each $1,000 principal amount of old 5 7/8% Notes, to exchange $1,000 principal
amount of new 7% Notes for each $1,000 principal amount of old 7% Notes, and to
exchange $1,000 principal amount of new 7 5/8% Notes for each $1,000 principal
amount of old 7 5/8% Notes.
In connection with the sale of the old Notes, we entered into a
Registration Rights Agreement with the initial purchasers dated as of July 30,
2001 (the "Registration Rights Agreement"), which grants the holders of the old
Notes certain exchange and registration rights. The exchange offer is intended
to satisfy such exchange rights, which terminate upon the consummation of the
exchange offer.
1
Based upon existing interpretations of the Securities Act by the Staff of
the SEC as set forth in several no-action letters to third parties, we believe
that the new Notes issued in the exchange offer may be offered for resale or
resold by holders without having to comply with the registration and prospectus
delivery requirements of the Securities Act, provided that:
- the new Notes are acquired in the ordinary course of the holders'
business and the holders have no arrangement with any person to engage in
a distribution of new Notes, and
- the holders are not "affiliates" of Qwest or us or broker-dealers who
purchased old Notes directly from us to resell under Rule 144A or any
other available exemption under the Securities Act.
Each holder, other than a broker-dealer, must represent that it is not an
affiliate of us or Qwest, is acquiring the new Notes in the ordinary course of
its business, is not engaged in and does not intend to engage in a distribution
of the new Notes and has no arrangement to participate in a distribution of new
Notes. Each broker-dealer that receives new Notes for its own account in the
exchange offer must acknowledge that it will comply with the prospectus delivery
requirements of the Securities Act in connection with any resale of the new
Notes. Broker-dealers who acquired old Notes directly from us and not as a
result of market-making activities or other trading activities may not
participate in the exchange offer and must comply with the prospectus delivery
requirements of the Securities Act in order to resell the old Notes.
We do not intend to seek our own no-action letter from the Staff of the
SEC, and there can be no assurance that the Staff would make a similar
determination with respect to the new Notes as it has in no-action letters to
third-parties referred to above.
EXPIRATION DATE............... The exchange offer will expire at 5:00 p.m.,
New York City time, on , 2001, or a
later date and time to which we extend it (the
"expiration date").
WITHDRAWAL.................... The tender of the old 5 7/8% Notes, the old 7%
Notes or the old 7 5/8% Notes in the exchange
offer may be withdrawn at any time before 5:00
p.m., New York City time, on , 2001,
or a later date and time to which we extend the
offer.
INTEREST ON THE NEW NOTES AND
THE OLD NOTES................. Interest on the new 5 7/8% Notes, the new 7%
Notes and the new 7 5/8% Notes will accrue from
the date of the original issuance of the old
5 7/8% Notes, the old 7% Notes or the old
7 5/8% Notes, as applicable, or from the date
of the last periodic payment of interest on the
old 5 7/8% Notes, the old 7% Notes or the old
7 5/8% Notes, as applicable, whichever is
later. No additional interest will be paid on
the old Notes tendered and accepted for
exchange. However, old Notes that are not
tendered or accepted for exchange will continue
to accrue interest.
CONDITIONS TO THE EXCHANGE
OFFER......................... The exchange offer is subject to certain
conditions, which we may waive. See "THE
EXCHANGE OFFER -- Conditions to the Exchange
Offer."
PROCEDURES FOR TENDERING OLD
NOTES......................... To accept the exchange offer, you must
complete, sign and date a copy of the
accompanying letter of transmittal and mail or
otherwise deliver it, together with the old
5 7/8% Notes, the old 7% Notes or the old
7 5/8% Notes, as the case may be, and any other
required documentation, to the exchange agent
at the address set forth in this prospectus.
Persons holding the old 5 7/8% Notes, the old
7% Notes or the old 7 5/8% Notes, as
applicable, through the Depository Trust
Company ("DTC") and wishing to accept the
exchange offer must do so under the DTC's
automated tender offer
2
program. Under this program, each tendering
participant will agree to be bound by the
letter of transmittal.
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS............. Any beneficial owner whose old Notes are
beneficially registered in the name of a
broker, dealer, commercial bank, trust company
or other nominee and who wishes to tender
should contact such registered holder promptly
and instruct such registered holder to tender
on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such
beneficial owner's own behalf, such owner must,
before completing and executing the letter of
transmittal and delivering its old Notes,
obtain a properly completed bond power from the
registered holder.
GUARANTEED DELIVERY
PROCEDURES.................... Holders of old Notes who wish to tender their
old Notes and whose old Notes are not
immediately available or who cannot deliver
their old Notes, the letter of transmittal or
any other documents required by the letter of
transmittal to the exchange agent (or comply
with the procedures for book-entry transfer)
before the expiration date must tender their
old Notes according to the guaranteed delivery
procedures set forth in "THE EXCHANGE
OFFER -- Guaranteed Delivery Procedures."
EXCHANGE AGENT................ Our principal exchange agent is Bank One Trust
Company, National Association.
FEDERAL INCOME TAX
CONSIDERATIONS................ In the opinion of our counsel, the exchange of
old Notes for new Notes in the exchange offer
will not be a taxable exchange for United
States federal income tax purposes.
EFFECT OF NOT TENDERING....... Old 5 7/8% Notes, old 7% Notes or old 7 5/8%
Notes that are not tendered, or that are
tendered but not accepted, will continue to be
subject to the existing restrictions on
transfer. We will have no further obligation to
register the old 5 7/8% Notes, the old 7% Notes
or the old 7 5/8% Notes under the Securities
Act. See "THE EXCHANGE OFFER -- Consequences Of
Failure To Exchange."
THE NEW NOTES
Some of the terms and conditions described below are subject to important
limitations and exceptions. The "DESCRIPTION OF NEW NOTES" section of this
prospectus beginning on page 16 contains a more detailed description of the
terms and conditions of the new Notes.
ISSUER........................ Qwest Capital Funding, Inc., a Colorado
corporation.
GUARANTOR..................... Qwest Communications International Inc., a
Delaware corporation.
SECURITIES OFFERED............ $1,250,000,000 principal amount of new 5 7/8%
Notes due 2004; $2,000,000,000 principal amount
of new 7% Notes due 2009; and $500,000,000
principal amount of new 7 5/8% Notes due 2021.
MATURITY...................... August 3, 2004, August 3, 2009 and August 3,
2021, as applicable.
INTEREST RATE................. 5 7/8%, 7% and 7 5/8%, as applicable, per
annum, calculated using a 360-day year of
twelve 30 day months.
3
INTEREST PAYMENT DATES........ Each February 3 and August 3 commencing
February 3, 2002.
RANKING....................... The new Notes will rank equally with all of our
other unsecured and unsubordinated
indebtedness. As of June 30, 2001, we had
approximately $14.4 billion of debt
outstanding, not including debt of Qwest's
other subsidiaries. The Notes are obligations
guaranteed by Qwest. Qwest is a holding company
with no material assets other than the stock of
its subsidiaries. Qwest's subsidiaries conduct
substantially all of their respective
operations and own substantially all of their
respective assets at the subsidiary level. As a
result, the Notes effectively rank junior to
all existing and future debt, trade payables
and other liabilities of Qwest's subsidiaries
other than us.
OPTIONAL REDEMPTION........... We can redeem the Notes at any time at a
redemption price determined as described under
"DESCRIPTION OF NEW NOTES -- Optional
Redemption" on page 18.
RISK FACTORS
We urge you to carefully review the risk factors beginning on page 6 for a
discussion of factors you should consider before exchanging your old Notes for
new Notes.
4
SELECTED FINANCIAL DATA FOR QWEST COMMUNICATIONS INTERNATIONAL INC.
(DOLLARS IN MILLIONS)
The table below shows selected historical financial information for Qwest.
Amounts reflected below for the years ended December 31, 1996, 1997, 1998 and
1999, as well as the six months ended June 30, 2000, represent the results of
operations of Old U S WEST only (the accounting acquirer in the Merger). For the
year ended December 31, 2000, the amounts reflect the results of operations for
(i) Old U S WEST from January 1, 2000 through June 29, 2000 and (ii) the merged
Qwest entity from June 30, 2000 through the end of the year. The amounts shown
for the six months ended June 30, 2001 reflect the operations of the merged
Qwest entity. Interim operating results are not necessarily indicative of
results that may be expected for the full year.
<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------- ----------------
1996 1997 1998 1999 2000 2000 2001
------- ------- ------- ------- ------- ------ -------
Operating revenues......... $11,168 $11,521 $12,395 $13,182 $16,610 $6,827 $10,273
Operating expenses......... 8,356 8,745 9,346 9,845 14,787 5,253 9,501
Operating income........... 2,812 2,776 3,049 3,337 1,823 1,574 772
Net income (loss)(1)....... 1,535 1,524 1,508 1,342 (81) 283 (3,352)
Total assets............... 17,279 17,667 18,407 23,272 73,501 69,848 73,906
Total debt................. 6,545 5,715 9,919 13,071 19,066 18,165 23,434
Debt to total capital
ratio.................... 61.6% 56.7% 92.9% 91.2% 31.6% 30.5% 38.6%
EBITDA(2).................. $ 4,970 $ 4,939 $ 5,248 $ 5,704 $ 6,917 $3,066 $ 4,026
Interest expense........... 448 405 543 736 1,041 418 681
Capital expenditures....... 2,831 2,672 2,905 4,218 6,968 2,702 5,559
Dividends paid on common
stock.................... $ 939 $ 992 $ 1,056 $ 1,187 $ 542 $ 542 $ 83
</Table>
---------------
(1) Net loss for the first six months of 2001 includes a charge of $3.169
billion on our marketable equity securities for other than temporary
declines in value, a charge of $358 million for Merger-related and other
one-time charges, a charge of $136 million for a depreciation adjustment for
access lines returned to service, a gain of $30 million on the sale of local
telephone exchanges, and an extraordinary charge of $65 million related to
the early retirement of debt. 2000 net loss includes a charge of $1.096
billion of Merger-related costs, a charge of $560 million on the decline in
the market value of certain financial instruments and a net gain of $182
million on the sales of investments. 1999 net income includes expenses of
$282 million related to a terminated merger, a loss of $225 million on the
sale of common stock and a charge of $34 million on the decline in the
market value of derivative financial instruments. 1999 net income also
includes $240 million for the cumulative effect of a change in accounting
principle related to recognizing directory publishing revenues and expenses
from the "deferred method" to the "point of publication method." 1998 net
income includes expenses of $68 million associated with the June 12, 1998
separation of Old U S WEST's former parent company into two independent
companies and an asset impairment charge of $21 million. 1997 net income
includes a $152 million regulatory charge related primarily to the 1997
Washington State Supreme Court ruling that upheld a Washington rate order, a
gain of $32 million on the sale of Old U S WEST's one-seventh interest in
Bell Communications Research, Inc. and a gain of $48 million on the sales of
local telephone exchanges. 1997 net income was also reduced by an
extraordinary charge of $3 million for the early extinguishment of debt.
1996 net income includes a gain of $36 million on the sale of local
telephone exchanges and the current effect of $15 million from adopting
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of."
(2) Earnings before interest, income taxes, depreciation and amortization
("EBITDA") does not include non-recurring and non-operating items such as
Merger-related costs, asset write-offs and impairments, gains/losses on the
sale of investments and fixed assets, changes in the market values of
investments, one-time legal charges and sales of local telephone exchanges.
EBITDA does not represent cash flow for the periods presented and should not
be considered as an alternative to net earnings (loss) as an indicator of
our operating performance or as an alternative to cash flows as a source of
liquidity, and may not be comparable with EBITDA as defined by other
companies.
5
RISK FACTORS
You should carefully consider the following discussion of risks, and the
other information included or incorporated by reference in this prospectus in
evaluating us and Qwest and our and their business before participating in the
exchange offer:
RISK FACTORS RELATED TO THE EXCHANGE
Holders of old Notes who do not exchange their old Notes for new Notes will
continue to be subject to the restrictions on transfer of the old Notes, as set
forth in the legends on the old Notes. The old Notes may not be offered or sold
unless they are registered under the Securities Act or are exempt from
registration. See "THE EXCHANGE OFFER."
