Qwest Reports Breakthrough First Quarter Results; EPS Positive; Margin Expansion; Improved Year-over-Year Revenue.DENVER Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. -- Qwest Communications
See: New York Stock Exchange : Q):
Unaudited (in millions, except per share amounts)
Seq. Y over Y
Q1 2006 Q4 2005 Change Q1 2005 Change
Operating Revenues $3,476 $3,480 (0.1)% $3,449 0.8%
Net Income (Loss) 88 (528) nm 57 54.4%
Net Income (Loss) per
Diluted Share 0.05 (0.28) nm 0.03 66.7%
--Positive Earnings Per Share --Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Margin Advances to 30.7 Percent(a) --Fourth Consecutive Quarter of Year-Over-Year Revenue Improvement --Free Cash Flow(a) -- Before Anticipated, One Time Items -- On Track Qwest Communications International Inc. (NYSE: Q) today reported solid first quarter results highlighted by positive earnings per share, revenue growth, and continued margin expansion. For the quarter, Qwest (Qwest Communications International Inc., Denver, CO, www.qwest.com) A telecommunications company that offers services to telecom carriers, businesses and homes using an extensive fiber-optic network throughout the U.S. and Mexico. reported earnings of $88 million, or $0.05 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $57 million, or $0.03 per share, in the first quarter 2005, which included a $257 million, or $0.14 per share, gain on the sale of wireless assets. "Qwest has started the year with strong momentum, posting both solid operating and financial performance for the first quarter and achieving important operating milestones resulting in positive earnings per share," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a C. Notebaert, Qwest chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Financial Results Qwest's first quarter revenue of $3.5 billion increased 0.8 percent compared to the first quarter a year ago. Revenue trends improved as a result of strong sales within Qwest's portfolio of mass market bundles and growth products, including high-speed Internet See broadband. , advanced data products, long distance and wireless. "Revenue growth, improved ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. and continued cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. have resulted in a 200 basis point improvement first quarter over first quarter in our adjusted EBITDA moving the margin to 31 percent," said Oren G. Shaffer Shaffer is a wholly owned subsidiary of National Oilwell Varco and is involved in the manufacturing and distribution of pressure control devices for the petroleum industry. , Qwest vice chairman and CFO See Chief Financial Officer. . Qwest's operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. declined 4 percent to $3.1 billion for the first quarter of 2006 over the first quarter of 2005 as a result of improvement in productivity and operating efficiencies, optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. initiatives in facility costs and lower depreciation. Capital Spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. , Cash Flow and Interest First quarter capital expenditures totaled $390 million, compared to $313 million in the first quarter of 2005, with a continued increase in the proportion spent on broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). , enabling higher speeds and footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. expansion. Capital spending in 2006 is expected to be at or slightly above 2005 levels as the company continues to focus in a disciplined fashion on investment in key growth areas and to support the highest service levels. Free cash flow benefited from improved operating results, offset by anticipated seasonal and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. items in the quarter. Cash generated from operations was $140 million in the first quarter, which includes a one-time previously announced payment of $100 million for shareholder litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , as well as $250 million related to employee bonuses and payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. timing. Qwest continues to expect to grow free cash flow by an incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. $450 to $600 million in 2006 (before one-time payments), benefiting primarily from improved operating results and reduced interest expense. Interest expense totaled $296 million for the first quarter compared to $381 million in the year-ago quarter. As a result of successfully tendering for and retiring high coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer legacy debt in the fourth quarter of last year, interest expense is expected to be reduced by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $300 million in 2006. Balance Sheet Update The company ended the quarter with total debt of $15.4 billion, a decline of $1.9 billion compared with the first quarter a year ago, and $740 million in cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Operational Highlights Qwest's improved revenue trends included operational progress in the following key growth areas: Customer Connections Qwest's customer connections - which include consumer and small-business primary and secondary access lines, high-speed Internet subscribers, wireless and video customers - grew 253,000 from the year-ago quarter, marking the third sequential One after the other in some consecutive order such as by name or number. quarterly increase. Customer connections were up over 330,000 since new bundling bundling, courtship custom, thought to have originated in Holland and the British Isles. It was extended to America, particularly to New England, and most widely practiced in the years prior to the Revolution of 1776. and localized Translated into the spoken language of the country. See localization. sales initiatives began in May 2005. Total retail line losses improved to a decline of 4.2 percent year-over-year, compared to a decline of 