Qwest Adjusts Its FinancialsQwest Adjusts Its Financials

To meet new Securities and Exchange Commission rules that govern how companies account for nontangible assets, Qwest Communications International Inc. will record a $20 billion to $30 billion non-cash write-off against its second quarter results, the company said late Monday.

The charge reflects the decline in value of U S West, the local phone company that Qwest agreed to acquire in July 1999 for $35 billion. The $20 billion to $30 billion write-off covers a loss in value of the "goodwill" that was part of the acquisition, or the amount Qwest paid for nontangibles such as brand cachet or potential revenue.

The lower value now attached to those aspects of the acquisition stems from an overall decline in the telecom sector, said Qwest chairman and CEO Joseph Nacchio. Today, there's a "very different economy and lowered industry demand for telecom services, which has resulted in our having to write down goodwill," he said in a statement.

New SEC accounting rules require companies to review the value of goodwill on their balance sheets and assess the goodwill's value by the end of the year. Qwest's write down of the $20 billion to $30 billion of U S West's goodwill complies with that rule and is included in an SEC filing by the company.