4
8K797.DOC
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): July 25, 1997
U S WEST, Inc.
(Exact name of registrant as specified in its charter)
A Delaware Corporation Commission File IRS Employer Identification
(State of incorporation) Number 1-8611 No. 84-0926774
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 July 25, 1997, U S WEST Communications Group released its second quarter
earnings results. In addition, U S WEST Media Group released its second
quarter earnings results on July 29, 1997. The releases and financial
statements are attached hereto as Exhibits.
Item 7. Exhibits
Exhibit Description
27 Financial Data Schedule.
99A Press Release issued July 25, 1997 concerning the earnings results of
U S WEST Communications Group for the second quarter of 1997.
99A.1 Unaudited Combined Statements of Operations of U S WEST
Communications Group for the quarters ended June 30, 1996 and 1997, filed in
connection with the Press Release dated July 25, 1997.
99A.2 Unaudited Selected Combined Group Data of U S WEST Communications
Group for the quarters ended June 30, 1996 and 1997, filed in connection with
the Press Release dated July 25, 1997.
99A.3 Unaudited Combined Balance Sheets of U S WEST Communications Group
for the quarter ended June 30, 1997 and the year ended December 31, 1996,
filed in connection with the Press Release dated July 25, 1997.
99A.4 Unaudited Combined Statements of Cash Flows of U S WEST
Communications Group for the quarters ended June 30, 1996 and 1997, filed in
connection with the Press Release dated July 25, 1997.
99A.5 Unaudited Statements of Operations of U S WEST Communications Group
for the quarters ended June 30, 1996 and 1997, filed in connection with the
Press Release dated July 25, 1997.
99A.6 Unaudited Earnings Normalization Schedule of U S WEST
Communications, Inc. for the quarters ended June 30, 1996 and 1997, filed in
connection with the Press Release dated July 25, 1997.
99B Press Release issued July 29, 1997 concerning the earnings results of
U S WEST Media Group for the second quarter of 1997.
99B.1 Unaudited Selected Proportionate Financial Data of U S WEST Media
Group for the quarters ended June 30, 1996 and 1997, filed in connection with
the Press Release dated July 29, 1997.
99B.2 Unaudited Other Proportionate Information of U S WEST Media Group
for the quarters ended June 30, 1996 and 1997, filed in connection with the
Press Release dated July 29, 1997.
99B.3 Unaudited Selected Financial and Operating Highlights of U S WEST
Media Group for the quarters ended June 30, 1996 and 1997, filed in connection
with the Press Release dated July 29, 1997.
99B.4 Unaudited Pro Forma Combined Statements of Operations of U S WEST
Media Group for the quarters ended June 30, 1996 and 1997, filed in connection
with the Press Release dated July 29, 1997.
99B.5 Unaudited Selected Financial Data of U S WEST Media Group for the
quarters ended June 30, 1996 and 1997, filed in connection with the Press
Release dated July 29, 1997.
99B.6 Unaudited Combined Balance Sheets of U S WEST Media Group for the
quarter ended June 30, 1997 and the year ended December 31, 1996, filed in
connection with the Press Release dated July 29, 1997.
99B.7 Investing Activity of U S WEST Media Group for the quarters ended
June 30, and March 31, 1997, filed in connection with the Press Release dated
July 29, 1997.
99C.1 Unaudited Consolidated Statements of Income of U S WEST, Inc. for
the quarter periods ended June 30, 1996 and 1997.
99C.2 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the
quarter ended June 30, 1997 and the year ended December 31, 1996.
99C.3 Unaudited Consolidated Statements of Cash Flows of U S WEST, Inc.
for the quarters ended June 30, 1996 and 1997.
<PAGE>
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: July 30, 1997
<PAGE>
EXHIBIT 99A
U S WEST Communications, Inc.
1801 California Street
Denver, Colorado 80202
[U S WEST Communications, Inc. logo and registered mark]
News Release
Release Date: July 25, 1997
Contact: Dave Banks, 303/896-3040
U S WEST COMMUNICATIONS REPORTS
EARNINGS PER SHARE GAIN OF 6.6 PERCENT
- PENDING REGULATORY ITEMS IMPACT REVENUES; COST CONTROLS CONTINUE -
ENGLEWOOD, Colo. -- U S WEST Communications Group (NYSE: USW) today reported
another quarter of strong earnings growth. Results were driven by a strong
balance of revenue production and aggressive cost reductions. The company
achieved this while launching new marketing initiatives; absorbing costs
related to growth; and expending almost $85 million year-to-date for mandated
interconnection to help foster local competition.
Normalized net income for the quarter increased 8.7 percent to $314 million
from $289 million in second quarter 1996. Normalized earnings per share grew
to $0.65 for the quarter, up 6.6 percent from the $0.61 reported in second
quarter 1996. Results for the quarter were normalized for an $18 million
one-time, after-tax gain associated with the sale of selected rural exchanges
in Idaho, Iowa and South Dakota. Results for second quarter, 1996 were
normalized to reflect the effects of a change in accounting principle and to
reflect a $30 million one-time, after-tax gain associated with the sale of
selected rural exchanges in the Dakotas.
"Investors and customers should be pleased with what the people of U S WEST
Communications have accomplished," said Richard McCormick, chairman and chief
executive officer of U S WEST, Inc. "They're meeting their financial
commitments to investors, while dramatically improving service levels, gearing
up for new growth initiatives, and meeting federal and state mandates related
to introducing competition in their local markets."
"We had a very solid quarter, primarily because our expense controls have
started to gain traction," said Sol Trujillo, president and chief executive
officer of U S WEST Communications Group. "This is our fourth consecutive
quarter of moderating expense growth, and we believe the run-rate impact of
what we've put into place in our core operations is sustainable."
-more-
Page 2
Trujillo said quarterly results were diluted by pending regulatory items and
also by the beginning of some significant spending relative to
interconnection. Although revenues are slightly below plan, Trujillo said
they are still showing strong core growth, and he expects improvement in the
second half with a number of marketing initiatives now in place or set to roll
out. Revenues have also been impacted by intraLATA toll losses.
