<PAGE>
REGISTRATION NOS. 33-50049,
33-50049-01, 33-19226
AND 33-19226-01
FILING UNDER RULE 424(b)(5)
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 3, 1995)
[LOGO]
$250,000,000
U S WEST CAPITAL FUNDING, INC.
6.31% NOTES DUE NOVEMBER 1, 2005
UNCONDITIONALLY GUARANTEED AS TO PAYMENT
OF PRINCIPAL AND INTEREST BY
U S WEST, INC.
------------
Interest on the Notes is payable on May 1 and November 1 of each year,
commencing May 1, 1996. The Notes will
mature on November 1, 2005. The Notes are repayable, at the option of the
registered holders thereof, in whole or in part, on November 1, 2000 (the
"Repayment Date"), at a price equal to their principal amount plus all accrued
interest thereon to the Repayment Date. Notice of an election to exercise such
repayment option must be given no earlier than September 1, 2000 and no later
than October 1, 2000, and once given, such election will be irrevocable. See
"Description of the Notes -- Repayment and Redemption". The Notes are not
redeemable prior to maturity at the option of U S WEST Capital Funding, Inc.
("Capital Funding") and are not entitled to a sinking fund. The Notes will be
unconditionally guaranteed (the "Guarantees") as to payment of principal and
interest by Capital Funding's corporate parent, U S WEST, Inc. ("U S WEST").
The Notes will be represented by global notes registered in the name of a
nominee of The Depository Trust Company, as Depositary (the "Depositary").
Beneficial interests in the Notes will be shown on, and transfers thereof will
be effected only through, records maintained by participants of the Depositary.
Except in the limited circumstances described herein, Notes in certificated form
will not be issued in exchange for the global notes. Settlement for the Notes
will be made in immediately available funds. The Notes will trade in the
Depositary's Same-Day Funds Settlement System until maturity, and secondary
market trading activity will therefore settle in immediately available funds.
All payments of principal and interest will be made by Capital Funding in
immediately available funds. See "Description of the Notes -- Book-Entry
System".
---------------------
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 ON 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>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC(1) DISCOUNT(2) CAPITAL FUNDING(1)(3)
<S> <C> <C> <C>
Per Note.................................. 100% .6% 99.4%
Total..................................... $250,000,000 $1,500,000 $248,500,000
<FN>
(1) Plus accrued interest, if any, from October 27, 1995.
(2) Capital Funding and U S WEST have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting".
(3) Before deducting estimated expenses of $125,000 payable by Capital Funding.
</TABLE>
---------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of certain
legal matters by counsel for the Underwriters and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Notes
will be made in New York, New York on or about October 27, 1995.
---------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
------------
The date of this Prospectus Supplement is October 24, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
-------------------
THE FOLLOWING INFORMATION CONCERNING U S WEST, CAPITAL FUNDING, THE NOTES
AND THE GUARANTEES SUPPLEMENTS, AND SHOULD BE READ IN CONJUNCTION WITH, THE
INFORMATION CONTAINED IN THE ACCOMPANYING PROSPECTUS. CAPITALIZED TERMS NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS GIVEN TO THEM IN THE
ACCOMPANYING PROSPECTUS.
U S WEST, INC.
U S WEST is a diversified global communications company engaged in the
telecommunications, cable, wireless communications and multimedia content and
services businesses. U S WEST conducts its businesses through two groups: the U
S WEST Communications Group (the "Communications Group") and the U S WEST Media
Group (the "Media Group"). The Communications Group provides regulated
communications services 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 "Communications Group Region"). The Media Group is
comprised of (i) cable and telecommunications network businesses outside the
Communications Group Region and internationally, (ii) domestic and international
wireless communications network businesses and (iii) domestic and international
multimedia content and services businesses.
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 of providing financing to U S WEST
and its affiliates through the issuance of indebtedness guaranteed by U S WEST
and has no independent operations.
USE OF PROCEEDS
Capital Funding will apply the net proceeds from the sale of the Notes
primarily to the repayment of a portion of its commercial paper indebtedness,
though some of such proceeds may also be used for loans to U S WEST and
affiliates of U S WEST for general corporate purposes. For the fiscal year ended
December 31, 1994, Capital Funding's commercial paper carried a weighted average
interest cost of 4.78%. For the six months ended June 30, 1995, Capital
Funding's commercial paper carried a weighted average interest cost of 6.11%.
S-2
<PAGE>
U S WEST, INC.
