-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KTugzCHuFrYt+GmLT7Zp/BYpxNV8auPAjSUL0u4VnMUqukhCvOK7WJhGUf5j6fsU 3BkcdoJqN/CnNHTnvt9p+g== 0000732718-96-000025.txt : 19960702 0000732718-96-000025.hdr.sgml : 19960702 ACCESSION NUMBER: 0000732718-96-000025 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19960501 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960501 SROS: NYSE 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08611 FILM NUMBER: 96554701 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 8-K 1 FORM 8-K 5-1-96 1 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: May 1, 1996 U S WEST, Inc.
A Delaware Commission File IRS Employer Identification Corporation Number 1-8611 No. 84-0926774
7800 East Orchard Road, Englewood, Colorado 80111 Telephone Number (303) 793_6500 2 Item 5. Other Events On April 25, 1996, U S WEST Communications Group released its first quarter earnings results. In addition, U S WEST Media Group released its first quarter earnings results on April 29, 1996. The releases are attached hereto as Exhibits 99A and 99B, respectively. Item 7. Exhibits Exhibit Description 27 Financial Data Schedule. 99A Press Release issued April 25, 1996 concerning the earnings results of U S WEST Communications Group for the first quarter of 1996. 99A.1 Unaudited Combined Statements of Operations of U S WEST Communications Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 25, 1996. 99A.2 Unaudited Selected Combined Group Data of Company for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 25, 1996. 99A.3 Unaudited Combined Balance Sheets of U S WEST Communications Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 25, 1996. 99A.4 Unaudited Combined Statements of Cash Flows of U S WEST Communications Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 25, 1996. 99A.5 Unaudited Statements of Operations of U S WEST Communications Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 25, 1996. 99B Press Release issued April 29, 1996 concerning the earnings results of U S WEST Media Group for the first quarter of 1996. 99B.1 Unaudited Combined Statements of Operations of U S WEST Media Group for the quarters and years ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 29, 1996. 3 99B.2 Unaudited Selected Combined Group Data of U S WEST Media Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 29, 1996. 99B.3 Unaudited Combined Balance Sheets of U S WEST Media Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 29, 1996. 99B.4 Unaudited Combined Statements of Cash Flows of U S WEST Media Group for the quarters ended March 31, 1995 and 1996, filed in connection with the Press Release dated April 29, 1996. 99B.5 Unaudited Selected Proportionate Data of U S WEST Media Group for the quarter ended March 31, 1996, filed in connection with the Press Release dated April 29, 1996. 99C.1 Unaudited Consolidated Statements of Operations of U S WEST, Inc. for the quarters ended March 31, 1995 and 1996. 99C.2 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the quarter ended March 31, 1996 and the year ended December 31, 1995. 99C.3 Unaudited Consolidated Statements of Cash Flows of U S WEST, Inc. for the quarters ended March 31, 1995 and 1996. 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: May 1, 1996 EX-99 2 PRESS RELEASE DATED 4/25/96 4 EXHIBIT 99A [U S WEST Communications Group Logo] Release Date: April 25, 1996 Contact: Becky Winning (303) 793-6367 Dave Banks (303) 896-2721 U S WEST COMMUNICATIONS GROUP REPORTS RECORD REVENUES AND IMPROVED PROFITS ENGLEWOOD, Colo. - U S WEST Communications Group (NYSE:USW) reported record growth in revenue and telephone access lines for the first quarter of 1996. Profits for the quarter, before one-time items, grew 4.7 percent compared with the first quarter of 1995. First-quarter revenues increased a record 6.3 percent to $2.5 billion, up from $2.3 billion a year ago. Revenue gains were driven by: * Record growth in local service revenues, up 9.0 percent; * Strong growth in revenues from value-added services, such as CLASS, Call Waiting, Caller ID, Voice Messaging Services and data networking services, up approximately 60 percent; * Double-digit growth in minutes of use, up 10.3 percent; * Record growth in access lines, up 4.8 percent (excluding the sale of selected rural telephone exchanges). "I'm pleased with U S WEST Communications Group's strong top-line growth and ongoing improvements in customer service," said Dick McCormick, chairman and chief executive officer of U S WEST, Inc. "Sol Trujillo and his team are positioning the company to succeed in an increasingly competitive environment." "Our revenue growth exceeded expectations in nearly every category," said Sol Trujillo, president and chief executive officer of U S WEST Communications Group. "That's great news, because revenue growth is one of the most important value drivers in our business. Our first-quarter results demonstrate our ability to increase revenues through improved penetration of existing products, new and innovative products and features, differentiated product packages and strong sales channel development." 