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

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

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-3040

QWEST CORPORATION

<Table>

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

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

TELEPHONE NUMBER (303) 992-5109
(Registrant's telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

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QWEST CORPORATION
FORM 10-Q

TABLE OF CONTENTS

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

PART I -- FINANCIAL INFORMATION

1. Financial Statements
Condensed Consolidated Statements of Operations --
Three months ended March 31, 2002 and 2001.................. 1
Condensed Consolidated Balance Sheets --
March 31, 2002 and December 31, 2001........................ 2
Condensed Consolidated Statements of Cash Flows --
Three months ended March 31, 2002 and 2001.................. 3
Notes to Condensed Consolidated Financial Statements........ 4
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 11

PART II -- OTHER INFORMATION

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

QWEST CORPORATION

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

<Table>
<Caption>
THREE MONTHS
ENDED
MARCH 31,
---------------
2002 2001
------ ------

Operating revenues:
Business services......................................... $1,000 $1,041
Consumer services......................................... 1,329 1,306
Wholesale services........................................ 708 761
Network services and other revenues....................... 12 11
------ ------
Total operating revenues.......................... 3,049 3,119
------ ------
Operating expenses:
Employee-related expenses................................. 729 780
Other operating expenses.................................. 740 705
Depreciation and amortization............................. 763 674
Merger-related and other charges.......................... -- 114
------ ------
Total operating expenses.......................... 2,232 2,273
------ ------
Operating income............................................ 817 846
------ ------
Other expense -- net:
Interest expense -- net................................... 166 147
Other expense (income) -- net............................. 14 (8)
------ ------
Total other expense -- net........................ 180 139
------ ------
Income before income taxes.................................. 637 707
Provision for income taxes.................................. 246 266
------ ------
Net income.................................................. $ 391 $ 441
====== ======
</Table>

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

QWEST CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)

<Table>
<Caption>
MARCH 31, DECEMBER 31,
2002 2001
----------- ------------
(UNAUDITED)

ASSETS

Current assets:
Cash and cash equivalents................................. $ 848 $ 204
Accounts receivable -- net................................ 2,312 2,403
Inventories and supplies.................................. 208 232
Deferred tax asset........................................ 22 41
Prepaid and other......................................... 76 65
------- -------
Total current assets........................................ 3,466 2,945
Property, plant and equipment -- net........................ 19,319 19,431
Other assets -- net......................................... 2,786 2,690
------- -------
Total assets................................................ $25,571 $25,066
======= =======

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Short-term borrowings..................................... $ 634 $ 1,511
Short-term borrowings -- affiliate........................ 2,396 2,292
Accounts payable.......................................... 1,127 1,098
Accrued expenses and other current liabilities............ 1,124 1,019
Advance billings and customer deposits.................... 373 375
------- -------
Total current liabilities................................... 5,654 6,295
Long-term borrowings........................................ 7,117 5,781
Post-retirement and other post-employment benefit
obligations............................................... 2,452 2,481
Deferred taxes, credits and other........................... 3,357 3,218

Contingencies and commitments (Note 5)

Stockholder's equity:
Common stock -- one share without par value, owned by
parent................................................. 8,451 8,415
Accumulated deficit....................................... (1,460) (1,124)
------- -------
Total stockholder's equity.................................. 6,991 7,291
------- -------
Total liabilities and stockholder's equity.................. $25,571 $25,066
======= =======
</Table>

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

QWEST CORPORATION

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

<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
------------------
2002 2001
------- --------

OPERATING ACTIVITIES
Net income................................................ $ 391 $ 441
Adjustments to net income:
Depreciation and amortization.......................... 763 674
Non-cash Merger-related charges........................ -- 59
Provision for bad debts................................ 76 47
Deferred income taxes.................................. 155 156
Changes in operating assets and liabilities:
Accounts receivable.................................... 20 (52)
Inventories, supplies and other current assets......... 15 (93)
Accounts payable, accrued expenses, advance billings
and customer deposits................................. 111 73
Restructuring and Merger-related reserves.............. (109) (74)
Other.................................................. 16 (66)
------ -------
Cash provided by operating activities.................. 1,438 1,165
------ -------
INVESTING ACTIVITIES
Expenditures for plant, property and equipment............ (676) (1,576)
Other..................................................... (8) (52)
------ -------
Cash used for investing activities........................ (684) (1,628)
------ -------
FINANCING ACTIVITIES
Net (repayments of) proceeds from short-term borrowings... (876) 410
Proceeds from issuance of long-term borrowings -- net..... 1,476 --
Repayments of long-term borrowings........................ (48) (74)
Dividends paid on common stock............................ (627) --
Other..................................................... (35) --
------ -------
Cash (used for) provided by financing activities.......... (110) 336
------ -------
CASH AND CASH EQUIVALENTS
Increase (decrease)....................................... 644 (127)
Beginning balance......................................... 204 252
------ -------
Ending balance............................................ $ 848 $ 125
====== =======
</Table>

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

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2002
(UNAUDITED)

NOTE 1: BASIS OF PRESENTATION

The condensed consolidated interim financial statements include the
accounts of Qwest Corporation ("Qwest" or "we" or "us" or "our") and our wholly
owned subsidiaries. We are a wholly owned subsidiary of Qwest Communications
International Inc. ("QCII").

The condensed consolidated interim financial statements are unaudited. We
prepared these financial statements in accordance with the instructions for Form
10-Q. In compliance with those instructions, certain information and footnote
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles in the United States ("GAAP") have
been condensed or omitted. We made certain reclassifications to prior balances
to conform to the current year presentation. In our opinion, we made all the
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly our consolidated results of operations, financial position and
cash flows as of March 31, 2002 and for all periods presented. These financial
statements should be read in conjunction with the audited financial statements
included in our Form 10-K for the year ended December 31, 2001. The condensed
consolidated results of operations for the three months ended March 31, 2002 are
not necessarily indicative of the results expected for the full year. The
condensed consolidated financial statements of Qwest Corporation do not purport
to represent nor should be inferred to represent the financial position, results
of operations, cash flows or any measure, including adjusted EBITDA, of any
assets or operations of pre-merger U S WEST, Inc. other than the financial
position, results of operations and cash flows of U S WEST Communications, Inc.
and its subsidiaries.

