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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 (Date of earliest event reported):
November 15, 1996
U S WEST, INC.
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
DELAWARE 1-8611 84-0926774
(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation) File Number) Identification Number)
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7800 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
(Address of principal executive offices) (zip code)
(303) 793-6500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 15, 1996, pursuant to the Agreement and Plan of Merger, dated
as of February 26, 1996, as amended and restated as of June 27, 1996 and as
further amended as of October 7, 1996 (the "Merger Agreement"), among U S
WEST, Inc., a Delaware corporation ("U S WEST"), Continental Merger
Corporation, a Delaware corporation and wholly owned subsidiary of U S WEST
("Company Sub), and Continental Cablevision, Inc., a Delaware corporation
("Continental"), Continental was merged with and into Company Sub, with
Company Sub continuing as the surviving corporation (the "Merger"). Company
Sub, which was renamed "Continental Cablevision, Inc." in connection with the
Merger, is now a wholly owned subsidiary of U S WEST.
Pursuant to the Merger Agreement, (a) each outstanding share of Class A
Common Stock, par value $.01 per share, of Continental (other than certain
unvested restricted shares and shares owned by Continental, U S WEST or by any
wholly owned subsidiary of Continental or U S WEST) was converted into
0.841920 of a share of U S WEST Media Group Common Stock, par value $.01 per
share, of U S WEST ("Media Stock") and 0.246394 of a share of Series D
Convertible Preferred Stock, par value $1.00 per share, of U S WEST ("Series D
Preferred Stock") and (b) each outstanding share of Class B Common Stock, par
value $.01 per share, of Continental ("Class B Common Stock") (other than
certain unvested restricted shares and shares owned by Continental, U S WEST
or by any wholly owned subsidiary of Continental or U S WEST) was converted
into, at the election of the holder thereof, (i) $8.56586 in cash, 0.841920 of
a share of Media stock and 0.075076 of a share of Series D Preferred Stock,
(ii) subject to proration described in the Merger Agreement, 1.178381 shares
of Media Stock and 0.105080 of a share of Series D Preferred Stock or (iii)
subject to proration described in the Merger Agreement, $30 in cash. Holders
of Class B Common Stock are being sent election forms pursuant to which they
will have the right to make an election with respect to the consideration to
be received by them pursuant to the Merger Agreement.
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U S WEST will issue to Continental's stockholders pursuant to the Merger
Agreement an aggregate of 150,614,848 shares of Media Stock, 20,000,000 shares
of Series D Preferred Stock and $1,150,000,000 in cash. The cash being paid
by U S WEST pursuant to the Merger Agreement is being financed through the
issuance of commercial paper indebtedness. U S WEST also assumed all of
Continental's outstanding indebtedness in connection with the Merger.
ITEM 5. OTHER EVENTS
On November 25, 1996, U S WEST Communications, Inc. issued a press
release entitled "U S WEST Communications Receives King County Superior Court
Decision in Washington State Rate Order Appeal." In addition, on November 26,
1996, U S WEST Communications, Inc. issued a press release entitled "U S WEST
Communications To Continue Appeal of Washington State Rate Order." The
releases are attached hereto as Exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The consolidated financial statements of Continental Cablevision, Inc.
and subsidiaries as of September 30, 1996 and for the nine months ended
September 30, 1995 and 1996 are filed as Exhibit 99A.
The consolidated financial statements of Continental Cablevision, Inc.
and subsidiaries as of December 31, 1994 and 1995 and for the years ended
December 31, 1994 and 1995 are filed as Exhibit 99B.
(b) Unaudited Pro Forma Condensed Combined Financial Statements
It is impracticable to file the Unaudited Pro Forma Condensed Combined
Financial Statements as of the date of this Current Report on Form 8-K. Such
financial statements will be filed within 60 days of the date on which this
Current Report on Form 8-K is being filed.
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(c) Exhibits
2A. Amended and Restated Agreement and Plan of Merger, dated as of June
27, 1996, among U S WEST, Inc., Continental Merger Corporation and Continental
Cablevision, Inc. (incorporated by reference to Exhibit 10 to U S WEST's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, File No.
1-8611).
2B. Amendment to Agreement and Plan of Merger, dated as of October 7,
1996, among U S WEST, Inc., Continental Merger Corporation and Continental
Cablevision, Inc. (incorporated by reference to Exhibit 10(a) to U S WEST's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, File
No. 1-8611).
10A. Stockholders' Agreement, dated as of February 27, 1996, among the
stockholders of Continental Cablevision, Inc. named therein and U S WEST, Inc.
(incorporated by reference to Exhibit 10af to U S WEST's Annual Report on Form
10-K for the year ended December 31, 1995, File No. 1-8611).
10B. Amendment No. 1 to Stockholders' Agreement, dated as of October 7,
1996, among the stockholders of Continental Cablevision, Inc. named therein
and U S WEST, Inc. (incorporated by reference to Exhibit 10-B to U S WEST's
Registration Statement on Form S-4, File No. 333-13901).