DIFFICULTIES IN COMBINING OPERATIONS AND REALIZING SYNERGIES
Qwest expects that the Merger will result in certain benefits, including
operating efficiencies, cost savings, synergies and other benefits. Achieving
the benefits of the Merger will depend in part upon the integration of the
businesses of Old U S WEST and Qwest in an efficient manner, which Qwest
believes will require considerable effort. In addition, the consolidation of
operations has required and will continue to require substantial attention from
management. The diversion of management attention and any difficulties
encountered in the transition and integration process could have a material
adverse effect on the revenues, levels of expenses and operating results of the
combined company. No assurance can be given that the two companies will succeed
in integrating their operations in a timely manner or without encountering
significant difficulties or that the expected operating efficiencies, cost
savings, synergies and other benefits from such integration will be realized.
There can be no assurance that such integration efforts will not have a material
adverse effect on Qwest's ability to compete or will not materially affect its
ability to service its debt, including the Notes.
FUTURE PROVISION OF INTERLATA SERVICES
In the 14-state territory where Qwest provides service as an incumbent
local exchange carrier, Qwest is permitted to provide interLATA services only
upon satisfaction of certain regulatory conditions primarily related to local
exchange telephone competition. These restrictions will be lifted on a
state-by-state basis following further proceedings in these states and at the
Federal Communications Commission (the "FCC"). Qwest expects to file its first
application with the FCC for authority to enter the interLATA business later
this year, to file the remaining applications in late 2001 or early 2002, and to
receive approval for all states by mid-2002. There can be no assurance that
Qwest will obtain timely approval of these applications. As a result of these
restrictions on in-region interLATA services, Qwest will not be able to offer a
ubiquitous long-distance solution to those customers requiring services both in
and out of the region. This may materially adversely impact Qwest's ability to
achieve its targeted growth in national accounts requiring these services. Even
after elimination of the interLATA restrictions, Qwest's long-distance
operations will be subject to various regulatory constraints, including the
requirement that interLATA services be offered through a subsidiary that is
structurally separated from Qwest's local exchange company. There can be no
assurance that these regulations will not have a material adverse effect on
Qwest's ability to compete or will not materially affect its ability to service
its debt, including the Notes.
QWEST IS DEPENDENT ON ITS SUBSIDIARIES FOR REPAYMENT OF DEBT
The Notes are obligations guaranteed by Qwest. Qwest is a holding company
with no material assets other than the stock of its subsidiaries. Qwest conducts
substantially all of its operations and owns substantially all of its assets at
the subsidiary level. As a result, the Guarantees effectively will rank junior
to all existing and future debt, trade payables and other liabilities of Qwest's
subsidiaries other than us. The rights of Qwest, and hence the rights of its
creditors (including holders of the Notes through Qwest's guarantee of payment
of principal, premium, if any, and interest) to participate in any distribution
of assets of any subsidiary upon its liquidation or reorganization or otherwise
would be subject to the prior claims of the subsidiary's creditors, except to
the extent that claims of Qwest itself as a creditor of the subsidiary may be
6
recognized. After the payment of the subsidiary's liabilities, the subsidiary
may not have enough assets remaining to pay Qwest to permit its creditors,
including the holders of the Notes through the guarantees, to be paid.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We originally issued and sold the old Notes on July 30, 2001 in an offering
exempt from registration under the Securities Act in reliance upon the
exemptions provided by Section 4(2), Rule 144A and Regulation S of the
Securities Act. Accordingly, the old Notes may not be transferred unless
registered or unless an exemption from the registration requirements of the
Securities Act and applicable state securities laws is available.
As a condition to the sale of the old Notes, we, Qwest and the initial
purchasers of the old Notes (the "initial purchasers") entered into the
Registration Rights Agreement. In the Registration Rights Agreement, we agreed
that we would use our reasonable best efforts to:
- file with the SEC a registration statement under the Securities Act with
respect to the new Notes within 150 calendar days of July 30, 2001 (or by
December 27, 2001);
- cause a registration statement to be declared effective under the
Securities Act within 210 calendar days after July 30, 2001 (or by
February 25, 2002);
- keep the exchange offer open for not less than 30 calendar days (or
longer if required by applicable law) after the date that notice of the
exchange offer is mailed to the holders of the old Notes; and
- consummate the exchange offer within 240 calendar days of July 30, 2001
(or by March 27, 2002).
We have filed a copy of the Registration Rights Agreement as an exhibit to
the registration statement of which this prospectus is a part. The registration
statement satisfies certain of our obligations under the Registration Rights
Agreement.
TERMS OF THE EXCHANGE OFFER, PERIOD FOR TENDERING OLD NOTES
This prospectus and the accompanying letter of transmittal together make up
the exchange offer. On the terms and subject to the conditions set forth in this
prospectus and the letter of transmittal, we will accept for exchange any old
5 7/8% Notes, any old 7% Notes and any old 7 5/8% Notes that are properly
tendered on or before the expiration date unless they are withdrawn as permitted
below. We will issue $1,000 principal amount of new 5 7/8% Notes in exchange for
each $1,000 principal amount of outstanding old 5 7/8% Notes surrendered in the
exchange offer, we will issue $1,000 principal amount of new 7% Notes in
exchange for each $1,000 principal amount of outstanding old 7% Notes
surrendered in the exchange offer, and we will issue $1,000 principal amount of
new 7 5/8% Notes in exchange for each $1,000 principal amount of outstanding old
7 5/8% Notes surrendered in the exchange offer. Holders of the old Notes may
tender some or all of their old Notes; however, old Notes may be exchanged only
in integral multiples of $1,000. The form and terms of the new Notes are the
same as the form and terms of the old Notes except that the exchange will be
registered under the Securities Act and the new Notes will not bear legends
restricting their transfer.
The new 5 7/8% Notes, the new 7% Notes and the new 7 5/8% Notes will
evidence the same debt as the old 5 7/8% Notes, the old 7% Notes and the old
7 5/8% Notes, respectively, and will be issued under the same indenture.
The exchange offer is not conditioned upon any minimum principal amount of
old 5 7/8% Notes, old 7% Notes or old 7 5/8% Notes being tendered. As of the
date of this prospectus, an aggregate of $1,250,000,000 in principal amount of
the old 5 7/8% Notes is outstanding, an aggregate of $2,000,000,000 in principal
amount of the old 7% Notes is outstanding and an aggregate of $500,000,000 in
principal amount of the old
7
7 5/8% Notes is outstanding. This prospectus is first being sent on or about
, 2001, to all holders of old Notes known to us.
Holders of the old Notes do not have any appraisal or dissenters' rights
under the indenture in connection with the exchange offer.
We may, at any time or from time to time, extend the period of time during
which the exchange offer is open and delay acceptance for exchange of any old
Notes by giving written notice of the extension to the holders as described
below. During the extension, all old Notes previously tendered will remain
subject to the exchange offer and may be accepted for exchange by us. Any old
Notes not accepted for exchange for any reason will be returned without expense
to the tendering holder as promptly as practicable after the expiration of the
exchange offer.
We reserve the right to amend or terminate the exchange offer if any of the
conditions of the exchange offer are not met. The conditions of the exchange
offer are specified below under "-- Conditions of the Exchange Offer." We will
give written notice of any extension, amendment, nonacceptance or termination to
the holders of the old Notes as promptly as practicable. Any extension to be
issued by means of a press release or other public announcement will be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
PROCEDURES FOR TENDERING OLD NOTES
The tender of old 5 7/8% Notes, old 7% Notes or old 7 5/8% Notes by a
holder as set forth below and the acceptance by us will create a binding
agreement between the tendering holder and us upon the terms and subject to the
conditions set forth in this prospectus and in the accompanying letter of
transmittal. Except as set forth below, a holder who wishes to tender old 5 7/8%
Notes, old 7% Notes or old 7 5/8% Notes for exchange must send a completed and
signed letter of transmittal, including all other documents required by the
letter of transmittal, to the exchange agent at one of the addresses set forth
below under "-- Exchange Agent" on or before the expiration date. In addition,
either:
- the exchange agent must receive before the expiration date certificates
for the old 5 7/8% Notes, old 7% Notes or old 7 5/8% Notes, as
applicable, along with the letter of transmittal;
- the exchange agent must receive confirmation before the expiration date
of a book-entry transfer of the old 5 7/8% Notes, old 7% Notes or old
7 5/8% Notes, as applicable, into the exchange agent's account at DTC as
described below; or
- the holder must comply with the guaranteed delivery procedures described
below.
The method of delivery of old 5 7/8% Notes, old 7% Notes or old 7 5/8%
Notes, letters of transmittal and all other required documents, including
delivery through DTC, is at the election and risk of the holders. If the
delivery is by mail, we recommend that holders use registered mail, properly
insured, with return receipt requested. In all cases, holders should allow
sufficient time to assure timely delivery. Holders should not send letters of
transmittal or old 5 7/8% Notes, old 7% Notes or old 7 5/8% Notes to us.
Some beneficial ownership of old Notes is registered in the name of a
broker, dealer, commercial bank, trustee or other nominee. If one of those
beneficial owners wishes to tender, the beneficial owner should contact the
registered holder of the old Notes promptly and instruct the registered holder
to tender on the beneficial owner's behalf. If one of those beneficial owners
wishes to tender on its own behalf, then before completing and signing the
letter of transmittal and delivering its old Notes, the beneficial owner must
obtain a properly completed power of attorney from the registered holder of old
Notes. If the letter of transmittal is signed by a person other than the
registered holder of the old Notes, the old Notes must be endorsed or
accompanied by appropriate powers of attorney. In either case, the letter of
transmittal must be signed exactly as the name of the registered holder appears
on the old Notes.
8
Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed unless the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes
surrendered for exchange are tendered:
- by a registered holder of the old Notes who has not completed the box
entitled "SPECIAL REGISTRATION INSTRUCTIONS" or "SPECIAL DELIVERY
INSTRUCTIONS" on the letter of transmittal, or
- for the account of a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an eligible guarantor institution. Eligible
guarantor institutions include:
- a member of a registered national securities exchange; or
- a member of the National Association of Securities Dealers, Inc.; or
- a commercial bank or trust company having an office or correspondent in
the United States.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantees must be by an eligible guarantor
institution.
If old Notes are registered in the name of a person other than a signer of
the letter of transmittal, the old Notes surrendered for exchange must be
endorsed by the registered holder with the signature guaranteed by an eligible
guarantor institution. Alternatively, the old Notes may be accompanied by a
written assignment, signed by the registered holder with the signature
guaranteed by an eligible guarantor institution.
All questions as to the validity, form, eligibility, time of receipt and
acceptance of old Notes tendered for exchange will be determined by us in our
sole discretion, and our determination will be final and binding. We reserve the
absolute right to reject any tenders of any old Notes not properly tendered or
any old Notes whose acceptance might, in our judgment or the judgment of our
counsel, be unlawful. We also reserve the absolute right to waive any defects or
irregularities or conditions of the exchange offer as to any old Notes either
before or after the expiration date. The interpretation of the terms and
conditions of the exchange offer as to any old Notes either before or after the
expiration date by us will be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of old Notes for
exchange must be cured within a reasonable period of time as we will determine.
Neither we, Qwest, the exchange agent nor any other person will be under any
duty to give notification of any defect or irregularity with respect to any
tender of old Notes for exchange. Any old Notes received by the exchange agent
that are not properly tendered and as to which the defects or irregularities
have not been cured or waived will be returned by the exchange agent to the
tendering holders, unless otherwise provided in the letter of transmittal, as
soon as practicable.
If the letter of transmittal or any old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless waived by us,
those persons must submit proper evidence satisfactory to us of their authority
to act.
By tendering, each holder will represent to us:
- that it is not an "affiliate," as defined in Rule 405 of the Securities
Act, of us or Qwest, or if it is an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act
to the extent applicable;
- that it is not a broker-dealer tendering Registrable Securities (as
defined in the Registration Rights Agreement described herein) acquired
directly from us;
- that it is acquiring the new 5 7/8% Notes, the new 7% Notes or the new
7 5/8% Notes in the ordinary course of its business; and
- at the time of the closing of the exchange offer it has no arrangement or
understanding to participate in the distribution, within the meaning of
the Securities Act, of the new 5 7/8% Notes, the new 7% Notes or the new
7 5/8% Notes.
