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, 1995
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: 2-36292
GTE SOUTH INCORPORATED
(Exact name of registrant as specified in its charter)
VIRGINIA 56-0656680
(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 21,000,000 shares of $25 par value common stock outstanding
at July 31, 1995. The Company's common stock is 100% owned by GTE
Corporation.
<TABLE>
PART I. FINANCIAL INFORMATION
GTE SOUTH INCORPORATED
CONDENSED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
(Thousands of Dollars)
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Local network services $ 125,189 $ 117,760 $ 246,300 $ 232,924
Network access services 122,717 119,135 242,172 243,567
Long distance services 36,628 32,070 74,140 54,925
Equipment sales and services 20,744 18,731 40,935 36,327
Other 10,585 9,334 30,200 40,448
315,863 297,030 633,747 608,191
OPERATING EXPENSES:
Cost of sales and services 69,695 79,277 137,259 154,721
Depreciation and amortization 69,208 66,204 137,462 131,532
Marketing, selling, general
and administrative 89,062 94,296 170,922 182,516
227,965 239,777 445,643 468,769
Net operating income 87,898 57,253 188,104 139,422
OTHER DEDUCTIONS:
Interest expense 15,153 15,075 30,050 29,525
Other - net 596 4,317 1,227 8,004
INCOME BEFORE INCOME TAXES 72,149 37,861 156,827 101,893
INCOME TAXES 28,011 14,094 59,876 38,143
NET INCOME $ 44,138 $ 23,767 $ 96,951 $ 63,750
</TABLE>
Per share data is omitted since the Company's common stock is 100% owned by GTE
Corporation (GTE).
See Notes to Condensed Financial Statements.
1
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(DOLLARS IN MILLIONS)
RESULTS OF OPERATIONS
On December 31, 1993, the Company entered into an Agreement of Merger with
Contel of Kentucky, Inc., a Kentucky corporation, Contel of North Carolina,
Inc., a North Carolina corporation, Contel of South Carolina, Inc., a
South Carolina corporation and Contel of Virginia, Inc., a Virginia
corporation (collectively, the Contel Subsidiaries). The agreement
provided that the Contel Subsidiaries would merge with and into the
Company, with the Company to be the surviving corporation (the Merger).
Each of the Contel Subsidiaries is a wholly-owned subsidiary of Contel
Corporation, which is itself a wholly-owned subsidiary of GTE Corporation.
The Contel Subsidiaries provided communication services in the states of
Kentucky, North Carolina, South Carolina and Virginia. The Merger became
effective on September 30, 1994 and was accounted for in a manner
consistent with a transfer of entities under common control which is
similar to a "pooling of interests." Accordingly, the condensed financial
statements include the combined historical results of operations and
financial position of the Company and the Contel Subsidiaries as though the
Merger had occurred at the beginning of 1994 and reflect the elimination of
intercompany transactions.
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net income $ 44.1 $ 23.8 $ 97.0 $ 63.8
Net income increased 85% or $20.3 and 52% or $33.2 for the three and six
months ended June 30, 1995, respectively, compared to the same periods in
1994. These increases are primarily due to continued customer growth and
lower operating expenses, partially offset by higher depreciation costs.
OPERATING REVENUES
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Local network services $ 125.2 $ 117.8 $ 246.3 $ 232.9
Network access services 122.7 119.1 242.2 243.6
Long distance services 36.6 32.1 74.1 54.9
Equipment sales & services 20.8 18.7 40.9 36.3
Other 10.6 9.3 30.2 40.5
Total operating revenues $ 315.9 $ 297.0 $ 633.7 $ 608.2
2
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Operating revenues increased 6% or $18.9 and 4% or $25.5 for the three and
six months ended June 30, 1995, respectively, compared to the same periods
in 1994.
Local network services revenues increased 6% or $7.4 and 6% or $13.4 for
the three and six months ended June 30, 1995, respectively, compared to the
same periods in 1994. Access lines increased 4% for the three and six
months ended June 30, 1995, compared to the same periods in 1994. This
growth generated additional revenues of $5.5 and $8.6, respectively. These
increases are also due to a $1.7 and $3.2 increase in revenues from
enhanced custom calling features for the three and six months ended
June 30, 1995 and 1994, respectively.