NOTE 2: MERGER WITH U S WEST

On June 30, 2000, QCII completed its acquisition (the "Merger") of our
former parent company, U S WEST, Inc. ("U S WEST"). All Merger-related costs
were recorded in 2001 and 2000 with the majority of those charges paid by
December 31, 2001. The activity during the first quarter of 2002 relating to the
remaining unpaid liabilities was as follows:

<Table>
<Caption>
JANUARY 1, MARCH 31,
2002 CURRENT CURRENT 2002
(DOLLARS IN MILLIONS) BALANCE PROVISION UTILIZATION BALANCE
- --------------------- ---------- --------- ----------- ---------

Contractual settlements and legal
contingencies.............................. $74 $ -- $65 $ 9
Severance and employee-related charges....... 7 -- 5 2
Other charges................................ -- -- -- --
--- ----- --- ---
Total Merger-related and other charges....... $81 $ -- $70 $11
=== ===== === ===
</Table>

As those matters identified as legal contingencies associated with
contractual settlements and other legal contingencies are resolved, any amounts
will be paid at that time. Any differences between amounts accrued and actual
payments will be reflected in results of operations as an adjustment to
Merger-related and other charges.

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3: BORROWINGS

<Table>
<Caption>
MARCH 31, DECEMBER 31,
2002 2001
(DOLLARS IN MILLIONS) --------- ------------

Current borrowings:
Commercial paper.......................................... $ 33 $ 888
Due to Qwest Capital Funding.............................. 2,396 2,292
Short-term notes and current portion of long-term
borrowings............................................. 479 485
Current portion of capital lease obligations.............. 122 138
------- ------
Total current borrowings.................................... 3,030 3,803
------- ------
Long-term borrowings:
Long-term notes and bonds................................. 7,043 5,694
Long-term capital lease obligations....................... 74 87
------- ------
Total long-term borrowings.................................. 7,117 5,781
------- ------
Total borrowings............................................ $10,147 $9,584
======= ======
</Table>

Until February 2002, we maintained commercial paper programs to finance
short-term operating cash needs of the business. We and QCII also had a $4.0
billion syndicated credit facility to support commercial paper programs at both
Qwest and Qwest Capital Funding ("QCF"). As a result of reduced demand for QCF's
and our commercial paper, in February 2002 we borrowed the full amount allocated
to us under the syndicated credit facility of $1.0 billion and used most of the
proceeds to repay commercial paper. After repaying the commercial paper, we had
approximately $137 million of proceeds available to repay current maturities
under short-term notes, long-term borrowings and lease obligations.

In March 2002, we amended the syndicated credit facility. As part of the
amendment, we (i) increased the maximum debt-to-Consolidated EBITDA ratio,
measured on a consolidated QCII basis, from 3.75-to-1 to 4.25-to-1 through the
quarter ending September 30, 2002, decreasing to 4.0-to-1 beginning December 31,
2002, and (ii) agreed to use a portion of net proceeds from future sales of
assets and capital market transactions, including the issuance of debt and
equity securities, to prepay the bank loan until the outstanding loan is $2.0
billion or less. "Consolidated EBITDA" as defined in the credit facility is a
measure of EBITDA that starts with QCII's net income and adds back certain
items, primarily those of a non-cash or a non-operating nature.

In March 2002, we issued $1.5 billion in bonds with a ten-year maturity and
an 8.875% interest rate. Following the amendment of the syndicated credit
facility agreement, we paid approximately $608 million of the proceeds from our
March 2002 bond offering to reduce the total amount outstanding under the
syndicated credit facility. Following the repayment and a redistribution of
amounts outstanding between us and QCF which resulted in the application of
another $392 million of the proceeds from the bond offering to our debt
obligations, all of the syndicated credit facility outstanding as of March 31,
2002 was assigned to QCF. The remaining net proceeds from our bonds will be used
to repay our short-term obligations and currently maturing long-term borrowings.

In February and March 2002, our credit ratings were lowered two levels to
BBB+ and Baa2 by Fitch Ratings ("Fitch") and Moody's Investor Service
("Moody's"), respectively, and one level to BBB by Standard and Poor's ("S&P").
These ratings in the case of Fitch are the third lowest level, and in the case
of S&P and Moody's, the second lowest level, of investment grade. The commercial
paper ratings for our commercial paper were also lowered to F-3, P-3 and A-3 by
Fitch, Moody's and S&P, respectively. See Note 10 for information on an
additional downgrade of our credit ratings by Fitch and S&P.

We are currently in compliance with all financial covenants in our credit
facility and indentures as of the last measurement date.
5

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4: RELATED PARTY TRANSACTIONS

During the first quarter of 2002, $627 million in dividends were paid to an
affiliate company and $100 million in dividends were accrued and will be paid in
the second quarter of 2002. Both transactions reduced our equity for the three
months ended March 31, 2002. Assets transferred to affiliates for the three
months ended March 31, 2002 and 2001 were $29 million and zero, respectively.

We purchase various services from affiliated companies. We also provide
various services to affiliated companies. The amount paid and received for these
services is determined in accordance with the Federal Communications Commission
and state regulatory cost allocation rules, which prescribe various cost
allocation methodologies that are dependent upon the service provided.
Management believes that such cost allocation methods are reasonable. The total
cost of services purchased from affiliated companies was $468 million and $303
million for the three months ended March 31, 2002 and 2001, respectively. The
total amount of revenues derived from affiliated companies was $91 million and
$77 million for the three months ended March 31, 2002 and 2001, respectively.

It is not practicable to provide a detailed estimate of the expenses that
would be recognized on a stand-alone basis. However, we believe that corporate
services, including those related to procurement, tax, legal and human services,
are obtained more economically through affiliates than they would be on a
stand-alone basis, since we absorb only a portion of the total costs.

NOTE 5: COMMITMENTS AND CONTINGENCIES

Commitments

Minimum Usage Requirements and Other Commitments. We have agreements with
interexchange carriers ("IXCs") and third-party vendors that require us to
maintain minimum monthly and/or annual billings based on usage. We believe we
will meet substantially all minimum usage commitments. In the event that
requirements are not met, appropriate charges will be recorded. We have
reflected in our financial statements the financial impact of all current, unmet
minimum usage requirements.

There have been no material changes in our commitments since December 31,
2001.