Second quarter highlights include:
Volumes and Penetration:
- - -The addition of 686,000 access lines (adjusted for the sale of selected rural
exchanges) over the past twelve months for an access line growth rate of 4.6
percent. On an adjusted basis, business access lines grew at 6.8 percent;
residential access lines grew at 3.6 percent; and residential additional lines
grew at nearly 27 percent, reaching a second-line penetration level of 12.2
percent.
- - -Residential penetration levels for the company's most popular custom calling
features reached all-time highs: Caller ID, 27.7 percent; Voice Messaging,
17.5 percent; and Call Waiting, 38.9 percent. A highly successful first
quarter Caller ID campaign contributed approximately $4 million in recurring
monthly revenues during the second quarter.
- - -The successful launch of National Directory Assistance in Colorado and New
Mexico. National DA allows customers to obtain phone numbers anywhere in the
U. S. simply by calling 1-411. In the first two months of deployment, the
product generated 250 percent of expected call volume. It has taken almost 20
percent of the share of National directory assistance calls originating in
those markets, and will roll out in the remainder of the territory in 3rd and
4th quarter.
- - -An increase of 9.5 percent in customer order volumes year-to-date versus the
first half of 1996, including orders for new services, transfers, and changes.
- - -The company has sold more than 165,000 Home Receptionist and Business
Receptionist Screen Phones, making it the industry leader in that product.
These phones visually and functionally integrate a number of custom calling
services, and increase the penetration of these vertical services.
Sales and Revenues:
- - -Adjusting for a number of items, local service revenue growth was 6.4
percent, with almost half the growth driven by the sales of vertical services.
Total revenue growth, adjusted for these same items, was 4.6 percent.
-more-
Page 3
-A 19 percent increase in private line and special access revenues, which
totaled over $200 million for the second 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 new product and services revenues are up more than 35 percent from
second quarter 1996 to over $280 million. Those revenues now represent 11
percent of total revenues.
Growth Initiatives:
- - -Final regulatory approval of the company's wireless PCS licenses to cover
nearly 20 million POPs throughout the region. The company plans to deploy
services in Denver in the Fall and at least one other market by the end of the
year.
- - -Rollout of the U S WEST Express Calling Card throughout the company's region.
Through a special partnering arrangement with Frontier Communications, this
1-800 calling card allows customers to make both interLATA and intraLATA calls
cost effectively nationwide. More than 2.9 million cards have been
distributed to date.
- - -Data networking services revenues of more than $75 million in the quarter --
up 48 percent from the same period in 1996.
Costs and Margins:
- - -Absorbed approximately $40 million year-to-date in expenses and approximately
$45 million year-to-date in capital related to interconnection. The company
expects to significantly increase its spending on interconnection for the
balance of 1997. U S WEST Communications now has 250 agreements throughout
its 14-state region with competitive local exchange carriers.
- - -The fourth consecutive quarter in which both employee related and total
operating expense growth have slowed.
- - -Employee year-over-year reductions, coupled with strong access line growth,
have driven telco employees per 10,000 access lines down 11.3 percent to 28.4.
- - -Growth in cash provided by operating activities of 40 percent, or almost $573
million, and even stronger growth in net cash flow, enabled the company to
reduce its borrowing levels by over $710 million during the first half of
1997.
-more-
Page 4
Trujillo added that the company is on plan with its 1997 earnings and
operational objectives. He reiterated that as the year progresses, costs
associated with starting up new businesses and complying with the
Telecommunications Act of 1996 will accelerate, dampening earnings growth in
later quarters.
U S WEST Communications (NYSE: USW) provides telecommunications and data
networking 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, 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: Some of the information presented in or in connection
with this announcement constitutes "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, there can
be no assurance that actual results will not differ materially from its
expectations. Factors that could cause actual results to differ from
expectations include: (i) different than anticipated competition from new
entrants into the local exchange and intraLATA toll markets, (ii) changes in
demand for the company's products and services, including optional custom
calling features, (iii) different than anticipated employee levels, capital
expenditures or operating expenses as a result of unusually rapid, in-region
growth, (iv) the gain or loss of significant customers, (v) pending regulatory
actions in state jurisdictions, and (vi) regulatory changes affecting the
telecommunications industry, including changes that could have an impact on
the competitive environment in the local exchange market.]
###
NOTE: THIS RELEASE AND THE FINANCIAL STATEMENTS WILL BE AVAILABLE ON THE
INTERNET AFTER 8:00 A.M. (MDT) BY ACCESSING U S WEST'S INTERNET SITE:
WWW.USWEST.COM
<PAGE>
<TABLE>
<BTB>
<CAPTION>
EXHIBIT 99A.1
COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, Percent June 30, Percent
In millions 1997 1996 Change 1997 1996 Change
- - ------------------------------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service $ 1,151 $ 1,179 (2.4)$ 2,382 $ 2,324 2.5
Interstate access 678 626 8.3 1,365 1,248 9.4
Intrastate access 200 189 5.8 400 379 5.5
Long-distance network 240 278 (13.7) 490 568 (13.7)
Other services 274 228 20.2 493 446 10.5
---------------- ----------------
Total operating revenues 2,543 2,500 1.7 5,130 4,965 3.3
---------------- ----------------
OPERATING EXPENSES
Employee-related 904 921 (1.8) 1,768 1,788 (1.1)
Other operating 391 387 1.0 836 775 7.9
Taxes other than
income taxes 98 100 (2.0) 205 197 4.1
Depreciation & amort. 530 518 2.3 1,057 1,035 2.1
---------------- ----------------
Total operating expenses 1,923 1,926 (0.2) 3,866 3,795 1.9