9
If the holder is a broker-dealer that will receive new 5 7/8% Notes, new 7%
Notes or new 7 5/8% Notes for its own account in exchange for old 5 7/8% Notes,
old 7% Notes or old 7 5/8% Notes that were acquired as a result of market-making
activities or other trading activities, the holder may be deemed to be an
"underwriter" within the meaning of the Securities Act. Such holder will be
required to acknowledge in the letter of transmittal that it will deliver a
prospectus in connection with any resale of the new 5 7/8% Notes, the new 7%
Notes or the new 7 5/8% Notes. However, by so acknowledging and by delivering a
prospectus, the holder will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE, DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all old 5 7/8% Notes, all
old 7% Notes and all old 7 5/8% Notes properly tendered and will issue the new
5 7/8% Notes, the new 7% Notes and the new 7 5/8% Notes, as applicable, promptly
after acceptance of the old 5 7/8% Notes, the old 7% Notes and the old 7 5/8%
Notes, respectively. See "-- Conditions of the Exchange Offer" below. We will be
deemed to have accepted properly tendered old 5 7/8% Notes, properly tendered
old 7% Notes and properly tendered old 7 5/8% Notes for exchange when we have
given oral or written notice to the exchange agent.
For each old 5 7/8% Note, each old 7% Note and each old 7 5/8% Note validly
tendered to us, the holder of the applicable old Note will receive an applicable
new Note having a principal amount equal to the principal amount of the tendered
old Note. The new 5 7/8% Notes will bear interest at the same rate and on the
same terms as the old 5 7/8% Notes, the new 7% Notes will bear interest at the
same rate and on the same terms as old 7% Notes, the new 7 5/8% Notes will bear
interest at the same rate and on the same terms as the old 7 5/8% Notes.
Consequently, interest on the new 5 7/8% Notes will accrue at a rate of 5 7/8%
per annum, interest on the new 7% Notes will accrue at rate of 7% per annum, and
interest on the new 7 5/8% Notes will accrue at a rate of 7 5/8% per annum and,
with regard to all Notes, will be payable semiannually in arrears on February 3
and August 3 of each year, commencing February 3, 2002. Interest on each new
Note will accrue from the last interest payment date on which interest was paid
on the respective surrendered old Note or, if no interest has been paid on such
old Note, from the date of the original issuance of such old Note.
The issuance of new Notes for old Notes that are accepted for exchange in
the exchange offer will be made only after timely receipt by the exchange agent
of certificates for the old Notes or a timely book-entry confirmation of the old
Notes into the exchange agent's account at the book-entry transfer facility, a
completed and signed letter of transmittal and all other required documents. If
any tendered old Notes are not accepted for any reason set forth in the terms
and conditions of the exchange offer, or if old Notes are submitted for a
greater amount than the holder desires to exchange, the unaccepted or
non-exchanged old Notes will be returned without expense to the tendering holder
as promptly as practicable after the exchange offer expires or terminates. In
the case of old Notes tendered by book-entry procedures described below, the
non-exchanged old Notes will be credited to an account maintained with the
book-entry transfer facility.
CONDITIONS OF THE EXCHANGE OFFER
We will not be required to accept for exchange any old 5 7/8% Notes, any
old 7% Notes or any old 7 5/8% Notes and may terminate or amend the exchange
offer before the expiration date, if we determine that we are not permitted to
effect the exchange offer because of:
- any changes in law, or applicable interpretations by the SEC; or
- any action or proceeding is instituted or threatened in any court or
governmental agency with respect to the exchange offer.
If we determine that any of the conditions are not satisfied, we may refuse
to accept any old 5 7/8% Notes, any old 7% Notes or any old 7 5/8% Notes and
return all tendered old 5 7/8% Notes, all tendered old 7% Notes or all tendered
old 7 5/8% Notes, as the case may be, to the tendering holders or extend the
exchange offer and retain all old 5 7/8% Notes, all old 7% Notes and all old
7 5/8% Notes tendered before the expiration date, subject to the rights of
holders to withdraw such old 5 7/8% Notes, old 7% Notes and old 7 5/8% Notes or
waive such
10
unsatisfied conditions with respect to the exchange offer and accept all
properly tendered old 5 7/8% Notes, old 7% Notes and old 7 5/8% Notes, as the
case may be, that have not been withdrawn. If such waiver or amendment
constitutes a material change to the exchange offer, we will promptly disclose
such waiver or amendment by means of a prospectus supplement that will be
distributed to the registered holders of the old Notes and we will extend the
exchange offer to the extent required by Rule 14e-1 under the Exchange Act.
Holders may have certain rights and remedies against us under the
Registration Rights Agreement if we fail to close the exchange offer, whether or
not the conditions stated above occur. These conditions are not intended to
modify those rights or remedies. See "REGISTRATION RIGHTS."
BOOK ENTRY TRANSFER
The exchange agent will make a request to establish an account for the old
5 7/8% Notes, the old 7% Notes and the old 7 5/8% Notes at the book-entry
transfer facility for the exchange offer within two business days after the date
of this prospectus, and any financial institution that is a participant in the
book-entry transfer facility's systems may make book-entry delivery of old
5 7/8% Notes, old 7% Notes or old 7 5/8% Notes by causing the book-entry
transfer facility to transfer the applicable old Notes into the exchange agent's
account at the book-entry transfer facility in accordance with the book-entry
transfer facility's procedures for transfer. However, although delivery of old
Notes may be effected through book-entry transfer at the book-entry transfer
facility, the letter of transmittal or facsimile, or an agent's message, with
any required signature guarantees and any other required documents, must be
received by the exchange agent at one of the addresses set forth below under
"-- Exchange Agent" on or before the expiration date or the guaranteed delivery
procedures described below must be complied with.
The term "agent's message" means a message, transmitted by DTC to the
exchange agent and forming a part of a book-entry confirmation, which states
that DTC has received an express acknowledgment from the tendering participant
stating that the participant has received and agrees to be bound by the terms of
the letter of transmittal, and that we may enforce the letter of transmittal
against the participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder wishes to tender its old Notes and the old Notes are
not immediately available, or time will not permit the holder's old Notes or
other required documents to reach the exchange agent before the expiration date,
or the procedure for book-entry transfer cannot be completed on time, the old
Notes may nevertheless be exchanged if:
- the tender is made through an eligible guarantor institution;
- before the expiration date, the exchange agent has received from the
eligible guarantor institution an agent's message with respect to
guaranteed delivery or a completed and signed letter of transmittal, or a
facsimile, and a notice of guaranteed delivery, substantially in the form
provided by us. Delivery may be made by facsimile transmission, mail or
hand delivery. The letter of transmittal and notice of guaranteed
delivery must set forth the name and address of the holder of the old
Notes and the amount of the old 5 7/8% Notes, the old 7% Notes or the old
7 5/8% Notes being tendered, state that the tender is being made and
guarantee that within five trading days on the New York Stock Exchange
("NYSE") after the date of signing of the notice of guaranteed delivery,
the applicable certificates for all physically tendered old Notes, in
proper form for transfer, or a book-entry confirmation, and any other
documents required by the letter of transmittal, will be deposited by the
eligible guarantor institution with the exchange agent; and
- the applicable certificates for all physically tendered old Notes, in
proper form for transfer, or a book-entry confirmation and all other
documents required by the letter of transmittal, are received by the
exchange agent within five NYSE trading days after the date of signing
the notice of guaranteed delivery.
11
WITHDRAWAL RIGHTS
Tenders of old 5 7/8% Notes, old 7% Notes or old 7 5/8% Notes may be
withdrawn at any time before the close of business on the expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses set forth below under
"-- Exchange Agent." Notice may be sent by facsimile transmission, mail or hand
delivery. Any notice of withdrawal must:
- specify the name of the person who tendered the old Notes to be
withdrawn;
- identify the applicable old Notes to be withdrawn, including the amount
of the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes;
- where certificates for old Notes have been transmitted, specify the name
in which the old Notes are registered, if different from that of the
withdrawing holder; and
- state that such holder of the old Notes is withdrawing his election to
have such old Notes tendered.
If certificates for old Notes have been delivered or otherwise identified
to the exchange agent, then, before the release of the certificates the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an eligible guarantor institution unless the holder is an eligible
guarantor institution. If old Notes have been tendered under the procedure for
book-entry transfer described above, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn old Notes and otherwise comply with the procedures
of the facility. We will determine all questions as to the validity, form,
eligibility and time of receipt of the notices, and our determination will be
final and binding on all parties. Any old Notes so withdrawn will be deemed not
to have been validly tendered for exchange for purposes of the exchange offer.
Any old Notes that have been tendered for exchange, but that are not exchanged
for any reason will be returned to the holder without cost to the holder as soon
as practicable after withdrawal, rejection of tender or termination of the
exchange offer. In the case of old Notes tendered by book-entry transfer into
the exchange agent's account at the book-entry transfer facility under the
book-entry transfer procedures described above, the old Notes will be credited
to an account with the book-entry transfer facility specified by the holder.
Properly withdrawn old Notes may be re-tendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or before the expiration date.
12
EXCHANGE AGENT
Bank One Trust Company, National Association has been appointed as the
exchange agent for the exchange offer. All signed letters of transmittal should
be directed to the exchange agent at one of the addresses set forth below.
Questions and requests for assistance, requests for additional copies of this
prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent addressed as
follows:
<Table>
BY MAIL: BY HAND, OVERNIGHT MAIL OR COURIER:
Bank One Trust Company, National Association Bank One Trust Company, National Association
Attention: Exchanges Attention: Exchanges
Global Corporate Trust Services Global Corporate Trust Services
1 Bank One Plaza, Mail Suite IL 1-0122 One North State Street, 9th Floor
Chicago, IL 60670-0122 Chicago, IL 60602
or or
Bank One Trust Company, National Association Bank One Trust Company, National Association
Attention: Exchanges Attention: Exchanges
Global Corporate Trust Services Global Corporate Trust Services
14 Wall Street, 8th Floor 14 Wall Street, 8th Floor
New York, NY 10005 New York, NY 10005
</Table>
FOR INFORMATION CALL:
(800) 524-9472
Fax: 312-407-8853
E-mail: bondholder@em.fcnbd.com
Delivery of a letter of transmittal to an address other than as set forth
above or transmission of instructions via facsimile other than as set forth
above does not constitute a valid delivery of the letter of transmittal.
FEES AND EXPENSES
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer and holders who tender old Notes will not be
required to pay brokerage commissions or fees.
We will pay the expenses that will be incurred in connection with the
exchange offer. We estimate the expenses will be approximately $100,000.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the term of the new Notes.
TRANSFER TAXES
Holders who instruct us to register new Notes in the name of a person other
than the registered tendering holder will be responsible for paying any
applicable transfer tax, as will holders who request that old Notes not tendered
or not accepted in the exchange offer be returned to a person other than the
registered tendering holder. In all other cases, no transfer taxes will be due.
REGULATORY MATTERS
We are not aware of any governmental or regulatory approvals that are
required in order to complete the exchange offer.
RESALES OF THE NEW NOTES
With respect to resales of new Notes, based on certain interpretive letters
issued by the Staff of the SEC to third parties, we believe that a holder of
Notes (other than (i) a broker-dealer who purchased old Notes
13
directly from us to resell pursuant to Rule 144A or any other available
exemption under the Securities Act or (ii) a person who is an affiliate of ours
or Qwest's within the meaning of Rule 405 under the Securities Act) who
exchanges old Notes for new Notes in the ordinary course of business and who is
not participating, does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of the new
Notes, will be allowed to resell the new Notes to the public without further
registration under the Securities Act and without delivering to the purchasers
of the new Notes a prospectus that satisfies the requirements of the Securities
Act. However, a broker-dealer who holds old Notes that were acquired for its own
account as a result of market making or other trading activities may be deemed
to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act.
For a period of 180 days from the expiration of the exchange offer, we will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. If any other holder is deemed to be an
"underwriter" within the meaning of the Securities Act or acquires new Notes in
the exchange offer for the purpose of distributing or participating in a
distribution of the new Notes, such holder must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, unless an exemption from registration is otherwise
available.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the exchange offer is voluntary. Old Notes that are not
exchanged for new Notes will remain outstanding, continue to accrue interest and
will be restricted securities. Accordingly, those old Notes may only be
transferred:
- to a person who the seller reasonably believes is a qualified
institutional buyer under Rule 144A under the Securities Act;
- in an offshore transaction under Rule 903 or Rule 904 of Regulation S
under the Securities Act; or
- under Rule 144 under the Securities Act (if available);
and in accordance with all applicable securities laws of the states of the
United States. Following the consummation of the exchange offer, neither we nor
Qwest will have any further obligation to such holders to provide for
registration under the Securities Act, except that under certain circumstances,
we are required to file a shelf registration statement under the Securities Act.
See "REGISTRATION RIGHTS."
PAYMENT OF ADDITIONAL INTEREST UPON REGISTRATION DEFAULTS
If we fail to meet our obligations to complete the exchange offer or file a
shelf registration statement, additional interest will accrue on the Notes. For
additional information regarding payments of additional interest, please see
"REGISTRATION RIGHTS."
