-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QlKPWAYNSh91anIwpz2B64/JbyDYaY90D1m6NF5CJ0/jZbicz5fv9USFVpN62V24 I3UPh5i0HkaiDsRGVCOKCw== 0000732715-96-000032.txt : 19960514 0000732715-96-000032.hdr.sgml : 19960514 ACCESSION NUMBER: 0000732715-96-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICHIGAN BELL TELEPHONE CO CENTRAL INDEX KEY: 0000065622 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 380823930 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03499 FILM NUMBER: 96561818 BUSINESS ADDRESS: STREET 1: 444 MICHIGAN AVE CITY: DETROIT STATE: MI ZIP: 48226 BUSINESS PHONE: 3132239900 MAIL ADDRESS: STREET 1: 30 SOUTH WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-3499 MICHIGAN BELL TELEPHONE COMPANY (Incorporated under the laws of the State of Michigan) 444 Michigan Avenue, Detroit, Michigan 48226 I.R.S. Employer Identification Number 38-0823930 Telephone Number - (800) 257-0902 THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF AMERITECH CORPORATION, MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2). Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- At April 30, 1996, 120,526,415 common shares were outstanding. 2 Part I - Financial Information ------------------------------ The following condensed financial statements have been prepared by Michigan Bell Telephone Company (the Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of the Company, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of results for each period shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. The Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's latest Annual Report on Form 10-K. CONDENSED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT (Dollars in Millions) (Unaudited) Three Months Ended March 31 ------------- 1996 1995 ---- ---- Revenues................................. $ 788.8 $ 705.3 --------- --------- Operating Expenses Employee-related expenses.............. 165.3 163.1 Depreciation and amortization.......... 126.5 119.5 Other operating expenses............... 225.3 213.2 Restructuring credit................... -- (72.8) Taxes other than income taxes.......... 35.2 33.5 --------- --------- 552.3 456.5 --------- --------- Operating income......................... 236.5 248.8 Interest expense......................... 21.1 22.8 Other income, net........................ 2.9 -- --------- --------- Income before income taxes............... 218.3 226.0 Income taxes............................. 75.0 77.6 --------- --------- Net income............................... 143.3 148.4 Accumulated deficit, beginning of period.................... (418.2) (560.3) Less, dividends declared............. 107.8 127.1 --------- --------- Accumulated deficit, end of period.......................... $ (382.7) $ (539.0) ========= ========= See Notes to Condensed Financial Statements. 3 CONDENSED BALANCE SHEETS (Dollars in Millions) Mar. 31, 1996 Dec. 31, 1995 ------------- ------------- (Unaudited) (Derived from Audited Financial Statements) ASSETS - ------ Current assets Cash and temporary cash investments......... $ 0.1 $ 0.1 Investment in Ameritech funding pool........ 20.8 17.0 --------- --------- 20.9 17.1 Receivables, net Customers................................. 646.8 634.2 Ameritech and affiliates.................. 1.9 9.2 Other..................................... 19.1 20.7 Material and supplies....................... 6.5 7.4 Prepaid and other........................... 20.0 22.1 --------- --------- 715.2 710.7 --------- --------- Property, plant and equipment................ 7,837.2 7,775.9 Less, accumulated depreciation............... 4,750.1 4,657.7 --------- --------- 3,087.1 3,118.2 --------- --------- Investments, primarily in affiliates......... 63.1 68.7 Other assets and deferred charges............ 238.4 238.0 --------- --------- Total assets................................. $ 4,103.8 $ 4,135.6 ========= ========= See Notes to Condensed Financial Statements. 4 CONDENSED BALANCE SHEETS (continued) (Dollars in Millions) Mar. 31, 1996 Dec. 31, 1995 ------------- ------------- (Unaudited) (Derived from Audited Financial Statements) LIABILITIES AND SHAREOWNER'S EQUITY Current liabilities Debt maturing within one year............ $ 36.9 $ 38.0 Accounts payable Ameritech Services, Inc. (ASI).......... 137.9 116.8 Ameritech and affiliates................ 47.7 31.0 Other................................... 138.3 197.1 Other current liabilities................ 384.8 415.5 --------- --------- 745.6 798.4 --------- --------- Long-term debt............................ 1,093.1 1,093.1 --------- --------- Deferred credits and other long-term liabilities Accumulated deferred income taxes........ 102.5 105.7 Unamortized investment tax credits....... 53.3 55.9 Postretirement benefits other than pensions.................... 670.1 676.2 Long-term payable to ASI................. 20.0 21.5 Other.................................... 61.6 62.7 --------- --------- 907.5 922.0 --------- --------- Shareowner's equity Common shares - ($14 2/7 par value; 120,810,000 shares authorized; 120,526,415 issued and outstanding).... 