9:40 am. I’ll be at the courthouse to start live-blogging the Joe Nacchio trial in about 45 minutes. The Denver Post reports former CFO Robin Szeliga is in the courthouse and may testify today. Qwest former director of legal affairs Kamelia Oneth, who began testifying Thursday, is back on the stand now, still undergoing direct examination. She testified about the mechanics of filing SEC form#4 and what the information showed. She also talked about the Qwest code of conduct regarding insider trading and trading by section 16 insiders. The judge instructed the jury that Nacchio is not being accused of violating the code of conduct or Qwest’s established trading windows. [Note: This is not a transcript. It is my notes of the proceedings typed as fast as I can. Spelling errors will be corrected this evening. I will update every 15 minutes or so, so please either bookmark and check back or refresh your screen every so often for the latest updates.] Code: Conry is U.S. Attorney Colleen Conry Robin is Robin Szeliga Stern is defense attorney Herbert Stern 10:00 am. Colleen Conry is questioning Robin Szeliga. Conry wants to ask about the budget process for 2001. They first began the process in about August, 2000. In the fall of 2000, Nacchio set the internal targets. The external guidelines or targets for Wall Street were set by Nacchio, Wolfe and someone else. A range for the external targets had already been shared with Wall Street. The internal target was higher than the range given to Wall. St. They called it their “stretch budget.” Conry asks what her role was in the five year plan. She directs her to Page 10 of a Government exhibit. It is titled “Combined Company Key Financial Metrics.” It refers to revenue and EBITDA. It shows a growth of revenue of 15 to 20%.

Robin heard Nacchio talk about the growth rates. He talked about the need to hit the five year plan growth rates in discussions and during employee and budget meetings and with analysts in the fall of 2000 and in 2001. Conry directs her attention to the July 10 meeting that took place shortly after the merger. At Conry’s request, Robin reviewed media clips of the meeting prior to coming to court. Court in recess until 10:35 am 10:35 am Back to July 10 meeting. Conry tells Robin she is going to play a portion of the meeting tape for the jury that focuses on Nacchio’s comments. She asks her whether she has read the transcript. Robin says yes and that the transcript of the meeting portion is accurate. T Stern has no objection to the admission of the tape. There is a sidebar over admission of transcript . Everyone is being pretty cordial so far this morning. Sidebar over. The transcript is for illustrative purposes only and will not go to the jury. Conry talks about setting the scene for the July 10, 2000 meeting. Its purpose was for Nacchio to speak about the merger which had happened about 10 days earlier. From the tape: Nacchio: We have a five year business plan. We have the numbers. I can’t tell you how we’re going to get there. It’s grow or die. Robin: She heard Nacchio say the five year plan would be the starting point. N. said we are a growth company, and if we didn’t grow, our stock price will go down. Conry moves to a meeting in early January, 2001 at which Nacchio spoke to the employees. Tape and transcript, same ruling as before. Plays it now. Nacchio: We’re going to meet our financial targets again. In my former job, this wasn’t a priority. The most important thing we do is meet our numbers. It’s more important than our products, than anything else we do. Robin: She heard Nacchio make similar statements before and after the merger. Conry goes back to July 10 meeting attended by a broad group of upper management and employees. Another clip is going to be played from this meeting. Same ruling on transcript not going to the jury. Tape: Nacchio talks about getting whacked and says to enjoy the upside. Now Conry goes back to September, 2000. Here’s the basic q and a: Who was working with you? Mark Evans and Steve Bickley. Bickly had long range planning, meaning longer than the one year budget plan. Look at Exhibit 803. What is it? It’s a memorandum to me from Bickley and Pat Pritchard , who reported to Bickley. Subject is “Risk estimate: (Negative numbers increase risk, positive numbers reduce risk.)” Conry: Walk the jury through the setup of the memo. Robin: On the left side is “unit” meaning business unit. The right columns are for Revenue and Capital (expenditures.) Mr. Bickley