As Filed With the Securities and Exchange Commission on November 16, 1998
Registration No. 333-58617
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1339282
(State of Incorporation) (I.R.S. Employer
Identification Number)
1000 QWEST TOWER
555 SEVENTEENTH STREET
DENVER, COLORADO 80202
TEL: 303-992-1400
(Address, including zip code, and telephone number
including area code, of registrant's principal executive offices)
---------------------------
ROBERT S. WOODRUFF, EXECUTIVE VICE PRESIDENT-FINANCE
QWEST COMMUNICATIONS INTERNATIONAL INC.
1000 QWEST TOWER
555 SEVENTEENTH STREET
DENVER, COLORADO 80202
TEL: 303-992-1400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
YASH A. RANA, ESQ.
O'MELVENY & MYERS LLP
CITICORP CENTER
153 EAST 53RD STREET, 54TH FLOOR
NEW YORK, NEW YORK 10022-4611
TEL: 212-326-2000
FAX: 212-326-2061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. [X]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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<PAGE>
QWEST COMMUNICATIONS INTERNATIONAL INC.
PROSPECTUS
COMMON STOCK
This Prospectus relates to approximately [____________] shares (the
"Shares") of common stock, par value $.01 per share (the "Qwest Common Stock"),
of Qwest Communications International Inc., a Delaware corporation ("Qwest").
The Shares are owned by or to be issued to the persons named in this Prospectus
under the caption "Selling Stockholders."
The Selling Stockholders may from time to time sell the Shares on the
National Association of Securities Dealers Automated Quotation System/National
Market (the "Nasdaq") or on any other national securities exchange on which the
Qwest Common Stock may be listed or traded, in negotiated transactions or
otherwise, at prices then prevailing or related to the then current market price
or at negotiated prices. The Shares may be sold directly or through brokers or
dealers. See "Plan of Distribution."
Qwest will receive no part of the proceeds of any sales made hereunder.
See "Use of Proceeds." All expenses of registration incurred in connection with
the offering are being borne by Qwest, but all selling and other expenses
incurred by the Selling Stockholders will be borne by the Selling Stockholders.
See "Selling Stockholders."
The Selling Stockholders and any broker-dealers participating in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), and profits on
the sale of Shares by the Selling Stockholders and any commissions or discounts
given to any such broker-dealer may be regarded as underwriting commissions or
discounts under the Securities Act.
The Shares have not been registered for sale by the Selling
Stockholders under the securities laws of any state as of the date of this
Prospectus. Brokers or dealers effecting transactions in the Shares should
confirm the registration thereof under the securities laws of the states in
which such transactions occur or the existence of any exemption from
registration.
The Qwest Common Stock is traded on the Nasdaq. On November [__], 1998,
the last sale price of the Qwest Common Stock on the Nasdaq was [$_________] per
share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO DEALER, SALESMAN, OR OTHER PERSON, INCLUDING THE SELLING STOCKHOLDERS, HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY QWEST. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER [__], 1998
<PAGE>
AVAILABLE INFORMATION
Qwest is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional Offices of
the Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New York, New
York 10048. Please call the Commission at 1-800-SEC-0330 for further information
relating to the public reference rooms. Copies of such information may be
obtained at the prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Commission maintains a Web site (http://www.sec.gov) that contains certain
reports, proxy statements and other information regarding Qwest. Shares of Qwest
Common Stock traded on the Nasdaq National Market. Material filed by Qwest may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C.
20006.
No person is authorized to give any information or to make any
representations with respect to the matters described in this Prospectus other
than those contained herein or in the documents incorporated by reference
herein. Any information or representations with respect to such matters not
contained herein or therein must not be relied upon as having been authorized by
Qwest. This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy securities in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of Qwest since the date hereof or that the information in this
Prospectus or in the documents incorporated by reference herein is correct as of
any time subsequent to the date hereof or thereof.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference forward-looking
statements within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act that include, among others, (1) statements by Qwest
concerning the benefits expected to result from certain business activities and
transactions, including, without limitation, synergies in the form of increased
revenues, decreased expenses and avoided expenses and expenditures that are
expected to be realized by Qwest after the closing of such transactions, (2)
Qwest's plans to complete the Qwest Network, an approximately 18,450 route-mile,
coast-to-coast, technologically advanced fiber optic communications network, and
(3) other statements by Qwest of expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts. Qwest cautions the reader that these forward-looking statements are
subject to risks and uncertainties, including financial, regulatory environment,
and trend projections, that could cause actual events or results to differ
materially from those expressed or implied by the statements. Such risks and
uncertainties include those risks, uncertainties and risk factors identified,
among other places, in documents filed with the Commission. The most important
factors that could prevent Qwest from achieving its stated goals include, but
are not limited to, (a) failure by Qwest to construct the Qwest Network on
schedule and on budget, (b) operating and financial risks related to managing
rapid growth, integrating acquired businesses and sustaining operating cash flow
to meet its debt service requirements, make capital expenditures and fund
operations, (c) intense competition in Qwest's Communications Services market,
(d) Qwest's ability to achieve Year 2000 compliance, (e) rapid and significant
changes in technology and markets, and (f) adverse changes in the regulatory or
legislative environment affecting Qwest. These cautionary statements should be
considered in connection with any subsequent written or oral forward-looking
statements that may be issued by Qwest or persons acting on its behalf. Qwest
undertakes no obligation to review or confirm analysts' expectations or
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, which have been filed by Qwest with the
Commission, are incorporated herein and specifically made a part hereof by this
reference: (1) Annual Report on Form 10-K for the fiscal year ended December 31,
1997; (2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, as
amended on Form 10-Q/A, filed May 7, 1998; (3) Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998; (4) Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998; (5) Registration Statement on Form S-4 (File
No. 333-65095) filed September 30, 1998; (6) Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-49915) filed May 13, 1998; (7)
Post-Effective Amendment No. 1 to Registration Statement on Form S-4 (File No.
333-49915) filed July 31, 1998; (8) Registration
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Statement on Form S-4 (File No. 333-46145) filed February 12, 1998; (9) Current
Report on Form 8-K filed October 29, 1998; (10) Current Report on Form 8-K filed
September 16, 1998; (11) Current Report on Form 8-K filed June 12, 1998, as
amended on Form 8-K/A filed October 13, 1998; and (12) Current Report on Form
8-K filed July 8, 1998, as amended on Form 8-K/A filed July 10, 1998. Icon CMT
Corp.'s Current Report on Form 8-K filed September 30, 1998, Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 and Quarterly Report on Form 10-Q
for the quarter ended September 30, 1998 are also incorporated herein and
specifically made a part hereof. As required by the Commission, all other
reports filed by Qwest pursuant to Section 13(a) or 15(d) of the Exchange Act
since December 31, 1997 are also incorporated by this reference. In addition,
all documents filed with the Commission by Qwest subsequent to the date of this
Prospectus and prior to the termination of the offering made hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents with the Commission. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT ON FORM S-3
(TOGETHER WITH ANY AMENDMENTS OR SUPPLEMENTS THERETO, THE "REGISTRATION
STATEMENT") FILED BY QWEST PURSUANT TO THE SECURITIES ACT. THIS PROSPECTUS DOES
NOT CONTAIN ALL THE INFORMATION SET FORTH IN THE REGISTRATION STATEMENT, CERTAIN
PARTS OF WHICH ARE OMITTED IN ACCORDANCE WITH THE RULES AND REGULATIONS OF THE
COMMISSION. THE REGISTRATION STATEMENT AND ANY AMENDMENTS THERETO, INCLUDING
EXHIBITS FILED AS A PART THEREOF, ALSO ARE AVAILABLE FOR INSPECTION AND COPYING
AS SET FORTH ABOVE. STATEMENTS CONTAINED IN THIS PROSPECTUS OR IN ANY DOCUMENT
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AS TO THE CONTENTS OF ANY CONTRACT
OR OTHER DOCUMENT REFERRED TO HEREIN OR THEREIN ARE NOT NECESSARILY COMPLETE,
AND IN EACH INSTANCE REFERENCE IS MADE TO THE COPY OF SUCH CONTRACT OR OTHER
DOCUMENT FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT, EACH SUCH STATEMENT
BEING QUALIFIED IN ALL RESPECTS BY SUCH REFERENCE.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF SUCH DOCUMENTS, OTHER THAN
EXHIBITS TO SUCH DOCUMENTS THAT ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE
HEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, TO WHOM THIS PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST TO: INVESTOR RELATIONS, QWEST
COMMUNICATIONS INTERNATIONAL INC., 1000 QWEST TOWER, 555 SEVENTEENTH STREET,
DENVER, COLORADO 80202, TELEPHONE NUMBER 800-567-7296.
QWEST COMMUNICATIONS INTERNATIONAL INC.
Qwest is a facilities-based provider of a full range of multimedia
communications services to businesses, consumers and communications entities
("Communications Services"). In addition, Qwest is constructing and installing
fiber optic communications systems for interexchange carriers and other
communications entities, as well as for its own use ("Construction Services").