SUMMARY FINANCIAL DATA
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, 1994. See "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus. The summary financial
data at December 31, 1994, 1993, 1992, 1991 and 1990 and for each of the five
years ended December 31, 1994 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." The summary financial
data at June 30, 1995 and 1994 and for the six months ended June 30, 1995 and
1994 are derived from the unaudited consolidated financial statements of U S
WEST, which have been prepared on the same basis as U S WEST's audited
consolidated financial statements and, in the opinion of management, contain all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for these
periods.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
--------- --------- --------- ------- -------- -------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL DATA
Sales and other revenues..................... $5,722 $5,349 $10,953 $10,294 $ 9,823 $ 9,528 $ 9,369
Income from continuing operations (1)........ 648 699 1,426 476 1,076 840 1,145
Net income (loss) (2)........................ 648 699 1,426 (2,806) (614) 553 1,199
Total assets................................. $24,193 $21,193 $23,204 $20,680 $ 23,461 $ 23,375 $ 22,160
Total debt (3)............................... 8,990 7,231 7,938 7,199 5,430 5,969 5,147
Shareowners' equity.......................... 7,679 6,597 7,382 5,861 8,268 9,587 9,240
Earnings per common share (continuing
operations) (1)............................. 1.37 1.56 3.14 1.13 2.61 2.09 2.97
Earnings (loss) per common share............. 1.37 1.56 3.14 (6.69) (1.49) 1.38 3.11
Return on common shareowners' equity (4)..... 17.0% 22.1% 21.6% -- 14.4% 5.7% 13.7%
Percentage of debt to total capital (3)...... 53.9% 52.3% 51.8% 55.1% 39.6% 38.4% 35.8%
Capital expenditures (3)..................... $1,365 $1,227 $2,820 $ 2,441 $ 2,554 $ 2,425 $ 2,217
OPERATING DATA
EBITDA (5)................................... $2,451 $2,287 $4,559 $ 4,228 $ 3,963 $ 3,920 $ 3,889
Telephone network access lines in service
(thousands)................................. 14,518 14,009 14,336 13,843 13,345 12,935 12,562
Billed access minutes of use (millions)...... 28,058 25,630 52,275 48,123 44,369 41,701 38,832
Cellular subscribers......................... 1,165,000 738,000 968,000 601,000 415,000 300,000 219,000
Cable television basic subscribers served.... 509,000 473,000 486,000 -- -- -- --
Employees.................................... 61,448 61,320 61,505 60,778 63,707 65,829 65,469
Number of common shareowners................. 798,009 831,620 816,099 836,328 867,773 899,082 935,530
Weighted average common shares outstanding
(thousands)................................. 469,490 449,024 453,316 419,365 412,518 401,332 386,012
<FN>
- ------------------------
(1) 1995 first six months income includes a gain of $49 ($.10 per share) on the
sales of rural telephone exchanges. 1994 first six months income includes a
gain of $31 ($.07 per share) on the sales of rural telephone exchanges and
a gain of $41 ($.09 per share) on the sale of U S WEST's paging unit. 1994
income from continuing operations includes a gain of $105 ($.23 per share)
on the sale of 24.4 percent of U S WEST's joint venture interest in cable
television/telephone operations in the United Kingdom (TeleWest
Communications plc), a gain of $41 ($.09 per share) on the sale of U S
WEST's paging unit and a gain of $51 ($.11 per share) on the sales of
certain rural telephone exchanges. 1993 income from continuing operations
was reduced by a restructuring charge of $610 ($1.46 per share) and $54
($.13 per share) for the cumulative effect on deferred taxes of the 1993
federally mandated increase in income tax rates. 1991 income from
continuing operations was reduced by a restructuring charge of $230 ($.57
per share).
(2) 1993 net income was reduced by extraordinary charges of $3,123 ($7.45 per
share) for the discontinuance of Statement of Financial Accounting
Standards ("SFAS") No. 71 and $77 ($.18 per share) for the early
extinguishment of debt. 1993 net income also includes a charge of $120
($.28 per share) for U S WEST's decision to discontinue the operations of
its capital assets segment. 1992 income includes a charge of $1,793 ($4.35
per share) for the cumulative effect of change in accounting principles.
Discontinued operations provided net income (loss) of $38 ($.09 per share),
$103 ($.25 per share), $(287) ($.71 per share) and $54 ($.14 per share) in
1993, 1992, 1991 and 1990, respectively.
(3) Capital expenditures, debt and the percentage of debt to total capital
exclude discontinued operations.
(4) 1993 return on shareowners' equity is not presented. Return on shareowners'
equity for fourth quarter 1993 was 19.9 percent based on income from
continuing operations. 1992 return on shareowners' equity is based on
income before the cumulative effect of change in accounting principles.
(5) Earnings before interest, taxes, depreciation and amortization ("EBITDA").
EBITDA excludes gains on sales of assets, restructuring charges and other
income. U S WEST considers EBITDA an important indicator of the operational
strength and performance of its businesses. EBITDA, however, should not be
considered as an alternative to operating or net income as an indicator of
the performance of U S WEST's businesses or as an alternative to cash flows
from operating activities as a measure of liquidity, in each case
determined in accordance with generally accepted accounting principles.
</TABLE>
S-3
<PAGE>
RECENT DEVELOPMENTS
THE RECAPITALIZATION PLAN. U S WEST has announced a plan (the
"Recapitalization Plan") to create two classes of common stock that are intended
to reflect separately the performance of the Communications Group and the Media
Group and to change the state of incorporation of U S WEST from Colorado to
Delaware. Under the Recapitalization Plan, each outstanding share of Common
Stock of U S WEST will be converted into one share of U S WEST Communications
Group Common Stock, which is intended to reflect separately the performance of
the Communications Group, and one share of U S WEST Media Group Common Stock,
which is intended to reflect separately the performance of the Media Group.
The Recapitalization Plan would enable U S WEST to report the results of the
Media Group separately from the results of the Communications Group and thereby
give stockholders a better understanding of these businesses without diminishing
the benefits of remaining a single corporation. Investors would be afforded the
ability to invest in either or both stocks depending upon their investment
objectives. The Recapitalization Plan will require the approval of U S WEST's
shareholders. U S WEST expects to seek such approval at a special meeting of
shareholders to be held in the fall of 1995. The Recapitalization Plan will not
affect the offer and sale of the Notes or the ability of U S WEST to issue the
Guarantees. In addition, the Recapitalization Plan will not result in the
transfer of any assets from U S WEST or any of its subsidiaries or alter the
legal nature of U S WEST's obligations to its creditors, including its
obligations under the Guarantees. Creditors of U S WEST, including the holders
of Notes, will continue to benefit from the cash flow of the subsidiaries
comprising both the Communications Group and the Media Group, subject to the
satisfaction of obligations by such subsidiaries.
The Recapitalization Plan is not expected to have any adverse impact on U S
WEST's credit rating. However, in connection with the Media Group's growth
strategy, U S WEST from time to time engages in discussions regarding
acquisitions. U S WEST may fund any such acquisitions, if consummated, with
internally generated funds, debt or equity. The incurrence of indebtedness to
fund such acquisitions and/or the assumption of indebtedness in connection with
such acquisitions could result in a downgrading of U S WEST's credit rating and,
as a result, have an adverse effect upon the market value of the Notes.
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% 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. The Atlanta Cable Properties are included in the Media
Group.
WIRELESS JOINT VENTURES. On July 25, 1994, AirTouch Communications
("AirTouch") and U S WEST announced an agreement to combine their domestic
cellular operations. This joint venture will have a presence in 9 of the top 20
cellular markets in the country and will form the third largest cellular company
in the United States, with more than 54 million potential customers ("POPs").