5.3 percent a year ago, excluding 53,000 UUnet and affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. disconnects in the prior year. Continued and anticipated pressure from the decline in the number of access lines resold by Qwest's competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. offset the improvement. As a result, total switched access lines declined 4.8 percent from a year ago, excluding the disconnects referenced above. Qwest maintained its leadership role in working with wholesale customers by signing commercially negotiated agreements on the company's Qwest Platform Plus contracts. However, wholesale line losses continued from competitive pressures and technology substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. . High-Speed Internet Growing demand for Qwest High-Speed Internet was a highlight for the quarter. The company added 198,000 high-speed Internet lines in the first quarter, which includes 18,000 subscribers added in previous periods but not recognized in prior subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. counts. The company benefited from strong demand, particularly in the conversion of customers from dial-up Refers to using the regular "dial-up" telephone network to send data from a computer to a remote network or to a remote device. The computer's digital data are converted to analog signals in the same frequency range as human voice by a modem. to broadband, as well as reduced churn churn: see butter. . These record net additions brings the total subscribers to 1.7 million - a 13 percent increase sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and a 50 percent increase year-over-year. The company's mass markets data and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the revenues increased 11 percent sequentially and 34 percent year-over-year. The company sees a significant potential revenue opportunity by increasing the current broadband penetration The successful unauthorized breach of a security perimeter. See penetration test. to industry benchmark A performance test of hardware and/or software. There are various programs that very accurately test the raw power of a single machine, the interaction in a single client/server system (one server/multiple clients) and the transactions per second in a transaction processing system. levels. Qwest continued to invest in its high-speed Internet footprint, as well as increase the speeds available to customers. Currently, 78 percent of Qwest's households are eligible for broadband services See broadband and broadband service provider. , up from approximately 67 percent at the end of 2004. About 98 percent of qualified households are able to purchase broadband speeds of 1.5 Mbps or greater and more than 50 percent are able to purchase service at speeds in excess of 3.0 Mbps. In addition to its focus on availability and speeds, Qwest was able to increase retention by devoting attention to the customer service and support experience. In the quarter, Qwest announced a new home and small-business modem-based wireless networking See wireless network. solution that included availability of extended around-the-clock a·round-the-clock adj. Variant of round-the-clock. Adj. 1. around-the-clock - at all times; "around-the-clock nursing care" day-and-night, round-the-clock, nonstop customer support and service. The solution delivers customers a second layer of security, as well as a selection of applications, including remote access and content control options. Bundles Qwest has been rewarded for its aggressive focus on bundle To sell hardware and software as a combined product or to combine several software packages for sale as a single unit. Contrast with unbundle. See bundled software and bundling. packaging and sales. Since the launch of new bundles a year ago, followed by targeted incentives and promotional initiatives, the company has significantly increased the number of products available in its bundled bun·dle n. 1. A group of objects held together, as by tying or wrapping. 2. Something wrapped or tied up for carrying; a package. 3. Biology A cluster or strand of closely bound muscle or nerve fibers. offerings. Sales of voice packages plus three products are up over 100 percent, and sales of packages plus four products are up nearly seven times since launch. Customer demand for value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. has contributed to increased consumer average monthly revenue per wireline customer by 6 percent to $49 from $46 a year ago. Qwest's full-featured bundled offering includes high-speed Internet access, a national wireless offering, local and long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. service and integrated TV services through Qwest's own ChoiceTV or its marketing alliance with DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. , Inc. The company's bundle penetration increased to 53 percent in the quarter, compared to 47 percent a year ago. In-Region Long-Distance Long-distance penetration of total retail lines increased to 38 percent in the first quarter, compared to 34 percent a year ago. Qwest increased total long-distance lines by 46,000 in the quarter. The company ended the quarter with more than 4.8 million long-distance lines, a 5 percent increase over a year ago. Wireless Wireless revenue grew 10 percent compared to the prior year as a result of promotions and successful bundling efforts. Qwest saw the fourth sequential quarter of growth in its wireless subscribers. The company's subscriber base grew by 14,000 in the quarter, bringing total wireless subscribers to 784,000. The company continues to benefit from wireless in the bundle with approximately 75 percent of wireless subscribers on an integrated bill with at least one other service. This has contributed to significantly lower churn this year. Qwest's data and enhanced features are driving higher wireless ARPU, which increased 9 percent to $50 from $46 a year