-----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, CwcDRzvWmUkRCRzfy7r3f6/v6mztrJ12W0TAO0Dg6/k6d09MjdkR5RLPQXStGUYg NRMko1ucPOg6UT6FFl36wA== 0000068622-94-000006.txt : 19940513 0000068622-94-000006.hdr.sgml : 19940513 ACCESSION NUMBER: 0000068622-94-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: US WEST INC CENTRAL INDEX KEY: 0000732718 STANDARD INDUSTRIAL CLASSIFICATION: 4813 IRS NUMBER: 840926774 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08611 FILM NUMBER: 94527428 BUSINESS ADDRESS: STREET 1: 7800 E ORCHARD RD STREET 2: SUITE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037936629 MAIL ADDRESS: STREET 1: 7800 EAST ORCHARD ROAD STREET 2: SUITE 480 CITY: ENGLEWOOD STATE: CO ZIP: 80111 10-Q 1 USW INC. 3/31/94 FORM 10-Q 1 ____________________________________________________________________________ ____________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________ FORM 10-Q ____________ [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 1-8611 U S WEST, Inc. A Colorado Corporation IRS Employer No. 84-0926774 7800 East Orchard Road, Englewood, Colorado 80111-2526 Telephone Number 303-793-6500 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No__ At April 30, 1994, 453,133,119 shares were outstanding. ____________________________________________________________________________ ____________________________________________________________________________ 2 U S WEST, Inc. Form 10-Q TABLE OF CONTENTS
Item Page PART I - FINANCIAL INFORMATION 1. Financial Statements Consolidated Statements of Operations - Three Months Ended March 31, 1994 and 1993 . . . . . . . . .3 Consolidated Balance Sheets - March 31, 1994 and December 31, 1993. . . . . . . . . .4 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1994 and 1993. . . . . . . .6 Notes to Consolidated Financial Statements. . . . . . . . .7 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . 10 PART II - OTHER INFORMATION 4. Submission of Matters to a Vote of Security Holders . . . . . 14 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . 14 2 3 Form 10-Q - Part I
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
___________________________________________________________________________ Three Months Ended Dollars in millions March 31, (except per share amounts) 1994 1993 ___________________________________________________________________________ Sales and other revenues $2,641 $2,510 Employee-related costs 911 870 Other operating expenses 477 472 Taxes other than income taxes 108 105 Depreciation and amortization 503 490 Interest expense 109 106 Other expense - net 11 18 ------- ------- Income from continuing operations before income taxes 522 449 Provision for income taxes 198 153 ------- ------- Income from continuing operations 324 296 Discontinued operations, net of tax - 20 ------- ------- NET INCOME $324 $316 ======= ======= Earnings per share: Continuing operations $0.73 $0.71 Discontinued operations - 0.05 ------- ------- EARNINGS PER SHARE $0.73 $0.76 ======= ======= DIVIDENDS PER SHARE $0.535 $0.535 ======= =======
See Notes to Consolidated Financial Statements. 3 4 Form 10-Q - Part I CONSOLIDATED BALANCE SHEETS (Unaudited)
____________________________________________________________________________ March 31, December 31, Dollars in millions 1994 1993 ____________________________________________________________________________ ASSETS Current assets Cash and cash equivalents $446 $128 Accounts and notes receivable 1,544 1,570 Inventories and supplies 203 193 Prepaid and other 648 609 ---------- -------- Total current assets 2,841 2,500 ---------- -------- Property, plant and equipment 29,441 29,161 Less: Accumulated depreciation 16,225 15,929 ---------- -------- Net property, plant and equipment 13,216 13,232 Investment in Time Warner Entertainment 2,529 2,552 Net assets of discontinued operations 515 554 Other assets 2,078 1,842 ---------- -------- Total assets $21,179 $20,680 ========== ========
See Notes to Consolidated Financial Statements. 4 5 Form 10-Q - Part I CONSOLIDATED BALANCE SHEETS (Unaudited), Continued
