<PAGE>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 September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-6589
WISCONSIN BELL, INC.
(Incorporated under the laws of the State of Wisconsin)
722 North Broadway, Milwaukee, Wisconsin 53202
I.R.S. Employer Identification Number 39-0716650
Telephone Number - (414) 549-7102
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 October 31, 1995, 31,960,395 common shares were outstanding.
<PAGE>2
Form 10-Q Part I Wisconsin Bell, Inc.
Part I - Financial Information
------------------------------
The following condensed financial statements have been prepared by
Wisconsin Bell, Inc. (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
and the quarterly reports on Form 10-Q previously filed in the current
year.
CONDENSED STATEMENTS OF INCOME AND REINVESTED EARNINGS (DEFICIT)
(Millions of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
Revenues $ 287.9 $ 288.8 $ 839.3 $ 857.5
-------- -------- -------- --------
Operating Expenses
Employee-related expenses 55.2 64.4 167.1 186.5
Depreciation and amortization 43.5 47.2 128.4 141.8
Other operating expenses 85.1 97.6 259.1 277.8
Restructuring (credit) charge (0.2) 25.7 (26.6) 78.7
Taxes other than income taxes 15.7 15.9 45.8 46.7
-------- -------- -------- --------
199.3 250.8 573.8 731.5
-------- -------- -------- --------
Operating income 88.6 38.0 265.5 126.0
Interest expense 7.9 7.8 23.1 21.0
Other (income) expense, net (0.7) 0.8 (0.9) (0.9)
-------- -------- -------- --------
Income before income taxes 81.4 29.4 243.3 105.9
Income taxes 31.6 10.0 95.3 37.6
-------- -------- -------- --------
Net income 49.8 19.4 148.0 68.3
Reinvested earnings (deficit),
beginning of period (177.6) 18.6 (195.5) 24.9
Less, dividends -- 29.3 80.3 84.5
-------- -------- -------- --------
Reinvested earnings (deficit),
end of period $ (127.8) $ 8.7 $ (127.8) $ 8.7
======== ======== ======== ========
See Notes to Condensed Financial Statements.
<PAGE>3
Form 10-Q Part I Wisconsin Bell, Inc.
CONDENSED BALANCE SHEETS
(Dollars in Millions)
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments $ -- $ --
Receivables, net
Customers 216.4 201.0
Ameritech and affiliates 9.9 5.4
Other 11.1 9.9
Material and supplies 2.8 3.9
Prepaid and other 10.6 89.7
--------- ---------
250.8 309.9
--------- ---------
Property, plant and equipment 2,812.9 2,725.8
Less, accumulated depreciation 1,644.2 1,540.0
--------- ---------
1,168.7 1,185.8
--------- ---------
Investments, primarily in affiliates 26.6 28.5
Other assets and deferred charges 89.0 53.7
--------- ---------
Total assets $ 1,535.1 $1,577.9
========= =========
See Notes to Condensed Financial Statements.
<PAGE>4
Form 10-Q Part I Wisconsin Bell, Inc.
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech $ 115.0 $ 180.2
Other 0.5 0.7
Accounts payable
Ameritech Services, Inc. (ASI) 49.9 46.5
Ameritech and affiliates 19.7 16.2
Other 60.9 75.6
Other current liabilities 77.7 88.0
--------- ---------
323.7 407.2
--------- ---------
Long-term debt 308.7 305.9
--------- ---------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes 41.5 69.2
Unamortized investment tax credits 27.5 31.7
Postretirement benefits other than pensions 263.0 261.1
Long-term payable to ASI 8.2 8.8
Other 38.7 37.9
--------- ---------
378.9 408.7
--------- ---------
Shareowner's equity
Common shares - ($20 par value;
31,995,000 shares authorized;
31,960,395 issued and outstanding) 639.2 639.2
Proceeds in excess of par value 12.4 12.4
Reinvested deficit (127.8) (195.5)
--------- ---------
523.8 456.1
--------- ---------
Total liabilities and shareowner's equity $ 1,535.1 $ 1,577.9
========= =========
See Notes to Condensed Financial Statements.