---------------- ----------------
Income from operations 620 574 8.0 1,264 1,170 8.0
Interest expense 100 110 (9.1) 203 221 (8.1)
Gains on sales of rural
telephone exchanges 29 49 (40.8) 47 49 (4.1)
Other income
(expense) - net (19) 4 - (41) (12) -
---------------- ----------------
Income before income
taxes & cumulative
effect of change in
accounting princple 530 517 2.5 1,067 986 8.2
Income tax provision 198 193 2.6 396 368 7.6
---------------- ----------------
Income before
cumulative effect of
change in accounting
principle 332 324 2.5 671 618 8.6
Cumulative effect of
change in accounting
principle - net of tax - - - - 34 -
---------------- ----------------
NET INCOME $ 332 $ 324 2.5 $ 671 $ 652 2.9
================ ================
</TABLE>
<TABLE>
<BTB>
<CAPTION>
COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
In millions, except June 30, Percent June 30, Percent
per share amounts 1997 1996 Change 1997 1996 Change
- - ------------------------------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Average common shares
outstanding 482.5 476.8 1.2 481.9 475.9 1.3
================ ================
Earnings per common
share:
Income before
cumulative effect of
change in accounting
principle $ 0.69 $ 0.68 1.5 $ 1.39 $ 1.30 6.9
Cumulative effect of
change in accounting
principle - - - - 0.07 -
---------------- ----------------
Earnings per
common share $ 0.69 $ 0.68 1.5 $ 1.39 $ 1.37 1.5
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A.2
SELECTED COMBINED GROUP DATA U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - -------------------------------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Normalized access
lines (thousands):
Business 4,692 4,394 6.8 4,692 4,394 6.8
Consumer 11,062 10,674 3.6 11,062 10,674 3.6
Total 15,754 15,068 4.6 15,754 15,068 4.6
Access lines
(thousands):
Business 4,678 4,394 6.5 4,678 4,394 6.5
Consumer 11,006 10,674 3.1 11,006 10,674 3.1
Total access lines 15,684 15,068 4.1 15,684 15,068 4.1
Billed access minutes
of use (millions):
Interstate 13,795 13,002 6.1 27,325 25,698 6.3
Intrastate 2,957 2,629 12.5 5,742 5,196 10.5
Total minutes of use 16,752 15,631 7.2 33,067 30,894 7.0
Employees:
Communications Group 47,090 51,141 (7.9) 47,090 51,141 (7.9)
Telephone
operations only 44,469 48,264 (7.9) 44,469 48,264 (7.9)
Telephone employees per
10,000 access lines 28.4 32.0 (11.3) 28.4 32.0 (11.3)
Dividends per
common share $0.535 $0.535 - $1.07 $1.07 -
Common shares
outstanding 483.0 477.4 1.2 483.0 477.4 1.2
Capital expenditures $ 516 $ 635 (18.7) $ 924 $1,346 (31.4)
EBITDA (1)<F1> 1,150 1,092 5.3 2,321 2,205 5.3
EBITDA margin 45.2% 43.7% - 45.2% 44.4% -
Return on equity (2)<F2> 31.6% 34.6% - 32.4% 33.6% -
Debt-to-capital ratio:
Communications Grp 58.2% 62.4%# - 58.2% 62.4%# -
Telephone
operations only 56.2% 60.5%# - 56.2% 60.5%# -
<FN>
As of December 31, 1996.
<F1> 1: Earnings before interest, taxes, depreciation, amortization,
and other (EBITDA). EBITDA also excludes gains on asset sales.
<F2> 2: Based on income before cumulative effect of change in
accounting principle.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A.3
COMBINED BALANCE SHEETS U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
June 30, December 31,
In millions 1997 1996
- - -------------------------------------- ---------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 89 $ 80
Accounts and notes receivable 1,605 1,622
Inventories and supplies 182 144
Deferred tax asset 197 171
Prepaid and other 73 65
---------------------------
Total current assets 2,146 2,082
---------------------------
Gross property, plant and equipment 32,787 32,645
Less accumulated depreciation 19,082 18,639
---------------------------
Property, plant and equipment - net 13,705 14,006
Other assets 910 827
---------------------------
Total assets $ 16,761 $ 16,915
===========================
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 166 $ 834
Accounts payable 1,029 989
Dividends payable 258 257
Other 1,670 1,387
---------------------------
Total current liabilities 3,123 3,467
---------------------------
Long-term debt 5,619 5,664
Postretirement and other postemployment
benefit obligations 2,393 2,387
Deferred taxes, credits and other 1,476 1,480
Communications Group equity 4,150 3,917
---------------------------
Total liabilities and equity $ 16,761 $ 16,915
===========================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A.4
COMBINED STATEMENTS OF U S WEST COMMUNICATIONS GROUP
CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
In millions 1997 1996
- - ---------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 671 $ 652
Adjustments to net income:
Depreciation and amortization 1,057 1,035
Gains on sales of rural telephone exchanges (47) (49)
Cumulative effect of change in accounting
principle - (34)
Deferred income taxes and amortization
of investment tax credits (17) (3)
Changes in operating assets and liabilities:
Restructuring payments (45) (74)
Postretirement medical and life costs,
net of cash fundings 3 (30)
Accounts receivable 17 57
Inventories, supplies and other (58) (35)
Accounts payable and accrued liabilities 336 (62)
Other - net 85 (28)
- - ---------------------------------------------------------------------
Cash provided by operating activities 2,002 1,429
- - ---------------------------------------------------------------------
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (841) (1,266)
Proceeds from sales of rural telephone exchanges 28 111
Proceeds from (payments on) disposals of property,
plant, and equipment 4 (7)
- - ---------------------------------------------------------------------
Cash (used for) investing activities (809) (1,162)
- - ---------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from (repayments on) issuance of
short-term debt (662) 260
Repayments of long-term debt (85) (253)
Dividends paid on common stock (475) (467)
Proceeds from issuance of common stock 38 76
- - ---------------------------------------------------------------------
Cash (used for) financing activities (1,184) (384)
- - ---------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Increase (decrease) 9 (117)
Beginning balance 80 172
- - ---------------------------------------------------------------------
Ending balance $ 89 $ 55
=====================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A.5
STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS, Inc.