____________________________________________________________________________ March 31, December 31, Dollars in millions 1994 1993 ____________________________________________________________________________ LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities Short-term debt $2,093 $1,776 Accounts payable 708 977 Current portion of restructuring charges 443 456 Other 1,911 1,772 ---------- -------- Total current liabilities 5,155 4,981 ---------- -------- Long-term debt 5,349 5,423 Postretirement and other postemployment benefit obligations 2,432 2,699 Deferred taxes, credits and other 1,868 1,716 Shareowners' equity Common shares - no par, 2,000,000,000 authorized, 452,825,531 and 441,139,829 outstanding, respectively 7,457 6,996 Accumulated deficit (839) (892) LESOP guarantee (243) (243) ---------- -------- Total shareowners' equity 6,375 5,861 ---------- -------- Total liabilities and shareowners' equity $21,179 $20,680 ========== ========
See Notes to Consolidated Financial Statements. 5 6 Form 10-Q - Part I CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
____________________________________________________________________________ Three Months Ended March 31, Dollars in millions 1994 1993 ____________________________________________________________________________ OPERATING ACTIVITIES Net income $324 $316 Adjustments to net income: Depreciation and amortization 503 490 Discontinued operations - (20) Deferred income taxes and amortization of investment tax credits 75 17 Changes in operating assets and liabilities: Accounts and notes receivable 26 (23) Inventories, supplies and other (59) (71) Accounts payable and accrued liabilities (44) 136 Other adjustments - net (68) (189) ---------- -------- Cash provided by operating activities 757 656 ---------- -------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (654) (640) Proceeds from disposals of property, plant and equipment-net 18 22 Other - net (76) (73) ---------- -------- Cash (used) for investing activities (712) (691) ---------- -------- FINANCING ACTIVITIES Net proceeds from short-term debt 335 422 Proceeds from long-term debt 182 112 Repayments of long-term debt (116) (229) Dividends paid (223) (201) Proceeds from issuance of common stock 256 19 ---------- -------- Cash provided by financing activities 434 123 ---------- -------- Cash provided by continuing operations 479 88 ---------- -------- Cash provided by (used for) discontinued operations (161) 25 ---------- -------- CASH AND CASH EQUIVALENTS Increase 318 113 Beginning balance 128 159 ---------- -------- Ending balance $446 $272 ========== ========
See Notes to Consolidated Financial Statements. 6 7 Form 10-Q - Part I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions) (Unaudited) A. Consolidated Financial Statements The consolidated financial statements have been prepared by U S WEST, Inc. ("U S WEST" or "Company"), pursuant to the rules and regulations of the SEC (Securities and Exchange Commission). Certain information and footnote disclosures normally accompanying financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company's management, the consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial information set forth therein. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report for the year ended December 31, 1993. Certain reclassifications within the consolidated financial statements have been made to conform to the current year presentation. B. Investment in Time Warner Entertainment On September 15, 1993, U S WEST acquired 25.51 percent pro-rata priority capital and residual equity interests in Time Warner Entertainment Company L.P. (TWE). Summarized operating results for TWE follow:
Three Months Ended March 31, 1994 Revenues $1,919 Operating expenses* 1,716 Interest and other - net** 151 -------- Income before income taxes $52 ======== Net income $48 ======== * Includes depreciation and amortization of $213 ** Includes corporate services of $15
The Company accounts for its investment in TWE under the equity method of accounting. U S WEST's recorded share of TWE's operating results is based on (1) TWE allocated net income or loss adjusted for the amortization of the excess of fair market value over the book value of the partnership assets; and (2) special income allocations as defined in the TWE Partnership Agreement. 