===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 29, 1998
U S WEST, Inc.
(Formerly "USW-C, Inc.")
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
A Delaware Corporation Commission File IRS Employer Identification
(State of Incorporation) Number 1-14087 No. 84-0953188
</TABLE>
1801 California Street, Denver, Colorado 80202
(Address of principal executive offices, including
Zip Code)
Telephone Number (303) 672-2700
(Registrant's telephone number, including area code)
===============================================================================
<PAGE>
Item 5. Other Events
On July 27, 1998, U S WEST, Inc. (formerly "USW-C, Inc.") released
its second quarter earnings results. The release and financial statements are
attached hereto as Exhibits.
Item 7. Exhibits
Exhibit Description
27 Financial Data Schedule
99 Press Release issued July 27, 1998 concerning the earnings results
of U S WEST, Inc. for the second quarter of 1998.
99A.1 Unaudited Combined Pro Forma Statements of Income of U S WEST,
Inc. for the quarters and six-month periods ended June 30, 1997
and 1998, respectively, filed in connection with the Press Release
dated July 27, 1998.
99A.2 Unaudited Pro Forma Earnings Normalization Schedule of U S WEST,
Inc. for the quarters and six-months periods ended June 30, 1997
and 1998, respectively, filed in connection with the Press Release
dated July 27, 1998.
99A.3 Unaudited Selected Consolidated Data of U S WEST, Inc. for the
quarters and six-month periods ended June 30, 1997 and 1998,
respectively, filed in connection with the Press Release dated
July 27, 1998.
99A.4 Unaudited Consolidated Statements of Income of U S WEST, Inc. for
the quarters and six-month periods ended June 30, 1997 and 1998,
respectively, filed in connection with the Press Release dated
July 27, 1998.
99A.5 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the
six months ended June 30, 1998 and the year ended December 31,
1997, filed in connection with the Press Release dated July 27,
1998.
99A.6 Unaudited Consolidated Statements of Cash Flows of U S WEST, Inc.
for the six-month periods ended June 30, 1997 and 1998,
respectively, filed in connection with the Press Release dated
July 27, 1998.
99A.7 Unaudited Combined Pro Forma Statements of Income of U S WEST,
Inc. for the four quarters of 1997, the year ended December 31,
1997, and the first quarter of 1998.
99A.8 Unaudited Pro Forma Earnings Normalization Schedule of U S WEST,
Inc. for the four quarters of 1997, the year ended December 31,
1997, and the first quarter of 1998, filed in connection with the
Press Release dated July 27, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U S WEST, Inc.
(Formerly "USW-C, Inc.")
By: /s/ Thomas O. McGimpsey
-------------------------------------------
Thomas O. McGimpsey
Assistant Secretary
Dated: July 29, 1998
U S WEST
Investor Relations
NEWS FLASH
July 27, 1998
Note to investors: U S WEST (NYSE: USW) will hold a live
teleconference call at 2:30 p.m. MDT (4:30 p.m. EDT) today to
discuss second quarter, 1998 results. President and CEO, Sol
Trujillo, will host the call. Those wishing to participate
should call 1-800-946-0712 by the scheduled start time. It will
be available for re-broadcast from 3:30 p.m. MDT today through 5
p.m. MDT on Wednesday, Aug. 5 by calling 1-888-821-9353.
U S WEST POSTS EPS GROWTH OF 7 PERCENT IN SECOND QUARTER -
Results driven by strong core telecommunications business,
plus addition of Dex directory publishing -
ENGLEWOOD, Colo. - U S WEST (NYSE: USW) today announced second
quarter normalized, diluted earnings per share of $.76, up 7
percent from second quarter, 1997. These are the new U S WEST's
first quarterly earnings since its June 12 split from MediaOne
Group (NYSE: UMG). That transaction resulted in the transfer of
U S WEST Dex, the company's directory publishing business, from
MediaOne Group to U S WEST. [Note: Net income and EPS figures
used in this release are pro-forma and include full-quarter and
year-to-date, 1997 and 1998 impacts from the U S WEST Dex
transaction.]
Results were driven by strong revenue growth of nearly 8 percent.
Adjusting for a $72 million out-of-period regulatory impact from
second quarter, 1997, revenue growth would have been 5.2 percent.