5 First-quarter net income rose 4.7 percent to $289 million, up from $276 million in 1995. Earnings per share rose 3.4 percent to $0.61 from $0.59 in the prior year. These totals exclude a one-time, after-tax gain on the sales of rural exchanges totaling $39 million in the first quarter of 1995. They also exclude the cumulative after-tax effect of an accounting change related to the adoption of the Statement of Financial Accounting Standards (SFAS) No. 121, which totaled $34 million, as well as the current-quarter, after-tax effect of that change, which reduced depreciation expense by $5 million. "Earnings for the quarter were reduced by higher-than-expected employee-related expenses, partially related to unplanned contract and overtime costs caused by flood conditions in Oregon and Washington," Trujillo said. "Approximately 21,000 of our customers were affected by the February flood, and we dispatched more than 800 technicians to restore service, including some on loan from other parts of the U.S. and Canada," Trujillo explained. "We spent approximately $15 million in contract labor and overtime to build customer loyalty with our 3.2 million customers in the Pacific Northwest. "The remainder of the increase in employee-related expense was due to accelerating growth in access lines and continued investment in service quality in the first quarter," Trujillo explained. "We initiated aggressive marketing tactics in the last half of 1995 to stimulate strong access-line growth in the first quarter so we could maximize annual revenue opportunities in 1996. We also planned to continue high-priority service-improvement initiatives. "We're beginning to see the results of those efforts," he continued. "In the first quarter of 1996, we added 268,000 access lines -- approximately 60 percent more than we added in the same period last year. At the same time, we achieved significant improvements in service quality. "We're spending to fuel growth, and that's good," he said. "We're also beginning to achieve productivity improvements on a per-unit-of-volume basis. Over time, those improvements will bring costs down." U S WEST Communications Group reported solid growth in EBITDA (earnings before interest, taxes, depreciation and amortization), to $1.1 billion, a 6.0 percent increase compared to first quarter 1995. The company's operating margin expanded to 24.2 percent versus 23.8 percent last year. Depreciation increased 3.6 percent to $517 million for the quarter, up from $499 for the first quarter last year. The change was primarily due to increased plant, partially offset by an $8 million (pre-tax) reduction in depreciation expense related to the adoption of SFAS No. 121. 6 Planned capital expenditures for the quarter increased to $711 million to meet the demands of explosive growth. "We're on track with our first-quarter performance," Trujillo said. "We're beginning to see the benefits of a clear strategic focus and key management initiatives. We remain firmly committed to our bottom-line objectives and we expect to make consistent progress toward our goal of delivering improved results." REGULATORY UPDATE Also in the first quarter, the Washington State Utilities and Transportation Commission (WUTC) acted on U S WEST Communications Group's rate request. In February of 1995, U S WEST Communications sought to raise rates for basic residential services for the first time in 13 years. Instead, the Commission ordered a significant revenue reduction and ordered the company to set one of the lowest rates for basic residential service in the nation. U S WEST Communications responded immediately by filing with the King County Superior Court for an appeal of the order, a temporary stay of the ordered rate reduction, and authorization to implement a revenue increase. These legal filings are currently under review by the court. "We were disappointed by the WUTC order," Trujillo said. "It's too early to speculate what the final outcome will be. However, we believe the current order is unreasonable and we'll aggressively pursue every avenue to achieve recovery of our investment and rational pricing in the state of Washington." FIRST QUARTER OPERATING HIGHLIGHTS Operating highlights for the quarter include: * Despite accelerating growth, U S WEST Communications demonstrated solid, year-over-year improvements in customer service measures. As an example, the company achieved a 25-percent reduction in the number of orders for primary service held for more than 30 days. * In January, U S WEST Communications announced the deployment of its "U S WEST Network 21" in seven major metro areas. This fiber-optic ring architecture will enable the company to provide state-of-the-art service to the majority of private-line and switched traffic in a metro area. 7 * U S WEST Communications also introduced a number of new products, packages and services. One example is the U S WEST Home Business Line, a new service that allows customers to convert their residence line to a business line and have two numbers -- one for residence use and the other for business use -- each with its own distinctive ring. * !NTERPRISE [registered trademark], the data-networking arm of U S WEST Communications, successfully tested data-communications technology capable of providing consumers and businesses with faster network access to data. During comprehensive technical trials in Colorado and Minnesota, U S WEST employees connected to the public Internet and to U S WEST's corporate network at speeds up to 1.544 megabits per second. * U S WEST Communications also issued its proposed agreement for competitive interconnection and