<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 1, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------------
<TABLE>
<S> <C> <C>
U S WEST, INC. COLORADO 84-0926774
U S WEST CAPITAL FUNDING, INC. COLORADO 84-1028672
U S WEST FINANCING I DELAWARE TO BE APPLIED FOR
U S WEST FINANCING II DELAWARE TO BE APPLIED FOR
U S WEST FINANCING III DELAWARE TO BE APPLIED FOR
(Exact name of Registrant as (State of other Jurisdiction of (I.R.S. Employer
Specified in its Charter) Incorporation or Organization) Identification Number)
</TABLE>
7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(303) 793-6500
(Name, address, including zip code, and telephone number, including area code,
of each registrants's principal executive offices)
------------------------------
<TABLE>
<S> <C>
STEPHEN E. BRILZ, ESQ. PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
U S WEST, INC. DENNIS J. BLOCK, ESQ.
7800 EAST ORCHARD ROAD WEIL, GOTSHAL & MANGES
ENGLEWOOD, COLORADO 80111 767 FIFTH AVENUE
(303) 793-6626 NEW YORK, NEW YORK 10153
(Name, address, including zip code, and telephone number (212) 310-8000
of agent for service for each registrant)
</TABLE>
------------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of the Registration Statement, as determined by
market conditions.
------------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED (1) UNIT (1)(2)(3) PRICE (1)(2)(3) FEE (1)
<S> <C> <C> <C> <C>
Preferred Securities of U S WEST Financing
I...........................................
Preferred Securities of U S WEST Financing
II..........................................
Preferred Securities of U S WEST Financing
III.........................................
Subordinated Debt Securities of U S WEST
Capital Funding, Inc........................
Guarantees of Preferred Securities of U S
WEST Financing I, U S WEST Financing II and
U S WEST Financing III by U S WEST,
Inc. (4)....................................
Guarantee of Subordinated Debt Securities by
U S WEST, Inc (4)...........................
Total $1,000,000,000 100% $1,000,000,000 $344,827.59
<FN>
- ------------------------------
(1) Such indeterminate number of Preferred Securities of U S WEST Financing I,
U S WEST Financing II and U S WEST Financing III and such indeterminate
principal amount of Subordinated Debt Securities of U S WEST Capital
Funding, Inc. as may from time to time be issued at indeterminate prices.
Subordinated Debt Securities may be issued and sold to U S WEST Financing
I, U S WEST Financing II or U S WEST Financing III, in which event such
Subordinated Debt Securities may later be distributed to the holders of
Preferred Securities upon a dissolution of U S WEST Financing I, U S WEST
Financing II or U S WEST Financing III and the distribution of the assets
thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of U S WEST Financing I, U S WEST Financing II and U S WEST
Financing III and the Subordinated Debt Securities of U S WEST Capital
Funding, Inc. registered hereby will not exceed $1,000,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for any Guarantees.
</TABLE>
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 1, 1995
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1995) [LOGO]
PREFERRED SECURITIES
U S WEST FINANCING I
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM- ")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
U S WEST, INC.
------------
The % Trust Originated Preferred Securities (the "Preferred
Securities") offered hereby evidence preferred undivided beneficial interests in
the assets of U S WEST Financing I, a business trust formed under the laws of
the State of Delaware ("U S WEST Financing") pursuant to an amended and restated
declaration of trust dated as of , 1995. U S WEST, Inc., a Colorado
corporation ("U S WEST"), will directly or indirectly own all the common
securities (the "Common Securities" and, together with the Preferred Securities,
the "Trust Securities") representing undivided beneficial interests in the
assets of U S WEST Financing. U S WEST Financing exists for the sole purpose of
issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in an equivalent amount of % Subordinated Deferrable Interest
Notes due 2025 ("Subordinated Debt Securities") of U S WEST Capital Funding,
Inc., a Colorado corporation and wholly-owned subsidiary of U S WEST ("Capital
Funding"). The Subordinated Debt Securities are fully and unconditionally
guaranteed (the "Debt Guarantee") on a subordinated basis as to payment of
principal, premium, if any, and interest by U S WEST. In the event of a default
on the Subordinated Debt Securities, the holders of the Preferred Securities
will have a preference over the holders of the Common Securities with respect to
payments in respect of distributions and payments upon liquidation, redemption
and maturity.
(CONTINUED ON NEXT PAGE)
-------------------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES
DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY
BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
Application has been made to list the Preferred Securities on the New York
Stock Exchange. If so approved, trading of the Preferred Securities on the New
York Stock Exchange is expected to commence within a 30 day period after the
initial delivery of the Preferred Securities.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING U S WEST
OFFERING PRICE (1) COMMISSION (2) FINANCING (3)(4)
<S> <C> <C> <C>
Per Preferred Security................. $25.00 (3) $25.00
Total.................................. (3)
<FN>
(1) Plus accrued distributions, if any, from , 1995.
(2) U S WEST and U S WEST Financing have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in Subordinated Debt Securities, Capital
Funding has agreed to pay to the Underwriters as compensation
("Underwriters Compensation") for their arranging the investment therein of
such proceeds, $ per Preferred Security (or $ in the aggregate);
provided, that such compensation for sales of 10,000 or more Preferred
Securities to a single purchaser will be $ per Preferred Security.
Therefore, to the extent of such sales, the actual amount of Underwriters
Compensation will be less than the aggregate amount specified in the
preceding sentence. See Underwriting."
(4) Expenses of the offering which are payable by Capital Funding are estimated
to be $ .
</TABLE>
-------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about ,
1995.
-------------------
MERRILL LYNCH & CO.
-------------------
The date of this Prospectus Supplement is , 1995.
- -SM- "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at an annual rate of % of the liquidation amount of $25 per
Preferred Security, accruing from the date of original issuance and payable
monthly in arrears on the last day of each calendar month commencing
, 1995 ("distributions"). The payment of distributions out of moneys
held by U S WEST Financing, and payments on liquidation of U S WEST Financing or
the redemption of Preferred Securities, as set forth below, are guaranteed by U
S WEST (the "Preferred Securities Guarantee") to the extent described under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The obligations of U S WEST under the Preferred Securities Guarantee
are subordinate and junior in right of payment to all other liabilities of U S
WEST and PARI PASSU with the most senior preferred stock issued by U S WEST. The
obligations of Capital Funding under the Subordinated Debt Securities are
subordinate and junior in right of payment to all present and future Senior
Indebtedness (as defined herein) of Capital Funding, which aggregated
approximately $1.4 billion at December 31, 1994, all of which is and will be
fully and unconditionally guaranteed by U S WEST. The obligations of U S WEST
under the Debt Guarantee are subordinate and junior in right of payment to all
present and future Senior Indebtedness of U S WEST which aggregated
approximately $3.5 billion at December 31, 1994 (including the Senior
Indebtedness of Capital Funding).
Capital Funding has the right to extend the interest payment period on the
Subordinated Debt Securities, at any time, for up to 60 consecutive months. See
"Description of the Subordinated Debt Securities and the Debt Guarantee --
Options to Extend Interest Payment Period." During any such payment extension
period, income will continue to accrue on the Subordinated Debt Securities for
United States federal income tax purposes in respect of such deferred interest.
As a result, during any payment extension period, holders of Preferred
Securities will be required to include deferred interest income in their gross
income for United States federal income tax purposes in advance of receipt of
the cash interest payments attributable to such deferred income. See "Investment
Considerations -- Option to Extend Interest Payment Period" and "United States
Federal Income Taxation -- Original Issue Discount, Premium and Market
Discount."
The Subordinated Debt Securities are redeemable by Capital Funding (in whole
or in part) from time to time, on or after , 2000. If Capital
Funding redeems Subordinated Debt Securities, U S WEST Financing must redeem
Trust Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debt Securities so redeemed at $25 per
Preferred Security plus accrued and unpaid distributions thereon (the
"Redemption Price") to the date fixed for redemption. See "Description of the
Preferred Securities -- Mandatory Redemption." The Preferred Securities will be
redeemed upon maturity of the Subordinated Debt Securities. The Subordinated
Debt Securities mature on , 2025, but the maturity date may be
extended for up to an additional 19 years at the option of Capital Funding,
provided certain financial covenants are met. See "Description of the
Subordinated Debt Securities and the Debt Guarantee -- Option to Extend Maturity
Date." In addition, upon the occurrence of a Special Event (as defined herein)
arising from a change in law or a change in legal interpretation, U S WEST
Financing may be dissolved with the result that the Subordinated Debt Securities
will be distributed to the holders of the Preferred Securities, on a pro rata
basis, in lieu of any cash distribution. In the case of a Special Event arising
from a change in law regarding tax matters, Capital Funding will also have the
right in certain circumstances to redeem the Subordinated Debt Securities. If
the Subordinated Debt Securities are distributed to the holders of the Preferred
Securities, Capital Funding will use its best efforts to have the Subordinated
Debt Securities listed on the New York Stock Exchange or on such other exchange
as the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Distribution" and "Description of the Subordinated
Debt Securities and the Debt Guarantee."
In the event of the voluntary or involuntary dissolution, winding up or
termination of U S WEST Financing, the holders of the Preferred Securities will
be entitled to receive, for each Preferred Security, a liquidation amount of $25
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, the
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities. See "Description of the Preferred Securities -- Liquidation
Distribution Upon Dissolution."
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
<PAGE>
U S WEST, INC.
SUMMARY FINANCIAL INFORMATION
The summary financial data below should be read in conjunction with the
financial statements and notes thereto included in U S WEST's Annual Report on
Form 10-K for the year ended December 31, 1993 and in U S WEST's Current Report
on Form 8-K dated January 19, 1995. See "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus. The summary financial data for the
four years ended December 31, 1993 are derived from the consolidated financial
statements of U S WEST which have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants. See "Experts" in the accompanying
Prospectus. The Summary financial data for the year ended December 31, 1994 are
derived from the unaudited consolidated financial statements of U S WEST.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- ---------
(UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Sales and other revenues................... $ 10,953 $ 10,294 $ 9,823 $ 9,528 $ 9,369
Income from continuing
operations................................ 1,426 476(1) 1,076 840(3) 1,145
Net income (loss).......................... 1,426 (2,806)(1) (614)(2) 553(3) 1,199
Earnings per common share from continuing
operations................................ 3.14 1.13(1) 2.61 2.09(3) 2.97
Earnings (loss) per common share........... 3.14 (6.69)(1) (1.49)(2) 1.38(3) 3.11
Dividends per common share................. $ 2.14 $ 2.14 $ 2.12 $ 2.08 $ 2.00
Weighted average common shares outstanding
(thousands)............................... 453,316 419,365 412,518 401,332 386,012
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD
END):
Short-term borrowings...................... $ 2,837 $ 1,776 $ 583 $ 367 $ 438
Long-term debt............................. 5,101 5,423 4,847 5,603 4,709
Preferred stock subject to mandatory
redemption................................ 51 -- -- -- --
Shareholders' equity....................... 7,382 5,861 8,268 9,587 9,240
Total assets............................... 23,204 20,680 23,461 23,375 22,160
<FN>
- ------------------------
(1) 1993 income from continuing operations included a restructuring charge of
$610 ($1.46 per share) and a charge of $54 ($0.13 per share) for the
cumulative effect on deferred taxes of the 1993 federally mandated increase
in income tax rates. Net income included charges of $100 ($0.24 per share)
for the estimated loss on disposal of discontinued operations and $20
($0.04 per share) for the cumulative effect on deferred taxes of the
federally mandated increase in income tax rates related to discontinued
operations. Net income also included extraordinary charges of $3,123 ($7.45
per share) for the discontinuance of SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation," and $77 ($0.18 per share) for the
early extinguishment of debt.
(2) 1992 net income included the effects of accounting charges totaling $1,793
($4.35 per share) related to the adoption of SFAS No. 106 "Employers'
Accounting for Postretirement Benefits Other than Pensions," and SFAS No.
112 "Employers' Accounting for Postemployment Benefits."
(3) 1991 includes a restructuring charge that reduced income from continuing
operations by $230 ($0.57 per share) and income from discontinued
operations by $360 ($0.90 per share).
</TABLE>
S-3
<PAGE>
THE FOLLOWING INFORMATION CONCERNING U S WEST, CAPITAL FUNDING, U S WEST
FINANCING, THE PREFERRED SECURITIES, THE PREFERRED SECURITIES GUARANTEE, THE
SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEE SUPPLEMENTS, AND SHOULD BE
READ IN CONJUNCTION WITH, THE INFORMATION CONTAINED IN THE ACCOMPANYING
PROSPECTUS. CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT HAVE THE SAME
MEANINGS AS IN THE ACCOMPANYING PROSPECTUS.
U S WEST, INC.
U S WEST is a diversified global communications company engaged in the
telecommunications, directory publishing, marketing and entertainment services
businesses. Telecommunications services are provided by U S WEST's principal
subsidiary to more than 25 million residential and business customers in the
states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming
(collectively, the "U S WEST Region"). Directory publishing, marketing and
entertainment services as well as cellular mobile communications services are
provided by other U S WEST subsidiaries to customers both inside and outside the
U S WEST Region.
U S WEST CAPITAL FUNDING, INC.
Capital Funding is a wholly-owned subsidiary of U S WEST and was
incorporated under the laws of the State of Colorado in June 1986. Capital
Funding was incorporated for the sole purpose to provide financing to U S WEST
and its affiliates through the issuance of indebtedness guaranteed by U S WEST
and has no independent operations.
U S WEST FINANCING I
U S WEST Financing is a business trust formed under Delaware law pursuant to
(i) a declaration of trust, dated as of , 1995, executed by U S WEST,
as sponsor (the "Sponsor") and the trustees of U S WEST Financing (the "U S WEST
Trustees") and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on , 1995. Such declaration will be amended and
restated in its entirety (as so amended and restated, the "Declaration") in the
form filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part. Upon issuance of the
Preferred Securities, the purchasers thereof will own all of the Preferred
Securities. In this Prospectus Supplement, the phrase, "holders of Preferred
Securities," refers to the beneficial owners of the Preferred Securities. See
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." U S West will directly or indirectly acquire Common
Securities in an amount equal to 3% of the total capital of U S WEST Financing.
U S WEST Financing exists for the exclusive purposes of (i) issuing the Trust
Securities representing undivided beneficial interests in the assets of the
trust and (ii) investing the gross proceeds of the Trust Securities in the
Subordinated Debt Securities.
Pursuant to the Declaration, the number of U S WEST Trustees will initially
be five. Three of the U S WEST Trustees (the "Regular Trustees") will be persons
who are employees or officers of or affiliated with U S WEST. The fourth trustee
will be a financial institution unaffiliated with U S WEST that will serve as
property trustee (the "Property Trustee"). The fifth U S WEST Trustee will be a
financial institution or an affiliate thereof who maintains a residence in the
State of Delaware (the "Delaware Trustee"). The First National Bank of Chicago
will be the Property Trustee and its affiliate will be the Delaware Trustee
until removed or replaced by the holder of the Common Securities.
Legal title to the Subordinated Debt Securities and the Debenture Guarantees
will be held by the Property Trustee for the benefit of the holders of the Trust
Securities. In addition, the Property Trustee will maintain exclusive control of
a segregated bank account (the "Property Account") to hold all payments in
respect of the Subordinated Debt Securities and the Debt Guarantee for the
benefit of the holders of Trust Securities. The Property Trustee will make
distributions to the holders of the Trust Securities out of funds from the
Property Account. U S WEST, as the direct or indirect holder of all the Common
Securities, will have the right to appoint or remove any U S WEST Trustee, to
increase or decrease the number of U S WEST Trustees, provided that the number
of U S WEST Trustees shall be at least three, a majority of which shall be
Regular Trustees. At such time when U S WEST Financing is no longer required to
have a property trustee under applicable law, the Regular Trustees may elect to
terminate the services of the Property Trustee and eliminate such function. In
such event, the legal title to the Subordinated Debt
S-4
<PAGE>
Securities and the Debt Guarantee will be transferred to U S WEST Financing and
the Property Account will be maintained by the Regular Trustees, who will make
distributions to the holders of the Trust Securities therefrom. Capital Funding
will pay all fees and expenses related to U S WEST Financing and the offering of
the Trust Securities, the payment of which will be fully and unconditionally
guaranteed by U S WEST. See "Description of the Subordinated Debt Securities and
the Debt Guarantee -- Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration and the Delaware Business Trust Act (the "Trust Act"). See
"Description of the Preferred Securities".
