UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
F O R M 10 - Q
X Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1996
..............
or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 1-2755
......
GTE Corporation
......................................................
(Exact name of registrant as specified in its charter)
New York 13-1678633
.............................................................................
.
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Stamford Forum, Stamford, Conn. 06904
.........................................................
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-965-2000
............
............................................................................
Former name, former address and former fiscal year, if changed since last
report
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 .
GTE had 973,784,230 shares of $.05 par value common stock outstanding
(excluding 5,932,455 treasury shares) at April 30, 1996.
PART I. FINANCIAL INFORMATION
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31
1996 1995
(In Millions)
REVENUES AND SALES
Local services $1,510 $1,409
Network access services 1,132 1,084
Toll services 607 642
Cellular services 603 492
Directory services 223 224
Other services and sales 876 814
Total revenues and sales 4,951 4,665
OPERATING COSTS AND EXPENSES
Cost of services and sales 1,921 1,770
Selling, general & administrative 851 837
Depreciation and amortization 929 894
Total operating costs and expenses 3,701 3,501
OPERATING INCOME 1,250 1,164
OTHER (INCOME) EXPENSE
Interest expense 283 281
Interest capitalized (10) (8)
Interest income (14) (13)
Other - net (3) 26
256 286
INCOME BEFORE INCOME TAXES 994 878
Income taxes 378 335
NET INCOME $ 616 $ 543
EARNINGS PER COMMON SHARE $ .63 $ .56
DIVIDENDS DECLARED PER COMMON SHARE $ .47 $ .47
AVERAGE COMMON SHARES 975 967
The accompanying notes are an integral part of these statements.
- 1 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Consolidated net income for the first quarter of 1996 was $616 million, or
$.63 per share, compared with $543 million, or $.56 per share in the first
quarter of last year. The results for the first quarter of 1996 include an
after-tax gain on the sale of nonstrategic telephone properties of $8
million, or $.01 per share. Excluding this gain, earnings per share for the
quarter increased 11 percent over the first quarter of 1995.
Operating income increased 7 percent to $1.25 billion, compared with $1.16
billion reported in the first quarter of last year, reflecting increased
revenues and the favorable effects of ongoing cost reductions from process
re-engineering activities.
Consolidated revenues and sales for the first quarter increased 6 percent to
$4.95 billion, compared to $4.67 billion in the first quarter of last year.
This increase resulted from growth in both network usage and the number of
customers.
For the first quarter of 1996, minutes of use of GTE's domestic
local-exchange network for long-distance calling grew at an annual rate of
9.7 percent, while total domestic access lines increased 6.6 percent to 18.8
million. Access lines per employee, a key indicator of productivity,
increased from 261 a year ago to 298, representing a 14 percent improvement.
Internationally, GTE serves an additional 5.7 million access lines.
Domestic cellular service revenues in the first quarter of 1996 totaled $555
million, a 22 percent increase over the same period last year, as customer
growth continued. During the first quarter of 1996, GTE added 83,000 new
domestic cellular customers bringing total U.S. customers served to
3,094,000 an increase of 26 percent over a year ago, excluding properties
sold in 1995. Growth at GTE's international operations increased total
cellular customers by 30 percent, excluding properties sold in 1995,
bringing total cellular customers served worldwide to 3.7 million, almost
double the customers just two years ago.
In connection with Telephone Operations' re-engineering plan, during the
first three months of 1996, costs of approximately $59 million have been
incurred, including $47 million to re-engineer customer service processes
and $12 million to re-engineer administrative processes. Since the plan's
inception at the beginning of 1994, 286 work centers have been consolidated
to 58 and workforce reductions of approximately 13,000 have occurred
resulting in total costs of $917 million, including $632 million to
re-engineer customer service processes and $115 million to re-engineer
administrative processes. The restructuring costs also include $170 million
to consolidate facilities and operations and other related costs. These
expenditures were primarily associated with the closure and relocation of
the various centers, software enhancements and separation benefits
associated with employee reductions. Implementation of the re-engineering
plan is expected to be substantially completed by year-end 1996. As of
March 31, 1996, $453 million remains in the restructuring reserve which
management believes is adequate to cover future expenditures.
