GTE NORTH INC
10-Q, 1994-08-15
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)
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                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                                
                            FORM 10-Q
                                
                           (Mark One)
                                
                                
[X]  Quarterly  Report Pursuant to Section 13  or  15(d)  of  the
Securities
    Exchange Act of 1934


For the period ended      June 30, 1994

                               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:  0-1210


                             GTE NORTH INCORPORATED
         (Exact name of registrant as specified in its charter)

           WISCONSIN                               35-1869961
          (State       or       other       jurisdiction       of
(I.R.S. Employer
    Incorporation or organization)
Identification No.)


19845 N. U.S. 31, P.O. Box 407, Westfield, Indiana     46074
  (Address of principal executive offices)
(Zip Code)


Registrant's telephone number, including area code       317-896-
6464



(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

The  Company  had  978,351 shares of $1,000 stated  value  common
stock outstanding at July 31, 1994.

              GTE NORTH INCORPORATED AND SUBSIDIARY



                              INDEX


PART I.  FINANCIAL INFORMATION                              PAGE


    Condensed Consolidated Statements of Income . . . . . . . . .
. . . .                                                     1

    Management's Discussion and Analysis of Financial
      Condition and Results of Operations. . . . . . . . . . . .
. . . .                                                     2

    Condensed Consolidated Balance Sheets - Assets. . . . . . . .
. . . .                                                     5

    Condensed Consolidated Balance Sheets - Liabilities and
      Shareholders' Equity . . . . . . . . . . . . . . . . . . .
. . . .                                                     6

    Condensed Consolidated Statements of Cash Flows . . . . . . .
. . . .                                                     7

    Notes to Condensed Consolidated Financial Statements. . . . .
. . . .                                                     8


PART II.  OTHER INFORMATION


    Items 1 through 6 . . . . . . . . . . . . . . . . . . . . . .
. . . .                                  9

    Signature . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . .                                  10



PART I.  FINANCIAL INFORMATION


              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                              Three Months Ended            Six
Months Ended
                                   June 30,           June 30,
                              1994      1993      1994      1993
                                      (Thousands of Dollars)
<S>                         <C>       <C>       <C>       <C>
OPERATING REVENUES:
 Local network services     $ 260,497 $ 243,039 $ 510,690 $ 483,901
 Network access services      265,199   243,603   511,557   478,217
 Long distance services        92,226    96,541   194,907   192,194
 Equipment sales and services          32,869    24,343    66,281
51,188
 Other                         30,669    38,907    67,655    87,790
                              681,460   646,433 1,351,090 1,293,290


OPERATING EXPENSES:
 Cost of sales and services   146,074   147,723   285,848   298,391
 Depreciation and amortization        129,422   127,082   256,118
252,548
 Marketing, selling, general and
   administrative             214,631   212,402   418,140   422,241
                              490,127   487,207   960,106   973,180


 Net operating income         191,333   159,226   390,984   320,110


OTHER (INCOME) DEDUCTIONS:
 Interest expense              27,250    31,772    55,398    63,287
 Other - net                      (93)             (126)       (175)
(531)


INCOME BEFORE INCOME TAXES    164,176   127,580   335,761   257,354


INCOME TAXES                   61,622    46,619   126,120    94,320


NET INCOME                  $ 102,554 $  80,961 $ 209,641 $ 163,034


 Per share data is omitted since the Company's common stock is 100%
owned by GTE
 Corporation (Parent Company).




