<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8_K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 1, 1996
U S WEST, Inc.
<TABLE>
<CAPTION>
<S> <C> <C>
A Delaware Commission File IRS Employer Identification
Corporation Number 1-8611 No. 84-0926774
</TABLE>
7800 East Orchard Road, Englewood, Colorado 80111
Telephone Number (303) 793_6500
<PAGE> 2
Item 5. Other Events
On April 25, 1996, U S WEST Communications Group released its first quarter
earnings results. In addition, U S WEST Media Group released its first
quarter earnings results on April 29, 1996. The releases are attached hereto
as Exhibits 99A and 99B, respectively.
Item 7. Exhibits
Exhibit Description
27 Financial Data Schedule.
99A Press Release issued April 25, 1996 concerning the earnings results of
U S WEST Communications Group for the first quarter of 1996.
99A.1 Unaudited Combined Statements of Operations of U S WEST
Communications Group for the quarters ended March 31, 1995 and 1996,
filed in connection with the Press Release dated April 25, 1996.
99A.2 Unaudited Selected Combined Group Data of Company for the quarters
ended March 31, 1995 and 1996, filed in connection with the Press
Release dated April 25, 1996.
99A.3 Unaudited Combined Balance Sheets of U S WEST Communications Group
for the quarters ended March 31, 1995 and 1996, filed in connection with
the Press Release dated April 25, 1996.
99A.4 Unaudited Combined Statements of Cash Flows of U S WEST
Communications Group for the quarters ended March 31, 1995 and 1996,
filed in connection with the Press Release dated April 25, 1996.
99A.5 Unaudited Statements of Operations of U S WEST Communications Group
for the quarters ended March 31, 1995 and 1996, filed in connection with
the Press Release dated April 25, 1996.
99B Press Release issued April 29, 1996 concerning the earnings results of
U S WEST Media Group for the first quarter of 1996.
99B.1 Unaudited Combined Statements of Operations of U S WEST Media Group
for the quarters and years ended March 31, 1995 and 1996, filed in
connection with the Press Release dated April 29, 1996.
<PAGE> 3
99B.2 Unaudited Selected Combined Group Data of U S WEST Media Group for
the quarters ended March 31, 1995 and 1996, filed in connection with the
Press Release dated April 29, 1996.
99B.3 Unaudited Combined Balance Sheets of U S WEST Media Group for the
quarters ended March 31, 1995 and 1996, filed in connection with the Press
Release dated April 29, 1996.
99B.4 Unaudited Combined Statements of Cash Flows of U S WEST Media Group
for the quarters ended March 31, 1995 and 1996, filed in connection with
the Press Release dated April 29, 1996.
99B.5 Unaudited Selected Proportionate Data of U S WEST Media Group for
the quarter ended March 31, 1996, filed in connection with the Press
Release dated April 29, 1996.
99C.1 Unaudited Consolidated Statements of Operations of U S WEST, Inc.
for the quarters ended March 31, 1995 and 1996.
99C.2 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the
quarter ended March 31, 1996 and the year ended December 31, 1995.
99C.3 Unaudited Consolidated Statements of Cash Flows of U S WEST, Inc.
for the quarters ended March 31, 1995 and 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
U S WEST, Inc.
/s/ STEPHEN E. BRILZ
By:___________________________
Stephen E. Brilz
Assistant Secretary
Dated: May 1, 1996
<PAGE> 4
EXHIBIT 99A
[U S WEST Communications Group Logo]
Release Date: April 25, 1996
Contact: Becky Winning (303) 793-6367
Dave Banks (303) 896-2721
U S WEST COMMUNICATIONS GROUP REPORTS RECORD REVENUES AND IMPROVED PROFITS
ENGLEWOOD, Colo. - U S WEST Communications Group (NYSE:USW) reported record
growth in revenue and telephone access lines for the first quarter of 1996.
Profits for the quarter, before one-time items, grew 4.7 percent compared with
the first quarter of 1995.
First-quarter revenues increased a record 6.3 percent to $2.5 billion, up
from $2.3 billion a year ago. Revenue gains were driven by:
* Record growth in local service revenues, up 9.0 percent;
* Strong growth in revenues from value-added services, such as CLASS, Call
Waiting, Caller ID, Voice Messaging Services and data networking services,
up approximately 60 percent;
* Double-digit growth in minutes of use, up 10.3 percent;
* Record growth in access lines, up 4.8 percent (excluding the sale of
selected rural telephone exchanges).
"I'm pleased with U S WEST Communications Group's strong top-line growth
and ongoing improvements in customer service," said Dick McCormick, chairman
and chief executive officer of U S WEST, Inc. "Sol Trujillo and his team are
positioning the company to succeed in an increasingly competitive
environment."
"Our revenue growth exceeded expectations in nearly every category," said
Sol Trujillo, president and chief executive officer of U S WEST Communications
Group. "That's great news, because revenue growth is one of the most important
value drivers in our business. Our first-quarter results demonstrate our
ability to increase revenues through improved penetration of existing
products, new and innovative products and features, differentiated product
packages and strong sales channel development."
