qwest communications 1231 06

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  • 1. Qwest Communications International Inc.Historical Financial InformationAs of December 31, 2006

2. QWEST COMMUNICATIONS INTERNATIONALINC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in millions, except per share amounts) Years Ended (Unaudited)Three Months EndedDecember 31,3/31/046/30/04 9/30/04 12/31/043/31/05 6/30/059/30/05 12/31/053/31/066/30/069/30/0612/31/062004 20052006Operating revenue $3,481 $3,442$3,449 $3,437 $3,449$3,470$3,504$3,480 $3,476 $3,472 $3,487$3,488$13,809 $13,903$13,923 Operating expenses:Cost of sales (exclusive of depreciation and amortization)1,454 1,486 1,548 1,402 1,4391,434 1,512 1,4511,4171,393 1,3821,4155,890 5,8365,607Selling, general and administrative 1,154 1,486 1,261 1,070 1,0361,045 1,016 1,0501,014970 1,0149934,971 4,1473,991Depreciation and amortization 777 784 779 783 774765 768 758691693 6916953,123 3,0652,770Asset impairment charges 433436 113 Total operating expenses 3,385 3,799 3,622 3,291 3,2493,244 3,296 3,2593,1223,056 3,0873,103 14,09713,048 12,368 Other expense (income)net:Interest expensenet 397 394 374366381 380384 338 296298291 2841,531 1,4831,169Other expense (income)net12(111) 40(54)(242) 13(31)392 (28) (17) (42)(84)(113)132 (171) Total other expense (income)net409 283 414312139 393353 730 268281249 2001,418 1,615998 (Loss) income before income taxes and cumulative effect ofaccounting changes - net(313) (640) (587)(166)61(167)(145) (509) 86135151 185 (1,706) (760)557 Income tax benefit (expense)3(136) 18 27 (4)31 3 2(18)43 9(88)336 (Loss) income before cumulative effect of accounting changesnet(310) (776) (569)(139)57(164)(144) (506) 88117194 194 (1,794) (757)593 Cumulative effect of accounting changesnet (22) (22) - Net (loss) income $(310)$(776)$(569) $(139) $57 $(164) $(144)$(528)$88 $117 $194$194$(1,794)$(779) $593Basic (loss) income per share $(0.17) $(0.43) $(0.31) $(0.08)$0.03 $(0.09) $(0.08) $(0.28) $0.05$0.06 $0.10$0.10 $(1.00) $(0.42) $0.31 Basic weighted average shares outstanding1,773 1,801 1,815 1,816 1,8171,823 1,844 1,8621,8741,882 1,9011,9011,801 1,8361,890Diluted (loss) income per share $(0.17) $(0.43) $(0.31) $(0.08)$0.03 $(0.09) $(0.08) $(0.28) $0.05$0.06 $0.09$0.10 $(1.00) $(0.42) $0.30 Diluted weighted average shares outstanding1,773 1,801 1,815 1,816 1,8221,823 1,844 1,8621,9111,952 2,0051,9921,801 1,8361,972 3. QWEST COMMUNICATIONS INTERNATIONALINC.CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited) 3/31/046/30/04 9/30/04 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 ASSETS Current assets: Cash and cash equivalents$1,353$1,184$1,314$1,151 $1,406$2,245$2,311 $846$610$1,189$962$1,241 Short-term investments702 423 598 764966 634 580101 130 205 218 248 Accounts receivablenet 1,743 1,742 1,700 1,5941,603 1,566 1,5951,525 1,541 1,477 1,718 1,600 Prepaid expenses and other current assets 583 737 634 709552 453 568692 743 682 677 565 Total current assets4,381 4,086 4,246 4,2184,527 4,898 5,0543,164 3,024 3,553 3,575 3,654Property, plant and equipmentnet17,80617,49517,25516,853 16,45916,10115,81215,568 15,27315,01614,82814,579 Capitalized software and other intangible assetsnet1,532 1,346 1,216 1,1791,112 1,073 1,035 1,007971 929 943 891 Prepaid pension and other assets2,077 2,179 2,209 