4
8K10796.DOC
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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): October 27, 1997
U S WEST, Inc.
(Exact name of registrant as specified in its charter)
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A Delaware Corporation Commission File IRS Employer Identification
(State of incorporation) Number 1-8611 No. 84-0926774
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7800 East Orchard Road, Englewood, Colorado 80111
(Address of principal executive offices)
Telephone Number (303) 793-6500
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
On October 27, 1997, U S WEST, Inc. issued a press release regarding U S WEST,
Inc's plan to split U S WEST Media Group and U S WEST Communications Group
into separate public companies in the form attached hereto as Exhibit 99.
On October 27, 1997, U S WEST Media Group issued a press release regarding the
sale of its interest in Video Cable Communications, an Argentinean joint
venture.
On October 27, 1997, U S WEST Communications Group released its third quarter
earnings results. In addition, U S WEST Media Group released its third
quarter earnings results on October 27, 1997. The releases and financial
statements are attached hereto as Exhibits.
Item 7. Exhibits
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Exhibit Description
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27 Financial Data Schedule.
99 Press Release issued October 27, 1997 entitled "U S WEST, Inc. Plans to Split
U S WEST Media Group, U S WEST Communications Group into Separate
Public Companies."
99A Press Release issued October 27, 1997 concerning the earnings results of
U S WEST Communications Group for the third quarter of 1997.
99A.1 Unaudited Combined Statements of Operations of U S WEST Communications
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99A.2 Unaudited Earnings Normalization Schedule of U S WEST Communications
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99A.3 Unaudited Selected Combined Group Data of U S WEST Communications
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99A.4 Unaudited Combined Balance Sheets of U S WEST Communications Group for
the quarter ended September 30, 1997 and the year ended December 31, 1996,
filed in connection with the Press Release dated October 27, 1997.
99A.5 Unaudited Combined Statements of Cash Flows of U S WEST Communications
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99B Press Release issued October 27, 1997 concerning the earnings results of
U S WEST Media Group for the third quarter of 1997.
99B.1 Unaudited Selected Proportionate Financial Data of U S WEST Media Group for
the quarters ended September 30, 1996 and 1997, filed in connection with the
Press Release dated October 27, 1997.
99B.2 Unaudited Other Proportionate Information of U S WEST Media Group for the
quarters ended September 30, 1996 and 1997, filed in connection with the Press
Release dated October 27, 1997.
99B.3 Unaudited Selected Financial and Operating Highlights of U S WEST Media
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99B.4 Unaudited Pro Forma Combined Statements of Operations of U S WEST Media
Group for the quarters ended September 30, 1996 and 1997, filed in connection
with the Press Release dated October 27, 1997.
99B.5 Unaudited Selected Financial Data of U S WEST Media Group for the quarters
ended September 30, 1996 and 1997, filed in connection with the Press Release
dated October 27, 1997.
99B.6 Unaudited Combined Balance Sheets of U S WEST Media Group for the quarter
ended September 30, 1997 and the year ended December 31, 1996, filed in
connection with the Press Release dated October 27, 1997.
99B.7 Investing Activity of U S WEST Media Group for the quarters ended September
30, June 30, and March 31, 1997, filed in connection with the Press Release dated
October 27, 1997.
99C.1 Unaudited Consolidated Statements of Operations of U S WEST, Inc. for the
quarter periods ended September 30, 1996 and 1997.
99C.2 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the quarter ended
September 30, 1997 and the year ended December 31, 1996.
99D Press Release issued October 27, 1997, entitled "U S WEST Media Group Sells its
Stake in Argentina Cable Venture.
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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.
/s/ STEPHEN E. BRILZ
By:___________________________
Stephen E. Brilz
Assistant Secretary
Dated: October 27, 1997
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EXHIBIT 99
U S WEST, INC.
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST, Inc. logo and registered mark]
News Release
Release Date: October 27, 1997
Contact: Lois Leach, 303-793-6355
Dick MacKnight, 303-793-6559
U S WEST, INC. PLANS TO SPLIT U S WEST MEDIA GROUP,
U S WEST COMMUNICATIONS GROUP
INTO SEPARATE PUBLIC COMPANIES
-- U S WEST Media Group to become MediaOne Group,
U S WEST Communications Group to become U S WEST --
-- Move will sharpen focus on customers, maximize shareholder value --
-- Transfer of U S WEST Dex from Media Group to Communications Group will be
part of split --
ENGLEWOOD, Colo., -- U S WEST, Inc., said today that it intends to split U S
WEST Media Group (NYSE:UMG) and U S WEST Communications Group (NYSE:USW) into
separate public companies sometime after mid-1998. Since November of 1995,
the groups have traded as distinct classes of "target" stock of U S WEST, Inc.
U S WEST's Board of Directors has approved management's recommendation to
develop specific terms and a plan for a transaction through which the two
companies would become independent publicly-traded entities with separate
boards of directors. The announcement was made by Richard D. McCormick,
chairman and chief executive officer of U S WEST, Inc.
"Recent developments in technology, markets and regulation will provide
strategic competitive opportunities for both businesses that outweigh the
benefits of remaining together," McCormick said. "This move will make it
easier for each of them to pursue exciting new opportunities for serving
customers in the communications, data and entertainment sectors."
The move to create two independent companies will allow both groups to focus
on developing the full potential of their respective distribution networks.
"This will mean a wider array of products and services for both sets of
customers," McCormick said.
The company said its current structure has achieved its purpose. The total
return on shareowners' investment since March 1, 1995, just before the
announcement of the target stock structure, is 89 percent. "We're proud of
this, but we believe that taking one more step -- creating independent
companies -- is the best way to continue that growth," McCormick said.
-1-
ORGANIZATION
U S WEST Communications Group will be renamed U S WEST, Inc. The new U S WEST
will include the telephone, data and wireless operations of the U S WEST
Communications Group, as well as the Yellow Pages and electronic directory
business known as U S WEST Dex. Solomon D. Trujillo, 45, currently president
and chief executive officer of U S WEST Communications Group, will become
chief executive officer of U S WEST, Inc., when the split occurs.
"The people of U S WEST have done an outstanding job and I'm excited to be
working with this great team to bring more and better services to our
customers," Trujillo said. "The future has never been brighter."
The company earlier announced plans to transfer U S WEST Dex, now part of U S
WEST Media Group, to the new U S WEST. The terms of this Dex transfer are
consistent with its previously announced movement. The transfer was valued at
$4.75 billion -- $3.9 billion in debt and $850 million in equity to Media
Group shareowners.
U S WEST Media Group will be renamed MediaOne Group, Inc., echoing the brand
by which the company's cable distribution system is known to more than five
million customers in 19 states. In addition to these cable properties,
MediaOne Group assets will include the company's interests in the Time Warner
Entertainment partnership, the wireless operations of U S WEST New Vector
Group, all of U S WEST's international interests and interactive services.