ago. The company continues to focus on adding wireless data subscribers and approximately 50 percent of new customers sign up for a data service. DIRECTV(R) Alliance Customer net additions for DIRECTV service grew 33 percent in the first quarter. Qwest and DIRECTV's strategic relationship allows Qwest to offer DIRECTV digital satellite television services to residential customers across the Western United States Noun 1. western United States - the region of the United States lying to the west of the Mississippi River West Santa Fe Trail - a trail that extends from Missouri to New Mexico; an important route for settlers moving west in the 19th century . Enterprise and Wholesale Revenues from Qwest's enterprise channel, which includes business and government customers, increased 3.3 percent over last year's results - a benefit of continued growth in data and IP sales. In the quarter, Qwest announced new or expanded networking and voice and data agreements with NASA NASA: see National Aeronautics and Space Administration. NASA in full National Aeronautics and Space Administration Independent U.S. , Allina Hospitals and Clinics and the State of Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. . Qwest is pleased the industry analyst community is beginning to recognize the company's progress. In the Forrester Research Forrester Research is an independent technology and market research company that provides its clients with advice about technology's impact on business and consumers. Corporate facts
named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. MPLS (1) (MultiProtocol Lambda Switching) The earlier name for GMPLS. See GMPLS. (2) (MultiProtocol Label Switching) A standard from the IETF for including routing information in the packets of an IP network. Services Wave Report (Feb. 14, 2006), Forrester Forrester is a surname. It may refer to
Qwest continued to advance its MPLS-based networking capabilities into the marketplace with news that it would offer to its wholesale customers Qwest IP Solutions(TM) - a wide-area networking solution that simplifies complex data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. . Special Items See Attachment See attach a file. E for special items. Conference Call Today As previously announced, Qwest will host a conference call for investors and the media today at 9 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT with Richard C. Notebaert, Qwest chairman and CEO, and Oren G. Shaffer, Qwest vice chairman and CFO. The call can be heard on the Web at www.qwest.com/about/investor/events. About Qwest Qwest Communications International Inc. (NYSE: Q), through its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. , is a leading provider of high-speed Internet, data, video and voice services. With nearly 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at www.qwest.com. Forward-Looking Statement forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Note This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: access line losses due to increased competition, including from technology substitution of our access lines with wireless and cable alternatives, among others; our substantial indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , and our inability to complete any efforts to de-lever our balance sheet through asset sales or other transactions; any adverse outcome of the current investigation by the U.S. Attorney's CERTIFICATE, ATTORNEY'S, Practice, English law. By statute 37 Geo. III., c. 90, s. 26, 28, attorneys are required to deliver to the commissioners of stamp duties, a paper or note in writing, containing the name and usual place of residence of such person, and thereupon, on paying certain office in Denver into certain matters relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc us; adverse results of increased review and scrutiny Scrutiny (Fr. scrutin, Late Lat. scrutinium, from scrutari, to search or examine thoroughly) is a careful examination or inquiry (as though there was a mistake). by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities , media and others (including any internal analyses) of financial reporting issues and practices or otherwise; rapid and significant changes in technology and markets; any adverse developments in commercial disputes or legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , including any adverse outcome of current or future legal proceedings related to matters that are or were the subject of governmental investigations, and, to the extent not covered not covered Health care adjective Referring to a procedure, test or other health service to which a policy holder or insurance beneficiary is not entitled under the terms of the policy or payment system–eg, Medicare. Cf Covered. by insurance, if any, our inability to satisfy any resulting obligations from funds available to us, if any; potential fluctuations in quarterly results; volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of our stock price; intense competition in the markets in which we compete including the likelihood of certain of our competitors consolidating with other providers; changes in demand for our products and services; acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of the deployment Installing, setting up, testing and running. This military term, which means the placement of troops and equipment in the field, is widely used with computers as an alternate to the word "implementation. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. or legislative environment affecting our business; changes in the outcome of future events from the assumed outcome included in our significant accounting policies; and our ability to utilize net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. in projected amounts. The information contained in this release is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This release may include analysts' estimates and other information prepared by third parties for which Qwest assumes no responsibility. Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any forward-looking statements and other statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. By including any information in this release, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material. The Qwest logo is a registered trademark of Qwest Communications International Inc. in the U.S. and certain other countries. (a) See attachment F for Non GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Reconciliation
