-----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, U89X/z/1R9pXTX3cDndMuEReYgEWYjLXCxFn8kfH+OSO0/QkwaLknd4c9hDH1eAv TgPZVeGUauB4YW0IvboDxQ== 0000732718-97-000009.txt : 19970512 0000732718-97-000009.hdr.sgml : 19970512 ACCESSION NUMBER: 0000732718-97-000009 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19970331 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970430 SROS: NYSE SROS: PSE 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: 97591485 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 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 25, 1997 U S WEST, Inc. (Exact name of registrant as specified in its charter)
A Delaware Corporation Commission File IRS Employer Identification (State of incorporation) Number 1-8611 No. 84-0926774
7800 East Orchard Road, Englewood, Colorado 80111 (Address of principal executive offices) Telephone Number (303) 793-6500 (Registrant's telephone number, including area code) Item 5. Other Events On April 25, 1997, 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, 1997. The releases and financial statements are attached hereto as Exhibits. Item 7. Exhibits
Exhibit Description - - ------- ----------- 27 Financial Data Schedule. 99A Press Release issued April 25, 1997 concerning the earnings results of U S WEST Communications Group for the first quarter of 1997. 99A.1 Unaudited Combined Statements of Operations of U S WEST Communications Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 25, 1997. 99A.2 Unaudited Selected Combined Group Data of U S WEST Communications Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 25, 1997. 99A.3 Unaudited Combined Balance Sheets of U S WEST Communications Group for the quarter ended March 31, 1997 and the year ended December 31, 1996, filed in connection with the Press Release dated April 25, 1997. 99A.4 Unaudited Combined Statements of Cash Flows of U S WEST Communications Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 25, 1997. 99A.5 Unaudited Statements of Operations of U S WEST Communications, Inc. for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 25, 1997. 99B Press Release issued April 29, 1997 concerning the earnings results of U S WEST Media Group for the first quarter of 1997. 99B.1 Unaudited Pro Forma Combined Statements of Operations of U S WEST Media Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 29, 1997. 99B.2 Unaudited Selected Data of U S WEST Media Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 29, 1997. 99B.3 Unaudited Combined Balance Sheets of U S WEST Media Group for the quarter ended March 31, 1997 and the year ended December 31, 1996, filed in connection with the Press Release dated April 29, 1997. 99B.4 Unaudited Selected Proportionate Financial Data of U S WEST Media Group for the quarters ended March 31, 1996 and 1997, filed in connection with the Press Release dated April 29, 1997. 99C.1 Unaudited Consolidated Statements of Income of U S WEST, Inc. for the quarter periods ended March 31, 1996 and 1997. 99C.2 Unaudited Consolidated Balance Sheets of U S WEST, Inc. for the quarter ended March 31, 1997 and the year ended December 31, 1996. 99C.3 Unaudited Consolidated Statements of Cash Flows of U S WEST, Inc. for the quarters ended March 31, 1996 and 1997. 99C.4 Unaudited Selected Consolidated Data of U S WEST, Inc. for the quarters ended March 31, 1996 and 1997.
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: April 30, 1997 EX-99 2 EXHIBIT 99A EXHIBIT 99A U S WEST COMMUNICATIONS, INC. 1801 California Street Denver, CO 80202 [U S WEST Communications logo and registered mark] News Release Release Date: April 25, 1997 Contact: Dave Banks, 303-804-6752 U S WEST COMMUNICATIONS' EARNINGS PER SHARE UP 11.5 PERCENT IN FIRST QUARTER - CONTINUED HEALTHY REVENUE GROWTH AND COST CONTROLS DRIVE RESULTS - ENGLEWOOD, Colo. April 25, 1997 -- U S WEST Communications Group (NYSE: USW) today reported another record quarter of earnings growth. Continued healthy revenue growth, successful marketing campaigns, and tighter cost controls in its core business enabled the company to achieve double digit earnings growth, while investing in growth initiatives and absorbing regulatory impacts. First quarter 1997 normalized income increased 13.5 percent to $328 million, up $39 million from the first quarter of 1996. Normalized earnings per share grew to $.68 for the quarter, 11.5 percent higher than the $.61 in the first quarter of 1996. Results for first quarter 1997 were normalized for an $11 million one-time, after-tax gain associated with the sale of selected rural exchanges in Nebraska, while the first quarter 1996 results were normalized to reflect the effects of a change in accounting principle. With 5 percent revenue growth for the quarter and a continued slowing of operating expense growth, up only 4 percent including costs associated with starting up new business initiatives, the company was able to generate strong earnings and expanded margins. "U S WEST Communications Group has started off 1997 with double-digit momentum on the heels of 1996's accelerating results," said Richard McCormick, chairman and chief executive officer of U S WEST, Inc. "The U S WEST Communications team has struck the delicate balance of running the business