DENVER, April 1, 2002 - Qwest Communications International Inc. (NYSE: Q) today announced that, as a result of an accounting rule change, SFAS 142, it would potentially reduce the carrying value of goodwill by an estimated $20-$30 billion. The company, which expects to record the non-cash charge for the second quarter of 2002, is required by the new accounting rules to review its goodwill and provide an assessment of its value by the end of 2002. In addition, the accounting change will eliminate any further amortization of goodwill, which is expected to reduce amortization expense by approximately $900 million in 2002 and beyond.
Qwest Chairman and CEO Joseph P. Nacchio said, ?Since we first announced our merger with U S West, we have a very different economy and lowered industry demand for telecom services, which has resulted in our having to write down goodwill. The merger with U S West brings significant long-term benefits to the shareholders, customers and employees of both companies. From a financial perspective, Qwest remains a very strong company with solid revenue, and from a business perspective, we have a world-leading combination of local, long-distance and global assets.?Details of the announcement, along with additional disclosure of the company?s financial performance and current business operations, are available in the company?s annual report on Form 10-K, which was filed today with the U. S. Securities and Exchange Commission.
Qwest also announced it has made certain closing adjustments for the fourth quarter and full year 2001. On a reported basis, prepared in accordance with generally accepted accounting principles (GAAP), these adjustments accounted for an additional ($0.01) loss for both the fourth quarter and the full year 2001 results, reported on January 29, 2002. On a pro forma normalized basis, the adjustment is ($.0.02) for both the fourth quarter and full year.
On a reported basis, Qwest?s previously announced net loss for 2001 of ($4.010) billion has been adjusted to ($4.023) billion, or ($2.41) to ($2.42) per diluted share. For the fourth quarter, Qwest?s previously announced reported net loss of ($516) million has been adjusted to ($529) million or ($0.31) to ($0.32) per diluted share.
On a pro forma normalized basis, Qwest?s previously announced net earnings for 2001 of $85 million has been adjusted to net earnings of $55 million, or $0.05 to $0.03 per diluted share. For the fourth quarter, also on a pro forma normalized basis, Qwest?s previously announced net loss of ($123) million has been adjusted to ($153) million, or ($.0.07) to ($0.09).
Commenting on the adjustment to earnings Nacchio said, ?The changes reflect the result of year-end adjustments that we made when we closed our books. We do not believe these adjustments are material.?
NOTE TO INVESTORS
?Reported? results are prepared in accordance with generally accepted accounting principles in the United States (GAAP). Recurring and pro forma normalized results are not prepared in accordance with GAAP.
Additionally, ?pro forma normalized? information regarding Qwest?s results from operations is provided as a complement to reported or GAAP results. The condensed consolidated pro forma normalized statements give retroactive effect as though the merger of Qwest and U S WEST, Inc. had occurred as of the beginning of the periods presented. Shares outstanding and earnings per share have been restated to give retroactive effect to the exchange ratio resulting from the merger. In addition, pro forma normalized results have been adjusted to eliminate the impact of non-recurring items such as merger-related and one-time charges, restructuring charges, asset write-offs and impairments, a depreciation adjustment on access lines returned to service, gains/losses on the sale of investments and fixed assets, change in the market value of investments, the write-down of investments, elimination of in-region long-distance activity, and a tax true-up on merger-related and restructuring charges.
Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband data, voice and image communications for businesses and consumers. The Qwest Macro Capacity® Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 190,000 miles globally. For more information, please visit the Qwest Web site at www.qwest.com.
This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by Qwest Communications International Inc. (together with its affiliates, ?Qwest?, ?we? or ?us?) with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: potential fluctuations in quarterly results; volatility of Qwest?s stock price; intense competition in the markets in which we compete; changes in demand for our products and services; the duration and extent of the current economic downturn, including its effect on our customers and suppliers; adverse economic conditions in the markets served by us or by companies in which we have substantial investments; adverse results of review and scrutiny by regulatory authorities, media and others of financial reporting practices; 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; higher than anticipated employee levels, capital expenditures and operating expenses; rapid and significant changes in technology and markets; adverse changes in the regulatory or legislative environment affecting our business; adverse developments in commercial disputes or legal proceedings; delays in our ability to provide interLATA services within our 14-state local service area; 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, and difficulties in combining the operations of the combined company. This release may include analysts? estimates and other information prepared by third parties for which we assume no responsibility. We undertake 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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