Qwest Reports Higher Sequential Net Income, Continued Margin Expansion, and Strong Free Cash Flow

-- Improved Earnings Per Share of $0.06

-- EBITDA Margin Advances 330 Basis Points Year-Over-Year to 31.9 Percent(a)

-- Net Income Increases 33 Percent Sequentially

-- Strong Free Cash Flow(a) of $595 Million

Qwest Communications International Inc. (NYSE:Q) today reportedsolid second quarter results highlighted by improved earnings pershare, further margin expansion and strong free cash flow. For thequarter, Qwest reported net income of $117 million, or $0.06 per fullydiluted share, compared with a loss of $164 million, or ($0.09) pershare in the second quarter 2005.

"We are very pleased that we've entered the second half of theyear with the momentum of two profitable quarters," said Richard C.Notebaert, Qwest chairman and CEO. "Our cost structure and investmentsremain focused and rational while customers are embracing ourhigher-value, higher ARPU products that contribute to our revenue."

Financial Results

Qwest reported revenue of $3.5 billion for the second quarter,benefiting from improving sales within Qwest's diverse portfolio ofgrowth products, including high-speed Internet, advanced dataproducts, long distance and wireless.

"The second quarter continues to illustrate that we are deliveringon goals and meeting expectations," said Oren G. Shaffer, Qwest vicechairman and CFO. "Our free cash flow is on track for the year, ourmargins continue to widen toward our target of the mid-30 percentrange, and we have continued growth opportunity for the remainder ofthe year."

Qwest's operating expenses declined 6 percent to $3.1 billion forthe second quarter of 2006 over the second quarter of 2005 as a resultof improvement in productivity and operating efficiencies, lowerfacility costs, and lower depreciation.

Qwest's EBITDA margins continued to expand, reaching 31.9 percentin the second quarter, a 330 basis point improvement from the secondquarter a year ago and up more than 100 basis points sequentially.

Cash Flow, Capital Spending and Interest

The company generated strong free cash flow of $595 million in thequarter by benefiting from improved operating results and lowerinterest payments. Qwest continues to expect free cash flow of $1.35billion to $1.5 billion in 2006 compared with $904 million in 2005(both before one-time payments).

Second quarter capital expenditures totaled $442 million, comparedto $352 million in the second quarter of 2005, with a continued focuson the proportion spent on broadband, enabling higher speeds andfootprint expansion. Capital spending in 2006 is expected to beapproximately equal to our 2005 level as the company continues tofocus in a disciplined fashion on investment in key growth areas andto support the highest service levels.

Interest expense totaled $298 million for the second quartercompared to $380 million in the year-ago quarter. As a result ofsuccessfully tendering for and retiring high coupon legacy debt in thefourth quarter of last year, interest expense is expected to bereduced by approximately $300 million in 2006.

Balance Sheet Update

The company ended the quarter with total debt of $15.4 billion, adecline of $2.2 billion compared with the second quarter a year ago.The company's near doubling of cash and short-term investments to $1.4billion during the quarter, brought total debt less cash andshort-term investments to less than $14 billion.

Customer Connections

The company continues to see growth from customer connectionssince new bundling and localized sales initiatives began in May 2005.Qwest's customer connections -- which include consumer andsmall-business primary and secondary access lines, high-speed Internetsubscribers, wireless and video customers -- grew 318,000 from theyear-ago quarter, marking the third quarter of year-over-yearincreases.

Total retail line losses held steady at a decline of 4.4 percentyear-over-year, excluding 32,000 UUnet and affiliate disconnects inthe prior year. Anticipated pressure from the decline in the number ofaccess lines resold by Qwest's competitors continued to impactaccess-line trends.

High-Speed Internet

Qwest High-Speed Internet continued to show strong growth for thequarter. As a result, mass markets data and Internet revenuesincreased 8 percent sequentially and 40 percent year-over-year. Thecompany added 120,000 high-speed Internet lines in the second quarter.Qwest benefited from strong demand, particularly in the conversion ofcustomers from dial-up to broadband and growing demand forhigher-speed offerings. These strong net additions bring the totalsubscribers to 1.8 million -- a 7 percent increase sequentially and a51 percent increase year-over-year.

Qwest continued to invest in its high-speed Internet footprint aswell as increase the speeds available to customers. Currently, 80percent of Qwest's households are eligible for broadband services, upfrom approximately 67 percent at the end of 2004. About 98 percent ofqualified households are able to purchase broadband speeds of 1.5 Mbpsor greater, more than 50 percent are able to purchase service atspeeds in excess of 3.0 Mbps, and more than 25 percent are able topurchase service at speeds in excess of 7.0 Mbps. In addition to itsfocus on availability and speeds, Qwest was able, through attention tothe customer service and support experience, to increase retention.