(UNAUDITED) (Telephone Operations Only)
Quarter Ended Six Months Ended
June 30, % June 30, %
In millions 1997 1996 Change 1997 1996 Change
- - ------------------------------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Local service $ 1,151 $ 1,179 (2.4)$ 2,382 $ 2,324 2.5
Interstate access 678 626 8.3 1,365 1,248 9.4
Intrastate access 200 189 5.8 400 379 5.5
Long-distance network 240 278 (13.7) 490 568 (13.7)
Other services 219 168 30.4 398 329 21.0
---------------- ----------------
Total operating revenues 2,488 2,440 2.0 5,035 4,848 3.9
---------------- ----------------
OPERATING EXPENSES
Employee-related 842 864 (2.5) 1,648 1,677 (1.7)
Other operating 374 373 0.3 824 762 8.1
Taxes other than
income taxes 95 97 (2.1) 200 192 4.2
Depreciation & amort 524 513 2.1 1,046 1,024 2.1
---------------- ----------------
Total operating expenses 1,835 1,847 (0.6) 3,718 3,655 1.7
---------------- ----------------
Income from operations 653 593 10.1 1,317 1,193 10.4
Interest expense 93 101 (7.9) 189 204 (7.4)
Gains on sales of rural
telephone exchanges 29 49 (40.8) 47 49 (4.1)
Other income
(expense) - net (18) 2 - (40) (15) -
---------------- ----------------
Income before income
taxes & cumulative
effect of change in
accounting principle 571 543 5.2 1,135 1,023 10.9
Income tax provision 218 208 4.8 433 391 10.7
---------------- ----------------
Income before
cumulative effect of
change in accounting
principle 353 335 5.4 702 632 11.1
Cumulative effect of
change in accounting
principle - net of tax - - - - 34 -
---------------- ----------------
NET INCOME $ 353 $ 335 5.4 $ 702 $ 666 5.4
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99A.6
EARNINGS NORMALIZATION SCHEDULE U S WEST COMMUNICATIONS GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ------------------------------- ------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NORMALIZED INCOME:
Reported net income $ 332 $ 324 2.5 $ 671 $ 652 2.9
Adjustments to normalize
net income:
Rural exchange sales (18) (30)(40.0) (29) (30) (3.3)
Cumulative effect of
change in accounting
principle-net of tax - - - - (34) -
Current year effect of
accounting change -
net of tax - (5) - - (10) -
---------------- ----------------
Normalized income $ 314 $ 289 8.7 $ 642 $ 578 11.1
================ ================
NORMALIZED EARNINGS PER
COMMON SHARE:
Reported net income $ 0.69 $ 0.68 1.5 $ 1.39 $ 1.37 1.5
Adjustments to normalize
net income:
Rural exchange sales (0.04) (0.06)(33.3) (0.06) (0.06) -
Cumulative effect of
change in accounting
principle-net of tax - - - - (0.07) -
Current year effect of
accounting change -
net of tax - (0.01) - - (0.02) -
---------------- ----------------
Normalized earnings
per common share $ 0.65 $ 0.61 6.6 $ 1.33 $ 1.22 9.0
================ ================
</TABLE>
<PAGE>
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: July 29, 1997
Contact: Blair Johnson Steve Lang
(303) 793-6296 (303) 793-6290
U S WEST MEDIA GROUP REPORTS SEVENTH CONSECUTIVE QUARTER
OF DOUBLE-DIGIT REVENUE AND CASH-FLOW GROWTH
ENGLEWOOD, Colo. - U S WEST Media Group (NYSE: UMG) today reported its seventh
straight quarter of double-digit growth in revenue and operating cash flow.
For the second quarter 1997, Media Group reported - on a proportionate basis:
- - -A 16 PERCENT INCREASE IN OPERATING CASH FLOW, to $657 million. Media Group's
operating cash flow for second quarter 1996 was $566 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 15 PERCENT INCREASE IN REVENUE, to $2.3 billion. Media Group's revenue for
second 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.
"This was another strong quarter - financially and operationally," said
Richard McCormick, U S WEST chairman and chief executive officer. "This marks
the first time our international operations -- including all three lines of
business -- were cash-flow positive. That's an encouraging development as
Media Group strives to reach its goal of 20 percent annual cash-flow growth."
Chuck Lillis, Media Group president and chief executive officer, said,
"Besides delivering strong cash flow, we renamed all our domestic cable
systems MediaOne -- a name that reflects how we're using a single network to
deliver new broadband services.
- - -more-
Page 2
"In the second quarter, we expanded one of those products -- our high-speed
data service, MediaOne Express -- into two new markets," Lillis said. "We
began the quarter with 3,500 data customers and ended it with more than 6,400.
And two weeks ago, we introduced MediaOne Express in a sixth market -
Atlanta."
MediaOne Express is also available in parts of greater Boston; Jacksonville,
Fla.; Detroit; Chicago; and southeast Florida. By the end of the year,
MediaOne expects to offer it in three more markets.
Lillis also said the company is making good progress toward its goal of
generating $1 billion by selling non-strategic assets. This year Media Group
has sold more than $625 million in non-strategic assets, including its
wireless interest in France, and a directory publishing company in the United
Kingdom. In addition, the company sold non-strategic programming and cable
interests, as well as shares in Teleport Communications Group and Time Warner
that Media Group acquired in its merger with Continental.
"Streamlining our business sharpens our focus in many ways, including
providing additional cash to fund our network upgrades," Lillis said. "These
upgrades are enabling us to go beyond cable TV to offer multichannel video,
high-speed data and telephone services."
Second quarter 1997 proportionate operating highlights - by line of business -
include:
- - -CABLE AND BROADBAND COMMUNICATIONS: MediaOne ended the second quarter with
almost 5.1 million subscribers, up 3.4 percent from the second quarter 1996.
Overall, revenue from Media Group's domestic cable operations, including its
investment in Time Warner Entertainment, increased 6.9 percent, to nearly $1.3
billion, while operating cash flow was up 5.8 percent, to $402 million.
-WIRELESS: Media Group's domestic cellular operations continued to
deliver strong results. Its subscriber base increased 33 percent, to 2.1
million proportionate customers, and its operating cash flow increased 54
percent, to $132 million. In addition, its operating cash flow margins
increased by 8.6 percentage points.