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the new Notes or the
closing of the exchange offer.
14
CAPITALIZATION OF QWEST COMMUNICATIONS INTERNATIONAL INC.
The following table sets forth as of June 30, 2001 (i) the historical
unaudited consolidated capitalization of Qwest and (ii) the pro forma unaudited
consolidated capitalization of Qwest, as adjusted to reflect the sale of the old
Notes on July 30, 2001 and the use of proceeds therefrom. The table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical Consolidated Financial
Statements and the notes thereto of Qwest in documents incorporated by reference
into this prospectus.
<Table>
<Caption>
JUNE 30, 2001
---------------------
(DOLLARS IN MILLIONS)
(UNAUDITED)
ACTUAL PRO FORMA
-------- ----------
Short-term debt, including current portion of long-term
debt...................................................... $ 5,859 $ 2,151
======= =======
Long-term debt.............................................. $17,575 $17,575
Notes offered hereby........................................ -- 3,750
Total stockholders' equity.................................. 37,286 37,286
------- -------
Total capitalization................................... $54,861 $58,611
======= =======
</Table>
Except as set forth above and in publicly available documents filed with
the SEC, there has been no material change in the capitalization of Qwest since
June 30, 2001.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
Qwest (which prior to the Merger is Old U S WEST) for each of the periods
indicated.(1)
<Table>
<Caption>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- ----------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ------ -------
5.20 5.67 4.75 3.19 1.05 1.84 $(150)(2)
</Table>
---------------
(1) "Earnings" is computed by adding income before income taxes, extraordinary
items and cumulative effect of change in accounting principle and fixed
charges. Also included in earnings is the add-back of Qwest's share of
losses in its equity method affiliates. "Fixed charges" consist of interest
on indebtedness and the portion of rentals representative of the interest
factor.
(2) For the six months ended June 30, 2001, the ratio of earnings to fixed
charges was calculated as a negative ratio. As a result, disclosed above is
the calculation of the coverage deficiency. For the purposes of this
calculation, we have included the impact of the $3.048 billion write-down of
the investment in KPNQwest that occurred during the second quarter of 2001,
as an add-back of Qwest's share of losses in its equity method affiliates.
15
DESCRIPTION OF NEW NOTES
GENERAL
Each of the new 5 7/8% Notes, the new 7% Notes and the new 7 5/8% Notes
will constitute separate series of debt securities ("Debt Securities") under an
indenture dated as of June 29, 1998, as supplemented and amended from time to
time (the "Indenture"), among us, Qwest and Bank One Trust Company, National
Association, as trustee (the "Trustee"). The new 5 7/8% Notes and the old 5 7/8%
Notes, together, the new 7% Notes and the old 7% Notes, together, and the new
7 5/8% Notes and the old 7 5/8% Notes, together, are each considered to be a
single series for all purposes under the Indenture. The following summaries of
certain provisions of the Indenture do not purport to be complete and are
subject to and are qualified in their entirety by reference to all of the
provisions of the Indenture, which provisions of the Indenture are incorporated
herein by reference. Capitalized and other terms not otherwise defined herein
will have the meanings given to them in the Indenture. A copy of the original
Indenture has been filed as an exhibit to Old U S WEST's Current Report on Form
8-K dated November 18, 1998 and the First Supplemental Indenture has been filed
as an exhibit to Qwest's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000. The forms of the Officers' Certificates establishing the terms of
the Notes and the Guarantees (as defined below) are included in the registration
statement filed with the SEC of which this prospectus is part. See "WHERE YOU
CAN FIND MORE INFORMATION."
The Indenture does not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued thereunder from time to time in one or more series. All Debt
Securities, including the new Notes are, and will be unconditionally guaranteed
as to payment of principal, premium, if any, and interest by Qwest (the
"Guarantees"). As of the date of this prospectus, the principal amount of Debt
Securities outstanding under the Indenture is approximately $10.1 billion,
excluding the Notes.
Since the new Notes will constitute separate series of Debt Securities
under the Indenture, holders of old 5 7/8% Notes who do not exchange such old
5 7/8% Notes for new 5 7/8% Notes will vote together as a separate series of
Debt Securities with holders of such new 5 7/8% Notes of that series for all
relevant purposes under the Indenture. Holders of old 7% Notes who do not
exchange such old 7% Notes for new 7% Notes will vote together as a separate
series of Debt Securities with holders of such new 7% Notes of that series for
all relevant purposes under the Indenture. Holders of old 7 5/8% Notes who do
not exchange such old 7 5/8% Notes for new 7 5/8% Notes will vote together as a
separate series of Debt Securities with holders of such new 7 5/8% Notes of that
series for all relevant purposes under the Indenture. In that regard, the
Indenture requires that certain actions by the holders of such old 5 7/8% Notes,
old 7% Notes and old 7 5/8% Notes (including acceleration following an Event of
Default) must be taken, and certain rights must be exercised, by specified
minimum percentages of the aggregate principal amount of the outstanding Notes
of the applicable series. In determining whether holders of the requisite
percentage in principal amount of the Notes of the applicable series have given
any notice, consent or waiver or taken any other action permitted under the
Indenture, any old 5 7/8% Notes that remain outstanding after the exchange offer
will be aggregated with the new 5 7/8% Notes and the holders of the old 5 7/8%
Notes and the new 5 7/8% Notes will vote together as a single series for all
purposes. The same will be true for the holders of old 7% Notes and new 7%
Notes, as well as for the holders of old 7 5/8% Notes and new 7 5/8% Notes.
Accordingly, all references in this section will be deemed to mean, at any time
after the exchange offer is consummated, the requisite percentage in aggregate
principal amount of the old 5 7/8% Notes and the new 5 7/8% Notes, the old 7%
Notes and the new 7% Notes, and the old 7 5/8% Notes and the new 7 5/8% Notes,
as the case may be.
The Notes will be issued only in registered form, without coupons, in
denominations of $1,000 and integral multiples thereof. The Notes are unsecured
obligations of ours and rank equally with all of our other unsecured and
unsubordinated indebtedness. The Guarantees are unsecured obligations of Qwest
and rank equally with all other unsecured and unsubordinated indebtedness of
Qwest. However, because Qwest is a holding company that conducts substantially
all of its operations through subsidiaries, the right of Qwest, and hence the
right of creditors of Qwest (including holders of the Notes through the
Guarantees), to participate in any distribution of assets of any subsidiary upon
its liquidation or reorganization or otherwise is necessarily
16
subject to the prior claims of creditors of such subsidiary, except to the
extent that claims of Qwest itself as a creditor of the subsidiary may be
recognized.
Interest on the Notes will be payable semiannually in arrears on February 3
and August 3 of each year, commencing February 3, 2002 (each an "Interest
Payment Date"), to the persons in whose names the Notes are registered at the
close of business on the date 15 days immediately preceding such Interest
Payment Date, as the case may be. Interest will be calculated on the basis of a
360-day year of twelve 30-day months. If any Interest Payment Date, maturity
date or redemption date is a Legal Holiday in New York, New York, the required
payment will be made on the next succeeding day that is not a Legal Holiday as
if it were made on the date such payment was due and no interest will accrue on
the amount so payable for the period from and after such Interest Payment Date,
maturity date or redemption date, as the case may be, to such next succeeding
day. "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are not required to be open.
The 5 7/8% Notes initially will be limited to $1,250,000,000 aggregate
principal amount. We and Qwest may "reopen" any series of Debt Securities and
issue additional securities of that series without the consent of the holders of
that series. The 5 7/8% Notes are unconditionally guaranteed as to payment of
principal, premium, if any, and interest by Qwest and the Guarantees rank
equally with all of Qwest's other unsecured and unsubordinated obligations. The
5 7/8% Notes will bear interest at the rate of 5 7/8% per annum from and
including July 30, 2001 or from the most recent interest payment date to which
interest has been paid or duly provided for. The 5 7/8% Notes will mature and
the principal amount will be payable on August 3, 2004. The 5 7/8% Notes will
not have the benefit of any sinking fund.
The 7% Notes initially will be limited to $2,000,000,000 aggregate
principal amount. We and Qwest may "reopen" any series of Debt Securities and
issue additional securities of that series without the consent of the holders of
that series. The 7% Notes are unconditionally guaranteed as to payment of
principal, premium, if any, and interest by Qwest and the Guarantees rank
equally with all of Qwest's other unsecured and unsubordinated obligations. The
7% Notes will bear interest at the rate of 7% per annum from and including July
30, 2001 or from the most recent interest payment date to which interest has
been paid or duly provided for. The 7% Notes will mature and the principal
amount will be payable on August 3, 2009. The 7% Notes will not have the benefit
of any sinking fund.
The 7 5/8% Notes initially will be limited to $500,000,000 aggregate
principal amount. We and Qwest may "reopen" any series of Debt Securities and
issue additional securities of that series without the consent of the holders of
that series. The 7 5/8% Notes are unconditionally guaranteed as to payment of
principal, premium, if any, and interest by Qwest and the Guarantees rank
equally with all of Qwest's other unsecured and unsubordinated obligations. The
7 5/8% Notes will bear interest at the rate of 7 5/8% per annum from and
including July 30, 2001 or from the most recent interest payment date to which
interest has been paid or duly provided for. The 7 5/8% Notes will mature and
the principal amount will be payable on August 3, 2021. The 7 5/8% Notes will
not have the benefit of any sinking fund.
PAYMENT
Holders of certificated Notes must surrender the Notes to the paying agent
to collect principal and interest payments at maturity. Principal, premium, if
any, and interest on certificated Notes will be payable at the office of the
paying agent maintained for such purpose or, at our option, payment of principal
and interest may be made by check mailed to a holder's registered address.
Payment of principal, premium, if any, and interest on any new Notes
represented by one or more permanent global notes in definitive, fully
registered form without interest coupons (the "Global Notes") will be made to
Cede & Co., the nominee for DTC, as the registered owner of the Global Notes by
wire transfer of immediately available funds as described below in
"-- Book-Entry Only; Delivery and Form." The Trustee, through its corporate
trust office in the Borough of Manhattan in The City of New York (in such
capacity, the "Paying Agent") will act as our paying agent with respect to the
new Notes. Payments of principal, premium, if any, and interest on the new Notes
will be made by us through the Paying Agent to DTC.
17
The principal of, premium, if any, and interest on the Notes will be
payable in U.S. dollars or in such other coin or currency of the United States
of America as at the time of payment is legal tender for the payment of public
and private debts. No service charge will be made for any registration of,
transfer or exchange of Notes, but we may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. The
Notes may be presented for registration of transfer or exchange at the office of
the Paying Agent in the Borough of Manhattan in the City of New York, or at any
other office or agency maintained by us or the Paying Agent for such purpose.
OPTIONAL REDEMPTION
The Notes will be redeemable at our option, in whole at any time or in part
from time to time, on at least 15 days but not more than 60 days prior written
notice mailed to the registered holders thereof, at a redemption price equal to
the greater of (i) 100% of the principal amount of the Notes to be redeemed or
(ii) the sum, as determined by the Quotation Agent (as defined below), of the
present values of the principal amount of the Notes to be redeemed and the
remaining scheduled payments of interest thereon from the redemption date to the
maturity date of the Notes to be redeemed, exclusive of interest accrued to the
redemption date (the "Remaining Life"), discounted from their respective
scheduled payment dates to the redemption date on a semiannual basis (assuming a
360-day year consisting of 30-day months) at the Treasury Rate (as defined
below) plus 25 basis points, in the case of the 5 7/8% Notes, 30 basis points,
in the case of the 7% Notes, and 37.5 basis points, in the case of the 7 5/8%
Notes, plus, in both cases, accrued and unpaid interest on the principal amount
being redeemed to the date of redemption.
If money sufficient to pay the redemption price of and accrued interest on
all of the Notes (or portions thereof) to be redeemed on the redemption date is
deposited with the Trustee or Paying Agent on or before the redemption date and
certain other conditions are satisfied, then on and after such redemption date,
interest will cease to accrue on such Notes (or such portion thereof) called for
redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the Remaining
Life that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity with the Remaining Life.
"Comparable Treasury Price" means, with respect to any redemption date, the
average of two Reference Treasury Dealer Quotations for such redemption date.
"Quotation Agent" means the Reference Treasury Dealer appointed by us.
"Reference Treasury Dealer" means each of Lehman Brothers Inc. and Merrill
Lynch Government Securities Inc., and their successors; provided, however, that
if any of the foregoing ceases to be a primary U.S. Government securities dealer
in New York City (a "Primary Treasury Dealer"), we will substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual yield to maturity of the Comparable Treasury
Issue, calculated on the third business day preceding such redemption date using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date.
