<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 11-K
ANNUAL REPORT
____________________
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
____________________
For the Period from January 1, 1999 to December 31, 1999
_____________________
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
Commission File No. 000-22609
______________________
QWEST COMMUNICATIONS INTERNATIONAL INC.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
(Name of issuer of securities held pursuant to the plan and address of its
principal executive office)
================================================================================
<PAGE>
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
----------------------------------------
INDEX TO FINANCIAL STATEMENTS AND
---------------------------------
SUPPLEMENTAL SCHEDULE
---------------------
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1999 and January 1, 1999 (Plan Inception) 2
Statement of Changes in Net Assets Available for
Plan Benefits for the Period from January 1, 1999 (Plan Inception)
to December 31, 1999 3
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE 4-8
SUPPLEMENTAL SCHEDULE:
Schedule I--Schedule of Assets Held for Investment Purposes
as of December 31, 1999 9-11
</TABLE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Participants and Plan Administrative Committee of the
Qwest Communications 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the QWEST COMMUNICATIONS 401(k) SAVINGS PLAN (the "Plan") as of
December 31, 1999 and January 1, 1999 (Plan Inception), and the related
statement of changes in net assets available for plan benefits for the period
from January 1, 1999 (Plan Inception) to December 31, 1999. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and January 1, 1999 (Plan Inception), and the changes in net
assets available for benefits for the period from January 1, 1999 (Plan
Inception) to December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ Arthur Andersen LLP
Denver, Colorado,
June 26, 2000.
-1-
<PAGE>
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
----------------------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
----------------------------------------------------
AS OF DECEMBER 31, 1999 AND JANUARY 1, 1999 (PLAN INCEPTION)
------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, January 1,
1999 1999
------------ ---------
INVESTMENTS (Notes 2 and 3):
<S> <C> <C>
Cash $ 5,680 $ -
Money market fund 147,017 -
Mutual funds 34,141,190 -
Collective trusts 13,972,580 -
Common stock 420,510 -
Employer stock 40,089,418 -
Participant loans 1,948,306 -
----------- ---------
Total investments 90,724,701 -
RECEIVABLES:
Loan repayments 22,331 -
Participant contributions 574,379 -
Employer contributions 145,171 -
----------- ---------
Total receivables 741,881 -
ACCRUED INCOME 6,524 -
CASH OVERDRAFT PAYABLE (670,525) -
----------- ---------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $90,802,581 $ -
=========== =========
</TABLE>
The accompanying notes are an integral part of these statements.
-2-
<PAGE>
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
----------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
--------------------------------------------------------------
FOR THE PERIOD FROM JANUARY 1, 1999 (PLAN INCEPTION)
-----------------------------------------------------
TO DECEMBER 31, 1999
--------------------
<TABLE>
<CAPTION>
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
<S> <C>
Contributions-
Participant $19,695,543
Employer 4,487,021
Rollovers 8,500,709
Investment income-
Interest and dividends 1,120,581
Net appreciation in fair value of investments (Note 3) 4,553,605
Other 31,233
-----------
Total additions 38,388,692
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants (8,350,203)
Administrative fees and investment expenses (8,640)
-----------
Total deductions (8,358,843)
MERGERS INTO THE PLAN (Note 1) 60,772,732
-----------
Net increase 90,802,581
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of period -
-----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
end of period $90,802,581
===========
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
----------------------------------------
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
-------------------------------------------------------
AS OF DECEMBER 31, 1999 AND JANUARY 1, 1999 (PLAN INCEPTION)
------------------------------------------------------------
1. DESCRIPTION OF PLAN:
--------------------
The following description of the Qwest Communications 401(k) Savings Plan (the
"Plan") provides only general information. Participants should refer to the
Plan document for a more complete description of the Plan's provisions.
General
-------
The Plan was established effective January 1, 1999 by Qwest Communications
International Inc. ("Qwest" or the "Company"). The Plan is a defined
contribution plan which covers substantially all employees of Qwest and certain
affiliated entities who meet the eligibility requirements, and is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty
Corporation.
Mergers into the Plan
---------------------
Effective May 1, 1999, the Qwest Communications International Inc. 401(k) Plan
("Old Qwest Plan"), the LCI International 401(k) Savings Plan ("LCI Plan"), the
U.S. Long Distance Corp. 401(k) Retirement Plan ("USLD Plan"), the Supernet,
Inc. 401(k) Profit Sharing Plan ("Supernet Plan") and the Lightwave Spectrum,
Inc. 401(k) Plan ("Lightwave Plan"), collectively known as the "Predecessor
Plans," merged into the Plan. These mergers are shown in the accompanying
statement of changes in net assets available for plan benefits as "Mergers into
the Plan" and the related assets transferred totaled $60,772,732.
