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Qwest Communications International Inc.
         Historical Financial Information
                 As of March 31, 2007
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars and shares in millions, except per share amounts)                                                                                                                      Years Ended
(Unaudited)                                                                                            Three Months Ended                                                      December 31,
                                                           3/31/05        6/30/05     9/30/05     12/31/05   3/31/06   6/30/06        9/30/06     12/31/06    3/31/07         2005        2006

Operating revenue                                             $   3,449   $   3,470   $   3,504   $   3,480   $   3,476   $   3,472   $   3,487   $   3,488   $   3,446   $    13,903    $ 13,923
Operating expenses:
 Cost of sales (exclusive of depreciation and amortization)       1,439       1,434       1,512       1,451       1,418       1,393       1,382       1,415       1,317         5,836       5,607
 Selling, general and administrative                              1,036       1,045       1,016       1,050       1,013         970       1,014         993         998         4,147       3,991
 Depreciation and amortization                                      774         765         768         758         691         693         691         695         612         3,065       2,770
                                                                                                                                                                               13,048      12,368
                                                                  3,249       3,244       3,296       3,259       3,122       3,056       3,087       3,103       2,927
Total operating expenses
Other expense (income)—net:
  Interest expense—net                                             381         380         384         338         296         298         291         284         282          1,483       1,169
  Other expense (income)—net                                      (242)         13         (31)        392         (28)        (17)        (42)        (84)         (5)           132        (171)
Total other expense (income)—net                                   139         393         353         730         268         281         249         200         277          1,615         998
Income (loss) before income taxes and cumulative effect
   of changes in accounting principles—net of taxes                 61        (167)       (145)       (509)         86         135         151         185         242           (760)        557
Income tax (expense) benefit                                        (4)          3           1           3           2         (18)         43           9          (2)             3          36
Income (loss) before cumulative effect of changes
  in accounting principles—net of taxes                             57        (164)       (144)       (506)         88         117         194         194         240           (757)        593
Cumulative effect of changes—net of taxes                           —           —           —          (22)         —           —           —           —           —             (22)         —
Net income (loss)                                             $     57    $   (164) $     (144) $     (528) $       88    $    117    $    194    $    194    $    240    $      (779) $      593

Basic income (loss) per share                                 $    0.03   $   (0.09) $    (0.08) $    (0.28) $     0.05   $    0.06   $    0.10   $    0.10   $    0.13   $     (0.42) $     0.31
Basic weighted average shares outstanding                         1,817       1,823       1,844       1,862       1,874       1,882       1,901       1,901       1,865         1,836       1,890

Diluted income (loss) per share                               $    0.03   $   (0.09) $    (0.08) $    (0.28) $     0.05   $    0.06   $    0.09   $    0.10   $    0.12   $     (0.42) $     0.30
Diluted weighted average shares outstanding                       1,822       1,823       1,844       1,862       1,911       1,952       2,005       1,992       1,959         1,836       1,972
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(Unaudited)
                                                                    3/31/05         6/30/05         9/30/05     12/31/05           3/31/06        6/30/06        9/30/06    12/31/06           3/31/07
                               ASSETS
Current assets:
 Cash and cash equivalents                                      $      1,406    $      2,245    $      2,311    $      846     $       610    $     1,189    $       962    $    1,241     $       887
 Short-term investments                                                  966             634             580           101             130            205            218           248             242
 Accounts receivable—net                                               1,603           1,566           1,595         1,525           1,541          1,477          1,718         1,600           1,510
 Prepaid expenses and other                                              552             453             568           692             743            682            677           565             555
Total current assets                                                   4,527           4,898           5,054         3,164           3,024          3,553          3,575         3,654           3,194

Property, plant and equipment—net                                     16,459          16,101          15,812        15,568          15,273         15,016         14,828        14,579          14,274
Capitalized software—net                                               1,068           1,030             991           963             927            885            840           818             812
Prepaid pension and other                                              2,075           2,041           1,870         1,802           1,902          1,838          1,871         2,188           2,421
Total assets                                                    $     24,129    $     24,070    $     23,727    $   21,497     $ 21,126       $ 21,292       $ 21,114       $ 21,239       $ 20,701

         LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
 Current borrowings                                             $        601    $        261    $        527    $      512     $       604    $     2,683    $     1,685    $    1,686     $     1,688
 Accounts payable                                                      1,235           1,161           1,314         1,314           1,103          1,063          1,094           997             895
 Accrued expenses and other                                            1,581           1,602           1,756         1,776           1,618          1,740          1,743         1,856           1,438
 Deferred revenue and advance billings                                   642             626             635           633             622            609            622           621             613
Total current liabilities                                              4,059           3,650           4,232         4,235           3,947          6,095          5,144         5,160           4,634

Long-term borrowings—net                                              16,691          17,287          16,702        14,968          14,834         12,693         13,228        13,206          13,199
Post-retirement and other post-employment benefit obligations          3,452           3,466           3,457         3,459           3,441          3,439          3,436         2,366           2,364
Deferred revenue                                                         554             548             532           522             514            508            516           506             506
Other                                                                  1,937           1,782           1,520         1,530           1,450          1,383          1,366         1,446           1,532
Total liabilities                                                     26,693          26,733          26,443        24,714          24,186         24,118         23,690        22,684          22,235
Stockholders' deficit:
                                                                                                                                                                                                    —
  Preferred stock                                                         —               —               —              —              —              —              —              —
  Common stock                                                            18              18              19             19             19             19             19             19             19
  Additional paid-in capital                                          43,111          43,170          43,260         43,290         43,355         43,475         43,531         43,384         43,022
  Treasury stock                                                         (20)            (16)            (17)           (17)           (17)           (17)           (18)           (24)           (28)
  Accumulated deficit                                                (45,664)        (45,828)        (45,972)       (46,500)       (46,412)       (46,295)       (46,101)       (45,907)       (45,619)
  Accumulated other comprehensive loss                                    (9)             (7)             (6)            (9)            (5)            (8)            (7)         1,083          1,072
Total stockholders' deficit                                           (2,564)         (2,663)         (2,716)        (3,217)        (3,060)        (2,826)        (2,576)        (1,445)        (1,534)
Total liabilities and stockholders' deficit                     $     24,129    $     24,070    $     23,727    $   21,497     $ 21,126       $ 21,292       $ 21,114       $ 21,239       $ 20,701
QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in millions)
(Unaudited)                                                                      3 Mos           6 Mos           9 Mos           12 Mos           3 Mos       6 Mos        9 Mos         12 Mos        3 Mos
                                                                                Ended           Ended           Ended            Ended           Ended       Ended        Ended          Ended        Ended
                                                                                3/31/05         6/30/05         9/30/05         12/31/05         3/31/06     6/30/06      9/30/06       12/31/06      3/31/07
OPERATING ACTIVITIES
 Net income (loss)                                                          $         57    $       (107) $         (251) $          (779)   $         88    $    205     $     399     $     593     $    240
 Adjustments to reconcile net income (loss) to net cash provided
   by operating activities:
   Depreciation and amortization                                                     774           1,539           2,307            3,065             691        1,384        2,075         2,770          612
   Provision for bad debts—net                                                        57             110             137              173              44           71          108           155           43
   Cumulative effect of changes in accounting principles—net of taxes                 —               —               —                22              —            —            —             —            —
   Gain on sale of assets                                                           (257)           (257)           (257)            (263)             —            (3)          (3)          (68)          —
   Loss (gain) on early retirement of debt—net                                        —               43              32              462              —            (5)           4             5           —
   Other non-cash charges—net                                                          1               9              13               32              15           32           35            52           14
 Changes in operating assets and liabilities:
   Accounts receivable                                                               (66)            (82)           (138)            (104)            (60)         (23)         (294)         (223)         47
   Prepaid expenses and other current assets                                          11              98               1               (8)            (37)          28            50           168         (50)
   Accounts payable and accrued expenses and other current liabilities              (178)           (258)             57               73            (368)        (284)         (236)         (372)       (584)
   Deferred revenue and advance billings                                             (32)            (54)            (61)             (73)            (19)         (38)          (25)          (33)         (8)
   Other non-current assets and liabilities                                          (24)           (128)           (252)            (287)           (214)        (190)         (184)         (258)        (46)
     Cash provided by operating activities                                           343             913           1,588            2,313             140        1,177         1,929         2,789         268