for today while building it for tomorrow." "This quarter's strong results reflect continued cost control initiatives, the step-up of marketing efforts, and the continued vitality of our operating territory," said U S WEST Communications president and CEO Sol Trujillo. "Our continued focus on growing revenues, controlling costs and tightening management disciplines throughout the business has enabled us to deliver the results we've committed to our shareowners. At the same time, we are investing in growth opportunities that will position us even better for the future." First Quarter Highlights Include: Volumes and Penetration: - - - The addition of 688,000 access lines (adjusted for the sales of selected rural exchanges) over the past twelve months for an access line growth rate of 4.6 percent. On an adjusted basis, business access lines grew at 6.3 percent, while residential access lines grew at 3.9 percent. - - - A 29 percent increase in residential customer additional access lines versus first quarter 1996, including growth of 81,000 lines in the first quarter of 1997 alone -- driving penetration of this service to 11.6 percent. - - - An unprecedented one-quarter gain of over 900,000 Caller ID subscribers - - -- the result of an aggressive and highly successful promotional campaign -- driving residential penetration of this product to 26 percent. Revenue generation from these significant sales will primarily begin during the second quarter. - - - An increase of 19.1 percent in customer order volumes versus the first quarter of 1996, including orders for new services, transfers, and changes. - - - Voice messaging subscriber levels reached over 1.3 million -- driving residential penetration of this product to approximately 16 percent. Sales and Revenues: - - - Local service revenue growth of 7.5 percent, with almost half of the growth driven by the sales of vertical features. Adjusted for a one-time reduction in cellular access pricing mandated by the 1996 Telecommunications Act, local service revenues would have grown by 8.9 percent. - - - A 22 percent increase in private line and special access revenues, which totaled over $200 million for the first quarter -- a reflection of the company's growing data networking services business and its ability to successfully compete in one of the most highly competitive segments of the telecommunications market. - - - A 9.2 percent increase in total access revenues to almost $900 million for the first quarter -- reflecting accelerating dedicated access product sales, continued growth in switched access minutes of use, and solid access line growth. - - - Total revenues from new products and services up nearly 50 percent from first quarter 1996 to approximately $232 million -- now representing 9.0 percent of total revenues. Total vertical services revenue of approximately $266 million -- a 21 percent growth over first quarter 1996. Growth Initiatives: - - - Data networking services revenues of over $67 million in the quarter -- up 63 percent from the same quarter of 1996. - - - The successful introduction and initial state rollouts of an innovative, strongly competitive 1-800 platform calling card product which allows U S WEST customers to place interLATA and intraLATA calls from anywhere within or outside of U S WEST's service territory. - - - The winning bids for 53 PCS licenses in the FCC's D and E block spectrum auctions. These licenses cover nearly 20 million POPs and the vast majority of U S WEST Communications' metropolitan service area. U S WEST's successful bids totaled $57 million for an attractive price of $2.88 per POP. Costs and Margins: - - - The third consecutive quarter in which both employee related and total operating expense growth levels have slowed. The growth in other operating expenses was primarily attributable to a step up in marketing activity, principally associated with successful Caller ID and brand enhancement campaigns. - - - Employee level reductions of almost 4,000 since first quarter of 1996 which, coupled with strong access line growth, have driven telco employees per 10,000 access lines down 11.5 percent. - - - The absorption of $20 million of costs in reported total operating expenses associated with the start-up of out-of-region data networking services, PCS, and long distance operations. Without these costs, EBITDA (earnings before interest, taxes, depreciation, and amortization), operating income and normalized EPS would have increased approximately 6.0 percent, 9.5 percent and 12.9 percent, respectively. - - - Growth in cash provided by operating activities of 36 percent, or almost $300 million, and even stronger growth in net cash flow, enabled the company to reduce its borrowing levels by over $450 million during the quarter. - - - Expansion of both EBITDA and operating margins to 45.3 percent and 24.9 percent, respectively. Trujillo added that the company is on plan with where it said it would be starting into the second quarter of 1997 and he is excited for what is expected to be a strong year for U S WEST Communications Group, both operationally and in building for future growth. He also reiterated that as the year progresses, costs associated with starting up new businesses and complying with the Telecommunications Act of 1996 will accelerate, dampening earnings growth in the later quarters. About U S WEST Communications Group: U S WEST Communications Group (NYSE: USW) provides telecommunications and high-speed data networking services to more than 25 million customers in 14 western and midwestern states. The company is one of two major groups that make up U S WEST, Inc. 