Network access services revenues increased 3% or $3.6 for the three months
and decreased less than 1% or $1.4 for the six months ended June 30, 1995,
compared to the same periods in 1994. The increase for the three months
ended June 30, 1995 is primarily due to a 6% increase in minutes of use,
which generated an additional $4.0 in revenues, and $3.9 in favorable
intraLATA access settlements, partially offset by a $4.7 decrease in
revenues related to a revised estimate of shareable earnings. The six
month decrease is primarily due to a $5.4 decrease in intraLATA activity
related to the Company's transition to an Originating Responsibility Plan
(ORP) in North Carolina and South Carolina, effective January 1, 1994, and
in Kentucky, effective March 1, 1994. The negative impact on network
access revenues is offset by increases in long distance revenues, increases
in access charge payments and a transitional support payment received by
the Company for a portion of the net revenue loss between the ORP and the
access-based pooling arrangement. The support payments will phase out over
the next few years. The six month decrease is also due to $3.8 of
unfavorable interstate access settlements and a $2.4 reduction in
interstate access revenues associated with price reductions. The six month
decrease is partially offset by a 7% increase in minutes of use, which
generated additional revenues of $9.3.
Long distance services revenues increased 14% or $4.5 and 35% or $19.2 for
the three and six months ended June 30, 1995, respectively, compared to the
same periods in 1994. The three month increase is primarily due to $2.5 of
favorable toll settlements and a $1.4 increase in message toll and credit
card usage. The six month increase is primarily due to a $15.5 increase in
toll activity related to the transition to the ORP, as mentioned above.
Equipment sales and services revenues increased 11% or $2.1 and 13% or $4.6
for the three and six months ended June 30, 1995, respectively, compared to
the same periods in 1994. The three and six month increases are primarily
due to a $0.9 increase in billing and collection service revenues during
the second quarter of 1995, an increase of $0.4 and $2.8 in sales of
Lineskeeper (Trademark) service, a protection service for inside wiring,
and a $0.4 and $0.5 increase in sales of Personal Secretary (Trademark)
voice messaging services.
3
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Other operating revenues increased 14% or $1.3 for the three months and
decreased 25% or $10.3 for the six months ended June 30, 1995, compared to
the same periods in 1994. The three month increase is primarily due to a
$1.9 decrease in the provision for uncollectibles, partially offset by a
$1.1 decrease in billing and collection revenues related to 1993 property
dispositions. The six month decrease is primarily due to a $2.7 decrease
in rent revenues and a $1.5 decrease in billing and collection revenues,
both of which are related to the transition to the ORP, as mentioned above.
Also contributing to the six month decrease is a $3.6 decrease in directory
advertising revenue due to lower directory sales and timing of directory
publications and a $2.0 decrease in billing and collection revenues related
to 1993 property dispositions.
OPERATING EXPENSES
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Operating expenses $ 228.0 $ 239.8 $ 445.6 $ 468.8
Operating expenses decreased 5% or $11.8 and 5% or $23.2 for the three and
six months ended June 30, 1995, respectively, compared to the same periods
in 1994. These decreases are primarily the result of lower cost of sales
and services and marketing, selling, general and administrative costs,
reflecting the favorable effects of ongoing cost-reduction programs from
process re-engineering activities, partially offset by higher depreciation
costs.
The three and six month decreases, respectively, are primarily due to a
$7.3 and $20.1 decrease in labor and benefit costs. The Company is
consolidating its operator services into a new facility in Lexington,
Kentucky, which provides services for both the Company and an affiliate.
Costs incurred by the facility are shared by the Company and the
participating affiliate. These operator services were previously provided
on a contractual basis. The three and six month decreases are also due to
a $3.7 and $8.2 decrease related to material purchases and a $1.9
settlement gain recorded in the second quarter of 1995 which resulted from
lump-sum payments from the Company's pension plans. The six month decrease
is also due to a $3.1 decrease in charges related to unbillable calling
card calls. The three and six month decreases are partially offset by a
$2.0 and $5.0 increase in depreciation costs related to rate changes in
Kentucky and North Carolina effective in June 1994, respectively. Also
offsetting the six month decrease is an $8.0 increase for payments of
access charges under the ORP, as mentioned above, to other local exchange
carriers (LECs) for intraLATA toll calls that are originated by the Company
and terminated by another LEC.