Internationally, Media Group's wireless business continued to grow
rapidly, more than doubling its subscriber base since the second quarter of
1996. Much of that growth came from One 2 One, the company's joint venture in
the United Kingdom. With aggressive marketing and expanded coverage now
reaching 85 percent of the U.K. population, One 2 One increased its second
quarter 1997 subscriber base by 59 percent from the same period last year.
One 2 One also improved its revenue per customer by more than 10 percent.
-more-
Page 3
- - -DIRECTORIES: Media Group's directory publishing business, now called U S
WEST Dex, produced strong second quarter revenue growth of 6.6 percent,
helping the company remain an industry leader. In addition, Dex increased its
revenue per customer by 7.4 percent in the second quarter. Media Group's
second quarter 1997 net loss was $94 million.
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.
# # #
Some of the information presented in or in connection with this announcement
constitutes "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that
its expectations are based on reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from its expectations. Factors that
could cause actual results to differ from expectations include: (I) a change
in economic conditions in the various markets served by the Company's
operations that could adversely affect the level of demand for cable,
wireless, directory or other services offered by the Company, (ii) greater
than anticipated competitive activity requiring new pricing for Company
services, (iii) higher than anticipated start-up costs associated with new
business opportunities, (iv) regulatory changes affecting the
telecommunications industry, (v) increases in fraudulent activity with respect
to wireless services, or (vi) delays in the development of anticipated
technologies, or the failure of such technologies to perform according to
expectations.
NOTE: THIS RELEASE AND THE FINANCIAL STATEMENTS WILL BE AVAILABLE ON THE
INTERNET AFTER 8:00 A.M. (MDT) BY ACCESSING U S WEST'S INTERNET SITE:
WWW.USWEST.COM
<PAGE>
U S WEST Media Group Page 4
U S WEST MEDIA GROUP - SELECTED OPERATING HIGHLIGHTS
ALL AMOUNTS SHOWN ARE PROPORTIONATE UNLESS OTHERWISE STATED
$ IN MILLIONS
CABLE AND BROADBAND COMMUNICATIONS
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
DOMESTIC
2Q97 GROWTH*
------ --------
TOTAL
Revenue $2,281 6.9%
EBITDA $402 5.8%
</TABLE>
CONSOLIDATED CABLE (EXCLUDING NEW SERVICES)
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
Homes Passed (000's) 8,395 2.4%
Multichannel Video
Subscribers (000's) 5,095 3.4
Revenue $580 9.2%
EBITDA $258 8.4%
High Speed Data
Customers (000's) 6.4 -
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
INTERNATIONAL
2Q97 GROWTH*
------ --------
TOTAL
Customers (000's) 1,199 12.0%
Revenue $118 42.2%
EBITDA $11 up $14
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
WIRELESS
DOMESTIC
2Q97 GROWTH
------- -------
CELLULAR
POPs (millions) 20.3 1.5%
Subscribers (000's) 2,073 33.1%
Service Revenue $296 23.8%
Operating Cash Flow $132 53.5%
OCF as a percent of
service revenue 44.5% 8.6 pp
Average revenue per $48.98 -8.9%
customer
</TABLE>
PRIMECO PERSONAL COMMUNICATIONS
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
POPs (millions) 14.7 7.3%
Subscribers (000's) 46 -
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
INTERNATIONAL
2Q97 GROWTH
----- -------
TOTAL
Customers (000's) 760 105.4%
Revenue $180 81.8%
Operating Cash Flow $7 up $8
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
ONE 2 ONE
Subscribers (000's) 351 59.0%
Market Share 9.5%
Coverage 85%
</TABLE>
DIRECTORY AND INFORMATION SERVICES
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
DOMESTIC
2Q97 GROWTH
------- -------
DIRECTORY PUBLISHING
Local Advertisers (000's) 482 -
Revenue $291 6.6%
Operating Cash Flow $149 9.6%
Operating Cash Flow 51.2% 1.4 pp
Margin
Revenue per Advertiser $2,254 7.4%
</TABLE>
<TABLE>
<CAPTION>
<BTB>
<S> <C> <C>
INTERNATIONAL
2Q97 GROWTH
----- -------
TOTAL
Revenue $47 4.4%
Operating Cash Flow $8 100.0%
</TABLE>
* Growth rates are pro forma as if the Continental merger occurred
January 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.1
SELECTED PROPORTIONATE U S WEST MEDIA GROUP
FINANCIAL DATA
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
1996 % 1996 %
In millions 1997 Pro formaChange 1997 Pro formaChange
- - -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Cable & telecomm.
Domestic $1,281 $1,198 6.9 $2,496 $2,351 6.2
Int'l 118 83 42.2 226 165 37.0
Wireless
Domestic 343 261 31.4 652 501 30.1
Int'l 180 99 81.8 324 187 73.3
Directory &
info. svcs.
Domestic 297 279 6.5 584 550 6.2
Int'l 47 45 4.4 76 77 (1.3)
Corp. & Other 2 3 (33.3) 7 6 16.7
-------- -------- -------- --------
Total $2,268 $1,968 15.2 $4,365 $3,837 13.8
======== ======== ======== ========
EBITDA
Cable & telecomm.
Domestic $ 402 $ 380 5.8 $ 792 $ 741 6.9
Int'l 11 (3) - 20 (5) -
Wireless
Domestic 111 78 42.3 212 147 44.2
Int'l 7 (1) - (3) - -
Directory &
info. svcs.
Domestic 138 124 11.3 277 241 14.9
Int'l 8 4 - 2 - -
Corp. & Other (20) (16) (25.0) (23) (25) 8.0
-------- -------- -------- --------
Total $ 657 $ 566 16.1 $1,277 $1,099 16.2
======== ======== ======== ========
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
<BTB>
OTHER PROPORTIONATE INFORMATION U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
1996 % 1996 %
In millions 1997 Pro forma Change 1997 Pro forma Change
- - -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Depr. & Amort.
Cable & telecomm.
Domestic $ 333 $ 324 2.8 $ 673 $ 644 4.5
Int'l 50 35 42.9 98 61 60.7
Wireless
Domestic 49 35 40.0 97 66 47.0
Int'l 45 18 - 90 41 -
Directory &
info. svcs.