Charles M. Lillis, 56, currently president and chief executive officer of U S
WEST Media Group, will become chief executive officer of MediaOne Group, Inc.
"Customer demand for entertainment, voice and high-speed data services is
exploding," Lillis said. "The people of MediaOne Group are poised to capture
the opportunity. I'm pleased to lead the effort."
When the split occurs, McCormick will become non-executive chairman of the
board of the new U S WEST. "Sol Trujillo and Chuck Lillis have done terrific
work in building their respective groups within U S WEST and will continue to
do so when they're leading their own independent companies," McCormick said.
The transaction is subject to a number of approvals, including approvals by
regulators and both shareowner groups and receipt of a favorable ruling from
the Internal Revenue Service.
OWNERS
Once the separation occurs, owners of U S WEST Communications Group target
stock will hold one share of the new U S WEST for each share of Communications
Group target stock.
Owners of Media Group target stock will hold one share of MediaOne Group stock
for each share of Media Group target stock. In addition, Media Group
shareowners will receive a fractional share of the new U S WEST for each share
of Media Group target stock. This fractional share represents their historic
interest in the assets of U S WEST Dex, which will be transferred to the new U
S WEST in conjunction with the split.
-2-
Holders of both groups whose stock is currently represented by stock
certificates will receive new certificates in exchange for their existing
ones.
"We intend to make this as simple as possible for shareowners," McCormick
said. Shareowners don't need to take any action at this time. Before they're
asked to vote on the split-off proposal, shareowners will receive proxies
providing more detail. The company expects to send materials to shareowners
by early- to mid-1998.
For all outstanding debt securities issued or guaranteed by U S WEST, Inc.,
including debt issued by its U S WEST Capital Funding subsidiary, U S WEST
intends to take appropriate steps in connection with the split to preserve
bondholder value.
EMPLOYEES
Both MediaOne Group and the new U S WEST will maintain their headquarters in
the Denver metropolitan area.
The split will affect approximately 700 people based primarily in the Denver
area who provide common legal, human resources, administrative, financial and
general corporate support for the U S WEST family of companies.
"These employees' work has been vital to the company's success and will remain
so to the new companies," McCormick added. "We will divide this talent to
meet the companies' needs. Generally, employees will follow their work."
U S WEST, Inc., is the parent company of two major operating groups. U S WEST
Communications provides telecommunications services to 25 million customers in
14 western and midwestern states. U S WEST Media Group is involved in
domestic and international cable and telephony, wireless communications, and
directory and information services.
-3-
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EXHIBIT 99B
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: October 27, 1997
Contact: Blair Johnson Steve Lang
303-793-6296 303-793-6290
U S WEST MEDIA GROUP REPORTS EIGHTH CONSECUTIVE QUARTER
OF DOUBLE-DIGIT REVENUE AND CASH-FLOW GROWTH
- International customers increase 71 percent, to 2.4 million -
- Cable-modem customers now at 13,000 -
ENGLEWOOD, Colo. - U S WEST Media Group (NYSE: UMG) today reported its eighth
straight quarter of double-digit growth in revenue and operating cash flow.
For the third quarter 1997, Media Group reported - on a proportionate basis:
- A 15 PERCENT INCREASE IN OPERATING CASH FLOW, to $667 million. Media
Group's operating cash flow for third quarter 1996 was $582 million on a
comparable basis. (All 1996 numbers have been adjusted to include Continental
Cablevision's results - even though it didn't merge with Media Group until
Nov. 15, 1996.)
Operating cash flow, which represents earnings before interest, taxes,
depreciation and amortization (EBITDA), is a key indicator of the company's
operating performance.
- A 14 PERCENT INCREASE IN REVENUE, to $2.3 billion. Media Group's revenue
for third quarter 1996 was $2.0 billion.
Because Media Group participates in numerous joint ventures, the company uses
proportionate accounting to reflect its relative share of operating revenues
and expenses associated with these operations.
In a separate announcement today, U S WEST, Inc., said that it intends to
split U S WEST Media Group and U S WEST Communications Group (NYSE: USW) into
separate public companies sometime after mid-1998. Since November 1995, the
two groups traded as distinct classes of "target" stock of U S WEST, Inc.
"This is a great move for shareowners and customers of both groups," said
Richard McCormick, chairman and chief executive officer of U S WEST, Inc.
"Creating independent companies will make it easier for both businesses to
pursue exciting new opportunities."
-more-
Page 2
One of the highlights of the third quarter, according to Chuck Lillis, Media
Group president and chief executive officer, was the strong consumer response
to the company's high-speed data and Internet access service - MediaOne
Express.
"After passing the 10,000-customer mark in early September, we're on a pace to
double that base by the end of the year," Lillis said. "And now we're
expanding our data service to meet the growing needs of the business world."
MediaOne Express ended the third quarter with 13,000 customers. Earlier this
month, the company introduced high-speed data service in Los Angeles - its
eighth market.
MediaOne, the company's broadband communications business, this month
completed a successful high-speed data telecommuting trial with Digital
Equipment Corp. employees in the Boston area. Later this year, Digital will
become the first major business to roll out MediaOne Express on a large-scale
basis, proving that it can provide secure, high-speed connections for people
working at home.
Third quarter 1997 proportionate operating highlights - by line of business -
include:
- CABLE AND BROADBAND COMMUNICATIONS: MediaOne ended the third quarter with
more than 5.1 million subscribers, up 3 percent from third quarter 1996.
Overall, revenue from Media Group's domestic cable operations, including its
investment in Time Warner Entertainment, increased 8 percent, to $1.3 billion,
while operating cash flow was up 8 percent, to $404 million.
- INTERNATIONAL: Media Group's international customer base increased 71
percent, to 2.4 million, over third quarter 1996 levels. During the same
period, international revenues grew 38 percent, to $352 million, while the
ventures generated $40 million in operating cash flow. Much of the
international growth came from the company's wireless businesses: subscribers
more than doubled in Media Group's Central European ventures, while increasing
76 percent at One 2 One, the company's joint venture in the United Kingdom.
One 2 One now reaches 90 percent of the British population and enjoys a 10
percent share of the wireless market.
-more-
Page 3
- WIRELESS: Media Group's domestic cellular operations continued to deliver
strong results. Its subscriber base increased 32 percent, to 2.2 million
proportionate customers, and its operating cash flow 20 percent, to $135
million. Operating cash flow margin for the quarter increased 2 percentage
points, to more than 45 percent.
- DIRECTORIES: Media Group's directory publishing business, now called U S
WEST Dex, produced strong third-quarter revenue growth of 7 percent, helping
the company remain an industry leader. In addition, Dex increased its revenue
per customer by 5.1 percent in the third quarter.
Media Group's third quarter 1997 net loss was $144 million, of which $478
million relate to pre-tax, noncash items.
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 1996,
Media Group had proportionate pro forma revenue of $8.1 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.