RECENT DEVELOPMENTS
DEVELOPMENT OF MULTIMEDIA NETWORK. In 1993, U S WEST announced its
intention to build a multi-media telecommunications network (the "Multimedia
Network") capable of providing voice, data and video services to customers
within the U S WEST Region. When completed, the Multimedia Network will carry
multimedia signals over a mix of optical fiber, coaxial cable and copper wire. U
S WEST expects that it will ultimately deliver a variety of integrated
communications, entertainment and information services and other high speed
digital services, including data applications, through the Multimedia Network in
selected areas of the U S WEST Region. These integrated services, including
video-on-demand, targeted advertising, home shopping, interactive games,
high-definition broadcast television and two-way, video telephony are expected
to become available over time as the Multimedia Network develops. U S WEST began
limited testing of its Multimedia Network in Omaha, Nebraska in December, 1994.
A market trial will begin in 1995 in an area that will cover up to 50,000 homes.
U S WEST is seeking approval from the Federal Communications Commission (the
"FCC") to install Multimedia Network architecture in Denver, Colorado,
Minneapolis-St.Paul, Minnesota, Portland, Oregon, and Boise, Idaho. The results
of the technical and market trials will be incorporated into the network
configuration and future service offerings.
CABLE ACQUISITION. On December 6, 1994, U S WEST acquired Wometco Cable
Corp. and the assets of Atlanta Cable Partners, L.P. and Georgia Cable Partners
(the "Atlanta Cable Properties") for approximately $1.2 billion. Together, the
Atlanta Cable Properties serve approximately 65 percent of the cable customers
in the Atlanta, Georgia metropolitan area. U S WEST expects that it will offer
local exchange services as well as multimedia services in the Atlanta area as a
result of this acquisition.
WIRELESS JOINT VENTURE. On July 25, 1994, AirTouch Communications
("AirTouch") and U S WEST announced an agreement to combine their domestic
wireless operations. AirTouch's initial equity ownership of the wireless
joint-venture, (the "AirTouch/U S WEST Joint Venture") will be approximately 70
percent and U S WEST's will be approximately 30 percent. This joint venture will
provide U S WEST with a national presence and economies of scale. The joint
venture will have a presence in 9 of the top 20 cellular markets in the country.
The transaction is expected to close in the second quarter of 1995 upon
obtaining certain federal and state regulatory approvals. Each company's
wireless operations initially will continue to operate as separate entities
owned by the individual partners. A Partnership Committee, comprised of the
president and chief operating officer of AirTouch and three other AirTouch
representatives, three U S WEST representatives and one mutually agreed upon
independent representative will oversee both companies' domestic cellular
operations. In addition, a joint Wireless Management Company will provide
management and support services.
A merger of the two companies' operations will take place upon the earlier
of four years from July 25, 1994, the lifting of certain restrictions imposed on
U S WEST in connection with the divesture by American Telephone & Telegraph of
its local telephone businesses, or at AirTouch's option. The agreement gives U S
WEST strategic flexibility, including the right to exchange its interest in the
joint venture for up to 19.9 percent of AirTouch's common stock, with any excess
amounts to be received in the form of AirTouch non-voting preferred stock.
On December 5, 1994, a partnership formed by the AirTouch/U S WEST joint
venture and a partnership between Bell Atlantic Corporation and NYNEX
Corporation (the "Bell Atlantic/NYNEX partnership") began bidding on personal
communications services ("PCS") licenses that are being auctioned by the
S-5
<PAGE>
FCC. The combined companies own cellular licenses in 15 of the top 20 cities and
serve over five million customers. The partnership is eligible to bid for PCS
licenses in 26 markets, representing more than 100 million POPS. This entity
will be governed by a board made up of three members from the Bell Atlantic/
NYNEX partnership and three members from the AirTouch/U S WEST joint venture. A
second partnership will develop a national branding and marketing strategy and a
common "look and feel" for both cellular and PCS customers. The cellular
properties of the Bell Atlantic/NYNEX partnership will not be merged with those
of the AirTouch/U S WEST joint venture.
TELEWEST INITIAL PUBLIC OFFERING. In 1994, TeleWest Communications plc
("TeleWest"), a venture with Tele-Communications, Inc., completed an initial
public offering of its common stock. U S WEST's interest in TeleWest was reduced
from 50 percent to 37.8 percent as a result of the offering, but based on the
offering price, its interest is valued at $1.1 billion. TeleWest provides cable
television and telephone services in the United Kingdom over a multimedia
network which has been designed to provide a wide range of interactive and
integrated entertainment, telecommunications and information services as they
become available in the future. TeleWest owns all or part of 23 franchises in
the United Kingdom that encompass 3.6 million homes. Through TeleWest, U S WEST
gains experience in packaging video and telephone service that it intends to
utilize in its operations outside of the United Kingdom.
INVESTMENT CONSIDERATIONS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus Supplement and in the
accompanying Prospectus and should particularly consider the following matters:
SUBORDINATE OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE, SUBORDINATED DEBT
SECURITIES AND DEBT GUARANTEE
U S WEST's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of U S WEST and
PARI PASSU with the most senior preferred stock issued by U S WEST. The
obligations of Capital Funding under the Subordinated Debt Securities are
subordinate and junior in right of payment to all present and future Senior
Indebtedness of Capital Funding, all of which are, and will be, fully and
unconditionally guaranteed by U S WEST. The obligations of U S WEST under the
Debt Guarantee are subordinate and junior in right of payment to all present and
future Senior Indebtedness of U S WEST. At December 31, 1994, Senior
Indebtedness of U S WEST and Capital Funding aggregated approximately $3.5
billion and $1.4 billion, respectively. There are no terms in the Preferred
Securities, the Subordinated Debt Securities, the Preferred Securities Guarantee
or the Debt Guarantee that limit U S WEST's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Preferred
Securities Guarantee and the Debt Guarantee. See "Description of the Preferred
Securities Guarantees" and "Description of the Subordinated Debt Securities and
the Debt Guarantees -- Subordination" in the accompanying Prospectus.
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid distributions
which are required to be paid on the Preferred Securities, to the extent U S
WEST Financing shall have funds available therefor, (ii) the Redemption Price,
including all accrued and unpaid distributions, payable out of funds available
therefor with respect to Preferred Securities called for redemption by U S WEST
Financing and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of U S WEST Financing, the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Preferred
Securities to the date of payment and (b) the amount of assets of U S WEST
Financing remaining available for distribution to holders of the Preferred
Securities in liquidation of U S WEST Financing. If Capital Funding were to
default in its obligation to pay amounts payable on the Subordinated Debt
Securities and U S WEST were to default on its obligations under the Debt
Guarantee, U S WEST Financing would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities, and
in such event holders of the Preferred Securities would not be able to rely upon
the Preferred Securities Guarantee for payment of such amounts. Instead, holders
of the Preferred Securities would be required to seek enforcement of the rights
of U S WEST Financing against Capital Funding pursuant to the terms of the
Subordinated Debt Securities
S-6
<PAGE>
and against U S WEST under the Debt Guarantee. See "Description of the Preferred
Securities Guarantees -- Status of the Preferred Securities Guarantees" and
"Description of the Subordinated Debt Securities and the Debt Guarantees --
Subordination" in the accompanying Prospectus. The Declaration provides that
each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions of the Preferred Securities Guarantee and the Indenture
(as defined herein).
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Capital Funding has the right under the Indenture to extend the interest
payment period at any time, and from time to time, on the Subordinated Debt
Securities, and, as a consequence, monthly distributions on the Preferred
Securities would be deferred (but would continue to accrue with interest
thereon) by U S WEST Financing during any such extended interest payment period.
Such right to extend the interest payment period for the Subordinated Debt
Securities is limited to a period not exceeding 60 consecutive months. In the
event that Capital Funding exercises this right to extend, none of (i) U S WEST,
(ii) Capital Funding, or (iii) if it is not a wholly-owned subsidiary of U S
WEST, U S WEST Communications, Inc. may declare or pay dividends on, make a
distribution with respect to, or redeem, purchase or acquire, any of its capital
stock until deferred interest on the Subordinated Debt Securities is paid in
full. In addition, Capital Funding will be required to defer interest payments
on all series of Subordinated Debt Securities held by other U S WEST Trusts (as
defined in the accompanying Prospectus) until deferred interest on all
Subordinated Debt Securities held by the U S WEST Trusts is paid in full. Prior
to the termination of any such extension period, Capital Funding may further
extend the interest payment period, provided that such extension period,
together with all such previous and further extensions thereof, may not exceed
60 consecutive months. Upon the termination of any extension period and the
payment of all amounts then due, Capital Funding may select a new extension
period, subject to the above requirements. See "Description of the Preferred
Securities -- Distributions" and "Description of the Subordinated Debt
Securities and the Debt Guarantee -- Option to Extend Interest Payment Period."
Should an extended interest payment period occur, each holder of Preferred
Securities will continue to accrue income for United States federal income tax
purposes in respect of the deferred interest allocable to its Preferred
Securities. As a result, holders of Preferred Securities will recognize income
for United States federal income tax purposes in advance of the receipt of cash
and will not receive the cash from U S WEST Financing related to such income if
such holder disposes of its Preferred Securities prior to the record date for
the date on which distributions of such amounts are made. See "United States
Federal Income Taxation -- Original Issue Discount, Premium and Market
Discount."
SPECIAL EVENT DISTRIBUTION
Upon the occurrence of a Special Event, U S WEST Financing may be dissolved
with the result that the Subordinated Debt Securities would be distributed to
the holders of the Preferred Securities in connection with the liquidation of U
S WEST Financing. In the case of a Special Event that is a Tax Event (as defined
herein), in certain circumstances Capital Funding shall have the right to redeem
the Subordinated Debt Securities, in whole or in part, in which event U S WEST
Financing will redeem the Trust Securities pro rata to the same extent as the
Subordinated Debt Securities are redeemed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of U S WEST
Financing were to occur. Accordingly, the Preferred Securities that an investor
may purchase, or the Subordinated Debt Securities that the investor may receive
on dissolution and liquidation of U S WEST Financing, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Subordinated Debt
Securities upon the occurrence of a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Subordinated Debt Securities and should carefully review all the information
regarding the Subordinated Debt Securities contained herein and in the
accompanying Prospectus. See "Description of the Preferred Securities -- Special
Event Redemption or Distribution" and "Description of the Subordinated Debt
Securities and the Debt Guarantee -- General."
S-7
<PAGE>
CAPITALIZATION OF U S WEST
The following table sets forth the unaudited consolidated capitalization of
U S WEST at December 31, 1994, and as adjusted to reflect the application of the
estimated net proceeds from the sale of the Preferred Securities. See "Use of
Proceeds." The table should be read in conjunction with U S WEST's consolidated
financial statements and notes thereto included in the documents incorporated by
reference herein. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1994
--------------------------
ACTUAL AS ADJUSTED (1)
------- -----------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings........................................ $ 2,837 $
------- -------
------- -------
Long-term borrowings......................................... $ 5,101 $
------- -------
Minority interest in redeemable preferred securities of
subsidiary.................................................. $ -- $
------- -------
Preferred stock subject to mandatory redemption.............. $ 51 $
------- -------
Common shareholders' equity:
Common Shares -- no par, 2,000,000,000 authorized;
469,343,048 outstanding................................. 8,056
Cumulative deficit....................................... (458)
LESOP guarantee.......................................... (187)
Foreign currency translation adjustment.................. (29)
------- -------
Total common shareholders' equity............................ 7,382
------- -------
Total capitalization......................................... $12,534 $
------- -------
------- -------
<FN>
- ------------------------
(1) Does not give effect to the shares of Common Stock, without par value, of U
S WEST ("Common Stock"), that may be issued upon exercise of options to
purchase 2,374,394 shares of Common Stock that are currently exercisable
under U S WEST's stock option plans or upon conversion of U S WEST's Liquid
Yield Option Notes due 2011 ("LYONS") into up to 9,894,278 shares of Common
Stock (based on the number of options and LYONS outstanding on December 31,
1994).
</TABLE>
S-8
<PAGE>
ACCOUNTING TREATMENT
The financial statements of U S WEST Financing will be consolidated with U S
WEST's financial statements with the Preferred Securities shown as a minority
interest in redeemable preferred securities of a subsidiary.
USE OF PROCEEDS
The proceeds of the sale of the Preferred Securities will be invested by U S
WEST Financing in Subordinated Debt Securities of Capital Funding. Capital
Funding will loan the proceeds from the issuance of such Subordinated Debt
Securities to U S WEST and its affiliates to be used for general corporate
purposes, including the reduction of short-term and long-term borrowings and
other business opportunities.
DESCRIPTION OF THE PREFERRED SECURITIES
The following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, a copy of which is filed as an
exhibit to the Registration Statement, of which this Prospectus Supplement is a
part, and the Trust Act.
GENERAL
The Declaration authorizes the U S WEST Trustees to issue the Preferred
Securities, which represent preferred undivided beneficial interests in the
assets of U S WEST Financing. All of the Common Securities will be owned,
directly or indirectly, by U S WEST. The Common Securities rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities except
that where an Event of Default occurs under the Indenture, the rights of the
holders of the Common Securities to receive payment of periodic distributions
and payments upon liquidation, redemption and maturity are subordinated to the
rights of the holders of the Preferred Securities. The Declaration does not
permit the issuance by U S WEST Financing of any securities other than the Trust
Securities or the incurrence of any indebtedness by U S WEST Financing. Pursuant
to the Declaration, the Property Trustee will own the Subordinated Debt
Securities and the Debt Guarantee purchased by U S WEST Financing for the
benefit of the holders of the Trust Securities or, if there is no Property
Trustee, the Subordinated Debt Securities and the Debt Guarantee will be held by
U S WEST Financing. The payment of distributions out of money held by U S WEST
Financing, and payments upon redemption of the Preferred Securities or
liquidation of U S WEST Financing, are guaranteed by U S WEST to the extent
described under "Description of the Preferred Securities Guarantees" in the
accompanying Prospectus. The Preferred Securities Guarantee does not cover
payment of distributions when U S WEST Financing does not have sufficient
available funds to pay such distributions. In such event, the remedy of a holder
of Preferred Securities is to vote to appoint a Special Representative (as
defined herein) to direct the Property Trustee to enforce its rights or, if
there is no Property Trustee, to directly enforce the rights of U S WEST
Financing under the Subordinated Debt Securities and the Debt Guarantee. See
"Description of the Preferred Securities -- Voting Rights."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one month will bear interest thereon at
the rate per annum of % thereof. The term "distributions" as used herein
includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from and will be payable monthly in arrears on the last day of
each calendar month of each year, commencing when, as and if
available for payment by the Property Trustee, except as otherwise described
below.
Capital Funding has the right under the Indenture to extend the interest
payment period from time to time on the Subordinated Debt Securities which, if
exercised, would defer monthly distributions on the
S-9
<PAGE>
Preferred Securities (though such distributions would continue to accrue with
interest since interest would continue to accrue on the Subordinated Debt
Securities) during any such extended interest payment period. Such right to
extend the interest payment period for the Subordinated Debt Securities is
limited to a period not exceeding 60 consecutive months. In the event that
Capital Funding exercises this right, none of (i) U S WEST, (ii) Capital
Funding, or (iii) if it is not a wholly-owned subsidiary of U S WEST, U S WEST
Communications, Inc., may declare or pay dividends on, make any distribution
with respect to, or redeem, purchase or acquire, any of its capital stock. In
addition, Capital Funding will be required to defer interest payments on all
series of Subordinated Debt Securities held by other U S WEST Trusts until
deferred interest on all Subordinated Debt Securities held by U S WEST Trusts is
paid in full. Prior to the termination of any such extension period, Capital
Funding may further extend the interest payment period, provided that such
extension period together with all such previous and further extensions thereof
may not exceed 60 consecutive months. Upon the termination of any extension
period and the payment of all amounts then due, Capital Funding may select a new
extension period, subject to the above requirements. See "Description of the
Subordinated Debt Securities and the Debt Guarantee -- Interest" and "-- Option
to Extend Interest Payment Period." If distributions are deferred, the deferred
distributions and accrued interest thereon shall be paid to holders of record of
the Preferred Securities as they appear on the records of U S WEST Financing on
the record date next following such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that U S WEST Financing has (i) funds available for the payment of
such distributions and (ii) cash on hand sufficient to permit such payments. U S
WEST Financing's funds available for distribution to the holders of the
Preferred Securities will be limited to payments received under the Subordinated
Debt Securities. See "Description of the Subordinated Debt Securities and the
Debt Guarantee." The payment of distributions, out of moneys held by U S WEST
Financing, are guaranteed by U S WEST as set forth under "Description of the
Preferred Securities Guarantees" in the accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of U S WEST Financing on the
relevant record dates, which, as long as the Preferred Securities remain in
book-entry only form, will be one Business Day (as defined herein) prior to the
relevant payment dates. Such distributions will be paid through the Property
Trustee or, if there is no Property Trustee, the Regular Trustees, who will hold
amounts received in respect of the Subordinated Debt Securities and the Debt
Guarantee in the Property Account for the benefit of the holders of the Trust
Securities. Subject to any applicable laws and regulations and the provisions of
the Declaration, each such payment will be made as described under "Book-Entry
Only Issuance -- The Depository Trust Company" below. In the event the Preferred
Securities shall not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select relevant record dates which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which distributions are to be made on the Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. A "Business Day" shall mean any day other than a
day on which banking institutions in The City of New York are authorized or
required by law to close.