These improving revenue results show the early impacts from the
company's new data and wireless growth businesses.
"We're pleased with these results," said Sol Trujillo, president
and CEO of U S WEST. "We're on plan and doing better than expectations.
Local service revenues are very strong; the growth platforms we're
building are performing well; productivity continues to improve;
and our efforts to build our ATM and IP-centric networks are moving
along nicely."
Some key quarterly highlights included:
o Local service revenue growth of 14.7 percent prior to
adjustments.
o Revenue growth from the company's data division,
!NTERPRISE, of 42 percent for the quarter to $120 million from
the same period in 1997.
- more -
<PAGE>
U S WEST Second Quarter Earnings - Page 2
o Rollout of the company's first-in-the-nation, one-number
Advanced PCS service in its fifth major market. The service is
now available to 10 million POPs.
o An improvement in revenue per sales representative per day of 42
percent and of revenue per order of 20 percent on the business
sales channel. On the consumer side, revenue per sales representative
per day was up 47 percent and revenue per order was up 13 percent.
o We've more than doubled the number of ATM switches in our network.
ATM provides advanced capabilities for carrying data traffic.
o An increase of 14 percent in the total number of Frame Relay ports in
service to 53,400. With its strategic ally, Intermedia Communications,
U S WEST customers have access to the largest Frame Relay switching
network in the country.
The company achieved the EPS growth while absorbing significant costs related to
expansion of new growth businesses, and expenses associated with mandated
interconnection and number portability, and year 2000 expenses.
U S WEST's healthy core business was boosted by a Caller ID campaign. This
campaign, combined with a similar promotion during first quarter has helped
increase net residential subscriber levels by nearly one million since second
quarter, 1997.
Additionally, the company filed for price cap regulation in Iowa during the
quarter, and expects a commission ruling on its Minnesota filing soon. A similar
plan is still pending in Colorado. If approved in these three states, a total of
nine of the company's 14 states would be under price regulation.
During the quarter, the company saw continuing impacts from competition in its
local telephony business. It now has re-sold almost 171,000 lines to
competitors.
Results for the quarter were partially offset by previously announced one-time
after-tax charges of $89 million related primarily to the split from MediaOne
Group. EPS for the quarter was reported at $.59 including the impacts of these
charges.
Other second quarter highlights include:
New Product Initiatives:
o The company neared completion of the first phase of the wide-scale commercial
deployment of its MegaBit high-speed digital subscriber line data services in 11
states and 31 cities throughout its region, including the Phoenix, Denver,
Minneapolis/St. Paul, Salt Lake City and Seattle metro areas. In Oregon, the
company plans to offer the service in five cities beginning in mid-August.
- more -
<PAGE>
U S WEST Second Quarter Earnings - Page 3
o Rollout of the company's Advanced PCS service in two additional markets
- Tucson, Ariz. (April 6) and Minneapolis (July 16) - bringing to 10
million (about 40 percent of the population in U S WEST's 14 states) the
total number of POPs the company can reach with its one-number wireless
service. In mid-July, U S WEST also introduced two new services to its PCS
line to further integrate its wireless and wireline services. A new dialtone
feature allows the phone to work just like a landline phone, and data mail
allows subscribers to send or receive text messages similar to alphanumeric
pagers.
o The company signed up some 30,000 customers in its "Buyer's Advantage"
program through its marketing alliance with Qwest. Though currently
prohibited from expanding this base, this special long-distance plan
enhanced the company's integrated customer-service portfolio. Additionally
the company now has interstate long-distance filings in place in four states
Montana, New Mexico, Nebraska and Wyoming.
o In April, the company announced plans to roll out its VDSL video services in
Phoenix by the end of the year.
Volumes and Penetration:
o More than 360,000 customers have signed up for the company's new "Custom
Choice" package since its inception in February (200,000 alone in the
second quarter). It generated approximately $3 million in incremental
revenues during the quarter. Custom Choice combines U S WEST's most
popular custom calling features into a discounted package, increasing
penetration of these features.
o Residential penetration levels at the end of the quarter for the company's
most popular custom calling features continued to grow: Caller ID, 33
percent, Voice Messaging, 18 percent (industry leader) and Call Waiting,
36 percent.
o The addition of 656,000 access lines (adjusted for the sales of selected
rural exchanges) over the past 12 months for a normalized growth rate of
4.2 percent. On an adjusted basis, business access lines grew at 4.6
percent; residential access lines grew at 4.0 percent; and residential
additional lines grew 24.6 percent, reaching a second-line penetration
level of 15.0 percent. Special access services growth was 21.2 percent
year-over-year. On a "voice-grade-equivalent" basis, access line growth was
9.3 percent.
o On the small business side, the number of total access lines equipped with
Centrex service increased by 56.3 percent year over year to nearly 1.3
million.