- 2 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
GTE is one of the largest publicly held telecommunications companies in the
world. GTE is also the largest U.S.-based local telephone company and a
leading cellular service provider, with wireline and wireless operations
that form a market area covering about one-third of the country's
population. Outside the United States, where GTE has operated for more than
40 years, GTE serves over 6 million customers. GTE is also a world-wide
leader in government and defense communications systems and equipment,
aircraft-passenger telecommunications, directories and
telecommunication-based information services and systems.
Other (Income) Expense
Other-net for the first quarter of 1996 includes a pre-tax gain of $12
million, resulting from the sale of nonstrategic local-exchange telephone
properties.
CAPITAL RESOURCES AND LIQUIDITY
Cash from operations for the first three months of 1996 totaled $1.64
billion compared to $1.36 billion for the first quarter of 1995. The
increase in cash from operations is due to improved operating results in the
first quarter of 1996.
Cash used in investing activities for the first three months of 1996 totaled
$891 million, compared with $830 million in the first quarter of 1995.
Capital expenditures for the first quarter of 1996 totaled $729 million
compared with $771 million in the same period last year. For the full year
1996, capital expenditures are expected to be approximately $4.1 billion
compared with $4.0 billion in 1995. The majority of new investment is being
made in GTE's telephone operations to meet the demands of growth, modernize
facilities and position GTE as a low-cost provider of high-quality voice,
data and video telecommunications services. Significant investments are
also being made in GTE's other businesses, such as mobile-cellular, to
increase capacity and continue to improve and expand the network.
Cash used in financing activities for the first three months of 1996 totaled
$692 million, compared with $519 million in the same period last year.
During the first quarter of 1996, dividend payments of $456 million and net
reductions in short and long-term borrowings and preferred securities
outstanding of $233 million were partially offset by $157 million received
through GTE's employee stock purchase and dividend reinvestment plans.
During the first quarter of 1996, $205 million was used to repurchase
approximately 4.6 million shares of GTE common stock.
GTE believes that its present investment grade credit rating and those of
its subsidiaries provide it with the financial flexibility necessary to
pursue growth opportunities as they arise. At March 31, 1996, GTE had $4.5
billion of unused bank lines of credit available to back up commercial paper
borrowings and for working capital requirements.
- 3 -
GTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (Continued)
RECENT DEVELOPMENTS
GTE began offering long-distance service to its customers in selected states
during the first quarter of 1996. To date, the service, marketed under the
name "GTE Easy Savings Plan" is available to GTE customers in the states of
Texas, Michigan, Illinois, Minnesota, Florida, Washington, Kentucky and
Indiana. GTE plans to offer this service to its customers in all 28 states
where it currently offers local telephone service by December 31, 1996.
In March 1996, the California Public Utilities Commission ("CPUC") approved
rules permitting local resale competition effective March 31, 1996. The
CPUC required GTE to provide interim wholesale discounts of 7 percent on
basic residential service and 12 percent on toll and business services to
future resale competitors. On April 12, 1996, GTE filed an application for
rehearing with the CPUC regarding the need to discount residential services
which are already priced below cost. In addition, GTE will be providing the
CPUC with service category specific cost studies of its wholesale discounts
in the CPUC's unbundling proceedings.
GTE's 1996 annual interstate access filing was submitted to the Federal
Communications Commission ("FCC") in April 1996. Overall, the proposed
rates result in a $19.3 million price reduction, effective July 1, 1996.
GTE anticipates the FCC will issue an order prior to the effective date,
which may require changes to GTE's annual filing.
The CPUC approved the merger of Contel of California into GTE California in
April 1996. As part of this order, the CPUC ordered $69.7 million of merger
savings to be flowed to the ratepayers of both companies, which represents
half of the total savings expected to be realized by this merger. GTE will
file a proposal to flowthrough these savings to local, toll, and access
customers over a five year period beginning in mid-1996.