Contingencies

Litigation. On July 23, 2001, we filed a demand for arbitration against
Citizens Communications Company ("Citizens") alleging that it breached
Agreements for Purchase and Sale of Telephone Exchanges dated as of June 16,
1999, between Citizens and U S WEST Communications, Inc., with respect to the
purchase and sale of exchanges in Arizona, Colorado, Idaho, Iowa, Minnesota,
Montana, Nebraska and Wyoming. The demand for arbitration was filed after
Citizens failed to close the exchange sales in violation of the terms of the
purchase agreements. Citizens, in turn, filed a demand for arbitration alleging
counter claims against us in connection with the sale of those same exchanges,
as well as exchanges located in North Dakota that we did sell to Citizens. In
the arbitration, we seek a determination that Citizens breached the agreements
and, as a result, we are entitled to draw down on a series of letters of credit
Citizens provided in connection with the transactions and other damages.
Citizens seeks a determination that we breached the agreements and, as a result,
Citizens is entitled to damages. This arbitration is still at a preliminary
stage.

In August 2001, we filed a complaint in state court in Colorado against
Touch America, Inc. ("Touch America"). In response, also in August 2001, Touch
America filed a complaint against us in federal district court in Montana and
removed the Colorado court complaint to federal district court in Colorado.
Touch America has also filed answers and counterclaims in the Colorado lawsuit.
Touch America's complaint in Montana was dismissed on November 5, 2001, and
Touch America's motion for reconsideration was denied on December 17, 2001.
Touch America has also filed two complaints before the Federal Communications

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Commission ("FCC"). The disputes between us and Touch America relate to various
billing, reimbursement and other commercial disputes arising under agreements
entered into for the sale of QCII's interLATA (local access and transport area)
business in our local service area (Arizona, Colorado, Idaho, Iowa, Minnesota,
Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington and Wyoming) to Touch America on June 30, 2000. Touch America also
asserts that we have violated state and federal antitrust laws, the
Telecommunications Act of 1996 (the "Act") (including claims alleging that
QCII's sale of indefeasible rights of use is in violation of the Act) and our
Federal Communications Commission tariff. Each party seeks damages against the
other for amounts billed and unpaid and for other disputes. Discovery has begun
at the FCC. The court case is in a preliminary stage, general discovery has not
begun and no trial date has been set.

We have also been named as a defendant in various other litigation matters.
We intend to vigorously defend these outstanding claims and the outstanding
claims specifically described above.

Intellectual Property. We frequently receive offers to take licenses for
patent and other intellectual rights, including rights held by competitors in
the telecommunications industry, in exchange for royalties or other substantial
consideration. We are also regularly the subject of allegations that our
products or services infringe upon various intellectual property rights, and
receive demands that we discontinue the alleged infringement. We normally
investigate such offers and allegations and respond appropriately, including
defending ourself vigorously when appropriate. There can be no assurance that,
if one or more of these allegations proved to have merit and involved
significant rights, damages or royalties, this would not have a material adverse
effect on us.

Regulatory Matters. On February 14, 2002, the Minnesota Department of
Commerce filed a formal complaint against us with the Minnesota Public Utilities
Commission alleging that we, in contravention of federal and state law, failed
to file interconnection agreements with the Minnesota Public Utilities
Commission relating to certain of our wholesale customers, and thereby allegedly
discriminating against other competitive local exchange carriers ("CLECs"). The
complaint seeks civil penalties related to such alleged violations between $50
million and $200 million. While a hearing has been held on this matter, the
administrative law judge on the matter has not yet ruled. Other states in the
local service area are looking into similar matters, including Arizona, New
Mexico and Iowa, each of which have initiated formal investigations, and further
proceedings may ensue in those and other states.

We have other pending regulatory actions in local regulatory jurisdictions
which call for price decreases, refunds or both. These actions are generally
routine and incidental to our business.

We have provided for certain of the above matters in our condensed
consolidated financial statements as of March 31, 2002. Although the ultimate
resolution of these claims is uncertain, we do not expect any material adverse
impacts as a result of the resolution of these matters.

NOTE 6: SEGMENT INFORMATION

As of January 1, 2002, QCII changed its segment reporting to reflect the
way it currently manages its operations. Our operations are included in QCII's
consolidated results and in the following QCII operating segments: (1) business
services, (2) consumer services, (3) wholesale services and (4) network
services. The business services segment provides local telephone services,
wireless products and services, and data and Internet protocol ("IP") services
to retail business customers. The consumer services segment provides local
telephone services, wireless products and services, and data and IP services to
the consumer market. The wholesale services segment provides exchange access
services that connect customers to the facilities of IXCs and interconnection to
our telecommunications network to CLECs as well as local telephone services,
wireless products and services, and data and IP services to primarily the same
customers. The network services segment provides access to our
telecommunications network, including our information technologies, primarily

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

to our retail services and wholesale services segments. We generate revenue from
access to our network by leasing our telephone poles, primarily to other
telecommunications providers. We provide the majority of our services to more
than 25 million residential and business customers in our local service area.

The following is a breakout of our segments, which we extracted from the
financial statements of QCII. The accounting policies used are the same as those
used in our condensed consolidated financial statements. Because significant
expenses of operating the business, consumer and wholesale services segments are
not allocated to such segments for QCII's decision making purposes, QCII
management does not believe the segment margins are representative of the actual
operating results of the segments for Qwest. The margin for the business,
consumer and wholesale services segments excludes network and corporate
expenses. The margin for the network services segment excludes corporate
expenses. The "Other" category includes unallocated corporate expenses and
revenues and certain revenues, expenses and capital expenditures of QCII which
are eliminated. Asset information by segment is not provided to our chief
operating decision-maker. The 2001 amounts have been restated to conform to the
changes in our segment reporting explained above. The condensed consolidated
financial statements of Qwest Corporation do not purport to represent nor should
be inferred to represent the financial position, results of operations, cash
flows or any measure, including adjusted EBITDA, of any assets or operations of
pre-merger U S WEST, Inc. other than the financial position, results of
operations and cash flows of U S WEST Communications, Inc. and its subsidiaries.