<PAGE> 5
First-quarter net income rose 4.7 percent to $289 million, up from $276
million in 1995. Earnings per share rose 3.4 percent to $0.61 from $0.59 in
the prior year. These totals exclude a one-time, after-tax gain on the sales
of rural exchanges totaling $39 million in the first quarter of 1995. They
also exclude the cumulative after-tax effect of an accounting change related
to the adoption of the Statement of Financial Accounting Standards (SFAS) No.
121, which totaled $34 million, as well as the current-quarter, after-tax
effect of that change, which reduced depreciation expense by $5 million.
"Earnings for the quarter were reduced by higher-than-expected
employee-related expenses, partially related to unplanned contract and
overtime costs caused by flood conditions in Oregon and Washington," Trujillo
said.
"Approximately 21,000 of our customers were affected by the February
flood, and we dispatched more than 800 technicians to restore service,
including some on loan from other parts of the U.S. and Canada," Trujillo
explained. "We spent approximately $15 million in contract labor and overtime
to build customer loyalty with our 3.2 million customers in the Pacific
Northwest.
"The remainder of the increase in employee-related expense was due to
accelerating growth in access lines and continued investment in service
quality in the first quarter," Trujillo explained. "We initiated aggressive
marketing tactics in the last half of 1995 to stimulate strong access-line
growth in the first quarter so we could maximize annual revenue opportunities
in 1996. We also planned to continue high-priority service-improvement
initiatives.
"We're beginning to see the results of those efforts," he continued. "In
the first quarter of 1996, we added 268,000 access lines -- approximately 60
percent more than we added in the same period last year. At the same time, we
achieved significant improvements in service quality.
"We're spending to fuel growth, and that's good," he said. "We're also
beginning to achieve productivity improvements on a per-unit-of-volume basis.
Over time, those improvements will bring costs down."
U S WEST Communications Group reported solid growth in EBITDA (earnings
before interest, taxes, depreciation and amortization), to $1.1 billion, a 6.0
percent increase compared to first quarter 1995. The company's operating
margin expanded to 24.2 percent versus 23.8 percent last year.
Depreciation increased 3.6 percent to $517 million for the quarter, up
from $499 for the first quarter last year. The change was primarily due to
increased plant, partially offset by an $8 million (pre-tax) reduction in
depreciation expense related to the adoption of SFAS No. 121.
<PAGE> 6
Planned capital expenditures for the quarter increased to $711 million to
meet the demands of explosive growth.
"We're on track with our first-quarter performance," Trujillo said.
"We're beginning to see the benefits of a clear strategic focus and key
management initiatives. We remain firmly committed to our bottom-line
objectives and we expect to make consistent progress toward our goal of
delivering improved results."
REGULATORY UPDATE
Also in the first quarter, the Washington State Utilities and Transportation
Commission (WUTC) acted on U S WEST Communications Group's rate request. In
February of 1995, U S WEST Communications sought to raise rates for basic
residential services for the first time in 13 years. Instead, the Commission
ordered a significant revenue reduction and ordered the company to set one of
the lowest rates for basic residential service in the nation. U S WEST
Communications responded immediately by filing with the King County Superior
Court for an appeal of the order, a temporary stay of the ordered rate
reduction, and authorization to implement a revenue increase. These legal
filings are currently under review by the court.
"We were disappointed by the WUTC order," Trujillo said. "It's too
early to speculate what the final outcome will be. However, we believe the
current order is unreasonable and we'll aggressively pursue every avenue to
achieve recovery of our investment and rational pricing in the state of
Washington."
FIRST QUARTER OPERATING HIGHLIGHTS
Operating highlights for the quarter include:
* Despite accelerating growth, U S WEST Communications demonstrated solid,
year-over-year improvements in customer service measures. As an example,
the company achieved a 25-percent reduction in the number of orders for
primary service held for more than 30 days.
* In January, U S WEST Communications announced the deployment of its "U S
WEST Network 21" in seven major metro areas. This fiber-optic ring
architecture will enable the company to provide state-of-the-art service to
the majority of private-line and switched traffic in a metro area.
<PAGE> 7
* U S WEST Communications also introduced a number of new products,
packages and services. One example is the U S WEST Home Business Line, a
new service that allows customers to convert their residence line to a
business line and have two numbers -- one for residence use and the other
for business use -- each with its own distinctive ring.
* !NTERPRISE [registered trademark], the data-networking arm of U S WEST
Communications, successfully tested data-communications technology capable
of providing consumers and businesses with faster network access to data.
During comprehensive technical trials in Colorado and Minnesota, U S WEST
employees connected to the public Internet and to U S WEST's corporate
network at speeds up to 1.544 megabits per second.
* U S WEST Communications also issued its proposed agreement for
competitive interconnection and resale to more than 20 existing and
potential competitors throughout its 14-state territory. The proposed
agreement establishes a framework for individual negotiations with potential
competitive providers.
U S WEST Communications Group provides telecommunications and high-speed data
services to more than 25 million customers in 14 western and midwestern
states. The company is one of two major groups that make up U S WEST. U S
WEST is in the connections business, helping customers share information,
entertainment and communications services in local markets worldwide. U S
WEST's other major group, U S WEST Media Group (NYSE:UMG), is involved in
domestic and international cable and wireless networks, directory publishing
and interactive multimedia services.
