CONSOLIDATED STATEMENTS OF INCOME (1) U S WEST, INC. (UNAUDITED) Quarter Ended Six Months Ended In millions, except June 30, % June 30, % per share amounts 1999 1998 (2) Change 1999 1998 (2) Change - - ------------------- -------- --------- ------ ------- --------- ------ OPERATING REVENUES Local services $ 1,933 $ 1,756 10.1 $ 3,800 $ 3,486 9.0 Access services 688 671 2.5 1,369 1,336 2.5 Long-distance services 156 200 (22.0) 330 404 (18.3) Directory services 333 310 7.4 659 616 7.0 Other services 148 116 27.6 282 220 28.2 ------- -------- ----- ------- Total operating rev. 3,258 3,053 6.7 6,440 6,062 6.2 ------- -------- ----- ------- OPERATING EXPENSES Employee-related 1,153 1,069 7.9 2,278 2,075 9.8 Other operating 677 636 6.4 1,339 1,292 3.6 Depreciation & amort 573 535 7.1 1,175 1,067 10.1 ------ ------- ----- ----- Total operating exp. 2,403 2,240 7.3 4,792 4,434 8.1 ------ ------- ----- ----- OPERATING INCOME 855 813 5.2 1,648 1,628 1.2 Interest expense 163 160 1.9 316 323 (2.2) Other expense 13 33 (60.6) 14 58 (75.9) ------ ------- ----- ----- Income before income taxes 679 620 9.5 1,318 1,247 5.7 Income tax provision 258 235 9.8 500 469 6.6 ------ ------- ----- ----- NET INCOME $ 421 $ 385 9.4 $ 818 $ 778 5.1 ====== ======= ===== ===== Basic earnings per share $ 0.84 $ 0.77 9.1 $ 1.62 $ 1.55 4.5 ====== ======= ===== ===== Basic average shares outstanding 503.9 501.5 0.5 503.6 501.4 0.4 ====== ======= ===== ===== Diluted earnings per share $ 0.83 $ 0.76 9.2 $ 1.61 $ 1.54 4.5 ====== ======= ===== ===== Diluted average shares outstanding 508.2 505.6 0.5 508.3 505.5 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 quarter and six months ended June 30, 1998 give effect to the Separation as if the business that comprised New U S WEST operated as a separate entity for the entire periods 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 periods indicated. <F2> (2) Net income for the quarter and six months ended June 30, 1998 excludes $89 of after tax charges associated with the Separation and an asset impairment, consisting of $129 of other operating expense, net of $40 of income tax expense. </FN>