CONSOLIDATED STATEMENTS OF INCOME (1) U S WEST, INC. (UNAUDITED) Quarter Ended Nine Months Ended September 30, % September 30, % In millions 1998 1997 Change 1998 1997 Change - - ---------------------- --------------------- ------- ------- ------- OPERATING REVENUES Local service $1,398 $1,314 6.4 $4,117 $3,739 10.1 Interstate access 693 663 4.5 2,102 2,028 3.6 Intrastate access 208 208 - 616 608 1.3 Long-distance network 199 231 (13.9) 595 721 (17.5) Directory services 315 296 6.4 935 879 6.4 Other services 299 248 20.6 809 682 18.6 --------------- ---------------- Total operating rev. 3,112 2,960 5.1 9,174 8,657 6.0 --------------- ---------------- OPERATING EXPENSES Employee-related 1,104 1,018 8.4 3,179 2,915 9.1 Other operating 567 539 5.2 1,798 1,517 18.5 Taxes other than income taxes 84 106 (20.8) 274 320 (14.4) Depreciation & amort 558 541 3.1 1,625 1,616 0.6 --------------- ---------------- Total operating exp. 2,313 2,204 4.9 6,876 6,368 8.0 --------------- ---------------- Operating income 799 756 5.7 2,298 2,289 0.4 Interest expense 172 100 72.0 378 304 24.3 Gains on sales of rural telephone exchanges - 30 - - 77 - Other expense 19 12 58.3 77 51 51.0 --------------- ---------------- Income before taxes and extraordinary item 608 674 (9.8) 1,843 2,011 (8.4) Income tax provision 229 251 (8.8) 703 752 (6.5) --------------- ---------------- Income before extraordinary item 379 423 (10.4) 1,140 1,259 (9.5) Extraordinary Item: Early extinguishment of debt - net of tax - (3) - - (3) - --------------- ---------------- NET INCOME $ 379 $ 420 (9.8) $1,140 $1,256 (9.2) =============== ================ <FN> (1) The historical results presented reflect unaudited historical financial information as if the businesses that comprise New U S WEST operated as a separate entity for the periods presented. The effects of the Separation, including the assumption of indebtedness and the issuance of shares in connection with the Dex transaction, have been included in the historical results as of the Separation Date. </FN> 9