[ Safe Harbor statement: This document contains statements about expected
future events and financial results that are forward-looking and subject to
risks and uncertainties. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Discussion of factors that may affect future
results is contained in our recent filings with the Securities and Exchange
Commission.]
Page 4
U S WEST MEDIA GROUP - SELECTED OPERATING HIGHLIGHTS
ALL AMOUNTS SHOWN ARE PROPORTIONATE UNLESS OTHERWISE STATED
$ IN MILLIONS
CABLE AND BROADBAND COMMUNICATIONS
DOMESTIC
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3Q97 GROWTH*
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TOTAL
Revenue $1,312 7.5%
Operating Cash Flow $ 404 7.7%
CONSOLIDATED CABLE
(EXCLUDING NEW SERVICES)
Homes Passed (000's) 8,449 2.4%
Multichannel Video
Subscribers (000's) 5,109 3.2%
Revenue $ 581 10.9%
Operating Cash Flow $ 250 5.5%
High Speed Data Customers 13.0 -
(000's)
INTERNATIONAL
3Q97 GROWTH*
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TOTAL
Customers (000's) 1,483 54.3%
Revenue $ 139 52.7
Operating Cash Flow $ 18 up $26
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WIRELESS
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DOMESTIC
3Q97 GROWTH
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CELLULAR
POPs (millions) 20.3 1.5%
Subscribers (000's) 2,200 32.2%
Service Revenue $ 298 15.1%
Operating Cash Flow $ 135 19.5%
OCF as a % of service revenue 45.3% up 1.7 pp
Average revenue per customer $47.23 -12.7%
PRIMECO PERSONAL
COMMUNICATIONS
POPs (millions) 14.7 7.3%
Subscribers (000's) 63 -
INTERNATIONAL
3Q97 GROWTH
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TOTAL
Customers (000's) 871 107.9%
Revenue $ 198 78.4%
Operating Cash Flow $ 23 up $22
ONE 2 ONE
Subscribers (000's) 404 76.0%
Market Share 10.4%
Coverage 90%
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DIRECTORY AND INFORMATION SERVICES
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DOMESTIC
3Q97 GROWTH
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DIRECTORY PUBLISHING
Local Advertisers (000's) 481 -0.2%
Revenue $ 293 6.9%
Operating Cash Flow $ 151 10.2% **
Operating Cash Flow Margin 51.5% 1.5 pp **
Revenue per Advertiser $2,236 5.1%
INTERNATIONAL
3Q97 GROWTH
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TOTAL
Revenue $ 15 -72.2%
Operating Cash Flow ($1) Down $6
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* Growth rates are pro forma as if the Continental merger occurred January 1,
1996.
** Normalized for $25 million charge in 3Q96.
<PAGE>
EXHIBIT 99A
U S WEST Communications, Inc.
7800 East Orchard Road
Englewood, Colorado 80111
[U S WEST Communications Group logo and registered mark]
News Release
Release Date: October 27, 1997
Contact: Dave Banks, 303-896-3040
U S WEST COMMUNICATIONS REPORTS CONTINUED SOLID EARNINGS
AS IT ROLLS OUT NEW PRODUCTS INCLUDING FIRST-IN-THE-NATION PCS SERVICE
- IMPROVING REVENUES LEAD TO DOUBLE-DIGIT EPS GROWTH -
ENGLEWOOD, Colo. - Fueled by healthy revenue growth, U S WEST Communications
Group (NYSE: USW) today reported a normalized third quarter earnings per share
increase of nearly 12 percent. The company achieved this while absorbing
costs related to the rollout of its first-in-the-nation "one number" PCS
product, as well as accelerated spending for mandated interconnection and
number portability to help foster local competition.
Operating revenues - driven largely by increased sales for local and data
networking services, and custom calling features - were up 6.3 percent, the
highest quarterly growth rate so far this year. Normalized income for the
quarter grew 13.5 percent to $320 million from $282 million in third quarter
1996. Normalized earnings per share rose to $0.66 for the quarter, up from
$0.59 in third quarter 1996.
Results for the quarter were normalized for a $19 million one-time, after-tax
gain associated with the sale of selected rural exchanges in Minnesota.
Results for the quarter were also normalized to reflect a $3 million one-time,
after-tax cost associated with calling of liquid yield option note debt.
Results for third quarter, 1996 were normalized to reflect the effects of a
change in accounting principle and a one-time, after-tax gain associated with
the sale of selected rural exchanges in Utah.
In a separate announcement today, U S WEST, Inc., said that it intends to
split U S WEST Communications Group and U S WEST Media Group (NYSE: UMG) into
separate public companies in the second half of 1998. Since November 1995,
the two groups have traded as distinct classes of "target" stock of U S WEST,
Inc.
"This is a great move for shareowners and customers of both groups," said
Richard McCormick, chairman and CEO of U S WEST, Inc. "Creating independent
companies will make it easier for both businesses to pursue exciting new
opportunities."
- - -more-
U S WEST Communications Third Quarter Earnings - Page 2
"We continue to achieve excellent results financially, operationally and in
the regulatory arena," said Sol Trujillo, president and chief executive
officer of U S WEST Communications Group. "We accelerated revenue growth,
even at a time of increased competition and spending to fund growth
initiatives. We continued to keep costs in check, and made significant
progress leveling the playing field in the regulatory arena. And, most
important for our customers, we demonstrated the real value of integrated
telecommunications, with the successful rollout of our new, one-number PCS
service."
- - - "Access2 Advanced PCS from U S WEST" rolled out in Denver on September 23.
With this first-in-the-nation product, customers can get the benefits of
one-number calling by choosing to use their wireless phone as an extension of
their primary home or business line. Customers can also choose to have
integrated voice mail, a single bill for both wireless and wireline services,
and can order services through a single sales channel. Rollout of Access2 -
the first integrated wireless PCS service in the nation - into two additional
markets is slated for the next four months.
Trujillo said investors should also be pleased with the company's recent
performance on the regulatory front. He called the U.S. 8th Circuit Court's
October 16 decision on re-bundling of network services a "major win for our
customers and for us." This decision prevents potential local-telephone
competitors from arbitraging between resale and unbundled element prices by
forcing U S WEST to re-combine individual network elements sold at "unbundled"
element costs. Additionally, Trujillo cited favorable progress on state
regulatory matters in Arizona, Idaho, Minnesota and Washington.
Other third quarter highlights include:
Volumes and Penetration:
- The addition of 663,000 access lines (adjusted for the sales of
selected rural exchanges) over the past twelve months for an access-line
growth rate of 4.3 percent. On an adjusted basis, business access lines grew
at 5.7 percent; residential access lines grew at 3.8 percent; and residential
additional lines grew 28.2 percent, reaching a second-line penetration level
of 12.9 percent.
- Residential penetration levels for the company's most popular custom
calling features reached all-time highs: Caller ID, 28 percent (2nd highest
in the industry); Voice Messaging, 19 percent (tops in the industry); and Call
Waiting, 39 percent.