7 8 Form 10-Q - Part I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions) (Unaudited) C. Discontinued Operations The Company's consolidated financial statements reflect the operating results of discontinued operations separately from continuing operations. Discontinued operations includes activities related to financial services and the financial guarantee insurance operations, in addition to U S WEST Real Estate, Inc. Prior periods have been restated to exclude the effects of discontinued operations. On April 11, 1994, U S WEST signed an agreement to sell 2 million shares of its common stock in Financial Security Assurance (FSA) to Fund American Enterprises Holdings, Inc. (FFC). In conjunction with the sale agreement, FSA issued, on May 6, 1994, 7.5 million shares (including the 2 million shares of common stock to be purchased by FFC and excluding shares issuable upon exercise of the over-allotment option) at $20 per share. Pursuant to the sale and offering, U S WEST reduced its ownership interest in FSA to 62.8 percent. Sales and other revenues of discontinued operations for first quarter 1994 and 1993 were $305 and $142, respectively. In January 1994, U S WEST Real Estate Inc. sold two properties for approximately $230. The sales were in line with company estimates. The assets and liabilities of the Capital Assets segment have been separately classified on the balance sheet as net assets of discontinued operations. Following is a summary of the net assets of discontinued operations:
____________________________________________________________________________ March 31, December 31, Dollars in millions 1994 1993 ____________________________________________________________________________ ASSETS Cash and cash equivalents $36 $24 Finance receivables - net 1,109 1,131 Investment in real estate - net 509 711 Bonds, at market value 866 894 Other assets 773 600 ------ -------- Total assets $3,293 $3,360 ====== ======== LIABILITIES Debt $1,477 $1,496 Deferred income taxes 681 681 Unearned premiums 332 346 Accounts payable and accrued liabilities 238 243 Minority interests 50 40 ------ -------- Total liabilities $2,778 $2,806 ====== ======== Net assets of discontinued operations $515 $554 ====== ========
8 9 Form 10-Q - Part I NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions) (Unaudited) D. Contingencies At U S WEST Communications, there are pending regulatory actions in local regulatory jurisdictions that call for price decreases, refunds or both. In one such instance, the Utah Supreme Court has remanded a Utah Public Service Commission ("PSC") order to the PSC for reconsideration, thereby establishing two exceptions to the rule against retroactive ratemaking: 1) unforeseen and extraordinary events, and 2) misconduct. The Commission's initial order denied a refund request from interexchange carriers and other parties related to the Tax Reform Act of 1986. If the Commission finds that either of the exceptions apply, the Company could be liable for refunds, although at this time any such amount is not reasonably estimable since the case is still in the discovery process. E. Selected Financial Data Selected financial data for U S WEST Financial Services, Inc. ("Financial Services"), a wholly-owned subsidiary of U S WEST, follows. The financial results of the Capital Assets segment, which includes Financial Services, are excluded from continuing operations due to the Company's decision to dispose of the segment.
Three Months Ended March 31, 1994 1993 Operating revenues $17 $70 As of March 31 December 31, 1994 1993 Net finance receivables $1,005 $1,020 Total assets 1,524 1,784 Total debt 750 957 Total liabilities 1,475 1,735 Shareowner's equity 49 49
9 10 Form 10-Q - Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts) Results of Operations Comparative details of Company operations for the three months ended March 31 follow:
Three Months Ended March 31, % 1994 1993 Change Sales and other revenues $2,641 $2,510 5.2 Employee-related costs 911 870 4.7 Other operating expenses 477 472 1.1 Taxes other than income taxes 108 105 2.9 ------- ------- Earnings before interest, taxes, depreciation, amortization and other (EBITDA) $1,145 $1,063 7.7 ======= ======= Income from continuing operations $324 $296 9.5 ======= ======= Earnings per share from continuing operations $0.73 $0.71 2.8 ======= =======
U S WEST's first quarter income from continuing operations increased by $28, or 9.5 percent, compared to the same period last year. Excluding the sale of certain rural telephone exchanges by U S WEST Communications, income from continuing operations increased by $13, or 4.4 percent. Income from continuing operations excludes results from U S WEST's Capital Assets segment, which is a discontinued operation as discussed in Note C to the Consolidated Financial Statements. U S WEST's volume growth, and the effect of continued cost controls, resulted in a 7.7 percent increase in earnings before interest, taxes, depreciation, amortization and other (EBITDA). 10 11 Form 10-Q - Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts), Continued Sales and Other Revenues An analysis of the change in revenues follows:
Lower Price (Higher) Inc(Dec) Changes Refunds Demand Other $ % ---------------------------------------------------------------------------- U S WEST Communications: Local service $1 ($5) $52 - $48 5.1 Interstate access (15) (2) 43 $(2) 24 4.5 Intrastate access (3) (2) 9 - 4 2.4 Long distance (1) 1 (5) - (5) (1.4) Other services 6 6 4.3 ----------------------------------------------------------------------------- ($18) ($8) $99 $4 $77 3.6 Cellular 51 43.6 Publishing 10 4.3 Other (7) - ----------------------------------------------------------------------------- U S WEST Consolidated $131 5.2 -----------------------------------------------------------------------------
The increase in revenues for the first quarter was largely due to increased demand for services at U S WEST Communications. Continued subscriber growth in the Company's cellular business also contributed to revenue growth. The Company increased its cellular subscriber base by 53 percent, to approximately 665,000, during the last 12 months. Local service revenues at U S WEST Communications increased principally as a result of higher demand for services, as evidenced by an increase of 490,000 access lines, or 3.6 percent, during the last 12 months. Access line growth was 3.8 percent adjusted for the sale of approximately 20,000 rural telephone access lines. Increased demand for access services more than offset the effects of rate reductions and refunds. Billed access minutes of use increased by 9.1 percent over the first quarter of last year. Long distance network revenues decreased due principally to the continuing effects of competition. Revenues from other services increased primarily as a result of continued market penetration in voice messaging services. Costs and Expenses Consolidated employee-related costs increased by $41, or 4.7 percent, during the first quarter as compared to the same period last year. The increase is primarily due to the elimination of the pension credit (resulting from changes in actuarial assumptions) and additional costs associated with customer service initiatives in the current year. Partially offsetting this increase was a reduction in postretirement benefits expense. Other operating expenses increased by $5, or 1.1 percent. Higher selling costs related to growth in the cellular subscriber base contributed to the increase. 11 12 Form 10-Q - Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts), Continued Increased depreciation and amortization expense was attributable to the aggregrate effects of a higher depreciable asset base and the discontinuance of Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation." Interest expense increased slightly, primarily as a result of the financing costs associated with the TWE investment. This increase was largely offset by the refinancing of debt in the prior year to take advantage of lower interest rates, in addition to a reclassification of capitalized interest in the current year. Pursuant to the discontinuance of SFAS No. 71, interest capitalized as a component of plant construction is being offset against interest expense. Other expense decreased during the first quarter primarily due to a pretax gain of $24 on the sale of certain rural telephone exchanges by U S WEST Communications. Partially offsetting this gain was the reclassification of capitalized interest and higher losses associated with developing businesses. The effective tax rate was 37.9 percent in the first quarter compared to 34.1 percent in the same period last year. This increase is primarily a result of the effects of discontinuing SFAS No. 71, the 1993 federally- mandated increase in income tax rates, and an increase in income before income taxes. Restructuring Charges The Company's 1993 third-quarter results included a $1 billion restructuring charge (pretax). The related restructuring plan is designed to provide faster, more responsive customer services while reducing the costs of providing these services. As part of the plan, the Company is developing new systems that will enable it to monitor networks to reduce the risk of service interruptions, activate telephone service on demand, provide automated inventory systems and centralize its service centers so that customers can have their telecommunications needs resolved with one phone call. The Company will also reduce its work force by aproximately 8,000 