resale to more than 20 existing and potential competitors throughout its 14-state territory. The proposed agreement establishes a framework for individual negotiations with potential competitive providers. U S WEST Communications Group provides telecommunications and high-speed data 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. U S WEST is 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 (NYSE:UMG), is involved in domestic and international cable and wireless networks, directory publishing and interactive multimedia services. # # # EX-99 3 EXHIBIT 99A.1 8 EXHIBIT 99A.1 COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended March 31, % In millions 1996 1995 Change - - ------------------------------------------------ ---------- --------- OPERATING REVENUES Local service $1,145 $1,050 9.0 Interstate access service 622 589 5.6 Intrastate access service 190 188 1.1 Long-distance network services 290 299 (3.0) Other services 218 192 13.5 ---------- ---------- Total operating revenues 2,465 2,318 6.3 ---------- ---------- OPERATING EXPENSES Employee-related expenses 867 813 6.6 Other operating expenses 388 349 11.2 Taxes other than income taxes 97 106 (8.5) Depreciation and amortization 517 499 3.6 ---------- ---------- Total operating expenses 1,869 1,767 5.8 ---------- ---------- Income from operations 596 551 8.2 Interest expense 111 101 9.9 Gain on sales of rural telephone exchanges - 63 - Other expense - net 16 13 23.1 ---------- ---------- Income before income taxes and cumulative effect of change in accounting principle 469 500 (6.2) Provision for income taxes 175 185 (5.4) ---------- ---------- Income before cumulative effect of change in accounting principle 294 315 (6.7) Cumulative effect of change in accounting principle - net of tax 34 - - ---------- ---------- NET INCOME $328 $315 4.1 ========== ==========
9 EXHIBIT 99A.1 (continued) COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended In millions, except March 31, % per share amounts 1996 1995 Change - - ------------------------------------------------ ---------- --------- Average common shares outstanding (#1) 475.1 468.6 1.4 ========== ========== Earnings per common share: (#1) Income before cumulative effect of change in accounting principle $0.62 $0.67 (7.5) Cumulative effect of change in accounting principle 0.07 - - ---------- ---------- Earnings per common share $0.69 $0.67 3.0 ========== ========== Normalized income: Reported net income $328 $315 4.1 Adjustments to normalize net income: Cumulative effect of accounting change - net of tax (34) - - Current year impact of accounting change - net of tax (5) - - Rural exchange sales - (39) - ---------- ---------- Normalized income $289 $276 4.7 ========== ========== Normalized earnings per common share: Reported net income $0.69 $0.67 3.0 Adjustments to normalize net income: Cumulative effect of accounting change - net of tax (0.07) - - Current year impact of accounting change - net of tax (0.01) - - Rural exchange sales - (0.08) - ---------- ---------- Normalized earnings per common share $0.61 $0.59 3.4 ========== ========== #1: Effective November 1, 1995, each share of U S WEST, Inc. common stock was converted into one share each of U S WEST Communications Group common stock and U S WEST Media Group common stock. Earnings per common share for 1995 have been presented on a pro forma basis to reflect the two classes of stock as if they were outstanding since January 1, 1995. For periods prior to the recapitalization, the average common shares outstanding are assumed to be equal to the average common shares outstanding for U S WEST, Inc.
EX-99 4 EXHIBIT 99A.2 10 EXHIBIT 99A.2 SELECTED COMBINED GROUP DATA U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended Dollars in millions, March 31, % except per share amounts 1996 1995 Change - - ----------------------------------------------- ---------- --------- EBITDA (#1) $1,113 $1,050 6.0 EBITDA margin 45.2% 45.3% - Capital expenditures $711 $545 30.5 Return on equity (#2) 32.5% 39.6% - Debt-to-capital ratio: Communications Group 64.8% 66.0%# - Telephone operations only 62.2% 63.1%# - Employees: Communications Group 51,132 51,083 0.1 Telephone operations only 48,308 47,215 2.3 Common shares outstanding (#3) 475.9 469.9 1.3 Dividends per common share (#3) $0.535 $0.535 - Access lines (thousands) (#4): Business 4,372 4,085 7.0 Consumer 10,691 10,331 3.5 Total access lines 15,063 14,416 4.5 Billed access minutes of use (millions): Interstate 12,696 11,594 9.5 Intrastate 2,567 2,245 14.3 Total minutes of use 15,263 13,839 10.3 # As of December 31, 1995. # 1: Earnings before interest, taxes, depreciation, amortization, and other (EBITDA). EBITDA also excludes gain on asset sales. # 2: Based on income before cumulative effect of change in accounting principle. # 3: Effective November 1, 1995, each share of U S WEST, Inc. common stock was converted into one share each of U S WEST Communications Group common stock and U S WEST Media Group common stock. The common shares outstanding and dividends per common share at March 31, 1995 are presented on a pro forma basis and assumed to be equal to the common shares outstanding for U S WEST, Inc. #4: 1995 access lines have been restated to conform to current year presentation. Access line growth, excluding 1995 second, third and fourth quarter rural exchange sales of 45,000 lines, was 4.8%.