We or Qwest may at any time, and from time to time, purchase the Notes at
any price or prices in the open market or otherwise.
18
BOOK ENTRY ONLY; DELIVERY AND FORM
The statements set forth below include summaries of certain rules and
operating procedures of DTC that will affect transfers of interests in the new
Notes.
The new Notes will initially be issued as Global Notes held in book-entry
form. The new Notes will be deposited with the Trustee as custodian for DTC and
registered in the name of Cede & Co., as nominee of DTC ("Nominee"). Except as
set forth below, a Global Note may not be transferred except as a whole by DTC
to Nominee, or by Nominee to DTC.
When a Global Note is issued, DTC or Nominee will credit, on its internal
system, the accounts of persons holding through it with the principal amounts of
the individual beneficial interest represented by the Global Note purchased by
those persons in the offering of the new Notes.
Payment of principal and of interest and premium, if any, on the Global
Notes will be made to Nominee as the registered owner of the Global Notes by
wire transfer of immediately available funds. None of us, Qwest or the Trustee
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Notes or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
Because DTC can act only on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, the ability of a person
having a beneficial interest in the Global Notes to pledge such interest to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of such interest, may be affected by the lack of physical
certificate.
Only participants that have accounts with DTC or persons that hold
interests through participants can own beneficial interests in a Global Note.
Ownership of beneficial interests by participants in a Global Note will be shown
on records maintained by DTC or Nominee for the Global Note, and that ownership
interest will be transferred only through those records. Ownership of beneficial
interests in the Global Note by persons that hold through participants will be
shown on records maintained by the participant, and the transfer of that
ownership interest within the participant will occur only through the
participant's records.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of the securities in definitive form. Those
limits and laws may make it more difficult to transfer beneficial interests in a
Global Note. We will make payments on the new Notes represented by any Global
Note to DTC or Nominee as the sole registered owner and the sole holder of the
new Notes represented by the Global Note. Neither we, Qwest, the Trustee nor any
agent of ours will have any responsibility for any aspect of DTC's reports
relating to beneficial ownership interests in a Global Note representing any new
Notes or for reviewing any of DTC's records relating to the beneficial ownership
interests. DTC has advised us that upon receipt of any payment on any Global
Note, DTC will immediately credit, on its book-entry registration and transfer
system, the accounts of participants with payments in amounts proportionate to
their beneficial interests in the principal or face amount of the Global Note.
We expect that payments by participants to owners of beneficial interests in a
Global Note held through those participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name" and will be the sole
responsibility of the participants subject to any statutory or regulatory
requirements as may be in effect from time to time.
So long as DTC or Nominee is the registered owner of the Global Notes, DTC
or Nominee will be considered the sole owner or holder of the new Notes
represented by the Global Notes for the purposes of receiving payment on the new
Notes, receiving notices and for all other purposes under the Indenture and the
new Notes. Except as provided above, owners of beneficial interests in a Global
Note will not be entitled to receive physical delivery of certificated new Notes
and will not be considered the holders of the Global Notes for any purposes
under the Indenture. Accordingly, each person owning a beneficial interest in a
Global Note must rely on the procedures of DTC and, if the person is not a
participant, on the procedures of the participant through which the person owns
its interest, to exercise any rights of a holder under the Global Notes or the
Indenture. We understand that under existing industry practices, if we request
any action of holders or an owner of a beneficial interest in a Global Note
wants to take any action that a holder is entitled to take under
19
the Indenture, DTC would authorize the participants holding the beneficial
interest to take that action, and the participants would authorize beneficial
owners owning through the participants to take the action on the instructions of
beneficial owners owning through them.
DTC has advised us that it will take any action permitted to be taken by a
holder of new Notes only at the direction of a participant to whose account with
DTC interests in the Global Notes are credited and only as to the portion of the
aggregate principal amount of the new Notes as to which the participant has
given that direction. DTC has advised us that DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, a "banking
organization" within the meaning of New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
Exchange Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in the securities through electronic book-entry changes in accounts
of the participants. This eliminates the need for physical movement of
securities certificates. DTC's participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant.
According to DTC, the foregoing information with respect to DTC has been
provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
CERTIFICATED NEW NOTES
New 5 7/8% Notes, new 7% Notes and new 7 5/8% Notes represented by the
applicable Global Notes are exchangeable for certificated new 5 7/8% Notes,
certificated new 7% Notes or certificated new 7 5/8% Notes, respectively, only
if:
- DTC notifies us that it is unwilling or unable to continue as a
depository for the Global Notes or if at any time DTC ceases to be a
registered clearing agency, and a successor depository is not appointed
by us within 90 days;
- we notify the Trustee that the Global Notes will be so transferable,
registrable and exchangeable; or
- an event of default with respect to the new 5 7/8% Notes, the new 7%
Notes or the new 7 5/8% Notes, as the case may be, has occurred and is
continuing.
Any Global Note that is exchangeable for certificated new Notes under the
preceding sentence will be transferred to, and registered and exchanged for,
certificated new Notes in authorized denominations and registered in names that
DTC or its nominee holding that Global Note may direct. Subject to the
foregoing, a Global Note is not exchangeable, except for a Global Note of the
same denomination to be registered in the name of DTC or its nominee. If a
Global Note becomes exchangeable for certificated new 5 7/8% Notes, certificated
new 7% Notes or certificated new 7 5/8% Notes, as the case may be:
- certificated new Notes will be issued only in fully registered form in
denominations of $1,000 or integral multiples;
- payments will be made and transfers will be registered at the office or
agency of us maintained for that purposes; and
- no service charge will be made for any issuance of the certificated new
Notes, although we may require payment to cover any tax or governmental
charge imposed.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the new Notes represented by the Global Notes will be made
in immediately available funds. We will make all payments of principal of and
interest and premium, if any, on the new Notes in immediately available funds.
20
The new Notes will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in the new Notes will therefore
be required by DTC to settle in immediately available funds.
CERTAIN COVENANTS
Other than as described below under "-- Limitation On Liens," the Indenture
does not contain any provisions that would limit our or Qwest's ability to incur
indebtedness or that would afford holders of Notes protection in the event of a
sudden and significant decline in our or Qwest's credit quality or a takeover,
recapitalization or highly leveraged or similar transaction involving us or
Qwest. Accordingly, we or Qwest could in the future enter into transactions that
could increase the amount of indebtedness outstanding at that time or otherwise
adversely affect our or Qwest's capital structure or credit rating. See
"PROSPECTUS SUMMARY -- Credit Ratings."
LIMITATION ON LIENS
The Indenture contains a covenant that if we mortgage, pledge or otherwise
subject to any lien all or some of our property or assets, we will secure the
Notes, any other outstanding Debt Securities and any of our other obligations
which may then be outstanding and entitled to the benefit of a covenant similar
in effect to such covenant, equally and proportionally with the indebtedness or
obligations secured by such mortgage, pledge or lien, for as long as any such
indebtedness or obligation is so secured. This covenant does not apply to:
- the creation, extension, renewal or refunding of (a) mortgages or liens
created or existing at the time property is acquired, (b) mortgages or
liens created within 180 days after property is acquired, or (c)
mortgages or liens securing the cost of construction or improvement of
property; or
- the making of any deposit or pledge to secure public or statutory
obligations or with any governmental agency at any time required by law
in order to qualify us to conduct all or some part of our business or in
order to entitle us to maintain self-insurance or to obtain the benefits
of any law relating to workmen's compensation, unemployment insurance,
old age pensions or other social security, or with any court, board,
commission or governmental agency as security incident to the proper
conduct of any proceeding before it.
The Indenture does not prevent any other entity from mortgaging, pledging
or subjecting to any lien any of its property or assets, whether or not acquired
from us or Qwest.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may, without the consent of the holders of the Notes or any other
outstanding Debt Securities, consolidate with, merge into or be merged into, or
transfer or lease our property and assets substantially as an entirety to
another entity. However, we may only do this if:
- the successor entity is a corporation and assumes by supplemental
indenture all of our obligations under the Notes, any other outstanding
Debt Securities and the Indenture; and
- after giving effect to the transaction, no Default or Event of Default
has occurred and is continuing.
After that time, all of our obligations under the Notes, any other
outstanding Debt Securities and the Indenture terminate.
Qwest may, without the consent of the holders of any of the Notes or any
other outstanding Debt Securities, consolidate with, merge into or be merged
into, or transfer or lease its property and assets substantially as an entirety
to another entity. However, Qwest may only do this if:
- the successor entity is a corporation and assumes by supplemental
indenture all of its obligations under the Guarantees and the Indenture;
and
- after giving effect to the transaction, no Default or Event of Default
has occurred and is continuing.
21
After that time, all of Qwest's obligations under the Guarantees and the
Indenture terminate.
EVENTS OF DEFAULT
Any one of the following is an Event of Default with respect to any series
of Debt Securities, including the 5 7/8% Notes, the 7% Notes and the 7 5/8%
Notes:
- if we or Qwest default in the payment of interest on the Debt Securities
of such series, and such default continues for 90 days;
- if we or Qwest default in the payment of the principal of any Debt
Security of such series when the same becomes due and payable at
maturity, upon redemption, or otherwise;
- if we or Qwest fail to comply with any of our or their other agreements
in the Debt Securities of such series, in the Indenture or in any
supplemental indenture under which the Debt Securities of such series
were issued, which failure continues for 90 days after we or Qwest
receive notice from the Trustee or the holders of at least 25% in
principal amount of all of the outstanding Debt Securities of that
series; and
- if certain events of bankruptcy or insolvency occur with respect to us or
Qwest.
If an Event of Default with respect to the Debt Securities of any series
occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of all of the outstanding Debt Securities of that series may
declare the principal (or, if the Debt Securities of that series are original
issue discount securities, such portion of the principal amount as may be
specified in the terms of that series) of all the Debt Securities of that series
to be due and payable. When such declaration is made, such principal (or, in the
case of original issue discount securities, such specified amount) will be
immediately due and payable. The holders of a majority in principal amount of
Debt Securities of that series may rescind such declaration and its consequences
if the rescission would not conflict with any judgment or decree and if all
existing Events of Default have been cured or waived (other than nonpayment of
principal or interest that has become due solely as a result of acceleration).
Holders of Debt Securities may not enforce the Indenture, the Debt
Securities or the Guarantees, except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Debt Securities. Subject to certain limitations, the holders of more than 50% in
principal amount of the Debt Securities of each series affected (with each
series voting as a class) may direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or exercising any trust
or power of the Trustee. The Trustee may withhold from holders of Debt
Securities notice of any continuing default (except a default in the payment of
principal or interest) if it determines in good faith that withholding notice is
in their interests.
AMENDMENT AND WAIVER
With the written consent of the holders of more than 50% of the principal
amount of the outstanding Debt Securities of each series that will be affected
(with each series voting as a class), we, Qwest and the Trustee may amend or
supplement the Indenture or modify the rights of the holders of Debt Securities
of that series. Such majority of holders may also waive compliance by us or
Qwest with any provision of the Indenture, any supplemental indenture or the
Debt Securities of any such series except a default in the payment of principal
or interest. However, without the consent of the holder of each Debt Security
affected, an amendment or waiver may not:
- reduce the amount of Debt Securities whose holders must consent to an
amendment or waiver;
- change the rate or the time for payment of interest;
- change the principal or the fixed maturity;
- waive a default in the payment of principal or interest, if any;
22
- make any Debt Security payable in a different currency; or
- make any change in certain provisions of the Indenture concerning (a)
waiver of existing defaults, (b) rights of holders of Debt Securities to
receive payment, or (c) amendments and waivers with consent of holders of
Debt Securities.
We, Qwest and the Trustee may amend or supplement the Indenture without the
consent of any holder of any of the Debt Securities:
- to cure any ambiguity, defect or inconsistency in the Indenture, the Debt
Securities or the Guarantees;
- to provide for the assumption of all of our obligations under the Debt
Securities and the Indenture or of Qwest's obligations under the
Guarantees and the Indenture by any corporation in connection with a
merger, consolidation or transfer or lease of our or Qwest's property and
assets substantially as an entirety;
- to provide for uncertificated Debt Securities in addition to or instead
of certificated Debt Securities;
- to make any change that does not adversely affect the rights of any
holder of Debt Securities;
- to provide for the issuance of and establish the form and terms and
conditions of a series of Debt Securities or the Guarantees, or to
establish the form of any certifications required to be furnished
pursuant to the terms of the Indenture or any series of Debt Securities;
- to add to the rights of holders of any of the Debt Securities; or
- to secure any Debt Securities as provided under the heading "-- Certain
Covenants -- Limitation On Liens."