99A. Consolidated financial statements of Continental Cablevision, Inc.
and subsidiaries as of September 30, 1996 and for the nine months ended
September 30, 1995 and 1996 (incorporated by reference from pages 3 to 14 of
Continental's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996, File No. 0-20577).
99B. Consolidated financial statements of Continental Cablevision, Inc.
and subsidiaries as of December 31, 1994 and 1995 and for the years ended
December 31, 1994 and 1995 (incorporated by reference from pages F-3 to F-25
of the Proxy Statement/Prospectus included in U S WEST's Registration
Statement on Form S-4, File No. 333-13901).
99C. Press Release, dated November 15, 1996.
99D. Press Release, dated November 22, 1996.
99E. Press Release, dated November 25, 1996.
99F. Press Release, dated November 26, 1996.
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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.
By:/s/ Stephen E. Brilz
Stephen E. Brilz
Assistant Secretary
Dated: November 27, 1996
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EXHIBIT 99C
U S WEST Media Group
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST Media Group logo and registered mark]
News Release
Release Date: November 15, 1996
Contact: Steve Lang Rob Stoddard
U S WEST Media Group Continental Cablevision
303-793-6290 617-854-3138
U S WEST MEDIA GROUP AND
CONTINENTAL CABLEVISION CLOSE MERGER
- ALLIANCE RESHAPES U S WEST; ADVANCES ITS STRATEGY -
ENGLEWOOD, COLO. -- U S WEST Media Group (NYSE: UMG) and Continental
Cablevision closed their merger today, enhancing U S WEST's position as a
world leader in telephone and cable services.
"This merger is a watershed event for us," said Richard McCormick,
chairman and CEO of U S WEST. "We formed our domestic cable strategy four
years ago as a way of expanding our presence outside our traditional
territory. With our Time Warner alliance, our MediaOne properties in Atlanta
and, now, Continental, our networks pass more than 26 million American cable
homes with superb clusters in the top 60 markets."
Chuck Lillis, president and CEO of Media Group, said, "We and Continental
have been aggressively upgrading our networks so customers can get more video
channels, faster Internet access and competitive local phone services. Now
that we're one of the nation's largest broadband communications companies,
we're in a great position to take advantage of these marketplace
opportunities. "
Amos B. Hostetter, Jr., formerly chairman and CEO of Continental and now
head of all Media Group domestic cable operations, said, "Our upgraded
networks -- rich in fiber-optic cable -- give us a tremendous advantage in
deploying two-way, broadband services. And our recent deployment of high-speed
Internet access over cable modems in Florida and Massachusetts has reinforced
our belief that customers are eager for these capabilities."
-more-
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With the merger, U S WEST, Inc., has two groups dedicated to offering
integrated information, communications and entertainment services in local
markets around the world: U S WEST Communications, which has about $10 billion
in annual revenues, and U S WEST Media Group, with about $8 billion in annual
proportionate revenues.
Continental's shareowners yesterday approved the merger of Continental
into a subsidiary of U S WEST, Inc. And, since the merger was announced in
February, both the Federal Communications Commission and the U.S. Department
of Justice have approved it. The FCC approval requires that U S WEST divest
itself of Continental cable properties in the U S WEST Communications 14-state
service territory. The DOJ approval requires that U S WEST divest itself, in
stages, of Continental's interest in Teleport Communications Group.
The terms of the transaction were unchanged from those previously
announced. The equity portion of the merger will be $1 billion in U S WEST
preferred stock, convertible to Media Group common stock; $1.150 billion in
cash; and 150.6 million shares of U S WEST Media Group common, valued by
Continental at $21 a share.
U S WEST also announced today that it plans to repurchase up to $350
million of Media Group common stock. This plan will be contingent upon market
conditions.
U S WEST Media Group (NYSE: UMG), one of America's largest broadband
communications companies, 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. U S
WEST's other major group, U S WEST Communications, provides telecommunications
services in 14 western and midwestern states.
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EXHIBIT 99D
U S WEST Media Group
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST Media Group logo and registered mark]
News Release
Release Date: November 22, 1996
Contact: Carolyn Crawford
U S WEST Media Group
303-793-6551
(CORRECTED VERSION) HOW THE U S WEST MEDIA GROUP AND CONTINENTAL CABLEVISION
MERGER AFFECTS
CONTINENTAL SHAREOWNERS
As part of their merger announced today, U S WEST Media Group (NYSE: UMG) and
Continental Cablevision said the closing would have the following effect on
Continental shareowners:
For each share they own, holders of Continental's Class A Common Stock will
receive 0.841920 of a share of U S WEST Media Group Common Stock, and 0.246394
(see footnote A) of a share of U S WEST Series D Convertible Preferred Stock;
Continental's Class B shareholders may choose one of three options:
1. STANDARD ELECTION - Class B shareholders would receive a combination of
U S WEST Media Group Common Stock, U S WEST Series D Convertible Preferred
Stock, and cash. For each Class B share, holders would receive 0.841920 of a
share of Media Group stock, 0.075076 of a share of Series D Preferred Stock,
and $8.56586 in cash.