<PAGE>5
Form 10-Q Part I Wisconsin Bell, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Nine Months Ended
September 30
------------
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 148.0 $ 68.3
Adjustments to net income
Restructuring (credit) charge, net of tax (15.9) 47.1
Depreciation and amortization 128.4 141.8
Deferred income taxes, net 13.2 1.6
Investment tax credits, net (4.2) (5.2)
Interest during construction (0.8) (0.4)
Provision for uncollectibles 9.7 9.4
Change in accounts receivable (30.8) (2.8)
Change in material and supplies 0.8 (2.2)
Change in certain other current assets 8.6 5.5
Change in accounts payable (7.8) (16.2)
Change in certain other current liabilities 12.0 8.0
Change in certain other noncurrent
assets and liabilities (8.9) (19.8)
Other 3.8 --
-------- --------
Net cash from operating activities 256.1 235.1
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (111.4) (101.2)
Proceeds from (cost of) disposals of
property, plant and equipment 1.2 (0.2)
Other investing activities 0.2 --
-------- --------
Net cash from investing activities (110.0) (101.4)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net (65.2) (47.7)
Retirements of long-term debt (0.6) (0.8)
Dividend payments (80.3) (84.5)
-------- --------
Net cash from financing activities (146.1) (133.0)
-------- --------
Net increase in cash and temporary cash investments -- 0.7
Cash and temporary cash investments
at beginning of period -- --
-------- --------
Cash and temporary cash investments
at end of period $ -- $ 0.7
======== ========
See Notes to Condensed Financial Statements.
<PAGE>6
Form 10-Q Part I Wisconsin Bell, Inc.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
SEPTEMBER 30, 1995
NOTE 1: Work Force Restructuring
During March 1994, the Company's parent, Ameritech Corporation, announced
its plan to reduce its existing nonmanagement work force. As of September
30, 1995, 1,113 employees left the Company as a result of the
restructuring. Under terms of agreements between Ameritech, the
Communications Workers of America (CWA) and the International Brotherhood
of Electrical Workers (IBEW), Ameritech implemented an enhancement to the
Ameritech Pension Plan by adding three years to both the age and the net
credited service of eligible nonmanagement employees who left the business
during a designated period, which expired in the third quarter of 1995. In
addition, certain business units offered financial incentives to selected
nonmanagement employees. See additional discussion in Management's
Discussion and Analysis below.
As a result of the restructuring, a pretax charge of $78.7, or $47.1 after-
tax, was recorded in the first nine months of 1994. In the first nine
months of 1995, a gain of $26.6, or $15.9 after-tax, was recorded resulting
primarily from settlement gains from lump sum pension payments from the
Ameritech pension plan to former employees. The cumulative gross program
cost through September 30, 1995 totaled $107.1, partially offset by
settlement gains of $61.9 for an aggregate pretax net program cost of
$45.2, or $27.0 after-tax. At September 30, 1995, the remaining severance
accrual was $0.9.
NOTE 2: Discontinuation of FAS 71 and Reclassifications
As discussed more fully in the 1994 Annual Report on Form 10-K, during the
fourth quarter of 1994 the Company incurred an extraordinary noncash
after-tax charge of $240.4 as a result of its decision to discontinue the
application of Statement of Financial Accounting Standards No. 71 (FAS 71),
"Accounting for the Effects of Certain Types of Regulation."
The principal component of the above charge related to a determination that
telephone plant asset lives prescribed by regulators were too long and
analog switches were obsolete. The net effect of this determination is
causing 1995 depreciation expense to decrease. Long-term, depreciation
expense will likely increase as the effects of shorter lives on plant
assets and future plant additions offset the discontinuation of
depreciation of analog switches.
Certain additional financial statement impacts occurred as a result of the
discontinuation of FAS 71, including the reclassification of the provision
for uncollectibles, previously shown as a reduction in other revenues, to
other operating expenses.
<PAGE>7
Form 10-Q Part I Wisconsin Bell, Inc.
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 nine months
of 1995 as compared with the first nine months of 1994:
Results of Operations
- ---------------------
Revenues
- --------
Total revenues in the first nine months of 1995 were $839.3 and were $857.5
for the same period in 1994. The following paragraphs explain the
components of that change.
- ---------------------------------------------------------------------------
Local Service
- -------------
September 30 Increase Percent
------------
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 411.7 $ 387.1 $ 24.6 6.4
The increase in local service revenues in the first nine months of 1995 was
primarily attributable to higher network volumes which increased local
service revenues by $21.8. The increased network usage volumes resulted
principally from growth in the number of access lines, which increased 3.6
percent to 2,028,019 as of September 30, 1995 as compared with 1,957,358 at
September 30, 1994, and greater sales of special calling features such as
Call Forwarding and Caller ID. An additional increase of $5.6 was due to
the 1994 implementation of the Extended Community Calling Plan (ECC) which
expanded local calling areas and reduced long distance usage. These
increases were partially offset by net rate reductions of $1.9, which
resulted from legislation which adopted price regulation in place of rate-
of-return regulation and removed limits on intrastate earnings.
