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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): April 28, 1999
MediaOne Group, Inc.
(Exact name of registrant as specified in its charter)
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A Delaware Corporation Commission File Number IRS Employer Identification No.
(State of incorporation) 1-8611 84-0926774
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188 Inverness Drive West
Englewood, Colorado 80112
(Address of principal executive offices)
(303) 858-3000
(Registrant's telephone number, including area code)
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Item 5. Other Events
On April 28, 1999 MediaOne Group, Inc. released its first quarter 1999 earnings
results. The releases and financial statements are attached hereto as Exhibits.
Item 7. Exhibits
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Exhibit Description
27 Financial Data Schedule
99 Press Release issued April 28, 1999 concerning the earnings
results of MediaOne Group, Inc. for the quarter ended
March 31, 1999.
99.1 Table of Contents and Proportionate Results Highlights of
MediaOne Group, Inc. for the three months ended March 31, 1998
and 1999, filed in connection with the Press Release dated April
28, 1999.
99.2 Pro Forma Consolidated Domestic Cable Highlights of MediaOne
Group, Inc. for the three months ended March 31, 1998 and 1999,
filed in connection with the press Release dated April 28, 1999.
99.3 Pro Forma Key Operating Statistics - Domestic Cable - of MediaOne
Group, Inc. for the quarters ended March 31, 1998 and 1999, filed
in connection with the Press Release dated April 28, 1999.
99.4 Pro Forma Key Operating Statistics - International - of MediaOne
Group, Inc. for the quarters ended March 31, 1998, December 31,
1998 and March 31, 1999, filed in connection with the Press
Release dated April 28, 1999.
99.5 Consolidated Statement of Operations of MediaOne Group, Inc. for
the three months ended March 31, 1998 and 1999, filed in
connection with the press Release dated April 28, 1999.
99.6 Consolidated Revenues and Operating Cash Flow Highlights - As
Reported - of MediaOne Group, Inc. for the three months ended
March 31, 1998 and 1999, as filed in connection with the Press
Release dated April 28, 1999.
99.7 Condensed Consolidated Balance Sheets - As Reported - for
MediaOne Group, Inc. as of March 31, 1999 and December 31, 1998,
as filed in connection with the Press Release dated April 28,
1999.
2
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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.
MediaOne Group, Inc.
/s/ STEPHEN E. BRILZ
By:___________________________________
Stephen E. Brilz
Assistant Secretary
Dated: April 29, 1999
3
April 28, 1999
Cathy Fowler, 303-858-3405
Steve Lang, 303-858-3406
MediaOne Group Operating Cash Flow Up 20 Percent
- Company Delivers Solid Operating Performance -
ENGLEWOOD, Colo. -- MediaOne Group (NYSE: UMG) today reported first quarter 1999
proportionate operating cash flow of $566 million, up 20 percent on a pro-forma
basis over the same quarter a year ago. Proportionate revenue increased 12
percent on a pro-forma basis, to $1.8 billion.*
MediaOne continued to roll out advanced analog video services, digital video,
telephone and high-speed data services to more of its five million U.S.
customers. MediaOne International once again grew at a fast clip, increasing the
number of subscriptions by 44 percent and providing 8.9 million cable,
telephone, Internet access and wireless subscriptions to customers in Europe and
Asia.
"Obviously, the big news in the quarter was our agreement to merge with Comcast.
Since then, of course, AT&T has presented us with a proposal, and we have signed
a confidentiality agreement so we can negotiate with them," said Chuck Lillis,
chairman and chief executive officer of MediaOne Group. "Operationally, we had
an excellent quarter. MediaOne continued to deliver impressive growth in
revenues and new products while driving improvements in the core video business.
And MediaOne International continued to exceed all expectations with exceptional
growth in subscriptions, revenue and operating cash flow."
MediaOne -- the U.S. broadband business
Revenue for MediaOne was $654 million, up 11 percent on a pro-forma basis for
the quarter. Operating cash flow was $241 million. Basic video subscribers
increased 1.1 percent on a pro-forma basis for the quarter.