4
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
OTHER DEDUCTIONS
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Other - net $ 0.6 $ 4.3 $ 1.2 $ 8.0
Income taxes 28.0 14.1 59.9 38.1
Other - net expenses decreased $3.7 and $6.8 for the three and six months
ended June 30, 1995, respectively, compared to the same periods in 1994.
These decreases are primarily due to fees associated with the early
retirement of debt in 1994. The six month decrease is also due to costs
incurred during 1994 related to the repositioning of properties in late
1993.
Income taxes increased $13.9 and $21.8 for the three and six months ended
June 30, 1995, respectively, compared to the same periods in 1994. These
increases are primarily due to the corresponding increases in pretax
income.
CAPITAL RESOURCES AND LIQUIDITY
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. Short-term borrowings can be obtained
through commercial paper borrowings or borrowings from GTE. In addition,
at June 30, 1995, a $3,490 line of credit was available to the Company
through shared lines of credit with GTE and other affiliates to support
short-term financing needs.
The Company's primary source of funds during the first six months of 1995
was cash from operations of $187.8 compared to $86.3 for the same period in
1994. The year-to-year increase in cash from operations is primarily the
result of $170.7 in tax payments made in the first quarter of 1994, related
to the disposition of nonstrategic properties in late 1993, as well as
improved results from operations. These increases are partially offset by
an increase in working capital, primarily customer accounts receivable.
The Company's capital expenditures during the first six months of 1995 were
$110.9 compared to $112.0 for the same period in 1994. The 1995
expenditures reflect the Company's continued growth in access lines and
modernization of current facilities and introduction of new products and
services, including broadband digital services and switched digital
5
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
services. In 1995, construction costs are expected to increase slightly
from $287.1 of capital expenditures incurred during 1994, reflecting the
Company's expanding network and replacement of outdated technologies with
digital switches and fiber optic networks.
Cash used in financing activities was $69.2 during the first six months of
1995 compared to cash provided for the same period in 1994 of $14.3. The
Company received $348.4 in 1994 from the collection of an affiliate note
receivable related to the 1993 sale of properties and used the proceeds to
fund dividend payments of $338.4 to GTE compared to dividend payments of
$33.6 during the first six months of 1995. The Company retired $56.9 of
long-term debt and preferred stock in the first six months of 1995 compared
to $62.1 for the same period in 1994. The Company increased its borrowings
of commercial paper by $21.4 in the first six months of 1995 compared to an
increase of $66.4 for the same period in 1994.
OTHER MATTERS
As previously reported, results for 1993 included a one-time pretax
restructuring charge of $163.0, which reduced net income by $100.4,
primarily for incremental costs related to implementation of the Company's
three-year re-engineering plan. The re-engineering plan will redesign and
streamline processes to improve customer-responsiveness and product
quality, reduce the time necessary to introduce new products and services
and further reduce costs.
Implementation of the re-engineering plan began during 1994 and is expected
to be completed by the end of 1996. Expenditures of $63.9 have been made
since inception of the re-engineering plan, including $28.9 during the
first six months of 1995. These expenditures were primarily associated
with the consolidation of customer contact, network operations and operator
service centers, separation benefits from employee reductions and
incremental expenditures to redesign and streamline processes. There have
been no significant changes made to the overall re-engineering plan as
originally reported. As of June 30, 1995, $99.1 remains in the
restructuring reserve, of which $43.9 is classified as a current liability.
Management believes the reserve is adequate to cover future expenditures.
In March 1995, the Federal Communications Commission (FCC) adopted interim
rules to be utilized by local exchange carriers (LECs), including the
Company, for their 1995 Annual Price Cap Filing. The interim rules allowed
LECs to select from three productivity/sharing options for each tariff
entity. Each of the three options reflected an increase to the 3.3%
productivity factor used since 1991. The Company selected a 5.3%
productivity factor, with no sharing required, in each of its tariff
entities for use in the 1995-1996 tariff year. Under the interim rules,
the Company filed tariffs to reduce rates by $10.2 annually, effective
August 1, 1995. The FCC is continuing to consider how the price cap plan
should be modified in order to adapt the system to the emergence of
competition.
