<PAGE> 1
EXHIBIT 99.2
MEDIAONE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS 2000 1999
--------------------------------------------- --------- ---------
<S> <C> <C>
Sales and other revenues:
Domestic cable and broadband $ 706 $ 654
Corporate and other -- 11
--------- ---------
Total sales and other revenues 706 665
--------- ---------
Operating expenses:
Cost of sales and other revenues 296 269
Selling, general and administrative expenses 171 185
Depreciation and amortization 379 250
--------- ---------
Total operating expenses 846 704
--------- ---------
Operating loss (140) (39)
Interest expense (147) (96)
Equity losses in unconsolidated ventures (71) (115)
Gains (losses) on investments:
Sales and exchanges of domestic investments 191 70
Sales of international investments 1,993 124
PrimeStar investment -- (65)
Minority interest expense in Centaur Funding (25) (25)
Guaranteed minority interest expense (24) (24)
Merger costs (19) (15)
Other income - net 155 37
--------- ---------
Income (loss) before income taxes 1,913 (148)
(Provision) benefit for income taxes (755) 37
--------- ---------
NET INCOME (LOSS) $ 1,158 $ (111)
========= =========
Preferred stock dividends and accretion (1) (14)
--------- ---------
EARNINGS (LOSS) AVAILABLE FOR COMMON STOCK $ 1,157 $ (125)
========= =========
Basic earnings (loss) per common share $ 1.80 $ (0.21)
========= =========
Diluted earnings (loss) per common share $ 1.78 $ (0.21)
========= =========
AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS):
Basic average common shares outstanding 642,947 603,813
========= =========
Diluted average common shares outstanding 651,110 603,813
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 2
MEDIAONE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
DOLLARS IN MILLIONS 2000 1999
------------------- ----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 7,540 $ 7,471
Accounts and notes receivable - net 374 489
Current portion of deferred tax asset 68 69
Prepaid and other 26 29
Marketable securities 66 62
------- -------
Total current assets 8,074 8,120
------- -------
Property, plant and equipment - net 5,369 5,090
Investment in Vodafone Group 9,725 8,718
Investment in Time Warner Entertainment 2,609 2,597
Net investment in international ventures held for sale 820 938
Intangible assets - net 11,329 11,507
Other assets 3,152 2,816
------- -------
Total assets $41,078 $39,786
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
2
<PAGE> 3
MEDIAONE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
DOLLARS IN MILLIONS 2000 1999
------------------- ------- -------
(UNAUDITED)
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
<S> <C> <C>
Short-term debt $ 1,505 $ 1,506
Accounts payable 292 350
Employee compensation 75 92
Deferred revenue and customer deposits 186 174
Current income taxes payable 937 1,552
Other 483 571
------- -------
Total current liabilities 3,478 4,245
------- -------
Long-term debt 9,119 8,673
Deferred income taxes 7,998 7,711
Deferred credits and other 349 168
Commitments and contingencies
Minority interest in Centaur Funding 1,115 1,113
Company-obligated mandatorily redeemable preferred securities of subsidiary
trust holding solely Company-guaranteed subordinated debentures 1,060 1,060
Preferred stock subject to mandatory redemption 50 50
Shareowners' equity:
Common shares 10,943 11,448
Retained earnings 5,280 4,123
Accumulated other comprehensive income 1,686 1,195
------- -------
Total shareowners' equity 17,909 16,766
------- -------
Total liabilities and shareowners' equity $41,078 $39,786
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
MEDIAONE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 2000 1999
---------------------------- ------- -------
DOLLARS IN MILLIONS
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 1,158 $ (111)
Adjustments to net income (loss):
Depreciation and amortization 379 250
Equity losses in unconsolidated ventures 71 115
(Gains) losses on investments:
Sales and exchanges of domestic investments (191) (70)
Sales of international investments (1,993) (124)
PrimeStar investment -- 65
Deferred income taxes (23) (18)
Changes in operating assets and liabilities:
Accounts and notes receivable, and other current assets 120 (77)
Accounts payable and accrued liabilities (155) 37
Current income taxes payable (615) 346
Other - net 29 45
------- -------
Cash (used for) provided by operating activities (1,220) 458
------- -------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (462) (401)
Investment in international ventures (14) (55)
Proceeds from sales of investments 2,289 304
Other - net 3 11
------- -------
Cash provided by (used for) investing activities 1,816 (141)
------- -------
FINANCING ACTIVITIES
Net repayments of short-term debt -- (160)
Repayments of long-term debt -- (3)
Proceeds from issuance of common stock 57 23
Dividends paid on preferred stock (1) (13)
Purchases of treasury stock (583) (47)
------- -------
Cash used for financing activities (527) (200)
------- -------
CASH AND CASH EQUIVALENTS
Increase 69 117
Beginning balance 7,471 415
------- -------
Ending balance $ 7,540 $ 532
======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(DOLLARS IN MILLIONS)
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The Consolidated Financial Statements have been prepared
by MediaOne Group, Inc. ("MediaOne Group" or the "Company") pursuant to the
interim reporting rules and regulations of the Securities and Exchange
Commission ("SEC") and include the accounts of MediaOne Group and its
consolidated subsidiaries. Certain information and footnote disclosures normally
accompanying financial statements prepared in accordance with generally accepted
accounting principles ("GAAP") have been condensed or omitted pursuant to such
SEC rules and regulations.