INVESTING ACTIVITIES
  Expenditures for property, plant and equipment and capitalized software           (313)           (665)         (1,110)          (1,613)           (390)       (832)        (1,226)       (1,632)       (318)
  Proceeds from sale of property and equipment                                       418             418             418              420              26          47             63           173          —
  Proceeds from sale of investment securities                                        630           1,086           1,230            1,793               7          42             56            70           6
  Purchase of investment securities                                                 (822)           (912)         (1,002)          (1,086)            (36)       (146)          (173)         (217)         —
  Other                                                                                1              17              22               27               1          —            (101)          (94)          4
    Cash used for investing activities                                               (86)            (56)           (442)            (459)           (392)       (889)        (1,381)       (1,700)       (308)

FINANCING ACTIVITIES
  Proceeds from long-term borrowings                                                  —            1,885           1,887            3,152              —           —             600           600          —
  Repayments of long-term borrowings, including current maturities                    (5)         (1,550)         (1,778)          (4,716)            (41)        (47)        (1,145)       (1,180)         (9)
  Proceeds from issuances of common stock                                              3               7              10               39              57         102            150           205          34
  Repurchases of common stock                                                         —               —               —                —               —           —              —           (209)       (393)
  Other                                                                               —             (105)           (105)            (634)             —           —             (37)         (110)         54
    Cash (used for) provided by financing activities                                  (2)            237              14           (2,159)             16          55           (432)         (694)       (314)

CASH AND CASH EQUIVALENTS
 Increase (decrease) in cash and cash equivalents                                    255           1,094           1,160             (305)           (236)        343           116           395          (354)
 Beginning balance                                                                 1,151           1,151           1,151            1,151             846         846           846           846         1,241
  Ending balance                                                            $      1,406    $      2,245    $      2,311    $        846     $        610    $   1,189    $     962     $   1,241     $    887
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL RESULTS
(Dollars in millions)                                                                                                                                                                      Years Ended
(Unaudited)                                                                                                Three Months Ended                                                              December 31,
                                                                3/31/05      6/30/05      9/30/05      12/31/05  3/31/06   6/30/06            9/30/06      12/31/06     3/31/07          2005        2006
Operating revenue:
 Wireline services                                             $    3,312   $    3,329    $    3,361   $    3,333   $    3,327   $    3,320   $    3,343   $    3,338   $    3,298   $    13,335   $   13,328
 Wireless services                                                    126          132           131          138          139          142          135          141          139           527          557
 Other services                                                        11            9            12            9           10           10            9            9            9            41           38
Total operating revenue                                             3,449        3,470         3,504        3,480        3,476        3,472        3,487        3,488        3,446        13,903       13,923

  Cost of sales (COS):
   Facility costs                                                     671          675           690          647          616          608          585          623          582         2,683        2,432
   Network expenses                                                    67           59            72           69           52           62           69           69           52           267          252
   Employee-related costs                                             409          387           404          387          396          388          397          392          379         1,587        1,573
   Other non-employee related costs                                   292          313           346          348          354          335          331          331          304         1,299        1,351
  Total cost of sales                                               1,439        1,434         1,512        1,451        1,418        1,393        1,382        1,415        1,317         5,836        5,608

  Selling, general and administrative (SG&A):
    Property and other taxes                                           99          111           100           43           88          72            96          64           90            353          320
    Bad debt                                                           57           53            27           36           44          27            37          47           43            173          155
                                                                                                                                                                  —
    Restructuring, realignment and severance                           15           (1)           26           74           22          (2)           43                       (5)           114           63
    Employee-related costs                                            407          410           401          405          401         405           407         426          394          1,623        1,639
    Other non-employee related costs                                  458          472           462          492          458         468           431         456          476          1,884        1,813
  Total selling, general and administrative                         1,036        1,045         1,016        1,050        1,013         970         1,014         993          998          4,147        3,990
Total COS + SG&A                                               $    2,475   $    2,479    $    2,528   $    2,501   $    2,431   $    2,363   $    2,396   $    2,408   $    2,315   $     9,983   $    9,598

                       (1)
Capital expenditures                                           $      313   $      352    $      445   $      503   $      390   $      442   $      394   $      406   $      318   $     1,613   $    1,632
Employees                                                          40,683       40,303        39,977       39,641       39,127       39,315       39,163       38,383       38,011        39,641       38,383


(1) Capital expenditures exclude non-cash items such as capital lease acquisitions.
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL RESULTS—WIRELINE SERVICES SEGMENT(1)
(Dollars in millions, operating statistics in thousands, except ARPU amounts)
(Unaudited)
                                                                                                                                                                                                 Years Ended
                                                                                                              Three Months Ended                                                                 December 31,
                                                         3/31/05        6/30/05        9/30/05        12/31/05      3/31/06    6/30/06         9/30/06         12/31/06        3/31/07        2005         2006
Wireline services revenue:
 Local voice                                         $      1,581   $      1,575   $      1,544   $       1,526   $   1,520   $    1,501   $       1,466   $       1,425   $      1,394   $     6,226   $    5,912
 Long-distance                                                558            547            553             558         559          562             572             560            550         2,216        2,253
 Access                                                       161            182            159             162         146          133             139             132            134           664          550
 Data and Internet                                          1,012          1,025          1,105           1,087       1,102        1,124           1,166           1,221          1,220         4,229        4,613
Total wireline services revenue                             3,312          3,329          3,361           3,333       3,327        3,320           3,343           3,338          3,298        13,335       13,328
Wireline services expenses:                                                                                                                                                                                    -
 Facility costs                                               595            596            615             572         545          534             511             548            507         2,378        2,138
 Network expenses                                              62             58             70              68          52           61              68              67             51           258          248
 Bad debt                                                      43             40             15              24          28           15              23              32             30           122           98
 Restructuring, realignment and severance                       6              4              2              22           2            1              40               2              1            34           45
 Employee-related costs                                       604            584            600             581         596          577             596             591            611         2,369        2,360
 Other non-employee related costs                             326            342            375             391         383          372             369             366            353         1,434        1,490
Total wireline services expenses                            1,636          1,624          1,677           1,658       1,606        1,560           1,607           1,606          1,553         6,595        6,379
Wireline services segment income                     $      1,676   $      1,705   $      1,684   $       1,675   $   1,721   $    1,760   $       1,736   $       1,732   $      1,745   $     6,740   $    6,949
Wireline services margin                                    50.6%          51.2%          50.1%           50.3%       51.7%        53.0%          51.9%            51.9%          52.9%         50.5%        52.1%