 See Notes to Condensed Consolidated Financial Statements.
</TABLE>



              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                    AND RESULTS OF OPERATIONS


OPERATING RESULTS

On  April  1, 1993, GTE North Incorporated merged with Contel  of
Illinois,   Inc.,  Contel  of  Indiana,  Inc.   and   Contel   of
Pennsylvania,  Inc. (indirect, wholly-owned subsidiaries  of  GTE
Corporation).  Prior to the merger, the properties of  GTE  North
Incorporated  located in Iowa, Minnesota, Missouri  and  Nebraska
were   transferred  to  a  newly  created  entity,  GTE   Midwest
Incorporated.   The  merger  was  accounted  for  in   a   manner
consistent with a transfer of entities under common control which
is similar to that of a "pooling of interests."  Accordingly, all
previously  issued  financial statements have  been  restated  to
reflect  the combined historical results of operations, financial
position,  and  cash  flows of GTE North  Incorporated  excluding
operations transferred to GTE Midwest Incorporated and  including
Contel  of Illinois, Inc., Contel of Indiana, Inc. and Contel  of
Pennsylvania,  Inc.   All  comparative  data  presented  in  this
discussion reflects such restatement.

Net  income  increased  27% or $21.6 million  and  29%  or  $46.6
million for the three months and six months ended June 30,  1994,
respectively,  compared  to  the  same  periods  in  1993.    The
increases reflect higher revenues from continued customer growth,
lower interest expense and a one-time charge of $4.3 million, net
of  tax,  associated  with  the  enhanced  early  retirement  and
voluntary  separation  programs  offered  to  eligible  employees
during the second quarter of 1993.

Operating Revenues

Operating  revenues increased 5% or $35.0 million for  the  three
months  ended June 30, 1994 and 4% or $57.8 million for  the  six
months ended June 30, 1994 compared to the same periods in 1993.

Local network service revenues increased 7% or $17.5 million  for
the  three months ended June 30, 1994 and 6% or $26.8 million for
the  six  months ended June 30, 1994 compared to the same periods
in  1993.   The  increases are primarily due to overall  customer
growth  and  increased  revenues from custom  calling  and  other
enhanced features.

Network access service revenues increased 9% or $21.6 million for
the  three months ended June 30, 1994 and 7% or $33.3 million for
the six months ended June 30, 1994 compared to 1993 primarily due
to increased minutes of use reflecting greater network usage.

Long  distance revenue decreased 4% or $4.3 million and increased
1% or $2.7 million for the three months and six months ended June
30,  1994, respectively, as compared to the same periods in 1993.
The  quarter-to-date  and  year-to-date  variances  are  due   to
settlement activity.

Equipment sales and service revenue increased 35% or $8.5 million
and  29%  or  $15.1 million for the three months and  six  months
ended  June 30, 1994, respectively, compared to the same  periods
in  1993. The increases are primarily due to increases in  wiring
maintenance agreements and billing and collection revenue.

             GTE NORTH INCORPORATED AND SUBSIDIARIES
                                
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS (CONTINUED)


Other  operating revenues decreased 21% or $8.2 million  for  the
three months ended June 30, 1994 and 23% or $20.1 million for the
six  months  ended June 30, 1994 compared to the same periods  in
1993.   The  decreases  are  due to lower  directory  advertising
revenue  reflecting  a change in the life of certain  directories
and  the  timing  of publication dates, lower rent  revenue  from
facilities  shared  with other GTE telephone operating  companies
and higher provisions for uncollectible accounts.

Operating Expenses

Operating expenses increased 1% or $2.9 million and decreased  1%
or  $13.1 million for the three months and six months ended  June
30,  1994,  respectively.  Excluding the results  of  a  one-time
charge  of  $7  million associated with the early retirement  and
voluntary  separation programs offered during the second  quarter
of  1993,  operating expenses increased 2% or  $9.9  million  and
decreased  1% or $6.1 million for the three and six months  ended
June  30,  1994, respectively.  The increase in the three  months
ended  June  30, 1994 was primarily due to increases in  software
expenses, billing and collection expenses and depreciation  costs
due  to increased plant balances.  The decrease in the six months
ended  June  30, 1994 was primarily due to a decrease in  product
sales costs and continuing cost reduction efforts associated with
headcount  reductions.   This decrease was  partially  offset  by
increases  in  billing and collection expenses  and  depreciation
costs.

