SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 31, 2000
QWEST COMMUNICATIONS INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
000-22609 84-1339282
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(Commission File Number) (IRS Employer Identification No.)
1801 California Street Denver, Colorado 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-992-1400
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 31, 2000, Qwest Communications International Inc. ("Qwest") hosted a
meeting with investors, financial analysts, other market professionals and
reporters during which it discussed, among other things, its business,
operations and expected financial results for future periods. As previously
announced, the webcast of the call (live and replay) is accessible on Qwest's
website.
At the meeting, among other things, Qwest announced its current views on the
following:
o Qwest was comfortable with the consensus of analysts' estimates for the
period 1998 through 2002 (1998 and 1999 numbers are historical, and not
estimates), which estimated the CAGR (compounded average growth rate) for pro
forma normalized revenue to be approximately 15.8% and EBITDA (earnings
before interest, taxes, depreciation and amortization) to be approximately
16.6%. As previously announced, the pro forma normalized numbers reflect the
acquisition of U S WEST, Inc. ("U S WEST") as if it had occurred at the
beginning of the periods indicated, and give effect to the divestiture of the
in-region interLATA revenue (approximately $155 million for the six months
ended June 30, 2000), the elimination of any construction services revenue of
Qwest in prior periods, and the elimination of one-time and merger related
charges.
o Qwest expected that it would meet or exceed its previously announced targets
of 15% to 17% CAGR for pro forma normalized revenue and almost 20% for EBITDA
over the period 2000 through 2005. Meeting those targets would take revenue
from $19 billion in 2000 to $38 billion to $42 billion in 2005, and EBITDA
from $7.4 billion in 2000 to $18 billion to $19 billion in 2005.
o Qwest expected $2.3 billion to $2.7 billion of incremental revenue in 2001
(over 2000), and it expected the various products to represent approximate
percentages as described below:
Products Percentage Range
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IP/Data 50% - 55%
Wireless 20% - 25%
Hosting and Applications 10% - 15%
Broadband Access 3% - 5%
Voice 5% - 8%
Directory/Other 3% - 5%
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o Qwest expected that it was likely to over-perform against its previously
announced synergy targets (for its acquisition of U S WEST). The synergy
targets were announced on July 19, 1999. Qwest did not indicate the amount by
which it expected to over-perform, and will not necessarily over-perform
equally in each category of synergies.
o Qwest expected that its annual capital expenditures for 2002 and beyond would
be in the $9.5 billion to $10 billion range. Qwest made this statement in
response to a question from the audience, and said that this estimate was
very preliminary and was based, among other things, on the current levels of
expenditures for the construction of CyberCenters(SM), the expansion of its
CLEC/DLEC business outside its 14-state local service territory and its
investment in its local and global network.
o Generally, Qwest seeks a threshold IRR (internal rate of return) of
approximately 35% in approving specific projects or initiatives. However,
Qwest may approve projects or initiatives that have a target IRR that is less
than the threshold IRR. Qwest cautions that, even if it believes when a
project or initiative is approved that the project or initiative is likely to
achieve or exceed a target IRR, the timing and amount of the actual returns,
if any, that Qwest may realize from the project or initiative may be
significantly different from the timing and amount of returns implied by the
target IRR, and that the differences may be material and adverse.
o In response to several questions regarding possible asset sales, Qwest said
that following the acquisition of U S WEST, it had evaluated all of its
combined assets. With respect to a possible sale of its Dex unit, Qwest said
that any sale of Dex would be complicated by the regulatory and tax
implications of the sale. With respect to the possible sale of rural access
lines, Qwest said that given the correct set of circumstances, and depending
on the buyer, timing, price, net proceeds to Qwest after considering taxes,
governmental conditions and other items, and other aspects of any
transaction, it would be willing to consider the sale of up to "a couple
million" access lines in its 14-state service territory. Qwest has
approximately 17.5 million access lines, of which it has entered into
definitive agreements to sell approximately 570,000 lines. The pending sales
are subject to regulatory approvals and other customary closing conditions.
Qwest cannot provide any assurance that any asset sales, if consummated, will
be made at an acceptable price or in a timely manner. Qwest cautions that the
sales will likely be subject to the approval of certain federal and state
regulatory authorities and that any approvals, if granted, could be subject
to conditions that could adversely affect the benefits to Qwest of completing
the sales and could be otherwise burdensome. The conditions could include,
but are not necessarily limited to, requirements that Qwest apply a portion
of the sales proceeds for additional investments in certain states or to
reduce charges in such states. The amounts of such investments or rate
reductions could be significant and uneconomic. In addition, with respect to
any sale of certain of the access lines, depending upon the number of access
lines and purchasers, the purchasers may become subject to additional
regulatory requirements, including but not limited to those imposed upon
incumbent local exchange carriers, which could limit the number of potential
purchasers or the price any purchasers might be willing to pay.
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o Qwest's priorities for 2001 and 2002 are: meet or beat financial targets;
grow new product areas; improve service; re-enter long distance; expand
globally; and operate with excellence.
By including any information in this Current Report on Form 8-K, Qwest does not
necessarily acknowledge that the information is material.
FORWARD LOOKING STATEMENTS WARNING
This Current Report on Form 8-K contains projections and other forward-looking
statements that involve risks and uncertainties. These statements may differ
materially from actual future events or results. Readers are referred to the
documents filed by Qwest with the Securities and Exchange Commission,
specifically the most recent reports which identify important risk factors that
could cause actual results to differ from those contained in the forward-looking
statements, including potential fluctuations in quarterly results, volatility of
Qwest's stock price, intense competition in the communications services market,
changes in demand for Qwest's products and services, dependence on new product
development and acceleration of the deployment of advanced new services, such as
broadband data, wireless and video services, which could require substantial
expenditure of financial and other resources in excess of contemplated levels,
rapid and significant changes in technology and markets, adverse changes in the
regulatory or legislative environment affecting Qwest's business and delays in
Qwest's ability to provide interLATA services within its 14-state local service
territory, failure to maintain rights of way, and failure to achieve the
projected synergies and financial results expected to result from the
acquisition of U S WEST timely or at all and difficulties in combining the
operations of the Registrant and U S WEST. This Current Report on Form 8-K
includes analysts' estimates and other information prepared by third parties for
which Qwest assumes no responsibility. Qwest undertakes no obligation to review
or confirm analysts' expectations or estimates or to release publicly any
revisions to any forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QWEST COMMUNICATIONS INTERNATIONAL INC.
DATE: November 3, 2000 By: /s/ YASH A. RANA
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Yash A. Rana
Associate General Counsel and Assistant
Secretary
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