- more -
<PAGE>
U S WEST Second Quarter Earnings - Page 4
Sales and Revenues:
o Local service revenues continued at a strong growth clip, rising by 14.7
percent year over year (8.1 percent on an adjusted basis). Local
service revenues on the consumer side were up 17.6 percent (almost 11
percent on an adjusted basis).
o A revenue increase of 5.7 percent from Dex.
o Revenue from U S WEST's data group, !NTERPRISE, grew 42 percent this quarter
to $120 million. Part of this growth can be attributed to the successful
launch of U S WEST's Internet access service, U S WEST.net. The product is
now available in 42 cities, including: Albuquerque, N.M.; Denver;
Minneapolis; Omaha, Neb.; Phoenix; Portland, Ore.; Salt Lake City; and
Seattle with plans for 11 additional market introductions in the third
quarter.
o A 21.5 percent increase in private line and special access revenues, which
totaled $245 million for the second quarter -- a reflection of the company's
growing data networking services business and its ability to successfully
compete in one of the most highly competitive segments of the
telecommunications market.
Costs and Margins:
o Absorbed approximately $66 million in expenses and approximately $73 million
in capital related to interconnection and number portability.
o Absorbed $19 million in Year 2000 expenses during the quarter.
U S WEST (NYSE: USW) provides a full range of telecommunications services -
including wireline, wireless PCS, data networking, directory and information
services - to more than 25 million customers nationally and in 14 western and
midwestern states. More information about U S WEST can be found on the
Internet at http://www.uswest.com.
Safe Harbor statement: This document contains statements about expected future
events and financial results that are forward-looking and subject to risks and
uncertainties. For those statements, we claim the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Discussion of factors that may affect future results is
contained in our recent filings with the Securities and Exchange Commission.
###
Further information: Larry Thede, 303-896-3550; Rodney Miller,
303-896-3096; Hadley Evans, 303-896-5706.
NOTE: This release and the financial statements will be available on the
Internet after 11:30 a.m. (MDT) by accessing U S WEST's Internet site:
www.uswest.com.
<TABLE>
<CAPTION>
COMBINED PRO FORMA STATEMENTS OF INCOME (1) U S WEST, INC.
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, % June 30, %
In millions 1998 1997 Change 1998 1997 Change
- ----------------------- ------- ------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service $1,369 $ 1,194 14.7 $2,719 $ 2,425 12.1
Interstate access 711 678 4.9 1,409 1,365 3.2
Intrastate access 202 200 1.0 408 400 2.0
Long-distance network 195 240 (18.8) 396 490 (19.2)
Directory services 313 296 5.7 620 583 6.3
Other services 263 222 18.5 510 434 17.5
---------------- ----------------
Total operating rev. 3,053 2,830 7.9 6,062 5,697 6.4
---------------- ----------------
OPERATING EXPENSES
Employee-related 1,069 971 10.1 2,075 1,897 9.4
Other operating 676 462 46.3 1,231 978 25.9
Taxes other than
income taxes 89 102 (12.7) 190 214 (11.2)
Depreciation & amort 535 539 (0.7) 1,067 1,075 (0.7)
---------------- ----------------
Total operating exp. 2,369 2,074 14.2 4,563 4,164 9.6
---------------- ----------------
Operating income 684 756 (9.5) 1,499 1,533 (2.2)
Interest expense 160 167 (4.2) 323 335 (3.6)
Gains on sales of rural
telephone exchanges - 29 - - 47 -
Other expense 33 17 94.1 58 39 48.7
---------------- ----------------
Income before income
taxes 491 601 (18.3) 1,118 1,206 (7.3)
Income tax provision 195 226 (13.7) 429 451 (4.9)
---------------- ----------------
PRO FORMA NET INCOME $ 296 $ 375 (21.1)$ 689 $ 755 (8.7)
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PRO FORMA STATEMENTS OF INCOME, (1) U S WEST, INC.