Other Expenses

Interest  expense decreased 14% or $4.5 million and 12%  or  $7.9
million  for  the  three  and six months  ended  June  30,  1994,
respectively.  These decreases are due primarily to  the  Company
calling $316 million of high-coupon first mortgage bonds in  late
1993  with proceeds from commercial paper.  The commercial  paper
was  refinanced  on a long-term basis at lower  current  interest
rates in February 1994.

Income  tax  expense increased 32% or $15.0 million  and  34%  or
$31.8 million for the three months and six months ended June  30,
1994,   respectively,  compared  to  1993.   These  changes   are
primarily attributable to increases in taxable income.


CAPITAL RESOURCES AND LIQUIDITY

The Company's primary source of funds during the first six months
of 1994 was cash flow from operating activities of $479.1 million
compared to $381.7 million for the same period in 1993.  The year-
to-year  increase in cash flow from operations is the  result  of
improved  operating results and an increase in the collection  of
customer receivables.






             GTE NORTH INCORPORATED AND SUBSIDIARIES
                                
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS (CONTINUED)


Capital expenditures represent a significant use of funds  during
1994  and  1993,  reflecting the Company's  continued  growth  in
access   lines,   modernization   of   current   facilities   and
introduction of new products and services.  The Company's capital
expenditures   during  the  first  six  months   of   1994   were
$269.8  million compared to $251.9 million during the same period
in  1993.  The Company's anticipated construction costs for  1994
are approximately $640 million.

Cash  used  for financing activities was $163.3 million  in  1994
compared  to  $127.0 million for the same period in  1993.   This
included  dividend  payments  of $10.3  million  to  shareholders
during the first six months of 1994 as compared to $193.5 million
in  1993.   Dividends of $84.7 million were declared  during  the
quarter  ending June 30, 1994, to be paid to common  shareholders
in  the third quarter.  Financing activities in 1994 included the
issuance of $447.4 million of long-term debt primarily to  redeem
short-term debt.

During   the  second  quarter  of  1994,  the  Company  continued
implementation of its re-engineering plan.  This plan will  allow
the  Company  to continue to respond aggressively to  competitive
and  regulatory  developments  through  reduced  costs,  improved
service  quality,  competitive prices and new product  offerings.
Moreover,  implementation of this program  over  the  next  three
years will position the Company to accelerate delivery of a  full
array  of voice, video and data services.  Cash requirements  for
the  implementation of the re-engineering plan  during  1994  are
expected to be largely offset by cost savings.

Management  believes that the Company has adequate  internal  and
external   resources   available  to   meet   ongoing   operating
requirements  for  construction of new  plant,  modernization  of
facilities and payment of dividends.  The Company generally funds
its  construction  program  from  operations,  although  external
financing is available through the issuance of short-term or long-
term   debt.   Short-term  borrowings  can  be  obtained  through
commercial  paper borrowings or borrowings from the parent,  GTE.
In  addition, a $2.8 billion line of credit is available  to  the
Company  through  shared  lines of  credit  with  GTE  and  other
affiliates to support short-term financing needs.


              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
              CONDENSED CONSOLIDATED BALANCE SHEETS
                                
                             ASSETS


                                            June 30, December 31,
                                             1994       1993
                                           (Thousands of Dollars)

CURRENT ASSETS:
 Cash and temporary investments          $    52,242 $     5,722
 Receivables, less allowances of
   $19,310 and $25,173, respectively         518,556     568,730
 Materials and supplies, at average cost      42,264      40,949
 Prepaid taxes                                46,079      40,707
 Deferred income tax benefits                 64,931      66,984
 Prepayments and other                         8,749      17,236
   Total current assets                      732,821     740,328





PROPERTY, PLANT AND EQUIPMENT:
 Original cost                             8,506,753   8,335,305
 Accumulated depreciation                 (3,818,872)
(3,654,967)
   Net property, plant and equipment       4,687,881   4,680,338





PREPAID PENSION                              385,899     335,874





OTHER ASSETS                                  64,273      56,473







   TOTAL ASSETS                          $ 5,870,874 $ 5,813,013




 See Notes to Condensed Consolidated Financial Statements.