The transaction closed in early October of 1995. By combining their domestic
cellular operations, U S WEST and AirTouch will create opportunities for new
cost efficiencies in equipment purchasing, information systems, distribution,
marketing and advertising. Upon closing, each company's cellular operations
initially will continue to operate as separately owned entities, but will report
to a wireless management company, which will oversee both companies' domestic
cellular operations and provide management and support services on a contract
basis. The wireless management company will be managed by a committee comprised
of the president and chief operating officer of AirTouch, three other AirTouch
representatives, three representatives of U S WEST and one mutually agreed upon
independent representative. AirTouch's initial equity ownership of this
partnership will be approximately 70% and U S WEST's will be 30%. A merger of
the two companies' domestic cellular operations will take place upon the earlier
of July 25, 1998, the lifting of certain restrictions imposed on U S WEST in
connection with the divestiture by AT&T Corp. of its local telephone businesses,
or at any time at AirTouch's option. The agreement gives U S WEST strategic
flexibility, including the right to
S-4
<PAGE>
exchange its interest in the joint venture for up to 19.9% of AirTouch common
stock, with any excess amounts to be received in the form of AirTouch non-voting
preferred stock. AirTouch and U S WEST also formed an equally owned partnership
to bid on personal communications services ("PCS") licenses.
In October 1994, a partnership between AirTouch and U S WEST and a
partnership between Bell Atlantic Corporation ("Bell Atlantic") and NYNEX
Corporation ("NYNEX") formed PCS Primeco, L.P. ("PCS Primeco") for the purpose
of bidding on PCS licenses being auctioned by the Federal Communications
Commission (the "FCC"). The objective of PCS Primeco is to build and operate PCS
networks where its partners do not operate cellular networks, thus enabling them
to establish a national wireless network. In the FCC auction, which concluded in
March 1995, PCS Primeco was awarded PCS licenses in 11 markets covering 57
million POPs, including licenses in Chicago, Dallas, Tampa, Houston, Miami and
New Orleans. PCS Primeco will be governed by an executive committee made up of
three Bell Atlantic-NYNEX representatives and three AirTouch-U S WEST
representatives. The four companies also formed a partnership to develop a
national branding and marketing strategy and a common "look and feel" for
wireless customers. The cellular properties of AirTouch and U S WEST will not be
merged with those of Bell Atlantic and NYNEX. U S WEST's wireless interests are
included in the Media Group.
S-5
<PAGE>
CAPITALIZATION OF U S WEST
The following table sets forth the unaudited consolidated capitalization of
U S WEST at June 30, 1995, and as adjusted to reflect the application of the
estimated net proceeds from the sale of the Notes. 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 JUNE 30, 1995
----------------------------
ACTUAL (1) AS ADJUSTED (1)
---------- ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term borrowings....................................... $ 4,364 $ 2,248(2)
---------- -------
---------- -------
Long-term borrowings........................................ $ 4,626 $ 6,176(2)
---------- -------
Guaranteed minority interest in trust holding subordinated
debentures of subsidiary................................... $ -- $ 600(2)
---------- -------
Preferred stock subject to mandatory redemption............. $ 51 $ 51
---------- -------
Common shareholders' equity:
Common shares -- no par, 2,000,000,000 authorized;
470,722,738 outstanding................................ 8,123 8,123
Cumulative deficit...................................... (282) (282)
LESOP guarantee......................................... (157) (157)
Foreign currency translation adjustment................. (5) (5)
---------- -------
Total common shareholders' equity........................... 7,679 7,679(3)
---------- -------
Total capitalization........................................ $12,356 $14,506(2)(3)
---------- -------
---------- -------
<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 2,021,149 shares of Common Stock that were exercisable at June 30,
1995 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 9,633,826 shares of
Common Stock (based on the number of options and LYONs outstanding at June
30, 1995).
(2) Gives effect to the issuance by affiliates of U S WEST on September 11,
1995 of $600 million of 7.96% Trust Originated Preferred Securities (the
"Preferred Securities"), on September 15, 1995 of $250 million 6 5/8% Notes
Due 2005 and $250 million 7 1/4% Debentures Due 2025, on October 6, 1995 of
$300 million 6 3/4% Notes Due October 1, 2005, and on October 13, 1995 of
$250 million of 6 3/8% Notes due 2002 and $250 million of 7 1/4% Debentures
due 2035, and the application of the net proceeds thereof to the reduction
of short-term borrowings. The Preferred Securities will be shown on U S
WEST's consolidated financial statements as a guaranteed minority interest
in trust holding subordinated debentures of a subsidiary. Does not give
effect to the issuance by an affiliate of U S WEST of US $130 million of
Swiss Franc denominated debt securities which is expected to be consummated
in late November 1995.
(3) The Recapitalization Plan, if implemented, will not affect the total common
shareholders' equity or the total capitalization of U S WEST.
</TABLE>
S-6
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued as a separate series of Debt Securities under an
Indenture, dated as of April 15, 1988 (the "Indenture"), among U S WEST, Capital
Funding and First National Bank of Santa Fe, as trustee. The provisions of the
Indenture are more fully described under "Description of Debt Securities and
Guarantees" in the accompanying Prospectus, to which reference is hereby made.
As of the date of this Prospectus Supplement, $515,000,000 aggregate principal
amount of Debt Securities has been issued under the Indenture and $465,000,000
aggregate principal amount of such Debt Securities remains outstanding.
The Notes will be limited to $250,000,000 aggregate principal amount and
will mature on November 1, 2005. The Notes will bear interest at the rate per
annum shown on the cover of this Prospectus Supplement from October 27, 1995 or
from the most recent Interest Payment Date to which interest has been paid or
provided for, payable semi-annually on May 1 and November 1 of each year,
commencing May 1, 1996, to the Person in whose name the Note (or any predecessor
Note) is registered at the close of business on the April 15 or October 15, as
the case may be, next preceding such Interest Payment Date. The Notes will be
issued in registered form in denominations of $1,000 and integral multiples
thereof. Interest will be calculated on the basis of a 360-day year of twelve
30-day months. The Notes will be unconditionally guaranteed as to payment of
principal and interest by U S WEST pursuant to the Guarantees. See "Description
of Debt Securities and Guarantees -- Guarantees" in the accompanying Prospectus.
Citibank, N.A. through its corporate trust office in the Borough of
Manhatten in The City of New York (the "Paying Agent") will act as Capital
Funding's paying agent with respect to the Notes. Payments of principal of and
interest on the Notes will be made by Capital Funding through the Paying Agent
to the Depositary. See "-- Book-Entry System."