<Table>
<Caption>
BUSINESS CONSUMER WHOLESALE NETWORK CONSOLIDATED
SERVICES SERVICES SERVICES SERVICES OTHER TOTAL
-------- -------- --------- -------- ------- ------------
(DOLLARS IN MILLIONS)

THREE MONTHS ENDED
MARCH 31,
2002
External revenues................ $1,545 $1,433 $1,021 $ 8 $ (958) $3,049
Margin(1)........................ 1,105 987 879 (1,391) -- 1,580
Capital expenditures............. 2 32 -- 878 (236) 676
2001
External revenues................ 1,782 1,466 1,449 6 (1,584) 3,119
Margin(1)........................ 1,365 1,005 1,306 (1,612) (430) 1,634
Capital expenditures............. 1 160 -- 2,755 (1,340) 1,576
</Table>

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

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

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

<Table>
<Caption>
THREE MONTHS
ENDED
MARCH 31,
---------------
2002 2001
(DOLLARS IN MILLIONS) ------ ------

Segment margin.............................................. $1,580 $1,634
Less:
Depreciation and amortization............................. 763 674
Merger-related and other charges.......................... -- 114
Total other expense -- net................................ 180 139
------ ------
Income before income taxes.................................. $ 637 $ 707
====== ======
</Table>

NOTE 7: NON-CASH ACTIVITIES

Supplemental disclosures of non-cash operating, investing and financing
activities are as follows:

<Table>
<Caption>
THREE MONTHS
ENDED
MARCH 31,
-------------
2002 2001
(DOLLARS IN MILLIONS) ----- -----

Assets acquired through capital leases...................... $17 $ 50
Assets transferred to affiliates............................ 29 --
Non-cash equity infusion to grantor trust................... -- 286
</Table>

During the first quarter of 2001, we established an irrevocable grantor
trust (the "Trust") related to the payment of certain contingent obligations
which are included in our condensed consolidated balance sheets. QCII funded the
Trust with a non-cash equity infusion to us of $286 million.

NOTE 8: RESTRUCTURING

During the fourth quarter of 2001, we approved a plan to further reduce
current employee levels, consolidate facilities and abandon certain capital
projects, terminate certain operating leases and recognize certain asset
impairments. In the fourth quarter of 2001, we recorded a restructuring charge
of $247 million to cover the costs associated with these actions. No additional
restructuring charges were recorded during the quarter ended March 31, 2002.

A summary of the activity during the first quarter of 2002 relating to the
unpaid charges was as follows:

<Table>
<Caption>
JANUARY 1, MARCH 31,
2002 2002
BALANCE PROVISION UTILIZATION BALANCE
(DOLLARS IN MILLIONS) ---------- --------- ----------- ---------

Severance and employee-related charges....... $179 $ -- $36 $143
Contractual settlements and legal
contingencies.............................. 29 -- 3 26
---- ----- --- ----
Total restructuring charges................ $208 $ -- $39 $169
==== ===== === ====
</Table>

During the quarter ended March 31, 2002, approximately 1,600 employees left
the business and have received or will receive benefits under the restructuring
plan. We anticipate that the majority of our charges will be paid by the end of
the current fiscal year. When matters are finalized, any differences between
amounts accrued and actual payments will be reflected in results of operations
as an adjustment to restructuring charges.

QWEST CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 9: NEW ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets." This statement addresses financial accounting and
reporting for intangible assets (excluding goodwill) acquired individually or
with a group of other assets at the time of their acquisition. It also addresses
financial accounting and reporting for goodwill and other intangible assets
subsequent to their acquisition. Intangible assets (excluding goodwill) acquired
outside of a business combination will be initially recorded at their estimated
fair value. If the intangible asset has a finite useful life, it will be
amortized over that life. Intangible assets with an indefinite life are not
amortized. Both types of intangible assets will be reviewed annually for
impairment and a loss recorded when the asset's carrying amount exceeds its
estimated fair value. The impairment test for intangible assets consists of
comparing the fair value of the intangible asset to its carrying value. Fair
value for goodwill and intangible assets is determined based upon discounted
cash flows and appraised values. If the carrying value of the intangible asset
exceeds its fair value, an impairment loss is recognized. Goodwill will be
treated similar to an intangible asset with an indefinite life. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. As required, we
adopted SFAS No. 142 effective January 1, 2002. The adoption of SFAS No. 142 did
not have a significant impact on our consolidated financial statements.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This statement addresses the costs of closing
facilities and removing assets. SFAS No. 143 requires entities to record the
fair value of a legal liability for an asset retirement obligation in the period
it is incurred. This cost is initially capitalized and amortized over the
remaining life of the underlying asset. Once the obligation is ultimately
settled, any difference between the final cost and the recorded liability is
recognized as a gain or loss on disposition. As required, we will adopt SFAS No.
143 effective January 1, 2003. We are currently evaluating the impact this
pronouncement will have on our future consolidated financial results.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This pronouncement addresses how
to account for and report impairments or disposals of long-lived assets. Under
SFAS No. 144, an impairment loss is to be recorded on long-lived assets being
held or used when the carrying amount of the asset is not recoverable from its
expected future undiscounted cash flows. The impairment loss is equal to the
difference between the asset's carrying amount and estimated fair value. In
addition, SFAS No. 144 requires that long-lived assets to be disposed of by
other than a sale for cash are to be accounted for and reported like assets
being held or used, except the impairment loss is recognized at the time of
disposition. Long-lived assets to be disposed of by sale are to be recorded at
the lower of their carrying amount or estimated fair value (less costs to sell)
at the time the plan of disposition has been approved and committed to by the
appropriate company management. In addition, depreciation is to cease at the
same time. As required, we adopted SFAS No. 144 effective January 1, 2002. The
adoption of SFAS No. 144 did not have a significant impact on our consolidated
financial statements.

NOTE 10: SUBSEQUENT EVENTS

On April 19, 2002, both Fitch and S&P reduced our credit ratings one level
to BBB and BBB-, respectively. The rating of BBB is the second lowest level of
investment grade for Fitch ratings, and BBB- is the lowest level of investment
grade for S&P ratings.

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

We have omitted certain information pursuant to General Instruction H(2).

Special Note: Certain statements set forth below under this caption
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. See "Special Note Regarding
Forward-Looking Statements" at the end of this Item 2 for additional factors
relating to such statements.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2002 Compared with the Three Months Ended March
31, 2001

A non-recurring item impacted net income in the first three months of 2001.
Results of operations for the three months ended March 31, 2002 and 2001
excluding the effect of this item in 2001 follows:

<Table>
<Caption>
THREE MONTHS
ENDED
MARCH 31,
-------------
2002 2001 DECREASE
(DOLLARS IN MILLIONS) ----- ----- --------------

Net income.................................................. $391 $441 $ (50) (11.3)%
Non-recurring items......................................... -- 70 (70) (100.0)%
---- ---- -----
Adjusted net income......................................... $391 $511 $(120) (23.5)%
==== ==== =====
</Table>

The non-recurring item represents an after-tax charge of $70 million for
the three months ended March 31, 2001 for charges associated with the
acquisition (the "Merger") of U S WEST, Inc. ("U S WEST") by Qwest
Communications International Inc. ("QCII").