- The company has sold more than 175,000 Home Receptionist and Business
Receptionist Screen Phones, making it the industry leader in sales of that
product. These phones visually and functionally integrate a number of custom
calling services, and increase the penetration of these vertical services.
-more-
U S WEST Communications Third Quarter Earnings - Page 3
- - - Completed regionwide deployment of 3-way Calling Pay-Per-Use. This product
is an example of growing revenues through usage-based pricing.
Sales and Revenues:
- - - Local service revenues grew 8.8 percent - their highest level of growth
since fourth quarter, 1996.
- - - A 25 percent increase in private line and special access revenues, which
totaled $217 million for the third quarter -- a reflection of the company's
growing data networking services business and its ability to successfully
compete in one of the most highly competitive segments of the
telecommunications market.
- - - Total vertical services revenue - including not only custom calling services
such as call waiting, but also voice messaging and Caller ID (CLASS) services
- - - are up 20 percent from third quarter 1996 to about $290 million. Those
revenues now represent 11 percent of total revenues.
- - - Completed the sale of rural exchanges that were announced in 1993. Since
then, the company sold some 342,000 access lines - about 2 percent of its
total access lines - in all 14 states. Total proceeds from these sales were
over $1 billion.
Additional Product and Brand Initiatives:
- - - The continuing 1997 rollout of National Directory Assistance to six of the
company's 14 states and in Portland, Ore. National DA service allows
customers to obtain phone numbers anywhere in the U. S. simply by calling
1-411. U S WEST Communications continues to be the leader among the RBOCs
with National DA in terms of geographic coverage and speed to market. In each
market introduction, customer response has exceeded objectives by more than
200 percent.
- - - U S WEST Communications announced its selection as the official local wired
and wireless telecommunications provider of the 2002 Winter Olympic Games in
Salt Lake City, Utah.
- - - The company's data networking division rolled out a new Internet-based,
electronic commerce service that helps retailers create an electronic
storefront on the Web. Soon, it will launch the first commercially available
"DSL" (digital subscriber line) data networking access service in the nation
as well as a high-speed Internet access service for consumers and small
businesses.
- - -more-
U S WEST Communications Third Quarter Earnings - Page 4
- - - On the small business side, sales of Centrex 21 - the company's enhanced
Centrex product - tripled during the quarter, bringing total sales to more
than 102,000 units.
Costs and Margins:
- - - Absorbed approximately $75 million year-to-date in expenses and
approximately $115 million year-to-date in capital related to interconnection
and number portability. The company expects to significantly increase
spending on interconnection for the balance of 1997 and into 1998.
- - - Growth in cash provided by operating activities of 23 percent, or $535
million, and even stronger growth in net cash flow, enabled the company to
reduce its borrowing levels by over $745 million during the first nine months
of the year.
Trujillo added that the company is on plan with its 1997 earnings and
operational objectives.
U S WEST Communications (NYSE: USW) provides a full range of
telecommunications services - including wireline, wireless PCS and data
networking - 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, 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 Media Group, is involved in domestic and
international cable and telephony, wireless communications, and directory and
information services.
[Safe Harbor statement: This document contains statements about expected
future events and financial results that are forward-looking and subject to
risks and uncertainties. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Discussion of factors that may affect future
results is contained in our recent filings with the Securities and Exchange
Commission.]
<PAGE>
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: October 27, 1997
Contact: Cathy Fowler, 303-793-6509
Tim Brill, 44-171-333-8221
U S WEST MEDIA GROUP SELLS ITS STAKE
IN ARGENTINE CABLE VENTURE
CEI Citicorp Holdings and Telefonica
Purchase Video Cable Communicacion,
a cable venture with approximately 684,000 subscribers
U S WEST Media Group (NYSE: UMG) today said it sold its 90 percent stake in
Video Cable Communicacion (VCC) pursuant to its agreement with CEI Citicorp
Holdings SA and Telefonica Internacional de Espana. Argentine businessman
Samuel Liberman, owner of the remaining ten percent of VCC, sold his portion
as well.
The total sale price of the venture was approximately $1.1 billion, with
consideration in the form of cash and assumption of debt. Media Group's cash
proceeds in connection with this transaction amount to $640 million.
"We are delighted with this transaction because it includes the right buyers
at the right price, and is clearly profitable for Media Group," said Gary
Ames, president and chief executive officer of U S WEST International, Media
Group's international arm. "VCC is a strong business, but it's not a good
geographic fit for us."
U S WEST International continues to invest in and be focused on international
operations where it has managerial and operational influence in market-leading
ventures. These focused ventures are in two lines of business,
cable-telephone and wireless, in Europe and Asia.
With this transaction, Media Group has exceeded its 1997 objective of selling
$1 billion of domestic and international non-strategic assets.
U S WEST International is part of the U S WEST Media Group (NYSE: UMG), one of
America's largest broadband communications companies. Media Group is involved
in domestic and international cable and telephony, wireless communications,
and directory and information services. For 1996, Media Group had
proportionate pro forma revenue of $8.1 billion.