6
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
In April 1995, GTE filed a motion with the U.S. District Court for the
District of Columbia to remove the 1984 Consent Decree, which restricts the
manner in which the Company can provide interLATA services. GTE believes
that the Consent Decree is no longer required since GTE has since divested
its interests in the entities whose purchase gave rise to the Consent
Decree.
In May 1995, the FCC approved GTE's applications to construct a new
fiber-optic and coaxial-cable video network in four markets, including
Manassas, Virginia. GTE expects to submit tariffs that set the rates for
use of its video network to the FCC for approval.
On October 18, 1994, the Virginia State Corporation Commission (VSCC)
issued an order in its 1994 incentive regulation plan review which reset
the Company's authorized ROE range for 1995 to 10.96-13.96%. Previously,
the VSCC also ordered that only 25% of the Company's Yellow Page
advertising income should be used to calculate its regulated earnings under
the plan and that the Company may file to restructure its rates on a
revenue neutral basis without filing a full rate case.
On February 23, 1995, new legislation was enacted in Virginia which will
allow local exchange competition, effective January 1, 1996. This statute
requires that firms desiring to compete in the local marketplace must be
certified by the VSCC. Upon granting a certificate to a new entrant, the
VSCC must adopt a form of regulation for the incumbent and new entrant
which does not regulate the earnings of either party. On June 9, 1995, the
Company filed a rate case application with the VSCC seeking to restructure
and rebalance its prices in Virginia in anticipation of this local
competition and the VSCC's impending approval of intraLATA toll
competition. In this filing, the Company has proposed a revenue neutral
rate design. The proposed rate design reduces toll and access charges and
includes a restructuring of the basic local exchange pricing. The Company
has also proposed bringing the business and residential prices closer
together. In addition, the separate GTE and Contel tariffs will be merged,
eliminating the VSCC's current requirement that GTE's and Contel's earnings
be regulated separately. Evidentiary hearings regarding this application
will be held in November 1995 and a final VSCC decision is expected in
January 1996.
On July 24, 1995, the VSCC issued an order allowing intraLATA toll
competition, on a 10XXX basis only, effective October 1, 1995. All
interexchange carriers with existing interLATA toll certificates will also
be authorized to provide intraLATA 10XXX service as of that date. This
order also determines that intraLATA 1+ calling should remain exclusively
with the LECs, primarily based on the fact that the Company and Bell
Atlantic continue to be prohibited from entering the interLATA market.
7
GTE SOUTH INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On April 6, 1995, similar local competition and regulatory reform
legislation was enacted in North Carolina. The North Carolina Utilities
Commission can authorize local exchange competition, effective July 1, 1996
or sooner if a price regulation plan has been approved for the Company.
REGULATORY ACCOUNTING
The Company follows the accounting for regulated enterprises prescribed by
SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation."
In general, SFAS No. 71 requires companies to depreciate plant and
equipment over lives approved by regulators which may extend beyond the
assets' actual economic and technological lives. SFAS No. 71 also requires
deferral of certain costs and obligations based upon approvals received
from regulators to permit recovery in the future. Consequently, the
recorded net book value of certain assets and liabilities, primarily
telephone plant and equipment, may be greater than that which would
otherwise be recorded by unregulated enterprises. On an ongoing basis, the
Company reviews the continued applicability of SFAS No. 71 based on the
current regulatory and competitive environment. Although recent
developments suggest that the telecommunications industry will become
increasingly competitive, the degree to which regulatory oversight of LECs,
including the Company, will be lifted and competition will be permitted to
establish the cost of service to the consumer is uncertain. As a result,
the Company continues to believe that accounting under SFAS No. 71 is
appropriate. If the Company were to determine that the use of SFAS No. 71
was no longer appropriate, it would be required to write-off the deferred
costs and obligations referred to above. It may also be necessary for the
Company to reduce the carrying value of its plant and equipment to the
extent that it exceeds fair market value. At this time, it is not possible
to estimate the amount of the Company's plant and equipment, if any, that
would be considered unrecoverable in such circumstances. The financial
impact of such a determination, however, which would be non-cash, could be
material.