was communicating the risk in the budget. $1 billion for Revenue; $700 million plus for Capital. Grand Total by risk assessment. $22 billion would have $1 billion of risk Grand total of Risk in Street disclosures : 21.6 billion revenue target Have you heard the term “Cushion to the street” What is it? It’s the difference between the internal stretch budget and the number we communicated to the street. Robin: After factoring out the cushion to the street, the risk was $1 billion. She talked to both Nacchio and Woodruff about the memo’s billion dollar risk in mid to late Dec, early Jan. At the meeting she explained the business units were very concerned they couldn’t meet their assigned targets. Nacchio said he, not Robin, would make the decision as to whether the business units had valid concerns. After the meeting, the targets weren’t reduced. 11:10 am September, 200o. Getting closer to completing 2000 planning process. Had just started to work on 2001. Nacchio changed the guidance for Wall Street. for 2000 and 2001. She saw the press release around this time, Exh 528, already in evidence. It’s dated Sept 7, 2000. Reads: ” For 2000 Qwest expects 20.3 to 21.7 (?) billion in revenue, exceeding the previous projection. Also mentions an increase in EBITDA. The 2001 plan was developed using product information — rates and volumes for individual products. Conry says she is going to review some of the business units. Directs Robin to a budget submission from the Qwest national mass markets business unit. Dated Oct 9, 2000. Titled “2001 Financial Review.” Robin met with the group around this time to discuss it. Nacchio, Mohebbi, Woodruff, Mark Evans, Becky Bernard from the unit and her own people were there. At the meeting, they flipped through the report. Bernard has a lot of experience in telecommunications. Page six of the document: It’s a waterfall chart from the end of 2000 to the target for 2001 for that unit. It shows steps that impact their planning process. The left side has steps going down, the right side has steps going up. There was a gap. 6.75 billion was where they began, and they were supposed to get to 7.5 billion. Bernard said at the meeting that she had no idea how they were going to close the gap. Nacchio told her to go back to the drawing board. The unit never submitted a further plan to close the gap. Exh. 808(a). It’s the 2001 Qwest Wholesale Markets unit budget submission. She saw it in Oct. 2000. It was a joint effort by people in that unit, their finance and regulatory groups. Questioning diverges to: Did you keep a calendar at Qwest? Yes. Asks her to identify it. Exhibit 902. Admitted. Looks at entries for week of October 9 to 15. It shows Oct. 9, there is an entry for the mass markets meeting. From 1:00 t 2:30. Oct. 11: entry for wholesale business unit meeting. 4:30 to 5:30 pm. Back to exhibit 808(a), the report of the wholesale unit. Meeting was attended by the unit head, Mr. Casey, Nacchio, Woodruff, Mohebbi, her and Mark Evans and Mr. Temple. 11:35 am Conry shows her a similar waterfall chart called Qwest Wholesale 2001 Revenue Outlook. There are steps going down on the left and up on the right. There was a gap of $362 million. Mr. Casey made several statements about his targets. He said his target was too high and why it was too high. He said he was unable to continue to close IRU deals because the market for IRU’s was going to significantly dry up in 2001. Nacchio asked Casey a lot of questions about it, after which Nacchio didn’t change the targets. Govt. exhibit 814: A budget update Robin forwarded to the execs (Nacchio, Mohebbi, Woodruff, etc.) Two units were closing their gaps. They did so by putting dollars into product lines even though they didn’t intend to grow the product lines that much. For example, Casey put a lot of revenue growth into the “private line.” She can’t recall if either unit closed their EBITDA gap. Exhibit 827. Second Business Unit budget submission. First saw it on date prepared, Dec 12, 2000. She thinks she reviewed it with Nacchio. It was prepared by the Inter-planning and Analysis Group. Entitled “Update from 11/15 meeting. ” The revenue Gap and EBITDA gap were closing. Final budget submission: Exhibit 830. Total revenue for 2000 is 18 billion, 954 million. Revenue is 21 billion 800,000. YOY growth is 13.9% . The cushion to the street at the top end would be $100 million. At bottom, $500 million. 11:55 and my battery is about to go. I’ll be back after lunch.