EX-99 5 EXHIBIT 99A.3 11 EXHIBIT 99A.3 COMBINED BALANCE SHEETS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
March 31, December 31, In millions 1996 1995 - - -------------------------------------- --------------------------- ASSETS Current assets: Cash and cash equivalents $43 $172 Accounts and notes receivable 1,508 1,617 Inventories and supplies 211 193 Deferred tax asset 249 259 Prepaid and other 91 51 --------------------------- Total current assets 2,102 2,292 --------------------------- Property, plant and equipment - net 13,771 13,529 Other assets 769 764 --------------------------- Total assets $16,642 $16,585 =========================== LIABILITIES AND EQUITY Current liabilities: Short-term debt $995 $1,065 Accounts payable 783 851 Dividends payable 255 254 Other 1,486 1,437 --------------------------- Total current liabilities 3,519 3,607 --------------------------- Long-term debt 5,679 5,689 Postretirement and other postemployment benefit obligations 2,319 2,351 Deferred taxes, credits and other 1,506 1,462 Communications Group equity 3,619 3,476 --------------------------- Total liabilities and equity $16,642 $16,585 ===========================
EX-99 6 EXHIBIT 99A.4 12 EXHIBIT 99A.4 COMBINED STATEMENTS OF U S WEST COMMUNICATIONS GROUP CASH FLOWS (UNAUDITED)
Quarter Ended March 31, In millions 1996 1995 - - --------------------------------------------------------------------- OPERATING ACTIVITIES Net income $328 $315 Adjustments to net income: Depreciation and amortization 517 499 Deferred income taxes and amortization of investment tax credits 24 47 Cumulative effect of change in accounting principle (34) - Gain on sales of rural telephone exchanges - (63) Changes in operating assets and liabilities: Restructuring payments (42) (77) Postretirement medical and life costs, net of cash fundings (34) (238) Accounts and notes receivable 109 28 Inventories, supplies and other (48) (34) Accounts payable and accrued liabilities 4 (4) Other - net (19) (73) - - --------------------------------------------------------------------- Cash provided by operating activities 805 400 - - --------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (640) (541) Proceeds from sales of rural telephone exchanges - 88 Proceeds from (payments on) disposals of property, plant and equipment (7) 4 - - --------------------------------------------------------------------- Cash (used for) investing activities (647) (449) - - --------------------------------------------------------------------- FINANCING ACTIVITIES Net (repayments of) proceeds from issuance of short-term debt (79) 242 Repayments of long-term debt (24) (18) Dividends paid on common stock (234) (231) Proceeds from issuance of common stock 50 - Advance to Media Group - (23) - - --------------------------------------------------------------------- Cash (used for) financing activities (287) (30) - - --------------------------------------------------------------------- CASH AND CASH EQUIVALENTS Decrease (129) (79) Beginning balance 172 116 - - --------------------------------------------------------------------- Ending balance $43 $37 =====================================================================
EX-99 7 EXHIBIT 99A.5 13 EXHIBIT 99A.5 STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS, Inc. (UNAUDITED)
Quarter Ended March 31, % In millions 1996 1995 Change - - ------------------------------------------------ ---------- --------- OPERATING REVENUES Local service $1,145 $1,050 9.0 Interstate access service 622 589 5.6 Intrastate access service 190 188 1.1 Long-distance network services 290 299 (3.0) Other services 161 151 6.6 ---------- ---------- Total operating revenues 2,408 2,277 5.8 ---------- ---------- OPERATING EXPENSES Employee-related expenses* 813 730 11.4 Other operating expenses* 389 391 (0.5) Taxes other than income taxes 95 103 (7.8) Depreciation and amortization 511 494 3.4 ---------- ---------- Total operating expenses 1,808 1,718 5.2 ---------- ---------- Income from operations 600 559 7.3 Interest expense 103 91 13.2 Gain on sales of rural telephone exchanges - 63 - Other expense - net 17 13 30.8 ---------- ---------- Income before income taxes and cumulative effect of change in accounting principle 480 518 (7.3) Provision for income taxes 183 195 (6.2) ---------- ---------- Income before cumulative effect of change in accounting principle 297 323 (8.0) Cumulative effect of change in accounting principle - net of tax 34 - - ---------- ---------- NET INCOME $331 $323 2.5 ========== ========== *1996 employee-related expenses include the impacts of employee transfers from affiliated Communications Group companies to U S WEST Communications, Inc. (USWC) during 1995. Prior to the transfers, these affiliate employee costs were billed to USWC and reflected as affiliate expense, which is included in other operating expenses.
EX-99 8 EXHIBIT 99B 14 EXHIBIT 99B [U S WEST Media Group Logo] RELEASE DATE: APRIL 29, 1996 CONTACT: BRUCE AMUNDSON (303) 793-6296 U S WEST MEDIA GROUP POSTS RECORD FIRST QUARTER PROPORTIONATE CUSTOMER, REVENUE AND EBITDA GROWTH ENGLEWOOD, Co. - U S WEST Media Group (NYSE:UMG) today reported robust first quarter results as the company's cable, wireless and directory operations produced strong proportionate customer, revenue and EBITDA growth. For the quarter ending March 31, Media Group reported: * Earnings before interest, taxes, depreciation and amortization (EBITDA) of $330 million, a 25 percent increase compared with the same period last year. * $1.4 billion in revenue, a 25 percent increase from first quarter 1995. * More than 6 million customers worldwide, an increase of 40 percent compared with first quarter last year. Because Media Group participates in numerous joint ventures, the company uses proportionate accounting to reflect its relative operating revenues and expenses associated with these operations. "When we established our targeted stock structure six months ago, I anticipated double_digit growth rates from Media Group," said Richard McCormick, U S WEST chairman and chief executive officer. "The team stepped up to the challenge and produced strong customer, revenue and cash flow growth. This performance is clearly visible given our new structure." Chuck Lillis, U S WEST Media Group president and chief executive officer, said Media Group's first quarter performance establishes the momentum necessary for a successful year. "We set very ambitious growth goals for 1996," Lillis said. "The strong start by all our lines of business shows we are on our way to achieving them. I am particularly pleased that we're exceeding our customer growth objectives while still focusing on making operational improvements. U S WEST Cellular, for example, produced industry-leading growth rates and improved its cash flow margin by almost three percentage points." 