REPAYMENT AND REDEMPTION
The Notes are repayable, in whole or in part, at the option of the
registered holders thereof, on November 1, 2000 (the "Repayment Date"), at a
price equal to the principal amount thereof plus all accrued interest thereon to
the Repayment Date. In order to exercise such repayment option, a holder must
deliver to the Paying Agent, at its corporate trust office in the Borough of
Manhattan in The City of New York, the Note or Notes, or such portion thereof,
as to which an election to exercise the repayment option is being made, together
with a duly signed and completed notice of election to have such Note or Notes,
or such portion thereof, repaid by Capital Funding. Such Note or Notes and such
notice of election to exercise the repayment option must be delivered to the
Paying Agent no earlier than September 1, 2000 and no later than October 1,
2000. Once made, an election to exercise the repayment option by a holder of a
Note will be irrevocable. Such option may be exercised with respect to less than
the entire principal amount of a Note, but any such redemption in part will be
in increments of the minimum denomination of the Notes.
The Depositary's nominee will be the registered holder entitled to make an
election to exercise the repayment option with respect to Notes represented by a
global Note. In order to ensure that the Depositary's nominee will exercise in a
timely manner the repayment option with respect to a particular Note, the
beneficial owner of an interest in such global Note must instruct the broker or
other direct or indirect participant through which it holds its interest to
notify the Depositary of its desire to exercise the repayment option. Different
firms have different cut-off times for accepting instructions from their
customers and, accordingly, each such beneficial owner should consult the broker
or other direct or indirect participant through which it holds its interest in a
global Note in order to ascertain the cut-off time by which such instruction
must be given to ensure that timely notice of an election to exercise the
repayment option may be given to the Depositary.
All determinations as to the validity, form, eligibility (including time of
receipt) and acceptance of any Note for repayment will be determined by Capital
Funding, whose determination will be final and binding.
The Notes are not redeemable prior to maturity at the option of Capital
Funding and are not entitled to a sinking fund.
S-7
<PAGE>
BOOK-ENTRY SYSTEM
The Depositary will act as securities depositary for the Notes. The Notes
will be issued only as fully registered securities registered in the name of
Cede & Co. (the Depositary's nominee). One or more fully registered global Note
certificates will be issued, representing an aggregate principal amount of
$250,000,000, and will be deposited with the Depositary.
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 Note.
The Depositary 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 Securities
Exchange Act of 1934, as amended. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary 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 (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations ("Direct
Participants"). The Depositary is owned by a number of its Direct Participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the Depositary's
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 the Depositary and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Notes within the Depositary's system must be made by or through
Direct Participants, which will receive a credit for the Notes on the
Depositary's records. The ownership interest of each actual purchaser of each
Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary 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 Notes. Transfers of ownership
interests in the Notes 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 Notes, except in
the event that use of the book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all the Notes deposited by Participants
with the Depositary are registered in the name of the Depositary's nominee, Cede
& Co. The deposit of Notes with the Depositary and their registration in the
name of Cede & Co. effect no change in beneficial ownership. The Depositary has
no knowledge of the actual Beneficial Owners of the Notes. The Depositary's
records reflect only the identity of the Direct Participants to whose accounts
such Notes 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 the Depositary 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.
Although voting with respect to the Notes is limited, in those cases where a
vote is required, neither the Depositary nor Cede & Co. will itself consent or
vote with respect to Notes. Under its usual procedures, the Depositary would
mail an Omnibus Proxy to Capital Funding as soon as possible after the
applicable record
S-8
<PAGE>
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes are credited on the
applicable record date (identified in a listing attached to the Omnibus Proxy).
Payments of principal of and interest on the Notes will be made to the
Depositary. The Depositary's practice is to credit Direct Participants' accounts
on the relevant payment date in accordance with their respective holdings shown
on the Depositary's records unless the Depositary 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 the Depositary, the Paying Agent, the Trustee,
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 the
Depositary is the responsibility of Capital Funding, the Paying Agent or the
Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, 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 Note will not be
entitled to receive physical delivery of Notes. Accordingly, each Beneficial
Owner must rely on the procedures of the Depositary to exercise any rights under
the Notes.
The Depositary may discontinue providing its services as securities
depositary with respect to the Notes at any time by giving reasonable notice to
Capital Funding or the Paying Agent. Under such circumstances, in the event that
a successor securities depository is not obtained, Note certificates are
required to be printed and delivered. Additionally, Capital Funding may decide
to discontinue use of the system of book-entry transfers through the Depositary
(or a successor depositary) with respect to the Notes. In that event,
certificates for the Notes will be printed and delivered.
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Depositary continues to make its Same-Day Funds
Settlement System available to Capital Funding, all payments of principal of and
interest on the Notes will be made by Capital Funding in immediately available
funds.
Secondary trading in long-term notes, debentures and bonds of corporate
issuers is generally settled in clearinghouse or next-day funds. In contrast,
the Notes will trade in the Depositary's Same-Day Funds Settlement System, and
secondary market trading activity in the Notes will therefore be required by the
Depositary to settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on
trading activity in the Notes.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that Capital
Funding and U S WEST believe to be reliable, but Capital Funding and U S WEST
take no responsibility for the accuracy thereof.
S-9
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") among Capital Funding, U S WEST and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated and Salomon Brothers Inc (the
"Underwriters"). Capital Funding has agreed to sell to the Underwriters and the
Underwriters have severally agreed to purchase, the respective principal amounts
of the Notes set forth after their names below. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent and that the Underwriters will be obligated to purchase all
of the Notes if any are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
- ---------------------------------------------------------------------------------------- --------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................................. $ 49,000,000
Goldman, Sachs & Co..................................................................... 49,000,000
Lehman Brothers Inc..................................................................... 49,000,000
Morgan Stanley & Co. Incorporated....................................................... 49,000,000
Salomon Brothers Inc.................................................................... 49,000,000
Muriel Siebert & Co. Inc................................................................ 5,000,000
--------------
Total......................................................................... $ 250,000,000
--------------
--------------
</TABLE>
The Underwriters have advised Capital Funding that they propose initially to
offer the Notes to the public at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .35% of the principal amount. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount of the Notes to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Notes are a new issue of securities with no established trading market.