Trust
-----
Trustee and recordkeeping services are performed by Merrill Lynch Trust Company
FSB ("Merrill Lynch"). Plan assets are held under a trust agreement (the
"Trust") maintained by Merrill Lynch (the "Trustee").
Eligibility
-----------
All employees of the Company and certain affiliated entities are eligible for
the Plan (except for collectively bargained employees, non-resident aliens,
leased employees and independent contractors) upon meeting the eligibility
requirements.
Employees are eligible to make salary deferral contributions to the Plan on the
first day of the payroll period after their first regular paycheck. Upon
completion of one year of service, as defined by the Plan document, employees
are eligible to participate in the Company's matching contributions. Employees
who were eligible to participate in the Predecessor Plans as of December 31,
1998 were automatically eligible for the Plan on January 1, 1999.
-4-
<PAGE>
Contributions
-------------
Participant Salary Deferral Contributions
Participants may elect to contribute to the Plan on a pre-tax basis from 1% to
18% of their eligible compensation, as defined by the Plan document.
Participant pre-tax contributions are limited to comply with statutory
regulations ($10,000 in 1999).
Company Matching Contributions
The Company matching contribution, if any, as authorized by the Company, for a
Plan year is equal to 100% of a participant's salary deferral contribution, up
to a maximum of 3% of a participant's eligible compensation. The Company may
make its contributions in cash or in stock, as the Company determines in its
sole discretion. For 1999, the Company match was 3% and made in cash or stock
(for portion participant directed to Employer stock) of $4,487,021.
Rollover Contributions
The Plan provides that the Trustee may accept from a participant a contribution
representing distributions from another plan which meets the requirements of the
Internal Revenue Code (the "IRC"), as further described in the Plan document.
Such "rollover contributions" are fully vested and are not subject to or
affected in any way by the maximum annual contribution limitation.
Total annual additions under the Plan and all other plans sponsored by the
Company are limited to the lesser of 25% of eligible compensation, as defined,
or $30,000. Annual additions are defined as the participant's contributions and
the Company's matching contributions.
Vesting
-------
Participants are fully vested in their accounts. Approximately $40,000 of
forfeitures were transferred from the Predecessor Plans upon the merger. These
will be used to offset future Company contributions as allowed by the Plan
document.
Participant Accounts
--------------------
Each participant's account is credited with the participant's contributions and
the Company matching contributions, if any. Separate accounts are maintained
for each participant. Participants' accounts are adjusted daily to reflect
unrealized appreciation or depreciation of investments, income, gains or losses
on disposition of assets and any other investment transactions.
Payment of Benefits
-------------------
Upon retirement, termination of employment or death, each participant or
beneficiary is entitled to receive amounts in accordance with the terms and
conditions of the Plan. Participants may also make certain in-service voluntary
withdrawals and hardship withdrawals if certain criteria are met.
Benefit payments are lump sum distributions. Certain other benefit distribution
options are allowed as protected benefits from the Predecessor Plans, as further
discussed in the Plan document.
-5-
<PAGE>
Investment Options
------------------
A participant may direct their account to any of twenty-three investment mutual
fund options offered by Merrill Lynch, including investments in Qwest Common
Stock. In addition, employees may invest in the Merrill Lynch Self-Directed
Brokerage Account.
Participants may change their investment options at any time.
Loans
-----
Participants may borrow from their fund accounts a minimum of $500 up to a
maximum equal to the lesser of $50,000 or 50% of their account balance.
Participants may have no more than one loan outstanding at any time. The
maximum loan term is 60 months unless it is for the purchase of a primary
residence in which case the maximum loan term is 180 months. The loans are
secured by the balance in the participant's account and earn interest equal to
the prime rate charged by a bank selected by the Company on the last day of the
calendar quarter preceding the date of the loan plus one percentage point.
Principal and interest are paid through payroll deductions.
Voting
------
All shares of Qwest Common Stock credited to participants' accounts are voted by
the participants in accordance with the Plan's provisions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Basis of Accounting
-------------------
The accompanying financial statements are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires the
Plan's management to use estimates and assumptions that affect the accompanying
financial statements and disclosures. Actual results could differ from these
estimates.
Valuation of Investments
------------------------
Investments in mutual funds, collective trusts other than noted below, common
stock and employer stock are valued at fair value based on quoted market prices.
Participant loans, money market funds and cash are valued at cost which
approximate fair value.