Adjusted net income for the three months ended March 31, 2002 decreased
$120 million or 23.5% over the same period in 2001. The decrease was primarily
due to declining local voice and intraLATA long-distance voice revenues, which
declined $92 million when comparing the first three months of 2002 to the same
period in 2001. We attribute this decline to competition and the weak economic
conditions in our local service area (Arizona, Colorado, Idaho, Iowa, Minnesota,
Montana, Nebraska, New Mexico, North Dakota, Oregon, South Dakota, Utah,
Washington and Wyoming) which resulted in a net decrease in the number of access
lines, higher depreciation expenses due to continued investment in our network
in 2001 and 2000 and higher interest expense from increased borrowings to
finance those investments. Switched access revenues also declined approximately
$53 million principally as a result of federal access reform that reduced the
rates we can collect for these services. Partially offsetting these revenue
decreases was growth of $78 million in sales of data, IP and wireless products
and services and a decrease in salaries and wages and payroll taxes of $109
million related to fewer employees in the first quarter of 2002 as compared to
the first quarter of 2001.

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

<Table>
<Caption>
THREE MONTHS
ENDED
MARCH 31,
--------------- INCREASE
2002 2001 (DECREASE) % CHANGE
(DOLLARS IN MILLIONS) ------ ------ ---------- --------

Operating revenues:
Business services.................................... $1,000 $1,041 $ (41) (3.9)%
Consumer services.................................... 1,329 1,306 23 1.8%
Wholesale services................................... 708 761 (53) (7.0)%
Network services and other revenues.................. 12 11 1 9.1%
------ ------ -----
Total operating revenues..................... 3,049 3,119 (70) (2.2)%
------ ------ -----
Operating expenses:
Employee-related expenses............................ 729 780 (51) (6.5)%
Other operating expenses............................. 740 705 35 5.0%
Depreciation and amortization........................ 763 674 89 13.2%
Merger-related and other charges..................... -- 114 (114) (100.0)%
------ ------ -----
Total operating expenses..................... 2,232 2,273 (41) (1.8)%
------ ------ -----
Operating income....................................... 817 846 (29) (3.4)%
------ ------ -----
Other expense -- net:
Interest expense -- net.............................. 166 147 19 12.9%
Other expense (income) -- net........................ 14 (8) 22 275.0%
------ ------ -----
Total other expense -- net................... 180 139 41 29.5%
------ ------ -----
Income before income taxes............................. 637 707 (70) (9.9)%
Provision for income taxes............................. 246 266 (20) (7.5)%
------ ------ -----
Net income............................................. $ 391 $ 441 $ (50) (11.3)%
====== ====== =====
</Table>

REVENUES

Overview. Qwest Corporation's ("Qwest" or "we" or "us" or "our") revenues
are generated from a variety of services and products. Business and consumer
services are derived principally from voice services such as local exchange
telephone services (or basic telephone service), enhanced service features (such
as Caller ID, Call Waiting, 3-Way Calling and Voice Mail), intraLATA (local
access and transport area) long-distance services, wireless products and
services, directory assistance and public telephone service. Also included in
business and consumer services revenues are retail advanced data and Internet
protocol ("IP") products and services. Advanced data products and services
include asynchronous transfer mode ("ATM"), frame relay, private line, customer
premise equipment ("CPE") and integrated services digital network ("ISDN"). IP
products consist primarily of dial-up Internet access and digital subscriber
line ("DSL"). Wholesale services revenues are derived primarily from network
transport, switching and billing services provided within our local service area
to interexchange carriers ("IXCs"), competitive local exchange carriers
("CLECs") and wireless carriers. Network transport and switching services relate
to use of our local network to connect customers to their long-distance
networks. Wholesale services revenues are also derived from sales of products
and services such as local voice, data, IP and wireless. Network services
revenues are derived primarily from our leasing of telephone poles. Other
revenues include sub-lease rentals and other miscellaneous revenue items.

Total revenues. Total revenues for the three months ended March 31, 2002
were $3.049 billion compared to $3.119 billion for the same period in 2001, a
decrease of $70 million. The decrease was primarily due to a decline of
approximately $66 million in total local voice revenues to $1.641 billion from
$1.707 billion for the three months ended March 31, 2002 and 2001, respectively.
Total local voice revenues were impacted by a decline of approximately 526,000
access lines from the end of the first quarter of 2001 as compared to the end of
the first quarter of 2002, a decrease of 3%. Total intraLATA long-distance voice
revenues also decreased $26 million to $47 million from $73 million for the
three months ended March 31, 2002 and 2001, respectively, which was primarily
the result of a net decrease in the number of access lines. Both the local

voice revenue and intraLATA long-distance revenue decreases were significantly
impacted by continued weakness in the regional economy and telecommunications
industry, ongoing competitive pressures from other telecommunications services
providers in our local service area and technology displacement. Switched access
revenues also declined approximately $53 million principally as a result of
federal access reform that reduced the rates we can collect for these services.

Partially offsetting the items contributing to the decrease in total
revenue was growth in sales of data, IP and wireless products and services. Data
and IP services revenues increased by approximately $36 million for the quarter
ended March 31, 2002 as compared to the quarter ended March 31, 2001 and
represented approximately 18% of our total revenues in 2002 as compared to 17%
in 2001. Increases in private line, ISDN, ATM and dial-up Internet access
contributed to the growth in total data and IP revenues. In addition, the number
of DSL customers grew to approximately 464,000 at the end of the first quarter
of 2002, up 52% over the comparable quarter of 2001. Wireless products and
services revenues in the first quarter of 2002 grew by approximately $42 million
or 28% over the three months ended March 31, 2001. We added over 200,000
wireless customers since the first quarter of 2001 and our monthly revenue per
customer increased from $50.00 to $51.00 for the three months ended March 31,
2001 and 2002, respectively. However, our net number of subscribers for the
first quarter of 2002 remained relatively flat when compared to the number of
subscribers at December 31, 2001. We have made a strategic decision to focus on
our margins and cash flows in our wireless business through continued focus on
our jointly marketed wireless and wireline service offerings. The monthly
revenue per customer declined from the end of 2001 and reflects the changes in
some of our calling plans where we are now including higher amounts of minutes
in response to competitive pressures.