In the opinion of MediaOne Group's management, the Consolidated Financial
Statements include all adjustments, consisting of normal recurring adjustments,
necessary to present fairly the financial information set forth therein. It is
suggested that these Consolidated Financial Statements be read in conjunction
with the Company's 1999 Consolidated Financial Statements and notes thereto
included in MediaOne Group's Form 10-K filed with the SEC on March 23, 2000.
Certain reclassifications within the Consolidated Financial Statements have been
made to conform to the current year presentation.
NOTE 2: AT&T MERGER
On May 6, 1999, MediaOne Group entered into an agreement with AT&T Corp.
("AT&T") to merge its operations with those of AT&T. The merger is expected to
close in mid-2000, subject to legal and regulatory approval.
NOTE 3: DOMESTIC ASSET DISPOSITIONS, EXCHANGES AND OTHER
On March 1, 2000, MediaOne Group sold its investment in shares of Motorola, Inc.
("Motorola") for gross proceeds of $41, resulting in a net pretax gain of $24.
The Motorola shares were received in January 2000 as a result of the exercise of
certain General Instrument Corporation ("GI") warrants held by the Company,
which were converted to Motorola shares as a result of the merger of GI into
Motorola.
5
<PAGE> 6
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
On March 10, 2000, the Company's interest in the Trip.com, an online travel
services company, was merged into Galileo International, Inc. ("Galileo"). The
Company's interest was converted into stock of Galileo and approximately $30 in
cash, resulting in a net pretax gain of $85. Also during March 2000, the
Company's investments in Preview Travel and IPIX were merged and exchanged into
investments in Travelocity.com and Bamboo.com, respectively, resulting in total
net pretax gains of $82. The new investments will be accounted for under the
cost method of accounting, as available for sale securities, with changes in the
fair market value of the investment being recorded in equity as a component of
other comprehensive income.
NOTE 4: OPERATING SEGMENTS
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 131,
"Disclosures about Segments of an Enterprise and Related Information," the
following table presents selected information for MediaOne Group's operating
segments for the three month periods ended March 31, 2000 and 1999. "Sales and
Other Revenues" and earnings before interest, taxes, depreciation, amortization
and other ("EBITDA") for the domestic segment are presented on a proportionate
basis. Proportionate results reflect the relative weight of MediaOne Group's
ownership in each of its respective domestic equity ventures together with the
consolidated results of its subsidiaries. The computation of EBITDA also
excludes gains on asset sales, equity losses, guaranteed minority interest
expense and minority interest expense in Centaur Funding. Adjustments made to
Sales and Other Revenues and EBITDA to arrive at proportionate results are
reversed in the column labeled "Eliminations and Adjustments," in conformity
with SFAS No. 131, so that in total, Sales and Other Revenues and EBITDA reflect
consolidated results.
Beginning in 2000, the Company no longer evaluates the proportionate results of
its international interests when assessing performance and allocating resources
due to the sale of a significant portion of these international investments.
Amounts previously disclosed for 1999 have been reclassified to conform with the
current year presentation.
6
<PAGE> 7
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
Operating Results:
<TABLE>
<CAPTION>
DOMESTIC CABLE &
BROADBAND
MEDIAONE OF MULTIMEDIA ELIMINATIONS
DELAWARE (1) VENTURES (2) INTERNATIONAL OTHER & ADJUSTMENTS CONSOLIDATED
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 2000
Sales and other revenues $ 706 $ 841 $ -- $ -- $ (841) $ 706
EBITDA(3) 261 216 (1) (20) (217) 239
Equity gains (losses) in
unconsolidated ventures -- -- (85) -- 14 (71)
Net income (loss) (4) (123) 6 1,219 56 -- 1,158
------- ------- ------- ------- ------- -------
THREE MONTHS ENDED MARCH 31, 1999
Sales and other revenues $ 654 $ 748 $ 10 $ 1 $ (748) $ 665
EBITDA(3) 241 243 (12) (16) (245) 211
Equity gains (losses) in
unconsolidated ventures -- -- (108) -- (7) (115)
Net income (loss) (74) 4 (18) (23) -- (111)
------- ------- ------- ------- ------- -------
</TABLE>
(1) MediaOne of Delaware represents the operations of the Company's
domestic cable and broadband subsidiary.