              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
              CONDENSED CONSOLIDATED BALANCE SHEETS
                                
              LIABILITIES AND SHAREHOLDERS' EQUITY
                                
                                
                                            June 30, December 31,
                                             1994       1993
                                           (Thousands of Dollars)

CURRENT LIABILITIES:
 Short-term debt, including current maturities    $    14,372  $
163,750
 Accounts payable                            106,963     208,283
 Accrued taxes                               147,374     144,788
 Accrued payroll and vacations               102,304      84,021
 Accrued dividends                            85,165       9,392
 Accrued interest                             25,244      14,855
 Accrued restructuring costs and other       332,620     328,173
   Total current liabilities                 814,042     953,262


LONG-TERM DEBT                             1,463,541   1,467,045


DEFERRED CREDITS, primarily deferred
 income taxes and investment tax credits   1,282,242   1,204,412


PREFERRED STOCK, subject to
 mandatory redemption                         18,774      19,544


SHAREHOLDERS' EQUITY:
 Preferred stock                              29,032      29,030
 Common stock                                978,351     978,351
 Other capital                                43,018      43,018
 Reinvested earnings                       1,241,874   1,118,351
   Total shareholders' equity              2,292,275   2,168,750







   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     $ 5,870,874  $
5,813,013





 See Notes to Condensed Consolidated Financial Statements.





              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



                                               Six Months Ended
                                                   June 30,
                                            1994        1993
                                           (Thousands of Dollars)


CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                              $   209,641 $   163,034

 Adjustments to reconcile net income to
   net cash from operating activities:
      Depreciation and amortization          256,118     252,548
      Deferred income taxes and investment
        tax credits                            5,868     (37,695)
      Provision for uncollectible accounts             21,995
16,467
      Changes in current assets and current
        liabilities                          (37,816)
(81,717)
      Other - net                             23,277      69,061
      Net cash from operating activities     479,083     381,698


CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures                       (269,822)
(251,861)
 Other - net                                     589         573
Net cash used in investing activities       (269,233)
(251,288)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Long-term debt issued                       447,443          --
 Long-term debt retired                       (4,535)
(25,654)
 Dividends paid to shareholders              (10,344)
(193,535)
 Net change in affiliate notes                 2,181      (9,945)
 Increase (decrease) in short-term debt     (598,075)
102,100
      Net cash used in financing activities          (163,330)
(127,034)

 Increase in cash and temporary investments            46,520
3,376

 Cash and temporary investments at beginning
   of period                                   5,722       5,079

 Cash and temporary investments at end
   of period                             $    52,242 $     8,455





 See Notes to Condensed Consolidated Financial Statements.





              GTE NORTH INCORPORATED AND SUBSIDIARY
                                
      NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(1)   The  condensed  consolidated financial statements  included
herein have been prepared by the Company, without audit, 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 financial statements and the notes  thereto
included  in  the  Company's 1993 Annual Report  to  Shareholders
incorporated by reference in the Annual Report on Form 10-K.

(2)   Reclassifications of prior year data have been made in  the
financial  statements where appropriate to conform  to  the  1994
presentation.

              GTE NORTH INCORPORATED AND SUBSIDIARY


PART II.   OTHER INFORMATION



Items 1 through 6 are not applicable for the quarter ended June
30, 1994.




                            SIGNATURE


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 NORTH INCORPORATED
                                        (Registrant)






Date:  August 15, 1994               WILLIAM M. EDWARDS, III
                                     WILLIAM M. EDWARDS, III
                                          Controller
                                     (Chief Accounting Officer)



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