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Registration No. 33-49647
Filing under Rule 424(b)(3)
PRICING SUPPLEMENT NO. 1 DATED MARCH 8, 1994
(To Prospectus and Prospectus Supplement
December 17, 1993)
U.S.$75,000,000
U S WEST COMMUNICATIONS, INC.
Medium-Term Notes
Due Nine Months or More From Date of Issue
Form of Note: Except as set forth herein, the
Notes offered hereby are "Floating
Rate Notes" and have such terms as
are described in the accompanying
Prospectus Supplement dated
December 17, 1993 relating to
Floating Rate Notes.
Settlement Date: March 15, 1994
Maturity Date: March 15, 1999
Issue Price: 100%
Initial Interest Rate: 5.50%
Interest Payment Dates: Interest will be payable quarterly
in arrears on each March 15, June
15, September 15, and December 15,
commencing June 15, 1994.
Interest Reset Dates: Each March 15, June 15, September
15 and December 15 from June 15,
1994 to and including December 15,
1998 (whether or not such day is a
Business Day).
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Interest Determination
Dates: The "Interest Determination Date"
pertaining to an Interest Reset
Date will be such Interest Reset
Date.
Calculation Agent: Morgan Stanley & Co. Incorporated
Interest Rate Basis: Constant Maturity Treasury Rate.
"Constant Maturity Treasury Rate"
means, with respect to any Interest
Determination Date (in the
following order of priority):
(i) The yield on 10-year United
States Treasury securities at
"constant maturity" for the related
Reference Date (as hereinafter
defined), as published by the Board
of Governors of the Federal Reserve
System in "Statistical Release
H.15(519), Selected Interest
Rates", or any successor
publication ("H.15(519)") opposite
the caption "Treasury Constant
Maturities, 10-Year". Upon
publication, the rates contained in
H.15(519) are also displayed on
page 7055 on the Dow Jones Telerate
Service (page 7055, or such page as
may replace page 7055 on that
service, being hereinafter referred
to as "Telerate Page 7055"). The
Calculation Agent may determine the
Constant Maturity Treasury Rate as
described above by reference to
Telerate Page 7055, provided,
however, if any discrepancy arises
between the rate determined by
reference to Telerate Page 7055 and
the rate published in H.15(519),
the rate published in H.15(519)
shall control. "Reference Date"
means the last Business Day
included in the H.15(519) published
for the Calendar Week immediately
preceding the Interest
Determination Date. "Calendar
Week" shall mean the week beginning
on each Monday.
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(ii) If the Constant Maturity
Treasury Rate as described in
clause (i) is not so published on
the applicable Interest
Determination Date, the Constant
Maturity Treasury Rate will be
calculated by the Calculation Agent
and will be the arithmetic mean of
the closing offered yield
quotations for the Reference Date
of three leading primary United
States government securities
dealers in The City of New York,
for actively traded ten-year U.S.
Treasury Notes.
(iii) If fewer than three dealers
selected by the Calculation Agent
are quoting as described in clause
(ii), the Constant Maturity
Treasury Rate will be the Constant
Maturity Treasury Rate in effect on
the preceding Interest Reset Date
(or, if there was no preceding
Interest Reset Date, the Initial
Interest Rate).
Spread Adjustment
Formula: .5 * CMT + 2.18%
Minimum Interest Rate: 5.50%
Accrued Interest: Interest will be computed on the
basis of a 360-day year of twelve
30-day months.
Business Day: Any day that is not a Saturday or
Sunday and is not a day on which
banking institutions in The City of
New York are generally authorized
or obligated by law or executive
order to close.
Terms used but not defined in this
Pricing Supplement shall have the
meanings specified in the above
-referenced Prospectus and
Prospectus Supplement.
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TAXATION
The following discussion supplements the discussion
contained in the accompanying Prospectus Supplement under the
heading "Certain United States Federal Income Tax Considerations
- -- Original Issue Discount".
On January 27, 1994, the IRS issued final Treasury
Regulations (the "OID Regulations") under the original issue
discount provisions of the Code. The OID Regulations, which
replaced the Proposed OID Regulations, generally apply to debt
instruments issued on or after April 4, 1994; therefore by their
terms they would not apply to the Notes offered hereby.
Nevertheless, taxpayers may rely on the OID Regulations for debt
instruments issued after December 21, 1992.