Qwest is expanding its existing long distance network into an approximately
18,450 route-mile coast-to-coast, technologically advanced, fiber optic
telecommunications network (the "Qwest Network"). Qwest will employ, throughout
substantially all of the Qwest Network, a self-healing SONET ring architecture
equipped with the most advanced commercially available fiber and transmission
electronics manufactured by Lucent Technologies and Northern Telecom Inc.,
respectively. The Qwest Network's advanced fiber and transmission electronics
are expected to provide Qwest with lower installation, operating and maintenance
costs than older fiber systems generally in commercial use today. In addition,
Qwest has entered into contracts for the sale of dark fiber along the route of
the Qwest Network, which will reduce Qwest's net cost per fiber mile with
respect to the fiber it retains for its own use. As a result of these cost
advantages, Qwest believes it will be well-positioned to capture market share
and take advantage of the rapidly growing demand for long haul voice and data
transmission capacity and services.
Under Qwest's current plan, the Qwest Network will extend approximately
18,450 route-miles coast-to-coast and connect approximately 130 metropolitan
areas that represent approximately 80% of the originating and terminating long
distance traffic in the United States. Presently, Qwest provides services to its
customers through owned and leased digital fiber optic facilities and more than
15 switches strategically located throughout the United States, connecting Qwest
to metropolitan areas that account for more than 95% of U.S. call volume.
Construction of the Qwest Network is scheduled to be completed in 1999. Through
a combination of the Qwest Network and leased facilities, Qwest will continue to
offer interstate services in all 48 contiguous states. In April 1998, Qwest
activated the entire transcontinental portion of the Qwest Network from Los
Angeles to San Francisco to New York, thus becoming the first network service
provider to complete a transcontinental native Internet Protocol ("IP") fiber
network. Qwest is also expanding its network to carry international
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data and voice traffic into Mexico and Europe. Completion of the Mexico network
is scheduled for early 1999. The network expansion into Europe includes capacity
on three submarine systems. The transatlantic capacity includes eight STM-1s
(the European equivalent to SONET OC-3) from New York City to London and other
European destinations.
In August 1998, Qwest announced its participation in a consortium of
communications companies that is building a submarine cable system connecting
the United States to Japan. Scheduled for completion by the second quarter of
2000, the 13,125-mile, four-fiber pair cable will ultimately possess the
capability to transmit information at the rate of 640 gigabits per second.
In September 1998, Qwest announced that in November 1998 it planned to
make available for use the nation's first OC-48 native IP network along the
Qwest Network. Along this OC-48 network, Qwest will offer high-speed dedicated
Internet access, web hosting, IP-based virtual private network services and
expanded availability of voice over IP long distance services. Additionally,
Qwest's European subsidiary, EUnet International Limited ("EUnet"), will provide
the first pan-European Internet broadcasting network. The new services will
allow customers in Europe to broadcast video, data and voice globally.
Qwest believes that demand from interexchange carriers and other
communications entities for advanced, high bandwidth voice, data and video
transmission capacity will increase over the next several years due to
regulatory and technological changes and other industry developments. These
anticipated changes and developments include: (i) continued growth in capacity
requirements for high-speed data transmission, ATM and Frame Relay services,
Internet and multimedia services and other new technologies and applications;
(ii) continued growth in demand for existing long distance services; (iii) entry
into the market of new communications providers; (iv) requirements of the three
principal nationwide carriers (AT&T Corporation, MCI WorldCom and Sprint
Corporation) to replace or augment portions of their older systems and (v)
reform in regulation of domestic access charges and international settlement
rates, which Qwest expects will lower long distance rates and fuel primary
demand for long distance services.
Qwest's principal executive offices are located at 1000 Qwest Tower,
555 Seventeenth Street, Denver, Colorado 80202, and its telephone number is
(303) 992-1400. Qwest's Internet address is www.qwest.net.
RECENT DEVELOPMENTS
LCI TRANSACTION. On June 5, 1998, Qwest acquired LCI International,
Inc. ("LCI"), a communications provider, for approximately $3.9 billion in Qwest
Common Stock. As part of the acquisition, Qwest issued approximately 129.9
million shares of Qwest Common Stock (including outstanding LCI stock options
assumed by Qwest) and incurred approximately $13.5 million in direct acquisition
costs. The LCI merger was accounted for as a purchase.
In connection with the acquisition, Qwest allocated $750 million to
in-process research and development ("R&D"), $250 million to existing technology
and $3,037.8 million to goodwill. Combined 1997 Qwest and LCI revenues totaled
$2,338.7 million. The merger is expected to deliver greater network
efficiencies, eliminate duplicate efforts to build sales and systems
infrastructure, avoid duplication of capital spending programs and accelerate
the companies' data and international strategies. The acquisition is expected to
lower net earnings of Qwest in 1998 as a result of the one-time R&D write-off
and other adjustments resulting from purchase accounting. Qwest expects to
realize revenue and cost synergies beginning in 1998 from the combination of the
two companies.
Qwest will complete final allocation of purchase price within one year
from the acquisition date. The items awaiting final allocation include
non-current asset valuation and final determination of the costs to sell or exit
certain activities of LCI. It is anticipated that final allocation of purchase
price will not differ materially from the preliminary allocation.
ICON TRANSACTION. On September 13, 1998, Qwest signed a definitive
merger agreement with Icon CMT Corp. ("Icon"), a provider of integrated Internet
solutions associated with web hosting and IP integration. The terms of the
merger agreement call for the acquisition of all of Icon's outstanding common
shares and the assumption of all of Icon's stock options and warrants by Qwest.
The purchase price of the all-stock transaction is anticipated to be
approximately $207.0 million, not including approximately $3.5 million of direct
acquisition costs. The actual number of shares of Qwest Common Stock to be
exchanged for each Icon share will be determined by dividing $12 by a 15-day
volume weighted average of trading prices for Qwest Common Stock prior to the
Icon stockholders meeting that will be held prior to closing, but will not be
less than .3200 shares (if Qwest's average stock price exceeds $37.50) or more
than .4444 shares (if Qwest's average stock price is less than $27.00). The
merger is intended to qualify as a tax-free reorganization and will be accounted
for as a purchase. The merger is expected to close by December 31, 1998.
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Qwest has also agreed to advance up to $15 million to Icon to fund
working capital requirements and for other corporate purposes. In consideration
for this commitment, Icon issued to Qwest a warrant to purchase up to 750,000
shares of Icon stock at $12 per share.
Approval of the merger is subject to the affirmative vote of a majority
of the outstanding shares of Icon common stock. Icon's three founders also
entered into agreements with Qwest to vote to approve the merger and to grant
Qwest purchase options on their shares. The warrant and purchase options give
Qwest beneficial ownership of approximately 44% of Icon's common stock.
CREDIT FACILITY COMMITMENT. On November 5, 1998, Qwest executed a
commitment letter with its three lead banks to syndicate an unsecured, $500.0
million to $750.0 million credit facility. Each of the lead banks has agreed to
commit up to $100.0 million, with a minimum aggregate commitment of $250.0
million. The new credit facility would be structured to include a $250.0 million
364-day revolving credit facility, with the balance as a five-year revolving
credit facility. The 364-day facility would be extendable for an additional 364
days on the lenders' approval or convertible at Qwest's option to a term loan
terminating at the same time as the five-year facility. Borrowings under the new
credit facility would bear interest at a variable rate based on LIBOR plus an
applicable margin. Consummation of the new credit facility is conditioned, among
other things, on the execution of a mutually satisfactory credit agreement.
Qwest and the three lead banks are working toward a December 1998 closing, but
there can be no assurance that the new credit facility will be in place before
the expiration of Qwest's existing $250 million credit facility on December 31,
1998.
ISSUANCE OF $750 MILLION NOTES. In November 1998, Qwest issued and sold
$750.0 million in principal amount of 7.50% Senior Notes, due 2008 (the "7.50%
Notes"), generating net proceeds of approximately $741.0 million, after
deducting offering costs. Interest on the 7.50% Notes is payable semiannually in
arrears on May 1 and November 1 of each year, commencing May 1, 1999. The 7.50%
Notes are subject to redemption at the option of Qwest, in whole or in part, at
any time at specified redemption prices.
In connection with the sale of the 7.50% Notes, Qwest agreed to make an
offer to exchange new notes, registered under the Securities Act and with terms
identical in all materials respects to the 7.50% Notes, for the 7.50% Notes or,
alternatively, to file a shelf registration statement under the Securities Act
with respect to the 7.50% Notes. If the registration statement for the exchange
offer or the shelf registration statement, as applicable, is not declared
effective within specified time periods or, after being declared effective,
ceases to be effective or usable for resale of the 7.50% Notes during specified
time periods (each a "Registration Default"), additional cash interest will
accrue at a rate per annum equal to 0.50% of the principal amount of the 7.50%
Notes during the 90-day period immediately following the occurrence of a
Registration Default and increasing in increments of 0.25% per annum of the
principal amount of the 7.50% Notes up to a maximum of 2.0% per annum, at the
end of each subsequent 90-day period until the Registration Default is cured.
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The unaudited pro forma condensed combined financial statements
presented below are derived from the historical consolidated financial
statements of Qwest, SuperNet, Inc. ("SuperNet"), Phoenix Network, Inc.