# # #
<PAGE> 8
EXHIBIT 99A.1
COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, %
In millions 1996 1995 Change
- - ------------------------------------------------ ---------- ---------
<S> <C> <C> <C>
OPERATING REVENUES
Local service $1,145 $1,050 9.0
Interstate access service 622 589 5.6
Intrastate access service 190 188 1.1
Long-distance network services 290 299 (3.0)
Other services 218 192 13.5
---------- ----------
Total operating revenues 2,465 2,318 6.3
---------- ----------
OPERATING EXPENSES
Employee-related expenses 867 813 6.6
Other operating expenses 388 349 11.2
Taxes other than income taxes 97 106 (8.5)
Depreciation and amortization 517 499 3.6
---------- ----------
Total operating expenses 1,869 1,767 5.8
---------- ----------
Income from operations 596 551 8.2
Interest expense 111 101 9.9
Gain on sales of rural telephone
exchanges - 63 -
Other expense - net 16 13 23.1
---------- ----------
Income before income taxes and
cumulative effect of change in
accounting principle 469 500 (6.2)
Provision for income taxes 175 185 (5.4)
---------- ----------
Income before cumulative effect
of change in accounting principle 294 315 (6.7)
Cumulative effect of change in
accounting principle - net of tax 34 - -
---------- ----------
NET INCOME $328 $315 4.1
========== ==========
</TABLE>
<PAGE> 9
EXHIBIT 99A.1 (continued)
COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
In millions, except March 31, %
per share amounts 1996 1995 Change
- - ------------------------------------------------ ---------- ---------
<S> <C> <C> <C>
Average common shares
outstanding (#1) 475.1 468.6 1.4
========== ==========
Earnings per common share: (#1)<F1>
Income before cumulative effect
of change in accounting principle $0.62 $0.67 (7.5)
Cumulative effect of change in
accounting principle 0.07 - -
---------- ----------
Earnings per common share $0.69 $0.67 3.0
========== ==========
Normalized income:
Reported net income $328 $315 4.1
Adjustments to normalize net income:
Cumulative effect of accounting
change - net of tax (34) - -
Current year impact of accounting
change - net of tax (5) - -
Rural exchange sales - (39) -
---------- ----------
Normalized income $289 $276 4.7
========== ==========
Normalized earnings per common share:
Reported net income $0.69 $0.67 3.0
Adjustments to normalize net income:
Cumulative effect of accounting
change - net of tax (0.07) - -
Current year impact of accounting
change - net of tax (0.01) - -
Rural exchange sales - (0.08) -
---------- ----------
Normalized earnings per common share $0.61 $0.59 3.4
========== ==========
<FN>
<F1>
#1: Effective November 1, 1995, each share of U S WEST, Inc. common
stock was converted into one share each of U S WEST Communications
Group common stock and U S WEST Media Group common stock. Earnings
per common share for 1995 have been presented on a pro forma basis
to reflect the two classes of stock as if they were outstanding
since January 1, 1995. For periods prior to the recapitalization,
the average common shares outstanding are assumed to be equal to
the average common shares outstanding for U S WEST, Inc.
</FN>
</TABLE>
<PAGE> 10
EXHIBIT 99A.2
SELECTED COMBINED GROUP DATA U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
Dollars in millions, March 31, %
except per share amounts 1996 1995 Change
- - ----------------------------------------------- ---------- ---------
<S> <C> <C> <C>
EBITDA (#1) $1,113 $1,050 6.0
EBITDA margin 45.2% 45.3% -
Capital expenditures $711 $545 30.5
Return on equity (#2) 32.5% 39.6% -
Debt-to-capital ratio:
Communications Group 64.8% 66.0%# -
Telephone operations only 62.2% 63.1%# -
Employees:
Communications Group 51,132 51,083 0.1
Telephone operations only 48,308 47,215 2.3
Common shares outstanding (#3) 475.9 469.9 1.3
Dividends per common share (#3) $0.535 $0.535 -
Access lines (thousands) (#4):
Business 4,372 4,085 7.0
Consumer 10,691 10,331 3.5
Total access lines 15,063 14,416 4.5
Billed access minutes of
use (millions):
Interstate 12,696 11,594 9.5
Intrastate 2,567 2,245 14.3
Total minutes of use 15,263 13,839 10.3
# As of December 31, 1995.
<FN>
<F1>
# 1: Earnings before interest, taxes, depreciation, amortization,
and other (EBITDA). EBITDA also excludes gain on asset sales.
<F2>
# 2: Based on income before cumulative effect of change in
accounting principle.
<F3>
# 3: Effective November 1, 1995, each share of U S WEST, Inc. common
stock was converted into one share each of U S WEST Communications
Group common stock and U S WEST Media Group common stock. The
common shares outstanding and dividends per common share at
March 31, 1995 are presented on a pro forma basis and assumed to be
equal to the common shares outstanding for U S WEST, Inc.
<F4>
#4: 1995 access lines have been restated to conform to current year
presentation. Access line growth, excluding 1995 second, third and
fourth quarter rural exchange sales of 45,000 lines, was 4.8%.