ATTACHMENT A
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS, SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Ended
March 31,
---------------------
%
2006 2005 Change
---------- ---------- --------
Operating revenue $3,476 $3,449 0.8%
Operating expenses:
Cost of sales (exclusive of
depreciation and amortization) 1,417 1,439 (1.5)%
Selling, general and administrative 1,014 1,036 (2.1)%
Depreciation and amortization 691 774 (10.7)%
---------- ----------
Total operating expenses 3,122 3,249 (3.9)%
---------- ----------
Other expense--net:
Interest expense--net 296 381 (22.3)%
Other (income) expense--net (28) 15 nm
Gain on sale of assets -- (257) nm
---------- ----------
Total other expense--net 268 139 92.8%
---------- ----------
Income before income taxes 86 61 41.0%
Income tax benefit (expense) 2 (4) nm
---------- ----------
Net income $88 $57 54.4%
========== ==========
Basic and diluted income per share $0.05 $0.03 66.7%
========== ==========
Basic weighted-average shares
outstanding 1,874,313 1,816,758 3.2%
========== ==========
Diluted weighted-average shares
outstanding 1,911,376 1,822,377 4.9%
========== ==========
----------------------------------------------------------------------
nm -- percentages greater than 200% and comparisons from positive to
negative values or to zero values are considered not meaningful.
ATTACHMENT B
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
(UNAUDITED)
March 31, December 31,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $610 $846
Short-term investments 130 101
Other current assets 2,284 2,217
------------ ------------
Total current assets 3,024 3,164
Property, plant and equipment--net, and other
assets 18,102 18,333
------------ ------------
Total assets $21,126 $21,497
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current borrowings $604 $512
Accounts payable and other current
liabilities 3,343 3,723
------------ ------------
Total current liabilities 3,947 4,235
Long-term borrowings--net 14,834 14,968
Other long-term liabilities 5,405 5,511
------------ ------------
Total liabilities 24,186 24,714
Stockholders' deficit (3,060) (3,217)
------------ ------------
Total liabilities and stockholders' deficit $21,126 $21,497
============ ============
ATTACHMENT C
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31,
---------------------
2006 2005
----------- ---------
Cash provided by operating activities $140 $343
=========== =========
Cash used for investing activities $(392) $(86)
=========== =========
Cash provided by (used for) financing activities $16 $(2)
=========== =========
(Decrease) increase in cash and cash equivalents $(236) $255
=========== =========
ATTACHMENT D
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
As of and for the
Three Months Ended
March 31,
%
2006 2005 Change
--------- --------- --------
OPERATING REVENUE (1)
Wireline services revenue
Voice services
Local voice
Business $316 $323 (2.2)%
Mass markets 1,028 1,061 (3.1)%
Wholesale 176 197 (10.7)%
--------- ---------
Total local voice 1,520 1,581 (3.9)%
Long-distance
Business 144 147 (2.0)%
Mass markets 155 135 14.8%
Wholesale 271 276 (1.8)%
--------- ---------
Total long-distance 570 558 2.2%
Access services 146 161 (9.3)%
--------- ---------
Total voice services 2,236 2,300 (2.8)%
--------- ---------
Data and Internet services
Business 588 544 8.1%
Mass markets 191 143 33.6%
Wholesale 312 325 (4.0)%
--------- ---------
Total data and Internet 1,091 1,012 7.8%
--------- ---------
Total wireline services revenue 3,327 3,312 0.5%
Wireless services revenue 139 126 10.3%
Other services revenue 10 11 (9.1)%
--------- ---------
Total operating revenue $3,476 $3,449 0.8%
========= =========
Capital expenditures (in millions) (2) $390 $313 24.6%
Total employees 38,737 40,613 (4.6)%
Consumer revenue: (3) $1,136 $1,119 1.5%
ARPU (in dollars) $48.55 $45.79 6.0%
In-Region long distance lines (in
thousands) 4,824 4,590 5.1%
High-speed Internet:
Subscribers (in thousands) (4) 1,678 1,122 49.6%
Qualified households/businesses (in
millions) 7.2 6.6 9.1%
Wireless/PCS: (5)
Total wireless services revenue $139 $126 10.3%
End of period subscribers (in thousands) 784 743 5.5%
ARPU (in dollars) $50 $46 8.7%
Access lines (in thousands): (6)
Business access lines
Retail lines 2,946 3,086 (4.5)%
Resold lines 1,667 1,848 (9.8)%
--------- ---------
Total business access lines 4,613 4,934 (6.5)%
--------- ---------
Mass markets access lines
Consumer primary lines 7,749 8,107 (4.4)%
Consumer additional lines 876 1,024 (14.5)%
Small business lines 1,308 1,274 2.7%
--------- ---------
Total mass markets access lines 9,933 10,405 (4.5)%
--------- ---------
Total access lines 14,546 15,339 (5.2)%
========= =========
ATTACHMENT D
(CONTINUED)
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
As of and for the
Three Months Ended
March 31,
-------------------
%
2006 2005 Change
--------- --------- --------
Mass markets retail connections (in
thousands):
Mass markets access lines 9,933 10,405 (4.5)%
High-speed Internet subscribers (4) 1,678 1,122 49.6%
Video subscribers 228 100 128.0%
Wireless subscribers 784 743 5.5%
--------- ---------
Total mass markets retail connections 12,623 12,370 2.0%
========= =========
Minutes of use from carriers and
CLECs (in Millions) 12,442 13,280 (6.3)%
ATTACHMENT D
(CONTINUED)
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
(1) Product revenue categories have been adjusted for current period
presentation.