MANDATORY REDEMPTION
The Subordinated Debt Securities will mature on , 2025, unless
extended, and may be redeemed at any time on or after , 2000. Upon
the repayment of the Subordinated Debt Securities, whether at maturity or upon
redemption, the proceeds from such repayment or payment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Subordinated Debt Securities so repaid
at the Redemption Price; provided that holders of Trust Securities shall be
given not less than 30 nor more than 60 days notice of such redemption. See
"Description of the Subordinated Debt Securities and the Debt Guarantee." In the
event that fewer than all the outstanding Preferred Securities are to be
redeemed, the Preferred Securities will be redeemed PRO RATA as described under
"Book-Entry Only Issuance -- The Depository Trust Company" below.
S-10
<PAGE>
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to or change in an
interpretation or application of such laws or regulations, there is more than an
insubstantial risk that (i) U S WEST Financing would be subject to United States
federal income tax with respect to income accrued or received on the
Subordinated Debt Securities, (ii) interest payable to U S WEST Financing on the
Subordinated Debt Securities would not be deductible by Capital Funding for
United States federal income tax purposes or (iii) U S WEST Financing would be
subject to more than a DE MINIMIS amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), U S WEST Financing is or will be considered an "investment
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act"), which Change in 1940 Act Law becomes
effective on or after the date of this Prospectus Supplement.
If a Tax Event or an Investment Company Event (each, as defined above, a
"Special Event") shall occur and be continuing, U S WEST Financing may be
dissolved with the result that Subordinated Debt Securities with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Securities
would be distributed to the holders of the Trust Securities in liquidation of
such holders' interests in U S WEST Financing, within 90 days following the
occurrence of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the holders of the Trust Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of such dissolution and distribution of Subordinated Debt Securities;
and, provided, further, that, if at the time there is available to U S WEST
Financing the opportunity to eliminate, within such 90 day period, the Special
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure, which has no
adverse effect on U S WEST Financing, Capital Funding, U S WEST or the holders
of the Trust Securities, U S WEST Financing will pursue such measure in lieu of
dissolution. Furthermore, if in the case of the occurrence of a Tax Event, (i)
Capital Funding has received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that
Capital Funding would be precluded from deducting the interest on the
Subordinated Debt Securities for United States federal income tax purposes even
if the Subordinated Debt Securities were distributed to the holders of Trust
Securities in liquidation of such holders' interests in U S WEST Financing as
described above or (ii) after its receipt of a Dissolution Tax Opinion, the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to U S WEST Financing, Capital Funding
shall have the right, upon not less than 30 nor more than 60 days notice, to
redeem the Subordinated Debt Securities in whole or in part for cash within 90
days following the occurrence of such Tax Event, and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debt Securities so redeemed shall be
redeemed by U S WEST Financing at the Redemption Price; provided, however, that,
if at the time there is available to Capital Funding or U S WEST Financing the
opportunity to eliminate, within such 90 day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect on U
S WEST Financing, Capital Funding, U S WEST or the holders of the Trust
Securities, Capital Funding or U S WEST Financing will pursue such measure in
lieu of redemption.
S-11
<PAGE>
If Subordinated Debt Securities are distributed to the holders of the
Preferred Securities, Capital Funding will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
After the date for any distribution of Subordinated Debt Securities upon
dissolution of U S WEST Financing, (i) the Preferred Securities will no longer
be deemed to be outstanding, (ii) the Depositary or its nominee, as the record
holder of the Preferred Securities, will receive a registered global certificate
or certificates representing the Subordinated Debt Securities to be delivered
upon such distribution and (iii) any certificates representing Preferred
Securities not held by the Depositary or its nominee will be deemed to represent
Subordinated Debt Securities having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid distribution on, such Preferred Securities, until such certificates are
presented to Capital Funding or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debt Securities that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of U S
WEST Financing were to occur. Accordingly, the Preferred Securities that an
investor may purchase, or the Subordinated Debt Securities that the investor may
receive on dissolution and liquidation of U S WEST Financing, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.
REDEMPTION PROCEDURES
U S WEST Financing may not redeem fewer than all of the outstanding
Preferred Securities unless all accrued and unpaid distributions have been paid
on all Preferred Securities for all monthly distribution periods terminating on
or prior to the date of redemption.
If U S WEST Financing gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, by 12:00 noon, New York
time, on the redemption date, U S WEST Financing will irrevocably deposit with
the Depositary funds sufficient to pay the applicable Redemption Price and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the holders of the Preferred Securities. See "Book-Entry Only Issuance
- -- The Depository Trust Company". If notice of redemption shall have been given
and funds deposited as required, then immediately prior to the close of business
on the date of such deposit, all rights of holders of such Preferred Securities
so called for redemption will cease, except the right of the holders of such
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by U S WEST Financing or by U S WEST
pursuant to the Preferred Securities Guarantee described under "Description of
the Preferred Securities Guarantees" in the accompanying Prospectus,
distributions on such Preferred Securities will continue to accrue, from the
original redemption date to the actual date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed pro rata as described
under "Book-Entry Only Issuance -- The Depository Trust Company" below.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), U S WEST or its affiliates may at any
time and, from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
S-12
<PAGE>
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of U S WEST Financing, the holders of the Preferred
Securities at that time will be entitled to receive out of the assets of U S
WEST Financing, after satisfaction of liabilities of creditors, distributions in
an amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
liquidation, dissolution, winding-up or termination, Subordinated Debt
Securities in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Preferred Securities have been distributed on a pro rata basis to the
holders of Preferred Securities.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because U S WEST Financing has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by U S WEST Financing on the Preferred Securities shall be paid on a pro rata
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if an Event of Default under the Indenture has
occurred and is continuing, the Preferred Securities shall have a preference
over the Common Securities.
Pursuant to the Declaration, U S WEST Financing shall terminate (i) on
, 2050, the expiration of the term of U S WEST Financing, (ii) upon
the bankruptcy of U S WEST, Capital Funding or the holder of the Common
Securities, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to U S WEST or Capital Funding or the revocation of U S
WEST's or Capital Funding's charter or Declaration and the expiration of 90 days
after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of the Subordinated Debt Securities following the occurrence of a
Special Event, (v) upon the redemption of all of the Preferred Securities or
(vi) upon the entry of a decree of a judicial dissolution of U S WEST, Capital
Funding or U S WEST Financing.
VOTING RIGHTS
Except as provided below, under the Trust Act and under "Description of the
Preferred Securities Guarantees -- Amendments and Assignment" in the
accompanying Prospectus and as otherwise required by law and the Declaration,
the holders of the Preferred Securities will have no voting rights.
If (i) U S WEST Financing fails to pay distributions in full on the
Preferred Securities for 18 consecutive monthly distribution periods, (ii) an
Event of Default (as defined herein) occurs and is continuing under the
Indenture or (iii) U S WEST is in default on any of its payment or other
obligations under the Preferred Securities Guarantee (as described under
"Description of the Preferred Securities Guarantees -- Certain Covenants of U S
WEST" in the accompanying Prospectus), then the holders of the Preferred
Securities, acting as a single class, will be entitled by the majority vote of
such holders to appoint a special representative (a "Special Representative")
and the Special Representative shall be authorized to direct the Property
Trustee to enforce its creditor rights or, if there is no Property Trustee, to
directly enforce U S WEST Financing's creditor rights under the Subordinated
Debt Securities and the Debt Guarantee. The Special Representative shall also be
authorized to enforce the rights of the holders of the Preferred Securities
under the Preferred Securities Guarantee and the rights of the holders of the
Preferred Securities to receive distributions on the Preferred Securities. See
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Special Representative shall not be a holder of beneficial
interests in U S WEST Financing, shall not be affiliated with U S WEST, shall
have no rights other than those described herein and shall have no liability for
the debts, obligations or liabilities of U S WEST Financing. For purposes of
determining whether U S WEST Financing has failed to pay distributions in full
for 18 consecutive monthly distribution periods, distributions shall be deemed
to remain in arrears, notwithstanding any payments in respect thereof, until
full cumulative distributions have been or contemporaneously are paid with
respect to all monthly distribution periods terminating on or prior to the date
of payment of such cumulative distributions. Not later than 30 days after such
right to appoint a Special Representative arises, the Regular Trustees shall
convene a meeting for the purpose of appointing a Special Representative. If the
S-13
<PAGE>
Regular Trustees fail to convene such meeting within such 30-day period, the
holders of not less than 10% of the aggregate stated liquidation amount of the
outstanding Preferred Securities will be entitled to convene such meeting. The
provisions of the Declaration relating to the convening and conduct of the
meetings of the holders will apply with respect to any such meeting. Any Special
Representative so appointed shall cease to be a Special Representative of the
holders if U S WEST Financing (or U S WEST pursuant to the Preferred Securities
Guarantee) shall have paid in full all accrued and unpaid distributions on the
Preferred Securities or such default or breach, as the case may be, shall have
been cured and the Regular Trustees shall continue the business of U S WEST
Financing without dissolution. Notwithstanding the appointment of any such
Special Representative, Capital Funding shall retain all rights under the
Indenture, including the right to extend the interest payment period or the
maturity date as provided under "Description of the Subordinated Debt Securities
and the Debt Guarantee -- Option to Extend Interest Payment Period" and "--
Option to Extend Maturity Date." If such an extension occurs, there will be no
Event of Default under the Indenture for failure to make any scheduled interest
payment during the Extension Period on the date originally scheduled or for
failure to make any principal payment on the maturity date.
So long as any Subordinated Debt Securities are held by the Property
Trustee, it shall not and, if there is no Property Trustee and the Subordinated
Debt Securities and the Debt Guarantee are held by U S WEST Financing, the
Regular Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or executing any
trust or power conferred on the Debt Trustee with respect to such Subordinated
Debt Securities, (ii) waive any past default which is waivable under Section
of the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Subordinated Debt Securities shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least 66 2/3% in liquidation
amount of the Preferred Securities affected thereby; PROVIDED, HOWEVER, that
where a consent under the Indenture would require the consent of each holder
affected thereby, no such consent shall be given by the Property Trustee or the
Regular Trustees, as the case may be, without the prior consent of each holder
of all Preferred Securities affected thereby. The Property Trustee or the
Regular Trustees, as the case may be, shall not revoke any action previously
authorized or approved by a vote of the Preferred Securities. The Property
Trustee or the Regular Trustees, as the case may be, shall notify all holders of
the Preferred Securities of any notice of default received from the Debt Trustee
with respect to the Subordinated Debt Securities. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, prior to taking
any of the foregoing actions, the Property Trustee or the Regular Trustees, as
the case may be, shall obtain an opinion of tax counsel to the effect that U S
WEST Financing will not be classified as a corporation or partnership for United
States federal income tax purposes on account of such action.
If any proposed amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Preferred Securities, whether
by way of amendment to the Declaration or otherwise, or (ii) the dissolution,
winding-up of termination of U S WEST Financing, other than pursuant to the
terms of Declaration, then the holders of outstanding Preferred Securities as a
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of the holders of at
least 66 2/3% in liquidation amount of the outstanding Preferred Securities
affected thereby. No amendment to the Declaration may be made if, as a result of
such amendment, U S WEST Financing would be classified as a corporation or
partnership for United States federal income tax purposes. See "-- Liquidation
Distribution Upon Dissolution."
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose,
at a meeting of all of the holders of Trust Securities or pursuant to written
consent. The Regular Trustees will cause a notice of any meeting at which
holders of Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed to
each holder of record of Preferred Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled
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to vote or of such matter upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents. No vote or consent of the
holders of Preferred Securities will be required for U S WEST Financing to
redeem and cancel Preferred Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by U S WEST or any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with U S WEST shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- the
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or remove
the U S WEST Trustees, who may be appointed or removed solely by U S WEST, as
the direct or indirect holder of all the Common Securities.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
U S WEST Financing may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. U S WEST Financing may, without the consent of the holders of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state; provided,
that (i) such successor entity either (x) expressly assumes all of the
obligations of U S WEST Financing under the Preferred Securities or (y)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities rank with
respect to distributions and payments upon liquidation, redemption and maturity,
(ii) Capital Funding expressly acknowledges such successor entity as the holder
of the Subordinated Debt Securities and U S WEST expressly acknowledges such
successor entity as the holder of the Debt Guarantee, (iii) the Preferred
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Preferred Securities are then listed, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Preferred Securities ( including any Successor Securities) in
any material respect (other than with respect to any dilution of the holders'
interest in the new entity), (vi) such successor entity has a purpose
substantially identical to that of U S WEST Financing; (vii) prior to such
merger, consolidation, amalgamation or replacement, U S WEST has received an
opinion of nationally recognized independent counsel to U S WEST Financing
experienced in such matters to the effect that following such merger,
consolidation, amalgamation or replacement, neither U S WEST Financing nor such
successor entity will be required to register as an investment company under the
1940 Act and (viii) U S WEST guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Preferred
Securities Guarantee. Notwithstanding the foregoing, U S WEST Financing shall
not consolidate with or merge into any other entity or permit any other entity
to merge into or consolidate with it if such merger or consolidation would cause
U S WEST Financing or the Successor Entity to be classified as a corporation or
partnerhip for United States federal income tax purposes, except with the
consent of holders of 100% in liquidation amount of the Trust Securities.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities Depositary for
the Preferred Securities. The Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (DTC's
nominee). One or more fully-registered global Preferred Securities certificates
will be issued, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
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The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock Exchange,
Inc. (the "New York Stock Exchange"), the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities deposited
by Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Preferred Securities with DTC and their registration in the name
of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Preferred Securities. DTC's records reflect
only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Preferred Securities are being redeemed, DTC will reduce pro rata the amount of
the interest of each Direct Participant in the Preferred Securities to be
redeemed.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to U S WEST Financing as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Preferred Securities are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
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Distribution payments on the Preferred Securities will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment date
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case with securities held for
the account of customers in bearer form or registered in "street name," and will
be the responsibility of such Participant and not of DTC, U S WEST Financing,
Capital Funding or U S WEST, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of distributions to DTC is the
responsibility of U S WEST Financing, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred Security
will not be entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to U
S WEST Financing. Under such circumstances, in the event that a successor
securities depository is not obtained, Preferred Securities certificates are
required to be printed and delivered. Additionally, U S WEST Financing (with the
consent of U S WEST) may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary). In that event, certificates
for the Preferred Securities will be printed and delivered. In each of the above
circumstances, the U S WEST Trustees will appoint a paying agent with respect to
the Preferred Securities.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that U S WEST and U S WEST Financing believe to
be reliable, but U S WEST and U S WEST Financing take no responsibility for the
accuracy thereof.
REGISTRAR AND TRANSFER AGENT
In the event that the Preferred Securities do not remain in book-entry only
form, the following provisions would apply:
The Regular Trustees will designate a paying agent for the Preferred
Securities, but the Regular Trustees may designate an additional or substitute
paying agent at any time.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of U S WEST Financing, but upon payment (with the giving
of such indemnity as U S WEST Financing or U S WEST may require) in respect of
any tax or other government charges which may be imposed in relation to it.
U S WEST Financing will not be required to register or cause to be
registered the transfer of Preferred Securities after such Preferred Securities
have been called for redemption.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate U S WEST
Financing in such a way so that U S WEST Financing will not be deemed to be an
"investment company" required to be registered under the 1940 Act or subject to
taxation as a corporation for federal income tax purposes and Capital Funding is
authorized and directed to conduct its affairs so that the Subordinated Debt
Securities will be treated as indebtedness of Capital Funding for United States
federal income tax purposes. In this connection, the Regular Trustees and
Capital Funding are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of U S WEST Financing, the Declaration
or the certificate of incorporation of Capital Funding, that each of the Regular
Trustees and Capital Funding determines in their discretion to be necessary or
desirable for such purposes, as long as such action does not adversely affect
the interests of the holders of the Preferred Securities or vary the terms
thereof.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEE
Set forth below is a description of the specific terms of the Subordinated
Debt Securities in which U S WEST Financing will invest with the proceeds of the
issuance and sale of the Trust Securities. This description supplements the
description of the general terms and provisions of the Subordinated Debt
Securities set forth in the accompanying Prospectus under the caption
"Description of the Subordinated Debt Securities and the Debt Guarantees." The
following description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Indenture (the "Base Indenture"), dated as of ,
1995, among Capital Funding, U S WEST and Norwest Bank Minnesota, National
Association, as Trustee (the "Debt Trustee"), as supplemented by a First
Supplemental Indenture, dated as of , 1995 (the Base Indenture, as so
supplemented, is hereinafter referred to as the "Indenture"), the forms of which
are filed as an exhibit to the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part. Certain capitalized
terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of U S WEST Financing
following the occurrence of a Special Event, Subordinated Debt Securities may be
distributed to the holders of the Preferred Securities in liquidation of U S
WEST Financing. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
If the Subordinated Debt Securities are distributed to the holders of the
Preferred Securities, Capital Funding will use its best efforts to have the
Subordinated Debt Securities listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed.