</FN>
</TABLE>
<PAGE> 11
EXHIBIT 99A.3
COMBINED BALANCE SHEETS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
In millions 1996 1995
- - -------------------------------------- ---------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $43 $172
Accounts and notes receivable 1,508 1,617
Inventories and supplies 211 193
Deferred tax asset 249 259
Prepaid and other 91 51
---------------------------
Total current assets 2,102 2,292
---------------------------
Property, plant and equipment - net 13,771 13,529
Other assets 769 764
---------------------------
Total assets $16,642 $16,585
===========================
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $995 $1,065
Accounts payable 783 851
Dividends payable 255 254
Other 1,486 1,437
---------------------------
Total current liabilities 3,519 3,607
---------------------------
Long-term debt 5,679 5,689
Postretirement and other postemployment
benefit obligations 2,319 2,351
Deferred taxes, credits and other 1,506 1,462
Communications Group equity 3,619 3,476
---------------------------
Total liabilities and equity $16,642 $16,585
===========================
</TABLE>
<PAGE> 12
EXHIBIT 99A.4
COMBINED STATEMENTS OF U S WEST COMMUNICATIONS GROUP
CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
In millions 1996 1995
- - ---------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $328 $315
Adjustments to net income:
Depreciation and amortization 517 499
Deferred income taxes and amortization
of investment tax credits 24 47
Cumulative effect of change in accounting
principle (34) -
Gain on sales of rural telephone exchanges - (63)
Changes in operating assets and liabilities:
Restructuring payments (42) (77)
Postretirement medical and life costs,
net of cash fundings (34) (238)
Accounts and notes receivable 109 28
Inventories, supplies and other (48) (34)
Accounts payable and accrued liabilities 4 (4)
Other - net (19) (73)
- - ---------------------------------------------------------------------
Cash provided by operating activities 805 400
- - ---------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (640) (541)
Proceeds from sales of rural telephone exchanges - 88
Proceeds from (payments on) disposals of property,
plant and equipment (7) 4
- - ---------------------------------------------------------------------
Cash (used for) investing activities (647) (449)
- - ---------------------------------------------------------------------
FINANCING ACTIVITIES
Net (repayments of) proceeds from issuance
of short-term debt (79) 242
Repayments of long-term debt (24) (18)
Dividends paid on common stock (234) (231)
Proceeds from issuance of common stock 50 -
Advance to Media Group - (23)
- - ---------------------------------------------------------------------
Cash (used for) financing activities (287) (30)
- - ---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Decrease (129) (79)
Beginning balance 172 116
- - ---------------------------------------------------------------------
Ending balance $43 $37
=====================================================================
</TABLE>
<PAGE> 13
EXHIBIT 99A.5
STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS, Inc.
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, %
In millions 1996 1995 Change
- - ------------------------------------------------ ---------- ---------
<S> <C> <C> <C>
OPERATING REVENUES
Local service $1,145 $1,050 9.0
Interstate access service 622 589 5.6
Intrastate access service 190 188 1.1
Long-distance network services 290 299 (3.0)
Other services 161 151 6.6
---------- ----------
Total operating revenues 2,408 2,277 5.8
---------- ----------
OPERATING EXPENSES
Employee-related expenses* 813 730 11.4
Other operating expenses* 389 391 (0.5)
Taxes other than income taxes 95 103 (7.8)
Depreciation and amortization 511 494 3.4
---------- ----------
Total operating expenses 1,808 1,718 5.2
---------- ----------
Income from operations 600 559 7.3
Interest expense 103 91 13.2
Gain on sales of rural telephone
exchanges - 63 -
Other expense - net 17 13 30.8
---------- ----------
Income before income taxes and
cumulative effect of change in
accounting principle 480 518 (7.3)
Provision for income taxes 183 195 (6.2)
---------- ----------
Income before cumulative effect
of change in accounting principle 297 323 (8.0)
Cumulative effect of change in
accounting principle - net of tax 34 - -
---------- ----------
NET INCOME $331 $323 2.5
========== ==========
<FN>
*1996 employee-related expenses include the impacts of employee
transfers from affiliated Communications Group companies to
U S WEST Communications, Inc. (USWC) during 1995. Prior to the
transfers, these affiliate employee costs were billed to USWC and
reflected as affiliate expense, which is included in other
operating expenses.
</FN>
</TABLE>
<PAGE> 14
EXHIBIT 99B
[U S WEST Media Group Logo]
RELEASE DATE: APRIL 29, 1996
CONTACT: BRUCE AMUNDSON
(303) 793-6296
U S WEST MEDIA GROUP POSTS RECORD FIRST QUARTER
PROPORTIONATE CUSTOMER, REVENUE AND EBITDA GROWTH
ENGLEWOOD, Co. - U S WEST Media Group (NYSE:UMG) today reported robust first
quarter results as the company's cable, wireless and directory operations
produced strong proportionate customer, revenue and EBITDA growth.
For the quarter ending March 31, Media Group reported:
* Earnings before interest, taxes, depreciation and amortization (EBITDA)
of $330 million, a 25 percent increase compared with the same period last
year.
* $1.4 billion in revenue, a 25 percent increase from first quarter 1995.
* More than 6 million customers worldwide, an increase of 40 percent
compared with first quarter last year.
Because Media Group participates in numerous joint ventures, the company uses
proportionate accounting to reflect its relative operating revenues and
expenses associated with these operations.
"When we established our targeted stock structure six months ago, I
anticipated double_digit growth rates from Media Group," said Richard
McCormick, U S WEST chairman and chief executive officer. "The team stepped
up to the challenge and produced strong customer, revenue and cash flow
growth. This performance is clearly visible given our new structure."