Through the remainder of 2002, we anticipate generating incremental
revenues from increased capacity and performance from our existing sales
channels, improved customer win-back and retention efforts, continued
implementation of existing dial-up Internet access contracts and interLATA
long-distance entry in our local service area.

Business services revenues. Business services revenues are derived from
sales of voice, IP, data, and wireless products and services to retail business
customers. Business services revenues were $1 billion for the three months ended
March 31, 2002 compared to $1.041 billion for the same period in 2001. The
decrease was primarily attributable to declines of approximately $59 million in
local voice services revenues and $6 million in intraLATA long-distance voice
services revenues resulting from a weak regional economy, increased competition
from various telecommunications providers and technology displacement. Included
in the $59 million decrease was a decline in basic local telephone service
revenues of $40 million for the first quarter of 2002 as compared to the first
quarter of 2001 as a result of the weak regional economy and increased
competition. Partially offsetting the items contributing to the decrease in
business services revenues was increased revenues of $33 million from affiliate
transactions (such as wireless, access and local voice services charges billed
to affiliates) and sales of wireless, data and IP products and services
including private line, ATM, ISDN, dial-up Internet access and DSL. We believe
revenues from data products and services will account for an increasingly larger
portion of business services revenue in future periods.

Consumer services revenues. Consumer revenues are derived from sales of
voice, IP, data and wireless products and services to the consumer market.
Consumer services revenues for the first three months of 2002 were $1.329
billion compared to $1.306 billion for the first three months in 2001. The
increase is primarily attributable to an increase in our residential wireless
revenues of $39 million from $132 million for the first quarter of 2001 to $171
million for the first quarter of 2002. The change was due to growth in the
number of subscribers resulting in increased sales of wireless products and
services as the average revenue per subscriber remained relatively flat,
increasing from $50.00 per month in the first quarter of 2001 to approximately
$51.00 per month in the first quarter of 2002. We expect our wireless subscriber
growth in 2002 to continue to be impacted by a weak economy and competitive
pressures. Data and IP revenues also increased approximately $22 million
primarily due to higher sales of DSL and dial-up Internet access services.
Partially offsetting these increases was a decrease in local voice and intraLATA
long-distance voice products and services as a result of the weak economy,
competitive losses and technology displacement. A decline in our access lines of
472,000 and reduced consumption of our enhanced service features (such as Caller
ID, Call Waiting, 3-Way Calling and Voice Mail) contributed to a decrease of $62
million, which was partially offset
13

by an increase of $46 million in sales of combined feature packages such as
Custom Choice(SM) and jointly marketed services such as Total Package(SM). A
decrease in intraLATA long-distance revenues of $19 million was caused by a net
decrease in the number of access lines.

Wholesale services revenues. Wholesale services revenues are derived from
network transport, switching and billing services provided within our local
service area to IXCs, CLECs and wireless carriers. We also provide wholesale
products and services such as voice, IP, data and wireless products and services
primarily to the same telecommunications customers. Wholesale services revenues
were $708 million and $761 million for the three months ended March 31, 2002 and
2001, respectively. The decrease was primarily attributable to a decline in
switched access revenues of approximately $42 million principally as a result of
federal access reform that reduced the rates we can collect for these services.
These reduced rates were somewhat offset by increased subscriber line charges
("SLCs"). We believe both of these trends will continue. Wholesale services
revenues also declined by $20 million due to a drop in co-location and billing
and collection revenues resulting from a reduction in the number of
telecommunications providers caused by weakness in the telecommunications sector
of the economy. Finally, our wholesale services revenues were also impacted to a
limited extent by our decision to increase prices on certain services to improve
profitability. This had the effect of reducing the number of minutes of use by
customers who purchased those services.

Network services and other revenues. Network services revenues are
generated primarily by leases of telephone poles. Other revenues are derived
principally from our leasing of office space and other miscellaneous revenues.
Network services and other revenues remained relatively flat at $12 million for
the first quarter of 2002 compared to $11 million for the first quarter of 2001.

OPERATING EXPENSES

Employee-related expenses. Employee-related expenses include salaries and
wages, benefits, payroll taxes and fees for independent contractors.

Employee-related expenses decreased by $51 million in the three months
ended March 31, 2002 as compared to the three months ended March 31, 2001. The
decline was primarily due to fewer employees as a result of the Merger and an
internal operating reorganization of certain employees (discussed below in other
operating expenses), which decreased salaries and wages and payroll taxes by
approximately $109 million. Partially offsetting these decreases in
employee-related expenses was a reduction in the pension credit (net of other
post-retirement benefits) of approximately $61 million resulting from the
volatile equity market conditions in 2001 and 2000, scheduled pension benefit
increases required under union contracts and rising health care rates (relating
to post-retirement benefits).

In April 2002, QCII announced that it expects to reduce its current
workforce by an additional 2,000 employees through attrition, continued business
process improvements and layoffs. A significant portion of this reduction should
affect us. These actions are a result of continuing weakness in both the
telecommunications sector and the regional economy in our 14-state local service
area, as well as increased competitive pressure. Although we do not expect to
incur any significant costs associated with these actions and do not expect to
record any charges in our condensed consolidated financial statements, no such
assurances can be given.

Other operating expenses. Other operating expenses include access charges
paid to carriers for the routing of local and long-distance traffic to their
facilities, taxes other than income taxes, uncollectible expenses and other
selling, general and administrative costs. The increase in other operating
expenses for the three months ended March 31, 2002 of $35 million as compared to
the same period in 2001, was primarily attributable to an increase of $28
million in uncollectible expenses to cover slow-paying and non-paying customers
due to weak economic conditions in our local service area. Affiliate expenses
also increased primarily as a result of an internal operating reorganization. In
March 2001, several employee groups (such as executive management, sales and
marketing, product planning and systems technical support) moved from Qwest to
an affiliate subsidiary of QCII in order to gain operational efficiencies and to
prepare for entry into the interLATA long-distance business. These costs were
previously captured in our employee-related expenses. After the reorganization,
these costs were billed back to us from the affiliate subsidiary and were

recorded in other operating expenses. The result is a shift in costs from
employee-related expenses to other operating expenses.

The items contributing to the increase in other operating expenses were
offset by decreases in access expenses, advertising expenses and other general
and administrative costs. Lower access expenses were a result of the decline in
access revenues due to the weak regional economy. Decreases in advertising and
other general and administrative expenses were principally due to cost cutting
measures as a result of the Merger.