("Phoenix"), LCI and Icon. The unaudited pro forma condensed combined balance
sheet as of September 30, 1998 gives pro forma effect to the proposed
acquisition by Qwest of all the issued and outstanding shares of capital stock
of Icon as if the acquisition had occurred on September 30, 1998. The unaudited
pro forma condensed combined statements of operations for the nine months ended
September 30, 1998 and for the year ended December 31, 1997 give pro forma
effect to the acquisitions of SuperNet, Phoenix, LCI and Icon as if such
acquisitions had occurred on January 1, 1997. The unaudited pro forma condensed
combined financial statements do not give effect to Qwest's acquisition of EUnet
because it is not significant for purposes of Rule 3-05 of the Securities and
Exchange Commission Regulation S-X.
The consummation of the LCI acquisition constituted a change in control
of LCI, which was an event of default under LCI's two credit facilities (the
"LCI Credit Facilities") and LCI's receivables securitization program. In
addition, an event of default under the LCI Credit Facilities also constituted
an event of default under LCI's operating lease agreement for a headquarters
building in Arlington, Virginia. LCI's discretionary lines of credit may be
discontinued at any time at the sole discretion of the providing banks. Certain
of LCI's debt securities permit mergers and consolidations, subject to
compliance with certain terms of the governing indenture. In November 1998,
Qwest paid down the outstanding balances under the LCI Credit Facilities and
LCI's lines of credit. In addition, in October 1998, Qwest reacquired the
ownership interest in LCI's receivables securitization program. Therefore, no
effect was presented in the unaudited pro forma
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condensed combined financial statements for the potential defaults discussed
above. The LCI Credit Facilities and LCI's lines of credit have been classified
as current in the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial statements give
effect to the acquisitions described above under the purchase method of
accounting and are based on the assumptions and adjustments described in the
accompanying notes to the unaudited pro forma condensed combined financial
statements presented on the following pages. The fair value of the consideration
has been allocated to the assets and liabilities acquired based upon the fair
values of such assets and liabilities at the date of each respective acquisition
and may be revised for a period of up to one year from the date of each
respective acquisition. The preliminary estimates and assumptions as to the
value of the assets and liabilities of LCI and Icon to the combined company is
based upon information available at the date of preparation of these unaudited
pro forma condensed combined financial statements, and will be adjusted upon the
final determination of such fair values. Qwest will complete final allocation of
purchase price within one year from the acquisition date. The items awaiting
final allocation include non-current asset valuation and final determination of
the costs to sell or exit certain activities of LCI. It is anticipated that
final allocation of purchase price will not differ materially from the
preliminary allocation.
The final allocation of purchase price to the Icon assets acquired and
liabilities assumed is dependent upon an analysis which has not progressed to a
stage at which there is sufficient information to make an allocation in these
pro forma condensed combined financial statements. Qwest has undertaken a study
to determine the allocation of the Icon purchase price to the various assets
acquired, including in-process research and development projects, and the
liabilities assumed. TO THE EXTENT THAT A PORTION OF THE ICON PURCHASE PRICE IS
ALLOCATED TO IN-PROCESS RESEARCH AND DEVELOPMENT, A CHARGE, WHICH MAY BE
SIGNIFICANT AND MATERIAL TO QWEST'S RESULTS OF OPERATIONS, WOULD BE RECOGNIZED
IN THE PERIOD IN WHICH THE PROPOSED MERGER OCCURS. However, this charge is not
expected to be material to the stockholders' equity or revenue of Qwest, based
on the aggregate Icon purchase price of approximately $207.0 million.
THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS DO NOT
PURPORT TO REPRESENT WHAT QWEST'S RESULTS OF OPERATIONS OR FINANCIAL CONDITION
WOULD HAVE ACTUALLY BEEN OR WHAT OPERATIONS WOULD BE IF THE TRANSACTIONS THAT
GIVE RISE TO THE PRO FORMA ADJUSTMENTS HAD OCCURRED ON THE DATES ASSUMED AND ARE
NOT INDICATIVE OF FUTURE RESULTS. THE UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS BELOW SHOULD BE READ IN CONJUNCTION WITH THE HISTORICAL
CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO OF QWEST, PHOENIX,
LCI, SUPERNET AND ICON.
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<TABLE>
<CAPTION>
QWEST COMMUNICATIONS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
Historical
--------------------------------------- Pro Forma Pro Forma
Qwest LCI(2) Phoenix(3) Icon(4) Adjustments Combined
----- ------ ---------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Communications services $ 884 $ 745 $ 17 $ 59 -- $ 1,705
Construction services 494 -- -- -- -- 494
------- ------- ------- ------- ------- -------
1,378 745 17 59 2,199
------- ------- ------- ------- ------- -------
Operating expenses:
Access and network operations 556 445 13 46 -- 1,060
Construction services 334 -- -- -- -- 334
Selling, general and administrative 341 163 7 29 -- 540
Depreciation and amortization 116 45 1 1 $ 32 (7) 220
10 (8)
1 (9)
14 (5)
Merger costs 63 -- -- 2 (65)(10) --
Provision for in-process R&D 818 -- -- -- (818)(10) --
------- ------- ------- ------- ------- -------
2,228 653 21 78 (826) 2,154
------- ------- ------- ------- ------- -------
Income (loss) from operations (850) 92 (4) (19) 826 45
Other expense (income):
Interest expense, net 51 14 -- (1) -- 64
------- ------- ------- ------- ------- -------
Income (loss) before income taxes (901) 78 (4) (18) 826 (19)
Income tax expense (benefit) (13) 30 -- -- 22 (15) 39
------- ------- ------- ------- ------- -------
Net income (loss) $ (888) $ 48 $ (4) $ (18) $ 804 $ (58)
======= ======= ======= ======= ======= =======
Loss per share - basic and diluted $ (3.42) $ (0.17)
======= =======
Weighted average shares used for
calculating loss per share - basic
and diluted 260 334
======= =======
See accompanying notes to unaudited pro forma condensed combined financial statements.
7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
QWEST COMMUNICATIONS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
Historical
----------------------------------------- Pro Forma Pro Forma
Qwest LCI(2) Phoenix(3) Icon(4) Adjustments Combined
----- ------ ---------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Communications services $ 115 $ 1,642 $ 77 $ 52 $ 6 (11) $ 1,892
Construction services 581 -- -- -- -- 581
------- ------- ------- ------- ---- -------
696 1,642 77 52 6 2,473
------- ------- ------- ------- ---- -------
Operating expenses:
Access and network operations 91 986 57 39 3 (11) 1,176
Construction services 397 -- -- -- -- 397
Selling, general and administrative 164 417 30 24 3 (11) 638
Depreciation and amortization 20 96 4 1 2 (9) 247
1 (11)
3 (12)
76 (7)
25 (8)
19 (5)
Merger costs -- 45 -- -- (45)(13) --
------- ------- ------- ------- ---- -------
672 1,544 91 64 87 2,458
------- ------- ------- ------- ---- -------
Income (loss) from operations 24 98 (14) (12) (81) 15
Other expense (income):
Interest expense, net 7 36 1 1 1 (14) 46
Other (7) -- -- -- -- (7)
------- ------- ------- ------- ---- -------
Income (loss) before income taxes 24 62 (15) (13) (82) (24)
Income tax expense (benefit) 9 31 -- -- 2 (15) 42
------- ------- ------- ------- ---- -------
Net income (loss) $ 15 $ 31 $ (15) $ (13) $(84) $ (66)
======= ======= ======= ======= ==== =======
Earnings (loss) per share - basic $ 0.08 $ (0.20)
======= =======
Earnings (loss) per share - diluted $ 0.07 $ (0.20)
======= =======
Weighted average shares used for
calculating earnings (loss) per share - basic 191 330
======= =======
Weighted average shares used for 194 330
calculating earnings (loss) per share - diluted ======= =======
See accompanying notes to unaudited pro forma condensed combined financial statements.
</TABLE>
8
<PAGE>
QWEST COMMUNICATIONS INTERNATIONAL INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
(AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
Historical Pro Forma Pro Forma
Qwest Icon Adjustments Combined
----- ---- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 225 $ 10 -- $ 235
Trade accounts receivable, net 294 12 -- 306
Deferred income tax asset 295 -- -- 295
Prepaid expenses and other 314 5 -- 319
------- ------- ----- -------
Total current assets 1,128 27 -- 1,155
Property and equipment, net 2,044 14 -- 2,058
Excess of cost over net assets acquired 3,215 -- $ 187 (6) 3,402
Other, net 328 -- -- 328
------- ------- ----- -------
TOTAL ASSETS $ 6,715 $ 41 $ 187 $ 6,943
======= ======= ===== =======
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities $ 1,180 $ 17 $ 4 (6) $ 1,201
Long-term debt and capital lease obligations 1,387 -- -- 1,387
Other long-term liabilities 462 -- -- 462
------- ------- ----- -------
Total liabilities 3,029 17 4 3,050
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 3 -- -- 3
Additional paid-in capital 4,603 63 207 (6) 4,810
(63)(6)
(Accumulated deficit) retained earnings (920) (39) 39 (6) (920)
------- ------- ----- -------
Total stockholders' equity 3,686 24 183 3,893
------- ------- ----- -------
TOTAL LIABILITIES AND $ 6,715 $ 41 $ 187 $ 6,943
STOCKHOLDERS' EQUITY ======= ======= ===== =======
See accompanying notes to unaudited pro forma condensed combined financial statements.
