-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mv4QFTq49rgVrVEu1xvTkXtfabSnaTRJw2k/r5uVUY2uG4ZFJF0rCM2KMbmDKpZu 6626I5BYGb+joXZcTJxCEw== 0000068622-94-000001.txt : 19940316 0000068622-94-000001.hdr.sgml : 19940316 ACCESSION NUMBER: 0000068622-94-000001 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19940315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S WEST COMMUNICATIONS INC CENTRAL INDEX KEY: 0000068622 STANDARD INDUSTRIAL CLASSIFICATION: 4813 IRS NUMBER: 840273800 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 33 SEC FILE NUMBER: 033-49647 FILM NUMBER: 94516083 BUSINESS ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD STREET 2: SUITE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 303-793-66 MAIL ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD STREET 2: SUITE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 FORMER COMPANY: FORMER CONFORMED NAME: MOUNTAIN STATES TELEPHONE & TELEGRAPH CO DATE OF NAME CHANGE: 19910109 424B3 1 PRICING SUPPLEMENT NO. 1 DATED 3/8/94 1 Registration No. 33-49647 Filing under Rule 424(b)(3) PRICING SUPPLEMENT NO. 1 DATED MARCH 8, 1994 (To Prospectus and Prospectus Supplement December 17, 1993) U.S.$75,000,000 U S WEST COMMUNICATIONS, INC. Medium-Term Notes Due Nine Months or More From Date of Issue Form of Note: Except as set forth herein, the Notes offered hereby are "Floating Rate Notes" and have such terms as are described in the accompanying Prospectus Supplement dated December 17, 1993 relating to Floating Rate Notes. Settlement Date: March 15, 1994 Maturity Date: March 15, 1999 Issue Price: 100% Initial Interest Rate: 5.50% Interest Payment Dates: Interest will be payable quarterly in arrears on each March 15, June 15, September 15, and December 15, commencing June 15, 1994. Interest Reset Dates: Each March 15, June 15, September 15 and December 15 from June 15, 1994 to and including December 15, 1998 (whether or not such day is a Business Day). 2 Interest Determination Dates: The "Interest Determination Date" pertaining to an Interest Reset Date will be such Interest Reset Date. Calculation Agent: Morgan Stanley & Co. Incorporated Interest Rate Basis: Constant Maturity Treasury Rate. "Constant Maturity Treasury Rate" means, with respect to any Interest Determination Date (in the following order of priority): (i) The yield on 10-year United States Treasury securities at "constant maturity" for the related Reference Date (as hereinafter defined), as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates", or any successor publication ("H.15(519)") opposite the caption "Treasury Constant Maturities, 10-Year". Upon publication, the rates contained in H.15(519) are also displayed on page 7055 on the Dow Jones Telerate Service (page 7055, or such page as may replace page 7055 on that service, being hereinafter referred to as "Telerate Page 7055"). The Calculation Agent may determine the Constant Maturity Treasury Rate as described above by reference to Telerate Page 7055, provided, however, if any discrepancy arises between the rate determined by reference to Telerate Page 7055 and the rate published in H.15(519), the rate published in H.15(519) shall control. "Reference Date" means the last Business Day included in the H.15(519) published for the Calendar Week immediately preceding the Interest Determination Date. "Calendar Week" shall mean the week beginning on each Monday. 3 (ii) If the Constant Maturity Treasury Rate as described in clause (i) is not so published on the applicable Interest Determination Date, the Constant Maturity Treasury Rate will be calculated by the Calculation Agent and will be the arithmetic mean of the closing offered yield quotations for the Reference Date of three leading primary United States government securities dealers in The City of New York, for actively traded ten-year U.S. Treasury Notes. (iii) If fewer than three dealers selected by the Calculation Agent are quoting as described in clause (ii), the Constant Maturity Treasury Rate will be the Constant Maturity Treasury Rate in effect on the preceding Interest Reset Date (or, if there was no preceding Interest Reset Date, the Initial Interest Rate). Spread Adjustment Formula: .5 * CMT + 2.18% Minimum Interest Rate: 5.50% Accrued Interest: Interest will be computed on the basis of a 360-day year of twelve 30-day months. Business Day: Any day that is not a Saturday or Sunday and is not a day on which banking institutions in The City of New York are generally authorized or obligated by law or executive order to close. Terms used but not defined in this Pricing Supplement shall have the meanings specified in the above -referenced Prospectus and Prospectus Supplement. 4 TAXATION The following discussion supplements the discussion contained in the accompanying Prospectus Supplement under the heading "Certain United States Federal Income Tax Considerations - -- Original Issue Discount". On January 27, 1994, the IRS issued final Treasury Regulations (the "OID Regulations") under the original issue discount provisions of the Code. The OID Regulations, which replaced the Proposed OID Regulations, generally apply to debt instruments issued on or after April 4, 1994; therefore by their terms they would not apply to the Notes offered hereby. Nevertheless, taxpayers may rely on the OID Regulations for debt instruments issued after December 21, 1992. Under the OID Regulations, Floating Rate Notes (such as the Notes offered hereby) are subject to special rules whereby a Floating Rate Note will qualify as a "variable rate debt instrument" if (a) its issue price does not exceed the total noncontingent principal payments due under the Floating Rate Note by more than a specified de minimis amount and (b) it provides for stated interest, paid or compounded at least annually, at