The Merrill Lynch Retirement Preservation Trust invests in guaranteed investment
contracts, bank investment contracts and synthetic guaranteed investment
contracts. These contracts are carried in the trust fund's audited financial
statements at cost plus accrued interest, which approximates fair market value.
The investment in the trust fund in the accompanying financial statements is
valued at the Plan's proportionate interest in the fund as of the financial
statement date. Interest rates earned on the investment change daily. The
average yield for the period ended December 31, 1999 was 5.90%. The crediting
interest rate as of December 31, 1999 and January 1, 1999 was approximately
5.92% and 6.58%, respectively.
-6-
<PAGE>
Income Recognition
------------------
In the statement of changes in net assets available for plan benefits, the net
appreciation in the fair value of investments consists of realized gains and the
unrealized appreciation on those investments.
Interest income is recorded on the accrual basis and dividends are recorded on
the ex-dividend date.
Purchases and sales of securities are recorded on a trade date basis.
Payment of Benefits
-------------------
Benefits are recorded when paid.
Administrative Fees and Investment Expenses
-------------------------------------------
The Plan may pay certain expenses of the Plan as described in the Plan document.
The Plan paid $8,640 of trust investment expenses for the period ended December
31, 1999. The Company paid all other administrative costs of the Plan for the
period ended December 31, 1999.
3. INVESTMENTS:
------------
The fair market value of individual investments that represents 5% or more of
the Plan's net assets as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Shares or Fair
Units Value
--------- -----------
<S> <C> <C>
Qwest Common Stock 932,312 $40,089,418
Merrill Lynch Equity Index Trust 95,060 9,620,120
Massachusetts Investors Trust 457,493 9,584,485
Class A
PIMCO Total Return Fund Class A 603,224 5,971,918
PIMCO Mid-Cap Growth Fund Class A 395,351 10,196,092
</TABLE>
During the period ended December 31, 1999, the Plan's investments (including
gains and losses on investments bought and sold, as well as held during the
year) appreciated in value by $4,553,605 as follows:
<TABLE>
<CAPTION>
<S> <C>
Mutual funds $1,519,561
Collective trusts 941,875
Common stock 98,745
Employer stock 1,993,424
---------
$4,553,605
=========
</TABLE>
4. PLAN TERMINATION:
-----------------
The Company has the right under the Plan to discontinue contributions at any
time, and to terminate the Plan subject to the provisions of ERISA.
-7-
<PAGE>
5. TAX STATUS:
-----------
The Plan has applied for a determination letter from the Internal Revenue
Service ("IRS"). The Plan administrator believes that the Plan is designed and
being operated in compliance with the applicable requirements of the IRC and
therefore tax-exempt.
6. RELATED PARTY TRANSACTIONS:
---------------------------
Certain Plan investments are shares of Qwest Communications International Inc.
common stock and investments managed by Merrill Lynch, which qualify as related
party transactions.
7. RISKS AND UNCERTAINTIES:
------------------------
The Plan provides for various investment options in money market funds, mutual
funds, collective trusts, common stock and Employer stock. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit and overall market volatility. Due to the level of risk associated with
certain investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and such changes
could materially affect participant's account balances and amounts reported in
the statements of net assets available for plan benefits.
8. MERGER AGREEMENT:
-----------------
In July 1999, Qwest entered into a definitive merger agreement with U S WEST
Inc. ("U S WEST"). The Boards of Directors and stockholders of both Qwest and
US WEST have approved the proposed merger. The merger is subject to federal and
state regulatory approvals and other customary closing conditions. Closing of
the merger is expected in July 2000. The effect this will have on the Plan has
not yet been determined.