During the quarter, Qwest teamed with Microsoft Corp. to becomethe first communications company in the United States to announceplans to offer co-branded Windows Live(TM) services. The Windows Liveservices platform will complement the Qwest High-Speed Internetoffering by providing customers with enhanced communicationsflexibility and security features.

Bundles

Qwest has been rewarded for its aggressive focus on bundlepackaging and sales. Since the launch of new bundles a year ago,followed by targeted incentives and promotional initiatives, thecompany has significantly increased the number of products availablein its bundled offerings. Qwest's full-featured bundled offeringincludes high-speed Internet access, a national wireless offering,local and long-distance service, and integrated TV services throughQwest's own ChoiceTV or its marketing alliance with DIRECTV, Inc.

The company's bundle penetration increased to 54 percent in thequarter, compared to 48 percent a year ago. Sales of voice packagesplus three and four products continue to experience significantgrowth. Customer demand for value-added services is driving higherconsumer ARPU, which increased 7 percent to $49 from $46 a year ago.

In-Region Long-Distance

Long-distance penetration of total retail lines reached 38 percentin the second quarter, compared to 35 percent a year ago. The companyended the quarter with more than 4.8 million long-distance lines, a 5percent increase over a year ago. During the quarter, the companylaunched its "digital voice" campaign to promote Qwest's reliable,high-quality, integrated local and long-distance services.

Wireless

Wireless revenue grew 8 percent compared to the prior year, drivenby promotions and successful bundling efforts. As a result ofproactively focusing on high-value customers, Qwest's wireless segmentincome turned positive in the quarter. Qwest continues to benefit fromwireless in the bundle with approximately 75 percent of wirelesssubscribers on an integrated bill with at least one other service. Thecompany's wireless subscriber base totaled 777,000 for the quarter.

Qwest's data and enhanced features, as well as higher-value priceplans, are driving higher wireless ARPU, which increased 4 percent to$52 from $50 a year ago. The company continues to focus on addingwireless data to subscribers and approximately 50 percent of newcustomers sign up for additional wireless enhancements.

DIRECTV(R) Alliance

Customer net additions for DIRECTV service grew 25 percent in thesecond quarter or more than three times from a year ago. Subscriberstotaled nearly 213,000 in the quarter. Qwest and DIRECTV's strategicrelationship allows Qwest to offer DIRECTV digital satellitetelevision services to residential customers across the entire Qwestregion.

Last month, the company in coordination with DIRECTV, launched the"Qwest Football Bundle" -- Qwest High-Speed Internet service, digitalvoice (unlimited local and long-distance service) and DIRECTVprogramming. The new campaign features a more interactive footballexperience, just in time for the upcoming fall season.

Enterprise and Wholesale

Revenues from Qwest's enterprise channel, which includes businessand government customers, held steady in the quarter benefiting fromcontinued strong growth in data and Internet revenue of 3.6 percentyear over year. Qwest continues to advance its MPLS-basedcapabilities, VoIP and iQ suite of services in the marketplace drivingstrong volumes of approximately 4 billion VoIP minutes per month.

In a move to expand the reach of its nationwide MPLS backbonenetwork, Qwest agreed to acquire OnFiber Communications, Inc., anAustin, Texas-based provider of custom-built and managed metropolitanEthernet and wide-area networks. OnFiber operates an all-opticalnetwork in 23 metropolitan areas and features a full offering ofaccess and transport services. The transaction is expected to close inthe third quarter.

Also in the quarter, Qwest announced new or expanded networkingand voice and data agreements with U.S. Bancorp, Scottrade, Inc.,Arizona State University and the State of Arizona.

The company's wholesale channel continued to drive profitablegrowth and improve efficiency in delivering services to customers.Wholesale long distance revenue grew 3.7 percent year over year,continuing to benefit from its focus on growth customers includingcable, wireless and VoIP providers. In the quarter, Qwest wholesalealso has increased its focus on international long distance servicesand as a result customers are seeing improved service delivery in thisspace.

Customer Service

For the fourth consecutive year, the J.D. Power results showsignificant improvement for Qwest as the company improved two levelsthis year. In addition, satisfaction with Qwest's technicians is thehighest among all providers, demonstrating Qwest's unwaveringcommitment to the Spirit of Service. Qwest continues to make steadyprogress, and all Qwest employees are committed to driving even moreimprovement.