Chuck Lillis, U S WEST Media Group president and chief executive officer, said
Media Group's first quarter performance establishes the momentum necessary for
a successful year.
"We set very ambitious growth goals for 1996," Lillis said. "The strong start
by all our lines of business shows we are on our way to achieving them. I am
particularly pleased that we're exceeding our customer growth objectives while
still focusing on making operational improvements. U S WEST Cellular, for
example, produced industry-leading growth rates and improved its cash flow
margin by almost three percentage points."
<PAGE> 15
Proportionate operating highlights, by line of business, for the quarter
include:
* CABLE AND TELEPHONY: Subscriber growth for MediaOne, the Atlanta cable
operation, continues to exceed the industry average. MediaOne ended the
quarter with 497,000 customers, a 6.7 percent increase from the same quarter
last year. This strong subscriber growth produced revenue of $57 million, a
10 percent increase on a comparable basis to last year. EBITDA was $27
million, a 12 percent increase. Media Group's international properties now
serve 625,000 subscribers, an increase of 171 percent.
* WIRELESS: U S WEST Cellular increased its subscriber base by 54 percent
on a same property basis. U S WEST Cellular now serves 1.4 million
customers. This strong subscriber growth produced $240 million in revenue
for the quarter, a 44 percent increase. It also led to an operating cash
flow margin of 36 percent and improved operating cash flow 48 percent.
Media Group's international properties now serve 334,000 wireless customers,
a 63 percent increase.
* DIRECTORIES: U S WEST Direct continues its industry_leading revenue
growth. Spurred by 12,000 new advertisers, U S WEST Direct reported revenue
of $265 million, a 6 percent increase from the same period last year.
Lillis also noted that during the first quarter Media Group announced the
Continental Cablevision merger. He said the proposed merger "crystallizes the
Media Group strategy and positions the company as one of the world's leading
cable providers." The addition of Continental will boost Media Group's owned
or managed domestic cable system to 26.2 million homes passed and 16.2 million
subscribers. The merger brings the number of international homes passed by
Media Group cable properties to nearly 14 million.
U S WEST Media Group is involved in domestic and international cable and
telephony, wireless communications, and directory and information services.
For 1995, U S WEST Media Group reported proportionate revenues of $5.1
billion. Media Group is one of two major groups that make up U S WEST, a
company in the connections business helping customers share information,
entertainment and communications services in local markets worldwide.
# # #
<PAGE> 16
KEY PROPORTIONATE OPERATING HIGHLIGHTS BY LINE OF BUSINESS
(ALL CHANGES ARE IN COMPARISON TO 1Q 1995)
<TABLE>
<CAPTION>
CABLE AND TELEPHONY
<S> <C>
MEDIAONE INTERNATIONAL
- 497,000 customers, a 6.7% increase - 625,000 subscribers, 171% increase
- - - Revenue of $57 million, a 5.6% increase including the 1995 purchase of the Czech
- - - EBITDA of $27 million, a 12.5% increase Republic and Netherlands
- Revenue of $61 million, a 154% increase
- EBITDA loss of $9 million, an 18%
improvement
TIME WARNER ENTERTAINMENT (TWE)
- - - 2.4 million customers, a 6.5% increase
(normalized for 1995 transactions)
- - - Revenue of $634 million, a 21% increase
- - - EBITDA of $138 million, a 15% increase
(normalized for 1995 transactions)
<CAPTION>
WIRELESS
<S> <C>
U S WEST CELLULAR INTERNATIONAL
- - - 1.4 million customers, a 54% increase - 334,000 subscribers, a 63% increase
(on a same property basis) - Revenue of $88 million, a 47% increase
- - - Revenue of $240 million, a 44% increase - EBITDA of $1 million, compared to a
- - - EBITDA of $76 million, a 48% increase loss of $12 million last year
- - - EBITDA, as a percent of net operating
revenue, of 36.1%
<CAPTION>
DIRECTORY AND INFORMATION SERVICES
<S> <C>
U S WEST DIRECT INTERNATIONAL
- - - Revenue of $265 million, a 6% increase - Revenue of $32 million, a 129% increase
- - - EBITDA of $133 million, a 5% increase - EBITDA loss of $4 million, unchanged
- - - Net income of $78 million, a 5% increase
<CAPTION>
U S WEST MEDIA GROUP COMBINED GAAP RESULTS
<S> <C>
- - - Revenue of $613 million - Income of $3 million
- - - EBITDA of $196 million - Earnings per share of 0 cents
</TABLE>
<PAGE> 17
EXHIBIT 99B.1
COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, %
In millions 1996 1995 Change
- - ----------------------------------------------- ---------- ----------
<S> <C> <C> <C>
SALES AND OTHER REVENUES
Directory and information services $288 $272 5.9
Wireless communications 264 202 30.7
Cable and telecommunications 57 54 5.6
Other 4 8 (50.0)
---------- ----------
Total sales and other revenues 613 536 14.4
---------- ----------
OPERATING EXPENSES
Costs of sales and other revenues 199 163 22.1
Selling, general and
administrative expenses 218 197 10.7
Depreciation and amortization 67 61 9.8
---------- ----------
Total operating expenses 484 421 15.0
---------- ----------
Income from operations 129 115 12.2
Interest expense 24 27 (11.1)
Equity losses in unconsolidated
ventures 66 57 15.8
Guaranteed minority interest expense 12 - -
Other income (expense) - net (7) 7 -
---------- ----------
Income before income taxes 20 38 (47.4)
Provision for income taxes 17 23 (26.1)
---------- ----------
NET INCOME 3 15 (80.0)
Preferred dividends 1 1 -
---------- ----------
EARNINGS AVAILABLE FOR
COMMON STOCK $2 $14 (85.7)
=====================
</TABLE>
<PAGE> 18
EXHIBIT 99B.1 (continued)
COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
In millions, except March 31, %
per share amounts 1996 1995 Change
- - ----------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Average common shares
outstanding (#1) 473.0 468.6 0.9
=====================
Earnings per common share $ - $0.03 -
=====================
<FN>
<F1>
#1: Effective November 1, 1995, each share of U S WEST, Inc.