1,721.8 1,721.8 Proceeds in excess of par value.......... 18.5 18.5 Accumulated deficit...................... (382.7) (418.2) --------- --------- 1,357.6 1,322.1 --------- --------- Total liabilities and shareowner's equity.. $ 4,103.8 $ 4,135.6 ========= ========= See Notes to Condensed Financial Statements. 5 CONDENSED STATEMENTS OF CASH FLOWS (Dollars in Millions) (Unaudited) Three Months Ended March 31 ------------- 1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income.................................... $ 143.3 $ 148.4 Adjustments to net income Restructuring credit, net of tax............ -- (47.1) Depreciation and amortization............... 126.5 119.5 Deferred income taxes, net.................. (2.9) 0.5 Investment tax credits, net................. (2.6) (3.5) Capitalized interest........................ (0.5) (0.4) Provision for uncollectibles................ 14.1 9.4 Change in accounts receivable............... (17.8) 10.6 Change in material and supplies............. (1.1) 1.5 Change in certain other current assets...... 1.9 9.8 Change in accounts payable.................. (21.0) (18.7) Change in certain other current liabilities. 99.8 71.2 Change in certain other noncurrent assets and liabilities.................... (9.9) (17.9) Other....................................... 8.1 9.4 -------- -------- Net cash from operating activities............ 337.9 292.7 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures........................... (94.2) (89.3) Cost of disposals of property, plant and equipment................. (0.2) (0.2) -------- -------- Net cash from investing activities............. (94.4) (89.5) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Intercompany financing, net.................... (0.7) (193.6) Retirements of long-term debt.................. (0.4) (0.6) Dividend payments.............................. (238.6) -- -------- -------- Net cash from financing activities............. (239.7) (194.2) -------- -------- Net increase in cash and temporary cash investments.................... 3.8 9.0 Cash and temporary cash investments, beginning of period........................... 17.1 14.2 -------- -------- Cash and temporary cash investments, end of period................................. $ 20.9 $ 23.2 ======== ======== See Notes to Condensed Financial Statements. 6 NOTES TO CONDENSED FINANCIAL STATEMENTS (Dollars in Millions) MARCH 31, 1996 NOTE 1: Work Force Restructuring As announced in March 1994, the Company's parent, Ameritech Corporation, restructured its existing nonmanagement work force, reducing the work force by 11,500 employees during 1994 and 1995, including 2,626 at the Company. As a result of the restructuring, the Company recorded a gain of $72.8 million or $47.1 million after-tax in the first three months of 1995, resulting primarily from settlement gains from lump sum pension payments from the Ameritech Pension Plan to former employees. No restructuring charges or credits were recorded in the first three months of 1996. The Company recorded additional restructuring charges in the fourth quarter of 1995, primarily for the consolidation of data centers and additional work force reductions. NOTE 2: Reclassification Certain reclassifications were made to the December 31, 1995 balances to correspond to the presentation as of March 31, 1996. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Dollars in Millions) The following is a discussion and analysis of the changes in revenues, operating expenses and other income and expenses for the first three months of 1996 as compared with the first three months of 1995. Results of Operations - --------------------- Revenues - -------- Total revenues in the first three months of 1996 were $788.8 million and were $705.3 million for the same period in 1995. The following paragraphs explain the components of that change. - ---------------------------------------------------------------------- Local service - ------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 337.1 $ 298.2 $ 38.9 13.0 The increase in local service revenues in the first three months of 1996 was primarily attributable to higher network usage volumes, which increased local service revenues by $35.4 million. The increased network usage volumes resulted principally from growth in the number of access lines, which increased 4.8 percent to 5,029,000 as of March 31, 1996 as compared to 4,800,000 at March 31, 1995, and greater sales of call management services, such as Call Forwarding and Caller ID. Local service revenues also increased by $3.4 million due to net rate increases. - ---------------------------------------------------------------------- Network access - -------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Interstate - ---------- Three Months Ended $ 144.3 $ 137.4 $ 6.9 5.0 Intrastate - ---------- Three Months Ended $ 44.5 $ 46.1 $ (1.6) (3.5) The increase in interstate network access revenues for the three months ended March 31, 1996 was primarily due to higher network usage of $15.1 million. Partially offsetting this increase were net rate reductions of $3.4 million, as well as a reduction of $4.0 million due to the elimination of the carrier common line surcharge in December 1995. Minutes of use related to interstate calls increased 9.5 percent in 1996 compared to the prior year period. The decrease in intrastate network access revenues for the three months ended March 31, 1996 was primarily due to rate decreases of $8.7 million, as well as a revenue decrease of $6.5 million due to a reclassification of certain revenues to the long distance category discussed below. These decreases were partially offset by higher network usage of $13.6 million. Minutes of use related to intrastate calls increased 9.2 percent in 1996 compared to the prior year period. 