In April 1996, Unicom, a joint venture of GTE, Bancomer-Valores Industriales
and Telefonica Internacional, signed a Memorandum of Understanding to merge
with Alestra, a joint venture formed by AT&T and Alfa. The merged company
will be known as Alestra and market services under the AT&T name. The
Unicom and Alestra merger is expected to result in an increased ability to
provide competitive long-distance and other telecommunication services in
Mexico once that market opens to competition later this year. Alestra's new
proposed ownership and investment structure are subject to regulatory
approval in Mexico. This transaction is not expected to have a material
effect on GTE's current financial position or results of operations.
Also, in April 1996, the Venezuelan government lifted foreign exchange
controls allowing the local currency to move to a market-based exchange
rate. As a result, the local currency devalued by approximately 65
percent. However, due to the mix of local currency and U.S. dollar
denominated assets and liabilities, the devaluation is not expected to have
a significant impact on GTE's results. GTE believes the current economic
difficulties in Venezuela are temporary and will be corrected, and continues
to view its interest in CANTV as a sound long-term investment.
- 4 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
(In Millions)
ASSETS
CURRENT ASSETS:
Cash and temporary investments $ 388 $ 332
Receivables, less allowances
of $266 and $263 million 3,831 4,227
Inventories and supplies 681 719
Deferred income tax benefits 278 330
Other 309 284
Total Current Assets 5,487 5,892
PROPERTY, PLANT AND EQUIPMENT, at cost 51,502 50,947
Accumulated depreciation (29,152) (28,510)
Total Property, Plant and Equipment, net 22,350 22,437
INVESTMENTS AND OTHER ASSETS:
Employee benefit plans 3,199 3,058
Franchises, goodwill and other intangibles,
net of accumulated amortization of
$424 and $404 million 2,803 2,765
Investments in unconsolidated companies 1,690 1,745
Other assets 1,121 1,122
Total Investments and Other Assets 8,813 8,690
Total Assets $36,650 $37,019
The accompanying notes are an integral part of these statements.
- 5 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
(In Millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term obligations, including
current maturities $ 2,753 $ 2,156
Accounts payable and accrued expenses 3,216 3,858
Taxes payable 1,124 890
Accrued restructuring costs 453 512
Dividends payable 463 476
Other 458 420
Total Current Liabilities 8,467 8,312
Long-term debt 11,971 12,744
Employee benefit plans 4,673 4,638
Deferred income taxes 1,218 1,203
Minority interests in equity of subsidiaries 2,259 2,230
Other liabilities 1,113 1,021
Total Liabilities 29,701 30,148
SHAREHOLDERS' EQUITY:
Common stock - shares issued 979,312,302
and 977,483,844 49 49
Additional paid-in capital 7,668 8,049
Retained earnings (deficit) 85 (534)
Guaranteed ESOP obligations (596) (603)
Treasury stock- 6,030,601 and
2,423,284 shares, at cost (257) (90)
Total Shareholders' Equity 6,949 6,871
Total Liabilities and Shareholders' Equity $36,650 $37,019
The accompanying notes are an integral part of these statements.
- 6 -
GTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31
1996 1995
(In Millions)
Operations
Net income $ 616 $ 543
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 929 894
Change in current assets and current
liabilities, excluding the effects of
acquisitions and dispositions 17 (250)
Deferred income taxes and other - net 77 169
Net cash from operations 1,639 1,356
Investing
Capital expenditures (729) (771)
Other - net (162) (59)
Net cash used in investing (891) (830)
Financing
Common stock issued 157 107
Purchase of treasury stock (205) -
Long-term debt and preferred securities issued 546 532
Long-term debt and preferred securities retired (82) (191)
Dividends (456) (454)
Decrease in short-term obligations,
excluding current maturities (697) (525)
Other - net 45 12
Net cash used in financing (692) (519)
Increase in cash and temporary
investments 56 7
Cash and temporary investments:
Beginning of period 332 323
End of period $ 388 $ 330
Cash paid during the period for:
Interest $ 198 $ 207
Income taxes 119 122
The accompanying notes are an integral part of these statements.