common stock was converted into one share each of U S WEST
Communications Group common stock and U S WEST Media Group
common stock. Earnings per common share for 1995 have been
presented on a pro forma basis to reflect the two classes of
stock as if they were outstanding since January 1, 1995.
For periods prior to the recapitalization, the average common
shares outstanding are assumed to be equal to the average
common shares outstanding for U S WEST, Inc.
</FN>
</TABLE>
<PAGE> 19
EXHIBIT 99B.2
SELECTED COMBINED GROUP DATA U S WEST MEDIA GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
Dollars in millions, March 31, %
statistics in thousands 1996 1995 Change
- - ----------------------------------------------- ---------- ---------
<S> <C> <C> <C>
REVENUES
U S WEST Direct $265 $250 6.0
Other directories 23 22 4.5
MediaOne 57 54 5.6
NewVector:
Service 239 186 28.5
Equipment 25 16 56.3
---------- ----------
Total NewVector 264 202 30.7
Other 4 8 (50.0)
---------- ----------
Total revenues $613 $536 14.4
EBITDA (#1)
U S WEST Direct $133 $127 4.7
Other directories (20) (20) -
MediaOne 27 24 12.5
NewVector 84 60 40.0
Other (28) (15) (86.7)
---------- ----------
Total EBITDA $196 $176 11.4
Other Data:
U S WEST Direct (Yellow Pages)
Net Income $78 $74 5.4
Advertisers 482 470 2.6
MediaOne (Atlanta Cable)
Basic subscribers - served 537 501 7.2
Basic subscribers - FCC equivalents 497 466 6.7
Homes passed 854 822 3.9
U S WEST NewVector (Wireless)
Subscribers (consolidated) 1,571 1,048 49.9
Proportionate POPs managed
(millions) 20.0 18.7 7.0
<FN>
<F1>
# 1: Earnings before interest, taxes, depreciation, amortization
and other (EBITDA). EBITDA also excludes equity losses and
guaranteed minority interest expense.
</FN>
</TABLE>
<PAGE> 20
EXHIBIT 99B.3
COMBINED BALANCE SHEETS U S WEST MEDIA GROUP
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
In millions 1996 1995
- - ------------------------------------- -------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $27 $20
Accounts and notes receivable 296 287
Deferred directory costs 251 247
Other assets 180 187
-------------------------
Total current assets 754 741
-------------------------
Property, plant and equipment - net 1,193 1,148
Investment in Time Warner Entertainment 2,492 2,483
Intangible assets - net 1,779 1,798
Investments in international ventures 1,408 1,511
Net investment in assets held for sale 424 429
Other assets 529 505
-------------------------
Total assets $8,579 $8,615
=========================
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $774 $836
Accounts payable 181 235
Deferred revenue and customer deposits 81 87
Other payables 448 411
-------------------------
Total current liabilities 1,484 1,569
-------------------------
Long-term debt 1,345 1,265
Deferred taxes, credits and other 639 658
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely Company-
guaranteed debentures 600 600
Preferred stock subject to
mandatory redemption 51 51
Media Group equity 4,587 4,599
Company LESOP guarantee (127) (127)
-------------------------
Total equity 4,460 4,472
-------------------------
Total liabilities and equity $8,579 $8,615
=========================
</TABLE>
<PAGE> 21
EXHIBIT 99B.4
COMBINED STATEMENTS OF U S WEST MEDIA GROUP
CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
In millions 1996 1995
- - ------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $3 $15
Adjustments to net income:
Depreciation and amortization 67 61
Equity losses in unconsolidated ventures 66 57
Deferred income taxes (17) (27)
Provision for uncollectibles 14 13
Changes in operating assets and liabilities:
Restructuring payments (4) (3)
Accounts and notes receivable (10) (9)
Deferred directory costs, prepaid and other (12) (9)
Accounts payable and accrued liabilities 6 (96)
Other - net (3) 78
- - ------------------------------------------------------------------
Cash provided by operating activities 110 80
- - ------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (117) (76)
Investment in international ventures (104) (182)
Investment in PCS (25) (42)
Cash (to) from investment in assets held for sale 3 (60)
Other - net 1 (21)
- - ------------------------------------------------------------------
Cash (used for) investing activities (242) (381)
- - ------------------------------------------------------------------
FINANCING ACTIVITIES
Net proceeds from issuances of short-term debt 139 435
Repayments of long-term debt (97) (150)
Proceeds from issuance of long-term debt 76 -
Proceeds from issuance of common stock 21 11
Advance from Communications Group - 23
- - ------------------------------------------------------------------
Cash provided by financing activities 139 319
- - ------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Increase 7 18
Beginning balance 20 93
- - ------------------------------------------------------------------
Ending balance $27 $111
==================================================================
Note: Certain reclassifications within the financial statements have
been made to conform to the current year presentation.