GENERAL
The Subordinated Debt Securities will be issued as unsecured debt under the
Indenture. The Subordinated Debt Securities will be limited in aggregate
principal amount to approximately $ million, such amount being the sum of
the aggregate stated liquidation amount of the Preferred Securities and the
capital contributed by Capital Funding in exchange for the Common Securities
(the "U S WEST Payment").
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest (as hereinafter defined), if any, on
, 2025, subject to the election of Capital Funding to extend the
maturity date of the Subordinated Debt Securities to a date not later than
, 2044, provided that Capital Funding satisfies certain financial
covenants. See "-- Option to Extend Maturity." The Subordinated Debt Securities
will be fully and unconditionally guaranteed on a subordinated basis as to
principal, premium, if any, and interest by U S WEST. See "Description of the
Subordinated Debt Securities and the Debt Guarantees -- Debt Guarantees" in the
accompanying Prospectus.
If Subordinated Debt Securities are distributed to holders of the Preferred
Securities in liquidation of such holders' interests in U S WEST Financing, such
Subordinated Debt Securities will initially be issued as a Global Security (as
defined below). As described herein, under certain limited circumstances,
Subordinated Debt Securities may be issued in certificated form in exchange for
a Global Security. See "-- Book-Entry and Settlement." In the event Subordinated
Debt Securities are issued in certificated form, such Subordinated Debt
Securities will be in denominations of $25 and integral multiples thereof and
may be transferred or exchanged at the offices described below. Payments on
Subordinated Debt Securities issued as a Global Security will be made to the
depositary for the Subordinated Debt Securities. In the event Subordinated Debt
Securities are issued in certificated form, principal and interest will be
payable, the transfer of the Subordinated Debt Securities will be registrable
and Subordinated Debt Securities will be exchangeable for Subordinated Debt
Securities of other denominations of a like aggregate principal amount at the
corporate trust office of the Debt Trustee in , ; provided, that
payment of interest may be made at the option of Capital Funding by check mailed
to the address of the persons entitled thereto.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness of
Capital Funding and that the Debt Guarantee is subordinated and
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junior in right of payment to all Senior Indebtedness of U S WEST. No payment of
principal of (including redemption and sinking fund payments), premium, if any,
or interest on, the Subordinated Debt Securities and no payment under the Debt
Guarantee may be made if any Senior Indebtedness of Capital Funding or U S WEST,
as the case may be, is not paid when due, any applicable grace period with
respect to such default has ended and such default has not been cured or waived
or ceased to exist, or if the maturity of any Senior Indebtedness of Capital
Funding or U S WEST, as the case may be, has been accelerated because of a
default. Upon any distribution of assets of Capital Funding or U S WEST to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all principal of, premium, if any, and interest due or to
become due on, all Senior Indebtedness of Capital Funding or U S WEST, as the
case may be, must be paid in full before the holders of Subordinated Debt
Securities or the Debt Guarantee are entitled to receive or retain any payment.
The rights of the holders of the Subordinated Debt Securities and the Debt
Guarantee will be subrogated to the rights of the holders of Senior Indebtedness
of Capital Funding or U S WEST, as the case may be, to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Subordinated Debt Securities or the Debt Guarantee, as the case may be, are paid
in full. In addition, the Subordinated Debt Securities and the Debt Guarantee
will rank PARI PASSU with all other subordinated debt securities and debt
guarantees issued under the Base Indenture to other U S WEST Trusts or to other
trusts or partnerships affiliated with U S WEST in connection with an issuance
of preferred securities.
The term "Senior Indebtedness" means, with respect to Capital Funding or U S
WEST, (i) the principal, premium, if any, and interest in respect of (A)
indebtedness of such obligor for money borrowed and (B) indebtedness evidenced
by securities, debentures, bonds or other similar instruments issued by such
obligor including, without limitation, in the case of U S WEST, all obligations
under its Liquid Yield Option Notes due 2011; (ii) all capital lease obligations
of such obligor; (iii) all obligations of such obligor issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
obligor and all obligations of such obligor under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such obligor for the reimbursement on any
letter of credit, banker's acceptance, security purchase facility or similar
credit transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) of other persons for the payment of which such obligor is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) of other persons
secured by any lien on any property or asset of such obligor (whether or not
such obligation is assumed by such obligor), except for (1) any such
indebtedness that is by its terms subordinated to or PARI PASSU with the
Subordinated Debt Securities or the Debt Guarantee, as the case may be, and (2)
any indebtedness between or among such obligor and its affiliates. Such Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which may be issued by Capital Funding or U S WEST. As of December 31, 1994,
Senior Indebtedness of U S WEST and Capital Funding aggregated approximately
$3.5 billion and $1.4 billion, respectively.
OPTIONAL REDEMPTION
Capital Funding shall have the right to redeem the Subordinated Debt
Securities, in whole or in part, from time to time, on or after ,
2000, upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and unpaid
interest, including Additional Interest, if any, to the redemption date.
INTEREST
Each Subordinated Debt Security shall bear interest at the rate of % per
annum from the original date of issuance, payable monthly in arrears on the last
day of each calendar month of each year (each, an "Interest Payment Date"),
commencing , 1995, to the person in whose name such Subordinated Debt
Security is registered, subject to certain exceptions, at the close of business
on the Business Day next preceding such Interest Payment Date. In the event the
Subordinated Debt Securities shall not continue to remain in book-entry only
form, Capital Funding shall have the right to select record dates which shall be
more than one Business Day prior to the Interest Payment Date.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debt Securities is not a Business Day,
then payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
OPTION TO EXTEND MATURITY DATE
The maturity date of the Subordinated Debt Securities is , 2025
(the "Scheduled Maturity Date"). Capital Funding, however, may, before the
Scheduled Maturity Date, extend such maturity date no more than one time, for up
to an additional 19 years from the Scheduled Maturity Date, provided that (a)
Capital Funding is not in bankruptcy or otherwise insolvent, (b) Capital Funding
is not in default on any Subordinated Debt Securities pertaining to the
Preferred Securities issued by any U S WEST Trust, (c) Capital Funding has made
timely payments on the Subordinated Debt Securities for the immediately
preceding 18 months without deferrals, (d) U S WEST Financing is not in arrears
on payments of distributions on the Preferred Securities, (e) such Subordinated
Debt Securities shall continue to pay interest at a rate sufficient to provide
payments equal to the amount of distributions that accrue on the Preferred
Securities, (f) such Subordinated Debt Securities are rated Investment Grade by
Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch Investor
Services, Duff & Phelps Credit Rating Company or any other nationally recognized
statistical rating organization, and (g) the final maturity of such Subordinated
Debt Securities is not later than the 49th anniversary of the issuance of the
Preferred Securities.
OPTIONS TO EXTEND INTEREST PAYMENT PERIOD
Capital Funding shall have the right at any time, and from time to time,
during the term of the Subordinated Debt Securities to extend the interest
payment period for a period not exceeding 60 consecutive months (the "Extension
Period"), at the end of which Extension Period, Capital Funding shall pay all
interest then accrued and unpaid (including any Additional Interest) (together
with interest thereon at the rate specified for the Subordinated Debt Securities
to the extent permitted by applicable law); provided, that, during any such
Extension Period, none of (i) U S WEST, (ii) Capital Funding, or (iii) if it is
not a wholly-owned subsidiary of U S WEST, U S WEST Communications, Inc. may
declare or pay any dividend on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to any of
its capital stock or preferred stock until deferred interest on the Subordinated
Debt Securities is paid in full. In addition, Capital Funding will be required
to defer interest on all series of Subordinated Debt Securities held by other U
S WEST Trusts until deferred interest on all Subordinated Debt Securities held
by U S WEST Trusts is paid in full. Prior to the termination of any such
Extension Period, Capital Funding may further extend the interest payment
period, provided that such Extension Period together with all such previous and
further extensions thereof may not exceed 60 consecutive months. Upon the
termination of any Extension Period and the payment of all amounts then due,
Capital Funding may select a new Extension Period, subject to the above
requirements. No interest during an Extension Period, except at the end thereof,
shall be due and payable. If U S WEST Financing shall be the sole holder of the
Subordinated Debt Securities, Capital Funding shall give U S WEST Financing
notice of its selection of such Extension Period one Business Day prior to the
earlier of (i) the date distributions on the Preferred Securities are payable or
(ii) the date U S WEST Financing is required to give notice to the New York
Stock Exchange or other applicable self-regulatory organization or to holders of
the Preferred Securities of the record date or the date such distribution is
payable, but in any event not less than one Business Day prior to such record
date. U S WEST Financing shall give notice of Capital Funding's selection of
such Extension Period to the holders of the Preferred Securities. If U S WEST
Financing shall not be the sole holder of the Subordinated Debt Securities,
Capital Funding shall give the holders of the Subordinated Debt Securities
Notice of its selection of such Extension Period ten Business Days prior to the
earlier of (i) the Interest Payment Date or (ii) the date Capital Funding is
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Subordinated Debt Securities
of the record or payment date of such related interest payment but in any event
not less than two Business Days prior to such record date.
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ADDITIONAL INTEREST
If at any time U S WEST Financing shall be required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, Capital Funding will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by U S WEST Financing after paying any such
taxes, duties, assessments or other governmental charges will be not less than
the amounts U S WEST Financing would have received had no such taxes, duties,
assessments or other governmental charges been imposed.
SET-OFF
Notwithstanding anything to the contrary in the Indenture, U S WEST and
Capital Funding shall have the right to set-off any payment either is otherwise
required to make thereunder with and to the extent U S WEST has theretofore
made, or is concurrently on the date of such payment making, a payment under the
Preferred Securities Guarantee.
EVENTS OF DEFAULT
In the case any Event of Default shall occur and be continuing under the
Indenture, the Property Trustee or, if there is no Property Trustee, the Regular
Trustees, will have the right to declare the principal of and the interest on
the Subordinated Debt Securities (including any Additional Interest) and any
other amounts payable under the Indenture to be forthwith due and payable and to
enforce its other rights as a creditor with respect to the Subordinated Debt
Securities. See "Description of the Subordinated Debt Securities and the Debt
Guarantees -- Events of Default" in the accompanying Prospectus for a
description of the Events of Default. See "Enforcement of Certain Rights by
Special Representative" below for a discussion of certain rights available to
holders of the Preferred Securities upon the occurrence of an Event of Default.
ENFORCEMENT OF CERTAIN RIGHTS BY SPECIAL REPRESENTATIVE
If (i) U S WEST Financing fails to pay distributions in full on the
Preferred Securities for 18 consecutive monthly distribution periods; (ii) an
Event of Default occurs and is continuing under the Indenture or (iii) U S WEST
is in default on any of its payment or other obligations under the Preferred
Securities Guarantee, under the terms of the Preferred Securities, the holders
of outstanding Preferred Securities will have the rights referred to under
"Description of the Preferred Securities -- Voting Rights," including the right
to appoint a Special Representative which Special Representative shall, if an
Event of Default occurs under the Indenture, be authorized to direct the
Property Trustee to enforce its creditor rights or, if there is no Property
Trustee, to directly enforce U S WEST Financing's creditor rights as the holder
of the Subordinated Debt Securities and the Debt Guarantee under the Indenture,
including the right to accelerate the principal amount of the Subordinated Debt
Securities. The procedures by which such rights would be effected are described
in "Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company." Notwithstanding the appointment of any such Special
Representative, Capital Funding shall retain all rights under the Indenture,
including the right to extend the interest payment period and maturity date. See
"-- Option to Extend Interest Payment Period" and "-- Option to Extend Maturity
Date." If such an extension occurs, there will be no Event of Default under the
Indenture for failure to make any scheduled interest payment during the
Extension Period on the date originally scheduled or for failure to make any
principal payment on the maturity date.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of U S WEST
Financing as a result of the occurrence of a Special Event, the Subordinated
Debt Securities will be issued in the form of one or more global certificates
(each, a "Global Security") registered in the name of the depositary or its
nominee. Except under the limited circumstances described below, Subordinated
Debt Securities represented by the Global Security will not be exchangeable for,
and will not otherwise be issuable as, Subordinated Debt Securities in
definitive form. The Global
S-21
<PAGE>
Securities described above may not be transferred except by the depositary to a
nominee of the depositary or by a nominee of the depositary to the depositary or
another nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the depositary or its nominee or to a successor depositary or its
nominee. Accordingly, each beneficial owner must rely on the procedures of the
depositary and, if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a Holder under the Indenture.
THE DEPOSITARY. If Subordinated Debt Securities are distributed to holders
of Preferred Securities in liquidation of such holders' interests in U S WEST
Financing, DTC will act as securities depositary for the Subordinated Debt
Securities. For a description of DTC and the specific terms of the depository
arrangements, see "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." As of the date of this Prospectus
Supplement, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. Capital
Funding may appoint a successor to DTC or any successor depositary in the event
DTC or such successor depositary is unable or unwilling to continue as
depositary.
None of U S WEST, Capital Funding, U S WEST Financing, the Debt Trustee, any
paying agent and any other agent of U S WEST, Capital Funding or the Debt
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security for such Subordinated Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES. A Global Security shall be
exchangeable for Subordinated Debt Securities registered in the names of persons
other than the depositary or its nominee only if (i) the depositary notifies
Capital Funding that it is unwilling or unable to continue as a depositary for
such Global Security and no successor depositary shall have been appointed, or
if any time the depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, at a time when the depositary is
required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (ii) Capital Funding in its sole
discretion determines that such Global Security shall be so exchangeable or
(iii) there shall have occurred an Event of Default with respect to such
Subordinated Debt Securities. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Subordinated Debt Securities
registered in such names as the depositary shall direct. It is expected that
such instructions will be based upon directions received by the depositary from
its Participants with respect to ownership of beneficial interests in such
Global Security.
MISCELLANEOUS
The Indenture will provide that Capital Funding will pay all fees and
expenses related to (i) the offering of the Trust Securities and the
Subordinated Debt Securities, (ii) the organization, maintenance and dissolution
of U S WEST Financing, (iii) the retention of the U S WEST Trustees and (iv) the
enforcement of the rights of holders of Preferred Securities, including the fees
and expenses associated with the services of the Special Representative. The
payment of such fees and expenses will be fully and unconditionally guaranteed
by U S WEST.
S-22
<PAGE>
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES,
THE DEBT GUARANTEE AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of U S WEST Financing is
to issue securities evidencing undivided beneficial interests in the assets of U
S WEST Financing, including, without limitation, the Preferred Securities, and
to invest the proceeds thereof in the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Subordinated Debt Securities will be equal to the
sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and interest and other payment dates on the Subordinated Debt
Securities will match the distribution rate and distribution and other payment
dates for the Preferred Securities; (iii) Capital Funding shall pay for all, and
U S WEST Financing shall not be obligated to pay, directly or indirectly, for
any, costs and expenses of U S WEST Financing; and (iv) the Declaration provides
that the U S WEST Trustees shall not cause or permit U S WEST Financing to,
among other things, engage in any activity that is not consistent with the
purposes of U S WEST Financing.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by U S WEST as and to the extent set forth under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If Capital Funding does not make interest payments on the
Subordinated Debt Securities purchased by U S WEST Financing and U S WEST does
not make payments under the Debt Guarantee, it is expected that U S WEST
Financing will not have sufficient funds to pay distributions on the Preferred
Securities. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of its issuance, but does not apply to any payment of
distributions unless and until U S WEST Financing has sufficient funds for the
payment of such distributions.
If Capital Funding fails to make interest or other payments on the
Subordinated Debt Securities when due (taking account of any Extension Period)
and U S WEST fails to make payments under the Debt Guarantee with respect to
such payments due on the Subordinated Debt Securities, the Declaration provides
a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company," may appoint a Special
Representative to direct the Property Trustee to enforce its rights, or if there
is no Property Trustee, to directly enforce U S WEST Financing's rights under
the Subordinated Debt Securities and Debt Guarantee. The Declaration also
provides, and U S WEST, under the Preferred Securities Guarantee, acknowledges,
that the Special Representative may enforce the Preferred Securities Guarantee
if U S WEST is in default on any of its payment obligations under the Preferred
Securities Guarantee. If a Special Representative is not appointed or if the
Special Representative fails to enforce the rights of Preferred Securities
holders under the Preferred Securities Guarantee, the Regular Trustees shall
have the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. In addition, if both the Regular Trustees
and the Special Representative fail to enforce the Preferred Securities
Guarantee, a holder of Preferred Securities, using the procedures described in
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company," may institute a legal proceeding directly against U S
WEST to enforce its rights under the Preferred Securities Guarantee without
first instituting a legal proceeding against U S WEST Financing or any other
person or entity.