4
In addition, MediaOne made solid progress in introducing new products. Earlier
this month, MediaOne launched digital telephone service in metropolitan Detroit,
making it the seventh such service area. The company serves more than 22,000
telephone lines used by nearly 17,000 customers. MediaOne reported 114,000
MediaOne Road Runner high-speed data customers, a 35-percent increase since the
end of 1998.
MediaOne Multimedia Ventures -- MediaOne Group's 25.51 percent stake in Time
Warner Entertainment
For the quarter, MediaOne Group's share of Time Warner Entertainment's reported
revenue was $748 million, up 7 percent on a pro-forma basis over first quarter
1998. MediaOne Group's share of TWE's reported earnings before interest, taxes,
depreciation, amortization and other associated costs for the quarter was $243
million, up 7 percent pro forma over the same period last year.
MediaOne International -- the international broadband and wireless joint
ventures
MediaOne International's pro-forma proportionate operating cash flow increased
321 percent during first quarter compared to the same period last year, to $101
million. Proportionate revenue was up 27 percent on a pro-forma basis, to $440
million.
International operations now provide 8.9 million cable, telephone, Internet
access and wireless subscriptions to customers in Europe and Asia, an increase
of 44 percent over last year.
The customer base of MediaOne International's broadband businesses grew by 11
percent over the same quarter last year, to 2.2 million customers. Telephone
line growth was 20 percent, ending the quarter with 1.7 million lines. The
international broadband businesses now serve 47,000 Internet access customers.
International wireless operations continued their stellar growth. Compared to
the same quarter last year, customer growth at One 2 One, the company's UK
wireless joint venture, increased by 88 percent, to 2.25 million customers.
MediaOne International's Central European wireless businesses expanded their
customer base by 75 percent to 2.5 million.
MediaOne Group (NYSE: UMG) is one of the world's largest broadband
communications companies, bringing the power of broadband and the Internet to
customers in the United States, Europe and Asia. The company also has interests
in some of the fastest-growing wireless communications businesses outside the
U.S. For 1998, the businesses that comprise MediaOne Group produced $7.1 billion
in proportionate revenue.
5
*NOTE: Because MediaOne Group operates numerous joint ventures, the company uses
proportionate accounting to reflect its share of operating revenues and expenses
associated with these operations.
Pro-forma numbers are used to provide direct "apples to apples" comparisons of
operations quarter over quarter, as the company has streamlined the business
significantly during the past year.
Operating cash flow, which represents earnings before interest, taxes,
depreciation and amortization, is a key indicator of the company's operating
performance.
[Safe Harbor statement: This document contains statements about expected future
events and financial results that are forward-looking and subject to risk 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.]
6
Contents
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Page
Proportionate
Proportionate Results 8
Domestic Cable
Consolidated Pro Forma
Domestic Cable Results 9
Statistics
Pro Forma Key Operating Statistics 10-11
Consolidated
Consolidated Operations 12
Consolidated Revenues and Operating
Cash Flow 13
Condensed Consolidated Balance Sheets 14
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7
MediaOne Group, Inc.
Proportionate Results Highlights (1)
(UNAUDITED)
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Three
Months Ended Pro
Dollars in March 31, Forma(2)
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millions 1999 1998 % %
- - -----------------------------------------------------------------------------
Proportionate Revenue
MediaOne $ 654 $ 619 5.7% 11.4%
Multimedia
Ventures (3) 748 742 0.8 6.7
International 440 318 38.4 27.2
Corporate
& other 4 16 (75.0) (75.0)
-------------------------------------
$ 1,846 $1,695 8.9% 11.9%
=====================================
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Proportionate Operating Cash Flow(4)
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MediaOne $ 241 $ 240 0.4% 0.4%
Multimedia
Ventures (3) 243 188 29.3 6.8
International 101 17 494.1 320.8
Corporate
& other (19) (13) (46.2) (46.2)
------------------------------------
$ 566 $ 432 31.0% 19.6%
====================================
</TABLE>
- - ---------------------------------------------------------------------
(1) Excludes results for the domestic wireless operations which were
sold in April, 1998.