<PAGE>8
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Network access
- --------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Interstate
- ----------
Nine Months Ended $ 186.8 $ 184.2 $ 2.6 1.4
Intrastate
- ----------
Nine Months Ended $ 46.9 $ 61.7 $ (14.8) (24.0)
The increase in interstate network access revenues for the nine months
ended September 30, 1995 was primarily due to higher network usage, which
resulted in increased revenues of $10.3, and a reduction of $2.7 in
National Exchange Carrier Association common line support payments.
Partially offsetting these revenue increases were net rate reductions of
$8.0. Minutes of use related to interstate calls increased 6.4 percent in
1995. See additional discussion below regarding Ameritech's interstate
access rate reductions.
The decrease in intrastate network access revenues for the nine months
ended September 30, 1995 was primarily due to rate reductions of $12.8
which resulted from legislation which adopted certain regulatory freedoms
as previously discussed. Also contributing to the decrease was a decrease
in network revenues of $1.3, as two major interexchange carriers increased
utilization of existing dedicated high capacity facilities.
- ---------------------------------------------------------------------------
Long distance service
- ---------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 127.2 $ 141.1 $ (13.9) (9.9)
The decrease in long distance revenues for the nine months ended September
30, 1995 was impacted by the 1994 implementation of the ECC plan
(previously discussed) which classified certain long distance usage to
lower-priced local service usage. The ECC plan effectively lowered long
distance revenues by $16.2. Partially offsetting this decrease were
increased revenues of $2.2 resulting from increases in long distance
network usage.
<PAGE>9
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other
- -----
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 66.7 $ 83.4 $ (16.7) (20.0)
Other revenues include revenues derived from directory advertising, billing
and collection services, inside wire installation and maintenance services
and other miscellaneous services. The decrease in other revenues was
primarily due to a renegotiated directory and license fee contract with
Ameritech Publishing, Inc. (API). The renegotiated contract accounted for
approximately $19.0 of the decrease. Also contributing to the decrease was
a decrease of $2.8 in rent revenues from a change in methodology in the way
the Company accounts for these revenues. In 1995, rent revenues were
reflected as credits to expense, whereas in 1994, such amounts were
included in other revenues. Partially offsetting these decreases were rate
increases for inside wire installation and maintenance services of $1.9 and
increases in nonregulated services revenues of $4.7.
- ---------------------------------------------------------------------------
Operating expenses
- ------------------
Total operating expenses for the nine months ended September 30, 1995
decreased by $157.7 or 21.6 percent to $573.8. The decrease was largely
attributable to the 1994 work force restructuring, which resulted in a
credit of $26.6 in the first nine months of 1995 related primarily to the
net settlement gains previously discussed in Note 1, compared with a charge
of $78.7 in the first nine months of 1994.
- ---------------------------------------------------------------------------
Employee-related expenses
- -------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 167.1 $ 186.5 $ (19.4) (10.4)
The decrease in employee-related expenses for the nine months ended
September 30, 1995 was attributable primarily to the effect of work force
reductions of $15.9 over the past year, as well as reduced bonus accruals
and postretirement and other benefits of $7.8. Partially offsetting these
decreases were the effects of increased overtime payments, wage increases
and medical and dental benefits of $4.3.
During September 1995, a union agreement was ratified by the Communications
Workers of America (CWA). The new contract and wage increases were
retroactive to August 6, 1995. The contract includes basic wage increases
of 10.9 percent (compounded) over three years. In addition, the contracts
provided for a signing bonus of $500 to each eligible employee upon
ratification. The contract addresses wages, benefits, pensions, employment
security, training and retraining and other conditions of employment. Most
of the Company's nonmanagement work force (about 80 percent of total
employees) is represented by the union.
There were 4,330 employees at September 30, 1995, compared with 4,917 at
September 30, 1994.
<PAGE>10
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Depreciation and
amortization
- ----------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 128.4 $ 141.8 $ (13.4) (9.4)
The decrease in depreciation and amortization expense for the nine months
ended September 30, 1995 was primarily due to the cessation of depreciation
of analog switches determined to be obsolete in connection with the
discontinuance of Statement of Financial Accounting Standards No. 71 (FAS
71), "Accounting for the Effects of Certain Types of Regulation," in the
fourth quarter of 1994. See Note 2 for further details. The change in
depreciation rates also contributed to the decrease.