2,0742,031 1,998 1,826 1,7581,858 1,794 1,768 2,115 Total assets $25,796$25,106 $24,926 $24,324$24,129 $24,070 $23,727 $21,497 $21,126 $21,292 $21,114$21,239LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current borrowings $996$836$652 $596$601$261$527 $512$604$2,683$1,685$1,686 Accounts payable1,421 1,242 1,3411,303 1,235 1,161 1,3141,314 1,103 1,063 1,094 997 Accrued expenses and other current liabilities1,536 1,838 2,0691,718 1,581 1,602 1,7561,776 1,618 1,740 1,743 1,856 Deferred revenue and advance billings 717 725 693669 642 626 635633 622 609 622 621 Total current liabilities 4,670 4,641 4,7554,286 4,059 3,650 4,2324,235 3,947 6,095 5,144 5,160Long-term borrowingsnet 16,54416,40716,54516,690 16,69117,28716,70214,968 14,83412,69313,22813,206 Post-retirement and other post-employment benefit obligations 3,370 3,419 3,442 3,4283,452 3,466 3,457 3,4593,441 3,439 3,436 2,366 Deferred revenue702 565 571 559554 548 532 522514 508 516 506 Other long-term liabilities 1,761 1,983 2,090 1,9731,937 1,782 1,520 1,5301,450 1,383 1,366 1,446 Total liabilities27,04727,01527,40326,936 26,69326,73326,44324,714 24,18624,11823,69022,684 Stockholders' deficit: Preferred stock Common stock 181818 18181819 1919191919 Additional paid-in capital 42,98943,10643,107 43,11143,11143,17043,260 43,29043,35543,47543,53143,384 Treasury stock(21)(20)(20) (20)(20)(16)(17) (17)(17)(17)(18)(24) Accumulated deficit (44,237)(45,013)(45,582) (45,721)(45,664)(45,828)(45,972) (46,500)(46,412)(46,295)(46,101)(45,907) Accumulated other comprehensive loss (9) (7) (6)(9) (5) (8) (7)1,083 Total stockholders' deficit(1,251) (1,909) (2,477)(2,612) (2,564) (2,663) (2,716)(3,217) (3,060) (2,826) (2,576) (1,445) Total liabilities and stockholders' deficit$25,796$25,106 $24,926 $24,324$24,129 $24,070 $23,727 $21,497 $21,126 $21,292 $21,114$21,239 4. QWEST COMMUNICATIONS INTERNATIONALINC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in millions) (Unaudited)3 Mos 6 Mos9 Mos12 Mos 3 Mos 6 Mos 9 Mos 12 Mos 3 Mos6 Mos 9 Mos 12 MosEnded EndedEnded Ended Ended Ended EndedEnded EndedEnded EndedEnded3/31/04 6/30/049/30/0412/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/066/30/06 9/30/06 12/31/06 OPERATING ACTIVITIESNet (loss) income$(310) $(1,086) $(1,655) $(1,794)$57 $(107)$(251) $(779)$88$205$399 $593Adjustments to reconcile net (loss) income to net cash providedby operating activities:Depreciation and amortization7771,5622,3413,123 774 1,539 2,3073,065 6911,384 2,075 2,770Provision for bad debtsnet 9310614519457 110 13717344 71 108 155Cumulative effect of changes in accounting principlesnet of taxes 22 Asset impairment charges43 77113 Gain on sale of assets(1)(8) (257) (257) (257)(263) (3) (3)(68)Loss (gain) on early retirement of debtnet 15 (5) 11 4332462(5)4 5Other non-cash chargesnet62 84 89 98 1 913 3215 323552Changes in operating assets and liabilities:Accounts receivable126 110 113170 (66)(82) (138)(104)(60) (23) (294) (223)Prepaid expenses and other current assets 241557(20) 1198 1 (8)(37)2850 168Accounts payable and accrued expenses and other current liabilities (128)1 317(80) (178) (258) 57 73(368)(284) (236) (372)Deferred revenue and advance billings(64) (193) (219)(255)(32)(54)(61) (73)(19) (38)(25)(33)Other non-current assets and liabilities (34)207 343306 (24) (128) (252)(287) (214)(190) (184) (258) Cash provided by operating activities 560 844 1,6091,848 343 913 1,5882,313 1401,177 1,929 2,789INVESTING ACTIVITIES Expenditures for property, plant and equipment and intangible assets (455) (941) (1,359)(1,731) (313) (665) (1,110)(1,613) (390)(832) (1,226) (1,632) Proceeds from sale of property and equipment 515 48 418 418 41842026 4763 173 Proceeds from sale of investment securities 216 986 1,1641,922 630 1,086 1,2301,793 7 425670 Purchase of investment securities(351) (929) (1,269)(2,137) (822) (912) (1,002)(1,086)(36)(146) (173) (217) Other(4)5 5 (7)11722 27 1 (101)(94) Cash used for investing activities (594) (874) (1,444)(1,905)(86)(56) (442)(459) (392)(889) (1,381) (1,700)FINANCING ACTIVITIES Proceeds from long-term borrowings1,7651,7662,3342,601 1,885 1,8873,152 600 600 Repayments of long-term borrowings, including current maturities (1,686)(1,862)(2,482)(2,714)(5)(1,550) (1,778)(4,716) (41) (47)(1,145) (1,180) Proceeds from issuance of common and treasury stock 145 103710 39 57102150 205 Repurchases of common stock (209) Other (59) (60) (74) (55)(105) (105)(634) (37) (110) Cash provided by (used for) financing activities 21 (152)(217)(158)(2) 23714 (2,159)16 55 (432) (694)CASH AND CASH EQUIVALENTS(Decrease) increase in cash and cash equivalents (13)(182) (52)(215)255 1,094 1,160 (305) (236)343 116395Beginning balance1,3661,3661,3661,366 1,151 1,151 1,1511,151 846 846 846846 Ending balance $1,353$1,184 $1,314$1,151$1,406$2,245$2,311 $846$610 $1,189 $962 $1,241 5. QWEST COMMUNICATIONS INTERNATIONALINC.SELECTED FINANCIAL RESULTS (Dollars in millions) Years Ended (Unaudited) Three Months EndedDecember 31,3/31/04 6/30/049/30/0412/31/043/31/05 6/30/059/30/05 12/31/053/31/06 6/30/069/30/0612/31/06 2004 2005 2006 Operating revenue Wireline services $3,341 $3,303$3,308 $3,303$3,312$3,329$3,361 $3,333$3,327$3,320 $3,343$3,338 $13,255$13,335$13,328 Wireless services127130 133124 126 132 131138 139 142135 141 514527557 Other services139 8 1011 912910109 940 41 38 Total operating revenue3,4813,442 3,4493,437 3,449 3,470 3,5043,480 3,476 3,4723,487 3,48813,809 13,903 13,923Cost of sales (COS): Facility costs 659 676745 648 674677 692649 618610587625 2,7282,6922,440 Network expenses5766 736667 5972 6952 62 69 69 262267252 Employee-related costs 450 437429 389 409387 404387 396388397392 1,7051,5871,573 Other non-employee related costs 288 307301 299 289311 344346 351333329329 1,1951,2901,342 Total cost of sales1,454 1,4861,548 1,402 1,4391,434 1,5121,451 1,4171,3931,3821,415 5,8905,8365,607Selling, general and administrative (SG&A): Property and other taxes 8111511278 99 111100 43 8872 9664386 353 320 Bad debt 93 13 3949 5753 27 36 4427 3747194 173 155 Restructuring, realignment andseverance related costs15 13255915 (1) 26 7422(2) 43211114 63 Employee-related costs 469 434413 413 407410 401405 401 405 407426 1,7291,6231,639 Other non-employee related costs 496 792692 471 458472 462492 459 468 431456 2,4511,8841,814 Total selling, general and administrative1,154 1,4861,261 1,070 1,0361,045 1,0161,050 1,014 970 1,014993 4,9714,1473,991Subtotal COS + SG&A2,608 2,9722,809 2,472 2,4752,479 2,5282,501 2,4312,3632,3962,40810,8619,9839,598Capital expenditures(1) $455 $486$418 $372$313$352$445 $503$390$442 $394$406$1,731 $1,613 $1,632 Employees 45,928 4