(2) Multimedia Ventures includes MediaOne Group's 25.51 percent equity
interest in TWE, as well as related overheads. The reported TWE results
are prepared in accordance with GAAP and have not been adjusted to
report TWE investments accounted for under the equity method on a
proportionate basis.
(3) The Company believes EBITDA is an important indicator of the operating
performance of its businesses and should not be considered an
alternative to operating or net income as an indicator of the
performance of MediaOne Group's businesses, or as an alternative to
cash flows from operating activities as a measure of liquidity, in each
case determined in accordance with GAAP.
(4) Consolidated net income for the three month period of 2000 includes one
time gains recognized on investment sales and exchanges of $1,344,
including $1,226 of one time gains on sales of international
investments.
Total Assets:
Total assets are those assets and investments that are used in, or pertain to,
each segment's operations, as follows:
<TABLE>
<CAPTION>
DOMESTIC CABLE & BROADBAND
----------------------------
MEDIAONE OF MULTIMEDIA
DELAWARE (1) VENTURES (2) INTERNATIONAL OTHER CONSOLIDATED
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TOTAL ASSETS AS OF:
March 31, 2000 $17,287 $ 2,639 $ 1,491 $19,661 $41,078
December 31, 1999 17,270 2,629 1,885 18,002 39,786
------- ------- ------- ------- -------
</TABLE>
(1) MediaOne of Delaware represents the operations of the Company's
domestic cable and broadband subsidiary.
(2) Multimedia Ventures includes MediaOne Group's 25.51 percent equity
interest in TWE.
7
<PAGE> 8
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
The "Other" column includes primarily cash, debt and equity securities, domestic
Internet related investments, and other corporate assets. The increase in Other
total assets of $1,659, or 9.2 percent, during 2000 is due primarily to changes
in the fair market value of the Company's investments in marketable equity
securities, including Vodafone Group Public Limited Company ("Vodafone")
American Depository Receipts ("ADRs") and preferred stock.
Revenue and EBITDA amounts for the three month period of 2000 represent results
from the Company's domestic operations. For the same period in 1999, these
results represented primarily domestic operations.
NOTE 5: NET INVESTMENT IN INTERNATIONAL VENTURES
On February 15, 2000, MediaOne Group sold its 25 percent interest in Singapore
Cablevision ("Singapore") to Singapore Technologies for gross proceeds of $218,
resulting in a net pretax gain of $199.
On March 23, 2000, MediaOne Group sold its interests in certain of its Central
European wireless ventures for proceeds of $2 billion, resulting in a net pretax
gain of $1,794. The ventures sold included Polska Telefonia Cyfrowa, a wireless
operator located in Poland, and Westel 900 and Westel Radiotelefon, wireless
operators located in Hungary.
On March 21, 2000, the Company signed an agreement to sell its interest in the
Russian Telecommunications Development Corporation ("RTDC"), a Russian venture
which holds various wireless investments, to MCT Corporation.
In 1999, the Company incurred a $43 charge as a result of the decision to exit
its international businesses. The exit charge included employee severance and
foreign income tax settlement costs ("Severance Costs") of $33 for approximately
120 people, and lease termination, relocation and other costs ("Other Costs") of
$10. During first quarter 2000, the Company paid $2 of Severance Costs, $1 of
Other Costs, and 15 people left under the exit plan. Since the inception of the
charge, the Company has paid a total of $7 of Severance Costs, $2 of Other
Costs, and approximately 60 people have left under the exit plan.
8
<PAGE> 9
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
NOTE 6: SHAREOWNERS' EQUITY
Following is a rollforward of shareowners' equity since the end of 1999:
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON RETAINED COMPREHENSIVE
SHARES EARNINGS INCOME
-------------------------------------------------------------- ----------------- ---------------- -------------------
<S> <C> <C> <C>
Balance at December 31, 1999 $ 11,448 $ 4,123 $ 1,195
Net income 1,158
Issuance of MediaOne Group Stock 30
Purchase of treasury stock (583)
Preferred stock dividends (1)
Market value adjustments for debt and equity securities, and
Exchangeable Notes,(1) net of reclassification
adjustments and income taxes 445
Foreign currency translation, net of income taxes 46
Other 48
-------- ------- -------
Balance at March 31, 2000 $ 10,943 $ 5,280 $ 1,686
======== ======= =======
</TABLE>
(1) The "Exchangeable Notes" represent debt exchangeable into Vodafone ADRs,
and/or the cash value of Vodafone ADRs.