employees (in addition to the remaining employee reductions pursuant to the restructuring plan announced in 1991) by the end of 1996. U S WEST Communications has begun the time-intensive staffing process necessary to consolidate the operations of its existing 560 customer centers into 26 customer centers in ten cities. Charges amounting to $2 and $8 for center moves and systems development, respectively, have been charged against the reserve in the first quarter. These charges will accelerate over the remainder of 1994 as the Company continues consolidation of the customer service centers and development of the new systems. The Company's 1991 restructuring plan included a pretax charge of $364 due to planned work-force reductions and the write-off of certain intangible and other assets. The plan will result in a work-force reduction of approximately 6,000 employees, of which approximately 5,200 have left the Company as of March 31, 1994. The portion of the restructuring charge related to work-force reductions was $240, of which approximately $45 was unused at March 31, 1994. The remaining balance of the restructuring reserve will be used by the end of 1994. 12 13 Form 10-Q - Part I Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts), Continued Liquidity and Capital Resources Cash provided by operations increased by $101 over the first three months of 1993, primarily due to a decrease in cash funding related to postretirement benefits during the first quarter of 1994. In the first quarter of 1994, the funding for postretirement benefits was $288, of which approximately $185 was in the form of a stock contribution, compared to cash funding of $246 in the first quarter last year. Details of cash provided by operating activities are provided in the Consolidated Statements of Cash Flows. In March 1994 approximately 5.5 million shares of common stock were issued in connection with the settlement of shareholder litigation ("Rosenbaum v. U S WEST Inc. et al.") for proceeds of approximately $210. Contingencies At U S WEST Communications, there are pending regulatory actions in local regulatory jurisdictions that call for price decreases, refunds or both. In one such instance, the Utah Supreme Court has remanded a Utah Public Service Commission ("PSC") order to the PSC for reconsideration, thereby establishing two exceptions to the rule against retroactive ratemaking: 1) unforeseen and extraordinary events, and 2) misconduct. The Commission's initial order denied a refund request from interexchange carriers and other parties related to the Tax Reform Act of 1986. If the Commission finds that either of the exceptions apply, the Company could be liable for refunds, although at this time any such amount is not reasonably estimable since the case is still in the discovery process. 13 14 PART II - OTHER INFORMATION Form 10-Q - Part II Item 4. Submission of Matters to a Vote of Security Holders Not Applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibits identified in parentheses below, on file with the Securities and Exchange Commission, are incorporated by reference as exhibits hereto. Exhibit Number 11 Statement regarding computation of earnings per share of U S WEST, Inc. 12 Statement regarding computation of earnings to fixed charges ratio of U S WEST, Inc. and U S WEST Financial Services, Inc. 99 Financial statements of Financial Security Assurance Inc., a 92 percent-owned subsidiary of the Company, for the quarterly period ended March 31, 1994. (b) Reports on Form 8-K U S WEST filed the following reports on Form 8-K during the first quarter of 1994: (i) report dated January 21, 1994, concerning the release of earnings for the fourth quarter and year ended December 31, 1993. (ii) report dated February 24, 1994, concerning the Company's announcement that it expects to issue 5.6 million shares of common stock in settlement of a class-action suit filed against the Company and other individuals in December 1991. 14 15 Form 10-Q U S WEST, Inc. SIGNATURES 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 thereunto duly authorized. /s/ James M. Osterhoff ---------------------- May 12, 1994 U S WEST, Inc. James M. Osterhoff Executive Vice President and Chief Financial Officer 15 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 U S WEST, Inc. Computation of Earnings Per Share (In Thousands, Except Per Share Amounts)