Capital expenditures—wireline services               $        255   $        252   $        346   $        394    $     322   $     364    $        321    $         307   $        263   $     1,247   $    1,314
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL RESULTS—WIRELINE SERVICES SEGMENT(1)
(Dollars in millions, operating statistics in thousands, except ARPU amounts)
(Unaudited)
OPERATING STATISTICS                                                                                                                                                                                    As of and for the
                                                                                                          As of and for the Three Months Ended                                                      Years Ended December 31,
Access lines(2):                                             3/31/05        6/30/05        9/30/05        12/31/05        3/31/06        6/30/06         9/30/06         12/31/06        3/31/07        12/31/05        12/31/06
 Business:
    Retail                                                      3,074          3,031          3,012           2,969          2,958           2,920           2,900           2,870          2,842           2,969           2,870
    Resold                                                      1,848          1,808          1,756           1,710          1,667           1,624           1,564           1,495          1,433           1,710           1,495
 Total business                                                 4,922          4,839          4,768           4,679          4,625           4,544           4,464           4,365          4,275           4,679           4,365
 Mass markets:
   Retail residential:
     Primary                                                    8,107          7,974          7,916           7,851          7,749           7,592           7,454           7,333          7,200           7,851           7,333
     Add                                                        1,024            985            948             913            876             840             803             770            740             913             770
   Total retail residential                                     9,131          8,959          8,864           8,764          8,625           8,432           8,257           8,103          7,940           8,764           8,103
  Small business                                                1,286          1,289          1,301           1,296          1,296           1,307           1,316           1,327          1,336           1,296           1,327
 Total mass markets                                            10,417         10,248         10,165          10,060          9,921           9,739           9,573           9,430          9,276          10,060           9,430

Total access lines                                             15,339         15,087         14,933          14,739         14,546         14,283          14,037           13,795         13,551          14,739          13,795
    UNEs                                                        1,137          1,077            997             953            925            893             852              801            754             953             801

Mass markets retail connections:
                                                               10,417         10,248         10,165          10,060          9,921          9,739           9,573            9,430          9,276          10,060           9,430
 Mass markets access lines
 High-speed Internet subscribers(3)                             1,122          1,190          1,340           1,480          1,678          1,798           1,973            2,138          2,305           1,480           2,138
 Video subscribers(3)                                             100            120            149             178            219            259             350              424            506             178             424
                                                                  743            744            748             770            784            777             781              801            812             770             801
 Wireless subscribers
                                                               12,382         12,302         12,402          12,488         12,602         12,573          12,677           12,793         12,899          12,488          12,793
Total mass markets retail connections


In-Region long distance lines                                   4,590          4,631          4,705           4,778          4,824           4,840           4,900           4,920          4,924           4,778           4,920

High-speed Internet subscribers                                 1,122          1,190          1,340           1,480          1,678           1,798           1,973           2,138          2,305           1,480           2,138

Consumer ARPU(4)                                         $      45.83   $      46.27   $      46.65   $       47.57   $      48.55   $       49.41   $       50.07   $       50.81   $      52.01   $       46.30   $       49.51


(1) Certain prior period revenue, expense and access line amounts have been reclassified to conform to the current period presentation.

(2) Resold lines include UNE lines, unbundled loops and public pay phone lines. Retail lines at December 31, 2005 reflect a decline of 32,000 lines in the fourth quarter of 2005
related to affiliate disconnects and 23,000 line and 21,000 line disconnects in the first and second quarter of 2005, respectively, related to UUNet.

(3) High-speed Internet subscribers and video subscribers include certain business customers.

(4) Consumer ARPU (Average Revenue Per Unit) is measured as consumer wireline revenue in the period divided by the average number of primary access lines for the period.
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.
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL RESULTS—WIRELESS SERVICES SEGMENT(1)
(Dollars in millions, operating statistics in thousands, except ARPU amounts)
(Unaudited)                                                                                                                                                                     Years Ended
                                                                                                   Three Months Ended                                                          December 31,
                                                             3/31/05    6/30/05    9/30/05    12/31/05   3/31/06   6/30/06           9/30/06   12/31/06        3/31/07       2005        2006
Wireless services revenue                                $       126   $    132   $    131   $     138   $     139    $      142   $     135   $    141   $        139   $      527   $      557
Wireless services expenses:
 Facility costs                                                76        79              75         75           71            74         74          75            75           305         294
 Wireless equipment                                            26        28              25         28           30            26         28          27            25           107         111
 Bad debt                                                      14        14              12         11           12            12         14          15            13            51          53
 Employee-related costs                                        14        12              12         12           12            12         13          12            14            50          49
 Other non-employee related costs                              29        16              20         17           17            12         17          16            12            82          62
Total wireless services expenses                              159       149             144        143          142           136        146         145           139           595         569
Wireless services segment income                         $    (33) $    (17) $          (13) $       (5) $        (3) $         6$       (11) $        (4) $        —    $       (68) $      (12)
                                                                                                                                                                   —%
Wireless services margin                                   -26.2%    -12.9%           -9.9%      -3.6%        -2.2%          4.2%      -8.1%       -2.8%                      -12.9%       -2.2%

Capital expenditures—wireless services                   $         1$         1$         —$          —$          —$           —$          —$           1$            1   $         2$            1


OPERATING STATISTICS                                                                                                                                                         As of and for the
                                                                                           As of and for the Three Months Ended                                          Years Ended December 31,
                                                             3/31/05    6/30/05    9/30/05    12/31/05     3/31/06   6/30/06   9/30/06         12/31/06        3/31/07     12/31/05      12/31/06
Subscribers                                                      743        744        748         770         784           777         781        801            812          770          801
      (2)
ARPU                                                     $        46   $     50   $     51   $      51   $       50   $       52   $      49   $     50   $         50   $       49   $         50




(1) Certain prior period revenue and expense amounts have been reclassified to conform to the current period presentation.

(2) 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 segment revenue or any other measure determined in accordance with GAAP.
Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL RESULTS—OTHER SERVICES SEGMENT(1)
(Dollars in millions)
(Unaudited)                                                                                                                                                                      Years Ended
                                                                                                    Three Months Ended                                                          December 31,
                                                           3/31/05     6/30/05     9/30/05     12/31/05   3/31/06   6/30/06         9/30/06     12/31/06    3/31/07           2005        2006
Other services revenue                                   $       11   $       9    $     12   $        9   $      10   $      10    $      9   $       9    $         9   $       41    $        38
Other services expenses:
 Property and other taxes                                       98          111         100          42          88           72          96          62          90             351          318
 Real estate costs                                             105           99         110         108         110          105         110         112         109             422          437
 Restructuring, realignment and
   severance related costs                                       7           (5)         25          52          20           (3)          3          (1)         (6)             79           19
 Employee-related costs                                        198          201         193         199         189          204         195         215         148             791          803
 Other non-employee related costs(2)                           272          300         279         299         276          289         239         269         282            1,150       1,073
Total other services expenses                                  680          706         707         700         683          667         643         657         623            2,793       2,650
Other services segment income                            $    (669) $      (697) $     (695) $     (691) $     (673) $       (657) $    (634) $     (648) $     (614)     $    (2,752) $    (2,612)

Capital expenditures—other services                      $       57   $      99    $     99   $     109    $      68   $      78    $     73   $      98    $        54   $      364    $     317


(1) Certain prior period revenue and expense amounts have been reclassified to conform to the current period presentation.