Domestic 11 8 37.5 20 15 33.3
Int'l 4 4 - 8 7 14.3
Corp. & Other 2 2 - 5 5 -
-------- -------- -------- --------
Total $ 494 $ 426 16.0 $ 991 $ 839 18.1
======== ======== ======== ========
Net Income (Loss)
Cable & telecomm.
Domestic $ (88) $ (113) 22.1 $ (207) $ (230) 10.0
Int'l (63) (69) 8.7 (120) (106) (13.2)
Wireless
Domestic 26 25 4.0 48 42 14.3
Int'l (42) (18) - (66) (42) (57.1)
Directory &
info. svcs.
Domestic 77 68 13.2 154 134 14.9
Int'l 2 (5) - (8) (12) 33.3
Corp. & Other (6) (7) 14.3 (4) (16) 75.0
-------- -------- -------- --------
Total $ (94) $ (119) 21.0 $ (203) $ (230) 11.7
======== ======== ======== ========
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.2
OTHER PROPORTIONATE INFORMATION U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended
June 30,
1996 %
In thousands unless noted 1997 Pro forma Change
- - ---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Cable & telecommunications
Domestic
Homes passed 12,302 11,928 3.1
Subscribers 7,674 7,362 4.2
International
Homes passed 2,774 1,864 48.8
Subscribers 1,199 919 30.5
Wireless
Domestic
Cellular POPs-managed
(millions) 20.3 20.0 1.5
Cellular subscribers 2,073 1,557 33.1
PCS POPs (millions) 14.7 13.7 7.3
PCS subscribers 46 - -
International
POPs (millions) 77.3 60.7 27.3
Subscribers 760 370 105.4
Directory & information svcs.
Dex revenue per directory
advertiser (whole dollars) $2,254 $2,098 7.4
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
7
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.3
SELECTED FINANCIAL AND DOMESTIC CABLE
OPERATING HIGHLIGHTS
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
Dollars in 1996 % 1996 %
millions 1997 Pro formaChange 1997 Pro formaChange
- - ------------------------ -------- -------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Domestic Cable
and Telecomm.
Results
Revenues
Basic cable $ 379 $ 342 10.8 $ 747 $ 683 9.4
Premium 81 87 (6.9) 163 174 (6.3)
Advertising 33 32 3.1 58 59 (1.7)
Primestar 26 16 62.5 49 31 58.1
Pay-per-view 19 10 90.0 30 22 36.4
New prod. tier 3 1 - 5 1 -
Other 44 45 (2.2) 85 82 3.7
-------- -------- -------- --------
Total Revenue $ 585 $ 533 9.8 $1,137 $1,052 8.1
-------- -------- -------- --------
EBITDA
Core cable $ 254 $ 236 7.6 $ 489 $ 459 6.5
Primestar 4 2 - 8 4 -
Other (21) (9) - (37) (15) -
-------- -------- -------- --------
Total EBITDA $ 237 $ 229 3.5 $ 460 $ 448 2.7
-------- -------- -------- --------
EBITDA margins
Core cable 45.8% 45.8% 45.4% 45.1%
Primestar 15.4% 12.5% 16.3% 12.9%
Other Operating
& Financial
Highlights
Homes passed
(thousands) 8,395 8,201 2.4 8,395 8,201 2.4
Subscribers
(thousands):
Basic cable 4,937 4,823 2.4 4,937 4,823 2.4
Primestar 158 103 53.4 158 103 53.4
Basic pen. 58.8% 58.8% 58.8% 58.8%
Premium units 3,887 3,806 2.1 3,887 3,806 2.1
Premium/Basic 78.7% 78.9% 78.7% 78.9%
High speed data
cust. (actual) 6,443 - - 6,443 - -
Core cbl. mnly.
rev./avg. sub $38.20 $36.29 5.3 $37.34 $36.00 3.7
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
8
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.4
PRO FORMA COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
1996 % 1996 %
In millions 1997 Pro formaChange 1997 Pro formaChange
- - -------------------------- ------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SALES AND OTHER
REVENUES $1,277 $1,132 12.8 $2,484 $2,207 12.6
OPERATING EXPENSES
Costs of sales and
other revenues 430 376 14.4 836 743 12.5
Selling, general and
administrative 360 337 6.8 680 653 4.1
Depreciation & amort 300 284 5.6 603 564 6.9
---------------- ----------------
Total oper. expense 1,090 997 9.3 2,119 1,960 8.1
---------------- ----------------
Income from
operations 187 135 38.5 365 247 47.8
Interest expense 166 170 (2.4) 341 340 0.3
Equity losses in
unconsol. ventures 153 91 68.1 318 166 91.6
Gains on sales of
investments 44 - - 95 - -
Guaranteed minority
interest expense 22 12 83.3 44 24 83.3
Other income
(expense) - net (5) (29) 82.8 (9) (40) 77.5
---------------- ----------------
Loss before income
tax benefit &
extraord. item (115) (167) 31.1 (252) (323) 22.0
Income tax benefit 18 48 (62.5) 46 93 (50.5)
---------------- ----------------
Loss before
extraord. item (97) (119) 18.5 (206) (230) 10.4
Extraordinary item:
Early extinguishment
of debt, net of tax 3 - - 3 - -
---------------- ----------------
NET LOSS (94) (119) 21.0 (203) (230) 11.7
Preferred dividends 12 13 (7.7) 25 25 -
---------------- ----------------
LOSS AVAILABLE
FOR COMMON STOCK $ (106) $ (132) 19.7 $ (228) $ (255) 10.6
================ ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
PRO FORMA COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
In millions, except 1996 % 1996 %
per share amounts 1997 Pro formaChange 1997 Pro formaChange
- - -------------------------- ------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Average common shares
outstanding 606.4 624.2 (2.9) 606.5 623.9 (2.8)
================ ================
Loss per common
share ($0.17) ($0.21) 19.0 ($0.38) ($0.41) 7.3
================ ================
</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
six months ended June 30, 1996, include 150.6 million shares
related to the Continental merger as if it had occurred as of
January 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.5
SELECTED FINANCIAL DATA U S WEST MEDIA GROUP
(UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
1996 % 1996 %
In millions 1997 Pro formaChange 1997 Pro formaChange
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Consolidated Revenues
Cable & telecomm.