</TABLE>
<PAGE> 22
EXHIBIT 99B.5
SELECTED PROPORTIONATE DATA (UNAUDITED) (1) U S WEST MEDIA GROUP
<TABLE>
<CAPTION>
Cable and
Telecommunications Wireless
Dollars in millions Domestic (2) Int'l Domestic Int'l
- - ------------------------ ------------ -------- ---------- -------
<S> <C> <C> <C> <C>
QTR Ended
March 31, 1996
Revenues $691 $61 $240 $88
EBITDA 165 (9) 69 1
Net income (loss) (3) (37) 17 (24)
Subscribers/advertisers
(thousands) 2,929 625 1,437 334
QTR Ended
March 31, 1995
Revenues $576 $24 $167 $60
EBITDA 124 (11) 51 (12)
Net income (loss) (18) (11) 15 (28)
Subscribers/advertisers
(thousands) 2,422 231 885 205
<FN>
<F1>
(1) Proportionate data reflects the Media Group's relative
ownership interest in revenues and EBITDA for both its
consolidated and equity method entities. Proportionate data is
not required by GAAP or intended to replace the Combined Financial
Statements prepared in accordance with GAAP.
<F2>
(2) Includes the Media Group's 25.51 percent pro-rata priority
and residual equity interests in reported TWE results.
</FN>
</TABLE>
<PAGE> 23
EXHIBIT 99B.5 (continued)
SELECTED PROPORTIONATE DATA (UNAUDITED) (1) U S WEST MEDIA GROUP
<TABLE>
<CAPTION>
Directory & Corp
Information Services &
Dollars in millions Domestic Int'l Other Total
- - ----------------------- ---------- --------- -------- -------
QTR Ended
March 31, 1996
<S> <C> <C> <C> <C>
Revenues $271 $32 $3 $1,386
EBITDA 117 (4) (9) 330
Net income (loss) 66 (7) (9) 3
Subscribers/advertisers
(thousands) 482 282 - 6,089
QTR Ended
March 31, 1995
Revenues $258 $14 $8 $1,107
EBITDA 109 (4) 6 263
Net income (loss) 62 (4) (1) 15
Subscribers/advertisers
(thousands) 470 150 - 4,363
<FN>
<F1>
(1) Proportionate data reflects the Media Group's relative
ownership interest in revenues and EBITDA for both its
consolidated and equity method entities. Proportionate data is
not required by GAAP or intended to replace the Combined Financial
Statements prepared in accordance with GAAP.
</FN>
</TABLE>
<PAGE> 24
EXHIBIT 99C.1
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, %
In millions 1996 1995 Change
- - --------------------------------------------------------- ----------
<S> <C> <C> <C>
SALES & OTHER REVENUES $3,050 $2,828 7.9
OPERATING EXPENSES
Employee-related expenses 1,043 978 6.6
Other operating expenses 591 510 15.9
Taxes other than income taxes 107 114 (6.1)
Depreciation and amortization 584 560 4.3
--------------------
Total operating expenses 2,325 2,162 7.5
--------------------
Income from operations 725 666 8.9
Interest expense 135 128 5.5
Equity losses in
unconsolidated ventures 66 57 15.8
Gain on sales of rural
telephone exchanges - 63 -
Guaranteed minority interest expense 12 - -
Other expense - net 23 6 -
--------------------
Income before income taxes and
cumulative effect of change in
accounting principle 489 538 (9.1)
Provision for income taxes 192 208 (7.7)
--------------------
Income before cumulative effect
of change in accounting principle 297 330 (10.0)
Cumulative effect of change in
accounting principle - net of tax 34 - -
--------------------
NET INCOME 331 330 0.3
Preferred dividends 1 - -
--------------------
EARNINGS AVAILABLE FOR
COMMON STOCK $330 $330 -
====================
</TABLE>
<PAGE> 25
EXHIBIT 99C.1 (continued)
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
In millions, except March 31, %
per share amounts 1996 1995 Change
- - --------------------------------------------------------- ----------
COMMUNICATIONS GROUP:
<S> <C> <C> <C>
Average common shares
outstanding (#1) 475.1 468.6 1.4
====================
Earnings per common share: (#1)<F1>
Income before cumulative effect
of change in accounting principle $0.62 $0.67 (7.5)
Cumulative effect of change in
accounting principle 0.07 - -
--------------------
Earnings per common share $0.69 $0.67 3.0
====================
MEDIA GROUP:
Average common shares
outstanding (#1) 473.0 468.6 0.9
====================
Earnings per common share $ - $0.03 -
====================
U S WEST, Inc.
Average common shares
outstanding (#1)<F1> - 468.6 -
====================
Earnings per common share $ - $0.70 -
====================
<FN>
<F1>
#1: Effective November 1, 1995, each share of U S WEST, Inc.
common stock was converted into one share each of U S WEST
Communications Group common stock and U S WEST Media Group
common stock. Earnings per common share for 1995 have been
presented on a pro forma basis to reflect the two classes of
stock as if they were outstanding since January 1, 1995.