(2) Certain immaterial expenses for facility costs, bad debt, and network expenses in the other services segment are recorded in other non-employee related costs.
QWEST COMMUNICATIONS INTERNATIONAL INC.
SEGMENT REVENUE INCLUDING CUSTOMER CHANNEL WITHIN WIRELINE SERVICES(1)
(Dollars in millions)
(Unaudited)                                                                                                                                                                     Years Ended
                                                                       Three Months Ended                                                                                      December 31,
                                     3/31/05   6/30/05   9/30/05  12/31/05   3/31/06   6/30/06                                       9/30/06     12/31/06    3/31/07         2005        2006
Wireline services revenue:
  Voice services:
    Local voice:
      Business                      $     320 $     320 $     321 $    311 $      314 $     309                                      $     305   $     298   $     283   $     1,272   $    1,226
      Mass markets                      1,063     1,060     1,039    1,035      1,029     1,017                                            992         966         952         4,197        4,004
      Wholesale                           198       195       184      180        177       175                                            169         161         159           757          682
    Total local voice                   1,581     1,575     1,544    1,526      1,520     1,501                                          1,466       1,425       1,394         6,226        5,912
    Long-distance:
      Business                            146       145       139      138        144       139                                            138         133         137           568          554
      Mass markets                        135       133       142      152        155       161                                            162         162         163           562          640
      Wholesale                           277       269       272      268        260       262                                            272         265         250         1,086        1,059
    Total long-distance                   558       547       553      558        559       562                                            572         560         550         2,216        2,253
    Access services                       161       182       159      162        146       133                                            139         132         134           664          550
    Total voice services                2,300     2,304     2,256    2,246      2,225     2,196                                          2,177       2,117       2,078         9,106        8,715
    Data and Internet:
    Business                              539       561       621      584        583       581                                            581         593         579         2,305        2,338
    Mass markets                          144       147       161      174        191       206                                            225         253         278           626          875
    Wholesale                             329       317       323      329        328       337                                            360         375         363         1,298        1,400
  Total data and Internet               1,012     1,025     1,105    1,087      1,102     1,124                                          1,166       1,221       1,220         4,229        4,613
Total wireline services revenue         3,312     3,329     3,361    3,333      3,327     3,320                                          3,343       3,338       3,298        13,335       13,328
Wireless services revenue                 126       132       131      138        139       142                                            135         141         139           527          557
Other services revenue                     11         9        12        9         10        10                                              9           9           9            41           38
Total operating revenue             $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472                                                  $   3,487   $   3,488   $   3,446   $    13,903   $   13,923

Operating revenue
Wireline services revenue:
 Business                                                $   1,006    $   1,027   $   1,082   $   1,034   $      1,041   $   1,029   $   1,024   $   1,024   $     999   $     4,149   $    4,118
 Mass markets                                                1,344        1,342       1,344       1,363          1,376       1,385       1,380       1,382       1,394         5,393        5,523
 Wholesale                                                     962          960         935         936            910         906         939         932         905         3,793        3,687
Total wireline services revenue                              3,312        3,329       3,361       3,333          3,327       3,320       3,343       3,338       3,298        13,335       13,328
Wireless services revenue                                      126          132         131         138            139         142         135         141         139           527          557
Other services revenue                                          11            9          12           9             10          10           9           9           9            41           38
Total operating revenue                                  $   3,449    $   3,470   $   3,504   $   3,480   $      3,476   $   3,472   $   3,487   $   3,488   $   3,446   $    13,903   $   13,923

(1) Certain prior period revenue amounts have been reclassified to conform to the current period presentation.
QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED FINANCIAL DATA—SPECIAL ITEMS
(Dollars in millions)
(Unaudited)

                                                                                                                                    Three Months Ended
                                                                                       3/31/05     6/30/05       9/30/05     12/31/05    3/31/06   6/30/06   9/30/06      12/31/06      3/31/07
SPECIAL ITEMS(1):


Operating expenses:
  Legal reserve (SG&A)                                                             $         —$          —$            —$          —$         —$        —$         —$            —$         (40)
  Restructuring, realignment and severance (SG&A)                                           (15)          1           (26)        (74)       (22)       —         (43)           —           —

Subtotal operating expenses                                                                 (15)             1        (26)        (74)       (22)        —        (43)           —          (40)
Other (expense) income—net:
                                                                                                                                                                                             —
  (Loss) gain on debt extinguishment                                                         —          (43)           11        (430)        —         —          —             —
  Gain on sale of assets                                                                   257           —             —            6         —         —          —             64          —
  Tax sharing settlement (Other—net)                                                         —           —             —           —          —         —          53            —           —

Subtotal other (expense) income—net                                                        257          (43)           11        (424)        —         —          53            64          —
Income tax sharing settlement                                                                —           —             —           —          —         —          39            —           —
Cumulative effect of changes in accounting principles—net of taxes                           —           —             —          (22)        —         —          —             —           —
                                                                                                                                                        —$
                                                                                                                                             (22) $
Total special items—(charges) benefits                                             $       242 $        (42) $        (15) $     (520) $                           49 $          64 $       (40)



(1) Effective for the quarter ended June 30, 2006, special items will only be identified herein when they are considered to be material.
Although certain costs associated with the items described above continue to be incurred, they are not considered to be material
and, therefore, are not detailed above.
QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—EBITDA
(Dollars in millions)
(Unaudited)
                                                                                                                                                                                                                        Years Ended
                                                                                                                                   Three Months Ended                                                                   December 31,
                                                                              3/31/05      6/30/05     9/30/05            12/31/05    3/31/06     6/30/06          9/30/06         12/31/06           3/31/07         2005        2006
         (1)
EBITDA :                                                                     $     974     $    991    $    976       $        979    $   1,045   $   1,109    $      1,091    $       1,080      $      1,131    $     3,920    $    4,325
Depreciation and amortization                                                     (774)        (765)        (768)             (758)       (691)       (693)            (691)           (695)              (612)        (3,065)       (2,770)
Total other expense—net                                                           (139)        (393)        (353)             (730)       (268)       (281)            (249)           (200)              (277)        (1,615)         (998)
Income tax benefit (expense)                                                         (4)          3            1                 3           2          (18)             43                   9             (2)             3            36
Cumulative effect of accounting changes - net                                       —             —           —                (22)          —           —               —                —                 —             (22)           —
Net (loss) income                                                            $      57     $   (164) $      (144) $           (528) $       88    $    117     $        194    $        194       $        240    $      (779) $       593



EBITDA Margin(1):
EBITDA                                                                       $     974     $    991    $    976       $        979    $   1,045   $   1,109    $      1,091    $       1,080      $      1,131    $     3,920    $    4,325
Operating revenue                                                            $   3,449     $   3,470   $   3,504      $      3,480    $   3,476   $   3,472    $      3,487    $       3,488      $      3,446    $    13,903    $   13,923
EBITDA margin (EBITDA divided by operating revenue)                              28.2%         28.6%       27.9%             28.1%        30.1%       31.9%           31.3%            31.0%             32.8%          28.2%         31.1%




(1) EBITDA and 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.
QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—NET DEBT
(Dollars in millions)
(Unaudited)


                                                                                                             Three Months Ended
                                                     3/31/05         6/30/05         9/30/05         12/31/05     3/31/06    6/30/06             9/30/06         12/31/06         3/31/07

Net Debt(1):
  Current borrowings                             $       601     $       261     $       527     $        512    $     604     $    2,683    $      1,685    $       1,686    $      1,688
  Long-term borrowings—net                             16,691          17,287          16,702          14,968        14,834        12,693          13,228          13,206           13,199

  Total borrowings—net                                 17,292          17,548          17,229          15,480        15,438        15,376          14,913          14,892           14,887
  Less: Cash and cash equivalents                      (1,406)         (2,245)         (2,311)           (846)         (610)       (1,189)           (962)          (1,241)           (887)
  Less: Short-term investments                           (966)           (634)           (580)           (101)         (130)         (205)           (218)            (248)           (242)
  Less: Long-term investments                             (36)             (1)             (1)             —             —             —               —                —               —
Net Debt                                         $     14,884    $     14,668    $     14,337    $     14,533    $   14,698    $   13,982    $     13,733    $     13,403     $     13,758