<PAGE>
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<CAPTION>
<BTB>
EXHIBIT 99A1
COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, % September 30, %
In millions 1997 1996 Change 1997 1996 Change
- - ------------------------ ------- --------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service $ 1,314 $ 1,208 8.8 $ 3,739 $ 3,532 5.9
Interstate access 663 606 9.4 2,028 1,854 9.4
Intrastate access 208 192 8.3 608 571 6.5
Long-distance network 231 272 (15.1) 721 840 (14.2)
Other services 257 237 8.4 707 683 3.5
---------------- ----------------
Total operating revenues 2,673 2,515 6.3 7,803 7,480 4.3
---------------- ----------------
OPERATING EXPENSES
Employee-related 951 900 5.7 2,719 2,688 1.2
Other operating 469 402 16.7 1,305 1,177 10.9
Taxes other than
income taxes 103 94 9.6 308 291 5.8
Depreciation & amort 534 545 (2.0) 1,591 1,580 0.7
---------------- ----------------
Total operating expenses 2,057 1,941 6.0 5,923 5,736 3.3
---------------- ----------------
Income from operations 616 574 7.3 1,880 1,744 7.8
Interest expense 100 111 (9.9) 303 332 (8.7)
Gains on sales of rural
telephone exchanges 30 2 - 77 51 51.0
Other expense 11 10 10.0 52 22 -
---------------- ----------------
Income before income
taxes, extd item &
cum effect of change in
accounting principle 535 455 17.6 1,602 1,441 11.2
Income tax provision 196 169 16.0 592 537 10.2
---------------- ----------------
Income before extd item &
cum effect of change in
accounting principle 339 286 18.5 1,010 904 11.7
Extraordinary item: Early
extinguishment of debt-
net of tax (3) - - (3) - -
---------------- ----------------
Income before cum
effect of change in
accounting principle 336 286 17.5 1,007 904 11.4
Cumulative effect of
change in accounting
principle - net of tax - - - - 34 -
---------------- ----------------
NET INCOME $ 336 $ 286 17.5 $ 1,007 $ 938 7.4
================ ================
</TABLE>
5
<TABLE>
<CAPTION>
<BTB>
COMBINED STATEMENTS OF OPERATIONS, U S WEST COMMUNICATIONS GROUP
CONTINUED (UNAUDITED)
Quarter Ended Nine Months Ended
In millions, except September 30, % September 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ------------------------ ------- --------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Average common shares
outstanding 483.2 478.4 1.0 482.4 476.7 1.2
================ ================
Earnings per common
share:
Income before extd
item & cum effect
of change in accounting
principle $ 0.70 $ 0.60 16.7 $ 2.09 $ 1.90 10.0
Extraordinary item: Early
extinguishment of debt (0.01) - - (0.01) - -
Cumulative effect of
change in accounting
principle - - - - 0.07 -
---------------- ----------------
Earnings per
common share $ 0.69 $ 0.60 15.0 $ 2.08 $ 1.97 5.6
================ ================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A2
EARNINGS NORMALIZATION SCHEDULE U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Nine Months Ended
In millions, except September 30, % September 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ------------------------ ------- --------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
NORMALIZED INCOME:
Reported net income $ 336 $ 286 17.5 $1,007 $ 938 7.4
Adjustments to normalize
net income:
Rural exchange sales (19) (1) - (48) (31) 54.8
Extraordinary item-net
of tax 3 - - 3 - -
Cumulative effect of
change in accounting
principle-net of tax - - - - (34) -
Current year effect of
accounting change -
net of tax - (3) - - (13) -
---------------- ----------------
Normalized income $ 320 $ 282 13.5 $ 962 $ 860 11.9
================ ================
NORMALIZED EARNINGS PER
COMMON SHARE:
Reported net income $ 0.69 $ 0.60 15.0 $ 2.08 $ 1.97 5.6
Adjustments to normalize
net income:
Rural exchange sales (0.04) - - (0.10) (0.06) 66.7
Extraordinary item-net
of tax 0.01 - - 0.01 - -
Cumulative effect of
change in accounting
principle-net of tax - - - - (0.07) -
Current year effect of
accounting change -
net of tax - (0.01) - - (0.03) -
---------------- ----------------
Normalized earnings
per common share $ 0.66 $ 0.59 11.9 $ 1.99 $ 1.81 9.9
================ ================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A3
SELECTED COMBINED GROUP DATA U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Nine Months Ended
In millions, except September 30, % September 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Normalized access
lines (thousands):
Business 4,738 4,482 5.7 4,738 4,482 5.7
Consumer 11,178 10,771 3.8 11,178 10,771 3.8
Total 15,916 15,253 4.3 15,916 15,253 4.3
Access lines
(thousands):
Business 4,721 4,482 5.3 4,721 4,482 5.3
Consumer 11,108 10,771 3.1 11,108 10,771 3.1
Total access lines 15,829 15,253 3.8 15,829 15,253 3.8
Billed access minutes
of use (millions):
Interstate 13,760 12,976 6.0 41,085 38,674 6.2
Intrastate 2,960 2,612 13.3 8,702 7,808 11.4
Total minutes of use 16,720 15,588 7.3 49,787 46,482 7.1
Employees:
Communications Grp 47,217 50,351 (6.2) 47,217 50,351 (6.2)
Telephone
operations only 43,388 47,568 (8.8) 43,388 47,568 (8.8)
Telephone empl per
10,000 access lines 27.4 31.2 (12.2) 27.4 31.2 (12.2)
Dividends per common
share $ 0.535 $ 0.535 - $ 1.605 $ 1.605 -
Common shares
outstanding 483.5 479.2 0.9 483.5 479.2 0.9
Capital expend $ 705 $ 662 6.5 $ 1,629 $ 2,008 (18.9)
EBITDA (#1) 1,150 1,119 2.8 3,471 3,324 4.4
EBITDA margin 43.0% 44.5% - 44.5% 44.4% -
Return on equity(#2) 31.6% 29.7% - 32.1% 32.2% -
Debt-to-capital ratio:
Communications Grp 57.6% 62.4%# - 57.6% 62.4%# -
Telephone
operations only 55.5% 60.5%# - 55.5% 60.5%# -
<FN>
<F1>
# 1: Earnings before interest, taxes, depreciation, amortization,
and other (EBITDA). EBITDA also excludes gains on asset sales.
<F2>
# 2: Based on income before extraordinary item and cumulative effect
of change in accounting principle.
<F3>
# As of December 31, 1996.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A4
COMBINED BALANCE SHEETS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
September 30, December 31,
In millions 1997 1996
- - -------------------------------------- ------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 196 $ 80
Accounts and notes receivable 1,587 1,622
Inventories and supplies 195 144
Deferred tax asset 169 171
Prepaid and other 66 65
------------- --------------
Total current assets 2,213 2,082
------------- --------------
Gross property, plant and equipment 33,040 32,645
Less accumulated depreciation 19,253 18,639
------------- --------------
Property, plant and equipment - net 13,787 14,006
Other assets 921 827
------------- --------------
Total assets $ 16,921 $ 16,915
============= ==============
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 726 $ 834
Accounts payable 1,193 989
Dividends payable 259 257
Other 1,567 1,387
------------- --------------
Total current liabilities 3,745 3,467
------------- --------------
Long-term debt 5,024 5,664
Postretirement and other postemployment
benefit obligations 2,400 2,387
Deferred taxes, credits and other 1,511 1,480
Communications Group equity 4,241 3,917
------------- --------------
Total liabilities and equity $ 16,921 $ 16,915
============= ==============
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A5
COMBINED STATEMENTS OF U S WEST COMMUNICATIONS GROUP
CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
In millions 1997 1996
- - ------------------------------------------------- -------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,007 $ 938
Adjustments to net income:
Depreciation and amortization 1,591 1,580
Gains on sales of rural telephone exchanges (77) (51)
Cumulative effect of change in accounting
principle - (34)
Deferred income taxes and amortization
of investment tax credits (4) (11)
Changes in operating assets and liabilities:
Restructuring payments (55) (114)
Postretirement medical and life costs,
net of cash fundings 11 (28)
Accounts receivable 35 24
Inventories, supplies and other (69) (14)
Accounts payable and accrued liabilities 332 72
Other - net 121 (5)
- - ------------------------------------------------- -------- ---------
Cash provided by operating activities 2,892 2,357
- - ------------------------------------------------- -------- ---------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (1,307) (1,891)
Purchase of PCS wireless licenses (51) -
Proceeds from sales of rural telephone exchanges 51 130
Proceeds from (payments on) disposals of
property, plant, and equipment 21 (1)
- - ------------------------------------------------- -------- ---------
Cash (used for) investing activities (1,286) (1,762)
- - ------------------------------------------------- -------- ---------
FINANCING ACTIVITIES
Net (repayments of) proceeds from
short-term debt (397) 195
Proceeds from issuance of long-term debt - 16
Repayments of long-term debt (410) (278)
Dividends paid on common stock (733) (703)
Proceeds from issuance of common stock 50 109
- - ------------------------------------------------- -------- ---------
Cash (used for) financing activities (1,490) (661)
- - ------------------------------------------------- -------- ---------
CASH AND CASH EQUIVALENTS
Increase (decrease) 116 (66)
Beginning balance 80 172
- - ------------------------------------------------- -------- ---------
Ending balance $ 196 $ 106
================================================= ======== =========
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B1
SELECTED PROPORTIONATE U S WEST MEDIA GROUP
FINANCIAL DATA
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 % 1996 %
In millions 1997 Pro formaChange 1997 Pro formaChange
- - -------------------------- ------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Cable & broadband
Domestic $ 1,312 $ 1,220 7.5 $ 3,808 $ 3,571 6.6
Int'l 139 91 52.7 365 256 42.6
Wireless
Domestic 357 286 24.8 1,009 787 28.2
Int'l 198 111 78.4 522 298 75.2
Directory &
info. svcs.