For periods prior to the recapitalization, the average common
shares outstanding used in the earnings per average common
share for the two classes of stock are assumed to be equal to
the average common shares outstanding for U S WEST, Inc.
</FN>
</TABLE>
<PAGE> 26
EXHIBIT 99C.1 (continued)
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31, %
In millions 1996 1995 Change
- - --------------------------------------------------------- ----------
SELECTED CONSOLIDATED DATA
U S WEST, Inc.
<S> <C> <C> <C>
Capital expenditures $803 $621 29.3
Debt-to-capital ratio (#1)<F2> 50.2% 50.7%#<F1> -
Employees 61,268 61,302 (0.1)
EBITDA $1,309 $1,226 6.8
EBITDA margin 42.9% 43.4% -
<FN>
<F1>
# As of December 31, 1995.
<F2>
#1 Ratio includes preferred securities as a component of
total capital. Including debt related to the net investment in
assets held for sale, the 1996 and 1995 ratios are 52.3% and
52.9%, respectively.
</FN>
</TABLE>
<PAGE> 27
EXHIBIT 99C.2
CONSOLIDATED BALANCE SHEETS U S WEST, Inc.
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
In millions 1996 1995
- - --------------------------------------- -------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $70 $192
Accounts and notes receivable 1,794 1,886
Inventories and supplies 237 227
Deferred tax asset 270 282
Prepaid and other 382 322
-------------------------
Total current assets 2,753 2,909
-------------------------
Property, plant and equipment - net 14,964 14,677
Investment in Time Warner Entertainment 2,492 2,483
Intangible assets - net 1,779 1,798
Investment in international ventures 1,408 1,511
Net investment in assets held for sale 424 429
Prepaid and other assets 1,293 1,264
-------------------------
Total assets $25,113 $25,071
=========================
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $1,769 $1,901
Accounts payable 866 975
Dividends payable 255 254
Other payables 2,010 1,922
-------------------------
Total current liabilities 4,900 5,052
-------------------------
Long-term debt 7,024 6,954
Postretirement and other postemployment
benefit obligations 2,403 2,433
Deferred taxes, credits and other 2,056 2,033
Company-obligated mandatorily
redeemable preferred securities of
subsidiary trust holding solely Company-
guaranteed debentures 600 600
Preferred stock subject to
mandatory redemption 51 51
Common shareowners' equity:
Common shares 8,320 8,228
Cumulative deficit (44) (115)
LESOP guarantee (127) (127)
Foreign currency translation adjustments (70) (38)
-------------------------
Total common shareowners' equity 8,079 7,948
-------------------------
Total liabilities & shareowners' equity $25,113 $25,071
=========================
</TABLE>
<PAGE> 28
EXHIBIT 99C.3
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended
March 31,
In millions 1996 1995
- - --------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $331 $330
Adjustments to net income:
Depreciation and amortization 584 560
Equity losses in unconsolidated ventures 66 57
Cumulative effect of change in accounting
principle (34) -
Gain on sales of rural telephone exchanges - (63)
Deferred income taxes and amortization
of investment tax credits 7 20
Changes in operating assets and liabilities:
Restructuring payments (46) (82)
Postretirement medical and life costs,
net of cash fundings (34) (174)
Accounts and notes receivable 92 32
Inventories, supplies and other (60) (43)
Accounts payable and accrued liabilities 31 (103)
Other - net (22) 7
- - --------------------------------------------------------------------
Cash provided by operating activities 915 541
- - --------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (757) (617)
Investment in international ventures (104) (182)
Proceeds from (payment on) disposals of property,
plant and equipment (7) 92
Cash (to) from net investment in assets
held for sale 3 (60)
Other - net (24) (63)
- - --------------------------------------------------------------------
Cash (used for) investing activities (889) (830)
- - --------------------------------------------------------------------
FINANCING ACTIVITIES
Net proceeds from issuance of short-term debt 60 678
Proceeds from issuance of long-term debt 76 -
Repayments of long-term debt (121) (168)
Dividends paid on common stock (234) (230)
Proceeds from issuance of common stock 71 11
Purchases of treasury stock - (63)
- - --------------------------------------------------------------------
Cash (used for) provided by financing activities (148) 228
- - --------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Decrease (122) (61)
Beginning balance 192 209
- - --------------------------------------------------------------------
Ending balance $70 $148
====================================================================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000732718
<NAME> U S WEST, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 70
<SECURITIES> 0
<RECEIVABLES> 1,794
<ALLOWANCES> 0
<INVENTORY> 237
<CURRENT-ASSETS> 2,753
<PP&E> 33,453
<DEPRECIATION> 18,489
<TOTAL-ASSETS> 25,113
<CURRENT-LIABILITIES> 4,900
<BONDS> 7,024
651
0
<COMMON> 8,320
<OTHER-SE> (241)
<TOTAL-LIABILITY-AND-EQUITY> 25,113
<SALES> 3,050
<TOTAL-REVENUES> 3,050
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,325
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135
<INCOME-PRETAX> 489
<INCOME-TAX> 192
<INCOME-CONTINUING> 297
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 34
<NET-INCOME> 331
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
