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 455 355 28.2 1,436 1,318 9.0
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 3,209 8.8 13,182 12,395 6.3
----- ----- ------ ------
OPERATING EXPENSES
Employee-related 1,266 1,133 11.7 4,733 4,312 9.8
Other operating 774 751 3.1 2,745 2,835 (3.2)
Depreciation & amort 604 574 5.2 2,367 2,199 7.6
----- ----- ------ ------
Total operating exp. 2,644 2,458 7.6 9,845 9,346 5.3
----- ----- ------ ------
Operating Income 847 751 12.8 3,337 3,049 9.4
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 223 576 (61.3) 1,902 2,302 (17.4)
Income tax provision 57 208 (72.6) 800 866 (7.6)
----- ----- ------ ------
Income before
cumultive effect of
accounting change 166 368 (54.9) 1,102 1,436 (23.3)
Cumulative effect of
change in accounting
principle - - - 240 - -
Net Income $ 166 $ 368 (54.9) $1,342 $1,436 (6.5)
=== === ====== ======
Basic earnings per
share $ 0.33 $ 0.73 (54.8) $ 2.66 $2.86 (7.0)
===== ===== ====== ======
Basic average shares
outstanding 505.7 502.7 0.6 504.4 501.8 0.5
===== ===== ====== ======
Diluted earnings per
share $ 0.32 $ 0.73 (56.2) $ 2.63 $2.84 (7.4)
===== ===== ====== ======
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 include 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 the year.
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>