Under the OID Regulations, Floating Rate Notes (such as the
Notes offered hereby) are subject to special rules whereby a
Floating Rate Note will qualify as a "variable rate debt
instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Floating Rate Note
by more than a specified de minimis amount and (b) it provides
for stated interest, paid or compounded at least annually, at
current values of (i) one or more qualified floating rates, (ii)
a single fixed rate and one or more qualified floating rates,
(iii) a single objective rate, or (iv) a single fixed rate and a
single objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where
variations in the value of such rate can reasonably be expected
to measure contemporaneous variations in the cost of newly
borrowed funds in the currency in which the Floating Rate Note is
denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a
variable rate equal to the product of a qualified floating rate
and a fixed multiple that is greater than zero but not more than
1.35 will constitute a qualified floating rate. A variable rate
equal to the product of a qualified floating rate and a fixed
multiple that is greater than zero but not more than 1.35,
increased or decreased by a fixed rate, will also constitute a
qualified floating rate. In addition, under the OID Regulations,
two or more qualified floating rates that can reasonably be
expected to have approximately the same values throughout the
term of the Floating Rate Note (e.g., two or more qualified
floating rates with values within 25 basis points of each other
as determined on the Floating Rate Note's issue date) will be
treated as a single qualified floating rate. Notwithstanding the
foregoing, a variable rate that would otherwise constitute a
qualified floating rate but which is subject to one or more
restrictions such as a maximum numerical limitation (i.e., a cap)
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or a minimum numerical limitation (i.e., a floor) may, under
certain circumstances, fail to be treated as a qualified floating
rate under the OID Regulations. An "objective rate" is a rate
that is not itself a qualified floating rate but which is
determined using a single fixed formula and which is based upon
(i) one or more qualified floating rates, (ii) one or more rates
where each rate would be a qualified floating rate for a debt
instrument denominated in a currency other than the currency in
which the Floating Rate Note is denominated, (iii) either the
yield or changes in the price of one or more items of actively
traded personal property or (iv) a combination of objective
rates. The OID Regulations also provide that other variable
interest rates may be treated as objective rates if so designated
by the IRS in the future. Despite the foregoing, a variable rate
of interest on a Floating Rate Note will not constitute an
objective rate if it is reasonably expected that the average
value of such rate during the first half of the Floating Rate
Note's term will be either significantly less than or
significantly greater than the average value of the rate during
the final half of the Floating Rate Note's term. A "qualified
inverse floating rate" is any objective rate where such rate is
equal to a fixed rate minus a qualified floating rate, as long as
variations in the rate can reasonably be expected to inversely
reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Floating Rate
Note provides for stated interest at a fixed rate for an initial
period of less than one year followed by a variable rate that is
either a qualified floating rate or an objective rate and if the
variable rate on the Floating Rate Note's issue date is intended
to approximate the fixed rate (e.g., the value of the variable
rate on the issue date does not differ from the value of the
fixed rate by more than 25 basis points), then the fixed rate and
the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a Floating Rate Note that provides for stated interest at
either a single qualified floating rate or a single objective
rate throughout the term thereof qualifies as a "variable rate
debt instrument" under the OID Regulations, then any stated
interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least
annually will constitute qualified stated interest and will be
taxed accordingly. Thus, a Floating Rate Note that provides for
stated interest at either a single qualified floating rate or a
single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID
Regulations will generally not be treated as having been issued
with original issue discount unless the Floating Rate Note is
issued at a "true" discount (i.e., at a price below the Note's
stated principal amount) in excess of a specified de minimis
amount.
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Based upon the foregoing, the Notes offered hereby would
qualify as "variable rate debt instruments" under the OID
Regulations. Furthermore, under the OID Regulations, the Notes
offered hereby would not be treated as having been issued with
original issue discount and all payments of interest on the Notes
would constitute payments of "qualified stated interest" and
would be taxable to a U.S. Holder as ordinary interest income at
the time such payments are accrued or are received (in accordance
with the U.S. Holder's regular method of tax accounting).
PURCHASE AS PRINCIPAL
This Pricing Supplement relates to $75,000,000 aggregate
principal amount of Notes that may be offered, as principal, by
Morgan Stanley & Co. Incorporated ("Morgan") from time to time to
one or more investors at varying prices related to prevailing
market conditions at the time or times of resale as determined by
Morgan. Net proceeds payable by Morgan to U S WEST
Communications, Inc. (the "Company") will be 99.50% of the
aggregate principal amount of the Notes, or $74,625,000, before
deduction of expenses payable by the Company. In connection with
the sale of the Notes, Morgan may be deemed to have received
compensation from the Company in the form of underwriting
discounts.