- 7 -
GTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION:
The unaudited Condensed Consolidated Financial Statements included
herein have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. 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 rules and
regulations. However, in the opinion of management of the Company, the
Condensed Consolidated Financial Statements include all adjustments,
which consist only of normal recurring accruals, necessary to present
fairly the financial information for such periods. These Condensed
Consolidated Financial Statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in
the Company's 1995 Annual Report on Form 10-K.
Reclassifications of prior year data have been made in the accompanying
condensed consolidated financial statements where appropriate to
conform to the 1996 presentation.
(2) PROPERTY SALES:
In connection with the program to sell or trade a small percentage of
nonstrategic domestic local-exchange telephone properties, during the
first quarter of 1996, GTE recorded a pre-tax gain of $12 million,
which increased net income by $8 million, or $.01 per share.
- 8 -
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting - April 17, 1996
(b) Proxies for the meeting were solicited pursuant to
Regulation 14A. There was no solicitation in opposition to
management's nominees as listed in the proxy statement. All
of management's nominees as listed in the proxy statement
were elected, the vote on said proposal being as follows:
Shares Voted
Directors Shares For Shares Withheld
Class I Directors:
Edward H. Budd 778,338,632 22,378,831
James L. Johnson 775,365,288 25,352,175
James L. Ketelsen 778,185,338 22,532,125
Charles R. Lee 775,763,554 24,953,909
Class II Directors:
Robert F. Daniell 777,958,659 22,758,804
Michael T. Masin 776,446,144 24,271,319
(c) Other matters voted upon:
Proposal to Ratify the Appointment of Auditors
Shareholders ratified the appointment of Arthur Andersen LLP to
conduct the annual audit of the financial statements of GTE
Corporation and its subsidiary companies for the year ending
December 31, 1996. The vote was:
FOR - 783,627,693 shares, or 98.83 percent of the shares voted.
AGAINST - 9,311,127 shares, or 1.17 percent of the shares voted.
ABSTENTIONS - 7,778,643 shares.
Proposal to Eliminate the Staggered Election of Directors
Shareholders voted against a shareholder proposal to eliminate
the staggered election of Directors. The vote was:
FOR - 251,681,811 shares, or 38.48 percent of the shares voted.
AGAINST - 402,404,437 shares, or 61.52 percent of the shares
voted.
ABSTENTIONS - 16,784,607 shares.
BROKERS NON-VOTES - 129,846,608 shares.
- 9 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
Proposal that the Board of Directors Provide a Comprehensive
Report on Foreign Military Sales
Shareholders voted against a shareholder proposal to require the
Board of Directors to provide a comprehensive report on GTE's
foreign military sales. The vote was:
FOR - 138,450,973 shares, or 21.80 percent of the shares voted.
AGAINST - 496,681,188 shares, or 78.20 percent of the shares
voted.
ABSTENTIONS - 36,409,794 shares.
BROKERS NON-VOTES - 129,175,508 shares.
Proposal to Request a Report of the Board of Directors Regarding
Equal Employment Opportunity ("EEO") and Affirmative Action
Policies and Programs
Shareholders voted against a shareholder proposal to request a
report of GTE's Board of Directors regarding EEO and Affirmative
Action policies and programs. The vote was:
FOR - 98,524,079 shares, or 15.63 percent of the shares voted.
AGAINST - 531,740,565 shares, or 84.37 percent of the shares
voted.
ABSTENTIONS - 41,277,759 shares.
BROKERS NON-VOTES - 129,175,060 shares.
Proposal to endorse the Coalition for Environmentally Responsible
Economies ("CERES") Principles
Shareholders voted against a shareholder proposal to request that
GTE endorse the CERES Principles. The vote was:
FOR - 75,101,747 shares, or 12.18 percent of the shares voted.
AGAINST - 541,381,714 shares, or 87.82 percent of the shares
voted.
ABSTENTIONS - 55,059,642 shares.
BROKERS NON-VOTES - 129,174,360 shares.