-8-
<PAGE>
SCHEDULE I
Page 1 of 3
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
-----------------------------------------
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
EIN #04 -8141739
----------------
FORM 5500 - SCHEDULE H - ITEM 4i
--------------------------------
<TABLE>
<CAPTION>
Name of Issue, Borrower, Shares or Current
Lessor or Similar Party Description of Investment Units Value
----------------------------------------- ---------------------------- ------------- ------------
<S> <C> <C> <C>
Cash Cash 5,680 $ 5,680
Qwest Common Stock* Employer Stock 932,312 40,089,418
Billing Concepts Corp. Common Stock Common Stock 30,195 196,264
Yahoo Inc. Common Stock Common Stock 270 116,825
Juno Online Services Inc. Common Stock Common Stock 1,150 40,825
Broadvision Inc. Common Stock Common Stock 35 5,952
Qualcomm Inc. Common Stock Common Stock 40 7,045
Amgen Inc. Common Stock Common Stock 100 6,006
Citigroup Inc. Common Stock Common Stock 100 5,568
Enron Corp. Common Stock Common Stock 150 6,656
Home Depot Inc. Common Stock Common Stock 75 5,156
Sun Microsystems, Inc. Common Stock Common Stock 110 8,517
Texas Instruments Inc. Common Stock Common Stock 5 483
Coca-Cola Company Common Stock Common Stock 100 5,825
Merck & Company Inc. Common Stock Common Stock 100 6,718
Charles Schwab Corp. Common Stock Common Stock 200 7,650
Orbital Sciences Corp. Common Stock Common Stock 55 1,020
Merrill Lynch Small Cap Index
Fund* Collective Trust 1,145 16,998
Merrill Lynch Equity Index
Trust* Collective Trust 95,060 9,620,120
Merrill Lynch Retirement
Preservation Trust* Collective Trust 4,335,462 4,335,462
Seligman Communications and
Information Fund Mutual Fund 14,199 670,908
Calvert Social Investments
Fund Balanced Portfolio Mutual Fund 286 9,249
MFS Global Total Return
Fund Class A Mutual Fund 3,743 52,183
</TABLE>
* Party-in-interest (Note 6).
The accompanying notes are an integral part of this schedule.
-9-
<PAGE>
SCHEDULE I
Page 2 of 3
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
-----------------------------------------
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
EIN #04 -8141739
----------------
FORM 5500 - SCHEDULE H - ITEM 4i
--------------------------------
<TABLE>
<CAPTION>
Name of Issue, Borrower, Shares or Current
Lessor or Similar Party Description of Investment Units Value
-------------------------- --------------------------- ------------- ------------
<S> <C> <C> <C>
Pioneer Europe Fund Class A Mutual Fund 1,110 $ 42,142
Templeton Developing
Markets
Class A Mutual Fund 3,727 58,173
MFS Massachusetts
Investors Growth
Stock Fund Class A Mutual Fund 24,367 495,418
Massachusetts Investors
Trust
Class A Mutual Fund 457,493 9,584,485
Davis New York Venture Fund
Class A Mutual Fund 3,642 104,751
Managers International
Equity Fund
Class A Mutual Fund 264 15,468
GAM International Fund Mutual Fund 89,975 2,893,594
Class A
Franklin Small Cap Growth
Fund
Class A Mutual Fund 4,090 180,510
Davis Series Financial Fund
Class A Mutual Fund 1,655 48,119
Pioneer Growth Shares Fund
Class A Mutual Fund 11,282 227,439
Davis Real Estate Fund
Class A Mutual Fund 242 4,429
PIMCO High Yield Fund
Class A Mutual Fund 2,656 28,362
PIMCO Total Return Fund
Class A Mutual Fund 603,224 5,971,918
PIMCO Mid-Cap Growth Fund
Class A Mutual Fund 395,351 10,196,092
MFS Total Return Fund Mutual Fund 251,208 3,486,762
Merrill Lynch Healthcare Fund
Class A* Mutual Fund 10,004 62,124
State Street Research Alpha Fund
Class A Mutual Fund 176 2,460
</TABLE>
* Party-in-interest (Note 6).
The accompanying notes are an integral part of this schedule.
-10-
<PAGE>
SCHEDULE I
Page 3 of 3
QWEST COMMUNICATIONS 401(k) SAVINGS PLAN
-----------------------------------------
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
-----------------------------------------------
AS OF DECEMBER 31, 1999
-----------------------
EIN #04 -8141739
----------------
FORM 5500 - SCHEDULE H - ITEM 4i
--------------------------------
<TABLE>
<CAPTION>
Name of Issue, Borrower, Shares or Current
Lessor or Similar Party Description of Investment Units Value
--------------------------------------- ----------------------------- ------------ ------------
<S> <C> <C> <C>
CMA Money Fund * Money Market Fund 147,017 $ 147,017
PIMCO Innovation Fund Class C Mutual Fund 66 4,129
Healthcare Series 5 Fund Mutual Fund 2,335 2,475
Participant Loans Interest rates ranging from
8.75% to 9.50% 1,948,306 1,948,306
-----------
Total Investments $90,724,701
===========
</TABLE>
* Party-in-interest (Note 6).
The accompanying notes are an integral part of this schedule.
-11-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
QWEST COMMUNICATIONS 401(K) SAVINGS PLAN
By: /s/ Robert S. Woodruff
-------------------------------------------------
Robert S. Woodruff
Executive Vice President - Finance
Chief Financial Officer, and Treasurer
Date: June 28, 2000