DEFEASANCE
We and Qwest may defease all of our or their obligations under the 5 7/8%
Notes, the 7% Notes or the 7 5/8% Notes and the Indenture with respect to the
5 7/8% Notes, the 7% Notes or the 7 5/8% Notes or any installment of interest on
the Notes if we or Qwest irrevocably deposit in trust with the Trustee money or
U.S. Government Obligations sufficient to pay, when due, principal and interest
on the 5 7/8% Notes, the 7% Notes or the 7 5/8% Notes, as the case may be, to
maturity or redemption or such installment of interest, as the case may be, and
if all other conditions set forth in the 5 7/8% Notes, the 7% Notes or the
7 5/8% Notes are met.
GUARANTEES
As described in more detail above under "-- General", Qwest has
unconditionally guaranteed the payment of principal and interest on the Notes
when and as such payments become due and payable. The Guarantees rank equally
with all other unsecured and unsubordinated obligations of Qwest.
GOVERNING LAW
The Indenture and the new Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEE AND THE PAYING AGENT
Qwest and certain of its affiliates, including us, maintain banking and
other business relationships in the ordinary course of business with Bank One
Trust Company, National Association. In addition, Bank One Trust Company,
National Association and certain of its affiliates serve as trustee,
authenticating agent, or paying agent with respect to certain Debt Securities of
Qwest and its affiliates.
23
REGISTRATION RIGHTS
Based on an interpretation by the Staff of the SEC set forth in no-action
letters, and subject to the immediately following sentence, we and Qwest believe
that the new Notes to be issued pursuant to the exchange offer may be offered
for resale, resold and otherwise transferred by the holders thereof (other than
holders who are broker-dealers) without further compliance with the registration
and prospectus delivery provisions of the Securities Act. However, any purchaser
of old Notes who is an affiliate of us or Qwest or who intends to participate in
the exchange offer for the purpose of distributing the new 5 7/8% Notes, the new
7% Notes or the new 7 5/8% Notes, as the case may be, or any broker-dealer who
purchased the old Notes from us for resale pursuant to Rule 144A or any other
available exemption under the Securities Act:
- will not be able to rely on the interpretations of the Staff set forth in
the no-action letters;
- will not be entitled to tender such old Notes in the exchange offer; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the old
Notes unless such sale or transfer is made pursuant to an exemption from
such requirements.
Neither we nor Qwest intend to seek our own no-action letter, and there can
be no assurance that the Staff would make a similar determination with respect
to the new Notes as it has in such no-action letters to third parties. Each
holder of the old Notes (other than certain specified holders) who wishes to
exchange the old Notes for new Notes in the exchange offer will be required to
represent that:
- it is not an affiliate of us or Qwest;
- it is not a broker-dealer tendering Registrable Securities (as defined in
the Registration Rights Agreement) acquired directly from us;
- the old Notes to be exchanged for new Notes in the exchange offer were
acquired in the ordinary course of its business; and
- at the time of the exchange offer, it has no arrangement or understanding
with any person to participate in the distribution (within the meaning of
the Securities Act) of the new Notes.
In addition, in connection with any resale of new Notes, any broker-dealer
who acquired the new Notes for its own account as a result of market-making or
other trading activities (a "Participating Broker-Dealer") and who receives new
Notes in exchange for such old Notes pursuant to the exchange offer, may be
deemed to be an "underwriter" within the meaning of the Securities Act and must
deliver a prospectus meeting the requirements of the Securities Act. The SEC has
taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the new Notes, other than a
resale of an unsold allotment from the original sale thereof, with the
prospectus contained in the registration statement filed in connection with the
exchange offer (the "Exchange Offer Registration Statement"). Under the
Registration Rights Agreement, we and Qwest are required to allow Participating
Broker-Dealers and other persons, if any, subject to similar prospectus delivery
requirements to use the prospectus contained in the Exchange Offer Registration
Statement in connection with the resale of such new Notes for a period of 240
calendar days from the issuance of the new Notes.
If:
- because of any change in law or in currently prevailing interpretations
of the Staff, we or Qwest are not permitted to effect the exchange offer;
- the exchange offer is not consummated within 240 calendar days following
July 30, 2001; or
- in the case of any holder that participates in the exchange offer, such
holder does not receive new Notes on the date of the exchange that may be
sold without restriction under state and federal securities laws (other
than due solely to the status of such holder as an affiliate of ours or
Qwest within the meaning of the Securities Act or as a broker-dealer);
24
then in each case, we or Qwest will promptly deliver to the holders written
notice thereof; and at our or Qwest's sole expense:
- as promptly as practicable (but in no event more than 90 days after so
required or requested pursuant to the Registration Rights Agreement),
file a shelf registration statement covering resales of the old Notes
(the "Shelf Registration Statement");
- use our reasonable best efforts to cause the Shelf Registration Statement
to be declared effective under the Securities Act as soon as practicable;
and
- use our reasonable best efforts to keep effective the Shelf Registration
Statement until the earlier of two years (or, if Rule 144(k) is amended
to provide a shorter restrictive period, such shorter period) after the
closing date or such time as all of the applicable old Notes have been
sold thereunder.
We or Qwest will, if a Shelf Registration Statement is filed, provide to
each holder copies of the prospectus that is a part of the Shelf Registration
Statement, notify each such holder when the Shelf Registration Statement for the
old Notes has become effective and take certain other actions as are required to
permit unrestricted resales of the old Notes. A holder that sells old Notes
pursuant to the Shelf Registration Statement will be required to be named as a
selling security holder in the related prospectus, to provide information
related thereto and to deliver such prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Registration Rights
Agreement that are applicable to such a holder (including certain
indemnification rights and obligations). Neither we nor Qwest will have any
obligation to include in the Shelf Registration Statement holders who do not
deliver such information to us or Qwest.
If we or Qwest fail to comply with certain provisions of the Registration
Rights Agreement, in each case as described below, then a special interest
premium (the "Special Interest Premium") will become payable in respect of the
old Notes.
If:
- the Exchange Offer Registration Statement is not filed with the SEC on or
before the 150th calendar day following July 30, 2001 (or by December 27,
2001);
- the Exchange Offer Registration Statement is not declared effective on or
before the 210th calendar day following July 30, 2001 (or by February 25,
2002); or
- the exchange offer is not consummated or the Shelf Registration Statement
is not declared effective on or before the 240th calendar day following
July 30, 2001 (or by March 27, 2002);
the Special Interest Premium will accrue in respect of the old 5 7/8% Notes, the
old 7% Notes or the old 7 5/8% Notes, as the case may be, from and including the
next calendar day following each of (a) such 150-day period in the case of the
first bullet listed above, (b) such 210-day period in the second bullet listed
above and (c) such 240-day period in the case of the third bullet listed above,
in each case at a rate equal to 0.25% per annum.
The aggregate amount of the Special Interest Premium in respect of each of
the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes, as the case may
be, payable pursuant to the above provisions, will in no event exceed 0.25% per
annum. If the Exchange Offer Registration Statement is not declared effective on
or before the 240th calendar day following July 30, 2001 and we and Qwest
request holders of the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8%
Notes, as the case may be, to provide the information called for by the
Registration Rights Agreement for inclusion in the Shelf Registration Statement,
the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes, as applicable,
owned by holders who do not deliver such information to us and Qwest when
required pursuant to the Registration Rights Agreement, will not be entitled to
any Special Interest Premium for any day after the 240th day following July 30,
2001.
25
Upon:
- filing of the Exchange Offer Registration Statement after the 150-day
period described above;
- effectiveness of the Exchange Offer Registration Statement after the
210-day period described above; or
- consummation of the exchange offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the 240-day period
described above;
the interest rate on the old 5 7/8% Notes, the old 7% Notes or the old 7 5/8%
Notes, as the case may be, from the day of such filing, effectiveness or
consummation, as the case may be, will be reduced to the applicable original
interest rate set forth on the cover page of this prospectus for the old 5 7/8
Notes, the old 7% Notes or the old 7 5/8% Notes.
If a Shelf Registration Statement is declared effective pursuant to the
foregoing paragraphs, and if we and Qwest fail to keep such Shelf Registration
Statement continuously (a) effective or (b) useable for resales for the period
required by the Registration Rights Agreement due to certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events, or because the prospectus contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and such
failure continues for more than 60 days (whether or not consecutive) in any
twelve-month period (the 61st day being referred to as the "Default Day"), then
from the Default Day until the earlier of:
- the date that the Shelf Registration Statement is again deemed effective
or is usable;
- the date that is the second anniversary of the closing date (or, if Rule
144(k) is amended to provide a shorter restrictive period, such shorter
period); or
- the date as of which all of the old 5 7/8% Notes, the old 7% Notes or the
old 7 5/8% Notes, as the case may be, are sold pursuant to the Shelf
Registration Statement;
the Special Interest Premium in respect of the old 5 7/8% Notes, the old 7%
Notes or the old 7 5/8% Notes, as the case may be, will accrue at a rate equal
to 0.25% per annum.
If we or Qwest fail to keep the Shelf Registration Statement continuously
effective or useable for resales pursuant to the preceding paragraph, we or
Qwest will give the holders notice to suspend the sale of the old 5 7/8% Notes,
the old 7% Notes or the old 7 5/8% Notes, as applicable, and will extend the
relevant period referred to above during which we or Qwest are required to keep
effective the Shelf Registration Statement (or the period during which
Participating Broker-Dealers are entitled to use the prospectus included in the
Exchange Offer Registration Statement in connection with the resale of new
5 7/8% Notes, the new 7% Notes or new 7 5/8% Notes, as the case may be) by the
number of days during the period from and including the date of the giving of
such notice to and including the date when holders will have received copies of
the supplemented or amended prospectus necessary to permit resales of the old
Notes or to and including the date on which we or Qwest have given notice that
the sale of the old Notes may be resumed, as the case may be.
Each old Note contains a legend to the effect that the holder thereof, by
its acceptance thereof, will be deemed to have agreed to be bound by the
provisions of the Registration Rights Agreement.
The Registration Rights Agreement is governed by, and construed in
accordance with, the laws of the State of New York. This summary of certain
provisions of the Registration Rights Agreement does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Registration Rights Agreement, a form copy of which is
included as an exhibit to Qwest's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2001. See "WHERE YOU CAN FIND MORE INFORMATION." In addition, the
information set forth above concerning certain interpretations and positions
taken by the Staff is not intended to constitute legal advice, and prospective
investors should consult their own legal advisors with respect to such matters.
26
CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
The following discussion summarizes certain U.S. federal tax consequences
of an exchange of old Notes for new Notes in the exchange offer and the
purchase, beneficial ownership and disposition of new Notes. For purposes of
this summary, a "U.S. Holder" means a beneficial owner of an old Note or a new
Note that is for U.S. federal income tax purposes:
- an individual who is a citizen or resident of the United States;
- a corporation or partnership (or other entity treated as a corporation or
partnership for U.S. federal income tax purposes) created or organized
under the laws of the United States or any state or political subdivision
thereof;
- an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
- a trust with respect to which a court within the United States is able to
exercise primary supervision over its administration, and one or more
United States persons have the authority to control all of its
substantial decisions.
An individual may, subject to certain exceptions, be deemed to be a
resident of the United States by reason of being present in the United States
for at least 31 days in the calendar year and for an aggregate of at least 183
days during a three-year period ending in the current calendar year (counting
for such purposes all the days present in the current year, one-third of the
days present in the immediately preceding year, and one-sixth of the days
present in the second preceding year).
A "Non-U.S. Holder" is a beneficial owner of an old Note or a new Note that
is not a U.S. Holder.
This summary is based on interpretations of the Internal Revenue Code of
1986, as amended (the "Code"), regulations issued thereunder, and rulings and
decisions currently in effect (or in some cases proposed), all of which are
subject to change. Any such change may be applied retroactively and may
adversely affect the federal tax consequences described herein. This summary
addresses only holders that own old Notes or will own new Notes as capital
assets and not as part of a "straddle" or a "conversion transaction" for U.S.
federal income tax purposes or as part of some other integrated investment. This
summary does not discuss all of the tax consequences that may be relevant to
particular investors or to investors subject to special treatment under the U.S.
federal income tax laws (such as life insurance companies, tax-exempt entities,
regulated investment companies, securities dealers, investors in pass-through
entities, financial institutions, holders subject to the alternative minimum
tax, U.S. expatriates, persons deemed to sell Notes under the constructive sale
provisions of the Code, investors who actually or constructively own 10 per cent
or more of the combined voting power of all classes of Company stock entitled to
vote, and investors whose functional currency is not the U.S. dollar). Persons
considering the exchange of their old Notes for new Notes and persons
considering the purchase of new Notes should consult their tax advisors
concerning the application of U.S. federal tax laws to their particular
situations as well as any consequences of the exchange of the old Notes for new
Notes and of the purchase, beneficial ownership and disposition of new Notes
arising under the laws of any state or other taxing jurisdiction.