8 Management's Discussion and Analysis of Results of Operations (cont'd.) Long distance service - --------------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 189.8 $ 171.0 $ 18.8 11.0 The increase in long distance service revenues for the three months ended March 31, 1996 was due primarily to volume increases, resulting in increases to revenue of $11.1 million, as well as rate increases of $1.2 million and an increase in long distance service revenues of $6.5 million due to a reclassification of certain revenues from the intrastate network access category. - ---------------------------------------------------------------------- Other - ----- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 73.1 $ 52.6 $ 20.5 39.0 Other revenues include revenues derived from directory advertising, billing and collection services, inside wire installation and maintenance services and other miscellaneous services. The increase in other revenues for the three months ended March 31, 1995 was due primarily to growth in voice messaging, sales of equipment and other nonregulated services of $18.2 million, as well as an increase in directory advertising revenue of $2.0 million. - ---------------------------------------------------------------------- Operating expenses - ------------------ Total operating expenses for the three months ended March 31, 1996 increased $95.8 million, or 21.0 percent to $552.3 million. The increase was primarily attributable to work force restructuring, which resulted in a credit of $72.8 million in the first quarter of 1995 related to settlement gains previously discussed. 9 Management's Discussion and Analysis of Results of Operations (cont'd.) Employee-related expenses - ------------------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 165.3 $ 163.1 $ 2.2 1.3 The increase in employee-related expenses for the three months ended March 31, 1996 was due primarily to increased incentive accruals and payroll taxes of $4.1 million, as well as a decrease of $4.9 million in the pension credit amount recorded in the first quarter of 1996 compared to the prior year period. These increases were partially offset by a decrease of $3.0 million due to wage rate decreases, work force reductions and decreased overtime, as well as decreases in benefits and other employee-related expenses of $3.7 million. There were 12,441 employees at March 31, 1996, compared with 12,544 at March 31, 1995. - ---------------------------------------------------------------------- Depreciation and amortization - ------------------ March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 126.5 $ 119.5 $ 7.0 5.9 The increase in depreciation and amortization expense for the three months ended March 31, 1996 was due to higher average plant balances, which resulted in an increase of $3.5 million in depreciation expense, as well as a $3.4 million increase resulting from the use of higher depreciation rates in the first quarter of 1996. - ---------------------------------------------------------------------- Other operating expenses - ------------------------ March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 225.3 $ 213.2 $ 12.1 5.7 The increase in other operating expenses for the three months ended March 31, 1996 was due to increases in advertising, uncollectible and other expenses of $15.1 million, related to increased sales efforts for equipment and call management services, as well as cost of sales increases of $13.5 million primarily related to equipment sales. These increases were partially offset by a decrease in contract and professional and affiliated services of $13.2 million, as well as a decrease of $3.4 million in access charge expenses, which resulted from elimination of the carrier common line surcharge, as discussed above. 