</TABLE>
9
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) On June 5, 1998, Qwest acquired LCI, a communications service provider, for
approximately $3.9 billion in Qwest common stock. At the close of the
acquisition (the "LCI Merger"), Qwest issued approximately 129.9 million
shares of Qwest common stock (including outstanding LCI stock options
assumed by Qwest) and incurred approximately $13.5 million in direct
acquisition costs. The LCI Merger was accounted for as a purchase.
(2) Represents the purchase by Qwest of the outstanding shares of LCI common
stock, the assumption of certain liabilities, the incurrence of related
transaction costs, and the initial allocation of the pro forma purchase
price.
(AMOUNTS
IN MILLIONS)
Aggregate value of stock consideration(a)...................... $ 3,657
Value of LCI outstanding stock options assumed by Qwest(b)..... 260
Direct costs of the acquisition................................ 14
---------
$ 3,931
=========
Allocation of purchase price:
Working capital, excluding deferred taxes...................$ (352)
Deferred federal income taxes (c)........................... 198
Property and equipment...................................... 716
Goodwill................................................... 3,038
Research and development (d)............................... 750
Developed technology (d).................................... 250
Long-term debt, excluding current portion................... (462)
Other liabilities and assets, net........................... (207)
---------
Total.........................................................$ 3,931
=========
(a) Represents the value of Qwest Common Stock issued for the
acquisition of the approximately 98.3 million shares of LCI common
stock outstanding. Based on an average trading price of $31.92,
Qwest issued approximately 114.6 million shares of Qwest Common
Stock to acquire all the outstanding shares of LCI common stock.
(b) Represents the assumption by Qwest of the approximately 13.1
million stock options outstanding under LCI's stock option plans.
Based upon an exchange ratio of 1.1661, Qwest issued approximately
15.3 million Qwest stock options to assume the outstanding LCI
stock options.
(c) Represents the allocation of purchase price to deferred income
taxes.
(d) In connection with the acquisition of LCI, Qwest allocated $750
million of the purchase price to in-process research and
development ("R&D") projects. $250 million was allocated to
developed technology, while $3,037.8 was allocated to goodwill.
This allocation to the in-process R&D represents the estimated fair
value based on risk-adjusted cash flows related to the incomplete
projects. At the date of the merger, the development of these
projects had not yet reached technological feasibility and the R&D
in progress had no alternative future uses. Accordingly, these
costs were expensed as of the merger date.
Through the use of third party appraisal consultants, Qwest
assessed and allocated values to the in-process research and
development. The values assigned to these assets were determined by
identifying significant research projects for which technological
feasibility had not been established. These assets consisted of a
significant number of R&D projects grouped into three categories:
(1) next-generation network systems automation tools; (2) advanced
data services, including frame relay and IP technologies; and (3)
new operational systems and tools. Taken together, these projects,
if successful, will enable Qwest to provide advanced voice and data
services as well as sophisticated network management and
administration functions. A brief description of the three
categories of in-process projects is presented below:
10
<PAGE>
o R&D RELATED TO NETWORK SYSTEMS AUTOMATION. These R&D projects are
intended to create a new method of automating LCI's service
provisioning and network management systems. These proprietary
projects include the development of data warehousing and new
interface technologies to enable the interchange of data across
disparate networks. As of the transaction date, Qwest believes
the overall project was 60% complete. Development efforts through
September 30, 1998 have proceeded according to expectations.
While material progress has been made with these projects,
significant risk still is associated with their completion. If
these projects are unsuccessful, their expected contribution to
revenues and profits will not materialize.
o R&D RELATED TO FRAME RELAY AND IP SERVICES. These projects
involve R&D related to the deployment of frame relay and IP
technologies within the LCI network. With the completion of this
next-generation network, LCI will be able to address emerging new
demand trends for data services. Management considers this a
complex project due to the customized work required. As of the
transaction date, Qwest believes the overall project was 60% to
70% complete. Development efforts through September 30, 1998 have
proceeded according to expectations. While material progress has
been made with these projects, significant risk still is
associated with their completion. If these projects are
unsuccessful, their expected contribution to revenues and profits
will not materialize.
o R&D RELATED TO OPERATIONAL SYSTEMS AND TOOLS. These projects
involve R&D related to the development of new service and network
management tools and engineering functions. These proprietary
projects are closely associated with LCI's deployment of advanced
data services. Applications enabled by these new technologies
include the ability to offer new products and service packages.
As of the transaction date, the Company believes the projects
were 60% to 70% complete. Development efforts through September
30, 1998 have proceeded according to expectations. While material
progress has been made with the R&D projects, these are unique
technologies and significant risk is associated with their
completion. If these projects are unsuccessful, their expected
contribution to revenues and profits will not materialize.
Remaining R&D efforts for these projects include various phases of
technology design, development and testing. Anticipated completion
dates for the projects in progress will occur in phases over the
next two years, at which point Qwest expects to begin generating
the economic benefits from the technologies. At the time of
valuation, the costs incurred and the expected costs to complete
all such projects were approximately $50 million and $60 million,
respectively.
The value assigned to purchased in-process technology was
determined by estimating the contribution of the purchased
in-process technology to developing commercially viable products,
estimating the resulting net cash flows from the expected product
sales of such products, and discounting the net cash flows from the
expected product sales of such products to their present value
using a risk-adjusted discount rate.
Qwest estimates total revenues from the specific acquired
in-process technology peak in 2003 and steadily decline from 2004
through 2009 as other new product and service technologies are
expected to be introduced by the company. These projections are
based on management's estimates of market size and growth, expected
trends in technology, and the expected timing of new product
introductions.
Discounting the net cash flows back to their present values is
based on the weighted average cost of capital ("WACC"). The
business enterprise is comprised of various types of assets, each
possessing different degrees of investment risk contributing to the
LCI's overall weighted average cost of capital. Intangible assets
are assessed higher risk factors due to their lack of liquidity and
poor versatility for redeployment elsewhere in the business.
Reasonable returns on monetary and fixed assets were estimated
based on prevailing interest rates. The process for quantifying
intangible asset investment risk involved consideration of the
uncertainty associated with realizing discernible cash flows over
the life of the asset. A discount rate of 19% was used for valuing
the in-process research and development. This discount rate is
higher than the implied WACC due to the inherent uncertainties
surrounding the successful development of the purchased in-process
technology, the useful life of such technology, the profitability
levels of such technology, and the uncertainty of technological
advances that are unknown at this time. As is standard in the
appraisal of high growth markets, projected revenues, expenses and
discount rates reflect the probability of technical and marketing
successes.
The value of the in-process projects was adjusted to reflect value
and contribution of the acquired research and development. In doing
so, consideration was given to the R&D's stage of completion, the
complexity of the
11
<PAGE>
work completed to date, the difficulty of completing the remaining
development, costs already incurred, and the projected cost to
complete projects.
Qwest believes that the foregoing assumptions used in the forecasts
were reasonable at the time of the merger. Qwest cannot assure,
however, that the underlying assumptions used to estimate expected
project sales, development costs or profitability, or the events
associated with such projects, will transpire as estimated. For
these reasons, actual results may vary from the projected results.
Qwest expects to continue their support of these efforts and
believes Qwest has a reasonable chance of successfully completing
the R&D programs. However, risk is associated with the completion
of the projects and Qwest cannot assure that the projects will meet
with either technological or commercial success.
If none of these projects is successfully developed, the sales and
profitability of Qwest may be adversely affected in future periods.
The failure of any particular individual project in-process would
not materially impact Qwest's financial condition, results of
operations or the attractiveness of the overall LCI investment.
Operating results are subject to uncertain market events and risks,
which are beyond Qwest's control, such as trends in technology,
government regulations, market size and growth, and product
introduction or other actions by competitors.
The developed technology and goodwill will be amortized on a
straight-line basis over 10 years and 40 years, respectively.
(3) On March 30, 1998, Qwest acquired Phoenix pursuant to a transaction whereby
each outstanding share of Phoenix common stock was exchanged for shares of
Qwest Common Stock having an aggregate market value equal to approximately
$27.2 million, and future payments of up to $4.0 million.
(4) On September 13, 1998 Qwest and Icon entered into a definitive merger
agreement (the "Icon Merger Agreement"). The Icon Merger Agreement provides
for the acquisition of Icon in a stock-for-stock merger, which will be
accounted for as a purchase. The actual number of shares of Qwest Common
Stock to be exchanged for each Icon share will be determined by dividing
$12 by a 15-day volume weighted average of trading prices for Qwest Common
Stock prior to the Icon stockholders meeting that will be held prior to
closing, but will not be less than .3200 shares (if Qwest's average stock
price exceeds $37.50) or more than .4444 shares (if Qwest's average stock
price is less than $27.00). The estimated number of shares of Qwest Common
Stock to be issued to Icon stockholders is 6 million shares (excluding 0.9
million shares to be issued upon the exercise of outstanding Icon stock
options and warrants assumed by Qwest). The proposed acquisition is subject
to certain closing conditions, including approval by the stockholders of
Icon.