- ---------------------------------------------------------------------------
Other operating expenses
- ------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 259.1 $ 277.8 $ (18.7) (6.7)
The decrease in other operating expenses for the nine months ended
September 30, 1995 was primarily attributable to decreases in access
charges of $13.8, as a result of renegotiated rates, and switching system
software of $2.2, as well as a net decrease of $5.4 in affiliate services.
Increases of $2.7 in advertising and bad debt expenses and payment to the
Wisconsin Advanced Telecommunications Foundation, which supports advanced
telecommunication projects and educates users across Wisconsin, partially
offset the decreases.
<PAGE>11
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Restructuring (credit) charge
- -----------------------------
September 30
------------ Percent
1995 1994 Change Change
---- ---- ------ ------
Nine Months Ended $ (26.6)$ 78.7 $ (105.3) n/a
As discussed in Note 1, Ameritech announced in March 1994 that it intended
to significantly reduce its nonmanagement work force by the end of 1995.
Reduction of the work force results from the Company's implementation of
technological improvements, consolidations and initiatives to balance the
Company's cost structure with emerging competition. Pretax charges of $78.7
related to the then anticipated work force reduction were recorded in the
first nine months of 1994. Noncash net settlement gains of $26.6 were
recorded in the first nine months of 1995 primarily associated with
lump-sum pension payments to former employees. Future settlement gains
(estimated at $0.6) are anticipated.
Actual employee reductions by quarter were: 114 in the second quarter of
1994, 207 in the third quarter of 1994, 593 in the fourth quarter of 1994,
20 in the first quarter of 1995, 65 in the second quarter of 1995, and 114
in the third quarter of 1995, for a total of 1,113. Cash requirements to
fund the financial incentives (principally contractual termination payments
totaling approximately $22.8) are being met as prescribed by applicable
collective bargaining agreements. Certain of these collective bargaining
agreements required contractual termination payments to be paid in a manner
other than lump-sum, thus requiring cash payments beyond an employee's
termination date.
This program reduced annual employee-related costs by approximately $50
thousand per departing employee. These savings are being partially offset
by the hiring of new employees with better matched skills to accommodate
growth, ensure high quality customer service and meet staffing requirements
for new business opportunities.
- ---------------------------------------------------------------------------
Taxes other than income taxes
- -----------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 45.8 $ 46.7 $ (0.9) (1.9)
The decrease in taxes other than income taxes for the nine months ended
September 30, 1995 is primarily attributable to lower gross receipts taxes
resulting from decreased revenues.
<PAGE>12
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other Income and Expenses
- -------------------------
Interest expense
- ----------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 23.1 $ 21.0 $ 2.1 10.0
The increase in interest expense for the nine months ended September 30,
1995 was primarily due to an increase in interest expense related to
corporate-owned life insurance programs and to borrowings from the
Ameritech short-term funding pool.
- ---------------------------------------------------------------------------
Other (income) expense, net
- ---------------------------
September 30 Change
------------ (Income) Percent
1995 1994 Expense Change
---- ---- ------- ------
Nine Months Ended $ (0.9)$ (0.9) $ -- --
Other (income) expense, net includes equity earnings in affiliates,
interest income and other nonoperating items. Other (income) expense, net
remained constant for the nine months ended September 30, 1995 as compared
with the prior year period. Prior year results included two nonrecurring
items. A 1994 Sprint sales tax refund of $1.1 from the state of Wisconsin
was largely offset by the 1994 write-off of certain miscellaneous
receivables. The decrease in current year equity earnings from Ameritech
Services, Inc. (ASI) offset the remainder of the difference.
- ---------------------------------------------------------------------------
Income taxes
- ------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 95.3 $ 37.6 $ 57.7 153.5
The increase in income taxes for the nine months ended September 30, 1995
was due primarily to the change in pretax income as a result of the work
force restructuring credit of $26.6 ($15.9 after-tax) in the first nine
months of 1995 as compared to the work force restructuring charge of $78.7
($47.1 after-tax) in the first nine months of 1994. Excluding these items,
income taxes changed in line with the earnings of the business.
<PAGE>13
Form 10-Q Part I Wisconsin Bell, Inc.
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Ratio of earnings to fixed charges
- ----------------------------------
The ratio of earnings to fixed charges for the nine months ended September
30 was 9.98 in 1995 and 5.36 in 1994. The ratio in 1995 was favorably
affected by a credit of $26.6 for work force restructuring (see prior
discussion of this item). The ratio in 1994 was adversely affected by a
$78.7 charge for work force restructuring. The work force restructuring
program has largely been funded by the Ameritech Pension Plan. After
adjustment to remove the effects of the work force restructuring, the ratio
is more indicative of the Company's ability to meet its funding
requirements.