(1) Net Debt is a non-GAAP financial measure that we calculate as our total borrowings (current plus long-term) less our cash and
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.
QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—FREE CASH FLOW FROM OPERATIONS
(Dollars in millions)
(Unaudited)

                                                                                                                                                                                           Years Ended
                                                                                                          Three Months Ended                                                               December 31,
                                                                 3/31/05     6/30/05     9/30/05     12/31/05   3/31/06  6/30/06             9/30/06     12/31/06        3/31/07         2005       2006

Free cash flow from operations(1):
Cash provided by operating activities                           $     343    $    570    $    675    $    725     $   140     $   1,037      $   752     $   860     $       268     $     2,313    $   2,789
Less: Expenditures for property, plant and equipment                 (313)       (352)       (445)        (503)       (390)          (442)       (394)       (406)           (318)        (1,613)       (1,632)

Free cash flow from operations                                         30         218         230         222         (250)          595         358         454              (50)          700         1,157
Add: certain one-time settlements                                      —           —           —          204          100            —           —          140              200           204           240
Free Cash Flow from Operations—as adjusted                      $      30    $    218    $    230    $    426     $   (150) $        595     $   358     $   594     $       150     $      904     $   1,397




(1) 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 significant debt balance. 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 flow from operating activities” or any other measure determined in accordance with GAAP.
QWEST COMMUNICATIONS INTERNATIONAL INC.
WIRELESS SERVICES ARPU RECONCILIATION
(Dollars in millions, subscribers in in thousands, and ARPU amounts in dollars)
(Unaudited)

                                                                                                            Three Months Ended
                                                          3/31/05         6/30/05         9/30/05     12/31/05    3/31/06   6/30/06         9/30/06     12/31/06        3/31/07
ARPU is calculated as follows(1):
Total quarterly wireless services revenue             $       126     $       132     $       131     $   138     $   139    $   142    $       135     $    141    $        139
Less: quarterly non-recurring revenue                          (23)            (21)            (17)        (22)       (22)       (20)            (20)        (22)            (19)
Quarterly recurring revenue                           $       103     $       111     $       114     $   116     $   117    $   122    $       115     $    119    $        120


Average monthly recurring revenue                     $        34     $        37     $        38     $    39     $    39    $    41    $        38     $     40              40
Divided by quarterly average wireless subscribers             745             743             745         759         778        782            775          790             796
Wireless services ARPU                                $        46     $        50     $        51     $    51     $    50    $    52    $        49     $     50    $         50




(1)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 segment revenue or any other measure determined in accordance with GAAP.
Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.

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qwest communications QProfile_1q07