(2) Results reflect pro forma adjustments for acquisitions,
dispositions and other asset transactions.
(3) Includes 25.51% of Time Warner Entertainment's reported results.
(4) Operating cash flow represents earnings before interest, taxes,
depreciation and amortization.
- - ---------------------------------------------------------------------
8
MediaOne Group, Inc.
Consolidated Domestic Cable Highlights-Pro Forma (1)
MediaOne
(UNAUDITED)
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Three
Months Ended
March 31,
Dollars in
millions 1999 1998 Percent
- - -----------------------------------------------------------------------------
Video Revenues
Basic cable $ 439 $ 413 6.3%
Premium 82 79 3.8
Pay-per-view 22 13 69.2
Advertising 42 31 35.5
Equip. & instal. 46 40 15.0
Other 1 1 -
------------------- --------
Total Video
Revenues 632 577 9.5
Telephone and High Speed Data 22 10 120.0
-------------------- --------
Total Broadband
Revenue $ 654 $ 587 11.4%
==================== ========
Operating Cash Flow(2)
Video
(excluding Y2K costs) $ 267 $ 250 6.8%
Telephone and High Speed Data (19) (10) (90.0)
Year 2000 costs (7) - -
--------------------- -------
Total Operating
Cash Flow $ 241 $ 240 0.4%
===================== =======
</TABLE>
- - -----------------------------------------------------------------------------
(1) Results reflect pro forma adjustments for acquisitions and
dispositions.
(2) Operating cash flow represents earnings before interest, taxes,
depreciation and amortization. Includes spending initiatives
(e.g. systems improvements, call center consolidations, etc.)
- - ---------------------------------------------------------------------
9
MediaOne Group, Inc.
Key Operating Statistics- Pro Forma (1)
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For the Quarter Ended
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In thousands, except Mar. 31, Dec. 31, Mar. 31,
dollar amounts 1999 1998 1998
- - ----------------------------------------
OPERATING STATISTICS- DOMESTIC CABLE
- - ----------------------------------------
MediaOne Domestic Cable
Statistics
Homes Passed 8,527 8,488 8,387
Basic Video Customers 4,966 4,948 4,912
Basic Video Customer
Growth (Y/Y) 1.1% 1.0% 1.5%
Basic Video Penetration 58.2% 58.3% 58.6%
High Speed Data Customers 114 84 29
Telephone Customers 17 10 -
Telephone Lines 22 13 -
</TABLE>
Results Per Customer:
- - ----------------------
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Video Monthly
Revenue per Customer $ 42.45 $ 41.18 $ 39.19
Total Monthly Broadband
Revenue per Customer $ 43.93 $ 42.02 $ 39.83
Video EBITDA Margin
(with Year 2000 costs) 41.1% 41.5% 43.3%
Total EBITDA Margin 36.9% 37.4% 40.9%
- - -----------------------------------------------------------------------------
Time Warner Entertainment (2)
Homes Passed 17,938 17,453 15,758
Basic Video Customers 11,153 10,794 9,916
High Speed Data
Customers 148 104 39
</TABLE>
- - -----------------------------------------------------------------------------
(1) Results reflect pro forma adjustments for acquisitions,
dispositions and other asset transactions.
(2) MediaOne Group has 50% management control of TWE
domestic broadband business and a 25.51% equity ownership.
TWE numbers are as reported versus normalized numbers.
- - ---------------------------------------------------------------------
10
MediaOne Group, Inc.