Domestic $ 585 $ 533 9.8 $1,137 $1,052 8.1
Int'l 4 - - 8 - -
Wireless
Domestic 363 290 25.2 698 554 26.0
Directory &
info. svcs.
Domestic 296 279 6.1 583 550 6.0
Int'l 23 25 (8.0) 45 42 7.1
Corp. & Other 6 5 20.0 13 9 44.4
-------- -------- -------- --------
Total $1,277 $1,132 12.8 $2,484 $2,207 12.6
======== ======== ======== ========
Consolidated EBITDA
Cable & telecomm.
Domestic $ 237 $ 229 3.5 $ 460 $ 448 2.7
Int'l (1) - - (3) - -
Wireless
Domestic 145 96 51.0 282 180 56.7
Int'l (6) - - (8) - -
Directory &
info. svcs.
Domestic 141 123 14.6 280 241 16.2
Int'l 2 - - (2) (5) 60.0
Corp. & Other (31) (29) (6.9) (41) (53) 22.6
-------- -------- -------- --------
Total $ 487 $ 419 16.2 $ 968 $ 811 19.4
======== ======== ======== ========
</TABLE>
The 1996 amounts are pro forma as if the Continental
Cablevision merger occurred January 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.6
COMBINED BALANCE SHEETS U S WEST MEDIA GROUP
(UNAUDITED) June 30, December 31,
In millions 1997 1996
- - --------------------------------------- --------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 155 $ 121
Accounts and notes receivable 514 508
Deferred directory costs 252 259
Marketable securities - 58
Other assets 203 193
--------------------------
Total current assets 1,124 1,139
--------------------------
Property, plant and equipment - net 4,581 4,275
Investment in Time Warner Entertainment 2,483 2,477
Net investment in international ventures 1,322 1,548
Intangible assets - net 12,461 12,595
Net investment in assets held for sale 416 409
Other assets 1,340 1,618
--------------------------
Total assets $ 23,727 $ 24,061
==========================
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 1,277 $ 217
Due to Continental shareholders - 1,150
Accounts payable 320 425
Deferred revenue and customer deposits 127 129
Other payables 925 795
--------------------------
Total current liabilities 2,649 2,716
--------------------------
Long-term debt 8,516 8,636
Deferred income taxes 3,577 3,600
Deferred credits and other 389 346
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 7,488 7,723
Company LESOP guarantee (72) (91)
--------------------------
Total equity 7,416 7,632
--------------------------
Total liabilities and equity $ 23,727 $ 24,061
==========================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99B.7
INVESTING ACTIVITY U S WEST MEDIA GROUP
Quarter Ended
June 30, March 31, YTD
In millions 1997 1997 Total
- - ---------------------------- --------- --------- ---------
<S> <C> <C> <C>
Cable & telecommunications
Domestic investments (1)
<F1> $ 300 $ 261 $ 561
International investments 9 12 21
Wireless
Domestic investments 123 141 264
International investments - 34 34
Directory & Other 6 16 22
Asset sales (2)<F2> (419) (206) (625)
--------- --------- ---------
Total $ 19 $ 258 $ 277
========= ========= =========
Valuation of Investments
Publicly Traded
Price
per share Total
# of Shs as of Value
(thousands) 7/25/97 (millions)
--------- --------- ---------
Telewest (TWSTY) 37,875 $12.75 $482.9
Teleport (TCGI) 11,786 37.81 445.6
Home Shopping Network (HSNI) 220 36.69 8.1
<FN>
<F1>
(1) Excludes $1,150 paid to Continental shareholders in first
quarter 1997.
<F2>
(2) Excludes Minnesota cable systems.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99C.1
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
Quarter Ended Six Months Ended
June 30, % June 30, %
In millions 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SALES & OTHER REVENUES $3,787 $3,124 21.2 $7,553 $6,174 22.3
OPERATING EXPENSES
Employee-related 1,215 1,098 10.7 2,363 2,141 10.4
Other operating 820 609 34.6 1,662 1,200 38.5
Taxes other than
income taxes 115 111 3.6 239 218 9.6
Depreciation & amort 830 588 41.2 1,660 1,172 41.6
------- -------- ------- --------
Total oper expenses 2,980 2,406 23.9 5,924 4,731 25.2
------- -------- ------- --------
Income from operations 807 718 12.4 1,629 1,443 12.9
Interest expense 266 136 95.6 544 271 -
Equity losses in
unconsol ventures 153 77 98.7 318 143 -
Gains on sales of
investments 44 - - 95 - -
Gains on sales of rural
telephone exchanges 29 49 (40.8) 47 49 (4.1)
Guaranteed minority
interest expense 22 12 83.3 44 24 83.3
Other expense - net 24 23 4.3 50 46 8.7
------- -------- ------- --------
Income before inc taxes,
extd item & cum effect
of chg in acctg princ 415 519 (20.0) 815 1,008 (19.1)
Income tax provision 180 206 (12.6) 350 398 (12.1)
------- -------- ------- --------
Income before extd
item & cum effect
of chg in acctg princ 235 313 (24.9) 465 610 (23.8)
Extraordinary item:
Early extinguishment
of debt - net of tax 3 - - 3 - -
------- -------- ------- --------
Income before cum effect
of chg in acctg princ 238 313 (24.0) 468 610 (23.3)
Cumulative effect of
change in accounting
principle - net of tax - - - - 34 -
------- -------- ------- --------
NET INCOME 238 313 (24.0) 468 644 (27.3)
Preferred dividends 12 1 - 25 2 -
------- -------- ------- --------
EARNINGS AVAILABLE FOR
COMMON STOCK $ 226 $ 312 (27.6)$ 443 $ 642 (31.0)
======= ======== ======= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended Six Months Ended
In millions, except June 30, % June 30, %
per share amounts 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- ------- ------ ------- ------- -------
COMMUNICATIONS GROUP:
Average common shares
outstanding 482.5 476.8 1.2 481.9 475.9 1.3
======= ======== ======= ========
Earnings per common
share:
Income before
cumulative effect of
change in accounting
principle $ 0.69 $ 0.68 1.5 $1.39 $1.30 6.9
Cumulative effect of
change in accounting
principle - - - - 0.07 -
------- -------- ------- --------
Earnings per
common share $ 0.69 $ 0.68 1.5 $1.39 $1.37 1.5
======= ======== ======= ========
MEDIA GROUP:
Average common shares
outstanding 606.4 473.6 28.0 606.5 473.3 28.1
======= ======== ======= ========
Loss per
common share $(0.17) $(0.03) - $(0.38) $(0.02) -
======= ======== ======= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended Six Months Ended
June 30, % June 30, %
Dollars in millions 1997 1996 Change 1997 1996 Change
- - ---------------------- ------- ------- ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED
DATA
Capital
expenditures $ 868 $ 758 14.5 $1,597 $1,561 2.3
Debt-to-capital
ratio (1)<F1> 55.0% 54.8%# - 55.0% 54.8%# -
Employees 67,668 61,399 10.2 67,668 61,399 10.2
EBITDA $1,637 $1,306 25.3 $3,289 $2,615 25.8
EBITDA margin 43.2% 41.8% - 43.5% 42.4% -
<FN>
As of December 31, 1996.