(5) Represents the amortization of intangible assets from the preliminary Icon
purchase price allocation. The amortization is calculated using an
estimated useful life of 10 years. See note 6.
(6) The pro forma adjustment represents the purchase of the outstanding shares
of Icon common stock by Qwest, the incurrence of related transaction costs
and the initial purchase price allocation. The initial purchase price was
based upon an estimated value of $207.0 million for the Qwest Common Stock
to be issued in exchange for the outstanding shares of Icon common stock
and the assumption of the Icon stock options and an estimated $3.5 million
in transaction costs.
(7) Represents the amortization of goodwill that resulted from the preliminary
LCI purchase price allocation. Goodwill amortization is calculated using an
estimated useful life of 40 years. See note 2.
(8) Represents the amortization of developed technology that results from the
preliminary LCI purchase price allocation. Developed technology
amortization is calculated using an estimated useful life of 10 years. See
note 2.
(9) Represents the amortization of goodwill that resulted from the Phoenix
purchase price allocation. Goodwill amortization is calculated using an
estimated useful life of 15 years.
(10) Merger costs and the provision for in-process R&D are eliminated because
they are non-recurring in nature. Merger costs and the provision for
in-process R&D for Qwest are directly attributable to the LCI Merger. These
charges are non-deductible for federal tax purposes.
12
<PAGE>
(11) On October 22, 1997, Qwest acquired from an unrelated third party all the
outstanding shares of common stock, and common stock issued at the closing
of the acquisition of SuperNet for $20.0 million in cash. The acquisition
was accounted for using the purchase method of accounting, and the purchase
price was allocated on that basis to the net assets acquired. The
historical statement of operations of Qwest includes the operating results
of SuperNet beginning October 22, 1997. This pro forma adjustment
represents SuperNet's unaudited results of operations for the period
January 1, 1997 to October 21, 1997.
(12) Represents amortization for the period January 1, 1997 to October 21, 1997
of goodwill that resulted from the SuperNet purchase price allocation.
(13) Represents the reversal of merger costs recognized by LCI in the
acquisition of USLD Communications Corp., which had been accounted for
under the pooling-of-interests method.
(14) Represents the amortization of LCI debt premium over the 10-year life of
the underlying debt.
(15) Represents the assumed income tax effect of the pro forma adjustment
relating to the amortization of developed technology, the reversal of
historical merger costs and the amortization of debt premium.
(16) Effective with the LCI merger, Qwest is no longer included in the
consolidated federal income tax return of the Anschutz Company, Qwest's
majority shareholder. As a result, the tax sharing agreement with Anschutz
Company is no longer effective. Qwest previously recognized a deferred tax
asset attributable to its net operating loss carryforwards under the tax
sharing agreement.
Qwest currently believes the tax benefits previously recognized under the
tax sharing agreement may be realized through tax planning strategies.
Accordingly, any in-substance dividend resulting from the deconsolidation
from Anschutz Company is not expected to be material to the consolidated
balance sheet of Qwest.
(17) Transactions among Qwest, SuperNet, Phoenix, LCI and Icon are not
significant.
USE OF PROCEEDS
All of the Shares offered hereby are being offered by the Selling
Stockholders. Qwest will receive no part of the proceeds of any sales made
hereunder.
SELLING STOCKHOLDERS
The Shares offered hereby are or will be held by the persons or
entities listed in Annex A.
Qwest will pay all expenses in connection with the registration and
sale of the Shares, except any selling commissions or discounts allocable to
sales of the Shares, fees and disbursements of counsel and other representatives
of the Selling Stockholders, and any stock transfer taxes payable by reason of
any such sale.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale from time to time by the
selling stockholders identified in the section entitled "Selling Stockholders"
and Annex A and their respective pledges, donees and other successors in
interest (collectively, the "Selling Stockholders") of up to approximately
[______________] shares of Qwest Common Stock in the aggregate. The Shares may
be sold from time to time by the Selling Stockholders. Such sales may be made in
underwritten offerings or in open market or block transactions or otherwise on
any national securities exchange or automated interdealer quotation system on
which shares of Qwest Common Stock are then listed, including the Nasdaq, in the
over-the-counter market, in private transactions or otherwise at prices related
to prevailing market prices at the time of the sale or at negotiated prices.
Some or all of the Shares may be sold through brokers acting on behalf of the
Selling Stockholders or to dealers for resale by such dealers. In connection
with such sales, such brokers and dealers may receive compensation in the form
of discounts or commissions from the Selling Stockholders and may receive
commissions from the purchasers
13
<PAGE>
of such Shares for whom they act as broker or agent (which discounts and
commissions are not anticipated to exceed those customary in the types of
transactions involved). The Selling Stockholders may offer to sell and may sell
shares of Qwest Common Stock in options transactions or deliver such shares to
cover short sales "against the box." If necessary, a supplemental or amended
Prospectus will describe the method of sale in greater detail. In effecting
sales, brokers or dealers engaged by the Selling Stockholders and/or purchasers
of the Shares may arrange for other brokers or dealers to participate. In
addition, any of the Shares covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this Prospectus.
If the shares are sold in an underwritten offering, the shares will be
acquired by the underwriters for their own accounts and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or prices at the time of the sale or at negotiated
prices. Any initial public offering price and any discounts or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters may sell shares to or through brokers or dealers, and such brokers
and dealers may receive compensation in the form of discounts, commissions or
commissions from the underwriters and may receive commissions from the
purchasers of such shares for whom they act as broker or agent (which discounts
and commissions are not anticipated to exceed those customary in the types of
transactions involved).
Qwest has agreed to pay all expenses in connection with the
registration of the Shares. The Selling Stockholders are responsible for paying
any other selling expenses, including underwriting discounts and brokers'
commissions, and expenses of Selling Stockholders' counsel.
The number of Shares that may be actually sold by each Selling
Stockholder will be determined by each such Selling Stockholder, and may depend
upon a number of factors, including, among other things, the market price of the
Shares. Because each of the Selling Stockholders may offer all, some or none of
the Shares, and because the offering contemplated by this Prospectus is
currently not being underwritten, no estimate can be given as to the number of
Shares that will be held by each of the Selling Stockholders upon or prior to
termination of this offering. Accordingly, there can be no assurance that any of
the Selling Stockholders will sell any or all of their respective Shares.
The Selling Stockholders and any underwriter, broker or dealer who acts
in connection with the sale of the Shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any compensation received by them and any profit on any resale of the Shares as
principals may be deemed to be underwriting discounts and commissions under the
Securities Act.
In order to comply with the securities laws of certain jurisdictions,
the securities offered hereby will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
EXPERTS
The consolidated financial statements and schedule of Qwest
Communications International Inc. and subsidiaries as of December 31, 1997 and
1996 and for each of the years in the three-year period ended December 31, 1997
have been incorporated herein and in the Registration Statement by reference in
reliance upon the report pertaining to such consolidated financial statements,
dated February 24, 1998, except as to note 22, which is as of March 8, 1998, and
the report dated February 24, 1998 pertaining to such schedule, of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated herein and
in the Registration Statement by reference, and upon the authority of said firm
as experts in accounting and auditing.
The consolidated financial statements and schedules of LCI
International, Inc. and subsidiaries as of December 31, 1997 and 1996 and for
each of the years in the three-year period ended December 31, 1997 incorporated
by reference in this registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report dated February
16, 1998 (except with respect to the matter discussed in Note 15, as to which
the date is March 16, 1998) with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The consolidated financial statements of Phoenix Network, Inc. as of
December 31, 1997 and 1996 and for each of the years in the three-year period
ended December 31, 1997 incorporated by reference herein and in the Registration
14
<PAGE>
Statement have been audited by Grant Thornton LLP, independent certified public
accountants, as indicated in its reports with respect thereto, and are included
herein in reliance on the reports of Grant Thornton LLP and upon the authority
of said firm as experts in accounting and auditing.
The financial statements of SuperNet, Inc. as of June 30, 1997 and for
the year ended June 30, 1997 have been incorporated by reference in the
Registration Statement in reliance upon the report, dated September 26, 1997 of
Dollinger, Smith & Co., independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Icon CMT Corp. as of December
31, 1996 and 1997 and for each of the three years in the period ended December
31, 1997, have been incorporated in this Prospectus by reference to the
Registration Statement on Form S-4 of Qwest Communications International Inc.
(File No. 333-65095) filed September 30, 1998. Such financial statements, except
as they relate to Frontier Media Group, Inc. as of December 31, 1996 and 1997
and for each of the two years in the period ended December 31, 1997, have been
audited by PricewaterhouseCoopers LLP, independent accountants, and insofar as
they relate to Frontier Media Group, Inc. as of December 31, 1996 and 1997 and
for each of the two years in the period ended December 31, 1997, by Ernst &
Young LLP, independent accountants whose reports are incorporated by reference
herein. Such financial statements have been so incorporated in reliance on the
reports of such independent accountants given on the authority of such firms as
experts in auditing and accounting.