(2) Capital expenditures exclude assets acquired through capital
leases.
(3) Consumer ARPU (Average Revenue Per Unit) is measured as consumer
revenue in the period divided by the average number of primary
access lines for the period. We believe this metric can be a
useful measure of the revenue performance of our consumer business
within our mass markets channel on a per-customer basis. We use
ARPU internally to assess the revenue performance of our consumer
business within our mass markets channel and the impact on this
business of periodic customer initiatives and product roll-outs.
ARPU is not a measure determined in accordance with accounting
principles generally accepted in the United States of America, or
GAAP and should not be considered as a substitute for our wireline
services segment revenue or any other measure determined in
accordance with GAAP.
(4) Total High-speed Internet subscribers does not include out-of-
region subscribers. Included in the 2006 high-speed Internet count
are 18,000 subscribers which relate to 2005 and 2004 activity and
have not been previously reported. If they had been included in
2005, the subscriber count and the percentage change would have
been 1,126 and 49.0%, respectively.
(5) Wireless ARPU (Average Revenue Per Unit) is measured as the
recurring portion of our wireless services revenue stream
attributed to subscribing customers (plus certain activation fees)
divided by the average number of subscribers for the period. We
believe this metric can be a useful measure of the revenue
performance of our wireless business on a per-customer basis. We
use ARPU internally to assess the revenue performance of our
wireless business and the impact on this business of periodic
customer initiatives and product roll-outs. ARPU is not a measure
determined in accordance with GAAP and should not be considered as
a substitute for our wireless services segment revenue or any
other measure determined in accordance with GAAP. Beginning in
2004, Wireless ARPU includes surcharges for the recovery of costs
associated with providing number portability and wireless 911
services.
Three Months Ended
March 31,
-------------------
%
2006 2005 Change
--------- --------- --------
ARPU is calculated as follows:
Total quarterly wireless services
revenue (in millions) $139 $126 10.3%
Less: quarterly non-recurring revenue
(in millions) (22) (23) (4.3)%
--------- ---------
Quarterly recurring revenue (in
millions) $117 $103 13.6%
--------- ---------
Average monthly recurring revenue (in
millions) 39 34 14.7%
--------- ---------
Divided by quarterly average wireless
services subscribers (in thousands) 778 745 4.4%
--------- ---------
Wireless services ARPU (in dollars) $50 $46 8.7%
========= =========
(6) We modified the classification of our access lines during the
fourth quarter of 2005 in our effort to better approximate our
revenue channels. Resold lines includes UNE-P lines, unbundled
loops, resale lines and public pay phone lines. Business retail
access lines at December 31, 2005, reflect a decline of 32,000
lines in the fourth quarter related to affiliate disconnects as
well as 23,000 line and 21,000 line disconnects in the first
quarter and second quarter of 2005, respectively, related to
UUNet.