Capital Funding has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
Capital Funding and U S WEST have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.
The Underwriters perform investment banking and other financial services for
Capital Funding and certain of its affiliates in the ordinary course of
business.
EXPERTS
The consolidated financial statements of U S WEST and the combined financial
statements of the Communications Group and the Media Group as of December 31,
1993 and 1994 and for each of the three years in the period ended December 31,
1994, included in U S WEST's Current Report on Form 8-K dated September 28,
1995, 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.
The consolidated financial statements and consolidated financial statement
schedule of U S WEST included in U S WEST's Annual Report on Form 10-K for the
year ended December 31, 1994 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.
The consolidated financial statements of Time Warner Entertainment Company,
L.P. as of December 31, 1994 and 1993 and for each of the three years in the
period ended December 31, 1994, which appear in the Current Report on Form 8-K
of U S WEST, dated May 23, 1995, as amended by Forms 8-K/A filed on
S-10
<PAGE>
July 12, 1995 and August 24, 1995, are incorporated herein by reference in
reliance on the report of Ernst & Young LLP, independent auditors, given upon
the authority of that firm as experts in accounting and auditing.
The financial statements of Mercury Personal Communications (trading as
Mercury One-2-One) as of March 31, 1995, 1994 and 1993 and for each of the three
years in the period ended March 31, 1994, which appear in the Current Report on
Form 8-K of U S WEST dated May 23, 1995, as amended by Forms 8-K/A filed on July
12, 1995 and August 24, 1995, are incorporated herein by reference in reliance
on the report of Arthur Andersen LLP, independent chartered accountants, given
upon the authority of that firm as experts in accounting and auditing.
The combined financial statements of Georgia Cable Holdings Limited
Partnership and Subsidiary Partnerships as of December 31, 1993 and 1992 and for
each of the years in the two-year period ended December 31, 1993, which appear
in the Current Report on Form 8-K of U S WEST, dated May 23, 1995, as amended by
Forms 8-K/A filed on July 12, 1995 and August 24, 1995, have been incorporated
by reference herein in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Wometco Cable Corp. and
subsidiaries as of December 31, 1993 and 1992 and for each of the years in the
two-year period ended December 31, 1993, which appear in the Current Report on
Form 8-K of U S WEST, dated May 23, 1995, as amended by Forms 8-K/A filed on
July 12, 1995 and August 24, 1995, have been incorporated by reference herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The report on the 1993 consolidated
financial statements of Wometco Cable Corp. and subsidiaries refers to a change
in the method of accounting for income taxes in 1993 to adopt the provisions of
Financial Accounting Standards Board FASB No. 109 -- Accounting for Income
Taxes.
LEGAL OPINIONS
Certain legal matters relating to the Notes and the Guarantees will be
passed upon for Capital Funding and U S WEST by Weil, Gotshal & Manges, 767
Fifth Avenue, New York, New York 10153 and by Stephen E. Brilz, Senior Attorney
and Assistant Secretary of U S WEST, Inc., and for the Underwriters by Brown &
Wood, One World Trade Center, New York, New York 10048.
S-11
<PAGE>
PROSPECTUS
(U S WEST Logo)
$1,185,000,000
U S WEST CAPITAL FUNDING, INC.
DEBT SECURITIES
UNCONDITIONALLY GUARANTEED AS TO PAYMENT OF PRINCIPAL, PREMIUM,
IF ANY, AND INTEREST, BY
U S WEST, INC.
U S WEST Capital Funding, Inc. ("Capital Funding") from time to time may
offer its notes, debentures, or other debt securities (the "Debt Securities"),
in one or more series, up to an aggregate principal amount of $1,185,000,000 (or
its equivalent, based on the applicable exchange rate at the time of offering,
in such foreign currencies, or units of two or more thereof as shall be
designated by Capital Funding). Debt Securities may be issued in registered form
without coupons, bearer form with coupons attached, or in the form of a Global
Security. All Debt Securities will be unconditionally guaranteed as to payment
of principal, premium, if any, and interest by U S WEST, Inc. ("U S WEST").
When a particular series of Debt Securities is offered, a supplement to this
Prospectus will be delivered (the "Prospectus Supplement") together with this
Prospectus setting forth the terms of such Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, denominations,
currency or currencies in which the principal, and premium, if any, and interest
are payable, maturity, rate (which may be fixed or variable) and time of payment
of interest, any terms for redemption or repurchase at the option of Capital
Funding or the holder, any terms for sinking fund payments, the initial public
offering price, the names of, and the principal amounts to be purchased by,
underwriters and the compensation of such underwriters, any listing of the Debt
Securities on a securities exchange, and the other terms in connection with the
offering and sale of such Debt Securities.
If an agent of Capital Funding or a dealer or an underwriter is involved in
the sale of the Debt Securities in respect of which this Prospectus is being
delivered, the agent's commission or dealer's or underwriter's discount will be
set forth in, or may be calculated from, the Prospectus Supplement. The net
proceeds to Capital Funding from such sale will be the purchase price of such
Debt Securities less such commission in the case of an agent, the purchase price
of such Debt Securities in the case of a dealer or the public offering price
less such discount in the case of an underwriter, and less, in each case, the
other attributable issuance expenses. The aggregate net proceeds to Capital
Funding from all the Debt Securities will be the purchase price of the Debt
Securities sold, less the aggregate of agents' commissions and dealers' and
underwriters' discounts and other expenses of issuance and distribution. The net
proceeds to Capital Funding from the sale of the Debt Securities will be set
forth in the Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements for any agents, dealers or underwriters.
-------------------
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.
-------------------
The date of this Prospectus is October 3, 1995.
<PAGE>
AVAILABLE INFORMATION
U S WEST is subject to the informational requirements of the Securities
Exchange Act of 1934 (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.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Seven World
Trade Center, 13th Floor, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, 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.