EARNINGS PER SHARE: Three Months Ended March 31, 1994 1993 ---------- ---------- Income from continuing operations $323,723 $295,713 Discontinued operations - 20,395 ---------- ---------- Net income for per share calculation $323,723 $316,108 ========== ========== Weighted average shares outstanding 444,378 415,082 ========== ========== Income from continuing operations $0.73 $0.71 Discontinued operations - 0.05 ---------- ---------- Earnings per share $0.73 $0.76 ========== ==========
2 EXHIBIT 11 U S WEST, Inc. Computation of Earnings Per Share (In Thousands, Except Per Share Amounts)
EARNINGS PER COMMON AND COMMON Three Months Ended EQUIVALENT SHARE: March 31, 1994 1993 ---------- ---------- Income from continuing operations $323,723 $295,713 Discontinued operations - 20,395 ---------- ---------- Net income for per share calculation $323,723 $316,108 ========== ========== Weighted average shares outstanding 444,378 415,082 Incremental shares from assumed exercise of stock options 391 298 ---------- ---------- Total shares 444,769 415,380 ========== ========== Income from continuing operations $0.73 $0.71 Discontinued operations - 0.05 ---------- ---------- Earnings per common and common $0.73 $0.76 equivalent share ========== ==========
3 EXHIBIT 11 U S WEST, Inc. Computation of Earnings Per Share (In Thousands, Except Per Share Amounts)
EARNINGS PER SHARE - ASSUMING Three Months Ended FULL DILUTION: March 31, 1994 1993 ---------- ---------- Income from continuing operations $323,723 $295,713 Interest on Convertible Liquid Yield Options Notes (LYONS) 5,441 5,067 ---------- ---------- Adjusted income from continuing operations for per share calculation 329,164 300,780 Discontinued operations - 20,395 ---------- ---------- Adjusted net income for per share calculation $329,164 $321,175 ========== ========== Weighted average shares outstanding 444,378 415,082 Incremental shares from assumed exercise of stock options 390 396 Shares issued upon conversion of LYONS 10,230 10,238 ---------- ---------- Total shares 454,998 425,716 ========== ========== Adjusted income from continuing operations $0.72 $0.71 Discontinued operations - 0.05 ---------- ---------- Earnings per share - assuming $0.72 $0.76 full dilution ========== ==========
EX-12 3 RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 U S WEST, Inc. RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Millions)
Quarter Ended 3/31/94 3/31/93 - ------------------------------------------- --------- --------- Income from continuing operations before income taxes $522 $449 Interest expense (net of amounts capitalized) 109 106 Interest factor on rentals (1/3) 23 25 --------- --------- Earnings $654 $580 Interest expense 116 106 Interest factor on rentals (1/3) 23 25 --------- --------- Fixed charges $139 $131 Ratio of earnings to fixed charges 4.71 4.43 - ----------------------------------------------- ---------- ---------
EX-12 4 FSI RATIO OF EARNINGS TO FIXED CHARGES 1 EXHIBIT 12 U S WEST Financial Services, Inc. RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Thousands)
With Without Parent Support Parent Support Quarter Ended Quarter Ended 3/31/94 3/31/93 3/31/94 3/31/93 - ------------------------------------------------------------------------------- Income before income taxes $3,196 $17,574 $1,127 $17,574 Interest expense 12,724 33,110 12,724 33,110 Interest factor on rentals (1/3) 41 186 41 186 ------ ------ ------ ------ Earnings $15,961 $50,870 $13,892 50,870 Interest expense 12,724 33,110 12,724 33,110 Interest factor on rentals (1/3) 41 186 41 186 ------ ------ ------ ------ Fixed charges $12,765 $33,296 $12,765 $33,296 Ratio of earnings to fixed charges 1.25 1.53 1.09 1.53 - -------------------------------------------------------------------------------
EX-99 5 FSA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1 EXHIBIT 99 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES Condensed Consolidated Financial Statements March 31, 1994 2 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 1994 AND 1993 INDEX
FINANCIAL STATEMENTS: Condensed Consolidated Balance Sheets 1 Condensed Consolidated Statements of Income 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Condensed Consolidated Financial Statements 4
3 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data)