CONTINUED (UNAUDITED)
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1998 1997 Change 1998 1997 Change
- ----------------------- ------- ------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Pro forma basic
average shares
outstanding 501.5 498.9 0.5 501.4 498.3 0.6
================ ================
Pro forma basic
earnings per share: $ 0.59 $ 0.75 (21.3) $ 1.37 $ 1.52 (9.9)
================ ================
Pro forma diluted
average shares
outstanding 505.6 510.2 (0.9) 505.5 509.5 (0.8)
================ ================
Pro forma diluted
earnings per share: $ 0.59 $ 0.74 (20.3)$ 1.36 $ 1.50 (9.3)
================ ================
<FN>
(1) The separation of U S WEST, Inc. ("Old U S WEST") into two independent
companies, U S WEST, Inc. ("New U S WEST") and MediaOne Group, Inc.,(the
"Separation") occurred on June 12, 1998 (the "Separation Date"). The 1998 and
1997 pro forma results give effect to the Separation, including the assumption
of indebtedness and the issuance of shares in connection with the Dex
transaction, as if the Separation had been consummated as of the beginning of
the periods indicated.
</FN>
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA EARNINGS NORMALIZATION SCHEDULE U S WEST, INC.
(UNAUDITED)
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1998 1997 Change 1998 1997 Change
- ----------------------- ------- ------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
NORMALIZED PRO FORMA INCOME:
Reported pro forma
net income $ 296 $ 375 (21.1) $ 689 $ 755 (8.7)
Adjustments:
Rural exchange sales - (18) - - (29) -
Separation costs 68 - - 68 - -
Asset impairment 21 - - 21 - -
---------------- ----------------
Normalized pro forma
income $ 385 $ 357 7.8 $ 778 $ 726 7.2
================ ================
NORMALIZED PRO FORMA
BASIC EARNINGS PER SHARE:
Reported pro forma basic
earnings per share $ 0.59 $ 0.75 (21.3) $ 1.37 $ 1.52 (9.9)
Adjustments:
Rural exchange sales - (0.04) - - (0.06) -
Separation costs 0.13 - - 0.13 - -
Asset impairment 0.04 - - 0.04 - -
---------------- ----------------
Normalized pro forma
basic earnings
per share $ 0.77 #$ 0.72 # 6.9 $ 1.55 #$ 1.46 6.2
================ ================
NORMALIZED PRO FORMA
DILUTED EARNINGS
PER SHARE:
Reported pro forma
diluted earnings
per share $ 0.59 $ 0.74 (20.3) $ 1.36 $ 1.50 (9.3)
Adjustments:
Rural exchange sales - (0.04) - - (0.06) -
Separation costs 0.13 - - 0.13 - -
Asset impairment 0.04 - - 0.04 - -
---------------- ----------------
Normalized pro forma
diluted earnings
per share $ 0.76 $ 0.71 # 7.0 $ 1.54 #$ 1.44 6.9
================ ================
<FN>
# Amount does not foot due to rounding of the individual components.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED DATA (UNAUDITED) U S WEST, INC.
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1998 1997 Change 1998 1997 Change
- ------------------- ------- ------- -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Normalized access lines (thousands):
Business 4,891 4,678 4.6 4,891 4,678 4.6
Consumer 11,449 11,006 4.0 11,449 11,006 4.0
Total 16,340 15,684 4.2 16,340 15,684 4.2
Access lines
(thousands):
Business 4,884 4,678 4.4 4,884 4,678 4.4
Consumer 11,422 11,006 3.8 11,422 11,006 3.8
Total access lines 16,306 15,684 4.0 16,306 15,684 4.0
Billed access minutes of use (millions):
Interstate 14,799 13,795 7.3 29,161 27,325 6.7
Intrastate 3,116 2,957 5.4 6,099 5,742 6.2
Total minutes of use 17,915 16,752 6.9 35,260 33,067 6.6
Employees:
U S WEST, Inc. 53,535 50,513 6.0 53,535 50,513 6.0
Telephone
operations only 45,497 44,469 2.3 45,497 44,469 2.3
Telephone empl per
10,000 access lines 27.9 28.4 (1.8) 27.9 28.4 (1.8)
Dividends per
common share (#1) $ 0.535$ 0.535 - $ 1.07$ 1.07 -
Common shares
outstanding (#1) 501.4 499.3 0.4 501.4 499.3 0.4
Capital expend $ 809 $ 523 54.7 $ 1,331 $ 932 42.8
EBITDA (#2) 1,219 1,295 (5.9) 2,566 2,608 (1.6)
EBITDA margin 39.9% 45.8% - 42.3% 45.8% -
Debt-to-capital ratio:
Telephone
operations only 56.4% 55.6%# - 56.4% 55.6%# -
<FN>
<F1>
# As of December 31, 1997.
<F2>
# 1: Dividends per common share for the six month period of 1998 and for the
three and six month periods of 1997, and common shares outstanding at June 30,
1997 are pro forma and assume the Separation had been consummated as of the
indicated periods
<F3>
# 2: Earnings before interest, taxes, depreciation, amortization, and other
(EBITDA). EBITDA also excludes gains on asset sales and is based on the combined
pro forma financial results.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME (1,2) U S WEST, INC.
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, % June 30, %
In millions 1998 1997 Change 1998 1997 Change
- ---------------------- --------------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service $1,369 $ 1,194 14.7 $ 2,719 $ 2,425 12.1
Interstate access 711 678 4.9 1,409 1,365 3.2
Intrastate access 202 200 1.0 408 400 2.0
Long-distance network 195 240 (18.8) 396 490 (19.2)
Directory services 313 296 5.7 620 583 6.3
Other services 263 222 18.5 510 434 17.5
--------------- ----------------
Total operating rev. 3,053 2,830 7.9 6,062 5,697 6.4
--------------- ----------------
OPERATING EXPENSES
Employee-related 1,069 971 10.1 2,075 1,897 9.4
Other operating 676 462 46.3 1,231 978 25.9
Taxes other than
income taxes 89 102 (12.7) 190 214 (11.2)
Depreciation & amort 535 539 (0.7) 1,067 1,075 (0.7)
--------------- ----------------
Total operating exp. 2,369 2,074 14.2 4,563 4,164 9.6
--------------- ----------------
Operating income 684 756 (9.5) 1,499 1,533 (2.2)
Interest expense 109 101 7.9 206 204 1.0
Gains on sales of rural
telephone exchanges - 29 - - 47 -
Other expense 33 17 94.1 58 39 48.7
--------------- ----------------
Income before income
taxes 542 667 (18.7) 1,235 1,337 (7.6)
Income tax provision 215 251 (14.3) 474 501 (5.4)
--------------- ----------------
NET INCOME $ 327 $ 416 (21.4)$ 761 $ 836 (9.0)
=============== ================
<FN>
<F1>
(1)The historical results prior to the Separation present unaudited historical
financial information as if the businesses that comprise New U S WEST operated
as a separate entity for the periods presented. The effects of the Separation,
including the assumption of indebtedness and the issuance of shares in
connection with the Dex transaction, have been included in the historical
results as of the Separation Date.
<F2>
(2)The financial effects of the Separation and the Dex transaction are not fully
reflected in the historical financial statements. Therefore, historical earnings
per share is not presented as it is not meaningful. See pro forma basic and
diluted earnings per share and pro forma average shares outstanding.
</FN>
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS U S WEST, Inc.
(UNAUDITED)
June 30, December 31,
In millions 1998 1997
- -------------------------------------- ------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 730 $ 27
Accounts and notes receivable 1,706 1,717
Inventories and supplies 213 150
Deferred directory costs 263 257
Deferred tax asset 217 271
Prepaid and other 87 82
------------- --------------
Total current assets 3,216 2,504
------------- --------------
Gross property, plant and equipment 34,565 33,651
Less accumulated depreciation 20,074 19,343
------------- --------------
Property, plant and equipment - net 14,491 14,308
Other assets 890 855
------------- --------------
Total assets $ 18,597 $ 17,667
============= ==============
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ 2,753 $ 695
Accounts payable 1,187 1,377
Dividends payable 268 259
Other 1,782 1,868
------------- --------------
Total current liabilities 5,990 4,199
------------- --------------
Long-term debt 7,946 5,020
Postretirement and other postemployment
benefit obligations 2,539 2,534
Deferred taxes, credits and other 1,642 1,547
Shareowners' equity 480 4,367
------------- --------------
Total liabilities and
shareowners' equity $ 18,597 $ 17,667
============================
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS U S WEST, Inc.