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. - - --------------------------------------------------------------- [Safe Harbor statement: Some of the information presented in or in connection with this announcement constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include: (i) different than anticipated competition from new entrants into the local exchange and intraLATA toll markets, (ii) changes in demand for the company's products and services, including optional custom calling features, (iii) different than anticipated employee levels, capital expenditures or operating expenses as a result of unusually rapid, in-region growth, (iv) the gain or loss of significant customers, (v) pending regulatory actions in state jurisdictions, and (vi) regulatory changes affecting the telecommunications industry, including changes that could have an impact on the competitive environment in the local exchange market.] ### NOTE: THIS RELEASE AND THE ATTACHED FINANCIAL INFORMATION WILL BE AVAILABLE ON THE INTERNET AFTER 8:00 A.M. (MDT) BY ACCESSING U S WEST'S INTERNET SITE: WWW/USWEST.COM EX-99 3 EXHIBIT 99A1 EXHIBIT 99A.1 COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended March 31, Percent Dollars in millions 1997 1996 Change -------------------------------------------------------------------- OPERATING REVENUES Local service $1,231 $1,145 7.5 Interstate access service 687 622 10.5 Intrastate access service 200 190 5.3 Long-distance network services 250 290 (13.8) Other services 219 218 0.5 -------------------- Total operating revenues 2,587 2,465 5.0 -------------------- OPERATING EXPENSES Employee-related expenses 864 867 (0.3) Other operating expenses 445 388 14.7 Taxes other than income taxes 107 97 10.3 Depreciation and amortization 527 517 1.9 -------------------- Total operating expenses 1,943 1,869 4.0 -------------------- Income from operations 644 596 8.1 Interest expense 103 111 (7.2) Gain on sale of rural telephone exchanges 18 - - Other expense - net 22 16 37.5 -------------------- Income before income taxes and cumulative effect of change in accounting principle 537 469 14.5 Provision for income taxes 198 175 13.1 -------------------- Income before cumulative effect of change in accounting principle 339 294 15.3 Cumulative effect of change in accounting principle - net of tax - 34 - -------------------- NET INCOME $339 $328 3.4 ====================
EXHIBIT 99A.1 (continued) COMBINED STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended Dollars in millions (except March 31, Percent per share amounts) 1997 1996 Change -------------------------------------------------------------------- Average common shares outstanding 481.3 475.1 1.3 ==================== Earnings per common share: Income before cumulative effect of change in accounting principle $0.70 $0.62 12.9 Cumulative effect of change in accounting principle - 0.07 - -------------------- Earnings per common share $0.70 $0.69 1.4 ==================== Normalized income: Reported net income $339 $328 3.4 Adjustments to normalize net income: Rural exchange sale (11) - - Cumulative effect of change in accounting principle - net of tax - (34) - Current year effect of change in accounting principle - net of tax - (5) - -------------------- Normalized income $328 $289 13.5 ==================== Normalized earnings per common share: Reported net income $0.70 $0.69 1.4 Adjustments to normalize net income: Rural exchange sale (0.02) - - Cumulative effect of change in accounting principle - net of tax - (0.07) - Current year effect of change in accounting principle - net of tax - (0.01) - -------------------- Normalized earnings per common share $0.68 $0.61 11.5 ====================
EX-99 4 EXHIBIT 99A2 EXHIBIT 99A.2 SELECTED COMBINED GROUP DATA U S WEST COMMUNICATIONS GROUP (UNAUDITED)
Quarter Ended Dollars in millions (except March 31, Percent per share amounts) 1997 1996 Change ----------------------------------------------- ---------- --------- Access lines (thousands): Business 4,621 4,372 5.7 Consumer 11,004 10,691 2.9 Total access lines 15,625 15,063 3.7 Normalized access lines: Business 4,646 4,372 6.3 Consumer 11,105 10,691 3.9 Total 15,751 15,063 4.6 Billed access minutes of use (millions): Interstate 13,530 12,696 6.6 Intrastate 2,785 2,567 8.5 Total minutes of use 16,315 15,263 6.9 Employees: Communications Group 47,138 51,132 (7.8) Telephone operations only 44,435 48,308 (8.0) Telephone employees per 10,000 access lines 28.4 32.1 (11.5) Dividends per common share $0.535 $0.535 - Common shares outstanding 482.0 475.9 1.3 Capital expenditures $408 $711 (42.6) EBITDA (1) $1,171 $1,113 5.2 EBITDA margin 45.3% 45.2% - Return on equity (2) 33.3% 32.5% - Debt-to-capital ratio: Communications Group 59.9% 62.4% - Telephone operations only 58.1% 60.5% - As of December 31, 1996. 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.