U S WEST and U S WEST Financing believe that the above mechanisms and
obligations, taken together, are substantially equivalent to a full and
unconditional guarantee by U S WEST of payments due on the Preferred Securities.
See "Description of the Preferred Securities Guarantees -- General" in the
accompanying Prospectus.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain of the principal United States federal
income tax consequences of the purchase, ownership, and disposition of the
Preferred Securities to a holder that is a citizen or resident of
S-23
<PAGE>
the United States, a corporation, partnership, or other entity created or
organized under the laws of the United States or any state thereof or the
District of Columbia or an estate or trust the income of which is subject to
United States federal income taxation regardless of source (a "U.S. Holder").
This summary does not address the United States federal income tax consequences
to persons other than U.S. Holders.
This summary is based on the United States federal income tax laws,
regulations, and rulings and decisions now in effect, all of which are subject
to change, possibly on a retroactive basis. This summary does not address the
tax consequences applicable to investors that may be subject to special tax
rules such as banks, thrifts, real estate investment trusts, regulated
investment companies, insurance companies, dealers in securities or currencies,
tax-exempt investors, or persons that will hold the Preferred Securities as a
position in a "straddle," as part of a "synthetic security" or "hedge," as part
of a "conversion transaction" or other integrated investment or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.
CLASSIFICATION OF U S WEST FINANCING
Upon the issuance of the Preferred Securities, Weil, Gotshal & Manges,
counsel to U S WEST, Capital Funding and U S WEST Financing, will issue its
opinion (the "Tax Opinion") to the effect that, under then current law and
assuming full compliance with the terms of the Indenture and the Declaration
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, U S WEST Financing will not be classified, for United
States federal income tax purposes, as an association taxable as a corporation
or a partnership, but rather, each holder of Preferred Securities will be
treated as owning an undivided interest in the Subordinated Debt Securities.
Accordingly, each holder will be required to include in its gross income the
original issue discount ("OID") accrued with respect to its allocable share of
those Subordinated Debt Securities. Investors should be aware that the Tax
Opinion does not address any other issue and is not binding on the Internal
Revenue Service (the "Service") or the courts.
ORIGINAL ISSUE DISCOUNT, PREMIUM AND MARKET DISCOUNT
Because of the option that Capital Funding has, under the terms of the
Subordinated Debt Securities, to extend interest payment periods for up to 60
months, all of the stated interest payments on those Debt Securities will be
treated as "original issue discount." Holders of debt instruments issued with
OID must include that discount in income on an economic accrual basis before the
receipt of cash attributable to the interest, regardless of their method of tax
accounting. The amount of OID that accrues in any month will approximately equal
the amount of the interest that accrues in that month at the stated interest
rate. In the event that the interest payment period is extended, holders will
continue to accrue OID approximately equal to the amount of the interest payment
due at the end of the extended interest payment period on an economic accrual
basis over the length of the extended interest period.
To the extent a holder acquires its Preferred Securities at a price that is
greater or less than the adjusted issue price of such holder's share of the
Subordinated Debt Securities (which generally should approximate par plus
accrued but unpaid interest), the holder may be deemed to have acquired its
interest in the Subordinated Debt Securities with acquisition premium or with
market discount, as the case may be. A holder who purchases Preferred Securities
at a premium will be permitted to reduce the amount of OID required to be
included in income to reflect the acquisition premium. A holder who purchases
Preferred Securities at a market discount will also include the amount of such
discount in income in accordance with the market discount rules described below.
A holder that acquires its indirect interest in the Subordinated Debt
Securities at a market discount generally will be required to recognize ordinary
income to the extent of accrued market discount on the Debt Securities upon the
retirement of the underlying Debt Securities or, to the extent of any gain, upon
the disposition of the Preferred Securities. Such market discount would accrue
ratably, or, at the election of the holder, under a constant yield method over
the remaining term of the Subordinated Debt Securities. A holder will also be
required to defer the deduction of a portion of the interest paid or accrued on
S-24
<PAGE>
indebtedness incurred to purchase or carry Preferred Securities that represent
Subordinated Debt Securities acquired with market discount. In lieu of the
foregoing, a holder may elect to include market discount in income currently as
it accrues on all market discount instruments acquired by such holder in the
taxable year of the election or thereafter, in which case the interest deferral
rule will not apply.
A holder may elect, in lieu of applying the market discount or premium rules
described above, to account for all income under the Subordinated Debt
Securities as if it were OID. A holder that makes this election and that is
considered to have acquired its interest in the Subordinated Debt Securities
with market discount will be considered to have made the election described in
the immediately preceding paragraph.
RECEIPT OF SUBORDINATED DEBT SECURITIES OR CASH UPON LIQUIDATION OF U S WEST
FINANCING
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution,"
Subordinated Debt Securities may be distributed to holders in exchange for the
Preferred Securities and in liquidation of U S WEST Financing. Under a revenue
ruling issued by the Service, such a distribution would be treated as a
non-taxable event to each holder and each holder would receive an aggregate tax
basis in the Subordinated Debt Securities equal to such holder's aggregate tax
basis in its Preferred Securities. A holder's holding period in the Subordinated
Debt Securities so received in liquidation of U S WEST Financing would include
the period for which the Preferred Securities were held by such holder.
SALES OF CERTIFICATES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the securities and the
amount realized on the sale. A holder's adjusted tax basis in the Preferred
Securities generally will be its initial purchase price increased by original
issue discount previously includible in such holder's gross income to the date
of disposition (and the accrual of market discount, if any) and decreased by
payments received on the Preferred Securities. Subject to the market discount
rules described above, any such gain or loss generally will be capital gain or
loss.
INFORMATION REPORTING TO HOLDERS
U S WEST Financing will be obligated to report annually to the holders of
record of the Preferred Securities, the original issue discount related to the
Subordinated Debt Securities that accrued during the year. Although U S WEST
Financing is not required to report to record holders until April 15 following
each calendar year, U S WEST Financing currently intends to deliver such reports
prior to January 31 following each calendar year. In addition, the Underwriters
have indicated to U S WEST Financing that to the extent that they hold Preferred
Securities as nominees for beneficial holders, they currently expect to report
to such beneficial holders on Forms 1099 by January 31 following each calendar
year. Under current law, nominee holders will not have any obligation to report
information regarding the beneficial holders to U S WEST Financing. U S WEST
Financing, moreover, will not have any obligation to report to beneficial
holders who are not also record holders.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's federal income tax, provided the required
information is provided to the Service.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
S-25
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), U S WEST Financing has agreed to sell to each of
the Underwriters named below, and each of the Underwriters, for whom Merrill
Lynch, Pierce, Fenner & Smith Incorporated [and [insert co-lead managers, if
any]] are acting as representatives (the "Representatives"), has severally
agreed to purchase the number of Preferred Securities set forth opposite its
name below. In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all the
Preferred Securities offered hereby if any of the Preferred Securities are
purchased. In the event of default by an Underwriter, the Underwriting Agreement
provides that, in certain circumstances, the purchase commitments of the
nondefaulting Underwriters may be increased or the Underwriting Agreement may be
terminated.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................................
----------
Total..................................................................
----------
----------
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus Supplement, and in part to certain securities dealers at
such price less a concession of $. per Preferred Securities. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of $. per
Preferred Securities to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debt Securities of Capital
Funding the Underwriting Agreement provides that Capital Funding will agree to
pay as compensation ("Underwriters' Compensation") for the Underwriters'
arranging the investment therein of such proceeds, an amount in New York
Clearing House (next day) funds of $. per Preferred Securities (or $ in
the aggregate) for the accounts of the several Underwriters provided that such
compensation for sales of 10,000 or more Preferred Securities to any single
purchaser will be $. per Preferred Securities. Therefore, to the extent of
such sales, the actual amount of Underwriters Compensation will be less than the
aggregate amount specified in the preceding sentence.
U S WEST has agreed, during the period beginning from the date of the
Underwriting Agreement and continuing to and including the earlier of (i) the
date after the closing date on which the distribution of the Preferred
Securities ceases, as determined by the Underwriters, or (ii) days after the
closing date, not to (and to cause the other U S WEST Trusts not to) offer,
sell, contract to sell, or otherwise dispose of any Preferred Securities, or any
preferred stock or any other securities of U S WEST or any of the other U S WEST
Trusts which are substantially similar to the Preferred Securities (other than
Subordinated Debt Securities), or any securities convertible into or
exchangeable for the Preferred Securities, without the prior written consent of
the Underwriters.
S-26
<PAGE>
Application has been made to list the Preferred Securities on the New York
Stock Exchange. If so approved, trading of the Preferred Securities on the New
York Stock Exchange is expected to commence within a 30 day period after the
initial delivery of the Preferred Securities. The Representatives have advised U
S WEST Financing that they intend to make a market in the Preferred Securities
prior to the commencement of trading on the New York Stock Exchange. The
Representatives will have no obligation to make a market in the Preferred
Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell lots of 100 or more Preferred Securities to a minimum of 400 beneficial
holders.
U S WEST Financing and U S WEST have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, U S WEST and its subsidiaries in the ordinary
course of business.
LEGAL MATTERS
The validity of the Preferred Securities, the Subordinated Debt Securities,
the Preferred Securities Guarantee, the Debt Guarantee and certain matters
relating thereto will be passed upon on behalf of U S WEST, Capital Funding and
U S WEST Financing by Weil, Gotshal & Manges, New York, New York and on behalf
of the Underwriters by Skadden, Arps, Slate, Meagher & Flom, New York, New York.
Weil, Gotshal & Manges and Skadden, Arps, Slate, Meagher & Flom will rely on the
opinion of Stephen E. Brilz, Senior Attorney and Assistant Secretary of U S
WEST, as to all matters of Colorado law. Certain United States Federal income
taxation matters will be passed upon for U S WEST, Capital Funding and U S WEST
Financing by Weil, Gotshal & Manges.
S-27
<PAGE>
- -------------------------------------------
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- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY U S WEST INC., U S WEST FINANCING I OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF U S WEST INC. OR U S WEST FINANCING I SINCE THE DATE HEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICIATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary Financial Information.................. S-3
US WEST, Inc................................... S-4
US WEST Capital Funding, Inc................... S-4
US WEST Financing I............................ S-4
Recent Developments............................ S-5
Investment Considerations...................... S-6
Capitalization of US WEST...................... S-8
Accounting Treatment........................... S-9
Use of Proceeds................................ S-9
Descriptions of the Preferred Securities....... S-9
Description of the Subordinated Debt Securities
and the Debt Guarantee........................ S-18
Effect of Obligations Under the Subordinated
Debt Securities, The Debt Guarantee and the
Preferred Securities Guarantee................ S-23
Certain Federal Income Tax Consequences........ S-23
Underwriting................................... S-26
Legal Matters.................................. S-27
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 3
US WEST Capital Funding, Inc................... 4
US WEST Financing Trusts....................... 4
US WEST, Inc................................... 4
Ratio of Earnings to Fixed Charges............. 5
Use of Proceeds................................ 5
Description of the Preferred Securities........ 5
Description of the Preferred Securities
Guarantees.................................... 6
Description of the Subordinated Debt Securities
and the Debt Guarantees....................... 8
Plan of Distribution........................... 13
Legal Options.................................. 13
Experts........................................ 14
</TABLE>
$1,000,000,000
U S WEST FINANCING I
% TRUST ORIGINATED
PREFERRED SECURITIES ("TOPRS")
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
U S WEST, INC.
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
, 1995
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 1, 1995
PROSPECTUS [LOGO]
$1,000,000,000
U S WEST CAPITAL FUNDING, INC.
SUBORDINATED DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF
PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
U S WEST, INC.
------------
U S WEST FINANCING I
U S WEST FINANCING II
U S WEST FINANCING III
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
U S WEST, INC.
------------
U S WEST Capital Funding, Inc., a Colorado corporation ("Capital Funding")
and a wholly-owned subsidiary of U S WEST, Inc., a Colorado corporation ("U S
WEST"), may from time to time offer its subordinated debt securities (the
"Subordinated Debt Securities") in one or more series and in amounts, at prices
and on terms to be determined at the time of the offering. The Subordinated Debt
Securities when issued will be unsecured obligations of Capital Funding and will
be fully and unconditionally guaranteed as to payment of principal, premium, if
any, and interest by U S WEST (the "Debt Guarantees"). Capital Funding's
obligations under the Subordinated Debt Securities and U S WEST's obligations
under the Debt Guarantees will be subordinate and junior in right of payment to
certain other indebtedness of Capital Funding and U S WEST, respectively, as may
be described in an accompanying Prospectus Supplement (the "Prospectus
Supplement").
U S WEST Financing I, U S WEST Financing II and U S WEST Financing III
(each, a "U S WEST Trust"), each a business trust formed under the laws of
Delaware, may from time to time offer preferred securities evidencing undivided
beneficial interests in the assets of the respective U S WEST Trust ("Preferred
Securities"). The payment of periodic cash distributions ("distributions") with
respect to Preferred Securities of each of the U S WEST Trusts, out of moneys
held by each of the U S WEST Trusts, and payments on liquidation, redemption or
maturity with respect to such Preferred Securities will be guaranteed by U S
WEST to the extent described herein (each, a "Preferred Securities Guarantee").
U S WEST's obligations under the Preferred Securities Guarantees will be
subordinate and junior in right of payment to all other liabilities of U S WEST
and PARI PASSU with the most senior preferred stock issued by U S WEST.
Subordinated Debt Securities may be issued and sold from time to time in one or
more series by Capital Funding to a U S WEST Trust in connection with the
investment of the proceeds from the offering of Preferred Securities and Common
Securities (as defined herein) of such U S WEST Trust. The Subordinated Debt
Securities subsequently may be distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such U S
WEST Trust upon the occurrence of certain events as may be described in the
Prospectus Supplement.
Specific terms of the particular Subordinated Debt Securities of any series
or the Preferred Securities of any U S WEST Trust in respect of which this
Prospectus is being delivered (the "Offered Securities") will be set forth in
the accompanying Prospectus Supplement with respect to such series of
Subordinated Debt Securities or such Preferred Securities, which will describe,
without limitation and where applicable the following: (i) in the case of
Subordinated Debt Securities, the specific designation, aggregate principal
amount, denomination, maturity, premium, if any, interest rate (or the method of
determining such rate), if any, dates on which premium, if any, and interest, if
any, will be payable, any redemption provisions, any sinking fund provisions,
the initial public offering price, the subordination terms, any listing on a
securities exchange and any other terms and (ii) in the case of Preferred
Securities, the specific designation, number of Preferred Securities,
distribution rate (or the method of determining such rate), dates on which
distributions will be payable, liquidation amount, voting rights (if any), any
redemption provisions, terms for any conversion or exchange into other
securities (if any), the initial public offering price, any listing on a
securities exchange, and any other rights, preferences, privileges, limitations
and restrictions.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Offered Securities shall not exceed
$1,000,000,000. The Prospectus Supplement relating to any series of Offered
Securities will contain information concerning certain United States federal
income tax considerations, if applicable to the Offered Securities.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
The date of this Prospectus is , 1995.
<PAGE>
The Offered Securities will be sold directly, through agents, underwriters
or dealers as designated from time to time, or through a combination of such
methods. If agents or any dealers or underwriters are involved in the sale of
the Offered Securities in respect of which this Prospectus is being delivered,
the names of such agents, dealers or underwriters and any applicable commissions
or discounts will be set forth in or may be calculated from the Prospectus
Supplement with respect to such Offered Securities.
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED BY U S
WEST, CAPITAL FUNDING OR ANY OF THE U S WEST TRUSTS TO GIVE ANY INFORMATION OR
TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF CAPITAL FUNDING, ANY OF THE U S
WEST TRUSTS OR U S WEST SINCE THE DATE HEREOF.
------------------------
AVAILABLE INFORMATION
U S WEST is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information concerning U S WEST can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60601. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements and
other information concerning U S WEST may also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 and
the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104,
the securities exchanges on which shares of U S WEST's common stock are listed.