  • 1. Qwest Communications International Inc. Historical Financial Information As of March 31, 2007
  • 2. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars and shares in millions, except per share amounts) Years Ended (Unaudited) Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Operating revenue $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 13,903 $ 13,923 Operating expenses: Cost of sales (exclusive of depreciation and amortization) 1,439 1,434 1,512 1,451 1,418 1,393 1,382 1,415 1,317 5,836 5,607 Selling, general and administrative 1,036 1,045 1,016 1,050 1,013 970 1,014 993 998 4,147 3,991 Depreciation and amortization 774 765 768 758 691 693 691 695 612 3,065 2,770 13,048 12,368 3,249 3,244 3,296 3,259 3,122 3,056 3,087 3,103 2,927 Total operating expenses Other expense (income)—net: Interest expense—net 381 380 384 338 296 298 291 284 282 1,483 1,169 Other expense (income)—net (242) 13 (31) 392 (28) (17) (42) (84) (5) 132 (171) Total other expense (income)—net 139 393 353 730 268 281 249 200 277 1,615 998 Income (loss) before income taxes and cumulative effect of changes in accounting principles—net of taxes 61 (167) (145) (509) 86 135 151 185 242 (760) 557 Income tax (expense) benefit (4) 3 1 3 2 (18) 43 9 (2) 3 36 Income (loss) before cumulative effect of changes in accounting principles—net of taxes 57 (164) (144) (506) 88 117 194 194 240 (757) 593 Cumulative effect of changes—net of taxes — — — (22) — — — — — (22) — Net income (loss) $ 57 $ (164) $ (144) $ (528) $ 88 $ 117 $ 194 $ 194 $ 240 $ (779) $ 593 Basic income (loss) per share $ 0.03 $ (0.09) $ (0.08) $ (0.28) $ 0.05 $ 0.06 $ 0.10 $ 0.10 $ 0.13 $ (0.42) $ 0.31 Basic weighted average shares outstanding 1,817 1,823 1,844 1,862 1,874 1,882 1,901 1,901 1,865 1,836 1,890 Diluted income (loss) per share $ 0.03 $ (0.09) $ (0.08) $ (0.28) $ 0.05 $ 0.06 $ 0.09 $ 0.10 $ 0.12 $ (0.42) $ 0.30 Diluted weighted average shares outstanding 1,822 1,823 1,844 1,862 1,911 1,952 2,005 1,992 1,959 1,836 1,972
  • 3. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in millions) (Unaudited) 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 ASSETS Current assets: Cash and cash equivalents $ 1,406 $ 2,245 $ 2,311 $ 846 $ 610 $ 1,189 $ 962 $ 1,241 $ 887 Short-term investments 966 634 580 101 130 205 218 248 242 Accounts receivable—net 1,603 1,566 1,595 1,525 1,541 1,477 1,718 1,600 1,510 Prepaid expenses and other 552 453 568 692 743 682 677 565 555 Total current assets 4,527 4,898 5,054 3,164 3,024 3,553 3,575 3,654 3,194 Property, plant and equipment—net 16,459 16,101 15,812 15,568 15,273 15,016 14,828 14,579 14,274 Capitalized software—net 1,068 1,030 991 963 927 885 840 818 812 Prepaid pension and other 2,075 2,041 1,870 1,802 1,902 1,838 1,871 2,188 2,421 Total assets $ 24,129 $ 24,070 $ 23,727 $ 21,497 $ 21,126 $ 21,292 $ 21,114 $ 21,239 $ 20,701 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current borrowings $ 601 $ 261 $ 527 $ 512 $ 604 $ 2,683 $ 1,685 $ 1,686 $ 1,688 Accounts payable 1,235 1,161 1,314 1,314 1,103 1,063 1,094 997 895 Accrued expenses and other 1,581 1,602 1,756 1,776 1,618 1,740 1,743 1,856 1,438 Deferred revenue and advance billings 642 626 635 633 622 609 622 621 613 Total current liabilities 4,059 3,650 4,232 4,235 3,947 6,095 5,144 5,160 4,634 Long-term borrowings—net 16,691 17,287 16,702 14,968 14,834 12,693 13,228 13,206 13,199 Post-retirement and other post-employment benefit obligations 3,452 3,466 3,457 3,459 3,441 3,439 3,436 2,366 2,364 Deferred revenue 554 548 532 522 514 508 516 506 506 Other 1,937 1,782 1,520 1,530 1,450 1,383 1,366 1,446 1,532 Total liabilities 26,693 26,733 26,443 24,714 24,186 24,118 23,690 22,684 22,235 Stockholders' deficit: — Preferred stock — — — — — — — — Common stock 18 18 19 19 19 19 19 19 19 Additional paid-in capital 43,111 43,170 43,260 43,290 43,355 43,475 43,531 43,384 43,022 Treasury stock (20) (16) (17) (17) (17) (17) (18) (24) (28) Accumulated deficit (45,664) (45,828) (45,972) (46,500) (46,412) (46,295) (46,101) (45,907) (45,619) Accumulated other comprehensive loss (9) (7) (6) (9) (5) (8) (7) 1,083 1,072 Total stockholders' deficit (2,564) (2,663) (2,716) (3,217) (3,060) (2,826) (2,576) (1,445) (1,534) Total liabilities and stockholders' deficit $ 24,129 $ 24,070 $ 23,727 $ 21,497 $ 21,126 $ 21,292 $ 21,114 $ 21,239 $ 20,701
  • 4. QWEST COMMUNICATIONS INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in millions) (Unaudited) 3 Mos 6 Mos 9 Mos 12 Mos 3 Mos 6 Mos 9 Mos 12 Mos 3 Mos Ended Ended Ended Ended Ended Ended Ended Ended Ended 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 OPERATING ACTIVITIES Net income (loss) $ 57 $ (107) $ (251) $ (779) $ 88 $ 205 $ 399 $ 593 $ 240 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 774 1,539 2,307 3,065 691 1,384 2,075 2,770 612 Provision for bad debts—net 57 110 137 173 44 71 108 155 43 Cumulative effect of changes in accounting principles—net of taxes — — — 22 — — — — — Gain on sale of assets (257) (257) (257) (263) — (3) (3) (68) — Loss (gain) on early retirement of debt—net — 43 32 462 — (5) 4 5 — Other non-cash charges—net 1 9 13 32 15 32 35 52 14 Changes in operating assets and liabilities: Accounts receivable (66) (82) (138) (104) (60) (23) (294) (223) 47 Prepaid expenses and other current assets 11 98 1 (8) (37) 28 50 168 (50) Accounts payable and accrued expenses and other current liabilities (178) (258) 57 73 (368) (284) (236) (372) (584) Deferred revenue and advance billings (32) (54) (61) (73) (19) (38) (25) (33) (8) Other non-current assets and liabilities (24) (128) (252) (287) (214) (190) (184) (258) (46) Cash provided by operating activities 343 913 1,588 2,313 140 1,177 1,929 2,789 268 INVESTING ACTIVITIES Expenditures for property, plant and equipment and capitalized software (313) (665) (1,110) (1,613) (390) (832) (1,226) (1,632) (318) Proceeds from sale of property and equipment 418 418 418 420 26 47 63 173 — Proceeds from sale of investment securities 630 1,086 1,230 1,793 7 42 56 70 6 Purchase of investment securities (822) (912) (1,002) (1,086) (36) (146) (173) (217) — Other 1 17 22 27 1 — (101) (94) 4 Cash used for investing activities (86) (56) (442) (459) (392) (889) (1,381) (1,700) (308) FINANCING ACTIVITIES Proceeds from long-term borrowings — 1,885 1,887 3,152 — — 600 600 — Repayments of long-term borrowings, including current maturities (5) (1,550) (1,778) (4,716) (41) (47) (1,145) (1,180) (9) Proceeds from issuances of common stock 3 7 10 39 57 102 150 205 34 Repurchases of common stock — — — — — — — (209) (393) Other — (105) (105) (634) — — (37) (110) 54 Cash (used for) provided by financing activities (2) 237 14 (2,159) 16 55 (432) (694) (314) CASH AND CASH EQUIVALENTS Increase (decrease) in cash and cash equivalents 255 1,094 1,160 (305) (236) 343 116 395 (354) Beginning balance 1,151 1,151 1,151 1,151 846 846 846 846 1,241 Ending balance $ 1,406 $ 2,245 $ 2,311 $ 846 $ 610 $ 1,189 $ 962 $ 1,241 $ 887