ATTACHMENT E
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)
Three Months Ended
March 31,
-------------------
2006 2005
--------- ---------
SPECIAL ITEMS:
Operating expenses:
Restructuring, realignment and severance related
costs (SG&A) $(22) $(15)
--------- ---------
Subtotal operating expenses (22) (15)
Other expense--net:
Gain on sale of assets -- 257
--------- ---------
Subtotal other expense--net -- 257
--------- ---------
Total special items--(charges)/benefits $(22) $242
========= =========
ATTACHMENT F
QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(DOLLARS IN MILLIONS)
(UNAUDITED)
As of and for the
Three Months Ended
March 31,
----------------------
2006 2005
----------- ----------
Segment Income:
Operating revenue $3,476 $3,449
Cost of sales (exclusive of depreciation and
amortization) (1,417) (1,439)
Selling, general and administrative (1,014) (1,036)
----------- ----------
Segment income $1,045 $974
=========== ==========
EBITDA--as adjusted: (1)
EBITDA--as adjusted $1,067 $989
Less: Restructuring, realignment and severance
related costs (22) (15)
----------- ----------
EBITDA: (1)
EBITDA $1,045 $974
Depreciation and amortization (691) (774)
Total other expense--net (268) (139)
Income tax benefit (expense) 2 (4)
----------- ----------
Net income $88 $57
=========== ==========
EBITDA Margin: (1)
EBITDA $1,045 $974
----------- ----------
Divided by total operating revenue 3,476 3,449
----------- ----------
EBITDA Margin 30.1% 28.2%
=========== ==========
EBITDA Margin--as adjusted: (1)
EBITDA--as adjusted $1,067 $989
----------- ----------
Divided by total operating revenue 3,476 3,449
----------- ----------
EBITDA margin--as adjusted 30.7% 28.7%
=========== ==========
Free Cash Flow from Operations: (2)
Cash provided by operating activities $140 $343
Less: Expenditures for property, plant and
equipment (390) (313)
----------- ----------
Free Cash Flow from Operations (250) 30
Add: One time settlement payments 100 --
----------- ----------
Free Cash Flow from Operations--as adjusted $(150) $30
=========== ==========
Net Debt: (3)
Current borrowings $604 $601
Long-term borrowings 14,834 16,691
----------- ----------
Total borrowings $15,438 $17,292
Less: Cash and cash equivalents (610) (1,406)
Less: Short-term investments (130) (966)
Less: Long-term investments -- (36)
----------- ----------
Net Debt $14,698 $14,884
=========== ==========
ATTACHMENT F
(CONTINUED)
QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(DOLLARS IN MILLIONS)
(UNAUDITED)
(1) EBITDA, EBITDA Margin, Adjusted EBITDA, and Adjusted EBITDA Margin
are non-GAAP financial measures. Other companies may calculate
these measures (or similarly titled measures) differently. We
believe these measures provide useful information to investors in
evaluating our capital-intensive business because they reflect our
operating performance before the impacts of non-cash items and are
indicators of our ability to service debt, pay taxes and fund
discretionary spending such as capital expenditures. Management
also uses EBITDA for a number of purposes, including setting
targets for compensation and assessing the performance of our
operations.
EBITDA for the three months ended March 31, 2006 and 2005 includes
$22 and $15 in restructuring, realignment and severance related
costs, respectively.
(2) Free cash flow from operations is a non-GAAP financial measure
that indicates cash generated by our business after operating
expenses, capital expenditures and interest expense. We believe
this measure provides useful information to our investors for
purposes of evaluating our ability to satisfy our debt and other
mandatory payment obligations and because it reflects cash flows
available for financing activities, voluntary debt repayment and
to strengthen our balance sheet. This is of particular relevance
for our business given our highly leveraged position. We also use
free cash flow from operations internally for a variety of
purposes, including setting targets for compensation and budgeting
our cash needs. Free cash flow from operations is not a measure
determined in accordance with GAAP and should not be considered as
a substitute for "operating income" or "net cash provided by
operating activities" or any other measure determined in
accordance with GAAP. Due to the forward-looking nature of
expected free cash flow amounts for 2006, information to reconcile
this non-GAAP financial measure is not available at this time.
(3) Net Debt is a non-GAAP financial measure that is calculated as our
total borrowings (current plus long-term) less our cash, cash
equivalents and short and long-term investments. We believe net
debt is helpful in analyzing our leverage, and management uses
this measure in making decisions regarding potential financings.
Net debt is not a measure determined in accordance with GAAP and
should not be considered as a substitute for "current borrowings",
"long-term borrowings" or any other measure determined in
accordance with GAAP.
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