Conference Call Today

As previously announced, Qwest will host a conference call forinvestors and the media today at 9 a.m. EDT with Richard C. Notebaert,Qwest chairman and CEO, and Oren G. Shaffer, Qwest vice chairman andCFO. The call can be heard on the Web atwww.qwest.com/about/investor/events.

About Qwest

Qwest Communications International Inc. (NYSE:Q), through itsoperating subsidiaries, is a leading provider of high-speed Internet,data, video and voice services. With nearly 40,000 employees, Qwest iscommitted to the "Spirit of Service" and providing world-classservices that exceed customers' expectations for quality, value andreliability. For more information, please visit the Qwest Web site atwww.qwest.com.

Forward Looking Statement Note

This release may contain projections and other forward-lookingstatements that involve risks and uncertainties. These statements maydiffer materially from actual future events or results. Readers arereferred to the documents filed by us with the Securities and ExchangeCommission, specifically the most recent reports which identifyimportant risk factors that could cause actual results to differ fromthose contained in the forward-looking statements, including but notlimited to: access line losses due to increased competition, includingfrom technology substitution of our access lines with wireless andcable alternatives, among others; our substantial indebtedness, andour inability to complete any efforts to de-lever our balance sheetthrough asset sales or other transactions; any adverse outcome of thecurrent investigation by the U.S. Attorney's office in Denver intocertain matters relating to us; adverse results of increased reviewand scrutiny by regulatory authorities, media and others (includingany internal analyses) of financial reporting issues and practices orotherwise; rapid and significant changes in technology and markets;any adverse developments in commercial disputes or legal proceedings,including any adverse outcome of current or future legal proceedingsrelated to matters that are or were the subject of governmentalinvestigations, and, to the extent not covered by insurance, if any,our inability to satisfy any resulting obligations from fundsavailable to us, if any; potential fluctuations in quarterly results;volatility of our stock price; intense competition in the markets inwhich we compete including the likelihood of certain of ourcompetitors consolidating with other providers; changes in demand forour products and services; acceleration of the deployment of advancednew services, such as broadband data, wireless and video services,which could require substantial expenditure of financial and otherresources in excess of contemplated levels; higher than anticipatedemployee levels, capital expenditures and operating expenses; adversechanges in the regulatory or legislative environment affecting ourbusiness; changes in the outcome of future events from the assumedoutcome included in our significant accounting policies; and ourability to utilize net operating losses in projected amounts.

The information contained in this release is a statement ofQwest's present intention, belief or expectation and is based upon,among other things, the existing regulatory environment, industryconditions, market conditions and prices, the economy in general andQwest's assumptions. Qwest may change its intention, belief orexpectation, at any time and without notice, based upon any changes insuch factors, in Qwest's assumptions or otherwise. The cautionarystatements contained or referred to in this release should beconsidered in connection with any subsequent written or oralforward-looking statements that Qwest or persons acting on its behalfmay issue. This release may include analysts' estimates and otherinformation prepared by third parties for which Qwest assumes noresponsibility.

Qwest undertakes no obligation to review or confirm analysts'expectations or estimates or to release publicly any revisions to anyforward-looking statements and other statements to reflect events orcircumstances after the date hereof or to reflect the occurrence ofunanticipated events.

By including any information in this release, Qwest does notnecessarily acknowledge that disclosure of such information isrequired by applicable law or that the information is material.

The Qwest logo is a registered trademark of Qwest CommunicationsInternational Inc. in the U.S. and certain other countries.

(a) See attachment E for Non GAAP Reconciliation
ATTACHMENT A

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS, SHARES IN THOUSANDS)
(UNAUDITED)

Three Months Ended
June 30, %
-----------------------
2006 2005 Change
----------- ---------- --------

Operating revenue $ 3,472 $ 3,470 0.1%
Operating expenses:
Cost of sales (exclusive of
depreciation
and amortization) 1,393 1,434 (2.9)%
Selling, general and administrative 970 1,045 (7.2)%
Depreciation and amortization 693 765 (9.4)%
----------- -----------
Total operating expenses 3,056 3,244 (5.8)%
----------- -----------
Other expense (income)--net:
Interest expense--net 298 380 (21.6)%
(Gain) loss on early retirement of
debt--net (5) 43 nm
Gain on sale of assets (3) - nm
Other income--net (9) (30) (70.0)%
----------- -----------
Total other expense (income)--net 281 393 (28.5)%
----------- -----------