- 10 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
Proposal that All Bonuses in Excess of $30,000 be Approved
by Stockholders
Shareholders voted against a shareholder proposal to require
that all bonuses in excess of $30,000 be approved by the
stockholders at the Annual Stockholders Meeting. The vote was:
FOR - 128,136,234 shares, or 19.54 percent of the shares voted.
AGAINST - 527,758,837 shares, or 80.46 percent of the shares
voted.
ABSTENTIONS - 15,656,715 shares.
BROKERS NON-VOTES - 129,165,677 shares.
Proposal to Require Shareholder Approval of Future Compensation
Agreements Contingent on a Change in Control
Shareholders voted against a shareholder proposal for the
adoption of a policy against future agreements with officers and
directors providing compensation contingent on a change in
control unless approved by a majority of shareholders. The vote
was:
FOR - 262,004,131 shares, or 40.60 percent of the shares voted.
AGAINST - 383,319,973 shares, or 59.40 percent of the shares
voted.
ABSTENTIONS - 26,219,998 shares.
BROKERS NON-VOTES - 129,173,361 shares.
Proposal to Eliminate Non-Employee Directors' Pension Benefits
Shareholders voted against a shareholder proposal to eliminate
future non-employee directors' pension benefits and the
relinquishment of pension benefits for current non-employee
directors. The vote was:
FOR - 275,062,130 shares, or 42.25 percent of the shares voted.
AGAINST - 375,972,199 shares, or 57.75 percent of the shares
voted.
ABSTENTIONS - 20,515,558 shares.
BROKERS NON-VOTES - 129,167,576 shares.
- 11 -
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (Continued)
Proposal for the Establishment of Criteria to Limit Executive
Officers' Compensation
Shareholders voted against a shareholder proposal for the Board
of Directors to establish criteria to limit executive officers'
compensation. The vote was:
FOR - 146,641,047 shares, or 22.36 percent of the shares voted.
AGAINST - 509,106,533 shares, or 77.64 percent of the shares
voted.
ABSTENTIONS - 15,803,404 shares.
BROKERS NON-VOTES - 129,166,479 shares.
Proposal to Limit Executive Officers' Pay Increases
Shareholders voted against a shareholder proposal to limit
executive officers' pay increases. The vote was:
FOR - 145,090,391 shares, or 22.14 percent of the shares voted.
AGAINST - 510,205,139 shares, or 77.86 percent of the shares
voted.
ABSTENTIONS - 16,254,648 shares.
BROKERS NON-VOTES - 129,167,285 shares.
- 12 -
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
(11) Statement re: Calculation of earnings per common
share
(12) Statement re: Calculation of the ratio of earnings
to fixed charges
(27) Financial Data Schedule
(b) GTE filed a report on Form 8-K dated January 26, 1996 under
Item 5, "Other Events." Financial information was included
with this report. GTE also filed a report on Form 8-K dated
February 15, 1996 under Item 5, "Other Events." No
financial information was included with this report.
- 13 -
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.
GTE CORPORATION
.............................
(Registrant)
Date: May 13, 1996 By Lawrence R. Whitman
.............................
Lawrence R. Whitman
Vice President - Controller
Date: May 13, 1996 By Marianne Drost
.............................
Marianne Drost
Secretary
- 14 -
EXHIBIT 11
GTE CORPORATION AND SUBSIDIARIES
CALCULATION OF EARNINGS PER COMMON SHARE
Three Months Ended
March 31
1996 1995
(In Thousands)
Consolidated net income $616,278 $543,282
Adjustments to consolidated net income:
Add - Preferred dividend requirements on
dilutive convertible preferred stocks - 138
Interest expense, net of tax effect, on
employees' stock plans 235 172
Total adjustments 235 310
Adjusted consolidated net income $616,513 $543,592
Average common shares 974,646 967,091
Adjustments to common shares:
Add - Dilutive convertible preferred stocks - 532
Employees' stock and stock option plans 2,691 1,935
Total adjustments 2,691 2,467
Adjusted average common shares 977,337 969,558
EARNINGS PER COMMON SHARE:
Primary (1) $ .63 $ .56
Fully diluted (2) $ .63 $ .56
(1) Computed by dividing consolidated net income for the periods by the
average common shares outstanding. Common stock equivalents are
excluded from this computation since they do not have a 3% dilutive
effect.