Domestic 297 276 7.6 881 826 6.7
Int'l 15 54 (72.2) 91 131 (30.5)
Corp. & Other 5 3 66.7 12 9 33.3
-------------------- --------------------
Total $ 2,323 $ 2,041 13.8 $ 6,688 $ 5,878 13.8
==================== ====================
EBITDA
Cable & broadband
Domestic $ 404 $ 375 7.7 $ 1,196 $ 1,116 7.2
Int'l 18 (8) - 38 (13) -
Wireless
Domestic 118 106 11.3 330 253 30.4
Int'l 23 1 - 20 1 -
Directory &
info. svcs.
Domestic 142 108 31.5 419 349 20.1
Int'l (1) 5 - 1 5 (80.0)
Corp. & Other (37) (5) - (60) (30) -
-------------------- --------------------
Total $ 667 $ 582 14.6 $ 1,944 $ 1,681 15.6
==================== ====================
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
5
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B2
OTHER PROPORTIONATE INFORMATION U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 % 1996 %
In millions 1997 Pro forma Change 1997 Pro forma Change
- - -------------------------- ------------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Depr. & Amort.
Cable & broadband
Domestic $ 351 $ 341 2.9 $ 1,024 $ 985 4.0
Int'l 57 32 78.1 155 93 66.7
Wireless
Domestic 50 33 51.5 147 99 48.5
Int'l 52 23 - 142 64 -
Directory &
info. svcs.
Domestic 13 7 85.7 33 22 50.0
Int'l 1 5 (80.0) 9 12 (25.0)
Corp. & Other 3 2 50.0 8 7 14.3
-------------------- --------------------
Total $ 527 $ 443 19.0 $ 1,518 $ 1,282 18.4
==================== ====================
Net Income (Loss)
Cable & broadband
Domestic $ (137) $ (145) (5.5) $ (344) $ (375) (8.3)
Int'l (78) (51) 52.9 (198) (157) 26.1
Wireless
Domestic 28 46 (39.1) 76 88 (13.6)
Int'l (42) (28) 50.0 (108) (70) 54.3
Directory &
info. svcs.
Domestic 75 59 27.1 229 193 18.7
Int'l (1) 3 - (9) (9) -
Corp. & Other 11 7 57.1 7 (9) -
-------------------- --------------------
Total $ (144)$ (109) 32.1 $ (347) $ (339) 2.4
==================== ====================
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
6
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B2
OTHER PROPORTIONATE INFORMATION U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended
September 30,
1996 %
In thousands unless noted 1997 Pro forma Change
- - ---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Cable & broadband
Domestic
Homes passed 12,368 12,100 2.2
Subscribers 7,696 7,462 3.1
International
Homes passed 3,509 2,015 74.1
Subscribers 1,483 961 54.3
Wireless
Domestic
Cellular POPs-managed
(millions) 20.3 20.0 1.5
Cellular subscribers 2,200 1,664 32.2
PCS POPs (millions) 14.7 13.7 7.3
PCS subscribers 63 - -
International
POPs (millions) 77.3 77.3 -
Subscribers 871 419 107.9
Directory & information svcs.
Dex revenue per directory
advertiser (whole dollars) $ 2,236 $ 2,127 5.1
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
7
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B3
SELECTED FINANCIAL AND DOMESTIC CABLE AND BROADBAND
OPERATING HIGHLIGHTS
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1996
Dollars in Pro % Pro %
millions 1997 forma Change 1997 forma Change
- - ------------------------- ---------------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Domestic Cable &
Broadband Results
Revenues
Basic cable $ 384 $ 341 12.6 $ 1,131 $ 1,024 10.4
Premium 82 86 (4.7) 245 260 (5.8)
Advertising 33 30 10.0 91 89 2.2
Primestar 29 18 61.1 78 49 59.2
Pay-per-view 12 12 - 42 34 23.5
New prod. tier 4 1 - 9 2 -
Equip. & Install 40 34 17.6 113 99 14.1
Other - 5 - 12 22 (45.5)
------------------- -------------------
Total Revenue $ 584 $ 527 10.8 $ 1,721 $ 1,579 9.0
------------------- -------------------
EBITDA
Core cable $ 246 $ 234 5.1 $ 735 $ 693 6.1
Primestar 4 3 33.3 12 7 71.4
Other (23) (13) 76.9 (60) (28) -
------------------- -------------------
Total EBITDA $ 227 $ 224 1.3 $ 687 $ 672 2.2
------------------- -------------------
EBITDA margins
Core cable 44.6% 46.2% 45.1% 45.5%
Primestar 13.8% 16.7% 15.4% 14.3%
Other Operating
& Financial
Highlights
Homes passed
(thousands) 8,449 8,247 2.4 8,449 8,247 2.4
Subscribers
(thousands):
Basic cable 4,943 4,833 2.3 4,943 4,833 2.3
Primestar 166 117 41.9 166 117 41.9
Basic pen. 58.5% 58.6% 58.5% 58.6%
Premium units
(thousands) 4,008 3,847 4.2 4,008 3,847 4.2
Premium/Basic 81.1% 79.6% 81.1% 79.6%
High speed data
cust. (actual) 12,994 - - 12,994 - -
Core cbl. mnly.