15
<PAGE>
ANNEX A
SELLING STOCKHOLDERS
================================================================================
NAME OF SHAREHOLDER NUMBER OF SHARES
- --------------------------------------------------------------------------------
1. Advent Euro-Italian Direct Investment Program L.P. [________]
- --------------------------------------------------------------------------------
2. Advent International Investors II Limited Partnership [________]
- --------------------------------------------------------------------------------
3. Advent Partners Limited Partnership [________]
- --------------------------------------------------------------------------------
4. Algard Offset A/S 1,024
- --------------------------------------------------------------------------------
5. Amundsen, Une 6,146
- --------------------------------------------------------------------------------
6. Anthonsen, Pal S. 3,325
- --------------------------------------------------------------------------------
7. AS Bonheur [________]
- --------------------------------------------------------------------------------
8. AS Ganger Rolf [________]
- --------------------------------------------------------------------------------
9. AS Peak 256
- --------------------------------------------------------------------------------
10. Ask, Aksjeklubben 1,024
- --------------------------------------------------------------------------------
11. Asplem, Arne 10,376
- --------------------------------------------------------------------------------
12. Avanti A/S 6,146
- --------------------------------------------------------------------------------
13. Bakke, Vidar 4,892
- --------------------------------------------------------------------------------
14. Bauer-Nilsen, Trygve 14,998
- --------------------------------------------------------------------------------
15. Bergstad, Ide 3,800
- --------------------------------------------------------------------------------
16. Bilse, Per 668
- --------------------------------------------------------------------------------
17. Bjerke, Jon Petter 37,301
- --------------------------------------------------------------------------------
18. Bloch, Laurent 8,832
- --------------------------------------------------------------------------------
19. Boyesen, Dag 948
- --------------------------------------------------------------------------------
20. Breistoel, Ole Byoern 512
- --------------------------------------------------------------------------------
21. Burget, Ivo 22,243
- --------------------------------------------------------------------------------
22. Capy, Francis 40,749
- --------------------------------------------------------------------------------
23. Charterhouse Venture Nominees Limited [________]
- --------------------------------------------------------------------------------
24. Chytil, Georg 668
- --------------------------------------------------------------------------------
25. Companiet AS 8,195
- --------------------------------------------------------------------------------
26. Dax, Philippe 8,832
- --------------------------------------------------------------------------------
27. De Becker, Geert 6,791
- --------------------------------------------------------------------------------
28. De Brouwer, Walter 17,633
- --------------------------------------------------------------------------------
29. de Vos, Luc, Director, EUnet 83,925
================================================================================
A-1
<PAGE>
================================================================================
NAME OF SHAREHOLDER NUMBER OF SHARES
- --------------------------------------------------------------------------------
30. Den Norske Krigforsikring for SKIB [________]
- --------------------------------------------------------------------------------
31. Devillers, Yves 82,245
- --------------------------------------------------------------------------------
32. Ellingsen, Ragnhild S 307
- --------------------------------------------------------------------------------
33. Eschle, Patrik 70,577
- --------------------------------------------------------------------------------
34. Fischer, Niels 3,503
- --------------------------------------------------------------------------------
35. FNET 33,119
- --------------------------------------------------------------------------------
36. Four Seasons Venture II AS [________]
- --------------------------------------------------------------------------------
37. Gallagher & Robertson A/S 3,800
- --------------------------------------------------------------------------------
38. Global Private Equity II Europe Limited Partnership [________]
- --------------------------------------------------------------------------------
39. Global Private Equity II Limited Partnership [________]
- --------------------------------------------------------------------------------
40. Global Private Equity II - PGGM Limited Partnership [________]
- --------------------------------------------------------------------------------
41. Goson, Aksjekubben 717
- --------------------------------------------------------------------------------
42. Guidon, Jacques 8,832
- --------------------------------------------------------------------------------
43. Haberler, Michael, Director, EUnet 250
- --------------------------------------------------------------------------------
44. Harmes, David, Director, EUnet 7,519
- --------------------------------------------------------------------------------
45. Hartman, Michael 584
- --------------------------------------------------------------------------------
46. Hartog & Co. AS [________]
- --------------------------------------------------------------------------------
47. Haukeboe, Kari 1280
- --------------------------------------------------------------------------------
48. Haukeboe, Tove 1280
- --------------------------------------------------------------------------------
49. Helledal, Britt 256
- --------------------------------------------------------------------------------
50. Hellum, Steffen 668
- --------------------------------------------------------------------------------
51. Helsingius, Johan, Director, EUnet 272,372
- --------------------------------------------------------------------------------
52. Herding, Bjorn 10,921
- --------------------------------------------------------------------------------
53. Herdlicka, Herbert, Director, EUnet 751
- --------------------------------------------------------------------------------
54. Hursti, Harri 39,598
- --------------------------------------------------------------------------------
55. Ionescu, Liviu-Grigore 14,841
- --------------------------------------------------------------------------------
56. IT Forum V/Sandnes Assurance 4,097
- --------------------------------------------------------------------------------
57. Ivanoff, Michael 1,774
- --------------------------------------------------------------------------------
58. Jambresic, Neven 1,167
- --------------------------------------------------------------------------------
59. James Omand, William Schmidt, and Gisle Naurstadt
jointly, as Shareholder Representatives under the
Transaction Agreement dated March 26, 1998 among Qwest
Communications International Inc. and certain
shareholders of EUnet International Limited. 26,726
================================================================================
A-2
<PAGE>
================================================================================
NAME OF SHAREHOLDER NUMBER OF SHARES
- --------------------------------------------------------------------------------
60. Jucker, Beat 7,004
- --------------------------------------------------------------------------------
61. Klingsheim, Kare 2,048
- --------------------------------------------------------------------------------
62. Lagauw, Martin 82,923
- --------------------------------------------------------------------------------
63. Laine, Arttu Pekka 870
- --------------------------------------------------------------------------------
64. Larilahti, Jyrki 668
- --------------------------------------------------------------------------------
65. Laurent-Ricard, Eric 53,292
- --------------------------------------------------------------------------------
66. Lucas, Humberto, Director, EUnet 91,729
- --------------------------------------------------------------------------------
67. Lucas, Pedros 8,832
- --------------------------------------------------------------------------------
68. Lyseggen, Jorn 668
- --------------------------------------------------------------------------------
69. Magnar, Helleren 4,036
- --------------------------------------------------------------------------------
70. Man. Risk AS 22,858
- --------------------------------------------------------------------------------
71. Martinsen, Dag Leo 1,024
- --------------------------------------------------------------------------------
72. Muller, Jan 62,284
- --------------------------------------------------------------------------------
73. Myrvang, Eirik 256
- --------------------------------------------------------------------------------
74. Naurstad, Gisle, Director, EUnet 50,809
- --------------------------------------------------------------------------------
75. Nesbak, Kristian 512
- --------------------------------------------------------------------------------
76. Niessner, Herbert 1,167
- --------------------------------------------------------------------------------
77. Novak, Petr 11,122
- --------------------------------------------------------------------------------
78. NUUG 33,251
- --------------------------------------------------------------------------------
79. Ogreied, Magne 409
- --------------------------------------------------------------------------------
80. Ojala, Petri 40,315
- --------------------------------------------------------------------------------
81. Olsen, Borge 753
- --------------------------------------------------------------------------------
82. Omand, Ann 2,048
- --------------------------------------------------------------------------------
83. Omand, James, Chairman of the Board of EUnet 42,685
- --------------------------------------------------------------------------------
84. Omand, Jennifer 2,048
- --------------------------------------------------------------------------------
85. Orsag, Jiri 62,868
- --------------------------------------------------------------------------------
86. Orshoven, Jan Van 82,409
- --------------------------------------------------------------------------------
87. Ose, Torbjorn 1,514
- --------------------------------------------------------------------------------
88. Pebriga AS 2,048
- --------------------------------------------------------------------------------
89. Pieters, Eric 82,409
- --------------------------------------------------------------------------------
90. Poole, Simon, Director, EUnet 97,190
- --------------------------------------------------------------------------------
91. Rahiala, Esko 39,598
================================================================================
A-3
<PAGE>
================================================================================
NAME OF SHAREHOLDER NUMBER OF SHARES
- --------------------------------------------------------------------------------
92. Ramont, Gracy 2,958
- --------------------------------------------------------------------------------
93. Reistad, Morten 35,808
- --------------------------------------------------------------------------------
94. Robustelli, Daniela 668
- --------------------------------------------------------------------------------
95. Rosendorf, Pavel, Director, EUnet 65,674
- --------------------------------------------------------------------------------
96. Ruef, Beni 1,899
- --------------------------------------------------------------------------------
97. Schartner, Thomas 668
- --------------------------------------------------------------------------------
98. Schiotz, Victoria 256
- --------------------------------------------------------------------------------
99. Seska AS [________]
- --------------------------------------------------------------------------------
100. Setsaas, Peter 2,048
- --------------------------------------------------------------------------------
101. Sikveland, Siguvd 614
- --------------------------------------------------------------------------------
102. Simask AS [________]
- --------------------------------------------------------------------------------
103. Skarland, Eiendom 1,229
- --------------------------------------------------------------------------------
104. Skarland Finans AS 819
- --------------------------------------------------------------------------------
105. Skarland, Svein 1,229
- --------------------------------------------------------------------------------
106. Skaufoss AS [________]
- --------------------------------------------------------------------------------
107. Skjefstad, Bente 668
- --------------------------------------------------------------------------------
108. Storrosten, Dag Ole 2,001
- --------------------------------------------------------------------------------
109. Sveinaas AS 819
- --------------------------------------------------------------------------------
110. Svemona AS 2,048
- --------------------------------------------------------------------------------
111. Tjetland, Bjorn G 2,048
- --------------------------------------------------------------------------------
112. Torp, Stein 256
- --------------------------------------------------------------------------------
113. Treindl, Alois 35,605
- --------------------------------------------------------------------------------
114. Triton A/S 1,024
- --------------------------------------------------------------------------------
115. TronderEnergi 4,097
- --------------------------------------------------------------------------------
116. Tvenge, Torstein [________]
- --------------------------------------------------------------------------------
117. Uranus Invest AS [________]
- --------------------------------------------------------------------------------
118. Van, Jean-Claude 8,832
- --------------------------------------------------------------------------------
119. Van Braekel, Luc 26,451
- --------------------------------------------------------------------------------
120. van Loock, Rudi 417
- --------------------------------------------------------------------------------
121. Vesta Forsikrung AS [________]
- --------------------------------------------------------------------------------
122. Vink, Erwin Willem, Director, EUnet 12,952
- --------------------------------------------------------------------------------
123. Wild, Markus 417
================================================================================
A-4
<PAGE>
================================================================================
NAME OF SHAREHOLDER NUMBER OF SHARES
- --------------------------------------------------------------------------------
124. Wurtz, Michel 8,832
- --------------------------------------------------------------------------------
125. Xnet Netzwerkservice GmbH 397,762
- --------------------------------------------------------------------------------
126. Zamfir, Elena 14,841
- --------------------------------------------------------------------------------
127. Zubickova, Zdenka 835
================================================================================
A-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a schedule of the estimated expenses to be incurred by
Qwest in connection with this offering of the Shares of Qwest Common Stock
registered hereby:
SEC registration fee....................................$42,558.00*
Stock exchange listing fees.............................$17,500.00
Legal fees and expenses.................................$20,000.00*
Transfer agent's fees and expenses......................$ 2,000.00*
----------
Total................................................$82,058.00*
==========
- ----------
* Estimated.