March 31 December 31, ASSETS 1994 1993 ------ ---- ---- (unaudited) Bonds at market value (amortized cost of $701,198 and $683,176 $703,194 $736,872 Short-term investments 3,369 31,720 -------- -------- Total investments 706,563 768,592 Cash and cash equivalents 15,204 15,770 Deferred acquisition costs 83,833 81,992 Prepaid reinsurance premiums 126,422 127,849 Reinsurance recoverable on unpaid losses 630 79 Receivable for securities sold 22,402 21 Other assets 36,001 34,878 -------- ---------- TOTAL ASSETS $991,055 $1,029,181 ======== ========== LIABILITIES AND SHAREHOLDER'S EQUITY Unearned premiums $332,393 $328,165 Losses and loss adjustment expenses 37,397 36,094 Deferred federal income taxes 19,348 35,832 Ceded reinsurance balances payable 6,987 7,408 Payable for securities purchased 14,459 30,741 Amounts withheld on account for others 25,566 25,649 Accrued expenses and other liabilities 27,885 22,824 -------- -------- TOTAL LIABILITIES 464,035 486,713 -------- -------- Common stock (1,000 shares authorized, issued and outstanding; par value of $15,000 per share) 15,000 15,000 Additional paid-in capital 497,506 497,506 Unrealized gain on investments (net of deferred income taxes of $699 and $18,788) 1,297 34,892 Accumulated earnings (deficit) 13,217 (4,930) -------- --------- TOTAL SHAREHOLDER'S EQUITY 527,020 542,468 -------- --------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $991,055 $1,029,181 ======== ==========
See notes to condensed consolidated financial statements. 4 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands)
Three Months Ended March 31, 1994 1993 ---- ---- REVENUES: Net premiums written (net of premiums ceded of $8,406 and $11,332) $22,181 $16,772 Increase in unearned premiums (5,466) (3,600) -------- -------- Premiums earned (net of premiums ceded of $9,890 and $6,337) 16,715 13,172 Net investment income 11,181 11,837 Net realized gains 3,122 7,858 Other income 77 129 -------- -------- TOTAL REVENUES 31,095 32,996 -------- -------- EXPENSES: Losses and loss adjustment expenses (net of reinsurance recoveries of $551 and $87) 754 498 Policy acquisition costs 3,636 3,245 Other operating expenses 2,797 5,047 -------- -------- TOTAL EXPENSES 7,187 8,790 -------- -------- INCOME BEFORE INCOME TAXES 23,908 24,206 Provision for income taxes 5,761 5,916 -------- -------- NET INCOME $18,147 $18,290 ======== ========
See notes to condensed consolidated financial statements. 5 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
Three Months Ended March 31, 1994 1993 ---- ---- Cash flows from operating activities: Premiums received, net $ 17,276 $ 7,345 Policy acquisition and other operating expenses paid, net (4,042) (2,571) Loss and LAE recoverd (paid), net 560 (6,489) Net investment income received 11,452 12,548 Federal income taxes recovered (paid) 508 (3,640) Interest paid (460) (754) Other, net (1,636) 888 --------- -------- Net cash provided by operating activities 23,658 7,327 -------- -------- Cash flows from investing activities: Proceeds from sales of bonds 107,646 128,107 Purchases of bonds (159,999) (134,332) Purchases of property and equipment (207) (290) Net decrease in short-term securities 28,336 5,351 --------- --------- Net cash used for investing activities (24,224) (1,164) --------- --------- Net increase (decrease) in cash and cash equivalents (566) 6,163 Cash and cash equivalents at beginning of period 15,770 13,483 --------- --------- Cash and cash equivalents at end of period $ 15,204 $ 19,646 ========= =========
See notes to condensed consolidated financial statements. 6 FINANCIAL SECURITY ASSURANCE INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993 (UNAUDITED) 1. ORGANIZATION AND OWNERSHIP Financial Security Assurance Inc. (the "Company"), a wholly owned subsidiary of Financial Security Assurance Holdings Ltd. (the "Parent"), is an insurance company domiciled in the State of New York. The Company is engaged in providing financial guaranty insurance on asset-backed financings and municipal obligations. 2. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements have been prepared by the Company and are unaudited. In the opinion of management, all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows at March 31, 1994 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These statements should be read in conjunction with the Company's December 31, 1993 consolidated financial statements and notes thereto. The year-end condensed balance sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The results of operations for the periods ended March 31, 1994 and 1993 are not necessarily indicative of the operating results for the full year. Certain amounts in the 1993 financial statements have been reclassed to conform to the 1994 presentation. -----END PRIVACY-ENHANCED MESSAGE-----