EX-99 5 EXHIBIT 99A3 EXHIBIT 99A.3 COMBINED BALANCE SHEETS U S WEST COMMUNICATIONS GROUP (UNAUDITED)
March 31, December 31, Dollars in millions 1997 1996 -------------------------------------- --------------------------- ASSETS Current assets: Cash and cash equivalents $81 $80 Accounts and notes receivable 1,540 1,622 Inventories and supplies 155 144 Deferred tax asset 142 171 Prepaid and other 83 65 --------------------------- Total current assets 2,001 2,082 --------------------------- Gross property, plant and equipment 32,766 32,645 Less accumulated depreciation 18,961 18,639 --------------------------- Property, plant and equipment - net 13,805 14,006 Other assets 856 827 --------------------------- Total assets $16,662 $16,915 =========================== LIABILITIES AND EQUITY Current liabilities: Short-term debt $375 $834 Accounts payable 1,025 989 Dividends payable 258 257 Other 1,537 1,387 --------------------------- Total current liabilities 3,195 3,467 --------------------------- Long-term debt 5,657 5,664 Postretirement and other postemployment benefit obligations 2,377 2,387 Deferred taxes, credits and other 1,390 1,480 Communications Group equity 4,043 3,917 --------------------------- Total liabilities and equity $16,662 $16,915 ===========================
EX-99 6 EXHIBIT 99A4 EXHIBIT 99A.4 COMBINED STATEMENTS OF U S WEST COMMUNICATIONS GROUP CASH FLOWS (UNAUDITED)
Quarter Ended March 31, Dollars in millions 1997 1996 - - --------------------------------------------------------------------- OPERATING ACTIVITIES Net income $339 $328 Adjustments to net income: Depreciation and amortization 527 517 Gain on sale of rural telephone exchanges (18) - Cumulative effect of change in accounting principle - (34) Deferred income taxes and amortization of investment tax credits 18 24 Changes in operating assets and liabilities: Restructuring payments (29) (42) Postretirement medical and life costs, net of cash fundings (10) (44) Accounts receivable 82 109 Inventories, supplies and other (34) (48) Accounts payable and accrued liabilities 222 14 Other - net - (19) - - --------------------------------------------------------------------- Cash provided by operating activities 1,097 805 - - --------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (400) (640) Proceeds from sale of rural telephone exchanges 7 - Payments on disposals of property, plant and equipment (7) (7) - - --------------------------------------------------------------------- Cash (used for) investing activities (400) (647) - - --------------------------------------------------------------------- FINANCING ACTIVITIES Repayments of short-term debt - net (429) (79) Repayments of long-term debt (54) (24) Dividends paid on common stock (237) (234) Proceeds from issuance of common stock 24 50 - - --------------------------------------------------------------------- Cash (used for) financing activities (696) (287) - - --------------------------------------------------------------------- CASH AND CASH EQUIVALENTS Increase (decrease) 1 (129) Beginning balance 80 172 - - --------------------------------------------------------------------- Ending balance $81 $43 =====================================================================
EX-99 7 EXHIBIT 99A5 EXHIBIT 99A.5 STATEMENTS OF OPERATIONS U S WEST COMMUNICATIONS, Inc. (UNAUDITED) (Telephone Operations Only)
Quarter Ended March 31, Percent Dollars in millions 1997 1996 Change -------------------------------------------------------------------- OPERATING REVENUES Local service $1,231 $1,145 7.5 Interstate access service 687 622 10.5 Intrastate access service 200 190 5.3 Long-distance network services 250 290 (13.8) Other services 179 161 11.2 -------------------- Total operating revenues 2,547 2,408 5.8 -------------------- OPERATING EXPENSES Employee-related expenses 806 813 (0.9) Other operating expenses 450 389 15.7 Taxes other than income taxes 105 95 10.5 Depreciation and amortization 522 511 2.2 -------------------- Total operating expenses 1,883 1,808 4.1 -------------------- Income from operations 664 600 10.7 Interest expense 96 103 (6.8) Gain on sale of rural telephone exchanges 18 - - Other expense - net 22 17 29.4 -------------------- Income before income taxes and cumulative effect of change in accounting principle 564 480 17.5 Provision for income taxes 215 183 17.5 -------------------- Income before cumulative effect of change in accounting principle 349 297 17.5 Cumulative effect of change in accounting principle - net of tax - 34 - -------------------- NET INCOME $349 $331 5.4 ====================
EX-99 8 EXHIBIT 99B EXHIBIT 99B U S WEST Media Group 7800 East Orchard Road Englewood, Colorado 80111 [U S WEST Media Group logo and registered mark] News Release Release Date: April 29, 1997 Contacts: Blair Johnson Steve Lang (303) 793-6296 (303) 793-6290 U S WEST MEDIA GROUP REACHES CABLE CUSTOMER MILESTONE, REPORTS SIXTH CONSECUTIVE QUARTER OF DOUBLE-DIGIT GROWTH ENGLEWOOD, Colo. - U S WEST Media Group (NYSE: UMG) today reported its sixth straight quarter of double-digit growth in revenue and operating cash flow and said it now serves five million domestic cable customers. For the first quarter 1997, Media Group reported -- on a proportionate basis: - - - A 16 PERCENT INCREASE IN OPERATING CASH FLOW, to $620 million. Media Group's operating cash flow for first quarter 1996 was $533 million on a comparable basis. (All 1996 numbers have been adjusted to include Continental Cablevision's results -- even though it didn't merge with Media Group until Nov. 15.) Operating cash flow, which represents earnings before interest, taxes, depreciation and amortization (EBITDA), is an important indicator of the company's operating performance. - - - A 12 PERCENT INCREASE IN REVENUE, to $2.1 billion. Media Group's revenue for first quarter 1996 was $1.9 billion. Because Media Group participates in numerous joint ventures, the company uses proportionate accounting to reflect its relative share of operating revenues and expenses associated with these operations. These strong results come on the heels of last week's announcement that Media Group