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer or director of such corporation or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, if such
officer or director acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe such officer's or director's conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his or her duty. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify such officer or
director against the expense which such officer or director actually and
reasonably incurred.
In accordance with Section 102(b)(7) of the DGCL, the Amended and
Restated Certificate of Incorporation of Qwest, as amended (the "Qwest
Certificate of Incorporation"), provides that directors shall not be personally
liable for monetary damages for breaches of their fiduciary duty as directors
except for (i) breaches of their duty of loyalty to Qwest or its stockholders,
(ii) acts or omissions not in good faith or which involve intentional misconduct
or knowing violations of law, (iii) certain transactions under Section 174 of
the DGCL (unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) transactions from which a director derives an improper
personal benefit. The effect of this provision is to eliminate the personal
liability of directors for monetary damages for actions involving a breach of
their fiduciary duty of care, including any actions involving gross negligence.
The Qwest Certificate of Incorporation and the Bylaws of Qwest
(the "Qwest Bylaws") provide for indemnification of Qwest's officers and
directors to the fullest extent permitted by applicable law, except that the
Qwest Bylaws provide that Qwest is required to indemnify an officer or director
in connection with a proceeding initiated by such person only if the proceeding
was authorized by the Board of Directors of Qwest. In addition, Qwest maintains
insurance policies which provide coverage for its officers and directors in
certain situations where Qwest cannot directly indemnify such officers or
directors.
Pursuant to Section 145 of the DGCL and the Qwest Certificate of
Incorporation and the Qwest Bylaws, Qwest maintains directors' and officers'
liability insurance coverage.
II-1
<PAGE>
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this Registration
Statement:
Exhibit No. Description
- ----------- -----------
3.1** Amended and Restated Certificate of Incorporation of Qwest.
3.2 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Qwest (previously filed).
3.3 Bylaws of Qwest (incorporated by reference to exhibit 3 in
Qwest's Form 10-Q for the quarter ended September 30, 1997
(File No. 000-22609)).
4.1(a)*** Indenture dated as of October 15, 1997 with Bankers Trust
Company (including form of Qwest's 9.47% Senior Discount Notes
due 2007 and 9.47% Series B Senior Discount Notes due 2007 as
an exhibit thereto).
4.1(b)**** Indenture dated as of August 28, 1997 with Bankers Trust
Company (including form of Qwest's 10 7/8% Series B Senior
Notes due 2007 as an exhibit thereto).
4.1(c)**** Indenture dated as of January 29, 1998 with Bankers Trust
Company (including form of Qwest's 8.29% Senior Discount Notes
due 2008 and 8.29% Series B Senior Discount Notes due 2008 as
an exhibit thereto).
4.2**** Registration Agreement dated January 29, 1998 with Salomon
Brothers Inc relating to Qwest's 8.29% Senior Discount Notes
due 2008.
4.3 Third Amended and Restated Credit Agreement, dated as of
September 5, 1997, by and among LCI International Inc., First
Union National Bank, Nationsbank of Texas, N.A., and the Bank
of New York (incorporated by reference to exhibit 4(c)(xv) in
LCI's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997).
4.4 Indenture dated as of June 23, 1997 between LCI
International, Inc., and First Trust National Association, as
trustee, Providing for the Issuance of Senior Debt
Securities, including Resolutions of the Pricing Committee of
the Board of Directors establishing the terms of the 7.25%
Senior Notes due June 15, 2007 (incorporated by reference to
exhibit 4(c) in LCI's Current Report on Form 8-K dated June
23, 1997).
5.1 Opinion of O'Melveny & Myers LLP with respect to the legality
of the Qwest Common Stock being registered (previously
filed).
10.1** Growth Share Plan, as amended, effective October 1, 1996.
10.2** Employment Agreement dated December 21, 1996 with Joseph P.
Nacchio.
10.3** Promissory Note dated November 20, 1996 and Severance
Agreement dated December 1, 1996 with Robert S. Woodruff.
10.4**** Equity Compensation Plan for Non-Employee Directors.
10.5**+ IRU Agreement dated as of October 18, 1996 with Frontier
Communications International Inc.
10.6**+ IRU Agreement dated as of February 26, 1996 with WorldCom
Network Services, Inc.
10.7**+ IRU Agreement dated as of May 2, 1997 with GTE.
10.8** Equity Incentive Plan.
10.9**** Employment Agreement dated March 7, 1997 with Stephen M.
Jacobsen.
10.10**** Employment Agreement dated October 8, 1997 with Lewis O.
Wilks.
10.11**** Employment Agreement dated September 26, 1997 with Brij
Khandelwal.
10.12**** Employment Agreement dated September 19, 1997 with Larry
Seese.
10.13**** Growth Share Plan Agreement with Joseph P. Nacchio, effective
January 1, 1997, and Amendment thereto.
10.14**** Non-Qualified Stock Option Agreement with Joseph P. Nacchio,
effective June 1997.
10.15 Employment Agreement, dated as of October 18, 1993, between
LCI International Management Services, Inc. and Joseph A.
Lawrence (incorporated by reference to LCI's Annual Report on
Form 10-K for the year ended December 31, 1994).*
10.16 LCI International, Inc. 1992 Stock Option Plan (incorporated
by reference to LCI's Registration Statement No. 33-60558).*
10.17 LiTel Communications, Inc. 1993 Stock Option Plan
(incorporated by reference to LCI's Registration Statement No.
33-60558).*
10.18 LCI International, Inc. 1994/1995 Stock Option Plan
(incorporated by reference to LCI's Annual Report on Form 10-K
for the year ended December 31, 1993).*
10.19 LCI International, Inc. and Subsidiaries Nonqualified Stock
Option Plan for Directors (incorporated by reference to LCI's
Registration Statement No. 33-67368).*
II-2
<PAGE>
10.20 LCI International, Inc. 1995/1996 Stock Option (incorporated
by reference to LCI's Proxy Statement for the 1995 Annual
Meeting of Shareowners).*
10.21 Employment Agreement, dated as of March 20, 1994, between LCI
International, Inc. and H. Brian Thompson (incorporated by
reference to LCI's Annual Report on Form 10-K for the year
ended December 31, 1994).*
10.22 LCI International Management Services, Inc. Supplemental
Executive Retirement Plan (incorporated by reference to LCI's
Quarterly Report on Form 10-Q for the quarter ended March 31,
1995).*
10.23 Employment Agreement, dated as of October 1, 1995 between LCI
International Management Services, Inc., and Larry Bouman
(incorporated by reference to exhibit 10(1)(xviii) in LCI's
Annual Report on Form 10-K for the year ended December 31,
1995).*
10.24 1997/1998 LCI International, Inc. Stock Option Plan
(incorporated by reference to exhibit 10(1)(xxi) in LCI's
Annual Report on Form 10-K for the year ended December 31,
1996).*
10.25 LCI International, Inc. and Subsidiaries Executive Incentive
Compensation Plan (incorporated by reference to exhibit
10(1)(xxii) in LCI's Annual Report on Form 10-K for the year
ended December 31, 1996).*
10.26 Contractor Agreement dated January 18, 1993 by and between LCI
International Telecom Corp. and American Communications
Network, Inc. (incorporated by reference to LCI's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995).