U S WEST and Capital Funding 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") under the Securities Act of 1933
(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 have been included
herein. U S WEST does not consider that such financial statements would be
material to holders of the Debt Securities because (i) Capital Funding is a
direct wholly-owned subsidiary of U S WEST, a reporting company under the
Exchange Act, (ii) Capital Funding does not have any independent operations but
exists for the sole purpose of issuing debt securities guaranteed by U S WEST,
and (iii) the obligations of Capital Funding under the Debt Securities are fully
and unconditionally guaranteed by U S WEST. See "Description of Debt Securities
and Guarantees."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by U S WEST with the Commission
(File No. 1-8611) and are incorporated herein by reference: (i) Annual Report on
Form 10-K for the year ended December 31, 1994, (ii) Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, (iii) Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995, and (iv) Current Reports on Form 8-K dated
January 19, 1995, April 10, 1995, April 18, 1995, May 23, 1995 (as amended by
Forms 8K/A filed on July 12, 1995 and August 24, 1995), June 20, 1995, July 28,
1995, September 22, 1995 and September 28, 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 Debt 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 shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein 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.
U S WEST AND CAPITAL FUNDING 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 WHICH ARE NOT SPECIFICALLY INCORPORATED BY
REFERENCE THEREIN. REQUESTS SHOULD BE DIRECTED TO THE TREASURER, U S WEST, INC.,
7800 EAST ORCHARD ROAD, ENGLEWOOD, COLORADO 80111 (TELEPHONE NUMBER (303)
793-6500).
-------------------
2
<PAGE>
U S WEST, INC.
U S WEST was incorporated in 1983 under the laws of the State of Colorado
and has its principal executive offices at 7800 East Orchard Road, Englewood,
Colorado 80111 (telephone number (303) 793-6500). U S WEST is a diversified
global communications company engaged in the telecommunications, cable, wireless
communications and multimedia content and services businesses. U S WEST conducts
its businesses through two groups: the U S WEST Communications Group (the
"Communications Group") and the U S WEST Media Group (the "Media Group"). The
Communications Group provides regulated communications services 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 "Communications
Group Region"). The Media Group is comprised of (i) cable and telecommunications
network businesses outside the Communications Group Region and internationally,
(ii) domestic and international wireless communications network businesses and
(iii) domestic and international multimedia content and services businesses.
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 of providing financing to U S WEST
and its affiliates through the issuance of indebtedness guaranteed by U S WEST
and has no independent operations. The principal executive offices of Capital
Funding are located at 7800 East Orchard Road, Englewood, Colorado 80111
(telephone number (303) 793-6500).
USE OF PROCEEDS
Capital Funding will apply the net proceeds from the sale of the 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 acquisitions, the reduction of short-term and long-term borrowings,
and for other business opportunities. The amount and timing of these loans will
depend upon the future growth and financing requirements of U S WEST and its
affiliates.
RATIOS 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 the 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>
SIX MONTHS
ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
- ------------------------------------ ------------
1990 1991 1992 1993 1994 1994 1995
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.07 3.11 3.85 2.38 4.85 4.98 4.09
</TABLE>
The 1993 ratio is based on earnings from continuing operations before
extraordinary charges associated with the decision to discontinue accounting for
the operations of U S WEST in accordance with SFAS No. 71 of $3.123 billion and
the early extinguishment of debt of $77 million. The 1993 and 1991 ratios
include restructuring charges of $1 billion and $364 million, respectively.
Excluding the restructuring charges the 1993 and 1991 ratios of earnings to
fixed charges would have been 4.22 and 3.75, respectively. The 1992 ratio is
based on earnings before the cumulative effect of change in accounting
principles which reduced net income by $1.793 billion.
3
<PAGE>
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The following description sets forth certain general terms and provisions of
the Debt Securities and Guarantees to which any Prospectus Supplement may
relate. The particular terms and provisions of the series of Debt Securities
offered by a Prospectus Supplement and the extent to which such general terms
and provisions described below may apply thereto, will be described in the
Prospectus Supplement relating to such series of Debt Securities.
The Debt Securities are to be issued under an Indenture, dated as of April
15, 1988 (the "Indenture"), among U S WEST, Capital Funding and First National
Bank of Santa Fe, as trustee (the "Trustee"). The following summaries of certain
provisions of the Debt Securities, the Guarantees, and the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all provisions of the Debt Securities, the Guarantees, and the
Indenture, including the definitions therein of certain terms. Wherever
particular sections or defined terms of the Indenture are referred to, it is
intended that such sections or defined terms shall be incorporated herein by
reference.
GENERAL
The Indenture does not limit the amount of Debt Securities which can be
issued thereunder and additional debt securities may be issued thereunder up to
the aggregate principal amount which may be authorized from time to time by, or
pursuant to a resolution of, Capital Funding's Board of Directors or by a
supplemental indenture. Reference is made to the Prospectus Supplement for the
following terms of the particular series of Debt Securities being offered
hereby: (i) the title of the Debt Securities of the series; (ii) any limit upon
the aggregate principal amount of the Debt Securities of the series; (iii) the
date or dates on which the principal of the Debt Securities of the series will
mature; (iv) the rate or rates (or manner of calculations thereof), if any, at
which the Debt Securities of the series will bear interest, the date or dates
from which any such interest will accrue and on which such interest will be
payable, and, with respect to Debt Securities of the series in registered form,
the record date for the interest payable on any interest payment date; (v) the
place or places where the principal of and interest, if any, on the Debt
Securities of the series will be payable; (vi) any redemption or sinking fund
provisions; (vii) if other than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which will be payable upon
declaration of acceleration of the maturity thereof; (viii) whether the Debt
Securities of the series will be issuable in registered or bearer form or both,
any restrictions applicable to the offer, sale, or delivery of Debt Securities
in bearer form ("bearer Debt Securities"), and whether and the terms upon which
bearer Debt Securities will be exchangeable for Debt Securities in registered
form ("registered Debt Securities") and vice versa; (ix) whether and under what
circumstances Capital Funding will pay additional amounts on the Debt Securities
of the series held by a person who is not a U.S. person (as defined below) in
respect of taxes or similar charges withheld or deducted and, if so, whether
Capital Funding will have the option to redeem such Debt Securities rather than
pay such additional amounts; (x) whether the Debt Securities will be denominated
or provide for payment in United States dollars or a foreign currency or units
of two or more such foreign currencies; and (xi) any additional provisions or
other special terms not inconsistent with the provisions of the Indenture,
including any terms which may be required by or advisable under United States
laws or regulations or advisable in connection with the marketing of Debt
Securities of such series. (Sections 2.01 and 2.02.) To the extent not described
herein, principal, premium, if any, and interest will be payable, and the Debt
Securities of a particular series will be transferable, in the manner described
in the Prospectus Supplement relating to such series.
