U S West Expands Outsourcing Program with SOURCE; Savings from Improved Asset Management Already Top $2.2 Million

Business Wire, July 10, 1996

DALLAS--(BUSINESS WIRE)--July 10, 1996--The Business and Government Services Division of U S WEST Communication Services, Inc., Englewood, Colo., has agreed to outsource the storage and redeployment of its defective and refurbished customer premise telecommunications products to SOURCE, Inc., the market leader in repair, refurbishing, servicing and sales of used telecom equipment and systems.

This will be the third phase of an extensive asset management program that includes product consignment, out-of-warranty repairs, defective equipment management and sales of refurbished equipment. Since its inception in late 1994, U S WEST has documented hard-dollar savings of more than $2.2 million while reducing turnaround time for repair and return of defective parts from 36 to 14 days on surface shipments.

"While the cost savings are important, our primary objective is making certain we're delivering quality products and services to our customers," said Doris Hanavan, materials manager of service for U S WEST. "With its sophisticated serial barcoding and information management systems, we're confident SOURCE will continue to set the industry standard in quality control."

The three-year contract covers repair, testing, asset and inventory management services for selected customer premise equipment (CPE) sold and/or supported by U S WEST. Under the contract terms, SOURCE will provide U S WEST and its customers with: -0-

-- Complete parts support form over 140 manufacturers

-- 24-hour emergency service

-- Quality assurance through Milspec AQL Certification

-- A one-year advance replacement warranty on all parts purchased from SOURCE

-- Access to SOURCE's database of more than 25,000 parts

"This further streamlines to process, enabling us to get equipment to customers even more quickly while reducing U S WEST's freight and handling expenses," said David Potter, chief executive officer of SOURCE. "We also expect to greatly reduce the return and out-of-box failure rates for its refurbished stock, which previously was shipped directly to its distribution center."

By consigning its excess CPE telecom inventory to SOURCE, U S WEST generally gets prices two to three times higher than the standard liquidation value. And by outsourcing the management of its defective equipment, the company no longer must sort the products and coordinate repair with more than 200 vendors.

Other specific program benefits since 1994 reduced inventory investments in field locations by more than $1 million.

-- Recovery of sales through the consignment program of $230,000, which further reduced inventory investments and carrying costs by another $530,000.

-- Cost savings of $500,000 by utilizing SOURCE for out-of-warranty repairs.

-- Offering of comprehensive asset management services to U S WEST customers, including product tracking, trade-ins, flexible leasing options and recertified parts.

U S WEST Communications Group (NYSE: USW) provides telecommunications services to more than 25 million customers in 14 western and midwestern states. The company is one of two major groups that make up U S WEST, a company in the connections business, helping customers share information, entertainment and communications services in local markets worldwide. U S WEST's other major group, U S WEST Media Group, is involved in domestic and international cable and telephony, wireless communications and directory and information services.

SOURCE, Inc. is headquartered in Dallas and is the leading independent provider for current and evolving business applications of computer and telephony integration. Founded in 1971, it supplies communications equipment, technology-neutral product support and repair and consulting services for all major manufacturers' equipment. Using individual serial barcodes, SOURCE controls an inventory of 250,000 products; tracks the ownership, value and service history of all equipment; and manages and processes more than 60,000 parts, components and systems each month.

Through its unique information management system -- which includes a parts database that is the "blue book" for used phones and systems -- SOURCE serves as an objective resource for more than 8,000 active customers, including manufacturers, end-users and service providers.

CONTACT: HLB Communications

Jan Shulman or Darrel Kachan, 312/649-0371