PRO FORMA STATEMENTS OF INCOME (1) (2) U S WEST, INC.
(UNAUDITED)
Quarter Ended Year ended
In millions, except Mar 31, Jun 30,Sept 30,Dec 31, Dec 31,
per share amounts 1998 1998 1998 1998 1998
- - ----------------------------- ------- ----- ------- ------ ---------
OPERATING REVENUES
Local services $ 1,726 $1,751 $1,798 $1,829 $ 7,104
Access services 664 669 657 670 2,660
Directory services 305 300 314 430 1,349
Long-distance services 204 200 202 189 795
Other services 104 116 132 166 518
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Total operating rev. 3,003 3,036 3,103 3,284 12,426
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OPERATING EXPENSES
Employee-related 1,004 1,070 1,100 1,141 4,315
Other operating 660 770 647 765 2,842
Depreciation & amort 532 535 558 574 2,199
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Total operating exp. 2,196 2,375 2,305 2,480 9,356
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Operating Income 807 661 798 804 3,070
OTHER EXPENSE
Interest expense 163 160 172 165 660
Other expense 25 33 19 10 87
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Income before income taxes 619 468 607 629 2,323
Income tax provision 230 184 229 232 875
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NET INCOME $ 389 $ 284 $ 378 $ 397 $ 1,448
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Basic earnings per share $ 0.78 $0.57 $ 0.75 $ 0.79 $ 2.89
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Basic average shares
outstanding 501.3 501.5 501.8 502.7 501.8
======= ===== ======= ====== =========
Diluted earnings per share $ 0.77 $0.56 $ 0.75 $ 0.78 $ 2.86
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Diluted average shares
outstanding 505.5 505.6 506.0 508.0 506.2
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Normalized diluted earnings
per share (3) $ 0.77 $0.74 $ 0.75 $ 0.78 $ 3.04
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<FN>
<F1>
(1) The separation of U S WEST, Inc. into two independent companies, U S WEST,
Inc. ("New U S WEST") and MediaOne Group, Inc., (the "Separation") occurred on
June 12, 1998. The results for the year ended December 31, 1998 give effect to
the Separation as if the business that comprised New U S WEST operated as a
separate entity for the entire period presented. Additionally, the results of
operations include pro forma adjustments for the assumption of indebtedness and
the issuance of shares in connection with the alignment of the directory
business with New U S WEST, as if the Separation had been consummated as of the
beginning of the year.
<F2>
(2) The results of operations for 1998 include pro forma adjustments for the
change in accounting principle to recognize revenues and expenses for directory
publishing under the "point of publication" method from the "amortization"
method as if the change in accounting principle had been adopted as of the
beginning of each period presented. Under the "point of publication" method,
revenues and expenses are recognized when the directories are delivered whereas
under the "amortization" method, revenues and expenses were recognized over the
lives of the directories, generally one year.
<F3>
(3) Second quarter 1998 income was normalized for $89 ($0.17 per share) for
costs associated with the Separation and an asset impairment.
</FN>