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of Capital Funding, and will rank on a parity with Capital
Funding's other indebtedness, and will have the benefit of the Guarantees
described herein. However, 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 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.
4
<PAGE>
Debt Securities of any series may be issued as registered Debt Securities or
bearer Debt Securities or both as specified in the terms of the series. Unless
otherwise indicated in the Prospectus Supplement, Debt Securities will be issued
in denominations of $1,000 and integral multiples thereof, and bearer Debt
Securities will not be offered, sold, resold or delivered to U.S. persons in
connection with their original issuance. For purposes of this Prospectus, "U.S.
person" means a citizen, national, or resident of the United States, a
corporation, partnership, or other entity created or organized in or under the
laws of the United States, or any political subdivision thereof, or an estate or
trust which is subject to United States federal income taxation regardless of
its source of income.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Indenture, interest on bearer Debt Securities
will be payable only against presentation and surrender of the coupons for the
interest installments evidenced thereby as they mature at a paying agency of
Capital Funding located outside of the United States and its possessions.
(Section 2.05(c).) Capital Funding will maintain such an agency for a period of
two years after the principal of such bearer Debt Securities has become due and
payable. During any period thereafter for which it is necessary in order to
conform to United States tax law or regulations, Capital Funding will maintain a
paying agent outside the United States and its possessions to which the bearer
Debt Securities may be presented for payment and will provide the necessary
funds therefor to such paying agent upon reasonable notice. (Section 2.04)
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. (Section 2.08(e).)
If appropriate, federal income tax consequences applicable to a series of
Debt Securities will be described in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
fully registered global securities (each a "Global Security") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Unless and until it is
exchanged for Debt Securities in definitive registered form, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary, or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indenture governing such Debt Securities. Except as may be described in the
Prospectus Supplement relating to such series, owners of beneficial interests in
a Global Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture governing such Debt Securities.
The specific terms of the depositary arrangements with respect to a series
of Debt Securities will be described in the Prospectus Supplement relating to
such series.
GUARANTEES
U S WEST will unconditionally guarantee the due and punctual payment of the
principal, premium, if any, and interest on the Debt Securities when and as the
same shall become due and payable, whether at maturity, upon redemption, or
otherwise. (Section 2.15.) The Guarantees will rank equally with all other
unsecured and unsubordinated obligations of U S WEST. 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 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.
5
<PAGE>
EXCHANGE OF SECURITIES
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the bearer
Debt Securities with all unpaid coupons relating thereto, at an agency of
Capital Funding maintained for such purpose and upon fulfillment of all other
requirements of such agent. (Section 2.08(b).) As of the date of this
Prospectus, United States Treasury regulations do not permit exchanges of
registered Debt Securities for bearer Debt Securities and, unless such
regulations are modified, the terms of a series of Debt Securities will not
permit registered Debt Securities to be exchanged for bearer Debt Securities.
LIENS ON ASSETS
If at any time, Capital Funding mortgages, pledges, or otherwise subjects to
any lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, Capital Funding will secure the
outstanding Debt Securities, and any other obligations of Capital Funding which
may then be outstanding and entitled to the benefit of a covenant similar in
effect to this covenant, equally and ratably with the indebtedness or
obligations secured by such mortgage, pledge, or lien, for as long as any such
indebtedness or obligation is so secured. The foregoing covenant does not apply
to the creation, extension, renewal, or refunding of mortgages or liens created
or existing at the time property is acquired, created within 180 days
thereafter, or created for the purpose of securing the cost of construction and
improvement of property, or to the making of any deposit or pledge to secure
public or statutory obligations or with any governmental agency at any time
required by law in order to qualify Capital Funding to conduct its business or
any part thereof or in order to entitle it to maintain self-insurance or to
obtain the benefits of any law relating to workers' compensation, unemployment
insurance, old age pensions, or other social security, or with any court, board,
commission, or governmental agency as security incident to the proper conduct of
any proceeding before it. Nothing contained in the Indenture prevents any entity
other than Capital Funding from mortgaging, pledging, or subjecting to any lien
any of its property or assets, whether or not acquired from Capital Funding or
U S WEST. (Section 4.03.)
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture may be amended or supplemented
by Capital Funding, U S WEST, and the Trustee with the consent of the holders of
a majority in principal amount of the outstanding Debt Securities of each series
affected by the amendment or supplement (with each series voting as a class), or
compliance with any provision may be waived with the consent of the holders of a
majority in principal amount of the outstanding Debt Securities of each series
affected by such waiver (with each series voting as a class). However, without
the consent of each Debt Securityholder affected, an amendment or waiver may not
(i) reduce the amount of Debt Securities whose holders must consent to an
amendment or waiver; (ii) change the rate of or change the time for payment of
interest on any Debt Security; (iii) change the principal of or change the fixed
maturity of any Debt Security; (iv) waive a default in the payment of the
principal of or interest on any Debt Security; (v) make any Debt Security
payable in money other than that stated in the Debt Security; or (vi) impair the
right to institute suit for the enforcement of any payment on or with respect to
any Debt Security. (Section 9.02.) The Indenture may be amended or supplemented
without the consent of any Debt Securityholder (i) to cure any ambiguity,
defect, or inconsistency in the Indenture, the Debt Securities of any series or
the Guarantees; (ii) to provide for the assumption of all the obligations of
Capital Funding or U S WEST under the Debt Securities, any coupons related
thereto, the Guarantees, and the Indenture by any corporation in connection with
a merger, consolidation, transfer, or lease of Capital Funding's or U S WEST's
property and assets substantially as an entirety, as provided for in the
Indenture; (iii) to provide for uncertificated Debt Securities in addition to or
in place of certificated Debt Securities; (iv) to make any change that does not
adversely affect the rights of any Debt Securityholder; (v) to provide for the
issuance of and establish the form and terms and conditions
6
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of a series of Debt Securities or the Guarantees endorsed thereon or to
establish the form of any certifications required to be furnished pursuant to
the terms of the Indenture or any series of Debt Securities; or (vi) to add to
the rights of Debt Securityholders. (Section 9.01.)