15 Proportionate operating highlights, by line of business, for the quarter include: * CABLE AND TELEPHONY: Subscriber growth for MediaOne, the Atlanta cable operation, continues to exceed the industry average. MediaOne ended the quarter with 497,000 customers, a 6.7 percent increase from the same quarter last year. This strong subscriber growth produced revenue of $57 million, a 10 percent increase on a comparable basis to last year. EBITDA was $27 million, a 12 percent increase. Media Group's international properties now serve 625,000 subscribers, an increase of 171 percent. * WIRELESS: U S WEST Cellular increased its subscriber base by 54 percent on a same property basis. U S WEST Cellular now serves 1.4 million customers. This strong subscriber growth produced $240 million in revenue for the quarter, a 44 percent increase. It also led to an operating cash flow margin of 36 percent and improved operating cash flow 48 percent. Media Group's international properties now serve 334,000 wireless customers, a 63 percent increase. * DIRECTORIES: U S WEST Direct continues its industry_leading revenue growth. Spurred by 12,000 new advertisers, U S WEST Direct reported revenue of $265 million, a 6 percent increase from the same period last year. Lillis also noted that during the first quarter Media Group announced the Continental Cablevision merger. He said the proposed merger "crystallizes the Media Group strategy and positions the company as one of the world's leading cable providers." The addition of Continental will boost Media Group's owned or managed domestic cable system to 26.2 million homes passed and 16.2 million subscribers. The merger brings the number of international homes passed by Media Group cable properties to nearly 14 million. U S WEST Media Group is involved in domestic and international cable and telephony, wireless communications, and directory and information services. For 1995, U S WEST Media Group reported proportionate revenues of $5.1 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. # # # 16 KEY PROPORTIONATE OPERATING HIGHLIGHTS BY LINE OF BUSINESS (ALL CHANGES ARE IN COMPARISON TO 1Q 1995)
CABLE AND TELEPHONY MEDIAONE INTERNATIONAL - 497,000 customers, a 6.7% increase - 625,000 subscribers, 171% increase - - - Revenue of $57 million, a 5.6% increase including the 1995 purchase of the Czech - - - EBITDA of $27 million, a 12.5% increase Republic and Netherlands - Revenue of $61 million, a 154% increase - EBITDA loss of $9 million, an 18% improvement TIME WARNER ENTERTAINMENT (TWE) - - - 2.4 million customers, a 6.5% increase (normalized for 1995 transactions) - - - Revenue of $634 million, a 21% increase - - - EBITDA of $138 million, a 15% increase (normalized for 1995 transactions) WIRELESS U S WEST CELLULAR INTERNATIONAL - - - 1.4 million customers, a 54% increase - 334,000 subscribers, a 63% increase (on a same property basis) - Revenue of $88 million, a 47% increase - - - Revenue of $240 million, a 44% increase - EBITDA of $1 million, compared to a - - - EBITDA of $76 million, a 48% increase loss of $12 million last year - - - EBITDA, as a percent of net operating revenue, of 36.1% DIRECTORY AND INFORMATION SERVICES U S WEST DIRECT INTERNATIONAL - - - Revenue of $265 million, a 6% increase - Revenue of $32 million, a 129% increase - - - EBITDA of $133 million, a 5% increase - EBITDA loss of $4 million, unchanged - - - Net income of $78 million, a 5% increase U S WEST MEDIA GROUP COMBINED GAAP RESULTS - - - Revenue of $613 million - Income of $3 million - - - EBITDA of $196 million - Earnings per share of 0 cents
EX-99 9 EXHIBIT 99B.1 17 EXHIBIT 99B.1 COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP (UNAUDITED)
Quarter Ended March 31, % In millions 1996 1995 Change - - ----------------------------------------------- ---------- ---------- SALES AND OTHER REVENUES Directory and information services $288 $272 5.9 Wireless communications 264 202 30.7 Cable and telecommunications 57 54 5.6 Other 4 8 (50.0) ---------- ---------- Total sales and other revenues 613 536 14.4 ---------- ---------- OPERATING EXPENSES Costs of sales and other revenues 199 163 22.1 Selling, general and administrative expenses 218 197 10.7 Depreciation and amortization 67 61 9.8 ---------- ---------- Total operating expenses 484 421 15.0 ---------- ---------- Income from operations 129 115 12.2 Interest expense 24 27 (11.1) Equity losses in unconsolidated ventures 66 57 15.8 Guaranteed minority interest expense 12 - - Other income (expense) - net (7) 7 - ---------- ---------- Income before income taxes 20 38 (47.4) Provision for income taxes 17 23 (26.1) ---------- ---------- NET INCOME 3 15 (80.0) Preferred dividends 1 1 - ---------- ---------- EARNINGS AVAILABLE FOR COMMON STOCK $2 $14 (85.7) =====================
18 EXHIBIT 99B.1 (continued) COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP (UNAUDITED)
Quarter Ended In millions, except March 31, % per share amounts 1996 1995 Change - - ----------------------------------------------- ---------- ---------- Average common shares outstanding (#1) 473.0 468.6 0.9 ===================== Earnings per common share $ - $0.03 - ===================== #1: Effective November 1, 1995, each share of U S WEST, Inc. common stock was converted into one share each of U S WEST Communications Group common stock and U S WEST Media Group common stock. Earnings per common share for 1995 have been presented on a pro forma basis to reflect the two classes of stock as if they were outstanding since January 1, 1995. For periods prior to the recapitalization, the average common shares outstanding are assumed to be equal to the average common shares outstanding for U S WEST, Inc.