rev./avg. sub $ 37.84 $ 35.52 6.5 $ 37.50 $ 35.84 4.6
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
8
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B4
PRO FORMA COMBINED U S WEST MEDIA GROUP
STATEMENTS OF OPERATIONS
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1996
Pro % Pro %
In millions 1997 forma Change 1997 forma Change
- - -------------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
SALES AND OTHER
REVENUES $ 1,270 $ 1,161 9.4 $ 3,754 $ 3,368 11.5
OPERATING EXPENSES
Costs of sales and
other revenues 416 391 6.4 1,252 1,134 10.4
Selling, general and
administrative 385 340 13.2 1,065 993 7.3
Depreciation 171 164 4.3 508 471 7.9
Amortization 130 129 0.8 396 386 2.6
---------------- ----------------
Depreciation & amort. 301 293 2.7 904 857 5.5
---------------- ----------------
Total oper. expenses 1,102 1,024 7.6 3,221 2,984 7.9
---------------- ----------------
Income from
operations 168 137 22.6 533 384 38.8
Interest expense 179 176 1.7 520 516 0.8
Equity losses in
unconsol. ventures 177 94 88.3 495 260 90.4
Gains on sales of
investments 13 - - 108 - -
Guaranteed minority
interest expense 22 12 83.3 66 36 83.3
Other income
(expense) - net (5) 8 - (14) (32) (56.3)
---------------- ----------------
Loss before income
tax benefit &
extraord. item (202) (137) 47.4 (454) (460) (1.3)
Income tax benefit 61 28 - 107 121 (11.6)
---------------- ----------------
Loss before
extraord. item (141) (109) 29.4 (347) (339) 2.4
Extraordinary item:
Early extinguishment
of debt, net of tax (3) - - - - -
---------------- ----------------
NET LOSS (144) (109) 32.1 (347) (339) 2.4
Preferred dividends 14 12 16.7 39 37 5.4
---------------- ----------------
LOSS AVAILABLE
FOR COMMON STOCK $ (158)$ (121) 30.6 $ (386)$ (376) 2.7
================ ================
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<BTB>
PRO FORMA COMBINED U S WEST MEDIA GROUP
STATEMENTS OF OPERATIONS
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1996
In millions, except Pro % Pro %
per share amounts 1997 forma Change 1997 forma Change
- - -------------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
Average common shares
outstanding 606.7 624.5 (2.9) 606.6 624.1 (2.8)
================ ================
Loss per common
share $ (0.26)$ (0.19) 36.8 $ (0.64)$ (0.60) 6.7
================ ================
</TABLE>
Pro forma amounts reflect the Continental Cablevision, Inc.
(Continental) merger, Continental's acquisition of the remaining
interest in Meredith/New Heritage Strategic Partners, L.P. and
the reclassification of the Teleport Communications Group, Inc.
investment to equity method as if each transaction occurred as
of January 1, 1996. Also includes Continental's results for
cable-telephony ventures in Singapore and Argentina.
The average common shares outstanding for the quarter ended and
nine months ended September 30, 1996, include 150.6 million shares
related to the Continental merger as if it had occurred as of
January 1, 1996.
10
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B5
SELECTED FINANCIAL DATA U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Nine Months Ended
September 30, September 30,
1996 % 1996 %
In millions 1997 Pro forma Change 1997 Pro forma Change
- - ----------------------------------- ------- ----------------- ------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Revenues
Cable & broadband
Domestic $ 584 $ 527 10.8 $ 1,721 $ 1,579 9.0
Int'l 6 - - 14 - -
Wireless
Domestic 373 315 18.4 1,071 869 23.2
Directory &
info. svcs.
Domestic 296 276 7.2 879 826 6.4
Int'l 3 40 (92.5) 48 82 (41.5)
Corp. & Other 8 3 - 21 12 75.0
------------------ ------------------
Total $ 1,270 $ 1,161 9.4 $ 3,754 $ 3,368 11.5
================== ==================
Consolidated EBITDA
Cable & broadband
Domestic $ 227 $ 224 1.3 $ 687 $ 672 2.2
Int'l 1 - - (2) - -
Wireless
Domestic 153 127 20.5 435 307 41.7
Int'l (2) - - (10) - -
Directory &
info. svcs.
Domestic 142 108 31.5 422 349 20.9
Int'l (2) 6 - (4) 1 -
Corp. & Other (50) (35) 42.9 (91) (88) 3.4
------------------ ------------------
Total $ 469 $ 430 9.1 $ 1,437 $ 1,241 15.8
================== ==================
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
11
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B6
COMBINED BALANCE SHEETS U S WEST MEDIA GROUP
(UNAUDITED) September 30, December 31,
In millions 1997 1996
- - --------------------------------------- ------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 63 $ 121
Accounts and notes receivable 533 508
Deferred directory costs 250 259
Marketable securities - 58
Other assets 177 193
------------ ------------
Total current assets 1,023 1,139
------------ ------------
Property, plant and equipment - net 4,762 4,275
Investment in Time Warner Entertainment 2,483 2,477
Net investment in international ventures 1,370 1,548
Intangible assets - net 12,327 12,595
Net investment in assets held for sale 410 409
Other assets 1,372 1,618
------------ ------------
Total assets $ 23,747 $ 24,061
============ ============
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 1,560 $ 217
Due to Continental shareholders - 1,150
Accounts payable 347 425
Deferred revenue and customer deposits 126 129
Other payables 890 795
------------ ------------
Total current liabilities 2,923 2,716
------------ ------------
Long-term debt 8,398 8,636
Deferred income taxes 3,553 3,600
Deferred credits and other 412 346
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely Company-guaranteed
debentures 1,080 1,080
Preferred stock subject to
mandatory redemption 100 51
Media Group equity 7,353 7,723
Company LESOP guarantee (72) (91)
------------ ------------
Total equity 7,281 7,632
------------ ------------
Total liabilities and equity $ 23,747 $ 24,061
============ ============
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B7
INVESTING ACTIVITY U S WEST MEDIA GROUP
Quarter Ended
September June March
30, 30, 31, YTD
In millions 1997 1997 1997 Total
- - -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash (used for)
investing activities
Cable & broadband
Domestic invest.(1)<F1> $ (295) $ (300) $ (261) $ (856)
International invest. (277) (9) (12) (298)
Wireless
Domestic invest. (113) (123) (141) (377)
International invest. - - (34) (34)
Directory & Other (12) (6) (16) (34)
Asset sales(2)<F2> 320 419 206 945
------------------------------------------
Total $ (377) $ (19) $ (258) $ (654)
<FN> ==========================================
</FN>
</TABLE>
<TABLE>
<CAPTION>
<BTB>
Valuation of Investments
Publicly Traded
Price
per share Total
# of Shs as of Value
(thousands) 10/23/97 (millions)
--------- --------- ---------
<S> <C> <C> <C>
Telewest (TWSTY) 37,875 $ 13.00 $ 492.4
Teleport (TCGI) 9,946 48.88 486.2
Home Shopping Network (HSNI) 220 44.56 9.8
<FN>
<F1>
(1) Excludes $1,150 paid to Continental shareholders in first
quarter 1997.
<F2>
(2) Excludes Minnesota cable systems.