(2) Computed assuming conversion or exercise of those preferred stocks and
stock plans that would have a dilutive effect.
(a) Average common shares outstanding are adjusted to reflect the
shares which would be issued upon conversion of preferred stocks
using the "if converted" method. Equivalent common shares to be
added to average shares for the employees' stock plans, stock
ownership plan and stock options are computed according to the
"treasury stock" method.
(b) Consolidated net income for the periods is adjusted to reflect
the increase in income for the preferred dividends declared for
the periods on the convertible preferred stocks, and the interest
accrued, net of tax effect, on funds received from installments
under the employees' stock plans.
<TABLE>
Exhibit 12
GTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
(Unaudited)
<CAPTION>
Three Months Ended Years Ended December 31
March 31, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net earnings available for fixed charges:
Income from continuing operations $ 616,278 $2,537,949 $2,440,869 $ 971,978 $1,760,704 $1,491,317
Add (deduct) -
Income taxes 377,663 1,466,426 1,532,482 567,747 966,589 662,860
Interest expense 283,496 1,150,625 1,139,233 1,298,234 1,475,670 1,574,746
Capitalized interest (net of
amortization) (4,796) (22,971) (6,045) (3,421) (4,931) (14,791)
Preferred stock dividends of Parent - 5,598 9,910 17,825 26,331 36,785
Preferred stock dividends of
subsidiaries 26,676 98,064 18,252 22,162 23,429 25,317
Additional income requirement on preferred
stock dividends of subsidiaries 2,568 9,664 11,426 12,739 12,671 11,006
Minority interests 36,036 145,437 140,464 112,335 112,425 103,626
Portion of rent expense representing
interest 31,604 128,034 139,715 153,058 196,533 210,698
1,369,525 5,519,366 5,416,396 3,134,832 4,543,090 4,064,779
Deduct - Minority interests (58,615) (246,678) (242,937) (236,944) (248,979) (247,284)
Adjusted earnings available
for fixed charges from
continuing operations $1,310,910 $5,272,688 $5,173,459 $2,897,888 $4,294,111 $3,817,495
Fixed Charges:
Interest charges $ 283,496 $1,150,625 $1,139,233 $1,298,234 $1,475,670 $1,574,746
Preferred dividends of subsidiaries 26,676 98,604 18,252 22,162 23,429 25,317
Additional income requirement on preferred
dividends of subsidiaries 2,568 9,664 11,426 12,739 12,671 11,006
Portion of rent expense representing
interest 31,604 128,034 139,715 153,058 196,533 210,698
344,344 1,386,927 1,308,626 1,486,193 1,708,303 1,821,767
Deduct - Minority interests (16,633) (70,052) (68,096) (78,421) (86,504) (89,479)
Adjusted fixed charges $ 327,711 $1,316,875 $1,240,530 $1,407,772 $1,621,799 $1,732,288
Ratio of Earnings to Fixed Charges - continuing
operations 3.98 4.00 4.18 2.07 2.66 2.22
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 388
<SECURITIES> 0
<RECEIVABLES> 3,831
<ALLOWANCES> 0
<INVENTORY> 681
<CURRENT-ASSETS> 5,487
<PP&E> 51,502
<DEPRECIATION> 29,152
<TOTAL-ASSETS> 36,650
<CURRENT-LIABILITIES> 8,467
<BONDS> 11,971
<COMMON> 49
0
0
<OTHER-SE> 6,900
<TOTAL-LIABILITY-AND-EQUITY> 36,650
<SALES> 4,951
<TOTAL-REVENUES> 4,951
<CGS> 3,701
<TOTAL-COSTS> 3,701
<OTHER-EXPENSES> (27)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 283
<INCOME-PRETAX> 994
<INCOME-TAX> 378
<INCOME-CONTINUING> 616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 616
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
