PRO FORMA CONSOLIDATED STATEMENTS OF INCOME (1)(2) U S WEST, INC.
(UNAUDITED)
Quarter Ended Year Ended
In millions, except December 31, % December 31, %
per share amounts 1999 1998(3) Change 1999 1998(3) Change
- - ------------------- ---- ---- ------ ---- ---- ------
OPERATING REVENUES
Local services $2,000 $1,829 9.3 $7,746 $7,104 9.0
Access services 691 670 3.1 2,729 2,660 2.6
Directory services 455 430 5.8 1,436 1,349 6.4
Long-distance services 113 189 (40.2) 584 795 (26.5)
Other services 232 166 39.8 687 518 32.6
----- ----- ------ ------
Total operating rev. 3,491 3,284 6.3 13,182 12,426 6.1
----- ----- ------ ------
OPERATING EXPENSES
Employee-related 1,266 1,141 11.0 4,733 4,315 9.7
Other operating 774 765 1.2 2,745 2,842 (3.4)
Depreciation & amort 604 574 5.2 2,367 2,199 7.6
----- ----- ------ ------
Total operating exp. 2,644 2,480 6.6 9,845 9,356 5.2
----- ----- ------ ------
Operating Income 847 804 5.3 3,337 3,070 8.7
OTHER EXPENSE
Interest expense 217 165 31.5 736 660 11.5
Loss on sale of Global
Crossing investment 423 - - 423 - -
Terminated merger -
related expenses - - - 282 - -
Other expense
(income), net (16) 10 (260.0) (6) 87 (106.9)
----- ----- ------ ------
Income before income
taxes 223 629 (64.5) 1,902 2,323 (18.1)
Income tax provision 57 232 (75.4) 800 875 (8.6)
----- ----- ------ ------
Net Income $ 166 $ 397 (58.2) $1,102 $1,448 (23.9)
===== ===== ====== ======
Basic earnings per
share $ 0.33 $ 0.79 (58.2) $ 2.18 $2.89 (24.6)
===== ===== ====== ======
Basic average shares
outstanding 505.7 502.7 0.6 504.4 501.8 0.5
===== ===== ====== ======
Diluted earnings per
share $ 0.32 $ 0.78 (59.0) $ 2.16 $2.86 (24.5)
===== ===== ====== ======
Diluted average shares
outstanding 511.7 508.0 0.7 509.3 506.2 0.6
===== ===== ====== ======
<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 1999 and 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) Certain reclassifications have been made to the 1998 amounts to conform with
the 1999 presentation.
</FN>