(UNAUDITED)
Six Months Ended
June 30,
In millions 1998 1997
- ------------------------------------------------- -------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 761 $ 836
Adjustments to net income:
Depreciation and amortization 1,067 1,075
Gains on sales of rural telephone exchanges - (47)
Deferred income taxes and amortization
of investment tax credits 89 (10)
Changes in operating assets and liabilities:
Accounts receivable 11 22
Inventories, supplies and other current assets (88) (62)
Accounts payable and accrued liabilities (76) 259
Other - net 88 95
- ------------------------------------------------- -------- ---------
Cash provided by operating activities 1,852 2,168
- ------------------------------------------------- -------- ---------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (1,283) (849)
Payment to MediaOne Group for the directory
business (Dex) (3,829) -
Proceeds from disposals of property, plant
and equipment 34 4
Purchase of PCS licenses (18) -
Proceeds from sales of rural telephone exchanges - 28
Other (34) -
- ------------------------------------------------- -------- ---------
Cash (used for) investing activities (5,130) (817)
- ------------------------------------------------- -------- ---------
FINANCING ACTIVITIES
Net proceeds from (repayments of) short-term debt 2,060 (669)
Net (repayments of) proceeds from issuance
of Old U S WEST debt (198) 11
Proceeds from issuance of long-term debt 3,066 -
Repayments of long-term debt (83) (86)
Proceeds from issuance of common stock 23 38
Dividends paid on common stock (519) (475)
Dividends paid to Old U S WEST (183) (161)
Dividend paid to MediaOne Group (139) -
Purchases of treasury stock (46) -
- ------------------------------------------------- -------- ---------
Cash provided by (used for) financing activities 3,981 (1,342)
- ------------------------------------------------- -------- ---------
CASH AND CASH EQUIVALENTS
Increase 703 9
Beginning balance 27 80
- ------------------------------------------------- -------- ---------
Ending balance $ 730 $ 89
================================================= ======== =========
</TABLE>
<TABLE>
<CAPTION>
COMBINED PRO FORMA STATEMENTS OF INCOME U S WEST, INC.
(UNAUDITED)
------------1997----------------1998
In millions Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year Qtr 1
- ----------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service 1,231 1,194 1,314 1,277 5,016 1,350
Interstate access 687 678 663 638 2,666 698
Intrastate access 200 200 208 153 761 206
Long-distance network 250 240 231 164 885 201
Directory services 287 296 296 318 1,197 307
Other services 212 222 248 272 954 247
------------------------------ ------
Total operating rev. 2,867 2,830 2,960 2,822 11,479 3,009
------------------------------ ------
OPERATING EXPENSES
Employee-related 926 971 1,018 1,038 3,953 1,006
Other operating 516 462 539 642 2,159 555
Taxes other than
income taxes 112 102 106 108 428 101
Depreciation & amort 536 539 541 547 2,163 532
------------------------------ ------
Total operating exp. 2,090 2,074 2,204 2,335 8,703 2,194
------------------------------ ------
Operating income 777 756 756 487 2,776 815
Interest expense 168 167 165 167 667 163
Gain on sale of Bellcore - - - 53 53 -
Gains on sales of rural
telephone exchanges 18 29 30 - 77 -
Other expense 22 17 12 21 72 25
------------------------------ ------
Income before income
taxes and extra-
ordinary item 605 601 609 352 2,167 627
Income tax provision 225 226 226 125 802 234
------------------------------ ------
PRO FORMA INCOME
BEFORE EXTRAORDINARY
ITEM 380 375 383 227 1,365 393
Extraordinary item -
debt refinancing - - (3) - (3) -
------------------------------ ------
PRO FORMA NET INCOME 380 375 380 227 1,362 393
============================== ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMBINED PRO FORMA STATEMENTS OF INCOME, (1) U S WEST, Inc.