10 Management's Discussion and Analysis of Results of Operations (cont'd.) Restructuring credit - -------------------- March 31 Percent ---------- (dollars in millions) 1996 1995 Change Change ------------------- ---- ---- -------- ------ Three Months Ended $ -- $ (72.8) $ 72.8 (100.0) As discussed in Note 1, the Company significantly reduced its nonmanagement work force during 1994 and 1995 by 2,626 employees. New employees with different skills were added during this period to accommodate growth and meet staffing requirements for new business opportunities. As of March 31, 1995, 2,138 employees had left the Company, with 60 leaving in the first quarter of 1995. A pretax, noncash settlement gain of $72.8 million was recorded in the first quarter of 1995, associated with lump-sum pension payments to former employees. No restructuring charges or credits were recorded in the first quarter of 1996. - ---------------------------------------------------------------------- Taxes other than income taxes - ----------------------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 35.2 $ 33.5 $ 1.7 5.1 The increase in taxes other than income taxes for the three months ended March 31, 1996 was due primarily to increases in property and other operating taxes. - ---------------------------------------------------------------------- Other Income and Expenses - ------------------------- Interest expense - ----------------- March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 21.1 $ 22.8 $ (1.7) (7.5) The decrease in interest expense for the three months ended March 31, 1996 was due primarily to lower interest on borrowings from the Ameritech short-term funding pool, reflecting lower average short-term balances, as well as an increase in the amount of interest capitalized in the first quarter compared to the prior year period. 11 Management's Discussion and Analysis of Results of Operations (cont'd.) Other income, net - ----------------- Change March 31 Income Percent ---------- (dollars in millions) 1996 1995 (Expense) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 2.9 $ -- $ 2.9 n/a Other income, net includes equity earnings in affiliates, interest income and other nonoperating items. The increase in other income, net for the three months ended March 31, 1996 is due primarily to increases in interest income and increased equity earnings from ASI, as well as a decrease in certain miscellaneous nonoperating expenses. - ---------------------------------------------------------------------- Income taxes - ------------ March 31 Increase Percent ---------- (dollars in millions) 1996 1995 (Decrease) Change ------------------- ---- ---- -------- ------ Three Months Ended $ 75.0 $ 77.6 $ (2.6) (3.4) The decrease in income taxes in the three months ended March 31, 1996 as compared to the prior year period was primarily attributable to the decrease in pretax earnings, related to the revenue and expense items previously discussed. - ---------------------------------------------------------------------- Ratio of earnings to fixed charges - ---------------------------------- The ratio of earnings to fixed charges for the three months ended March 31, was 10.34 in 1996 and 10.30 in 1995. The ratio in 1995 was favorably affected by a credit of $72.8 million for work force restructuring (see prior discussion of this item). The work force restructuring program has largely been funded by the Ameritech Pension Plan. The computations of the ratio of earnings to fixed charges for the five years ended December 31, 1995 have been restated. The ratio, as adjusted, for the years ended December 31, 1995, 1994, 1993, 1992 and 1991 was 8.59, 4.69, 5.22, 4.74 and 4.10, respectively. The impact of the restatement was not significant and was made to be consistent with unregulated enterprises. 12 Management's Discussion and Analysis of Results of Operations (cont'd.) Other Matters - -------------- Telecommunications Act of 1996 - ------------------------------ The Telecommunications Act of 1996 was signed into law by the President on February 8, 1996. This legislation defines the conditions under which Ameritech will be permitted to offer interLATA long distance service and provides certain mechanisms intended to facilitate local exchange competition. This legislation, in addition to allowing Ameritech to offer interLATA long distance services, will allow competitors into the Company's traditional local exchange markets. Management believes the legislation gives the Company an opportunity to expand its revenue base by providing long distance services, while retaining lower-margin access revenues as other local service providers, acting as resellers, continue to use Ameritech's network facilities. On April 19, 1996 the Federal Communications Commission (FCC) issued a notice of proposed rulemaking seeking comment on proposed rules opening local telephone markets to competition. The FCC has until August 8, 1996 to issue the new rules. Dial 1+ - ------- On May 1, 1996, AT&T Corp. and MCI Communications Corp. filed a joint motion with the Michigan Public Service Commission seeking unconditional implementation of intraLATA Dial 1+, or the ability to place an intraLATA long distance call with an alternate long distance carrier by dialing 1 before the regular phone number, throughout Michigan on and after May 2, 1996 and related relief, including access charge discounts for late implementation. On May 9, Ameritech filed a brief opposing the relief sought in the motion. The outcome of this filing cannot be determined at this time. 13 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits -------- 12 Computation of Ratio of Earnings to Fixed Charges for the three months ended March 31, 1996 and March 31, 1995, and for the five years ended December 31, 1995. 