EX-99 10 EXHIBIT 99B.2 19 EXHIBIT 99B.2 SELECTED COMBINED GROUP DATA U S WEST MEDIA GROUP (UNAUDITED)
Quarter Ended Dollars in millions, March 31, % statistics in thousands 1996 1995 Change - - ----------------------------------------------- ---------- --------- REVENUES U S WEST Direct $265 $250 6.0 Other directories 23 22 4.5 MediaOne 57 54 5.6 NewVector: Service 239 186 28.5 Equipment 25 16 56.3 ---------- ---------- Total NewVector 264 202 30.7 Other 4 8 (50.0) ---------- ---------- Total revenues $613 $536 14.4 EBITDA (#1) U S WEST Direct $133 $127 4.7 Other directories (20) (20) - MediaOne 27 24 12.5 NewVector 84 60 40.0 Other (28) (15) (86.7) ---------- ---------- Total EBITDA $196 $176 11.4 Other Data: U S WEST Direct (Yellow Pages) Net Income $78 $74 5.4 Advertisers 482 470 2.6 MediaOne (Atlanta Cable) Basic subscribers - served 537 501 7.2 Basic subscribers - FCC equivalents 497 466 6.7 Homes passed 854 822 3.9 U S WEST NewVector (Wireless) Subscribers (consolidated) 1,571 1,048 49.9 Proportionate POPs managed (millions) 20.0 18.7 7.0 # 1: Earnings before interest, taxes, depreciation, amortization and other (EBITDA). EBITDA also excludes equity losses and guaranteed minority interest expense.
EX-99 11 EXHIBIT 99B.3 20 EXHIBIT 99B.3 COMBINED BALANCE SHEETS U S WEST MEDIA GROUP (UNAUDITED)
March 31, December 31, In millions 1996 1995 - - ------------------------------------- ------------------------- ASSETS Current assets: Cash and cash equivalents $27 $20 Accounts and notes receivable 296 287 Deferred directory costs 251 247 Other assets 180 187 ------------------------- Total current assets 754 741 ------------------------- Property, plant and equipment - net 1,193 1,148 Investment in Time Warner Entertainment 2,492 2,483 Intangible assets - net 1,779 1,798 Investments in international ventures 1,408 1,511 Net investment in assets held for sale 424 429 Other assets 529 505 ------------------------- Total assets $8,579 $8,615 ========================= LIABILITIES AND EQUITY Current liabilities: Short-term debt $774 $836 Accounts payable 181 235 Deferred revenue and customer deposits 81 87 Other payables 448 411 ------------------------- Total current liabilities 1,484 1,569 ------------------------- Long-term debt 1,345 1,265 Deferred taxes, credits and other 639 658 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely Company- guaranteed debentures 600 600 Preferred stock subject to mandatory redemption 51 51 Media Group equity 4,587 4,599 Company LESOP guarantee (127) (127) ------------------------- Total equity 4,460 4,472 ------------------------- Total liabilities and equity $8,579 $8,615 =========================
EX-99 12 EXHIBIT 99B.4 21 EXHIBIT 99B.4 COMBINED STATEMENTS OF U S WEST MEDIA GROUP CASH FLOWS (UNAUDITED)
Quarter Ended March 31, In millions 1996 1995 - - ------------------------------------------------------------------ OPERATING ACTIVITIES Net income $3 $15 Adjustments to net income: Depreciation and amortization 67 61 Equity losses in unconsolidated ventures 66 57 Deferred income taxes (17) (27) Provision for uncollectibles 14 13 Changes in operating assets and liabilities: Restructuring payments (4) (3) Accounts and notes receivable (10) (9) Deferred directory costs, prepaid and other (12) (9) Accounts payable and accrued liabilities 6 (96) Other - net (3) 78 - - ------------------------------------------------------------------ Cash provided by operating activities 110 80 - - ------------------------------------------------------------------ INVESTING ACTIVITIES Expenditures for property, plant and equipment (117) (76) Investment in international ventures (104) (182) Investment in PCS (25) (42) Cash (to) from investment in assets held for sale 3 (60) Other - net 1 (21) - - ------------------------------------------------------------------ Cash (used for) investing activities (242) (381) - - ------------------------------------------------------------------ FINANCING ACTIVITIES Net proceeds from issuances of short-term debt 139 435 Repayments of long-term debt (97) (150) Proceeds from issuance of long-term debt 76 - Proceeds from issuance of common stock 21 11 Advance from Communications Group - 23 - - ------------------------------------------------------------------ Cash provided by financing activities 139 319 - - ------------------------------------------------------------------ CASH AND CASH EQUIVALENTS Increase 7 18 Beginning balance 20 93 - - ------------------------------------------------------------------ Ending balance $27 $111 ================================================================== Note: Certain reclassifications within the financial statements have been made to conform to the current year presentation.