current values of (i) one or more qualified floating rates, (ii) a single fixed rate and one or more qualified floating rates, (iii) a single objective rate, or (iv) a single fixed rate and a single objective rate that is a qualified inverse floating rate. A "qualified floating rate" is any variable rate where variations in the value of such rate can reasonably be expected to measure contemporaneous variations in the cost of newly borrowed funds in the currency in which the Floating Rate Note is denominated. Although a multiple of a qualified floating rate will generally not itself constitute a qualified floating rate, a variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than zero but not more than 1.35 will constitute a qualified floating rate. A variable rate equal to the product of a qualified floating rate and a fixed multiple that is greater than zero but not more than 1.35, increased or decreased by a fixed rate, will also constitute a qualified floating rate. In addition, under the OID Regulations, two or more qualified floating rates that can reasonably be expected to have approximately the same values throughout the term of the Floating Rate Note (e.g., two or more qualified floating rates with values within 25 basis points of each other as determined on the Floating Rate Note's issue date) will be treated as a single qualified floating rate. Notwithstanding the foregoing, a variable rate that would otherwise constitute a qualified floating rate but which is subject to one or more restrictions such as a maximum numerical limitation (i.e., a cap) 5 or a minimum numerical limitation (i.e., a floor) may, under certain circumstances, fail to be treated as a qualified floating rate under the OID Regulations. An "objective rate" is a rate that is not itself a qualified floating rate but which is determined using a single fixed formula and which is based upon (i) one or more qualified floating rates, (ii) one or more rates where each rate would be a qualified floating rate for a debt instrument denominated in a currency other than the currency in which the Floating Rate Note is denominated, (iii) either the yield or changes in the price of one or more items of actively traded personal property or (iv) a combination of objective rates. The OID Regulations also provide that other variable interest rates may be treated as objective rates if so designated by the IRS in the future. Despite the foregoing, a variable rate of interest on a Floating Rate Note will not constitute an objective rate if it is reasonably expected that the average value of such rate during the first half of the Floating Rate Note's term will be either significantly less than or significantly greater than the average value of the rate during the final half of the Floating Rate Note's term. A "qualified inverse floating rate" is any objective rate where such rate is equal to a fixed rate minus a qualified floating rate, as long as variations in the rate can reasonably be expected to inversely reflect contemporaneous variations in the cost of newly borrowed funds. The OID Regulations also provide that if a Floating Rate Note provides for stated interest at a fixed rate for an initial period of less than one year followed by a variable rate that is either a qualified floating rate or an objective rate and if the variable rate on the Floating Rate Note's issue date is intended to approximate the fixed rate (e.g., the value of the variable rate on the issue date does not differ from the value of the fixed rate by more than 25 basis points), then the fixed rate and the variable rate together will constitute either a single qualified floating rate or objective rate, as the case may be. If a Floating Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof qualifies as a "variable rate debt instrument" under the OID Regulations, then any stated interest on such Note which is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually will constitute qualified stated interest and will be taxed accordingly. Thus, a Floating Rate Note that provides for stated interest at either a single qualified floating rate or a single objective rate throughout the term thereof and that qualifies as a "variable rate debt instrument" under the OID Regulations will generally not be treated as having been issued with original issue discount unless the Floating Rate Note is issued at a "true" discount (i.e., at a price below the Note's stated principal amount) in excess of a specified de minimis amount. 6 Based upon the foregoing, the Notes offered hereby would qualify as "variable rate debt instruments" under the OID Regulations. Furthermore, under the OID Regulations, the Notes offered hereby would not be treated as having been issued with original issue discount and all payments of interest on the Notes would constitute payments of "qualified stated interest" and would be taxable to a U.S. Holder as ordinary interest income at the time such payments are accrued or are received (in accordance with the U.S. Holder's regular method of tax accounting). PURCHASE AS PRINCIPAL This Pricing Supplement relates to $75,000,000 aggregate principal amount of Notes that may be offered, as principal, by Morgan Stanley & Co. Incorporated ("Morgan") from time to time to one or more investors at varying prices related to prevailing market conditions at the time or times of resale as determined by Morgan. Net proceeds payable by Morgan to U S WEST Communications, Inc. (the "Company") will be 99.50% of the aggregate principal amount of the Notes, or $74,625,000, before deduction of expenses payable by the Company. In connection with the sale of the Notes, Morgan may be deemed to have received compensation from the Company in the form of underwriting discounts. -----END PRIVACY-ENHANCED MESSAGE-----