8
GTE SOUTH INCORPORATED
CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1995 1994
(Thousands of Dollars)
CURRENT ASSETS:
Cash $ 14,241 $ 6,549
Receivables, less allowances of
$20,228 and $24,090, respectively 208,565 221,195
Materials and supplies 20,344 14,461
Deferred income tax benefits 22,675 26,896
Prepayments and other 21,994 7,617
Total current assets 287,819 276,718
PROPERTY, PLANT AND EQUIPMENT:
Original cost 3,886,067 3,821,365
Accumulated depreciation (1,508,353) (1,418,438)
Net property, plant and equipment 2,377,714 2,402,927
OTHER ASSETS 95,622 82,483
TOTAL ASSETS $ 2,761,155 $ 2,762,128
See Notes to Condensed Financial Statements.
9
GTE SOUTH INCORPORATED
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, December 31,
1995 1994
(Thousands of Dollars)
CURRENT LIABILITIES:
Short-term debt, including current maturities $ 136,441 $ 171,022
Accounts payable 110,469 109,442
Accrued taxes 35,258 53,351
Accrued payroll and vacations 33,845 34,036
Accrued dividends 27,665 290
Accrued interest 11,003 12,286
Accrued restructuring costs and other 155,632 154,533
Total current liabilities 510,313 534,960
LONG-TERM DEBT 593,650 594,187
RESERVES AND DEFERRED CREDITS:
Deferred income taxes 374,019 370,217
Employee benefit obligations 125,784 106,779
Restructuring costs and other 88,011 122,281
Total reserves and deferred credits 587,814 599,277
PREFERRED STOCK, subject to
mandatory redemption 2,757 3,026
SHAREHOLDERS' EQUITY:
Preferred stock 412 412
Common stock 525,000 525,000
Other capital 58,320 58,310
Reinvested earnings 482,889 446,956
Total shareholders' equity 1,066,621 1,030,678
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,761,155 $ 2,762,128
See Notes to Condensed Financial Statements.
10
GTE SOUTH INCORPORATED
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1995 1994
(Thousands of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 96,951 $ 63,750
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 137,462 131,532
Deferred income taxes and investment
tax credits 7,910 (37,160)
Provision for uncollectible accounts 12,240 11,009
Tax payments on disposition -- (170,684)
Changes in current assets and
current liabilities (57,946) 47,285
Other - net (8,814) 40,566
Net cash from operating activities 187,803 86,298
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (110,876) (112,044)
Other - net -- 4,663
Net cash used in investing activities (110,876) (107,381)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term debt and preferred stock retired (56,945) (62,136)
Dividends paid to shareholders (33,643) (338,387)
Net change in affiliate notes -- 348,446
Increase in short-term debt 21,353 66,400
Net cash from (used in) financing
activities (69,235) 14,323
Increase (decrease) in cash 7,692 (6,760)
Cash at beginning of period 6,549 17,810
Cash at end of period $ 14,241 $ 11,050
See Notes to Condensed Financial Statements.
11
GTE SOUTH INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) The unaudited condensed 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 financial
statements include all adjustments, which consist only of normal recurring
accruals, necessary to present fairly the financial information for such
periods. These condensed financial statements should be read in
conjunction with the financial statements and the notes thereto included in
the Company's 1994 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 1995 presentation.
12
GTE SOUTH INCORPORATED
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K.
(27) Financial Data Schedule.
(b) The Company filed no reports on Form 8-K during the second
quarter of 1995.
13
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 hereunto duly authorized.
GTE SOUTH INCORPORATED
(Registrant)
Date: August 9, 1995 WILLIAM M. EDWARDS, III
WILLIAM M. EDWARDS, III
Controller
(Chief Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 14,241
<SECURITIES> 0
<RECEIVABLES> 228,793
<ALLOWANCES> 20,228
<INVENTORY> 20,344
<CURRENT-ASSETS> 287,819
<PP&E> 3,886,067
<DEPRECIATION> 1,508,353
<TOTAL-ASSETS> 2,761,155
<CURRENT-LIABILITIES> 510,313
<BONDS> 593,650
<COMMON> 525,000
2,757
412
<OTHER-SE> 541,209
<TOTAL-LIABILITY-AND-EQUITY> 2,761,155
<SALES> 633,747
<TOTAL-REVENUES> 633,747
<CGS> 137,259
<TOTAL-COSTS> 445,643
<OTHER-EXPENSES> 1,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,050
<INCOME-PRETAX> 156,827
<INCOME-TAX> 59,876
<INCOME-CONTINUING> 96,951
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,951
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