EX-99 13 EXHIBIT 99B.5 22 EXHIBIT 99B.5 SELECTED PROPORTIONATE DATA (UNAUDITED) (1) U S WEST MEDIA GROUP
Cable and Telecommunications Wireless Dollars in millions Domestic (2) Int'l Domestic Int'l - - ------------------------ ------------ -------- ---------- ------- QTR Ended March 31, 1996 Revenues $691 $61 $240 $88 EBITDA 165 (9) 69 1 Net income (loss) (3) (37) 17 (24) Subscribers/advertisers (thousands) 2,929 625 1,437 334 QTR Ended March 31, 1995 Revenues $576 $24 $167 $60 EBITDA 124 (11) 51 (12) Net income (loss) (18) (11) 15 (28) Subscribers/advertisers (thousands) 2,422 231 885 205 (1) Proportionate data reflects the Media Group's relative ownership interest in revenues and EBITDA for both its consolidated and equity method entities. Proportionate data is not required by GAAP or intended to replace the Combined Financial Statements prepared in accordance with GAAP. (2) Includes the Media Group's 25.51 percent pro-rata priority and residual equity interests in reported TWE results.
23 EXHIBIT 99B.5 (continued) SELECTED PROPORTIONATE DATA (UNAUDITED) (1) U S WEST MEDIA GROUP
Directory & Corp Information Services & Dollars in millions Domestic Int'l Other Total - - ----------------------- ---------- --------- -------- ------- QTR Ended March 31, 1996 Revenues $271 $32 $3 $1,386 EBITDA 117 (4) (9) 330 Net income (loss) 66 (7) (9) 3 Subscribers/advertisers (thousands) 482 282 - 6,089 QTR Ended March 31, 1995 Revenues $258 $14 $8 $1,107 EBITDA 109 (4) 6 263 Net income (loss) 62 (4) (1) 15 Subscribers/advertisers (thousands) 470 150 - 4,363 (1) Proportionate data reflects the Media Group's relative ownership interest in revenues and EBITDA for both its consolidated and equity method entities. Proportionate data is not required by GAAP or intended to replace the Combined Financial Statements prepared in accordance with GAAP.
EX-99 14 EXHIBIT 99C.1 24 EXHIBIT 99C.1 CONSOLIDATED STATEMENTS OF U S WEST, Inc. OPERATIONS (UNAUDITED)
Quarter Ended March 31, % In millions 1996 1995 Change - - --------------------------------------------------------- ---------- SALES & OTHER REVENUES $3,050 $2,828 7.9 OPERATING EXPENSES Employee-related expenses 1,043 978 6.6 Other operating expenses 591 510 15.9 Taxes other than income taxes 107 114 (6.1) Depreciation and amortization 584 560 4.3 -------------------- Total operating expenses 2,325 2,162 7.5 -------------------- Income from operations 725 666 8.9 Interest expense 135 128 5.5 Equity losses in unconsolidated ventures 66 57 15.8 Gain on sales of rural telephone exchanges - 63 - Guaranteed minority interest expense 12 - - Other expense - net 23 6 - -------------------- Income before income taxes and cumulative effect of change in accounting principle 489 538 (9.1) Provision for income taxes 192 208 (7.7) -------------------- Income before cumulative effect of change in accounting principle 297 330 (10.0) Cumulative effect of change in accounting principle - net of tax 34 - - -------------------- NET INCOME 331 330 0.3 Preferred dividends 1 - - -------------------- EARNINGS AVAILABLE FOR COMMON STOCK $330 $330 - ====================
25 EXHIBIT 99C.1 (continued) CONSOLIDATED STATEMENTS OF U S WEST, Inc. OPERATIONS (UNAUDITED)
Quarter Ended In millions, except March 31, % per share amounts 1996 1995 Change - - --------------------------------------------------------- ---------- COMMUNICATIONS GROUP: Average common shares outstanding (#1) 475.1 468.6 1.4 ==================== Earnings per common share: (#1) Income before cumulative effect of change in accounting principle $0.62 $0.67 (7.5) Cumulative effect of change in accounting principle 0.07 - - -------------------- Earnings per common share $0.69 $0.67 3.0 ==================== MEDIA GROUP: Average common shares outstanding (#1) 473.0 468.6 0.9 ==================== Earnings per common share $ - $0.03 - ==================== U S WEST, Inc. Average common shares outstanding (#1) - 468.6 - ==================== Earnings per common share $ - $0.70 - ==================== #1: Effective November 1, 1995, each share of U S WEST, Inc. common stock was converted into one share each of U S WEST Communications Group common stock and U S WEST Media Group common stock. Earnings per common share for 1995 have been presented on a pro forma basis to reflect the two classes of stock as if they were outstanding since January 1, 1995. For periods prior to the recapitalization, the average common shares outstanding used in the earnings per average common share for the two classes of stock are assumed to be equal to the average common shares outstanding for U S WEST, Inc.