Income (loss) before income taxes 135 (167) nm
Income tax (expense) benefit (18) 3 nm
----------- -----------
Net income (loss) $ 117 $ (164) nm
=========== ===========

Basic income (loss) per share $ 0.06 $ (0.09) nm
=========== ===========

Basic weighted average shares
outstanding 1,882,398 1,823,338 3.2%
=========== ===========

Diluted income (loss) per share $ 0.06 $ (0.09) nm
=========== ===========

Diluted weighted average shares
outstanding 1,951,728 1,823,338 7.0%
=========== ===========

Six Months Ended
June 30, %
-----------------------
2006 2005 Change
----------- ----------- -------

Operating revenue $ 6,948 $ 6,919 0.4%
Operating expenses:
Cost of sales (exclusive of
depreciation
and amortization) 2,810 2,873 (2.2)%
Selling, general and administrative 1,984 2,081 (4.7)%
Depreciation and amortization 1,384 1,539 (10.1)%
----------- -----------
Total operating expenses 6,178 6,493 (4.9)%
----------- -----------
Other expense (income)--net:
Interest expense--net 594 761 (21.9)%
(Gain) loss on early retirement of
debt--net (5) 43 nm
Gain on sale of assets (3) (257) (98.8)%
Other income--net (37) (15) 146.7%
----------- -----------
Total other expense (income)--net 549 532 3.2%
----------- -----------

Income (loss) before income taxes 221 (106) nm
Income tax (expense) benefit (16) (1) nm
----------- -----------
Net income (loss) $ 205 $ (107) nm
=========== ===========

Basic income (loss) per share $ 0.11 $ (0.06) nm
=========== ===========

Basic weighted average shares
outstanding 1,878,378 1,820,048 3.2%
=========== ===========

Diluted income (loss) per share $ 0.11 $ (0.06) nm
=========== ===========

Diluted weighted average shares
outstanding 1,935,806 1,820,048 6.4%
=========== ===========

nm - percentages greater than 200% and comparisons from positive to
negative values or to
zero values are considered not meaningful.

ATTACHMENT B

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
(UNAUDITED)

June 30, December 31,
2006 2005
------- -------

ASSETS
Current assets:
Cash and cash equivalents $ 1,189 $ 846
Short-term investments 205 101
Other current assets 2,159 2,217
------- ---------
Total current assets 3,553 3,164
Property, plant and equipment--net, and other
assets 17,739 18,333
-------- ---------
Total assets $21,292 $21,497
======== =========


LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current borrowings $ 2,683 $ 512
Accounts payable and other current liabilities 3,412 3,723
-------- ---------
Total current liabilities 6,095 4,235
Long-term borrowings--net 12,693 14,968
Other long-term liabilities 5,330 5,511
-------- ---------
Total liabilities 24,118 24,714
Stockholders' deficit (2,826) (3,217)
-------- ---------
Total liabilities and stockholders' deficit $21,292 $21,497
======== =========

ATTACHMENT C

QWEST COMMUNICATIONS INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
(UNAUDITED)

Six Months Ended
June 30,
------------------
2006 2005
--------- --------

Cash provided by operating activities $ 1,177 $ 913
========= ========

Cash used for investing activities $ (889) $ (56)
========= ========

Cash provided by financing activities $ 55 $ 237
========= ========

Increase in cash and cash equivalents $ 343 $ 1,094
========= ========

ATTACHMENT D

QWEST COMMUNICATIONS INTERNATIONAL INC.
SELECTED CONSOLIDATED DATA
(DOLLARS IN MILLIONS)
(UNAUDITED)