- ---------------------------------------------------------------------------
Dial 1+
- -------
On July 25, 1995, the Wisconsin Public Service Commission issued an interim
order directing implementation of IntraLATA "Dial 1+" to be phased in
during the first half of 1996. The Company subsequently petitioned for
reconsideration of this order, which was denied by the Commission in
September 1995. On October 13, 1995, the Company filed an appeal of the
Dial 1+ decision in Dane County Circuit Court. The Company has filed
testimony with the Commission which asserts that implementation of
intraLATA 1+ dialing in advance of interLATA authority for Ameritech will
result in significant revenue and market share losses.
- ---------------------------------------------------------------------------
Interstate access rate reduction
- --------------------------------
On July 18, 1995, the Federal Communications Commission (FCC) approved
Ameritech's request for price regulation without sharing of earnings
effective January 1, 1995. As a result, the total annual reduction in
prices that the Company charges long distance companies for local
connections increased to $10.9 effective August 1, 1995. The current year
impact is expected to be a reduction in interstate access revenues of $4.6,
which represents an increase of $1.6 over the 1995 reduction otherwise
required under the FCC's interim price cap rules.
<PAGE>14
Form 10-Q Part II Wisconsin Bell, Inc.
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
Nine Months Ended September 30, 1995 and September 30, 1994.
27 Financial Data Schedule.
(b) Reports on Form 8-K
--------------------
No Form 8-K was filed by the registrant during the quarter for
which this report is filed.
<PAGE>15
Form 10-Q Part II Wisconsin Bell, Inc.
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.
WISCONSIN BELL, INC.
--------------------
(Registrant)
Date: November 13, 1995 /s/ Cheryl K. Wooley
--------------------
Cheryl K. Wooley
Vice President
State Finance Organizations
(Principal Financial Officer)
<PAGE>16
EXHIBIT 12
WISCONSIN BELL, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Nine Months Ended
September 30
------------
1995 1994
---- ----
1. EARNINGS
--------
a) Income before interest cost
and income taxes $ 267.2 $ 127.3
c) Portion of rental expense
representative of the
interest factor (1) 3.2 2.9
-------- --------
Total 1(a) through 1(b) $ 270.4 $ 130.2
-------- --------
2. FIXED CHARGES
a) Total interest cost including
capital lease obligations $ 23.9 $ 21.4
b) Portion of rental expense
representative of the
interest factor (1) 3.2 2.9
-------- --------
Total 2(a) through 2(b) $ 27.1 $ 24.3
-------- --------
3. RATIO OF EARNINGS TO FIXED CHARGES 9.98 5.36
==== ====
- ---------------
(1) One-third of rental expense is considered to be the amount
representing return on capital.
(2) The results for the first nine months of 1995 reflect a $26.6 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. Results for
the first nine months 1994 reflect a $78.7 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.
(3) Interest cost includes capitalized interest expense.
(4) Earnings have not been adjusted to reflect the timing of dividends
received and equity in earnings of unconsolidated affiliates since the
effect on an annual basis has been insignificant.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
WISCONSIN BELL, INC.'S SEPTEMBER 30, 1995 FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 0
<SECURITIES> 0<F1>
<RECEIVABLES> 256,800
<ALLOWANCES> 19,400
<INVENTORY> 2,800
<CURRENT-ASSETS> 250,800
<PP&E> 2,812,900
<DEPRECIATION> 1,644,200
<TOTAL-ASSETS> 1,535,100
<CURRENT-LIABILITIES> 323,700
<BONDS> 308,700
<COMMON> 639,200
0
0
<OTHER-SE> (115,400)
<TOTAL-LIABILITY-AND-EQUITY> 1,535,100
<SALES> 0<F2>
<TOTAL-REVENUES> 839,300
<CGS> 0<F3>
<TOTAL-COSTS> 573,800
<OTHER-EXPENSES> (900)
<LOSS-PROVISION> 9,700
<INTEREST-EXPENSE> 23,100
<INCOME-PRETAX> 243,300
<INCOME-TAX> 95,300
<INCOME-CONTINUING> 148,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 148,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>SECURITIES ARE NOT MATERIAL AND THEREFORE HAVE NOT BEEN STATED SEPARATELY
IN THE FINANCIAL STATEMENTS. THIS AMOUNT IS INCLUDED IN THE CASH TAG.
<F2>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.
<F3>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).
</FN>
</TABLE>