2. STOCK ELECTION - Class B shareholders would receive, subject to
proration, 1.178381 shares of U S WEST Media Group Common Stock and 0.105080
of a share of U S WEST Series D Convertible Preferred Stock.
3. CASH ELECTION - Class B shareholders would receive $30 in cash for each
share they own.
Cash will be paid in lieu of issuing fractional shares.
Each share of U S WEST Series D Convertible Preferred Stock will pay dividends
at the rate of 4.500 percent annually and will be convertible at the option of
the holder into 1.905 shares of U S WEST Media Group Common Stock.
U S WEST Media Group, one of America's largest broadband
communications companies, 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.
U S WEST's other major group, U S WEST Communications, provides
telecommunications services in 14 western and midwestern states.
Footnote A
In the original version of this news release, issued Nov. 15, 1996, an
incorrect number was used to explain how much U S WEST Series D Convertible
Preferred Stock that holders of Continental's Class A Common Stock will
receive for each of their shares. The correct number is 0.246394. (The
incorrect number was 0.246344.)
The portion of a share pertaining to U S WEST Media Group Common Stock was
correct in the initial release.
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EXHIBIT 99E
U S WEST Communications, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST Communications Group logo and registered mark]
News Flash
November 25, 1996
U S WEST COMMUNICATIONS RECEIVES KING COUNTY SUPERIOR COURT DECISION IN
WASHINGTON STATE RATE ORDER APPEAL
ENGLEWOOD, Colo. -- The King County Superior Court in Washington State today
ruled on U S WEST Communications' appeal of the April 11, 1996 rate order from
the Washington State Utilities and Transportation Commission (WUTC) to
decrease rates in net by $91.5 million. In its first rate increase request in
13 years, U S WEST had sought to raise rates for basic residential service.
Instead, the commission ordered a revenue reduction -- primarily in
highly-competitive services such as access, toll, and business local exchange
service -- and ordered U S WEST Communications to set a flat fee of $10.50 a
month for basic local service -- one of the lowest rates in the nation.
Althought the Company has not yet received the Court's written decision, it
was informed by the Court this afternoon that it upheld the WUTC's rate order.
U S WEST Communications is disappointed by the announced outcome in this rate
case. The Company will continue to exercise its legal and procedural options
as appropriate, and will announce its future actions relative to this matter
once it has received and reviewed the decision in full.
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.
More information: Bruce M. Mann (303-793-6368) or Becky Winning
(303-793-6367)
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EXHIBIT F
U S WEST Communications Group
Investor Relations
7800 East Orchard Road, Suite 290
Englewood, Colorado 80111
303-793-6365
NEWS FLASH
November 26, 1996
U S WEST COMMUNICATIONS TO CONTINUE APPEAL
OF WASHINGTON STATE RATE ORDER
ENGLEWOOD, Colo. -- U S WEST Communications Group (NYSE:USW) announced today
that it will continue its appeal of the Washington State Utilities and
Transportation Commission's April 1995 rate case decision.
In February, 1995, U S WEST Communications filed a rate case with the
Washington State Utilities and Transportation Commission (WUTC). In its first
rate increase request in 13 years, U S WEST had sought to raise rates for
basic residential service. In April of 1996, the WUTC denied the revenue
increase and instead ordered a $91.5 million revenue reduction -- primarily in
highly-competitive services such as access, toll, and business local exchange
service. The WUTC also ordered U S WEST Communications to set a flat fee of
$10.50 a month for basic local service - the second-lowest residential phone
rate in the nation.
U S WEST Communications immediately filed an appeal in the King County
Superior Court and requested a stay of the order. Major issues of the appeal
included:
* Depreciation expense
* Imputation of yellow pages revenues
* Service quality
* Unbundling of Centrex services
* Operating expenses
* Cost studies
In April, a stay was granted pending the outcome of the King County Superior
Court's ruling on the appeal.
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On November 25, Judge Lasnik ruled on the appeal. In his summary decision, he
upheld the WUTC on all points on the basis of the standard of review
established in the State Administrative Procedure Act.
"It's not unusual for a lower court in the state of Washington to defer to the
state appellate courts, and in this case, the judge's summary ruling was very
brief and did not include a substantive discussion on the merits of the
appeal," said Sol Trujillo, chief executive officer and president of U S WEST
Communications Group. "We plan to file a notice of appeal and a motion for
stay with the Washington State Supreme Court as soon as possible.
"We'll also continue to work with the Commission to resolve related issues.
We believe our arguments have merit, and we will pursue all regulatory, legal
and legislative options to protect our shareowners' investment in U S WEST
Communications," he added.
The Company plans to ask for expedited treatment from the Court; however, the
timing of related rulings is at the Court's discretion. The Company will make
a decision on whether to begin accruing for the $91.5 million revenue
reduction when it receives a ruling from the appellate court, which it expects
in the coming weeks.
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 groups that make up U S WEST. U S WEST is
in the connections business, helping customers share information,
entertainment and communications in local markets worldwide.
For more information, contact: Bruce Mann (303) 793-6368 or Becky Winning
(303) 793-6367.
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