  • 5. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS (Dollars in millions) Years Ended (Unaudited) Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Operating revenue: Wireline services $ 3,312 $ 3,329 $ 3,361 $ 3,333 $ 3,327 $ 3,320 $ 3,343 $ 3,338 $ 3,298 $ 13,335 $ 13,328 Wireless services 126 132 131 138 139 142 135 141 139 527 557 Other services 11 9 12 9 10 10 9 9 9 41 38 Total operating revenue 3,449 3,470 3,504 3,480 3,476 3,472 3,487 3,488 3,446 13,903 13,923 Cost of sales (COS): Facility costs 671 675 690 647 616 608 585 623 582 2,683 2,432 Network expenses 67 59 72 69 52 62 69 69 52 267 252 Employee-related costs 409 387 404 387 396 388 397 392 379 1,587 1,573 Other non-employee related costs 292 313 346 348 354 335 331 331 304 1,299 1,351 Total cost of sales 1,439 1,434 1,512 1,451 1,418 1,393 1,382 1,415 1,317 5,836 5,608 Selling, general and administrative (SG&A): Property and other taxes 99 111 100 43 88 72 96 64 90 353 320 Bad debt 57 53 27 36 44 27 37 47 43 173 155 — Restructuring, realignment and severance 15 (1) 26 74 22 (2) 43 (5) 114 63 Employee-related costs 407 410 401 405 401 405 407 426 394 1,623 1,639 Other non-employee related costs 458 472 462 492 458 468 431 456 476 1,884 1,813 Total selling, general and administrative 1,036 1,045 1,016 1,050 1,013 970 1,014 993 998 4,147 3,990 Total COS + SG&A $ 2,475 $ 2,479 $ 2,528 $ 2,501 $ 2,431 $ 2,363 $ 2,396 $ 2,408 $ 2,315 $ 9,983 $ 9,598 (1) Capital expenditures $ 313 $ 352 $ 445 $ 503 $ 390 $ 442 $ 394 $ 406 $ 318 $ 1,613 $ 1,632 Employees 40,683 40,303 39,977 39,641 39,127 39,315 39,163 38,383 38,011 39,641 38,383 (1) Capital expenditures exclude non-cash items such as capital lease acquisitions.
  • 6. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—WIRELINE SERVICES SEGMENT(1) (Dollars in millions, operating statistics in thousands, except ARPU amounts) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Wireline services revenue: Local voice $ 1,581 $ 1,575 $ 1,544 $ 1,526 $ 1,520 $ 1,501 $ 1,466 $ 1,425 $ 1,394 $ 6,226 $ 5,912 Long-distance 558 547 553 558 559 562 572 560 550 2,216 2,253 Access 161 182 159 162 146 133 139 132 134 664 550 Data and Internet 1,012 1,025 1,105 1,087 1,102 1,124 1,166 1,221 1,220 4,229 4,613 Total wireline services revenue 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 13,335 13,328 Wireline services expenses: - Facility costs 595 596 615 572 545 534 511 548 507 2,378 2,138 Network expenses 62 58 70 68 52 61 68 67 51 258 248 Bad debt 43 40 15 24 28 15 23 32 30 122 98 Restructuring, realignment and severance 6 4 2 22 2 1 40 2 1 34 45 Employee-related costs 604 584 600 581 596 577 596 591 611 2,369 2,360 Other non-employee related costs 326 342 375 391 383 372 369 366 353 1,434 1,490 Total wireline services expenses 1,636 1,624 1,677 1,658 1,606 1,560 1,607 1,606 1,553 6,595 6,379 Wireline services segment income $ 1,676 $ 1,705 $ 1,684 $ 1,675 $ 1,721 $ 1,760 $ 1,736 $ 1,732 $ 1,745 $ 6,740 $ 6,949 Wireline services margin 50.6% 51.2% 50.1% 50.3% 51.7% 53.0% 51.9% 51.9% 52.9% 50.5% 52.1% Capital expenditures—wireline services $ 255 $ 252 $ 346 $ 394 $ 322 $ 364 $ 321 $ 307 $ 263 $ 1,247 $ 1,314
  • 7. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—WIRELINE SERVICES SEGMENT(1) (Dollars in millions, operating statistics in thousands, except ARPU amounts) (Unaudited) OPERATING STATISTICS As of and for the As of and for the Three Months Ended Years Ended December 31, Access lines(2): 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 12/31/05 12/31/06 Business: Retail 3,074 3,031 3,012 2,969 2,958 2,920 2,900 2,870 2,842 2,969 2,870 Resold 1,848 1,808 1,756 1,710 1,667 1,624 1,564 1,495 1,433 1,710 1,495 Total business 4,922 4,839 4,768 4,679 4,625 4,544 4,464 4,365 4,275 4,679 4,365 Mass markets: Retail residential: Primary 8,107 7,974 7,916 7,851 7,749 7,592 7,454 7,333 7,200 7,851 7,333 Add 1,024 985 948 913 876 840 803 770 740 913 770 Total retail residential 9,131 8,959 8,864 8,764 8,625 8,432 8,257 8,103 7,940 8,764 8,103 Small business 1,286 1,289 1,301 1,296 1,296 1,307 1,316 1,327 1,336 1,296 1,327 Total mass markets 10,417 10,248 10,165 10,060 9,921 9,739 9,573 9,430 9,276 10,060 9,430 Total access lines 15,339 15,087 14,933 14,739 14,546 14,283 14,037 13,795 13,551 14,739 13,795 UNEs 1,137 1,077 997 953 925 893 852 801 754 953 801 Mass markets retail connections: 10,417 10,248 10,165 10,060 9,921 9,739 9,573 9,430 9,276 10,060 9,430 Mass markets access lines High-speed Internet subscribers(3) 1,122 1,190 1,340 1,480 1,678 1,798 1,973 2,138 2,305 1,480 2,138 Video subscribers(3) 100 120 149 178 219 259 350 424 506 178 424 743 744 748 770 784 777 781 801 812 770 801 Wireless subscribers 12,382 12,302 12,402 12,488 12,602 12,573 12,677 12,793 12,899 12,488 12,793 Total mass markets retail connections In-Region long distance lines 4,590 4,631 4,705 4,778 4,824 4,840 4,900 4,920 4,924 4,778 4,920 High-speed Internet subscribers 1,122 1,190 1,340 1,480 1,678 1,798 1,973 2,138 2,305 1,480 2,138 Consumer ARPU(4) $ 45.83 $ 46.27 $ 46.65 $ 47.57 $ 48.55 $ 49.41 $ 50.07 $ 50.81 $ 52.01 $ 46.30 $ 49.51 (1) Certain prior period revenue, expense and access line amounts have been reclassified to conform to the current period presentation. (2) Resold lines include UNE lines, unbundled loops and public pay phone lines. Retail lines at December 31, 2005 reflect a decline of 32,000 lines in the fourth quarter of 2005 related to affiliate disconnects and 23,000 line and 21,000 line disconnects in the first and second quarter of 2005, respectively, related to UUNet. (3) High-speed Internet subscribers and video subscribers include certain business customers. (4) Consumer ARPU (Average Revenue Per Unit) is measured as consumer wireline revenue in the period divided by the average number of primary access lines for the period. 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.
  • 8. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—WIRELESS SERVICES SEGMENT(1) (Dollars in millions, operating statistics in thousands, except ARPU amounts) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Wireless services revenue $ 126 $ 132 $ 131 $ 138 $ 139 $ 142 $ 135 $ 141 $ 139 $ 527 $ 557 Wireless services expenses: Facility costs 76 79 75 75 71 74 74 75 75 305 294 Wireless equipment 26 28 25 28 30 26 28 27 25 107 111 Bad debt 14 14 12 11 12 12 14 15 13 51 53 Employee-related costs 14 12 12 12 12 12 13 12 14 50 49 Other non-employee related costs 29 16 20 17 17 12 17 16 12 82 62 Total wireless services expenses 159 149 144 143 142 136 146 145 139 595 569 Wireless services segment income $ (33) $ (17) $ (13) $ (5) $ (3) $ 6$ (11) $ (4) $ — $ (68) $ (12) —% Wireless services margin -26.2% -12.9% -9.9% -3.6% -2.2% 4.2% -8.1% -2.8% -12.9% -2.2% Capital expenditures—wireless services $ 1$ 1$ —$ —$ —$ —$ —$ 1$ 1 $ 2$ 1 OPERATING STATISTICS As of and for the As of and for the Three Months Ended Years Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 12/31/05 12/31/06 Subscribers 743 744 748 770 784 777 781 801 812 770 801 (2) ARPU $ 46 $ 50 $ 51 $ 51 $ 50 $ 52 $ 49 $ 50 $ 50 $ 49 $ 50 (1) Certain prior period revenue and expense amounts have been reclassified to conform to the current period presentation. (2) 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 segment revenue or any other measure determined in accordance with GAAP. Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.
  • 9. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL RESULTS—OTHER SERVICES SEGMENT(1) (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Other services revenue $ 11 $ 9 $ 12 $ 9 $ 10 $ 10 $ 9 $ 9 $ 9 $ 41 $ 38 Other services expenses: Property and other taxes 98 111 100 42 88 72 96 62 90 351 318 Real estate costs 105 99 110 108 110 105 110 112 109 422 437 Restructuring, realignment and severance related costs 7 (5) 25 52 20 (3) 3 (1) (6) 79 19 Employee-related costs 198 201 193 199 189 204 195 215 148 791 803 Other non-employee related costs(2) 272 300 279 299 276 289 239 269 282 1,150 1,073 Total other services expenses 680 706 707 700 683 667 643 657 623 2,793 2,650 Other services segment income $ (669) $ (697) $ (695) $ (691) $ (673) $ (657) $ (634) $ (648) $ (614) $ (2,752) $ (2,612) Capital expenditures—other services $ 57 $ 99 $ 99 $ 109 $ 68 $ 78 $ 73 $ 98 $ 54 $ 364 $ 317 (1) Certain prior period revenue and expense amounts have been reclassified to conform to the current period presentation. (2) Certain immaterial expenses for facility costs, bad debt, and network expenses in the other services segment are recorded in other non-employee related costs.
