COMBINED STATEMENTS OF INCOME U S WEST COMMUNICATIONS GROUP (UNAUDITED) Quarter Ended March 31, % Dollars in millions 1998 1997 Change - - ------------------------------------- ---------- ------------------- OPERATING REVENUES Local service $ 1,350 $ 1,231 9.7 Interstate access service 698 687 1.6 Intrastate access service 206 200 3.0 Long-distance network services 201 250 (19.6) Other services 255 219 16.4 ---------- ---------- Total operating revenues 2,710 2,587 4.8 ---------- ---------- OPERATING EXPENSES Employee-related expenses 938 864 8.6 Other operating expenses 481 445 8.1 Taxes other than income taxes 97 107 (9.3) Depreciation and amortization 524 527 (0.6) ---------- ---------- Total operating expenses 2,040 1,943 5.0 ---------- ---------- Operating income 670 644 4.0 Interest expense 97 103 (5.8) Gain on sale of rural telephone exchanges - 18 - Other expense - net 25 22 13.6 ---------- ---------- Income before income taxes 548 537 2.0 Provision for income taxes 201 198 1.5 ---------- ---------- NET INCOME $ 347 $ 339 2.4 ========== ========== COMBINED STATEMENTS OF INCOME U S WEST COMMUNICATIONS GROUP (UNAUDITED) Quarter Ended Dollars in millions (except March 31, % per share amounts) 1998 1997 Change - - ------------------------------------- ---------- ------------------- Basic average common shares outstanding 485.0 481.3 0.8 ========== ========== Basic earnings per common share: $ 0.72 $ 0.70 2.9 ========== ========== Diluted average common shares outstanding 489.1 492.4 (0.7) ========== ========== Diluted earnings per common share: $ 0.71 $ 0.70 1.4 ========== ========== Normalized income: Reported net income $ 347 $ 339 2.4 Adjustments to normalize net income: Rural exchange sale - (11) - ---------- ---------- Normalized income $ 347 $ 328 5.8 ========== ========== Normalized basic earnings per common share: Reported basic earnings per common share $ 0.72 $ 0.70 2.9 Adjustments to normalize net income: Rural exchange sale - (0.02) - ---------- ---------- Normalized basic earnings per common share $ 0.72 $ 0.68 5.9 ========== ========== Normalized diluted earnings per common share: Reported diluted earnings per common share $ 0.71 $ 0.70 1.4 Adjustments to normalize net income: Rural exchange sale - (0.02) - ---------- ---------- Normalized diluted earnings per common share $ 0.71 $ 0.67 # 6.0 ========== ========== <FN> # Amount does not foot due to rounding of the individual components. </FN>