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER TO U.S. HOLDERS AND
NON-U.S. HOLDERS
The exchange of old Notes for new Notes pursuant to the exchange offer will
not be a taxable event for U.S. federal income tax purposes. U.S. Holders and
Non-U.S. Holders will not recognize any taxable gain or loss as a result of such
exchange and will have the same tax basis and holding period in the new Notes as
they had in the old Notes immediately before the exchange.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO U.S. HOLDERS
Treatment of Interest. Stated interest on the new Notes will be taxable to
U.S. Holders as ordinary interest income as the interest accrues or is paid in
accordance with the holder's regular method of accounting.
27
Market Discount. If a U.S. Holder holds an old Note that was acquired for
an amount that is less than its principal amount by more than a de minimis
amount (generally 0.25% of the principal amount multiplied by the number of
remaining whole years to maturity), the amount of the difference will be treated
as "market discount." When an old Note with market discount is exchanged for a
new Note, the market discount carries over to the new Note. Unless the U.S.
Holder elects to include such market discount in income as it accrues, a U.S.
Holder will be required to treat any principal payment on, and any gain on the
sale, exchange, retirement or other disposition (including a gift) of, a new
Note as ordinary income to the extent of any accrued market discount that has
not previously been included in income. In general, market discount on the new
Notes will accrue ratably over the remaining term of the new Notes or, at the
election of the U.S. Holder, under a constant yield method. In addition, a U.S.
Holder could be required to defer the deduction of all or a portion of the
interest paid on any indebtedness incurred or continued to purchase or carry a
new Note unless the U.S. Holder elects to include market discount in income
currently. Such an election applies to all debt instruments held by a taxpayer
and may not be revoked without the consent of the Internal Revenue Service (the
"IRS").
Amortization of Bond Premium. A U.S. Holder, whose tax basis immediately
after its acquisition of a new Note exceeds the sum of all remaining payments
other than qualified stated interest payable on the new Note, will be considered
to have purchased the Note at a premium. The U.S. Holder may elect to amortize
such premium (as an offset to interest income), using a constant yield method,
over the remaining term of the new Note (or to an earlier call date if it
results in a smaller amount of amortizable bond premium). Such election, once
made, generally applies to all debt instruments held or subsequently acquired by
the U.S. Holder on or after the first day of the first taxable year to which
such election applies and may be revoked only with the consent of the IRS. A
U.S. Holder that elects to amortize such premium must reduce its tax basis in
the related Note by the amount of the premium amortized during its holding
period. If a U.S. Holder does not elect to amortize the premium, the amount of
such premium will be included in the U.S. Holder's tax basis for purposes of
computing gain or loss in connection with a taxable disposition of the new Note.
Sale or Other Disposition of New Notes. In general, upon the sale,
retirement or other taxable disposition of a new Note, a U.S. Holder will
recognize taxable gain or loss equal to the difference between (i) the amount of
the cash and the fair market value of any property received on the sale,
retirement or other taxable disposition (not including any amount attributable
to accrued but unpaid interest or accrued market discount not previously
included in income) and (ii) the U.S. Holder's adjusted tax basis in the new
Note. A U.S. Holder's adjusted tax basis in a new Note generally will be equal
to the cost of the Note to such U.S. Holder, increased by the amount of any
market discount previously included in income by the U.S. Holder and reduced by
the amount of any payments received by the U.S. Holder, other than payments of
qualified stated interest, and by the amount of amortizable bond premium taken
into account. Subject to the discussion of market discount above, gain or loss
realized on the sale, retirement or other taxable disposition of a new Note will
be capital gain or loss.
U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
For purposes of the following summary, interest and gain on the sale,
exchange or other disposition of a new Note will be considered "U.S. trade or
business income" if such income or gain is:
- effectively connected with the conduct of a trade or business in the
United States; or
- in the case of a treaty resident, attributable to a permanent
establishment (or, in the case of an individual, to a fixed base) in the
United States.
Treatment of Interest. A Non-U.S. Holder that is not subject to U.S.
federal income tax as a result of any direct or indirect connection to the
United States other than its ownership of a new Note will not be subject to U.S.
federal income or withholding tax in respect of interest income on the new Note
if:
- the interest is not U.S. trade or business income;
- the Non-U.S. Holder provides an appropriate statement, generally on IRS
Form W-8BEN, together with all appropriate attachments, signed under
penalties of perjury, identifying the Non-U.S. Holder
28
and stating, among other things, that the Non-U.S. Holder is not a United
States person for U.S. federal income tax purposes; and
- the Non-U.S. Holder is not a "related controlled foreign corporation"
with respect to us as specially defined for U.S. federal income tax
purposes, or a bank whose receipt of interest on the new Notes is
described in Section 881(c)(3)(A) of the Code.
If a new Note is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide a
signed statement to eliminate withholding tax. However, in such case, the signed
statement must be accompanied by a copy of the IRS Form W-8BEN or the substitute
form provided by the beneficial owner to the organization or institution. A
Non-U.S. Holder that is treated as a partnership for U.S. federal tax purposes
generally will be required to provide an IRS Form W-8IMY and to attach an
appropriate certification by each beneficial owner of the Non-U.S. Holder
(including in certain cases, such beneficial owner's beneficial owners).
Prospective investors, including foreign partnerships and their partners, should
consult their tax advisors regarding these possible additional reporting
requirements.
To the extent these conditions are not met, a 30% withholding tax will
apply to interest income on the new Note, unless an income tax treaty reduces or
eliminates such tax or unless the interest is U.S. trade or business income with
respect to such Non-U.S. Holder and the Non-U.S. Holder provides an appropriate
statement to that effect. In the latter case, such Non-U.S. Holder generally
will be subject to U.S. federal income tax with respect to all income from the
new Notes at regular rates applicable to U.S. taxpayers. Additionally, in such
event, Non-U.S. Holders that are corporations could be subject to a branch
profits tax on such income.
Sale or Other Disposition of New Notes. In general, a Non-U.S. Holder will
not be subject to U.S. federal income tax on any amount received (other than
amounts in respect of accrued but unpaid interest) upon retirement or
disposition of a new Note unless such Non-U.S. Holder is an individual present
in the United States for 183 days or more in the taxable year of the sale,
exchange or other disposition and certain other requirements are met, or unless
the gain is U.S. trade or business income. In the latter event, Non-U.S. Holders
generally will be subject to U.S. federal income tax with respect to such gain
at regular rates applicable to U.S. taxpayers. Additionally, in such event,
Non-U.S. Holders that are corporations could be subject to a branch profits tax
on such gain.
Treatment of New Notes for U.S. Federal Estate Tax Purposes. An individual
Non-U.S. Holder (who is not domiciled in the United States for U.S. federal
estate tax purposes at the time of death) will not be subject to U.S. federal
estate tax in respect of a new Note, so long as payments of interest on such new
Note would not have been considered U.S. trade or business income at the time of
such Non-U.S. Holder's death.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
Under certain circumstances, the Code requires "information reporting"
annually to the IRS and to each holder of new Notes, and "backup withholding" at
a current rate of 30.5% with respect to certain payments made on or with respect
to the new Notes. Backup withholding generally does not apply with respect to
certain holders of new Notes, including corporations, tax-exempt organizations,
qualified pension and profit sharing trusts and individual retirement accounts.
A U.S. Holder may be subject to backup withholding unless such U.S. Holder
provides an IRS Form W-9, signed under penalties of perjury, identifying the
U.S. Holder, providing such U.S. Holder's taxpayer identification number and
certifying such U.S. Holder is not subject to backup withholding.
A Non-U.S. Holder that provides an IRS Form W-8BEN, together with all
appropriate attachments, signed under penalties of perjury, identifying the
Non-U.S. Holder and stating that the Non-U.S. Holder is not a United States
person, will not be subject to IRS reporting requirements and U.S. backup
withholding. IRS Forms W-8BEN will generally be required from the beneficial
owners of interests in a Non-U.S. Holder that is treated as a partnership for
U.S. federal income tax purposes.
29
The payment of the proceeds on the disposition of a new Note to or through
the U.S. office of a broker generally will be subject to information reporting
and backup withholding at a rate of 30.5% unless the Non-U.S. Holder either
certifies its status as a Non-U.S. Holder under penalties of perjury on IRS Form
W-8BEN (as described above) or otherwise establishes an exemption. Under the
Economic Growth and Tax Relief Reconciliation Act of 2001, the backup
withholding tax rate will be gradually reduced each year until 2006, when the
backup withholding rate will be 28%.
The payment of the proceeds on the disposition of a new Note by a Non-U.S.
Holder to or through a non-U.S. office of a non-U.S. broker will not be subject
to backup withholding or information reporting unless the non-U.S. broker is a
"U.S. related person" (as defined below). The payment of proceeds on the
disposition of a new Note by a Non-U.S. Holder to or through a non-U.S. office
of a U.S. broker or a U.S. related person generally will not be subject to
backup withholding but will be subject to information reporting unless the
Non-U.S. Holder certifies its status as a Non-U.S. Holder under penalties of
perjury or the broker has certain documentary evidence in its files as to the
Non-U.S. Holder's foreign status and the broker has no actual knowledge to the
contrary.
For this purpose, a "U.S. related person" is:
- a "controlled foreign corporation" as specially defined for U.S. federal
income tax purposes;
- a foreign person, 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment (or for such part of the period that the broker has been in
existence) is derived from activities that are effectively connected with
the conduct of a U.S. trade or business; or
- a foreign partnership, if at any time during its tax year one or more of
its partners are United States persons who, in the aggregate, hold more
than 50% of the income or capital interest of the partnership or if, at
any time during its taxable year, the partnership is engaged in the
conduct of a U.S. trade or business.
Backup withholding is not an additional tax and may be refunded (or
credited against the holder's U.S. federal income tax liability, if any),
provided that certain required information is furnished. The information
reporting requirements may apply regardless of whether withholding is required.
Copies of the information returns reporting such interest and withholding also
may be made available to the tax authorities in the country in which a Non-U.S.
Holder is a resident under the provisions of an applicable income tax treaty or
agreement.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives new Notes for its own
account in the exchange offer must acknowledge that it acquired the old Notes
for its own account as a result of market-making or other trading activities and
must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of the new Notes. The letter of
transmittal states that by so acknowledging and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "REGISTRATION
RIGHTS." A Participating Broker-Dealer may use this prospectus, as it may be
amended or supplemented from time to time, in connection with resales of new
5 7/8% Notes, new 7% Notes or new 7 5/8% Notes received in exchange for old
5 7/8% Notes, old 7% Notes or old 7 5/8% Notes, respectively, where the old
5 7/8% Notes, the old 7% Notes or the old 7 5/8% Notes, as the case may be, were
acquired as a result of market-making activities or other trading activities.
Under the Registration Rights Agreement, we and Qwest have agreed that for a
period of 240 calendar days after the expiration date, we will make this
prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any resale of new Notes.
We will not receive any proceeds from any sale of the new Notes by any
Participating Broker-Dealer. New Notes received by Participating Broker-Dealers
for their own account in the exchange offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
30
through the writing of options on the new 5 7/8% Notes, the new 7% Notes or the
new 7 5/8% Notes, as the case may be, or a combination of the methods of resale,
at market prices prevailing at the time of resale, at prices related to the
prevailing market prices or negotiated prices. Any resale may be made directly
to purchasers or to or through brokers or dealers who may receive compensation
in the form of commissions or concessions from any such Participating
Broker-Dealer and/or the purchasers of the new Notes. Any Participating Broker-
Dealer that resells new Notes that were received by it for its own account in
the exchange offer and any broker or dealer that participates in a distribution
of the new Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any resale of new Notes and any commissions or
concessions received by those persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
Participating Broker-Dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 240 calendar days after closing of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any Participating Broker-Dealer that requests
the documents in the letter of transmittal. We have agreed to pay all expenses
incident to our or Qwest's performance of, or compliance with, the Registration
Rights Agreement and all expenses incident to the exchange offer, including the
expenses of one counsel for the holders of the old Notes, but excluding
commissions or concessions of any brokers or dealers, and will indemnify the
holders, including any broker-dealers, and certain parties related to the
holders against certain liabilities, including liabilities under the Securities
Act.