MERGER
Capital Funding or U S WEST may consolidate with or merge into, or transfer
or lease its property and assets substantially as an entirety to, another entity
if the successor entity is a corporation and assumes all the obligations, as the
case may be, of Capital Funding, under the Debt Securities, and any coupons
related thereto and the Indenture, or of U S WEST, under the Guarantees and the
Indenture, and if, after giving effect to such transaction, a Default or Event
of Default would not occur or be continuing. Thereafter, all such obligations of
Capital Funding or U S WEST, as the case may be, shall terminate. (Sections 5.01
and 5.02.)
The general provisions of the Indenture do not afford holders of the Debt
Securities protection in the event of a highly-leveraged transaction,
reorganization, merger or similar transaction involving U S WEST or Capital
Funding that may adversely affect holders of the Debt Securities.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Debt Securities: (i) default in the payment of
interest on any Debt Security of such series for 90 days; (ii) default in the
payment of the principal of any Debt Security of such series; (iii) failure by
Capital Funding or U S WEST for 90 days after notice to it to comply with any of
its other agreements in the Debt Securities of such series, in the Indenture, in
the Guarantees, or in any supplemental indenture; and (iv) certain events of
bankruptcy or insolvency of Capital Funding or the Guarantor. (Section 6.01.) If
an Event of Default occurs with respect to the Debt Securities of any series and
is continuing, the Trustee or the holders of at least 25% in principal amount of
all of the outstanding Debt Securities of that series may declare the principal
(or, if the Debt Securities of that series are original issue discount Debt
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all the Debt Securities of that series to be due and
payable. Upon such declaration, such principal (or, in the case of original
issue discount Debt Securities, such specified amount) shall be due and payable
immediately. (Section 6.02).
Securityholders may not enforce the Indenture, the Debt Securities, or the
Guarantees, except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debt
Securities. (Section 7.01.) Subject to certain limitations, holders of a
majority in principal amount of the Debt Securities of each series affected
(with each series voting as a class) may direct the Trustee in its exercise of
any trust power. (Section 6.05.) The Trustee may withhold from Debt
Securityholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. (Section 7.05.)
CONCERNING THE TRUSTEE
U S WEST and certain of its affiliates, including Capital Funding, maintain
banking relationships in the ordinary course of business with the Trustee. In
addition, the Trustee and certain of its affiliates serve as trustee,
authenticating agent, or paying agent with respect to certain debt securities of
U S WEST and its affiliates.
PLAN OF DISTRIBUTION
GENERAL
Capital Funding may sell the Debt Securities being offered hereby: (i)
directly to purchasers, (ii) through agents, (iii) through underwriters, (iv)
through dealers, or (v) through a combination of any such methods of sale.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions either (i) at a fixed price or prices, which may be
changed; (ii) at market prices prevailing at the time of sale; (iii) at prices
related to such prevailing market prices; or (iv) at negotiated prices.
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Offers to purchase Debt Securities may be solicited directly by Capital
Funding or by agents designated by Capital Funding from time to time. Any such
agent, which may be deemed to be an underwriter, as that term is defined in the
Securities Act, involved in the offer or sale of the Debt Securities in respect
of which this Prospectus is delivered will be named, and any commissions payable
by Capital Funding to such agent will be set forth, in the Prospectus Supplement
or the Pricing Supplement. Unless otherwise indicated in the Prospectus
Supplement or the Pricing Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment. Agents may be customers of,
engaged in transactions with, or perform services for, Capital Funding in the
ordinary course of business.
If an underwriter or underwriters are utilized in the sale, Capital Funding
and U S WEST will execute an underwriting agreement with such underwriters at
the time of sale to them and the names of the underwriters and the terms of the
transactions will be set forth in the Prospectus Supplement, which will be used
by the underwriters to make resales of the Debt Securities.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, Capital Funding will sell such Debt
Securities to the dealer, as principal. The dealer may then resell such Debt
Securities to the public at varying prices to be determined by such dealer at
the time of resale.
Underwriters, dealers, agents, and other persons may be entitled, under
agreements which may be entered into with Capital Funding and U S WEST, to
indemnification against, or contribution with respect to, certain civil
liabilities, including liabilities under the Securities Act.
EXPERTS
The consolidated financial statements and the consolidated financial
statement schedule included in U S WEST's Annual Report on Form 10-K for the
year ended December 31, 1994, are incorporated herein by reference in reliance
on reports of Coopers & Lybrand L.L.P., independent certified public
accountants, given upon the authority of that firm as experts in accounting and
auditing.
LEGAL OPINIONS
Certain legal matters relating to the Debt Securities and the Guarantees to
be offered hereby will be passed upon for Capital Funding and U S WEST by
Stephen E. Brilz, Senior Attorney and Assistant Secretary of U S WEST, Inc., and
for the agents or underwriters, if any, by Brown & Wood, One World Trade Center,
New York, New York 10048.
8
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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, CAPITAL FUNDING 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 OR CAPITAL
FUNDING 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 SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
U S WEST, Inc.................................. S-2
U S WEST Capital Funding, Inc.................. S-2
Use of Proceeds................................ S-2
U S WEST, Inc. -- Summary Financial Data....... S-3
Recent Developments............................ S-4
Capitalization of U S WEST..................... S-6
Description of the Notes....................... S-7
Underwriting................................... S-10
Experts........................................ S-10
Legal Opinions................................. S-11
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference..................................... 2
U S WEST, Inc.................................. 3
U S WEST Capital Funding, Inc.................. 3
Use of Proceeds................................ 3
Ratios of Earnings to Fixed Charges............ 3
Description of Debt Securities and
Guarantees.................................... 4
Plan of Distribution........................... 7
Experts........................................ 8
Legal Opinions................................. 8
</TABLE>
$250,000,000
U S WEST
CAPITAL FUNDING, INC.
6.31% NOTES
DUE NOVEMBER 1, 2005
UNCONDITIONALLY GUARANTEED AS TO
PAYMENT OF PRINCIPAL AND INTEREST BY
[LOGO]
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
OCTOBER 24, 1995
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