CONSOLIDATED STATEMENTS OF CASH FLOWS U S WEST, Inc. Year Ended December 31, In millions 1998 1997 - ------------------------------------------------- -------- --------- OPERATING ACTIVITIES Net income $ 1,508 $ 1,524 Adjustments to net income: Depreciation and amortization 2,199 2,163 Gains on sales of rural telephone exchanges - (77) Gain on sale of investment in Bellcore - (53) Asset impairment 35 - Deferred income taxes and amortization of investment tax credits 106 (15) Changes in operating assets and liabilities: Accounts receivable (26) (60) Inventories, supplies and other current assets (12) (63) Accounts payable, accrued expense and advanced billings (13) 487 Other 130 285 - ------------------------------------------------- -------- --------- Cash provided by operating activities 3,927 4,191 - ------------------------------------------------- -------- --------- INVESTING ACTIVITIES Expenditures for property, plant and equipment (2,672) (2,168) Proceeds from (payments on) disposals of property, plant and equipment (30) 22 Proceeds from sales of rural telephone exchanges - 67 Proceeds from sale of investment in Bellcore - 65 Other (67) (73) - ------------------------------------------------- -------- --------- Cash used for investing activities (2,769) (2,087) - ------------------------------------------------- -------- --------- FINANCING ACTIVITIES Net proceeds from (repayments of) short-term debt 887 (640) Net (repayments of) proceeds from issuance of Old U S WEST short-term debt (198) 153 Proceeds from issuance of long-term debt 3,781 29 Repayment of Old U S WEST debt in connection with the DEX Alignment (3,829) - Repayments of long-term debt (442) (446) Proceeds from issuance of common stock 88 75 Dividends paid on common stock (1,056) (992) Dividends paid to Old U S WEST (194) (336) Payment to Old U S WEST for debt refinancing costs (140) - Return of capital from Old U S WEST 13 - Purchases of treasury stock (46) - - ------------------------------------------------- -------- --------- Cash used for financing activities (1,136) (2,157) - ------------------------------------------------- -------- --------- CASH AND CASH EQUIVALENTS Increase (decrease) 22 (53) Beginning balance 27 80 - ------------------------------------------------- -------- --------- Ending balance $ 49 $ 27 ================================================= ======== ========= 11