Capital Funding, the U S WEST Trusts and U S WEST have filed with the
Commission a registration statement on Form S-3 (herein, together with all
amendments and exhibits, referred to as the "Registration Statement") relating
to the Offered Securities under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
No separate financial statements of Capital Funding or any of the U S WEST
Trusts have been included herein. U S WEST does not consider that such financial
statements would be material to holders of the Offered Securities because: (i)
Capital Funding and each U S WEST Trust is a direct or indirect wholly-owned
subsidiary of U S WEST, a reporting company under the Exchange Act, (ii) neither
Capital Funding nor any U S WEST Trust has any independent operations but exists
for the sole purpose of issuing, in the case of Capital Funding, debt securities
guaranteed by U S WEST, and in the case of the U S WEST Trusts, securities
representing undivided beneficial interests in the U S WEST Trusts and investing
the proceeds thereof in Subordinated Debt Securities guaranteed by U S WEST, and
(iii) the obligations of Capital Funding under the Subordinated Debt Securities
are fully and unconditionally guaranteed by U S WEST, and the obligations of
each U S WEST Trust under the Trust Securities, to the extent funds are
available, are fully and unconditionally guaranteed by U S WEST. See
"Description of the Subordinated Debt Securities and the Debt Guarantees" and
"Description of the Preferred Securities Guarantees."
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by U S WEST with the
Commission (File No. 1-8611) are incorporated herein by reference: (i) Annual
Report on Form 10-K for the year ended December 31, 1993, (ii) Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1994, June 30, 1994, and September
30, 1994, (iii) Current Reports on Form 8-K dated January 21, 1994, February 24,
1994, April 1, 1994, April 18, 1994, June 24, 1994, July 15, 1994, July 18,
1994, July 25, 1994, October 18, 1994, December 8, 1994 and January 19,
1995. .
All documents filed by U S WEST pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date any such document is filed.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein or in any Prospectus Supplement shall be deemed
to be modified or superseded for purposes of this Prospectus or in any
Prospectus Supplement to the extent that a statement contained herein or therein
(or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein or therein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
any Prospectus Supplement.
U S WEST WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY OR ALL OF
THE DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE HEREIN, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO THE TREASURER, U S WEST,
INC., 7800 EAST ORCHARD ROAD, ENGLEWOOD, COLORADO 80111 (TELEPHONE NUMBER (303)
793-6500).
------------------------
3
<PAGE>
U S WEST CAPITAL FUNDING, INC.
U S WEST Capital Funding is a wholly-owned subsidiary of U S WEST and was
incorporated under the laws of the State of Colorado in June 1986. U S WEST
Capital Funding was incorporated to provide financing to U S WEST and its
affiliates through the issuance of indebtedness guaranteed by U S WEST. The
principal executive offices of U S WEST Capital Funding are located at 7800 East
Orchard Road, Englewood, Colorado, 80111 (telephone number (303) 793-6500).
THE U S WEST FINANCING TRUSTS
Each of U S WEST Financing I, U S WEST Financing II and U S WEST Financing
III is a business trust formed under Delaware law pursuant to (i) a separate
Declaration (each, a "Declaration") executed by U S WEST, as sponsor for such
trust (the "Sponsor") and the U S WEST Trustees (as defined herein) of such
trust and (ii) the filing of a certificate of trust with the Delaware Secretary
of State on February , 1995. Each U S WEST Trust exists for the exclusive
purposes of (i) issuing the Preferred Securities and common securities
representing undivided beneficial interests in the assets of the Trust (the
"Common Securities" and, together with the Preferred Securities, the "Trust
Securities") and (ii) investing the gross proceeds of the Trust Securities in
the Subordinated Debt Securities. All of the Common Securities will be directly
or indirectly owned by U S WEST. The Common Securities will rank pari passu, and
payments will be made thereon pro rata, with the Preferred Securities except
that upon an Event of Default (as defined herein) under the Indenture (as
defined herein), the rights of the holders of the Common Securities to payment
in respect of distributions and payments upon liquidation, redemption and
maturity will be subordinated to the rights of the holders of the Preferred
Securities. U S WEST will, directly or indirectly, acquire Common Securities in
an amount equal to 3% of the total capital of each U S WEST Trust. Each U S WEST
Trust has a term of approximately 55 years, but shall earlier terminate as
provided in the Declaration. Each U S WEST Trust's business and affairs will be
conducted by the trustees (the "U S WEST Trustees") appointed by U S WEST, as
the direct or indirect holder of all the Common Securities. The holder of the
Common Securities will be entitled to appoint or remove any of, or increase or
reduce the number of, the U S WEST Trustees of a U S WEST Trust. The duties and
obligations of such U S WEST Trustees shall be governed by the Declaration of
such U S WEST Trust. A majority of the U S WEST Trustees (the "Regular
Trustees") of each U S WEST Trust will be persons who are employees or officers
of or affiliated with U S WEST. One U S WEST Trustee of each U S WEST Trust will
be a financial institution or an affiliate thereof who maintains a residence in
the State of Delaware. In addition, one U S WEST Trustee of each U S WEST Trust
may be designated as a property trustee pursuant to the terms set forth in a
Prospectus Supplement. Capital Funding will pay all fees and expenses related to
the U S WEST Trusts and the offering of Trust Securities, the payment of which
will be guaranteed by U S WEST. Each U S WEST Trust's registered office in the
State of Delaware is 301 King Street, Wilmington, Delaware 19801. The principal
place of business of each U S WEST Trust shall be c/o U S WEST, Inc., 7800 East
Orchard Road, Englewood, Colorado 80111 (telephone number (303) 793- 6500).
U S WEST, INC.
U S WEST is a diversified global communications company engaged in the
telecommunications, directory publishing, marketing and entertainment services
businesses. Telecommunications services are provided by U S WEST's principal
subsidiary to more than 25 million residential and business customers in the
states of Arizona, Colorado, Idaho, Iowa, Minnesota, Montana, Nebraska, New
Mexico, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming
(collectively, the "U S WEST Region"). Directory publishing, marketing and
entertainment services as well as cellular mobile communications services are
provided by other U S WEST subsidiaries to customers both inside and outside the
U S WEST Region. U S WEST was incorporated in 1983 under the laws of the State
of Colorado and has its principal executive offices at 7800 Orchard Road,
Englewood, Colorado 80111 (telephone number (303) 793-6500).
4
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges from
continuing operations of U S WEST for the periods indicated. For the purpose of
calculating this ratio, earnings consist of income before income taxes and fixed
charges. Fixed charges include interest on indebtedness (excluding discontinued
operations) and the portion of rentals representative of the interest factor.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
4.07 3.11 3.85 2.38 4.85
</TABLE>
USE OF PROCEEDS
Each U S WEST Trust will invest all proceeds received from the sale of its
Trust Securities in Subordinated Debt Securities.
Unless otherwise specified in the Prospectus Supplement, Capital Funding
will apply the net proceeds from the sale of the Subordinated Debt Securities to
its general funds to be used for loans to U S WEST and affiliates of U S WEST,
which will in turn use the funds for general corporate purposes, including the
reduction of short-term and long-term borrowings and other business
opportunities.
DESCRIPTION OF THE PREFERRED SECURITIES
Each U S WEST Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Declaration of each U S WEST Trust authorizes the Regular
Trustees of such U S WEST Trust to issue one series of Preferred Securities,
having such terms, including distributions, redemption, voting, liquidation
rights and such other preferred, deferred or other special rights or such
restrictions as shall be set forth therein. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of a U S WEST Trust for specific
terms, including (i) the distinctive designation of such Preferred Securities;
(ii) the number of Preferred Securities issued by such U S WEST Trust; (iii) the
annual distribution rate (or method of determining such rate) for Preferred
Securities issued by such U S WEST Trust and the date or dates upon which such
distributions shall be payable; provided, however, that distributions on such
Preferred Securities shall be payable on a monthly basis to holders of such
Preferred Securities as of a record date in each month during which such
Preferred Securities are outstanding; (iv) whether distributions on Preferred
Securities issued by such U S WEST Trust shall be cumulative, and, in the case
of Preferred Securities having such cumulative distribution rights, the date or
dates or method of determining the date or dates from which distributions on
Preferred Securities issued by such U S WEST Trust shall be cumulative; (v) the
amount or amounts which shall be paid out of the assets of such U S WEST Trust
to the holders of Preferred Securities of such U S WEST Trust upon voluntary or
involuntary dissolution, winding-up or termination of such U S WEST Trust; (vi)
the obligation, if any, of such U S WEST Trust to purchase or redeem Preferred
Securities issued by such U S WEST Trust and the price or prices at which, the
period or periods within which, and the terms and conditions upon which,
Preferred Securities issued by such U S WEST Trust shall be purchased or
redeemed, in whole or in part, pursuant to such obligation; (vii) the voting
rights, if any, of Preferred Securities issued by such U S WEST Trust in
addition to those required by law, including the number of votes per Preferred
Security and any requirement for the approval by the holders of Preferred
Securities, or of Preferred Securities issued by one or more U S WEST Trusts, or
of both, as a condition to specified action or amendments to the Declaration of
such U S WEST Trust; and (viii) any other relative rights, preferences,
privileges, limitations or restrictions of Preferred Securities issued by such U
S WEST Trust not inconsistent with the Declaration of such U S WEST Trust or
with applicable law. All Preferred Securities offered hereby will be guaranteed
by U S WEST to the extent set forth below under "Description of the Preferred
Securities Guarantees." Any applicable United States federal income tax
considerations applicable to any offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
5
<PAGE>
In connection with the issuance of Preferred Securities, each U S WEST Trust
will issue one series of Common Securities. The Declaration of each U S WEST
Trust authorizes the Regular Trustees of such trust to issue one series of
Common Securities having such terms including distributions, redemption, voting,
liquidation rights or such restrictions as shall be set forth therein. The terms
of the Common Securities issued by a U S WEST Trust will be identical to the
terms of the Preferred Securities issued by such trust and the Common Securities
will rank pari passu, and payments will be made thereon pro rata, with the
Preferred Securities except that, upon an Event of Default, the rights of the
holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and maturity will be subordinated to the
rights of the holders of the Preferred Securities. The Common Securities will
also carry the right to vote to appoint or remove any of the U S WEST Trustees
of a U S WEST Trust. All of the Common Securities of a U S WEST Trust will be
directly or indirectly owned by U S WEST.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by U S WEST for the
benefit of the holders from time to time of Preferred Securities. The summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the form of Preferred
Securities Guarantee, which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part.
GENERAL
Pursuant to each Preferred Securities Guarantee, U S WEST will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities issued by a U S WEST Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by such U S
WEST Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such U S WEST Trust may have or assert. The following
payments with respect to Preferred Securities issued by a U S WEST Trust, to the
extent not paid by such U S WEST Trust (the "Guarantee Payments"), will be
subject to the Preferred Securities Guarantee thereon (without duplication): (i)
any accrued and unpaid distributions which are required to be paid on such
Preferred Securities, to the extent such U S WEST Trust shall have funds
available therefor, (ii) the redemption price, including all accrued and unpaid
distributions (the "Redemption Price"), payable out of funds available therefor
with respect to any Preferred Securities called for redemption by such U S WEST
Trust and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of such U S WEST Trust, the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on such Preferred
Securities to the date of payment and (b) the amount of assets of such U S WEST
Trust remaining available for distribution to holders of such Preferred
Securities in liquidation of such U S WEST Trust. U S WEST's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by U S WEST to the holders of Preferred Securities or by causing the applicable
U S WEST Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a full and unconditional
guarantee with respect to the Preferred Securities issued by the applicable U S
WEST Trust from the time of issuance of such Preferred Securities, but will not
apply to any payment of distributions except to the extent such U S WEST Trust
shall have sufficient cash on hand to permit such payment and funds legally
available therefor. If Capital Funding does not make interest payments on the
Subordinated Debt Securities purchased by a U S WEST Trust and U S WEST does not
fulfill its obligations under the Debt Guarantee relating to such Subordinated
Debt Securities, such U S WEST Trust will not pay distributions on the Preferred
Securities issued by such U S WEST Trust. See "Description of the Subordinated
Debt Securities and the Debt Guarantees -- Certain Covenants."
U S WEST has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the U S WEST Trusts (the "Common Securities
Guarantees") with respect to the Common Securities to the same extent as the
Preferred Securities Guarantee except that upon an Event of Default, holders of
Preferred Securities shall have priority over holders of Common Securities with
respect to distributions and payments on liquidation, redemption or maturity.
6
<PAGE>
CERTAIN COVENANTS OF U S WEST
In each Preferred Securities Guarantee, U S WEST will covenant that, so long
as any Preferred Securities issued by the applicable U S WEST Trust remain
outstanding, it will not (and will cause Capital Funding and, if it is not a
wholly-owned subsidiary of U S WEST, U S WEST Communications, Inc. not to)
declare or pay any dividend on, or make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock or make any guarantee payment with respect to the foregoing if
at such time U S WEST shall be in default with respect to its payment under such
Preferred Securities Guarantee or there shall have occurred any event that would
constitute an Event of Default under the Indenture.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities issued by the applicable U S WEST Trust. The manner of
obtaining any such approval of holders of such Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of U S WEST and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable U S WEST Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable U S WEST Trust upon full payment of the
Redemption Price of all Preferred Securities of such U S WEST Trust, upon
distribution of the Subordinated Debt Securities held by such U S WEST Trust to
the holders of the Preferred Securities of such U S WEST Trust or upon full
payment of the amounts payable in accordance with the Declaration of such U S
WEST Trust upon liquidation of such U S WEST Trust. Each Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities issued by the applicable U
S WEST Trust must restore payment of any sums paid under such Preferred
Securities or such Preferred Securities Guarantee.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations of
U S WEST and will rank (i) subordinate and junior in right of payment to all
other liabilities of U S WEST, including the Debt Guarantees, (ii) PARI PASSU
with the most senior preferred or preference stock now or hereafter issued by U
S WEST and with any guarantee now or hereafter entered into by U S WEST in
respect of any preferred or preference stock of any affiliate of U S WEST and
(iii) senior to U S WEST's common stock. The Declaration of each U S WEST Trust
provides that each holder of Preferred Securities issued by such U S WEST Trust
by acceptance thereof agrees to the subordination provisions and other terms of
the Preferred Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). Each Preferred Securities Guarantee will be deposited with the Regular
Trustees of the applicable U S WEST Trust to be held for the benefit of the
holders of the Preferred Securities issued by such U S WEST Trust. In the event
of the appointment of a special representative by the Preferred Securities
holders of a U S WEST Trust (a "Special Representative") to, among other things,
enforce the Preferred Securities Guarantee relating to the Preferred Securities
issued by such U S WEST Trust, the Special Representative may take possession of
such Preferred Securities Guarantee for such purpose. If no Special
Representative has been appointed to enforce such Preferred Securities Guarantee
or if the appointed Special Representative fails to enforce the rights of
Preferred Securities holders under the Preferred Securities Guarantee, the
Regular Trustees of such U S WEST Trust shall have the right to enforce such
Preferred Securities Guarantee on behalf of the holders of such Preferred
Securities. The holders of not less than a majority in aggregate liquidation
amount of such Preferred Securities shall have the right to direct the time,
method and place of
7
<PAGE>
conducting any proceeding for any remedy available in respect of the Preferred
Securities Guarantee, including the giving of directions to the Regular Trustees
or the Special Representative, as the case may be. If the Regular Trustees or
the Special Representative fail to enforce the Preferred Securities Guarantee as
above provided, any holder of such Preferred Securities may, after a period of
30 days has elapsed from such holder's written request to the Regular Trustees
or the Special Representative, as the case may be, to enforce such Preferred
Securities Guarantee, institute a legal proceeding directly against U S WEST to
enforce its rights under such Preferred Securities Guarantee, without first
instituting a legal proceeding against the U S WEST Trust or any other person or
entity. A Preferred Securities Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the
applicable U S WEST Trust.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES AND THE DEBT GUARANTEES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture, dated as of , 1995 (the "Indenture"), among
U S WEST, Capital Funding and Norwest Bank Minnesota, National Association, as
Trustee (the "Debt Trustee"). The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Indenture, which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. Whenever
particular provisions or defined terms in the Indenture are referred to herein,
such provisions or defined terms are incorporated by reference herein. Section
and Article references used herein are references to provisions of the Indenture
unless otherwise noted.
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated obligations
of Capital Funding. The Indenture does not limit the aggregate principal amount
of Subordinated Debt Securities which may be issued thereunder and provides that
the Subordinated Debt Securities may be issued from time to time in one or more
series. The Subordinated Debt Securities are issuable in one or more series
pursuant to an indenture supplemental to the Indenture or a resolution of
Capital Funding's Board of Directors or a special committee thereof (each, a
"Supplemental Indenture") (Section 2.01).
In the event Subordinated Debt Securities are issued to a U S WEST Trust in
connection with the issuance of Trust Securities by such U S WEST Trust, such
Subordinated Debt Securities subsequently may be distributed pro rata to the
holders of such Trust Securities in connection with the dissolution of such U S
WEST Trust upon the occurrence of certain events described in the Prospectus
Supplement relating to such Trust Securities. Only one series of Subordinated
Debt Securities will be issued to a U S WEST Trust in connection with the
issuance of Trust Securities by such U S WEST Trust.