intends to merge its domestic wireless operations with those of AirTouch Communications. "The AirTouch transaction is a big strategic step for Media Group, one that's good for everyone involved," said Richard McCormick, U S WEST chairman and chief executive officer. "This gives Media Group shareowners AirTouch stock in a tax-efficient manner, letting them realize the full value of their wireless investments. It also reduces our leverage and helps Media Group focus on its core cable business." Chuck Lillis, Media Group president and chief executive officer, said, "The kind of growth we're seeing puts us on track for another great year. Our domestic cellular cash flow growth is extraordinary. Our directory publishing business continues to be an industry leader in revenue growth. And we reached an important cable milestone: our five millionth customer." First quarter 1997 proportionate operating highlights -- by line of business - - -- include: - - - CABLE AND BROADBAND COMMUNICATIONS: Media Group's wholly owned cable operations in the U.S. ended the first quarter with more than 5 million subscribers, up 3 percent from first quarter 1996. The subscriber base includes 3,500 high-speed Internet access customers. Overall, revenue from Media Group's domestic cable operations, including its investment in Time Warner Entertainment, increased 5 percent, to $1.2 billion, while operating cash flow was up 8 percent, to $390 million. This growth stems from strong operating results and one-time gains in Media Group's Time Warner Entertainment partnership. In addition, for the first time, Media Group's overall international cable operations generated positive operating cash flow. - WIRELESS: Media Group's domestic cellular operations continued to lead the industry in two growth measurements. Its subscriber base increased 38 percent, to almost two million proportionate customers, and its operating cash flow increased 64 percent, to $123 million. In addition, its operating cash flow margins increased by 10 percentage points. Internationally, Media Group's wireless businesses continued to grow rapidly, led by One 2 One, the company's revitalized joint venture in the United Kingdom. With expanded coverage and aggressive marketing, One 2 One increased its first quarter 1997 subscriber base by 50 percent from the same period last year. Media Group's overall international wireless subscriber base increased 83 percent. - - - DIRECTORIES: Media Group's directory publishing business, now called U S WEST Dex, produced strong first quarter revenue growth of 7 percent, helping the company maintain its industry-leading position. "This was a solid quarter -- right in line with our expectations," Lillis said. "Our cash flow from operations show how quickly our business is growing, while our net loss reflects the accounting requirements for our Continental merger." Media Group's first quarter 1997 cash flow from operations was $249 million, while its net loss was $109 million. U S WEST Media Group, one of America's largest broadband communications companies, is involved in domestic and international cable and telephony, wireless communications, and directory and information services. For 1996, Media Group reported proportionate revenues of $6.4 billion. Media Group is one of two major groups that make up U S WEST, a company in the connections business, helping customers share information, entertainment and communications services in local markets worldwide. U S WEST's other major group, U S WEST Communications, provides telecommunications services in 14 western and midwestern states. Some of the information presented in or in connection with this announcement constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include: (i) a change in economic conditions in the various markets served by the Company's operations that could adversely affect the level of demand for cable, wireless, directory or other services offered by the Company, (ii) greater than anticipated competitive activity requiring new pricing for Company services, (iii) higher than anticipated start-up costs associated with new business opportunities, (iv) regulatory changes affecting the telecommunications industry, (v) increases in fraudulent activity with respect to wireless services, or (vi) delays in the development of anticipated technologies, or the failure of such technologies to perform according to expectations. NOTE: THIS RELEASE AND THE FINANCIAL STATEMENTS WILL BE AVAILABLE ON THE INTERNET AFTER 8 A.M. (MDT) BY ACCESSING U S WEST'S INTERNET SITE: WWW.USWEST.COM
U S WEST MEDIA GROUP - SELECTED OPERATING HIGHLIGHTS All Amounts Shown are Proportionate Unless Otherwise Stated in millions CABLE AND TELEPHONY DOMESTIC 1Q97 GROWTH* ------ -------- Total Revenue $1,215 5.4% EBITDA $ 390 8.0% Consolidated Cable (excluding cost of new services) Homes Passed (000's) 8,308 1.7% Multichannel Video Subscribers (000's) 5,025 3.1% Revenue $ 549 6.1% EBITDA $ 239 6.2% Other Key Statistics High Speed Data Customers (000's) 3.5 - INTERNATIONAL 1Q97 GROWTH* ------ -------- TOTAL Customers (000's) 1,166 14.0% Revenue $ 108 31.7% EBITDA $ 9 up $11
WIRELESS
DOMESTIC 1Q97 GROWTH ------- --------- CELLULAR POPs (millions) 20.3 1.5% Subscribers (000's) 1,984 38.1% Service Revenue $ 274 26.3% Operating Cash Flow $ 123 64.0% OCF as a % of service revenue 44.9% 10 pp Average revenue per customer $47.77 -8.7% PRIMECO PERSONAL COMMUNICATIONS POPs (millions) 14.7 7.3% Subscribers (000's) 27 - INTERNATIONAL 1Q97 GROWTH ------- --------- TOTAL Customers (000's) 612 83.2% Revenue $ 144 63.6% Operating Cash Flow ($10) down $11 ONE 2 ONE Subscribers (000's) 310 50.0% Market Share 8.8% up 1pp Coverage 80+% -
DIRECTORY AND INFORMATION SERVICES
DOMESTIC 1Q97 GROWTH* ------- ------------ DIRECTORY PUBLISHING Local Advertisers (000's) 482 - Revenue $ 284 7.2% Operating Cash Flow $ 146 9.8% Operating Cash Flow Margin 51.4% 1.2pp Revenue per Advertiser $2,224 7.4% INTERNATIONAL 1Q97 GROWTH* ------- ------------ TOTAL Revenue $ 29 -9.4% Operating Cash Flow ($6) -50.0% * Growth rates are pro forma as if the Continental merger occurred January 1, 1996.