27 Financial Data Schedule. (b) Reports on Form 8-K ------------------- No Form 8-K was filed by the registrant during the quarter which this report is filed. 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MICHIGAN BELL TELEPHONE COMPANY ------------------------------- (Registrant) Date: May 10, 1996 /s/ Laurie L. Streling ---------------------- Laurie L. Streling Comptroller State Finance Organization (Principal Accounting Officer) EX-12 2 EXHIBIT 12 MICHIGAN BELL TELEPHONE COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Millions) Three Months Ended March 31 ------------- 1996 1995 ---- ---- 1. EARNINGS a) Income before interest expense, income taxes and undistributed equity earnings (3)................. $ 245.9 $ 257.9 b) Single Business Tax (2).............. 6.3 7.2 c) Portion of rental expense representative of the interest factor (1)(2).............. 3.1 2.8 -------- -------- Total 1(a) through 1(c)................. $ 255.3 $ 267.9 -------- -------- 2. FIXED CHARGES a) Total interest expense including capital lease obligations........... $ 21.1 $ 22.8 b) Capitalized interest................. 0.5 0.4 c) Portion of rental expense representative of the interest factor (1)................. 3.1 2.8 -------- -------- Total 2(a) through 2(c)................. $ 24.7 $ 26.0 -------- -------- 3. RATIO OF EARNINGS TO FIXED CHARGES...... 10.34 10.30 ===== ===== (1) One-third of rental expense is considered to be the amount representing return on capital. (2) Earnings are income before income taxes and fixed charges. Since the Single Business Tax (the Tax) and rental expense have already been deducted, the Tax and the one-third portion of rental expense considered to be fixed charges are added back. (3) The results for the first three months of 1995 reflect a $72.8 million pretax credit primarily from settlement gains resulting from lump sum pension payments from the pension plan to former employees who left the business in the nonmanagement work force restructuring. EXHIBIT 12 MICHIGAN BELL TELEPHONE COMPANY COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Dollars in Millions) 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- 1. EARNINGS a) Income before interest expense, income tax, extraordinary charge, cumulative effect of change in accounting principles and undistributed equity earnings (3)... $ 863.1 $ 477.3 $ 584.2 $ 548.0 $ 533.8 b) Single Business Tax (2)........ 26.2 28.3 27.6 25.2 25.6 c) Portion of rental expense representative of the interest factor (1)(2). 13.1 11.8 13.5 14.5 14.8 -------- ------- ------- ------- ------- Total 1(a) through 1(c)... $ 902.4 $ 517.4 $ 625.3 $ 587.7 $ 574.2 ======= ======= ======= ======= ======= 2. FIXED CHARGES a) Total interest expense including capital lease obligations............. $ 90.3 $ 97.1 $ 104.8 $ 108.4 $ 123.1 b) Capitalized interest........... 1.7 1.5 1.4 1.2 2.2 c) Portion of rental expense representative of the interest factor (1).... 13.1 11.8 13.5 14.5 14.8 ------- ------- ------- ------- ------- Total 2(a) through 2(c)... $ 105.1 $ 110.4 $ 119.7 $ 124.1 $ 140.1 ======== ======= ======= ======= ======= 3. RATIO OF EARNINGS TO FIXED CHARGES 8.59 4.69 5.22 4.74 4.10 ======== ======= ======= ======= ======= (1) One-third of rental expense is considered to be the amount representing return on capital. (2) Earnings are income before income taxes and fixed charges. Since the Single Business Tax (the Tax) and rental expense have already been deducted, the Tax and the one-third portion of rental expense considered to be fixed charges are added back. (3) The results for 1995 reflect a $64.9 pretax credit primarily from settlement gains resulting from lump sum pension payments from the pension plan to former employees who left the business in the nonmanagement work force restructuring, partially offset by increased force costs related to the restructuring started in 1994, as well as a write-down of certain data processing equipment to net realizable value. Results for 1994 reflect a $174.4 pretax charge associated with the nonmanagement work force restructuring. Costs of the work force restructuring program have largely been funded from the Ameritech Pension Plan. EX-27 3 ART.5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 20,900 0 708,800 41,000 6,500 715,200 7,837,200 4,750,100 4,103,800 745,600 1,093,100 0 0 1,721,800 (364,200) 4,103,800 0 788,800 0 552,300 (2,900) 14,100 21,100 218,300 75,000 143,300 0 0 0 143,300 0 0 SECURITIES ARE NOT MATERIAL AND THEREFORE HAVE NOT BEEN STATED SEPARATELY IN THE FINANCIAL STATEMENTS. THIS AMOUNT IS INCLUDED IN THE CASH TAG. NET SALES OF TANGIBLE PRODUCTS IS NOT MORE THAN 10% OF TOTAL OPERATING REVENUES AND THEREFORE HAS NOT BEEN STATED SEPARATELY IN THE FINANCIAL STATEMENTS PURSUANT TO REGULATION S-X, RULE 5-03(B). THIS AMOUNT IS INCLUDED IN THE "TOTAL REVENUES" TAG. COST OF TANGIBLE GOODS SOLD IS INCLUDED IN COST OF SERVICE AND PRODUCTS IN THE FINANCIAL STATEMENTS AND THE "TOTAL COST" TAG, PURSUANT TO REGULATION S-X, RULE 5-03(B).
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