  • 10. QWEST COMMUNICATIONS INTERNATIONAL INC. SEGMENT REVENUE INCLUDING CUSTOMER CHANNEL WITHIN WIRELINE SERVICES(1) (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Wireline services revenue: Voice services: Local voice: Business $ 320 $ 320 $ 321 $ 311 $ 314 $ 309 $ 305 $ 298 $ 283 $ 1,272 $ 1,226 Mass markets 1,063 1,060 1,039 1,035 1,029 1,017 992 966 952 4,197 4,004 Wholesale 198 195 184 180 177 175 169 161 159 757 682 Total local voice 1,581 1,575 1,544 1,526 1,520 1,501 1,466 1,425 1,394 6,226 5,912 Long-distance: Business 146 145 139 138 144 139 138 133 137 568 554 Mass markets 135 133 142 152 155 161 162 162 163 562 640 Wholesale 277 269 272 268 260 262 272 265 250 1,086 1,059 Total long-distance 558 547 553 558 559 562 572 560 550 2,216 2,253 Access services 161 182 159 162 146 133 139 132 134 664 550 Total voice services 2,300 2,304 2,256 2,246 2,225 2,196 2,177 2,117 2,078 9,106 8,715 Data and Internet: Business 539 561 621 584 583 581 581 593 579 2,305 2,338 Mass markets 144 147 161 174 191 206 225 253 278 626 875 Wholesale 329 317 323 329 328 337 360 375 363 1,298 1,400 Total data and Internet 1,012 1,025 1,105 1,087 1,102 1,124 1,166 1,221 1,220 4,229 4,613 Total wireline services revenue 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 13,335 13,328 Wireless services revenue 126 132 131 138 139 142 135 141 139 527 557 Other services revenue 11 9 12 9 10 10 9 9 9 41 38 Total operating revenue $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 13,903 $ 13,923 Operating revenue Wireline services revenue: Business $ 1,006 $ 1,027 $ 1,082 $ 1,034 $ 1,041 $ 1,029 $ 1,024 $ 1,024 $ 999 $ 4,149 $ 4,118 Mass markets 1,344 1,342 1,344 1,363 1,376 1,385 1,380 1,382 1,394 5,393 5,523 Wholesale 962 960 935 936 910 906 939 932 905 3,793 3,687 Total wireline services revenue 3,312 3,329 3,361 3,333 3,327 3,320 3,343 3,338 3,298 13,335 13,328 Wireless services revenue 126 132 131 138 139 142 135 141 139 527 557 Other services revenue 11 9 12 9 10 10 9 9 9 41 38 Total operating revenue $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 13,903 $ 13,923 (1) Certain prior period revenue amounts have been reclassified to conform to the current period presentation.
  • 11. QWEST COMMUNICATIONS INTERNATIONAL INC. SELECTED FINANCIAL DATA—SPECIAL ITEMS (Dollars in millions) (Unaudited) Three Months Ended 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 SPECIAL ITEMS(1): Operating expenses: Legal reserve (SG&A) $ —$ —$ —$ —$ —$ —$ —$ —$ (40) Restructuring, realignment and severance (SG&A) (15) 1 (26) (74) (22) — (43) — — Subtotal operating expenses (15) 1 (26) (74) (22) — (43) — (40) Other (expense) income—net: — (Loss) gain on debt extinguishment — (43) 11 (430) — — — — Gain on sale of assets 257 — — 6 — — — 64 — Tax sharing settlement (Other—net) — — — — — — 53 — — Subtotal other (expense) income—net 257 (43) 11 (424) — — 53 64 — Income tax sharing settlement — — — — — — 39 — — Cumulative effect of changes in accounting principles—net of taxes — — — (22) — — — — — —$ (22) $ Total special items—(charges) benefits $ 242 $ (42) $ (15) $ (520) $ 49 $ 64 $ (40) (1) Effective for the quarter ended June 30, 2006, special items will only be identified herein when they are considered to be material. Although certain costs associated with the items described above continue to be incurred, they are not considered to be material and, therefore, are not detailed above.
  • 12. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—EBITDA (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 (1) EBITDA : $ 974 $ 991 $ 976 $ 979 $ 1,045 $ 1,109 $ 1,091 $ 1,080 $ 1,131 $ 3,920 $ 4,325 Depreciation and amortization (774) (765) (768) (758) (691) (693) (691) (695) (612) (3,065) (2,770) Total other expense—net (139) (393) (353) (730) (268) (281) (249) (200) (277) (1,615) (998) Income tax benefit (expense) (4) 3 1 3 2 (18) 43 9 (2) 3 36 Cumulative effect of accounting changes - net — — — (22) — — — — — (22) — Net (loss) income $ 57 $ (164) $ (144) $ (528) $ 88 $ 117 $ 194 $ 194 $ 240 $ (779) $ 593 EBITDA Margin(1): EBITDA $ 974 $ 991 $ 976 $ 979 $ 1,045 $ 1,109 $ 1,091 $ 1,080 $ 1,131 $ 3,920 $ 4,325 Operating revenue $ 3,449 $ 3,470 $ 3,504 $ 3,480 $ 3,476 $ 3,472 $ 3,487 $ 3,488 $ 3,446 $ 13,903 $ 13,923 EBITDA margin (EBITDA divided by operating revenue) 28.2% 28.6% 27.9% 28.1% 30.1% 31.9% 31.3% 31.0% 32.8% 28.2% 31.1% (1) EBITDA and 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.
  • 13. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—NET DEBT (Dollars in millions) (Unaudited) Three Months Ended 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 Net Debt(1): Current borrowings $ 601 $ 261 $ 527 $ 512 $ 604 $ 2,683 $ 1,685 $ 1,686 $ 1,688 Long-term borrowings—net 16,691 17,287 16,702 14,968 14,834 12,693 13,228 13,206 13,199 Total borrowings—net 17,292 17,548 17,229 15,480 15,438 15,376 14,913 14,892 14,887 Less: Cash and cash equivalents (1,406) (2,245) (2,311) (846) (610) (1,189) (962) (1,241) (887) Less: Short-term investments (966) (634) (580) (101) (130) (205) (218) (248) (242) Less: Long-term investments (36) (1) (1) — — — — — — Net Debt $ 14,884 $ 14,668 $ 14,337 $ 14,533 $ 14,698 $ 13,982 $ 13,733 $ 13,403 $ 13,758 (1) Net Debt is a non-GAAP financial measure that we calculate as our total borrowings (current plus long-term) less our cash and 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.
  • 14. QWEST COMMUNICATIONS INTERNATIONAL INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES—FREE CASH FLOW FROM OPERATIONS (Dollars in millions) (Unaudited) Years Ended Three Months Ended December 31, 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 2005 2006 Free cash flow from operations(1): Cash provided by operating activities $ 343 $ 570 $ 675 $ 725 $ 140 $ 1,037 $ 752 $ 860 $ 268 $ 2,313 $ 2,789 Less: Expenditures for property, plant and equipment (313) (352) (445) (503) (390) (442) (394) (406) (318) (1,613) (1,632) Free cash flow from operations 30 218 230 222 (250) 595 358 454 (50) 700 1,157 Add: certain one-time settlements — — — 204 100 — — 140 200 204 240 Free Cash Flow from Operations—as adjusted $ 30 $ 218 $ 230 $ 426 $ (150) $ 595 $ 358 $ 594 $ 150 $ 904 $ 1,397 (1) 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 significant debt balance. 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 flow from operating activities” or any other measure determined in accordance with GAAP.
  • 15. QWEST COMMUNICATIONS INTERNATIONAL INC. WIRELESS SERVICES ARPU RECONCILIATION (Dollars in millions, subscribers in in thousands, and ARPU amounts in dollars) (Unaudited) Three Months Ended 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 9/30/06 12/31/06 3/31/07 ARPU is calculated as follows(1): Total quarterly wireless services revenue $ 126 $ 132 $ 131 $ 138 $ 139 $ 142 $ 135 $ 141 $ 139 Less: quarterly non-recurring revenue (23) (21) (17) (22) (22) (20) (20) (22) (19) Quarterly recurring revenue $ 103 $ 111 $ 114 $ 116 $ 117 $ 122 $ 115 $ 119 $ 120 Average monthly recurring revenue $ 34 $ 37 $ 38 $ 39 $ 39 $ 41 $ 38 $ 40 40 Divided by quarterly average wireless subscribers 745 743 745 759 778 782 775 790 796 Wireless services ARPU $ 46 $ 50 $ 51 $ 51 $ 50 $ 52 $ 49 $ 50 $ 50 (1)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 segment revenue or any other measure determined in accordance with GAAP. Wireless ARPU includes surcharges for the recovery of costs associated with providing number portability and wireless 911 services.