We have not entered into any arrangements or understandings with any person
to distribute the new Notes to be received in the exchange offer.
LEGAL MATTERS
Certain legal matters with respect to the new Notes will be passed upon for
us and Qwest by O'Melveny & Myers LLP, Los Angeles, California, and by Yash A.
Rana, Vice President, Senior Associate General Counsel and Assistant Secretary
of Qwest, and for us by Holme Roberts & Owen LLP, Denver, Colorado. O'Melveny &
Myers LLP, Los Angeles, California, is also passing on certain federal income
tax matters in connection with the new Notes.
EXPERTS
The consolidated financial statements and schedules of Qwest for the year
ended December 31, 2000 incorporated by reference in Qwest's Annual Report on
Form 10-K filed with the SEC on March 16, 2001 (as amended by Form 10-K/A filed
on August 20, 2001), incorporated by reference in this prospectus and the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") permits
the board of directors of Qwest Communications International Inc. ("Qwest") to
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlements actually and reasonably incurred by him or
her in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of his or her being or
having been a director, officer, employee or agent of Qwest, in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities (including reimbursement for expenses incurred) arising under
the Securities Act of 1933, as amended (the "Securities Act"). The statute
provides that indemnification pursuant to its provisions is not exclusive of
other rights of indemnification to which a person may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.
Qwest's Restated Certificate of Incorporation and Bylaws provide for
indemnification of its directors and officers to the fullest extent permitted by
law.
As permitted by Section 102 of the DGCL, Qwest's Restated Certificate of
Incorporation eliminates a director's personal liability for monetary damages to
Qwest and its stockholders arising from a breach or alleged breach of a
director's fiduciary duty except for liability under Section 174 of the DGCL,
for liability for any breach of the director's duty of loyalty to Qwest or its
stockholders, for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law or for any transaction from
which the director derived an improper personal benefit.
The Bylaws of Qwest Capital Funding, Inc. ("Capital Funding") provide for
the indemnification of directors and officers to the extent permissible under
applicable law. Section 7-109-102 of the Colorado Business Corporation Act (the
"CBCA") specifies the circumstances under which a corporation may indemnify its
directors, officers, employees or agents. For acts done in a person's "official
capacity," the CBCA generally requires that an act be done in good faith and in
a manner reasonably believed to be in the best interests of the corporation. In
all other civil cases, the person must have acted in good faith and in a way
that was not opposed to the corporation's best interests. In criminal actions or
proceedings, the CBCA imposes an additional requirement that the actor had no
reasonable cause to believe his conduct was unlawful. In any proceeding by or in
the right of the corporation, or charging a person with the improper receipt of
a personal benefit, no indemnification, except for court-ordered indemnification
for reasonable expenses occurred, can be made. Indemnification is mandatory when
any director or officer is wholly successful, on the merits or otherwise, in
defending any civil or criminal proceeding. The rights granted by the Bylaws
will not be deemed exclusive of any other rights to which those seeking
indemnification, contribution, or advancement of expenses may be entitled under
any statute, certificate or articles of incorporation, agreement, contract of
insurance, vote of shareholders or disinterested directors, or otherwise. The
rights of indemnification and advancement of expenses provided by or granted
pursuant to the Bylaws will continue as to a person who has ceased to be an
indemnified representative in respect of matters arising before such time and
will inure to the benefit of the heirs, executors, administrators, and personal
representatives of such a person.
The directors and officers of Qwest and Capital Funding are covered by
insurance policies indemnifying against certain liabilities, including certain
liabilities arising under the Securities Act which might be incurred by them in
such capacities and against which they cannot be indemnified by or on behalf of
Qwest or Capital Funding.
The agents, dealers or underwriters who executed the agreements filed as
Exhibit 1 to this registration statement agreed to indemnify Qwest and Capital
Funding directors and their officers who signed the registration statement
against certain liabilities which might arise under the Securities Act with
respect to information furnished to Qwest and Capital Funding by or on behalf of
any such indemnifying party.
II-1
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibits identified in parentheses below are on file with the Commission
and are incorporated herein by reference to such previous filings. All other
exhibits are provided as part of this electronic transmission.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
(1-A) -- Purchase Agreement, dated July 25, 2001, by and among
Capital Funding, Qwest, Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the initial purchasers named therein
(filed as an exhibit to Qwest's Quarterly Report on Form
10-Q for the quarter ended June 30, 2001 and incorporated
herein by reference).
(4-A) -- Registration Rights Agreement, dated July 30, 2001, by and
among Capital Funding, Qwest and the initial purchasers
named therein (filed as an exhibit to Qwest's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2001 and
incorporated herein by reference).
(4-B) -- Forms of Letter of Transmittal, Broker Letters and Notice of
Guaranteed Delivery.
(4-C) -- Indenture, dated as of June 29, 1998, by and among Capital
Funding, Qwest and Bank One Trust Company, National
Association as Trustee (filed as an exhibit to Old U S
WEST's Form 8-K dated November 18, 1998, File No. 1-14087
and incorporated herein by reference). The form or forms of
debt securities with respect to each particular series of
debt securities registered hereunder is filed as an exhibit
to a Current Report on Form 8-K of Qwest and incorporated
herein by reference.
(4-D) -- First Supplemental Indenture, dated as of June 30, 2000, to
the Indenture, dated as of June 29, 1998, by and among
Capital Funding, Qwest and Bank One Trust Company, National
Association, as Trustee (filed as an exhibit to Qwest's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000 and incorporated herein by reference).
(4-E) -- Officers' Certificate of Capital Funding establishing the
terms of the Notes.
(4-F) -- Officers' Certificate of Qwest establishing the terms of the
Guarantees.
(5-A) -- Opinion of O'Melveny & Myers LLP with respect to legality of
the securities being registered.
(5-B) -- Opinion of Holme Roberts & Owen LLP, with respect to
authority to issue the securities being registered.
(8) -- Opinion of O'Melveny & Myers LLP with respect to certain tax
matters.
(12) -- Computation of Ratio of Earnings to Fixed Charges.
(23-A) -- Consent of Arthur Andersen LLP.
(23-B) -- Consent of O'Melveny & Myers LLP (included in Exhibit 5-A).
(23-C) -- Consent of Holme Roberts & Owen LLP (included in Exhibit
5-B).
(24-A) -- Qwest Power of Attorney (also included on Signature Page).
(24-B) -- Capital Funding Power of Attorney (included on Signature
Page).
(25) -- Statement of Eligibility of Trustee (Form T-1).
</Table>
ITEM 22. UNDERTAKINGS.
(a) The undersigned hereby undertakes:
(1) That before any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c) under the Securities Act, the issuer undertakes
that such reoffering prospectus will contain the information called for by
the applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Securities Act and is used in connection with an
offering of securities subject to Rule 415 under the Securities Act, will
be filed as a
II-2
part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act, each such post-effective amendment
will be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time will be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
(the "Commission") such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceedings) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) The undersigned hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement will be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(f) The undersigned hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
II-3
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment will be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time will be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) For purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement will be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial
bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Qwest
Communications International Inc. has duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Denver, State of Colorado, on the 30th day of October, 2001.
QWEST COMMUNICATIONS INTERNATIONAL
INC.
By: /s/ YASH A. RANA
------------------------------------
Yash A. Rana
Vice President, Senior Associate
General
Counsel and Assistant Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Yash A. Rana, as his attorney in
fact and agent, with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated and on October 30, 2001.
<Table>
PRINCIPAL EXECUTIVE OFFICER:
/s/ JOSEPH P. NACCHIO Chairman and Chief Executive Officer
------------------------------------------------
Joseph P. Nacchio
PRINCIPAL FINANCIAL OFFICER AND ACCOUNTING
OFFICER:
/s/ ROBIN R. SZELIGA Executive Vice President & Chief Financial Officer
------------------------------------------------
Robin R. Szeliga
DIRECTORS:
* Director, Chairman of the Board
------------------------------------------------
Philip F. Anschutz
* Director
------------------------------------------------
Joseph P. Nacchio
* Director
------------------------------------------------
Linda G. Alvarado
</Table>
II-5
<Table>
* Director
------------------------------------------------
Craig R. Barrett
* Director
------------------------------------------------
Hank Brown
* Director
------------------------------------------------
Thomas J. Donohue
* Director
------------------------------------------------
Jordan L. Haines
* Director
------------------------------------------------
Cannon Y. Harvey
* Director
------------------------------------------------
Peter S. Hellman
* Director
------------------------------------------------
Vinod Khosla
* Director
------------------------------------------------
Marilyn C. Nelson
* Director
------------------------------------------------
Frank Popoff
* Director
------------------------------------------------
Craig D. Slater
* Director
------------------------------------------------
W. Thomas Stephens
*By: /s/ YASH A. RANA
-----------------------------------------
Yash A. Rana, Attorney-in-fact
</Table>
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Qwest Capital
Funding, Inc. has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Denver,
State of Colorado, on the 30th day of October, 2001.
QWEST CAPITAL FUNDING, INC.
By: /s/ YASH A. RANA
------------------------------------
Yash A. Rana
Vice President, Senior Associate
General
Counsel and Assistant Secretary
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Yash A. Rana as his attorney in
fact and agent, with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration Statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated and on October 30, 2001.
<Table>
PRINCIPAL EXECUTIVE OFFICER:
/s/ JOSEPH P. NACCHIO Chairman and Chief Executive Officer
------------------------------------------------
Joseph P. Nacchio
PRINCIPAL FINANCIAL OFFICER AND ACCOUNTING
OFFICER:
/s/ ROBIN R. SZELIGA Executive Vice President & Chief Financial Officer
------------------------------------------------
Robin R. Szeliga
DIRECTORS:
/s/ DRAKE S. TEMPEST Director
------------------------------------------------
Drake S. Tempest
/s/ ROBIN R. SZELIGA Director
------------------------------------------------
Robin R. Szeliga
</Table>
II-7
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
(1-A) -- Purchase Agreement, dated July 25, 2001, by and among
Capital Funding, Qwest, Lehman Brothers Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as
representatives of the initial purchasers named therein
(filed as an exhibit to Qwest's Quarterly Report on Form
10-Q for the quarter ended June 30, 2001 and incorporated
herein by reference).
(4-A) -- Registration Rights Agreement, dated July 30, 2001, by and
among Capital Funding, Qwest and the initial purchasers
named therein (filed as an exhibit to Qwest's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2001 and
incorporated herein by reference).
(4-B) -- Forms of Letter of Transmittal, Broker Letters and Notice of
Guaranteed Delivery.
(4-C) -- Indenture, dated as of June 29, 1998, by and among Capital
Funding, Qwest and Bank One Trust Company, National
Association as Trustee (filed as an exhibit to Old U S
WEST's Form 8-K dated November 18, 1998, File No. 1-14087
and incorporated herein by reference). The form or forms of
debt securities with respect to each particular series of
debt securities registered hereunder is filed as an exhibit
to a Current Report on Form 8-K of Qwest and incorporated
herein by reference.
(4-D) -- First Supplemental Indenture, dated as of June 30, 2000, to
the Indenture, dated as of June 29, 1998, by and among
Capital Funding, Qwest and Bank One Trust Company, National
Association, as Trustee (filed as an exhibit to Qwest's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2000 and incorporated herein by reference).
(4-E) -- Officers' Certificate of Capital Funding establishing the
terms of the Notes.
(4-F) -- Officers' Certificate of Qwest establishing the terms of the
Guarantees.
(5-A) -- Opinion of O'Melveny & Myers LLP with respect to legality of
the securities being registered.
(5-B) -- Opinion of Holme Roberts & Owen LLP, with respect to
authority to issue the securities being registered.
(8) -- Opinion of O'Melveny & Myers LLP with respect to certain tax
matters.
(12) -- Computation of Ratio of Earnings to Fixed Charges.
(23-A) -- Consent of Arthur Andersen LLP.
(23-B) -- Consent of O'Melveny & Myers LLP (included in Exhibit 5-A).
(23-C) -- Consent of Holme Roberts & Owen LLP (included in Exhibit
5-B).
(24-A) -- Qwest Power of Attorney (also included on Signature Page).
(24-B) -- Capital Funding Power of Attorney (included on Signature
Page).
(25) -- Statement of Eligibility of Trustee (Form T-1).
</Table>