Reference is made to the Prospectus Supplement which will accompany this
Prospectus for the following terms of the series of Subordinated Debt Securities
being offered thereby: (i) the specific title of such Subordinated Debt
Securities; (ii) any limit on the aggregate principal amount of such
Subordinated Debt Securities; (iii) the date or dates on which the principal of
such Subordinated Debt Securities is payable; (iv) the rate or rates at which
such Subordinated Debt Securities will bear interest or the method of
determination of such rate or rates; (v) the date or dates from which such
interest shall accrue, the interest payment dates on which such interest will be
payable or the manner of determination of such interest payment dates and the
record dates for the determination of holders to whom interest is payable on any
such interest payment dates; (vi) the right, if any, to extend the interest
payment periods and the duration of such extension; (vii) the period or periods
within which, the price or prices at which, and the terms and conditions upon
which, such Subordinated Debt Securities may be redeemed, in whole or in part,
at the option of Capital Funding; (viii) the right and/or obligation, if any, of
Capital Funding to redeem or purchase such Subordinated Debt Securities pursuant
to any sinking fund or analogous provisions or at the option of the holder
thereof and the period or periods, the price or prices at which, and the terms
and conditions upon
8
<PAGE>
which, such Subordinated Debt Securities shall be redeemed or purchased, in
whole or part, pursuant to such right and/or obligation; (ix) the terms of
subordination; (x) the form of such Subordinated Debt Securities; (xi) if other
than denominations of $25 or any integral multiple thereof, the denominations in
which such Subordinated Debt Securities shall be issuable; (xii) any and all
other terms with respect to such series; and (xiii) whether such Subordinated
Debt Securities are issuable as a global security, and in such case, the
identity of the depositary. (Section 2.01).
The Indenture does not contain any provisions that afford holders of
Subordinated Debt Securities protection in the event of a highly leveraged
transaction involving U S WEST or Capital Funding.
DEBT GUARANTEES
The Indenture provides that U S WEST will fully and unconditionally
guarantee the due and punctual payment of the principal, premium, if any, and
interest on the Subordinated Debt Securities when and as the same shall become
due and payable, whether at maturity, upon redemption or otherwise. (Section
2.12) Since U S WEST is a holding company, the right of U S WEST and, hence, the
right of creditors of U S WEST (including the holders of the Subordinated Debt
Securities) to participate in any distribution of the assets of any subsidiaries
of U S WEST, whether upon liquidation, reorganization, or otherwise, is subject
to prior claims of creditors of the subsidiary, except to the extent that claims
of U S WEST itself as a creditor of a subsidiary may be recognized.
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right of
payment to certain other indebtedness of Capital Funding and the Debt Guarantees
will be subordinated and junior in right of payment to certain other
indebtedness of U S WEST to the extent set forth in the Prospectus Supplement
that will accompany this Prospectus.
CERTAIN COVENANTS
U S WEST and Capital Funding will not (and, in the event Subordinated Debt
Securities are sold to a U S West Trust, U S WEST will cause, if it is not a
wholly-owned subsidiary of U S WEST, U S WEST Communications, Inc. not to)
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, if at such time (i) there shall have occurred any event that
would constitute an Event of Default under the Indenture, (ii) in the event
Subordinated Debt Securities are issued to a U S WEST Trust in connection with
the issuance of Trust Securities by such U S WEST Trust, U S WEST shall be in
default with respect to its payment of any obligations under the related
Preferred Securities Guarantee and Common Securities Guarantee or (iii) Capital
Funding shall have given notice of its election of an extended interest payment
period as provided in the Indenture and such period, or any extension thereof,
shall be continuing. If Capital Funding elects to extend the interest payment
period with respect to one series of Subordinated Debt Securities issued to a U
S WEST Trust, it must also elect to extend the interest payment period for all
series of Subordinated Debt Securities issued to other U S WEST Trusts, until
deferred interest on all Subordinated Debt Securities issued to U S WEST Trusts
is paid in full. (Section 4.06)
In the event Subordinated Debt Securities are issued to a U S WEST Trust in
connection with the issuance of Trust Securities of such U S WEST Trust, for so
long as such Trust Securities remain outstanding, U S WEST will covenant (i) to
directly or indirectly maintain 100% ownership of the Common Securities of such
U S WEST Trust; provided, however, that any permitted successor of U S WEST
under the Indenture may succeed to U S WEST's ownership of such Common
Securities, (ii) to not voluntarily dissolve, wind-up or terminate such U S WEST
Trust, except in connection with certain mergers, consolidations or
amalgamations permitted by the Declaration of such U S WEST Trust and (iii) to
use its reasonable efforts to cause such U S WEST Trust to remain a business
trust, except in connection with the distribution of Subordinated Debt
Securities to the holders of Trust Securities in liquidation of such U S WEST
Trust and in connection with certain mergers, consolidations or amalgamations
permitted by the Declarations of such U S WEST Trust, and otherwise continue not
to be treated as a corporation or partnership for United States federal income
tax purposes. (Section 4.07).
9
<PAGE>
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Subordinated Debt Securities of each series will be issued in registered
form and in either certificated form or represented by one or more global
securities. If not represented by one or more global securities, Subordinated
Debt Securities may be presented for registration of transfer (with the form of
transfer endorsed thereon duly executed) or exchange, at the office of the
Debenture Registrar or at the office of any transfer agent designated by Capital
Funding for such purpose with respect to any series of Subordinated Debt
Securities and referred to in an applicable Prospectus Supplement, without
service charge and upon payment of any taxes and other governmental charges as
described in the Indenture. Such transfer or exchange will be effected upon the
Debenture Registrar or such transfer agent, as the case may be, being satisfied
with the documents of title and identity of the person making the request.
Capital Funding has appointed the Debt Trustee as Debenture Registrar with
respect to the Subordinated Debt Securities. (Section 2.05). If a Prospectus
Supplement refers to any transfer agents (in addition to the Debenture
Registrar) initially designated by Capital Funding with respect to any series of
Subordinated Debt Securities, Capital Funding may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that Capital Funding will be
required to maintain a transfer agent in each Place of Payment for such series.
(Section 4.02). Capital Funding may at any time designate additional transfer
agents with respect to any series of Subordinated Debt Securities.
In the event of any redemption in part, Capital Funding shall not be
required to (i) issue, register the transfer of or exchange any Subordinated
Debt Securities during a period beginning at the opening of business 15 days
before any selection for redemption of Subordinated Debt Securities of like
tenor and of the series of which such Subordinated Debt Securities are a part,
and ending at the close of business on the earliest date in which the relevant
notice of redemption is deemed to have been given to all holders of Subordinated
Debt Securities of like tenor and of such series to be redeemed and (ii)
register the transfer of or exchange any Subordinated Debt Securities so
selected for redemption, in whole or in part, except the unredeemed portion of
any Subordinated Debt Securities being redeemed in part. (Section 2.05).
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any Subordinated Debt Securities will be
made only against surrender to the Paying Agent of such Subordinated Debt
Securities. Unless otherwise indicated in an applicable Prospectus Supplement,
principal of and any premium and interest, if any, on Subordinated Debt
Securities will be payable, subject to any applicable laws and regulations, at
the office of such Paying Agent or Paying Agents as Capital Funding may
designate from time to time, except that at the option of Capital Funding
payment of any interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Debenture Register with
respect to such Subordinated Debt Securities. (Section 4.03). Unless otherwise
indicated in an applicable Prospectus Supplement, payment of interest on a
Subordinated Debt Security on any Interest Payment Date will be made to the
person in whose name such Subordinated Debt Security (or predecessor security)
is registered at the close of business on the Regular Record Date for such
interest payment. (Section 2.03).
Capital Funding will act as Paying Agent with respect to the Subordinated
Debt Securities. Capital Funding may at any time designate additional Paying
Agents or rescind the designation of any Paying Agents or approve a change in
the office through which any Paying Agent acts, except that Capital Funding will
be required to maintain a Paying Agent in each Place of Payment for each series
of the respective Subordinated Debt Securities. (Sections 4.02 and 4.03).
All moneys paid by Capital Funding to a Paying Agent for the payment of the
principal of or premium or interest, if any, on any Subordinated Debt Securities
of any series which remain unclaimed at the end of two years after such
principal, premium, if any, or interest shall have become due and payable will
be repaid to Capital Funding and the holder of such Subordinated Debt Securities
will thereafter look only to Capital Funding for payment thereof. (Section
11.05).
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<PAGE>
GLOBAL SECURITIES
If any Subordinated Debt Securities of a series are represented by one or
more global securities (each, a "Global Security"), the applicable Prospectus
Supplement will describe the circumstances, if any, under which beneficial
owners of interests in any such Global Security may exchange such interests for
Subordinated Debt Securities of such series and of like tenor and principal
amount in any authorized form and denomination. Principal of and any premium and
interest on a Global Security will be payable in the manner described in the
applicable Prospectus Supplement. (Section 2.11).
The specific terms of the depositary arrangement with respect to any portion
of a series of Subordinated Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting U S WEST, Capital Funding and
the Debt Trustee, with the consent of the holders of not less than a majority in
principal amount of the Subordinated Debt Securities of each series which are
affected by the modification, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of that series of
Subordinated Debt Securities; provided, that no such modification may, without
the consent of the holder of each outstanding Subordinated Debt Security
affected thereby, (i) extend the fixed maturity of any Subordinated Debt
Securities of any series, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof, without the consent of the holder of each
Subordinated Debt Security so affected or (ii) reduce the percentage of
Subordinated Debt Securities, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of each
Subordinated Debt Security then outstanding and affected thereby. (Section
9.02).
In addition, U S WEST, Capital Funding and the Debt Trustee may execute,
without the consent of any holder of Subordinated Debt Securities, any
supplemental indenture for certain other usual purposes including the creation
of any new series of Subordinated Debt Securities. (Sections 2.01, 9.01 and
10.01).
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to each series of Subordinated Debt Securities:
(a) failure for 90 days to pay interest on the Subordinated Debt
Securities of that series, including any Additional Interest in respect
thereof, when due; provided, however, that a valid extension of the interest
payment period by Capital Funding shall not constitute a default in the
payment of interest for this purpose; and provided, further, that if
Subordinated Debt Securities are issued to a U S WEST Trust in connection
with the issuance of Trust Securities by such U S WEST Trust, such 90 day
period shall be replaced with a 30 day period; or
(b) failure to pay principal or premium, if any, on the Subordinated
Debt Securities of that series when due whether at maturity, upon redemption
by declaration or otherwise, or to make any sinking fund payment with
respect to that series; provided, however, that a valid extension of the
maturity of such Subordinated Debt Securities shall not constitute a default
for this purpose; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to another series) contained in the Indenture for 90
days after written notice to Capital Funding from the Debt Trustee or the
holders of at least 25% in principal amount of the outstanding Subordinated
Debt Securities of that series; or
(d) certain events in bankruptcy, insolvency or reorganization of U S
WEST or Capital Funding; or
(e) in the event Subordinated Debt Securities are issued to a U S WEST
Trust in connection with the issuance of Trust Securities by such U S WEST
Trust, the voluntary or involuntary dissolution, winding-up or termination
of such U S WEST Trust, except in connection with the distribution of
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<PAGE>
Subordinated Debt Securities to the holders of Trust Securities in
liquidation of such U S WEST Trust and in connection with certain mergers,
consolidations or amalgamations permitted by the Declaration of such U S
WEST Trust. (Section 6.01).
The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debt Trustee for that series. (Section 6.06). The Debt Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of any particular
series of the Subordinated Debt Securities may declare the principal due and
payable immediately on default with respect to such series, but the holders of a
majority in aggregate outstanding principal amount of such series may annul such
declaration and waive the default with respect to such series if the default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration and any applicable premium has been
deposited with the Debt Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal amount of any
series of the Subordinated Debt Securities affected thereby may, on behalf of
the holders of all the Subordinated Debt Securities of such series, waive any
past default, except (i) a default in the payment of principal, premium, if any,
or interest (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the Debt
Trustee), (ii) a default in the covenant of each of U S WEST and certain of its
subsidiaries not to declare or pay dividends on, or redeem, purchase or acquire
any of its capital stock during an interest deferral period, or (iii) a default
in the covenant of Capital Funding to defer interest payments on all
Subordinated Debt Securities held by the other U S WEST Trusts during such
interest deferral period. (Section 6.06).
CONSOLIDATION, MERGER AND SALE
The Indenture does not contain any covenant which restricts U S WEST's or
Capital Funding's ability to merge or consolidate with or into any other
corporation, sell or convey all or substantially all of its assets to any
person, firm or corporation or otherwise engage in restructuring transactions.
(Section 10.01).
DEFEASANCE AND DISCHARGE
Under the terms of the Indenture, U S WEST and Capital Funding will be
discharged from any and all obligations in respect of the Subordinated Debt
Securities of any series (except in each case for certain obligations to
register the transfer or exchange of Subordinated Debt Securities, replace
stolen, lost or mutilated Subordinated Debt Securities, maintain paying agencies
and hold moneys for payment in trust) if Capital Funding deposits with the Debt
Trustee, in trust, moneys or Government Obligations, in an amount sufficient to
pay all the principal of, and interest on, the Subordinated Debt Securities of
such series on the dates such payments are due in accordance with the terms of
such Subordinated Debt Securities. (Sections 11.01 and 11.02).
GOVERNING LAW
The Indenture, the Subordinated Debt Securities and the Debt Guarantee will
be governed by, and construed in accordance with, the internal laws of the State
of New York. (Section 13.05).
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01). Subject to such provision,
the Debt Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Subordinated Debt
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. (Section 7.02).
The Debt Trustee is not required to expand or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the Debt
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01).
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<PAGE>
U S WEST and certain of its affiliates, including Capital Funding, maintain
a deposit account and banking relationship with the Debt Trustee. The Debt
Trustee serves as trustee under other indentures pursuant to which unsecured
debt securities of U S WEST are outstanding.
MISCELLANEOUS
Capital Funding and U S WEST will have the right at all times to assign any
of their respective rights or obligations under the Indenture to a direct or
indirect wholly-owned subsidiary of U S WEST; provided, that, in the event of
any such assignment, Capital Funding and U S WEST, as the case may be, will
remain liable for all of their respective obligations. Subject to the foregoing,
the Indenture will be binding upon and inure to the benefit of the parties
thereto and their respective successors and assigns. The Indenture provides that
it may not otherwise be assigned by the parties thereto. (Section 13.11).
PLAN OF DISTRIBUTION
Capital Funding may sell any series of Subordinated Debt Securities and the
U S WEST Trusts may sell the Preferred Securities being offered hereby in one or
more of the following ways from time to time: (i) to underwriters for resale to
the public or to institutional investors; (ii) directly to institutional
investors or (iii) through agents to the public or to institutional investors.
The Prospectus Supplement with respect to any Offered Securities will set forth
the terms of the offering of such Offered Securities, including the name or
names of any underwriters or agents, the purchase price of such Offered
Securities and the proceeds to Capital Funding or the applicable U S WEST Trust,
as the case may be, from such sale, any underwriting discounts or agency fees
and other item's constituting underwriters' or agents' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or paid
to dealers and any securities exchanges on which such Offered Securities may be
listed.
If underwriters are used in the sale, such Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Offered Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such series of Offered Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with U
S WEST, Capital Funding and/or a U S WEST Trust to indemnification by U S WEST,
Capital Funding and/or such U S WEST Trust against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the underwriters or agents may be required to make in respect
thereof. Underwriters and agents may be customers of, engage in transactions
with, or perform services for U S WEST and its affiliates in the ordinary course
of business.
Each series of Offered Securities will be a new issue of securities and will
have no established trading market. Any underwriters to whom Offered Securities
are sold by Capital Funding or by a U S WEST Trust for public offering and sale
may make a market in such Offered Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. The Offered Securities may or may not be listed on a national securities
exchange.
LEGAL OPINIONS
The validity of the Offered Securities and certain legal matters relating
thereto will be passed upon by Weil, Gotshal & Manges, New York, New York. Weil,
Gotshal & Manges will rely on the opinion of Stephen E. Brilz, Senior Attorney
of U S WEST, as to certain matters of Colorado law. Certain matters as to United
States federal income taxation will also be passed upon by Weil, Gotshal &
Manges.
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<PAGE>
EXPERTS
The consolidated financial statements and the consolidated financial
statement schedules included in U S WEST's Annual Report on Form 10-K for the
year ended December 31, 1993 are incorporated herein by reference in reliance on
the reports of Coopers & Lybrand L.L.P., independent certified public
accountants, given upon the authority of that firm as experts in accounting and
auditing.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee.................. $344,827.59
Rating Agency Fees............................................. *
Blue Sky Fees and Expenses..................................... *
Trustee's Expenses............................................. *
Printing and Engraving Fees.................................... *
Accounting Fees and Expenses................................... *
Legal Fees and Expenses........................................ *
Miscellaneous.................................................. *
----------
Total...................................................... *
----------
----------
<FN>
- ------------------------
* To be completed by amendment.