Key Operating Statistics- Pro Forma (1)
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For the Quarter Ended
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Mar. 31, Dec. 31, Mar. 31,
In thousands 1999 1998 1998
- - -------------------------------------
OPERATING STATISTICS (Venture Level)-
INTERNATIONAL BROADBAND
- - -------------------------------------
U.K. and European Cable/Telephone (2)
Homes Passed 5,419 5,369 5,252
Video Customers 1,926 1,896 1,795
Telephone Lines 1,679 1,600 1,400
Internet Access Customers 45 37 20
Asian Cable/Telephone
Homes Passed 1,787 1,756 1,413
Video Customers 283 265 202
Telephone Lines 7 5 1
Internet Access Customers 2 2 -
- - --------------------------------------
OPERATING STATISTICS (Venture Level)-
INTERNATIONAL WIRELESS
- - -------------------------------------
One 2 One
POPs 58,000 58,000 58,000
Customers 2,250 1,921 1,198
Customer Growth (Y/Y) 87.8% 89.4% 93.2%
Central European Wireless
POPs 63,900 63,900 63,900
Customers 2,520 2,205 1,444
Customer Growth (Y/Y) 74.5% 87.2% 103.1%
Asian and Other Wireless
POPs 76,900 76,900 76,900
Customers 155 152 116
- - -------------------------------------
OPERATING STATISTICS (Venture Level)-
TOTAL INTERNATIONAL SUBSCRIPTIONS
- - -------------------------------------
Video Customers 2,209 2,161 1,997
Wireless Customers 4,925 4,278 2,758
Telephone Lines 1,686 1,605 1,401
Internet Access Customers 47 39 20
--------- --------- ---------
Total International
Subscriptions 8,867 8,083 6,176
Growth (Y/Y) 43.6% 44.4% 43.4%
</TABLE>
- - ---------------------------------------------------------------------
(1) Results reflect pro forma adjustments for acquisitions,
dispositions and other asset transactions.
(2) MediaOne International changed its ownership in Telewest from
26.8% in 2nd QTR 1998 to 21.6% in 3rd QTR 1998, 29.9% in 4th
QTR 1998, and 29.8% in 1st QTR 1999.
- - -----------------------------------------------------------------------------
11
MediaOne Group, Inc.
Consolidated Operations Highlights- As Reported (1)
(UNAUDITED)
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Three Months Ended
March 31,
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Dollars in millions, except
per share data 1999 1998
- - ------------------------------------------------------------------------------
REVENUES $ 665 $ 972
Cost of sales 269 317
Selling, general and admin. 185 307
-------- --------
OPERATING CASH FLOW (2) 211 348
Depreciation & amortization (250) (348)
Interest expense, minority
guarantee, other (145) (172)
Equity losses in
unconsolidated ventures (115) (136)
Gains on sales of investments 194 17
Other expense (43) (37)
Income tax benefit 37 106
-------- --------
LOSS FROM
CONTINUING OPERATIONS (111) (222)
Discontinued operations income,
net of tax (3) - 434
-------- --------
NET INCOME (LOSS) (111) 212
Preferred dividends and accretion (14) (13)
-------- --------
EARNINGS (LOSS) AVAILABLE
FOR COMMON STOCK $ (125) $ 199
======== ========
- - -----------------------------------------------------------------------------
AVERAGE SHARES OUTSTANDING (4)
Basic and Diluted 603.8 608.3
BASIC AND DILUTED LOSS PER COMMON SHARE (5)
Loss from continuing
operations $ (0.21) $ (0.38)
Total loss $ (0.21) $ (0.24)
</TABLE>
- - ------------------------------------------------------------------------------
(1) Domestic wireless operations were sold in April, 1998.
(2) Operating cash flow represents earnings before interest, taxes,
depreciation and amortization.
(3) Represents $347 of income attributable to USW stock for the
three months ended March 31, 1998.
(4) Actual shares outstanding as of March 31, 1999 and 1998 were
604.0 million and 608.6 million, respectively.
(5) Adjusting for one time unusual transactions (($.20) gains on
sales of investments, $.07 Primestar investment loss, and $.03
other) EPS was ($.31) for 1999. 1998 EPS was ($.37).
- - ------------------------------------------------------------------------------
12
MediaOne Group, Inc.