As of and for the
Three Months Ended
June 30,
-------------------------
%
2006 2005 Change
-------- -------- -------
OPERATING REVENUE (1)
Wireline services revenue
Voice services
Local voice services
Business $ 309 $ 323 (4.3)%
Mass markets 1,018 1,058 (3.8)%
Wholesale 174 194 (10.3)%
-------- --------
Total local voice services 1,501 1,575 (4.7)%
Long-distance services
Business 138 146 (5.5)%
Mass markets 161 133 21.1%
Wholesale 278 268 3.7%
-------- --------
Total long-distance services 577 547 5.5%
Access services 133 182 (26.9)%
-------- --------
Total voice services 2,211 2,304 (4.0)%
-------- --------
Data and Internet services
Business 582 562 3.6%
Mass markets 206 147 40.1%
Wholesale 321 316 1.6%
-------- --------
Total data and Internet services 1,109 1,025 8.2%
-------- --------
Total wireline services revenue 3,320 3,329 (0.3)%
Wireless services revenue 142 132 7.6%
Other services revenue 10 9 11.1%
-------- --------
Total operating revenue $ 3,472 $ 3,470 0.1%
======== ========
Capital expenditures (in millions) (2) $ 442 $ 352 25.6%
Total employees 38,843 40,187 (3.3)%
Consumer revenue: (3)
ARPU (in dollars) $ 49.41 $ 46.22 6.9%
In-Region long distance lines (in
thousands) 4,840 4,631 4.5%
High-speed Internet:
Subscribers (in thousands) (4) 1,798 1,190 51.1%
Qualified households/businesses (in
millions) 7.2 7.0 2.9%
Wireless/PCS: (5)
Total wireless services revenue $ 142 $ 132 7.6%
End of period subscribers (in thousands) 777 744 4.4%
ARPU (in dollars) 52 50 4.0%
Access lines (in thousands): (6)
Business access lines
Retail lines 2,900 3,044 (4.7)%
Resold lines 1,624 1,808 (10.2)%
-------- --------
Total business access lines 4,524 4,852 (6.8)%
-------- --------
Mass markets access lines
Consumer primary lines 7,592 7,974 (4.8)%
Consumer additional lines 840 985 (14.7)%
Small business lines 1,327 1,276 4.0%
-------- --------
Total mass markets access lines 9,759 10,235 (4.7)%
------- -------
Total access lines 14,283 15,087 (5.3)%
======== ========

Mass markets retail connections
(in thousands):
Mass markets access lines 9,759 10,235 (4.7)%
High-speed Internet subscribers (4) 1,798 1,190 51.1%
Video subscribers 273 120 127.5%
Wireless subscribers 777 744 4.4%
-------- --------
Total mass markets retail connections 12,607 12,289 2.6%
======== ========
Minutes of use from carriers and
CLECs (in Millions) 12,047 12,677 (5.0)%

(1) Product revenue categories have been adjusted for current period
presentation.

(2) Capital expenditures exclude assets acquired through capital
leases.

(3) Consumer ARPU (Average Revenue Per Unit) is measured as consumer
revenue in the period divided by the average number of primary access
lines for the period. We believe this metric can be a useful measure
of the revenue performance of our consumer business within our mass
markets channel on a per-customer basis. We use ARPU internally to
assess the revenue performance of our consumer business within our
mass markets channel and the impact on this business of periodic
customer initiatives and product roll-outs. ARPU is not a measure
determined in accordance with accounting principles generally
accepted in the United States of America, or GAAP, and should not be
considered as a substitute for our wireline services segment revenue
or any other measure determined in accordance with GAAP.

(4) Total High-speed Internet subscribers does not include out-of-
region subscribers. Included in the 2006 high-speed Internet count
are 18,000 subscribers which relate to 2005 and 2004 activity and
have not been previously reported. If they had been included in 2005,
the subscriber count and the percentage change would have been 1,198
and 50.0%, respectively.

(5) Wireless ARPU (Average Revenue Per Unit) is measured as the
recurring portion of our wireless services revenue stream attributed
to subscribing customers (plus certain activation fees) divided by
the average number of subscribers for the period. We believe this
metric can be a useful measure of the revenue performance of our
wireless business on a per-customer basis. We use ARPU internally to
assess the revenue performance of our wireless business and the
impact on this business of periodic customer initiatives and product
roll-outs. ARPU is not a measure determined in accordance with GAAP
and should not be considered as a substitute for our wireless
services segment revenue or any other measure determined in
accordance with GAAP. Wireless ARPU includes surcharges for the
recovery of costs associated with providing number portability and
wireless 911 services.

Three Months
Ended
June 30, %
-----------------
2006 2005 Change
-------- -------- -------
ARPU is calculated as follows:
Total quarterly wireless services revenue
(in millions) $ 142 $ 132 7.6%
Less: quarterly non-recurring revenue (in
millions) (20) (21) (4.8)%
-------- --------
Quarterly recurring revenue (in
millions) $ 122 $ 111 9.9%
-------- --------
Average monthly recurring revenue (in
millions) 41 37 10.8%
-------- --------
Divided by quarterly average wireless
services subscribers (in thousands) 782 743 5.2%
-------- --------
Wireless services ARPU (in dollars) $ 52 $ 50 4.0%
======== ========

(6) We modified the classification of our access lines during the
fourth quarter of 2005 in our effort to better approximate our
revenue channels. Resold lines includes UNE-P lines, unbundled loops,
resale lines and public pay phone lines. Business retail access lines
at December 31, 2005 reflect a decline of 32,000 lines in the fourth
quarter related to affiliate disconnects as well as 23,000 line and
21,000 line disconnects in the first quarter and second quarter of
2005, respectively, related to UUNet.