</FN>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99C1
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
Quarter Ended Nine Months Ended
September 30, % September 30, %
In millions 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
SALES & OTHER REVENUES$ 3,918 $ 3,179 23.2 $ 11,471 $ 9,353 22.6
OPERATING EXPENSES
Employee-related 1,269 1,105 14.8 3,632 3,246 11.9
Other operating 910 623 46.1 2,572 1,823 41.1
Taxes other than
income taxes 120 101 18.8 359 319 12.5
Depreciation & amort 835 624 33.8 2,495 1,796 38.9
---------------- -------- --------
Total oper expenses 3,134 2,453 27.8 9,058 7,184 26.1
---------------- -------- --------
Income from operations 784 726 8.0 2,413 2,169 11.2
Interest expense 279 140 99.3 823 411 -
Equity losses in
unconsol ventures 177 81 - 495 224 -
Gains on sales of
investments 13 - - 108 - -
Gains on sales of rural
telephone exchanges 30 2 - 77 51 51.0
Guaranteed minority
interest expense 22 12 83.3 66 36 83.3
Other expense - net 16 1 - 66 47 40.4
---------------- -------- --------
Income before inc taxes,
extd item & cum effect
of chg in acctg princ 333 494 (32.6) 1,148 1,502 (23.6)
Income tax provision 135 190 (28.9) 485 588 (17.5)
---------------- -------- --------
Income before extd
item & cum effect
of chg in acctg princ 198 304 (34.9) 663 914 (27.5)
Extraordinary item:
Early extinguishment
of debt - net of tax (6) - - (3) - -
---------------- -------- --------
Income before cum effect
of chg in acctg princ 192 304 (36.8) 660 914 (27.8)
Cumulative effect of
change in accounting
principle - net of tax - - - - 34 -
---------------- -------- --------
NET INCOME 192 304 (36.8) 660 948 (30.4)
Preferred dividends 14 1 - 39 3 -
---------------- -------- --------
EARNINGS AVAILABLE FOR
COMMON STOCK $ 178 $ 303 (41.3)$ 621 $ 945 (34.3)
================ ======== ========
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
<BTB>
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
Quarter Ended Nine Months Ended
In millions, except September 30, % September 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
COMMUNICATIONS GROUP:
Average common shares
outstanding 483.2 478.4 1.0 482.4 476.7 1.2
================ ======== ========
Earnings per common
share:
Income before extd
item & cum effect of
change in accounting
principle $ 0.70 $ 0.60 16.7 $ 2.09 $ 1.90 10.0
Extraordinary item:
Early extinguishment
of debt (0.01) - - (0.01) - -
Cumulative effect of
change in accounting
principle - - - - 0.07 -
---------------- -------- --------
Earnings per
common share $ 0.69 $ 0.60 15.0 $ 2.08 $ 1.97 5.6
================ ======== ========
MEDIA GROUP:
Average common shares
outstanding 606.7 473.9 28.0 606.6 473.5 28.1
================ ======== ========
Loss per
common share $ (0.26)$ 0.04 - $ (0.64)$ 0.01 -
================ ======== ========
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<BTB>
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
Quarter Ended Nine Months Ended
September 30, % September 30, %
Dollars in millions 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- -------------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
DATA
Capital
expenditures $1 ,075 $ 776 38.5 $ 2,672 $2,337 14.3
Debt-to-capital
ratio (#1)<F1> 55.3% 54.8%# - 55.3% 54.8%# -
Employees 67,888 60,837 11.6 67,888 60,837 11.6
EBITDA $ 1,619 $1,350 19.9 $ 4,908 $ 3,965 23.8
EBITDA margin 41.3% 42.5% - 42.8% 42.4% -
<FN>
<F1>
# As of December 31, 1996.
#1 Ratio includes preferred securities and other preferred stock
subject to mandatory redemption as a component of total capital.
Including debt related to the net investment in assets held for sale,
preferred securities and other preferred stock subject to mandatory
redemption, the Company's percentage of debt to total capital was
60.0% and 59.5% at September 30, 1997 and December 31, 1996,
respectively.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99C2
CONSOLIDATED BALANCE SHEETS U S WEST, Inc.
(UNAUDITED)
September 30, December 31,
In millions 1997 1996
- - ------------------------------------------ ------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 259 $ 201
Accounts and notes receivable 2,107 2,113
Inventories and supplies 216 159
Deferred tax asset 206 213
Prepaid and other 345 426
------------ -------------
Total current assets 3,133 3,112
------------ -------------
Property, plant and equipment - net 18,549 18,281
Investment in Time Warner Entertainment 2,483 2,477
Net investment in international ventures 1,370 1,548
Intangible assets - net 12,385 12,595
Net investment in assets held for sale 410 409
Other assets 2,224 2,433
------------ -------------
Total assets $ 40,554 $ 40,855
============ =============
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ 2,286 $ 1,051
Accounts payable 1,447 1,316
Due to Continental Cablevision
shareholders - 1,150
Dividends payable 267 263
Other payables 2,565 2,294
------------ -------------
Total current liabilities 6,565 6,074
------------ -------------
Long-term debt 13,422 14,300
Postretirement and other postemployment
benefit obligations 2,502 2,479
Deferred taxes 4,308 4,349
Deferred credits and other 1,055 973
Company-obligated mandatorily redeemable
preferred securities of subsidiary
trust holding solely Company-guaranteed
debentures 1,080 1,080
Preferred stock subject to
mandatory redemption 100 51
Shareowners' equity:
Preferred shares 921 920
Common shares 10,800 10,741
Retained earnings (deficit) (45) 18
LESOP guarantee (72) (91)
Foreign currency translation adjustments (82) (39)
------------ -------------
Total shareowners' equity 11,522 11,549
------------ -------------
Total liabilities & shareowners' equity $ 40,554 $ 40,855
============ =============
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000732718
<NAME> U S WEST, INC.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 259 259
<SECURITIES> 0 0
<RECEIVABLES> 2,107 2,107
<ALLOWANCES> 0 0
<INVENTORY> 216 216
<CURRENT-ASSETS> 3,133 3,133
<PP&E> 39,149 39,149
<DEPRECIATION> 20,600 20,600
<TOTAL-ASSETS> 40,554 40,554
<CURRENT-LIABILITIES> 6,565 6,565
<BONDS> 13,422 13,422
1,180 1,180
921 921
<COMMON> 10,800 10,800
<OTHER-SE> (199) (199)
<TOTAL-LIABILITY-AND-EQUITY> 40,554 40,554
<SALES> 3,918 11,471
<TOTAL-REVENUES> 3,918 11,471
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 3,134 9,058
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 279 823
<INCOME-PRETAX> 333 1,148
<INCOME-TAX> 135 485
<INCOME-CONTINUING> 198 663
<DISCONTINUED> 0 0
<EXTRAORDINARY> (6) (3)
<CHANGES> 0 0
<NET-INCOME> 192 660
<EPS-PRIMARY> 0.69 2.08
<EPS-DILUTED> 0.69 2.08
</TABLE>