Portions of this exhibit have been omitted pursuant to a
request for confidential treatment.*
10.27 Transfer and Administrative Agreement among Enterprise Funding
Corporation, LCI SPC I, Inc., LCI International Telecom Corp.,
NationsBank, N.A. and certain other parties thereto, dated
August 29, 1996 (incorporated by reference to exhibit 10(r)(i)
in LCI's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996).
10.28 Receivables Purchase Agreement dated August 29, 1996, among
LCI International Telecom Corp. and LCI SPC I, Inc.
(incorporated by reference to exhibit 10(r)(ii) in LCI's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1996).
10.29 Subordinated Intercompany Revolving Note, dated August 29,
1996, issued to LCI International Telecom Corp. by LCI SPC I,
Inc. (incorporated by reference to exhibit 10(r)(iii) in LCI's
Quarterly Report on Form 10-Q for the quarter ended September
30, 1996).
10.30 Support Agreement, dated August 29, 1996, by LCI
International, Inc. in favor of LCI SPC I, Inc. (incorporated
by reference to exhibit 10(r)(iv) in LCI's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1996).
10.31 Participation Agreement dated as of November 1996 among LCI
International, Inc., as the Construction Agent and as the
Lessee, First Security Bank, National Association, as the
Owner Trustee under the Stuart Park Trust the various banks
and lending institutions which are parties thereto from time
to time as the Holders, the various banks and lending
institutions which are parties thereto from time to time as
the Lenders and NationsBank of Texas, N.A., as the Agent for
the Lenders (incorporated by reference to exhibit 10(s)(i) in
LCI's Annual Report on Form 10-K for the year ended December
31, 1996).
10.32 Unconditional Guaranty Agreement dated as of November 15, 1996
made by LCI International, Inc., as Guarantor in favor of
NationsBank of Texas, N.A., as Agent for the ratable benefit
of the Tranche A Lenders (incorporated by reference to exhibit
10(s)(ii) in LCI's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.33 Agency Agreement between LCI International, Inc., as the
Construction Agent and First Security Bank, National
Association, as the Owner Trustee under the Stuart Park Trust
as the Lessor dated as of November 15, 1996 (incorporated by
reference to exhibit 10(s)(iii) in LCI's Annual Report on Form
10-K for the year ended December 31, 1996).
10.34 Deed of Lease Agreement dated as of November 15, 1996 between
First Security Bank, National Association as the Owner Trustee
under the Stuart Park Trust, as Lessor and LCI International,
Inc. as Lessee (incorporated by reference to exhibit 10(s)(iv)
in LCI's Annual Report on Form 10-K for the year ended
December 31, 1996).
21.1 Subsidiaries of the Registrant (incorporated by reference to
the exhibit of the same number in Form S-4 filed September 30,
1998).
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Grant Thornton LLP.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Dollinger, Smith & Co.
23.7 Consent of O'Melveny & Myers LLP (contained in exhibit 5.1).
II-3
<PAGE>
24.1 Power of Attorney (previously filed).
(ii) Financial Statement Schedules. The following is a complete list of
Financial Statement Schedules filed as part of this Registration Statement:
Schedule IIA Qwest Communications International Inc. Valuation and Qualifying
Accounts.++
Schedule IIB LCI International, Inc. Valuation and Qualifying Accounts.++
Schedule IIC Icon CMT Corporation Valuation and Qualifying Accounts
(incorporated by reference to the exhibit of the same number in Form S-4 filed
September 30, 1998).
- ----------------
* Indicates executive compensation plans and arrangements.
** Incorporated by reference to the exhibit of the same number in Form S-1 as
declared effective on June 23, 1997 (File No. 333-25391).
*** Incorporated by reference to exhibit 4.1 in Form S-4 as declared effective
on January 5, 1998 (File No. 333-42847).
**** Incorporated by reference to the exhibit of the same number in Qwest's Form
10-K for the year ended December 31, 1997.
+ Portions have been omitted pursuant to a request for confidential
treatment.
++ Incorporated by reference herein from Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333- 49915) filed by Qwest on May 13, 1998.
Item 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-4
<PAGE>
SIGNATURES
PURSUANT THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
QWEST COMMUNICATIONS INTERNATIONAL INC. HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON NOVEMBER 13, 1998.
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/ ROBERT S. WOODRUFF
------------------------------------
Name: Robert S. Woodruff
Title: Executive Vice President--Finance
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Capacity Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ PHILIP F. ANSCHUTZ* Chairman of the Board November 13, 1998
- ------------------------
PHILIP F. ANSCHUTZ
/s/ H. BRIAN THOMPSON* Vice Chairman of the Board November 13, 1998
- ------------------------
H. BRIAN THOMPSON
/s/ JOSEPH P. NACCHIO* Director, President and November 13, 1998
- ------------------------ Chief Executive Officer
JOSEPH P. NACCHIO (Principal Executive
Officer)
/s/ ROBERT S. WOODRUFF Director and Executive November 13, 1998
- ------------------------ Vice President--
ROBERT S. WOODRUFF Finance and Chief
Financial Officer and
Treasurer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ CANNON Y. HARVEY* Director November 13, 1998
- ------------------------
CANNON Y. HARVEY
/s/ JORDAN L. HAINES* Director November 13, 1998
- ------------------------
JORDAN L. HAINES
/s/ DOUGLAS M. KARP* Director November 13, 1998
- ------------------------
DOUGLAS M. KARP
/s/ VINOD KHOSLA* Director November 13, 1998
- ------------------------
VINOD KHOSLA
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Signature Capacity Date
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ RICHARD T. LIEBHABER* Director November 13, 1998
- -------------------------
RICHARD T. LIEBHABER
/s/ DOUGLAS L. POLSON* Director November 13, 1998
- ----------------------
DOUGLAS L. POLSON
/s/ CRAIG D. SLATER* Director November 13, 1998
- --------------------
CRAIG D. SLATER
/s/ W. THOMAS STEPHENS* Director November 13, 1998
- -----------------------
W. THOMAS STEPHENS
/s/ ROY A. WILKENS* Director November 13, 1998
- -----------------------
ROY A. WILKENS
</TABLE>
*By: /s/ ROBERT S. WOODRUFF, AS ATTORNEY-IN-FACT
--------------------------------------------
ROBERT S. WOODRUFF
II-6
<PAGE>
QWEST COMMUNICATIONS INTERNATIONAL INC.
INDEX TO EXHIBITS
Exhibit
Number Exhibit Description
- ------ -------------------
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Grant Thornton LLP.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Dollinger, Smith & Co.
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Qwest Communications International Inc.:
We consent to the use of our report, dated February 24, 1998, except as
to note 22, which is as of March 8, 1998, relating to the consolidated balance
sheets of Qwest Communications International Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, incorporated herein by reference, and
of our report, dated February 24, 1998, pertaining to the related consolidated
financial statement schedule incorporated herein by reference, and to the
reference to our firm under the heading "EXPERTS" in the Registration Statement.
KPMG PEAT MARWICK LLP
Denver, Colorado
November 13, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
February 16, 1998 (except with respect to the matter discussed in Note 15, as to
which the date is March 16, 1998) included in Qwest Communications International
Inc.'s Amendment No. 1 to Form S-4 Registration No. 333-49915 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Columbus, Ohio
November 12, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 19, 1998, accompanying the
consolidated financial statements of Phoenix Network, Inc. and subsidiaries as
of December 31, 1996 and 1997 and for each of the three years in the period
ended December 31, 1997, appearing in the Registration Statement. We hereby
consent to the use of our report on the aforementioned consolidated financial
statements in the Registration Statement and to the use of our name as it
appears under the caption "EXPERTS."
GRANT THORNTON LLP
Denver, Colorado
November 13, 1998
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of Qwest
Communications International Inc. of our report dated March 6, 1998, except as
to the acquisition and restatement described in Note 2, which is as of September
30, 1998, relating to the consolidated financial statements of Icon CMT Corp.,
which appears in on page F-2 of the Registration Statement on Form S-4 of Qwest
Communications International Inc. (File No. 333-65095) dated September 30, 1998.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PricewaterhouseCoopers LLP
Stamford, Connecticut
November 13, 1998
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-58617) and
Prospectus of Qwest Communications International Inc. and to the incorporation
by reference therein of our report dated February 14, 1998 with respect to the
financial statements of Frontier Media Group, Inc. included in the Registration
Statement of Qwest Communications International Inc. (Form S-4 No. 333-65095)
dated September 30, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
----------------------------
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
November 11, 1998
EXHIBIT 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statement of Qwest Communications International Inc. on Form S-3 of our report
dated September 26, 1997 relating to the balance sheet of SuperNet, Inc. as of
June 30, 1997 and the related statements of operations, changes in stockholder's
equity and cash flows for the year then ended. We also consent to the reference
to us under the heading "EXPERTS" in such Registration Statement.
DOLLINGER, SMITH & CO.
Englewood, Colorado
November 13, 1998