ATTACHMENT E

QWEST COMMUNICATIONS INTERNATIONAL INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(DOLLARS IN MILLIONS)
(UNAUDITED)

As of and for the As of and for the
Three Months Six Months
Ended Ended
June 30, June 30,
---------------- ----------------
2006 2005 2006 2005
-------- -------- -------- --------
Segment Income:
Operating revenue $ 3,472 $ 3,470 $ 6,948 $ 6,919
Cost of sales (exclusive of
depreciation and amortization) (1,393) (1,434) (2,810) (2,873)
Selling, general and administrative (970) (1,045) (1,984) (2,081)
-------- -------- -------- --------
Segment income $ 1,109 $ 991 $ 2,154 $ 1,965
======== ======== ======== ========


EBITDA: (1)
EBITDA $ 1,109 $ 991 $ 2,154 $ 1,965
Depreciation and amortization (693) (765) (1,384) (1,539)
Total other expense--net (281) (393) (549) (532)
Income tax (expense) benefit (18) 3 (16) (1)
-------- -------- -------- --------
Net income $ 117 $ (164) $ 205 $ (107)
======== ======== ======== ========

EBITDA Margin: (1)
EBITDA $ 1,109 $ 991 $ 2,154 $ 1,965
-------- -------- -------- --------
Divided by total operating revenue 3,472 3,470 6,948 6,919
-------- -------- -------- --------
EBITDA Margin 31.9% 28.6% 31.0% 28.4%
======== ======== ======== ========


Free Cash Flow from Operations: (2)
Cash provided by operating
activities $ 1,037 $ 570 $ 1,177 $ 913
Less: Expenditures for property,
plant and equipment (442) (352) (832) (665)
-------- -------- -------- --------
Free Cash Flow from Operations 595 218 345 248
Add: One-time settlement deposit - - 100 -
-------- -------- -------- --------
Free Cash Flow from Operations--as
adjusted $ 595 $ 218 $ 445 $ 248
======== ======== ======== ========

Net Debt: (3)
Current borrowings $ 2,683 $ 261
Long-term borrowings 12,693 17,287
------- -------
Total borrowings $15,376 $17,548

Less: Cash and cash equivalents (1,189) (2,245)
Less: Short-term investments (205) (634)
Less: Long-term investments -- (1)
------- -------
Net Debt $13,982 $14,668
======= =======

(1) EBITDA and EBITDA Margin are non-GAAP financial measures. Other
companies may calculate these measures (or similarly titled measures)
differently. We believe these measures provide useful information to
investors in evaluating our capital-intensive business because they
reflect our operating performance before the impacts of non-cash
items and are indicators of our ability to service debt, pay taxes
and fund discretionary spending such as capital expenditures.
Management also uses EBITDA for a number of purposes, including
setting targets for compensation and assessing the performance of our
operations.

(2) Free cash flow from operations is a non-GAAP financial measure
that indicates cash generated by our business after operating
expenses, capital expenditures and interest expense. We believe this
measure provides useful information to our investors for purposes of
evaluating our ability to satisfy our debt and other mandatory
payment obligations and because it reflects cash flows available for
financing activities, voluntary debt repayment and to strengthen our
balance sheet. This is of particular relevance for our business given
our highly leveraged position. We also use free cash flow from
operations internally for a variety of purposes, including setting
targets for compensation and budgeting our cash needs. Free cash flow
from operations is not a measure determined in accordance with GAAP
and should not be considered as a substitute for "operating income"
or "net cash provided by operating activities" or any other measure
determined in accordance with GAAP. Due to the forward-looking nature
of expected free cash flow amounts for 2006, information to reconcile
this non-GAAP financial measure is not available at this time.

(3) Net Debt is a non-GAAP financial measure that is calculated as our
total borrowings (current plus long-term) less our cash, cash
equivalents and short and long-term investments. We believe net debt
is helpful in analyzing our leverage, and management uses this
measure in making decisions regarding potential financings. Net debt
is not a measure determined in accordance with GAAP and should not be
considered as a substitute for "current borrowings," "long-term
borrowings" or any other measure determined in accordance with GAAP.