Depreciation expense. Depreciation expense increased $89 million for the
three months ended March 31, 2002 compared to the same period in 2001, due to
higher overall property, plant and equipment balances resulting from our capital
spending programs in 2001 and 2000.

Merger-related and other charges. There were no charges associated with
the Merger recorded in the three months ended March 31, 2002 because all costs
associated with the Merger had been incurred by June 30, 2001.

Total other expense -- net. Interest expense increased $19 million for the
three months ended March 31, 2002 over the comparable 2001 period. The increase
was primarily attributable to increased borrowings required to fund the 2001
capital improvements to our network. In addition, the current status of our
borrowing program has resulted in higher interest rates on new borrowings since
December 31, 2001. We incurred other expense of $14 million for the three months
ended March 31, 2002 compared to $8 million in other income earned for the three
months ended March 31, 2001. The increase in other expense of $22 million is
primarily due to a $39 million write-off of deferred costs associated with a
contract termination. Partially offsetting the increases in other expense for
the three months ended March 31, 2002, was an interest adjustment of $22 million
related to a federal tax settlement from prior years.

Provision for income taxes. The effective tax rate for the three months
ended March 31, 2002 of 38.6% was higher than the rate of 37.6% for the three
months ended March 31, 2001 due to changes in permanent differences and
investment tax credits. Permanent differences represent items whose accounting
treatment and tax treatment will never be the same (such as an accounting
expense that is not deductible for tax purposes).

NET INCOME

For the three months ended March 31, 2002, we generated net income of $391
million compared to net income of $441 million for the three months ended March
31, 2001. The decrease of $50 million was primarily due to declining local voice
and intraLATA long-distance voice revenues attributable to competition and the
weak economic conditions in our local service area (Arizona, Colorado, Idaho,
Iowa, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oregon, South
Dakota, Utah, Washington and Wyoming), higher depreciation due to continued
investment in our network and higher interest expense from increased borrowings
to finance those investments. Partially offsetting these decreases was growth in
sales of data, IP and wireless products and services and a decrease in
employee-related expenses related to fewer employees in the first quarter of
2002 as compared to the first quarter of 2001.

RECENT REGULATORY DEVELOPMENTS

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

Interconnection. The FCC is continuing to interpret the obligations of
incumbent local exchange carriers ("ILECs") under the 1996 Act to interconnect
their networks with, and make unbundled network elements available to, CLECs.
These decisions establish our obligations in our local service area, and our
rights when we compete outside of our local service area. In January 2002, the
FCC released its Triennial
15

Review of Unbundled Network Elements in which it seeks to ensure that the
framework established in the 1996 Act remains current given advances in
technology and developments in the markets for telecommunications services. The
outcome of this proceeding may affect our current obligations regarding sharing
our network with our competitors. In addition, state commissions continue to
review our pricing pursuant to applicable FCC rules. We currently have open
dockets on the pricing of interconnection and unbundled network elements in 13
of the 14 states in which we operate as an ILEC.

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

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

InterLATA Long-Distance Entry. Several Regional Bell Operating Companies
("RBOCs") have filed for and received permission to enter into the interLATA
long-distance business in several states. Although many of these applications
have been supported by state PUCs, the FCC had rejected all applications until
December 1999.

We have filed applications with all of our local service area state PUCs
for support of our planned applications to the FCC for authority to enter the
interLATA long-distance business. Workshops and related proceedings are complete
in twelve of our fourteen local service area states, and hearings are underway
in the remaining two local service area states. We agreed to test operational
support systems ("OSS") on a regional basis in thirteen states, and testing of
those systems began in March 2001. Testing in Arizona was conducted separately,
and began in February 2001. OSS testing and review processes are in their final
stages, and state proceedings on our applications are in progress. We currently
plan to have filed for interLATA long-distance approval with the FCC for all
states in our local service area in the second or third quarter of 2002 and
expect to receive approval of the applications within 90 days of each filing.
However, there can be no assurance that we will be in a position to make these
applications to the FCC on our current schedule, or will obtain timely FCC
approval of these applications.

Reciprocal Compensation for Internet service providers ("ISPs"). On April
27, 2001, the FCC issued an Order with regard to intercarrier compensation for
ISP bound traffic. The Order required carriers serving ISP bound traffic to
reduce reciprocal compensation rates over a 36-month period beginning with an
initial reduction to $0.0015 per minute of use and ending with a rate of $0.0007
per minute of use. In addition, a cap was placed on the number of minutes of use
on which the terminating carrier may charge such rates.

On May 3, 2002, the U.S. Appeals Court, District of Columbia, remanded this
Order to the FCC for further proceedings and indicated the FCC may likely have
the authority to elect this type of reciprocal compensation rate scheme.

CONTINGENCIES

We have certain pending legal and regulatory matters. You can find
information regarding such matters in Note 5 to the condensed consolidated
financial statements.

NEW ACCOUNTING STANDARDS

for goodwill and other intangible assets subsequent to their acquisition.
Intangible assets (excluding goodwill) acquired outside of a business
combination will be initially recorded at their estimated fair value. If the
intangible asset has a finite useful life, it will be amortized over that life.
Intangible assets with an indefinite life are not amortized. Both types of
intangible assets will be reviewed annually for impairment and a loss recorded
when the asset's carrying amount exceeds its estimated fair value. The
impairment test for intangible assets consists of comparing the fair value of
the intangible asset to its carrying value. Fair value for goodwill and
intangible assets is determined based upon discounted cash flows and appraised
values. If the carrying value of the intangible asset exceeds its fair value, an
impairment loss is recognized. Goodwill will be treated similar to an intangible
asset with an indefinite life. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001. As required, we adopted SFAS No. 142
effective January 1, 2002. The adoption of SFAS No. 142 did not have a
significant impact on our consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." This pronouncement addresses how
to account for and report impairments or disposals of long-lived assets. Under
SFAS No. 144, an impairment loss is to be recorded on long-lived assets being
held or used when the carrying amount of the asset is not recoverable from its
expected future undiscounted cash flows. The impairment loss is equal to the
difference between the asset's carrying amount and estimated fair value. In
addition, SFAS No. 144 requires that long-lived assets to be disposed of by
other than a sale for cash are to be accounted for and reported like assets
being held or used, except the impairment loss is recognized at the time of the
disposition. Long-lived assets to be disposed of by sale are to be recorded at
the lower of their carrying amount or estimated fair value (less costs to sell)
at the time the plan of disposition has been approved and committed to by the
appropriate company management. In addition, depreciation is to cease at the
same time. As required, we adopted SFAS No. 144 effective January 1, 2002. The
adoption of SFAS No. 144 did not have a significant impact on our consolidated
financial statements.