EX-99 9 EXHIBIT 99B1 EXHIBIT 99B.1
PRO FORMA COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP (UNAUDITED) Quarter Ended March 31, 1996 Percent Dollars in millions 1997 Pro forma Change - - ----------------------------------- ---------- ---------- --------- SALES AND OTHER REVENUES Cable and telecommunications $555 $519 6.9 Directory and information services 309 288 7.3 Wireless communications 335 264 26.9 Other 8 4 - ---------- ---------- Total sales and other revenues 1,207 1,075 12.3 ---------- ---------- OPERATING EXPENSES Costs of sales and other revenues 406 367 10.6 Selling, general and administrative expenses 320 316 1.3 Depreciation and amortization 303 280 8.2 ---------- ---------- Total operating expenses 1,029 963 6.9 ---------- ---------- Income from operations 178 112 58.9 Interest expense 175 170 2.9 Equity losses in unconsolidated ventures 165 75 - Gain on sale of investment 51 - - Guaranteed minority interest expense 22 12 83.3 Other expense - net 4 11 (63.6) ---------- ---------- Loss before income taxes (137) (156) (12.2) Income tax benefit 28 45 (37.8) ---------- ---------- NET LOSS (109) (111) (1.8) Dividends on preferred stock 13 12 8.3 ---------- ---------- LOSS AVAILABLE FOR COMMON STOCK ($122) ($123) (0.8) ========== ==========
EXHIBIT 99B.1 (continued)
PRO FORMA COMBINED STATEMENTS OF OPERATIONS U S WEST MEDIA GROUP (UNAUDITED) Quarter Ended March 31, In millions (except 1996 Percent per share amounts) 1997 Pro forma Change - - ----------------------------------- ---------- ---------- -------- Average common shares outstanding 606.5 623.6 (2.7) ========== ========== Loss per common share ($0.20) ($0.20) - ========== ==========
Pro forma amounts reflect the Continental Cablevision, Inc. (Continental) merger, Continental's acquisition of the remaining interest in Meredith/New Heritage Strategic Partners, L.P. and the reclassification of the Teleport Communications Group, Inc. investment to equity method as if each transaction occurred as of January 1, 1996. Also includes Continental's results for cable-telephony ventures in Singapore and Argentina. The average common shares outstanding for the quarter ended March 31, 1996, includes 150.6 million shares related to the Continental merger as if it had occurred as of January 1, 1996. EX-99 10 EXHIBIT 99B2 EXBIBIT 99B.2
SELECTED DATA U S WEST MEDIA GROUP (UNAUDITED) Quarter Ended March 31, Percent 1997 1996 Change --------- --------- ------- Other Proportionate Information (in thousands unless noted) Domestic Cable Subscribers (1) 5,025 4,873 3.1 Domestic Cable Homes Passed (1) 8,308 8,166 1.7 International Subscribers: Cable (1) 1,166 919 26.9 Wireless 612 334 83.2 Domestic Cellular Subscribers 1,984 1,437 38.1 Domestic PCS Subscribers 27 - - Domestic Cellular POPs-managed (millions) 20.3 20.0 1.5 Domestic PCS POPs (millions) 14.7 13.7 7.3 Dex Revenue per Directory Advertiser (whole dollars) $2,224 $2,071 7.4 Media Group Investing Activity (in millions) Cable and Telecommunications Domestic Investments * $261 $44 - International Investments 12 7 71.4 Wireless Domestic Investments 141 88 60.2 International Investments 34 94 (63.8) Directory & Other 16 9 77.8 Asset sales (206) - - --------- --------- Total $258 $242 6.6 ========= ========= (1) The 1996 amounts are pro forma as if the Continental Cablevison merger occurred January 1, 1996. * Excludes $1,150 paid to Continental shareholders in first quarter 1997.
