Qwest Reports Q2 Loss 616473

Qwest cuts net loss from $776M, or $0.43 per share, in 2Q04 to $164M, or $0.09 per share

August 2, 2005

3 Min Read

DENVER -- Qwest Communications International Inc. (NYSE:Q - News) today reported second quarter results that benefited from improved revenue trends, increased operating income and growth in free cash flow. See reconciliation in Attachment F. For the quarter, the fully diluted net loss per share was $0.09, which includes special items of $(0.02), compared with a loss of $0.43 a year ago, which includes special items of $(0.25). See Attachment E for special items.

"Qwest's second quarter results demonstrate that our business and marketing strategies work," said Richard C. Notebaert, Qwest chairman and CEO. "We continued to steadily improve performance, free cash flows and financial flexibility and are pursuing, in a disciplined way, opportunities to drive future growth and value for all of our constituents."

Financial Results

Qwest reported second quarter revenue of $3.47 billion compared to $3.45 billion in the first quarter and $3.44 billion in the second quarter a year ago. This represents the fifth consecutive quarter of stable revenues, as well as year-over-year growth in mass markets and business revenues. Wireline revenues benefited from an improvement in business local, data and Internet revenues, mass markets growth products, such as long-distance and high-speed Internet, as well as wholesale settlements. Qwest's wireless revenues grew 4.8 percent sequentially to $130 million and 1.6 percent compared with the second quarter of the prior year.

"Improved operating results are driving meaningful expansion in free cash flow," said Oren G. Shaffer, Qwest vice chairman and CFO. "Our ongoing improvement in cash flow generation, coupled with our recent financing transactions, advances us in our goal to reduce debt and invest in growth."

Qwest's second quarter operating expenses totaled $3.2 billion, a decline of 15 percent or $555 million compared to the second quarter of 2004. Cost of sales declined $52 million in the second quarter compared with the second quarter of last year. The decrease was driven by continued improvement in productivity and operating efficiency, and the reduction of fixed and variable costs as a result of our facilities cost optimization initiatives, partially offset by an increase in wireless usage-based minutes.

Selling, general and administrative (SG&A) expenses decreased $441 million for the same period. Second quarter 2004 results included $393 million in special items. In addition, SG&A benefited from further productivity improvements and continued cost-containment efforts.

Revenue less cost of sales and SG&A for the second quarter totaled $991 million compared with $470 million for the second quarter of 2004, including special items.

Capital Spending, Cash Flow and Interest

Second quarter capital expenditures totaled $352 million including a sales tax refund of $33 million, compared to $486 million in the second quarter of 2004. The company's disciplined approach to capital spending focuses on investment in key growth areas and supporting the highest service levels.

Cash generated from operations of $570 million in the second quarter exceeded capital expenditures by $218 million. Qwest expects consistent operating results to be the main driver in generating improved free cash flow for 2005 of $600 to $800 million before one-time payments.

Interest expense totaled $380 million for the second quarter, a decline of four percent compared to the second quarter a year ago.

Balance Sheet Update

The company reduced total debt less cash and marketable investments by more than $850 million to $14.7 billion compared to $15.5 billion in the second quarter of 2004. The company has approximately $240 million in remaining maturities in 2005, of which $179 million was paid in July. The remainder will be paid at maturity.

Liquidity continued to improve through a series of transactions in the quarter, including the issuance of $1.95 billion in notes due 2013 and beyond, as well as tender offers for high coupon debt and the early retirement of other maturities totaling $1.5 billion. Qwest ended the quarter with $2.9 billion in cash and short-term investments.

Qwest Communications International Inc.

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like