FACTORS IMPACTING LIQUIDITY

We are a wholly-owned subsidiary of QCII. As such, factors relating to or
affecting QCII's liquidity and capital resources could have a material impact on
us either due to perception in the market or due to provisions in certain of our
financing agreements. Because we meet the conditions set forth in general
Instruction H (1)(a) and (b) of Form 10-Q, however, we have prepared this
Quarterly Report on Form 10-Q on the basis of the reduced narrative disclosure
permitted under General Instruction H (2). As a result, we have not included
information relating to trends, demands, commitments, events or uncertainties
that are reasonably likely to materially impact our liquidity or capital
resources. We encourage you to review QCII's Quarterly Report on Form 10-Q,
filed with the Securities and Exchange Commission on May 15, 2002, as the same
may be amended, for a detailed description of issues relating to liquidity and
capital resources that could affect our business. Also see Note 3 to the
condensed consolidated financial statements of Qwest for a discussion of certain
matters material to our liquidity and capital resources.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

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

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

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

RISK FACTORS IMPACTING FORWARD-LOOKING STATEMENTS

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

- the duration and extent of the current economic downturn in our 14-state
local service area, including its effect on our customers and suppliers;

- any adverse outcome of the SEC's current inquiries into QCII's accounting
policies, practices and procedures;

- adverse results of increased review and scrutiny of QCII by regulatory
authorities, media and others (including any internal analyses) of
financial reporting issues and practices or otherwise;

- QCII's cash needs, which are likely to consume much of our net income
this year;

- rapid and significant changes in technology and markets;

- failure to achieve the projected synergies and financial results expected
to result from QCII's acquisition of U S WEST, and difficulties in
combining the operations of the combined company;

- QCII's future ability to provide interLATA services within our 14-state
local service area;

- potential fluctuations in quarterly results;

- intense competition in the markets in which we compete;

- changes in demand for our products and services;

- adverse economic conditions in the markets served by us;
18

- dependence on new product development and acceleration of the deployment
of advanced new services, such as broadband data, wireless and video
services, which could require substantial expenditure of financial and
other resources in excess of contemplated levels;

- higher than anticipated employee levels, capital expenditures and
operating expenses;

- adverse changes in the regulatory or legislative environment affecting
our business;

- adverse developments in commercial disputes or legal proceedings; and

- changes in the outcome of future events from the assumed outcome included
in our significant accounting policies described in our Annual Report on
Form 10-K for the year ended December 31, 2001, as the same may be
amended.

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

PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Qwest and its subsidiaries are subject to claims and proceedings arising in
the ordinary course of business. For a discussion of these actions, see Note 5
to the condensed consolidated financial statements.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

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

(3.1) -- Amended Articles of Incorporation of the Registrant filed
with the Secretary of State of Colorado on July 6, 2000,
evidencing change of Registrant's name from U S WEST
Communications, Inc. to Qwest Corporation (incorporated
by reference to Qwest Corporation's quarterly report on
Form 10-Q for the quarter ended June 30, 2000).
(3.2) -- Restated Articles of Incorporation of the Registrant.
(Incorporated herein by this reference to Exhibit 3a to
Form 10-K filed on April 13, 1998, File No. 1-3040.)
(3.3) -- Bylaws of the Registrant, as amended. (Incorporated
herein by this reference to Exhibit 3b to Form 10-K filed
on April 13, 1998, File No. 1-3040.)
(4.1) -- No instrument which defines the rights of holders of long
and intermediate term debt of the Registrant is filed
herewith pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this regulation, the
Registrant hereby agrees to furnish a copy of any such
instrument to the SEC upon request.
(4.2) -- Indenture, dated as of October 15, 1999, by and between U
S WEST Communications, Inc. and Bank One Trust Company,
NA, as Trustee (Exhibit 4b to Form 10-K for the period
ended December 31, 1999, File No. 1-3040).
10.1 -- Purchase Agreement, dated as of March 7, 2002, among
Qwest Corporation and Credit Suisse First Boston
Corporation, Banc of America Securities LLC, Lehman
Brothers Inc., ABN AMRO Incorporated, Commerzbank Capital
Markets Corp. and First Union Securities, Inc. as
Representatives of the Initial Purchasers listed therein.
10.2 -- Registration Rights Agreement, dated as of March 12,
2002, among Qwest Corporation and the Initial Purchasers
listed therein.
(10.3) -- Amended and Restated Credit Agreement, dated as of March
12, 2002, among Qwest Capital Funding, Inc., Qwest
Corporation, Qwest Communications International Inc. and
the banks listed therein (incorporated by reference to
Qwest Communications International Inc.'s Current Report
on Form 8-K, dated March 18, 2002, File No. 1-15577).
</Table>

II-1

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

( ) Previously filed.

(b) Reports on Form 8-K:

(i) On March 4, 2002, we filed a report on Form 8-K regarding the
drawdown of $1 billion available to us under our share of the bank credit
facility and the effect on our covenants and business.

(ii) On March 6, 2002, we filed a report on Form 8-K regarding
proposed amendments to our syndicated credit facility.

(iii) On March 8, 2001, we filed a report on Form 8-K regarding an
offering of $1.5 billion in debt.

(iv) On March 11, 2002, we filed a report on Form 8-K regarding our
expected March 12, 2002 completion date of an unregistered debt offering of
$1.5 billion pursuant to Rule 144A and Regulation S under the Securities
Act of 1933.

(v) On March 12, 2002, we filed a report on Form 8-K regarding
completion of our $1.5 billion debt offering.

(vi) On March 18, 2002, we filed a report on Form 8-K regarding the
amendment of the Qwest Communications International Inc. and Qwest Capital
Funding, Inc. $4 billion unsecured bank agreement.

II-2

SIGNATURES

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

QWEST CORPORATION

By: /s/ CHARLES A. JOSENHANS
-------------------------------------
Charles A. Josenhans
Vice President, Controller
and Treasurer
(Principal Financial and Chief
Accounting Officer)

May 15, 2002

II-3

EXHIBIT INDEX

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

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

( ) Previously filed.