EX-99 11 EXHIBIT 99B3 EXHIBIT 99B.3
COMBINED BALANCE SHEETS U S WEST MEDIA GROUP (UNAUDITED) March 31, December 31, Dollars in millions 1997 1996 - - --------------------------------------- ------------- ------------ ASSETS Current assets: Cash and cash equivalents $83 $121 Accounts and notes receivable 533 508 Deferred directory costs 269 259 Marketable securities - 58 Other assets 195 193 ------------- ------------ Total current assets 1,080 1,139 ------------- ------------ Property, plant and equipment - net 4,403 4,275 Investment in Time Warner Entertainment 2,483 2,477 Intangible assets - net 12,543 12,595 Net investment in international ventures 1,427 1,548 Net investment in assets held for sale 403 409 Other assets 1,446 1,618 ------------- ------------ Total assets $23,785 $24,061 ============= ============ LIABILITIES AND EQUITY Current liabilities: Short-term debt $1,420 $217 Due to Continental shareholders - 1,150 Accounts payable 317 425 Deferred revenue and customer deposits 147 129 Other payables 836 795 ------------- ------------ Total current liabilities 2,720 2,716 ------------- ------------ Long-term debt 8,603 8,636 Deferred income taxes 3,526 3,600 Deferred credits and other 363 346 Preferred securities of subsidiary trust holding Company-guaranteed debentures 1,080 1,080 Preferred stock subject to mandatory redemption 51 51 Media Group equity 7,533 7,723 Company LESOP guarantee (91) (91) ------------- ------------ Total equity 7,442 7,632 ------------- ------------ Total liabilities and equity $23,785 $24,061 ============= ============
EX-99 12 EXHIBIT 99B4 EXHIBIT 99B.4
SELECTED PROPORTIONATE U S WEST MEDIA GROUP FINANCIAL DATA (UNAUDITED) Quarter Ended March 31, 1996 Percent In millions 1997 Pro forma Change - - ------------------------------ --------- --------- ------- Revenues Cable and Telecommunications Domestic (1) $1,215 $1,153 5.4 International (1) 108 82 31.7 Wireless Domestic 309 240 28.8 International 144 88 63.6 Directory & Information Svcs. Domestic 287 271 5.9 International 29 32 (9.4) Corporate & Other 5 3 66.7 --------- --------- Total $2,097 $1,869 12.2 ========= ========= EBITDA Cable and Telecommunications Domestic (1) $390 $361 8.0 International (1) 9 (2) - Wireless Domestic 101 69 46.4 International (10) 1 - Directory & Information Svcs. Domestic 139 117 18.8 International (6) (4) 50.0 Corporate & Other (3) (9) (66.7) --------- --------- Total $620 $533 16.3 ========= ========= (1) The 1996 amounts are pro forma as if the Continental Cablevison merger occurred January 1, 1996.
EXHIBIT 99B.4 (continued)
SELECTED PROPORTIONATE U S WEST MEDIA GROUP FINANCIAL DATA (UNAUDITED) Quarter Ended March 31, 1996 Percent In millions 1997 Pro forma Change - - ------------------------------ --------- --------- ------- Depreciation & Amortization Cable and Telecommunications Domestic (1) $340 $320 6.3 International (1) 48 26 84.6 Wireless Domestic 48 31 54.8 International 45 23 95.7 Directory & Other 16 13 23.1 --------- --------- Total $497 $413 20.3 ========= ========= Net Income (Loss) Cable and Telecommunications Domestic (1) ($119) ($117) 1.7 International (1) (57) (37) 54.1 Wireless Domestic 22 17 29.4 International (24) (24) - Directory & Information Svcs. Domestic 77 66 16.7 International (10) (7) 42.9 Corporate & Other 2 (9) - --------- --------- Total ($109) ($111) (1.8) ========= ========= (1) The 1996 amounts are pro forma as if the Continental Cablevison merger occurred January 1, 1996.
EX-99 13 EXHIBIT 99C1 EXHIBIT 99C.1 CONSOLIDATED STATEMENTS OF U S WEST, Inc. OPERATIONS (UNAUDITED)
Quarter Ended March 31, Percent Dollars in millions 1997 1996 Change - - ------------------------------------ -------- -------- ------- SALES & OTHER REVENUES $3,766 $3,050 23.5 OPERATING EXPENSES Employee-related expenses 1,148 1,043 10.1 Other operating expenses 842 591 42.5 Taxes other than income taxes 124 107 15.9 Depreciation and amortization 830 584 42.1 -------- -------- Total operating expenses 2,944 2,325 26.6 -------- -------- Income from operations 822 725 13.4 Interest expense 278 135 - Equity losses in unconsolidated ventures 165 66 - Gain on sale of rural telephone exchanges 18 - - Gain on sale of investment 51 - - Guaranteed minority interest expense 22 12 83.3 Other expense 26 23 13.0 -------- -------- Income before income taxes and cumulative effect of change in accounting principle 400 489 (18.2) Provision for income taxes 170 192 (11.5) -------- -------- Income before cumulative effect of change in accounting principle 230 297 (22.6) Cumulative effect of change in accounting principle - net of tax - 34 - -------- -------- NET INCOME 230 331 (30.5) Dividends on preferred stock 13 1 - -------- -------- EARNINGS AVAILABLE FOR COMMON STOCK $217 $330 (34.2) ======== ========
EXHIBIT 99C.1 (Continued) CONSOLIDATED STATEMENTS OF U S WEST, Inc. OPERATIONS (UNAUDITED)
Quarter Ended In millions (except March 31, Percent per share amounts) 1997 1996 Change - - ------------------------------------ -------- -------- ------- COMMUNICATIONS GROUP: Average common shares outstanding 481.3 475.1 1.3 ======== ======== Earnings per common share: Income before cumulative effect of change in accounting principle $0.70 $0.62 12.9 Cumulative effect of change in accounting principle - 0.07 - -------- -------- Earnings per common share $0.70 $0.69 1.4 ======== ======== MEDIA GROUP: Average common shares outstanding 606.5 473.0 28.2 ======== ======== Earnings (loss) per common share ($0.20) $ - - ======== ========