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The By-laws of U S WEST and Capital Funding provide for the indemnification
of directors and officers to the extent permissible under applicable law.
Sections 7-109-101 through 7-109-110 of the Colorado Business Corporation Act
(the "CBCA") specify the circumstances under which a corporation may indemnify
its directors, officers, employees, fiduciaries or agents. For acts done in a
person's "official capacity," the CBCA generally requires that an act be done in
good faith and in a manner reasonably believed to be in the best interests of
the corporation. In all other civil cases, the person must have acted in good
faith and in a way that was not opposed to the corporation's best interests. In
criminal actions or proceedings, the CBCA imposes an additional requirement that
the actor had no reasonable cause to believe his conduct was unlawful. In any
proceeding by or in the right of the corporation, or charging a person with the
improper receipt of a personal benefit, no indemnification, can be made, except
that in a proceeding by or in the right of the corporation, indemnification for
reasonable expenses incurred in connection with such proceeding is permitted.
Indemnification is mandatory when any director or officer is wholly successful,
on the merits or otherwise in defending any civil or criminal proceeding.
The Declaration of each U S WEST Trust provides that no U S WEST Trustee,
affiliate of any U S WEST Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives or agents of any U S WEST Trustee,
or any employee or agent of such U S WEST Trust or its affiliates (each an
"Indemnified Person") shall be liable, responsible or accountable in damages or
otherwise to such U S WEST Trust or any employee or agent of the trust or its
affiliates for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of such U S WEST Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by such Declaration or by law, except that an Indemnified Person shall be
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omission. The Declaration of each U S WEST Trust also provides that to the
fullest extent permitted by applicable law, U S WEST shall indemnify and hold
harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of such U S WEST
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by such Declaration,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
gross negligence or willful misconduct with respect to such act or omissions.
The Declaration of each U S WEST Trust further provides that to the fullest
extent permitted by applicable law, expenses (including legal fees) incurred by
an Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by U S WEST prior to
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the final disposition of such claim, demand, action, suit or proceeding upon
receipt by of an undertaking by or on behalf of the Indemnified Person to repay
such amount if it shall be determined that the Indemnified Person is not
entitled to be indemnified for the underlying cause of action as authorized by
such Declaration.
The directors and officers of Capital Funding and U S WEST and the Regular
Trustees are covered by insurance policies indemnifying against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"), which might be incurred by them in such
capacities and against which they cannot be indemnified by Capital Funding, U S
WEST or the U S WEST Trusts.
Any agents, dealers or underwriters who execute any of the agreements filed
as Exhibit 1 to this registration statement will agree to indemnify Capital
Funding's and U S WEST's directors and their officers and the U S WEST Trustees
who signed the registration statement against certain liabilities which might
arise under the Securities Act with respect to information furnished to Capital
Funding and U S WEST or any of the U S WEST Trusts by or on behalf of any such
indemnifying party.
ITEM 16. EXHIBITS.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated herein by reference to such previous filings. All other exhibits
are provided as part of this electronic transmission.
<TABLE>
<S> <C> <C>
*1 - Form of Underwriting Agreement for offering of Preferred
Securities.
4-A - Certificate of Trust of U S WEST Financing I.
4-B - Certificate of Trust of U S WEST Financing II.
4-C - Certificate of Trust of U S WEST Financing III.
*4-D - Form of Declaration of Trust of U S WEST Financing I.
*4-E - Form of Declaration of Trust of U S WEST Financing II.
*4-F - Form of Declaration of Trust of U S WEST Financing III.
*4-G - Form of Indenture among U S WEST, Inc., U S WEST Capital Funding,
Inc. and , as Trustee.
*4-H - Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Subordinated Debt Securities and
Preferred Securities.
*4-I - Form of Preferred Security (included in 4-D above).
*4-J - Form of Subordinated Debt Security and Debenture Guarantee
(included in 4-H above).
*4-K - Form of Guarantee with respect to Preferred Securities.
*5 - Opinion of Weil, Gotshal & Manges.
*8-A - Opinion of Weil, Gotshal & Manges.
(12) - Computation of Ratio of Earnings to Fixed Charges of U S WEST,
Inc. (Exhibit 12 to Form 10-Q for the quarter ending September
30, 1994 File No. 1-8611).
23-A - Consent of Independent Public Accountants.
*23-B - Consent of Weil, Gotshal & Manges is contained in the opinion of
counsel filed as Exhibit 5.
24. - Powers of Attorney (the powers of attorney for the U S WEST
Trustees of U S WEST Financing I, U S WEST Financing II and U S
WEST Financing III are included in Exhibits 4-A, 4-B and 4-C,
respectively).
*25. - Statement of Eligibility under the Trust Indenture Act of 1939,
as amended, of Norwest Bank Minnesota, National Association, as
Trustee under the Indenture.
<FN>
- ------------------------
* To be filed by amendment.
</TABLE>
ITEM 17. UNDERTAKINGS.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of U S WEST's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference
II-2
<PAGE>
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of the Registrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by U S WEST pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a registration
statement in reliance upon Rule 430A and contained in the form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement as of
the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST, INC.
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON THE 1ST DAY OF MARCH,
1995.
U S WEST, Inc.
By /s/ STEPHEN E. BRILZ
------------------------------------
Stephen E. Brilz
Assistant Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING DIRECTORS AND OFFICERS OF U S WEST, INC. IN THE CAPACITIES AND ON THE
DATE INDICATED.
PRINCIPAL EXECUTIVE OFFICER:
RICHARD D. McCORMICK* Chairman of the Board,
President and Chief
Executive Officer
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER:
JAMES M. OSTERHOFF* Executive Vice President
and Chief Financial
Officer
DIRECTORS:
RICHARD B. CHENEY*
REMEDIOS DIAZ-OLIVER*
GRANT A. DOVE*
MARY M. GATES*
ALLAN D. GILMOUR*
PIERSON M. GRIEVE*
SHIRLEY M. HUFSTEDLER*
ALLEN F. JACOBSON*
RICHARD D. MCCORMICK*
MARILYN CARLSON NELSON*
FRANK POPOFF*
GLEN L. RYLAND*
JERRY O. WILLIAMS*
DANIEL YANKELOVICH*
*By /s/ STEPHEN E.
BRILZ
- -----------------------------------
Stephen E. Brilz
Attorney-in-Fact
Dated: March 1, 1995
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST CAPITAL
FUNDING, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON THE 1ST DAY OF
MARCH, 1995.
U S WEST Capital Funding, Inc.
By /s/ STEPHEN E. BRILZ
------------------------------------
Stephen E. Brilz
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following directors and officers of U S WEST Capital Funding, Inc. in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
JAMES T. ANDERSON* President
PRINCIPAL FINANCIAL OFFICER:
Vice President and
CHARLES J. BURDICK* Treasurer
PRINCIPAL ACCOUNTING OFFICER:
Vice President and
JAMES R. TAUCHER* Controller
DIRECTORS:
JAMES T. ANDERSON*
JAMES M. OSTERHOFF*
*By /s/ STEPHEN E.
BRILZ
- -----------------------------------
Stephen E. Brilz
Attorney-in-Fact
Dated: March 1, 1995
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, U S WEST
FINANCING I, U S WEST FINANCING II AND U S WEST FINANCING III CERTIFY THAT THEY
HAVE REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE REQUIREMENTS FOR FILING
ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
THEIR BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
DENVER, STATE OF COLORADO, ON THE 1ST DAY OF MARCH, 1995.
U S WEST Financing I
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
U S WEST Financing II
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
U S WEST Financing III
By /s/ JAMES T. ANDERSON
------------------------------------
James T. Anderson, Trustee
By /s/ CHARLES J. BURDICK
------------------------------------
Charles J. Burdick, Trustee
By /s/ ROGER FOX
------------------------------------
Roger Fox, Trustee
II-6
<PAGE>
EXHIBIT 4-A
CERTIFICATE OF TRUST
The undersigned, the trustees of U S WEST Financing I desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 DEL. C. c. 38
hereby certify as follows:
1. The name of the business trust being formed hereby (the "Trust") is
U S WEST Financing I.
2. The name and business address of the trustee of the Trust who is a
resident of the State of Delaware is as follows:
Michael J. Majchrzak
300 King Street
Wilmington, DE 19801
Dated: March 1, 1995
Michael J. Majchrzak
as Trustee
/s/ Michael J. Majchrzak
------------------------------------
James T. Anderson
as Trustee
/s/ James T. Anderson
------------------------------------
Charles J. Burdick
as Trustee
/s/ Charles J. Burdick
------------------------------------
Roger Fox
as Trustee
/s/ Roger Fox
------------------------------------
<PAGE>
EXHIBIT 4-B
CERTIFICATE OF TRUST
The undersigned, the trustees of U S West Financing II desiring to form a
business trust pursuant to Delaware Business Trust Act, 12 DEL. C. c. 38 hereby
certify as follows:
3. The name of the business trust being formed hereby (the "Trust") is
U S West Financing II.
4. The name and business address of the trustee of the Trust, who is
a resident of the State of Delaware is as follows:
Michael J. Majchrzak
300 King Street
Wilmington, DE 19801
Dated: March 1, 1995
Michael J. Majchrzak
as Trustee
/s/ Michael J. Majchrzak
--------------------------------------
James T. Anderson
as Trustee
/s/ James T. Anderson
--------------------------------------
Charles J. Burdick
as Trustee
/s/ Charles J. Burdick
--------------------------------------
Roger Fox
as Trustee
/s/ Roger Fox
--------------------------------------
<PAGE>
EXHIBIT 4-C
CERTIFICATE OF TRUST
The undersigned, the trustees of U S WEST Financing III desiring to form
a business trust pursuant to Delaware Business Trust Act, 12 DEL. C. c. 38
hereby certify as follows:
5. The name of the business trust being formed hereby (the "Trust") is
U S WEST Financing III.
6. The name and business address of the trustee of the Trust who is a
resident of the State of Delaware is as follows:
Michael J. Majchrzak
300 King Street
Wilmington, DE 19801
Dated: March 1,1995
Michael J. Majchrzak
as Trustee
/s/ Michael J. Majchrzak
---------------------------------
James T. Anderson
as Trustee
/s/ James T. Anderson
---------------------------------
Charles J. Burdick
as Trustee
/s/ Charles J. Burdick
---------------------------------
Roger Fox
as Trustee
/s/ Roger Fox
---------------------------------
<PAGE>
EXHIBIT 23-A
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
of U S WEST, Inc. (the "Company") on Form S-3 of our reports, which include
an explanatory paragraph regarding the Company's discontinuance of accounting
for the operations of U S WEST Communications, Inc. in accordance with
Statement of Accounting Standards No. 71, "Accounting for the Effects of
Certain Types of Regulation", in 1993, and a change in the method of
accounting for postretirement benefits other than pensions and other
postemployment benefits in 1992, dated January 20, 1994, except for the last
paragraph in Note 8, for which the date is February 23, 1994, on our audits
of the consolidated financial statements and the consolidated financial
statement schedules of U S WEST, Inc., as of December 31, 1993 and 1992, and
for the three years ended December 31, 1993, 1992 and 1991. We also consent
to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Denver, Colorado
March 1, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, Inc., a Colorado corporation (hereinafter referred to
as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
Registration Statement, including a related prospectus (all effectively
referred to as the "Registration Statement") for the registration of
guarantees by the Company (the "Guarantees"), in conjunction with a
registration by U S West Capital Funding, Inc. ("Capital Funding") and/or
another special purpose company to be organized by the Company ("Special
Purpose Company") of up to $1,000,000,000 of Subordinated Debt Securities
(the "Debt Securities") and/or Preferred Equity Securities (the "Equity
Securities" and, together with the Debt Securities, the "Securities"); and
WHEREAS, each of the undersigned is a Director of the Company;
NOW, THEREFORE, each of the undersigned constitutes and appoints JAMES T.
ANDERSON, CHARLES J. BURDICK, BARBARA M. JAPHA, and STEPHEN E. BRILZ, and each
of them, as attorneys for him or her and in his or her name, place, and stead,
and in each capacity as a Director of the Company, to execute and file such
Registration Statement, including the related prospectus, and thereafter to
execute and file any amended registration statement or statements and amended
prospectus or prospectuses or amendments or supplements to any of the
foregoing, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents
and purposes, as he or she might or could do if personally present at the doing
thereof, hereby ratifying and confirming all that said attorneys may or shall
lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF. each of the undersigned has executed this Power of
Attorney this 3rd day of February, 1995.
/s/ Richard B. Cheney /s/ Allen F. Jacobson
- --------------------------------- --------------------------------------
Richard B. Cheney Allen F. Jacobson
/s/ Remedios Diaz-Oliver /s/ Marilyn C. Nelson
- --------------------------------- --------------------------------------
Remedios Diaz-Oliver Marilyn C. Nelson
/s/ Grant A. Dove /s/ Frank Popoff
- --------------------------------- --------------------------------------
Grant A. Dove Frank Popoff
/s/ Allan D. Gilmour /s/ Glen L. Ryland
- --------------------------------- --------------------------------------
Allan D. Gilmour Glen L. Ryland
/s/ Pierson M. Grieve /s/ Jerry O. Williams
- --------------------------------- --------------------------------------
Pierson M. Grieve Jerry O. Williams
/s/ Shirley M. Hufstedler /s/ Daniel Yankelovich
- --------------------------------- --------------------------------------
Shirley M. Hufstedler Daniel Yankelovich
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST, Inc., a Colorado corporation (hereinafter referred
to as the "Company"), proposes to file with the Securities and Exchange
Commission, under the provisions of the Securities Act of 1933, as amended, a
Registration Statement, including a related prospectus (all effectively
referred to as the "Registration Statement") for the registration of
guarantees by the Company (the "Guarantees"), in conjunction with a
registration by U S WEST Capital Funding, Inc. ("Capital Funding") and/or
another special purpose company to be organized by the Company ("Special
Purpose Company") of up to $1,000,000,000 of Subordinated Debt Securities
(the "Debt Securities") and/or Preferred Equity Securities (the "Equity
Securities" and, together with the Debt Securities, the "Securities"); and
WHEREAS, each of the undersigned is an Officer or Director, or both, of
the Company as indicated below each signature;
NOW, THEREFORE, each of the undersigned constitutes and appoints JAMES
T. ANDERSON, CHARLES J. BURDICK, BARBARA M. JAPHA, AND STEPHEN E. BRILZ, and
each of them, as attorneys for him and in his name, place, and stead, and in
each capacity with the Company, to execute and file such Registration
Statement, including the related prospectus, and thereafter to execute and
file any amended registration statement or statements and amended prospectus
or prospectuses or amendments or supplements to any of the foregoing, hereby
giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as he
might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 3rd day of February, 1995.
/s/ Richard D. McCormick /s/ James M. Osterhoff
- -------------------------------- ------------------------------
Richard D. McCormick James M. Osterhoff
Chairman of the Board, Executive Vice President and
Chief Executive Officer and President Chief Financial Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, U S WEST Capital Funding, Inc., a Colorado corporation
(hereinafter referred to as the "Company"), proposes to file with the
Securities and Exchange Commission, under the provisions of the Securities
Act of 1933, as amended, a Registration Statement, including a related
prospectus (all effectively referred to as the "Registration Statement") for
the registration of $1,000,000,000 of subordinated debt and/or guarantees to
be issued by the Company in conjunction with a registration by certain
special purpose companies to be organized by U S WEST, Inc. of up to
$1,000,000,000 of subordinated debt securities and/or preferred equity
securities; and
WHEREAS, each of the undersigned is an Officer or Director, or both, of
the Company as indicated below each signature;
NOW, THEREFORE, each of the undersigned constitutes and appoints JAMES T.
ANDERSON, CHARLES J. BURDICK, BARBARA M. JAPHA, and STEPHEN E. BRILZ, and
each of them, as attorneys for him and in his name, place and stead, and in
each capacity with the Company, to execute and file such Registration
Statement, including the related prospectus, and thereafter to execute and
file any amended registration statement or statements and amended prospectus
or prospectuses or amendments or supplements to any of the foregoing, hereby
giving and granting to said attorneys full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as he
might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virture hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney this 3rd day of February, 1995.
/s/ James T. Anderson /s/ James M. Osterhoff
- ----------------------------------- --------------------------------------
James T. Anderson James M. Osterhoff
President and Director Director
/s/ Charles J. Burdick /s/ James R. Taucher
- ----------------------------------- --------------------------------------
Charles J. Burdick James R. Taucher
Vice President and Treasurer Vice President and Controller