Common Stock. Other activity during 2000 represents a gain of $27 on the
exercise of a call option on MediaOne Group Stock and $21 of tax benefits on
employee stock option exercises.
Share Repurchase. During the three month period ended March 31, 2000, MediaOne
Group purchased and placed into treasury 9,448,900 shares of MediaOne Group
Stock, at an average purchase price of $61.69 per share and a total cost basis
of $583. The share repurchases were transacted under a 25 million share
repurchase plan authorized in 1998 by the Company's Board of Directors.
9
<PAGE> 10
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
Comprehensive Income. Total comprehensive income and the components of
comprehensive income follow:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
2000 1999
------- -------
<S> <C> <C>
Net income (loss) $ 1,158 $ (111)
Other comprehensive income, before tax:
Foreign currency translation adjustment (11) (65)
Unrealized gains on debt and equity securities, and
Exchangeable Notes 823 899
Reclassification for (gains) losses realized in net income
(loss) (10) (105)
Income tax provision related to items of other comprehensive
income (311) (281)
------- -------
Total other comprehensive income, net of tax 491 448
======= =======
Total comprehensive income $ 1,649 $ 337
======= =======
</TABLE>
The majority of the unrealized gains on debt and equity securities during the
three month period of 2000 relate to the Company's investment in Vodafone ADRs
and preferred stock, as well as its investment in shares of Time Warner Telecom,
Inc. ("TW Telecom"). Of the reclassifications for gains and losses realized in
2000, $97 pretax ($62 after tax) relate to gains realized upon the sale of
Motorola shares and upon the exchange of various Internet investments, and $87
pretax ($54 after tax) relate to foreign currency translation losses on the sale
of various international investments during the period. The majority of the
unrealized gains and losses on debt and equity securities during 1999 related to
the Company's investment in AirTouch Communications, Inc. common and preferred
stock. The reclassification in 1999 related to the sale of the Company's
investment in shares of Cable & Wireless Optus Limited ("Optus").
10
<PAGE> 11
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
NOTE 7: EARNINGS PER SHARE
The following table reflects the computation of MediaOne Group's basic and
diluted earnings (loss) per share in accordance with SFAS No. 128, "Earnings Per
Share." The 1999 diluted loss per share and related share amounts do not include
potential share issuances associated with stock options and the Company's then
outstanding convertible Series D preferred shares since the effect would have
been antidilutive on the net loss for the period.
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
--------- ---------
<S> <C> <C>
Net income (loss) $ 1,158 $ (111)
Preferred stock dividends and accretion (1) (14)
--------- ---------
Earnings (loss) available to common stock shareowners used for basic
and diluted earnings (loss) per share $ 1,157 $ (125)
========= =========
Weighted average number of shares used for basic earnings (loss) per share
642,947 603,813
Effect of dilutive securities - stock options 8,163 --
--------- ---------
Weighted average number of shares used for diluted earnings (loss) per share
651,110 603,813
========= =========
Basic earnings (loss) per common share $ 1.80 $ (0.21)
========= =========
Diluted earnings (loss) per common share $ 1.78 $ (0.21)
========= =========
</TABLE>
NOTE 8: SUBSEQUENT EVENTS
During April 2000, MediaOne Group sold its Japanese cable and telephony
investment for proceeds of $280, including the repayment of $71 in capital
contributions made to the Japanese venture after June 30, 1999, plus interest
earned on these contributions. In addition, MediaOne Group was released from
guarantees given to support debt at the Japanese venture, which, as of March 31,
2000, totaled approximately $150. MediaOne Group also agreed to sell an
investment in a Japanese cellular company, which is expected to close during the
second quarter of 2000.
11
<PAGE> 12
MEDIAONE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS)
(UNAUDITED)
In April 2000, in accordance with the merger agreement between Telewest
Communications plc ("Telewest") and Flextech plc ("Flextech), MediaOne Group
received approximately 39,762,000 shares of Telewest in exchange for its
investment in Flextech shares. The Company now owns an approximate 23 percent
interest in Telewest. In addition, an agreement entered into by the Company in
the fourth quarter of 1999 to sell its interest in Flextech shares has expired.
On April 28, 2000, MediaOne Group sold 9 million shares of its investment in TW
Telecom for gross proceeds of $450, thereby decreasing its investment in TW
Telecom to approximately 6.3 million shares. The Company also granted a
thirty-day option to the underwriters to purchase up to an additional 500,000
shares of TW Telecom, if needed, under the same terms and conditions.
12