EX-99 14 EXHIBIT 99C2 EXHIBIT 99C.2
CONSOLIDATED BALANCE SHEETS U S WEST, Inc. (UNAUDITED) March 31, December 31, Dollars in millions 1997 1996 - - --------------------------------------- ------------------------- ASSETS Current assets: Cash and cash equivalents $164 $201 Accounts and notes receivable 2,059 2,113 Inventories and supplies 171 159 Deferred tax asset 186 213 Prepaid and other 399 426 ------------------------- Total current assets 2,979 3,112 ------------------------- Property, plant and equipment - net 18,208 18,281 Investment in Time Warner Entertainment 2,483 2,477 Net investment in international ventures 1,427 1,548 Intangible assets - net 12,597 12,595 Net investment in assets held for sale 403 409 Other assets 2,236 2,433 ------------------------- Total assets $40,333 $40,855 ========================= LIABILITIES AND SHAREOWNERS' EQUITY Current liabilities: Short-term debt $1,795 $1,051 Accounts payable 1,249 1,316 Due to Continental Cablevision shareholders - 1,150 Dividends payable 266 263 Other payables 2,503 2,294 ------------------------- Total current liabilities 5,813 6,074 ------------------------- Long-term debt 14,260 14,300 Postretirement and other postemployment benefit obligations 2,473 2,479 Deferred taxes 4,438 4,522 Deferred credits and other 733 800 Preferred securities of subsidiary trust holding Company-guaranteed debentures 1,080 1,080 Preferred stock subject to mandatory redemption 51 51 Shareowners' equity: Preferred shares 921 920 Common shares 10,739 10,741 Retained earnings (deficit) (57) 18 LESOP guarantee (91) (91) Foreign currency translation adjustments (27) (39) ------------------------- Total shareowners' equity 11,485 11,549 ------------------------- Total liabilities & shareowners' equity $40,333 $40,855 =========================
EX-99 15 EXHIBIT 99C3 EXHIBIT 99C.3 CONSOLIDATED STATEMENTS OF U S WEST, Inc.
CASH FLOWS (UNAUDITED) Quarter Ended March 31, Dollars in millions 1997 1996 - - --------------------------------------------------------------------- OPERATING ACTIVITIES Net income $230 $331 Adjustments to net income: Depreciation and amortization 830 584 Equity losses in unconsolidated ventures 165 66 Gain on sale of rural telephone exchanges (18) - Gain on sale of investment (51) - Cumulative effect of change in accounting principle - (34) Deferred income taxes and amortization of investment tax credits (27) 7 Changes in operating assets and liabilities: Restructuring payments (33) (46) Postretirement medical and life costs, net of cash fundings (6) (44) Accounts and notes receivable 108 92 Inventories, supplies and other (51) (60) Accounts payable and accrued liabilities 194 41 Other - net 5 (22) - - --------------------------------------------------------------------- Cash provided by operating activities 1,346 915 - - --------------------------------------------------------------------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (764) (757) Investment in Continental Cablevision (1,150) - Investment in international ventures (48) (104) Proceeds from sale of investment 121 - Payments on disposals of property, plant and equipment - (7) Cash from net investment in assets held for sale 29 3 Other - net 4 (24) - - --------------------------------------------------------------------- Cash (used for) investing activities (1,808) (889) - - --------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from (repayments of) short-term debt - net (3,339) 60 Proceeds from issuance of long-term debt 4,090 76 Repayments of long-term debt (55) (121) Dividends paid on common and preferred stock (248) (234) Proceeds from issuance of common stock 30 71 Purchases of treasury stock (53) - - - --------------------------------------------------------------------- Cash provided by (used for) financing activities 425 (148) - - --------------------------------------------------------------------- CASH AND CASH EQUIVALENTS Decrease (37) (122) Beginning balance 201 192 - - --------------------------------------------------------------------- Ending balance $164 $70 =====================================================================
EX-27 16 FDS
5 0000732718 U S WEST, INC. 1,000,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 164 0 2,059 0 171 2,979 38,152 19,944 40,333 5,813 14,260 1,131 921 10,739 (175) 40,333 3,766 3,766 0 0 2,944 0 278 400 170 230 0 0 0 230 0.70 0.70
EX-99 17 EX99C4 EXHIBIT 99C.4 SELECTED CONSOLIDATED DATA U S WEST, Inc. (UNAUDITED)
Quarter Ended March 31, Percent Dollars in millions 1997 1996 Change - - ------------------------------------ ------- ------- ------- Capital expenditures $729 $803 (9.2) Debt-to-capital ratio (#1) 56.0% 54.8%# - Employees 68,468 61,268 11.8 EBITDA $1,652 $1,309 26.2 EBITDA Margin 43.9% 42.9% - # As of December 31, 1996. #1 Ratio includes preferred securities and other preferred stock as a component of total capital. Including debt related to the net investment in assets held for sale, preferred securities and mandatorily redeemable preferred stock, the Company's percentage of debt to total capital was 60.6% at March 31, 1997 and 59.5% at December 31, 1996.
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