26 EXHIBIT 99C.1 (continued) CONSOLIDATED STATEMENTS OF U S WEST, Inc. OPERATIONS (UNAUDITED)
Quarter Ended March 31, % In millions 1996 1995 Change - - --------------------------------------------------------- ---------- SELECTED CONSOLIDATED DATA U S WEST, Inc. Capital expenditures $803 $621 29.3 Debt-to-capital ratio (#1) 50.2% 50.7%# - Employees 61,268 61,302 (0.1) EBITDA $1,309 $1,226 6.8 EBITDA margin 42.9% 43.4% - # As of December 31, 1995. #1 Ratio includes preferred securities as a component of total capital. Including debt related to the net investment in assets held for sale, the 1996 and 1995 ratios are 52.3% and 52.9%, respectively.
EX-99 15 EXHIBIT 99C.2 27 EXHIBIT 99C.2 CONSOLIDATED BALANCE SHEETS U S WEST, Inc. (UNAUDITED)
March 31, December 31, In millions 1996 1995 - - --------------------------------------- ------------------------- ASSETS Current assets: Cash and cash equivalents $70 $192 Accounts and notes receivable 1,794 1,886 Inventories and supplies 237 227 Deferred tax asset 270 282 Prepaid and other 382 322 ------------------------- Total current assets 2,753 2,909 ------------------------- Property, plant and equipment - net 14,964 14,677 Investment in Time Warner Entertainment 2,492 2,483 Intangible assets - net 1,779 1,798 Investment in international ventures 1,408 1,511 Net investment in assets held for sale 424 429 Prepaid and other assets 1,293 1,264 ------------------------- Total assets $25,113 $25,071 ========================= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt $1,769 $1,901 Accounts payable 866 975 Dividends payable 255 254 Other payables 2,010 1,922 ------------------------- Total current liabilities 4,900 5,052 ------------------------- Long-term debt 7,024 6,954 Postretirement and other postemployment benefit obligations 2,403 2,433 Deferred taxes, credits and other 2,056 2,033 Company-obligated mandatorily redeemable preferred securities of subsidiary trust holding solely Company- guaranteed debentures 600 600 Preferred stock subject to mandatory redemption 51 51 Common shareowners' equity: Common shares 8,320 8,228 Cumulative deficit (44) (115) LESOP guarantee (127) (127) Foreign currency translation adjustments (70) (38) ------------------------- Total common shareowners' equity 8,079 7,948 ------------------------- Total liabilities & shareowners' equity $25,113 $25,071 =========================
EX-99 16 EXHIBIT 99C.3 28 EXHIBIT 99C.3 CONSOLIDATED STATEMENTS OF U S WEST, Inc. CASH FLOWS (UNAUDITED)
Quarter Ended March 31, In millions 1996 1995 - - -------------------------------------------------------------------- OPERATING ACTIVITIES Net income $331 $330 Adjustments to net income: Depreciation and amortization 584 560 Equity losses in unconsolidated ventures 66 57 Cumulative effect of change in accounting principle (34) - Gain on sales of rural telephone exchanges - (63) Deferred income taxes and amortization of investment tax credits 7 20 Changes in operating assets and liabilities: Restructuring payments (46) (82) Postretirement medical and life costs, net of cash fundings (34) (174) Accounts and notes receivable 92 32 Inventories, supplies and other (60) (43) Accounts payable and accrued liabilities 31 (103) Other - net (22) 7 - - -------------------------------------------------------------------- Cash provided by operating activities 915 541 - - -------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (757) (617) Investment in international ventures (104) (182) Proceeds from (payment on) disposals of property, plant and equipment (7) 92 Cash (to) from net investment in assets held for sale 3 (60) Other - net (24) (63) - - -------------------------------------------------------------------- Cash (used for) investing activities (889) (830) - - -------------------------------------------------------------------- FINANCING ACTIVITIES Net proceeds from issuance of short-term debt 60 678 Proceeds from issuance of long-term debt 76 - Repayments of long-term debt (121) (168) Dividends paid on common stock (234) (230) Proceeds from issuance of common stock 71 11 Purchases of treasury stock - (63) - - -------------------------------------------------------------------- Cash (used for) provided by financing activities (148) 228 - - -------------------------------------------------------------------- CASH AND CASH EQUIVALENTS Decrease (122) (61) Beginning balance 192 209 - - -------------------------------------------------------------------- Ending balance $70 $148 ====================================================================
EX-27 17 FINANCIAL DATA SCHEDULE
5 0000732718 U S WEST, INC. 1,000,000 3-MOS DEC-31-1996 MAR-31-1996 70 0 1,794 0 237 2,753 33,453 18,489 25,113 4,900 7,024 651 0 8,320 (241) 25,113 3,050 3,050 0 0 2,325 0 135 489 192 297 0 0 34 331 .69 .69
-----END PRIVACY-ENHANCED MESSAGE-----