CONTINUED (UNAUDITED)
In millions except per ------------1997----------------1998
share amounts Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Qtr 1
- ----------------------- ------------------------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Pro forma basic
average shares
outstanding 497.7 498.9 499.6 500.2 499.1 501.3
===================================== ======
Pro forma basic
earnings per share
before extraordinary
item 0.76 0.75 0.77 0.45 2.73 0.78
Extraordinary item - - (0.01) - (0.01) -
-------------------------------------- ------
Pro forma basic
earnings per share 0.76 0.75 0.76 0.45 2.73 0.78
====================================== ======
Pro forma diluted
average shares
outstanding 508.7 510.2 507.7 503.7 507.6 505.5
====================================== ======
Pro forma diluted
earnings per share
before extraordinary
item 0.75 0.74 0.76 0.45 2.71 0.78
Extraordinary item - - (0.01) - (0.01) -
-------------------------------------- ------
Pro forma diluted
earnings per share 0.75 0.74 0.75 0.45 2.70 0.78
====================================== ======
Amounts may not foot due to rounding of individual components.
<FN>
(1) The separation of U S WEST, Inc. ("Old U S WEST") into two independent
companies, U S WEST, Inc. ("New U S WEST") and MediaOne Group, Inc.,(the
"Separation") occurred on June 12, 1998 (the "Separation Date"). The 1998 and
1997 pro forma results give effect to the Separation, including the assumption
of indebtedness and the issuance of shares in connection with the Dex
transaction, as if the Separation had been consummated as of the beginning of
the periods indicated.
</FN>
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA EARNINGS NORMALIZATION SCHEDULE U S WEST, Inc.
(UNAUDITED)
Inmillions except per ------------1997---------------1998
share amounts Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Qtr 1
- ----------------------- -------------------------------------- ------
<S> <C> <C> <C> <C> <C> <C>
NORMALIZED
PRO FORMA INCOME:
Reported pro forma
net income 380 375 380 227 1,362 393
Adjustments:
Rural exchange sales (11) (18) (19) - (48) -
Gain on Bellcore sale - - - (32) (32) -
Early debt
extinguishment - - 3 - 3 -
--------------------------------------- ------
Normalized pro forma
income 369 357 364 195 1,285 393
======================================= ======
NORMALIZED BASIC
PRO FORMA EARNINGS PER SHARE:
Reported pro forma basic
earnings per share 0.76 0.75 0.76 0.45 2.73 0.78
Adjustments:
Rural exchange sales (0.02) (0.04) (0.04) - (0.10) -
Gain on Bellcore sale - - - (0.06) (0.06) -
Early debt
extinguishment - - 0.01 - 0.01 -
--------------------------------------- ------
Normalized pro forma
basic earnings
per share 0.74 0.72 0.73 0.39 2.57 0.78
======================================= ======
NORMALIZED DILUTED
PRO FORMA EARNINGS PER SHARE:
Reported diluted
pro forma earnings
per share 0.75 0.74 0.75 0.45 2.70 0.78
Adjustments:
Rural exchange sales (0.02) (0.04) (0.04) - (0.09) -
Gain on Bellcore sale - - - (0.06) (0.06) -
Early debt
extinguishment - - 0.01 - 0.01 -
--------------------------------------- ------
Normalized pro forma
diluted earnings
per share 0.73 0.71 0.72 0.39 2.55 0.78
======================================= ======
</TABLE>
Amounts may not foot due to rounding of individual components.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001054522
<NAME> U S WEST, INC.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> APR-01-1998 JAN-01-1998
<PERIOD-END> JUN-30-1998 JUN-30-1998
<CASH> 730 730
<SECURITIES> 0 0
<RECEIVABLES> 1,706 1,706
<ALLOWANCES> 0 0
<INVENTORY> 213 213
<CURRENT-ASSETS> 3,216 3,216
<PP&E> 34,565 34,565
<DEPRECIATION> 20,074 20,074
<TOTAL-ASSETS> 18,597 18,597
<CURRENT-LIABILITIES> 5,990 5,990
<BONDS> 7,946 7,946
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 480 480
<TOTAL-LIABILITY-AND-EQUITY> 18,597 18,597
<SALES> 3,053 6,062
<TOTAL-REVENUES> 3,053 6,062
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 2,369 4,563
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 109 206
<INCOME-PRETAX> 542 1,235
<INCOME-TAX> 215 474
<INCOME-CONTINUING> 327 761
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 327 761
<EPS-PRIMARY> 0.59 1.37
<EPS-DILUTED> 0.59 1.36
</TABLE>