Consolidated Revenues and Operating Cash Flow Highlights- As Reported
(Unaudited)
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Three
Months Ended
March 31,
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Dollars in millions 1999 1998 Percent
- - ------------------------------------------------------------------------------
Consolidated Revenues
MediaOne $ 654 $ 619 5.7%
International 7 5 40.0
Corporate & other 4 7 (42.9)
---------------------
Current Operations 665 631 5.4%
Domestic wireless - 341 N/M
---------------------
Total $ 665 $ 972 N/M
=====================
Consolidated Operating
Cash Flow (1)
MediaOne $ 241 $ 240 0.4%
International - (2) -
Corporate & other (30) (28) (7.1)
---------------------
Current Operations 211 210 0.5%
Domestic wireless - 138 N/M
---------------------
Total $ 211 $ 348 N/M
=====================
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- - ------------------------------------------------------------------------------
(1) Operating cash flow represents earnings before interest, taxes,
depreciation and amortization.
N/M-Not meaningful due to the sale of the domestic wireless
businesses.
- - ------------------------------------------------------------------------------
13
MediaOne Group, Inc.
Condensed Consolidated Balance Sheets- As Reported
(UNAUDITED)
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March 31, December 31,
Dollars in millions 1999 1998
- - ------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 532 $ 415
Accounts and notes receivable, and other 511 785
-------------------------------
1,043 1,200
-------------------------------
Property and equipment - net 4,259 4,069
Investments:
Time Warner Entertainment 2,452 2,442
AirTouch Communications 7,250 5,919
International ventures 1,213 1,344
-------------------------------
10,915 9,705
-------------------------------
Intangible and other assets - net 13,077 13,218
-------------------------------
Total $ 29,294 $ 28,192
===============================
- - ------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt $ 422 $ 569
Other current liabilities 1,141 1,045
------------------------------
1,563 1,614
------------------------------
Long-term debt:
Exchangeable Notes (PIES) 2,270 1,702
Other 3,130 3,151
------------------------------
5,400 4,853
------------------------------
Deferred income taxes, credits and other 6,951 6,676
Minority interest in Centaur Funding 1,102 1,099
Company-obligated mandatorily redeemable
preferred securities of subsidiary trust
holding solely Company-guaranteed debentures 1,061 1,061
Preferred stock subject to
mandatory redemption (Series C and E) 100 100
Shareholders' equity:
Preferred shares (Series D) 928 927
Common shares 10,328 10,324
Retained earnings 544 669
Accumulated other comprehensive income 1,317 869
------------------------------
13,117 12,789
------------------------------
Total $ 29,294 $ 28,192
==============================
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- - ------------------------------------------------------------------------------
-14-
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<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE
</LEGEND>
<CIK> 0000732718
<NAME> MediaOne Group, Inc.
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<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> MAR-31-1999 MAR-31-1999
<CASH> 532 532
<SECURITIES> 53 53
<RECEIVABLES> 326 326
<ALLOWANCES> 0 0
<INVENTORY> 3 3
<CURRENT-ASSETS> 1,043 1,043
<PP&E> 5,385 5,385
<DEPRECIATION> 1,126 1,126
<TOTAL-ASSETS> 29,294 29,294
<CURRENT-LIABILITIES> 1,563 1,563
<BONDS> 5,400 5,400
1,161 1,161
928 928
<COMMON> 10,328 10,328
<OTHER-SE> 1,861 1,861
<TOTAL-LIABILITY-AND-EQUITY> 29,294 29,294
<SALES> 665 665
<TOTAL-REVENUES> 665 665
<CGS> 269 269
<TOTAL-COSTS> 454 454
<OTHER-EXPENSES> 250 250
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 96 96
<INCOME-PRETAX> (148) (148)
<INCOME-TAX> 37 37
<INCOME-CONTINUING> (111) (111)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (111) (111)
<EPS-PRIMARY> (0.21) (0.21)
<EPS-DILUTED> (0.21) (0.21)
</TABLE>