<F1> 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
59.8% and 59.5% at June 30, 1997 and December 31, 1996,
respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99C.2
CONSOLIDATED BALANCE SHEETS U S WEST, Inc.
(UNAUDITED)
June 30, December 31,
In millions 1997 1996
--------------------------------------- ------------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 244 $ 201
Accounts and notes receivable 2,104 2,113
Inventories and supplies 218 159
Deferred tax asset 237 213
Prepaid and other 356 426
------------- -----------
Total current assets 3,159 3,112
------------- -----------
Property, plant and equipment - net 18,286 18,281
Investment in Time Warner Entertainment 2,483 2,477
Net investment in international ventures 1,322 1,548
Intangible assets - net 12,516 12,595
Net investment in assets held for sale 416 409
Other assets 2,184 2,433
------------- -----------
Total assets $ 40,366 $ 40,855
============= ===========
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Short-term debt $ 1,443 $ 1,051
Accounts payable 1,250 1,316
Due to Continental Cablevision
shareholders - 1,150
Dividends payable 266 263
Other payables 2,702 2,294
------------- -----------
Total current liabilities 5,661 6,074
------------- -----------
Long-term debt 14,135 14,300
Postretirement and other postemployment
benefit obligations 2,492 2,479
Deferred taxes 4,343 4,349
Deferred credits and other 989 973
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 10,776 10,741
Retained earnings (deficit) (17) 18
LESOP guarantee (72) (91)
Foreign currency translation adjustments (42) (39)
------------- -----------
Total shareowners' equity 11,566 11,549
------------- -----------
Total liabilities & shareowners'
equity $ 40,366 $ 40,855
============== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<BTB>
EXHIBIT 99C.3
CONSOLIDATED STATEMENTS OF U S WEST, Inc.
CASH FLOWS (UNAUDITED) Six Months Ended
June 30,
In millions 1997 1996
- - ---------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 468 $ 644
Adjustments to net income:
Depreciation and amortization 1,660 1,172
Equity losses in unconsolidated ventures 318 143
Gains on sales of investments (95) -
Gains on sales of rural telephone exchanges (47) (49)
Cumulative effect of change in accounting
principle - (34)
Deferred income taxes and amortization
of investment tax credits (85) (50)
Changes in operating assets and liabilities:
Restructuring payments (50) (82)
Postretirement medical and life costs,
net of cash fundings 10 (24)
Accounts and notes receivable (11) 21
Inventories, supplies and other (91) (45)
Accounts payable and accrued liabilities 384 (55)
Other - net 117 (10)
- - ---------------------------------------------------------------------
Cash provided by operating activities 2,578 1,631
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INVESTING ACTIVITIES
Expenditures for property, plant and equipment (1,558) (1,509)
Investment in Continental Cablevision (1,150) -
Investment in international ventures (44) (139)
Proceeds from asset sales 575 -
Proceeds from disposals of property, plant
and equipment 32 104
Cash from net investment in assets
held for sale 50 93
Other - net (141) (74)
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Cash (used for) investing activities (2,236) (1,525)
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FINANCING ACTIVITIES
Proceeds from (repayments of) short-term
debt - net (3,714) 340
Proceeds from issuance of long-term debt 4,110 330
Repayments of long-term debt (193) (476)
Dividends paid on common and preferred stock (498) (469)
Proceeds from issuance of common stock 49 104
Purchases of treasury stock (53) -
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Cash (used for) financing activities (299) (171)
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CASH AND CASH EQUIVALENTS
Decrease 43 (65)
Beginning balance 201 192
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Ending balance $ 244 $ 127
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000732718
<NAME> U S WEST, INC.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 244 244
<SECURITIES> 0 0
<RECEIVABLES> 2,104 2,104
<ALLOWANCES> 0 0
<INVENTORY> 218 218
<CURRENT-ASSETS> 3,159 3,159
<PP&E> 38,547 38,547
<DEPRECIATION> 20,261 20,261
<TOTAL-ASSETS> 40,366 40,366
<CURRENT-LIABILITIES> 5,661 5,661
<BONDS> 14,135 14,135
1,180 1,180
921 921
<COMMON> 10,776 10,776
<OTHER-SE> (131) (131)
<TOTAL-LIABILITY-AND-EQUITY> 40,366 40,366
<SALES> 3,787 7,553
<TOTAL-REVENUES> 3,787 7,553
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 2,980 5,924
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 266 544
<INCOME-PRETAX> 415 815
<INCOME-TAX> 180 350
<INCOME-CONTINUING> 235 465
<DISCONTINUED> 0 0
<EXTRAORDINARY> 3 3
<CHANGES> 0 0
<NET-INCOME> 238 468
<EPS-PRIMARY> 0.69 1.39
<EPS-DILUTED> 0.69 1.39
</TABLE>
