<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
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 2-33059
GTE HAWAIIAN TELEPHONE COMPANY INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HAWAII 99-0049500
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
600 Hidden Ridge, HQE04B12 - Irving, Texas 75038
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code 972-718-5600
(Former name, former address and former fiscal year,
if changed since last report)
The registrant, a wholly-owned subsidiary of GTE 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
--- ---
The Company had 10,000,000 shares of $25 par value common stock outstanding at
April 30, 1997. The Company's common stock is 100% owned by GTE Corporation.
<PAGE> 2
PART I. FINANCIAL INFORMATION
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1997 1996
------------------ ------------------
(Thousands of Dollars)
<S> <C> <C>
REVENUES AND SALES
Local services $ 67,844 $ 60,529
Network access services 40,512 35,421
Toll services 19,700 22,702
Other services and sales 21,890 22,376
------------------ ------------------
Total revenues and sales 149,946 141,028
------------------ ------------------
OPERATING COSTS AND EXPENSES
Cost of services and sales 61,484 68,099
Selling, general and administrative 30,594 23,530
Depreciation and amortization 30,361 30,791
------------------ ------------------
Total operating costs and expenses 122,439 122,420
------------------ ------------------
OPERATING INCOME 27,507 18,608
OTHER (INCOME) EXPENSE
Interest - net 9,303 10,208
Other - net (336) 366
------------------ ------------------
INCOME BEFORE INCOME TAXES 18,540 8,034
Income taxes 6,878 2,546
------------------ ------------------
NET INCOME $ 11,662 $ 5,488
================== ==================
</TABLE>
Per share data is omitted since the Company's common stock is 100% owned by GTE
Corporation (GTE).
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE> 3
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(Dollars in Millions)
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Net income $ 11.7 $ 5.5
</TABLE>
Net income increased $6.2 for the three months ended March 31, 1997, compared
to same period in 1996. The increase is primarily the result of higher revenues
and sales, reflecting the favorable results of the 1995 Rate Case and continued
customer growth, while maintaining constant expense levels. The increase is
partially offset by higher income taxes.
REVENUES AND SALES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Local services $ 67.8 $ 60.5
Network access services 40.5 35.4
Toll services 19.7 22.7
Other services and sales 21.9 22.4
-------------- --------------
Total revenues and sales $ 149.9 $ 141.0
</TABLE>
Total revenues and sales increased 6% or $8.9 for the three months ended March
31, 1997, compared to the same period in 1996.
Local service revenues increased 12% or $7.3 for the three months ended March
31, 1997, compared to the same period in 1996. This increase reflects the
results of the final award for the 1995 Rate Case received in January 1997,
which increased local service revenues by $5.4, and a $1.1 growth in revenues
from custom calling features, such as SmartCall(R) services. The number of
access lines increased 3.5% during the first three months of 1997, generating
$0.5 in additional revenues.
Network access service revenues increased 14% or $5.1 for the three months
ended March 31, 1997, compared to the same period in 1996. The increase
reflects a 12% growth in minutes of use, which generated $1.7 in additional
revenues, and a $1.8 increase in special access revenues resulting from a
growth in dedicated lines. Higher end user access charge revenues of $0.3
resulting from growth in access lines also contributed to the increase. These
increases are partially offset by a $0.2 reduction in interstate access
revenues resulting from rate changes associated with the Federal Communication
Commission's (FCC's) 1995 and 1996 price caps.
Toll service revenues decreased 13% or $3 for the three months ended March 31,
1997, compared to the same period in 1996, primarily due to a decline in
domestic toll volumes, resulting from continued competition with long distance
carriers authorized to provide interisland toll service on a 10XXX and 1+
basis.
2
<PAGE> 4
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
OPERATING COSTS AND EXPENSES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Total operating costs and expenses $ 122.4 $ 122.4
</TABLE>
Total operating costs and expenses remained virtually unchanged for the three
months ended March 31, 1997, compared to the same period in 1996. Increases of
$3 in contractor costs and $1.6 in advertising costs are partially offset by a
$2.4 decrease in product sales expense and a $1.3 decrease in costs associated
with international service contracts.
INCOME TAXES
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
Income taxes $ 6.9 $ 2.5
</TABLE>
Income taxes increased $4.4 for the three months ended March 31, 1997, compared
to the same period in 1996. This increase is primarily due to a corresponding
increase in pre-tax income and adjustments to prior years' tax liabilities.
OTHER MATTERS
On May 7, 1997, in accordance with the Telecommunications Act of 1996 (the
Telecommunications Act), the FCC announced its decisions concerning price caps,
access charge reform and universal service. The text of the universal service
order was released on May 8, 1997. The FCC price cap and access reform orders
are expected to be released by May 20, 1997. GTE is currently assessing the
effect of these recent decisions.
The Company is continuing to negotiate with requesting carriers over the terms
of interconnection, unbundled network elements and resale rates. In some cases,
the parties have been unable to agree within the statutory period for
negotiation and have gone to arbitration before the state regulatory
commission. Since December 1996, state commission decisions determining the
prices and terms of unresolved issues have been released in Hawaii. Subsequent
decisions are expected to be issued over a period extending through the third
quarter of 1997.
In August 1996, pursuant to the Telecommunications Act, AT&T filed a petition
with the Public Utilities Commission (PUC) of the State of Hawaii requesting
arbitration of remaining interconnection, resale and unbundling issues between
AT&T and the Company. Hearings were held on October 14 to 17, 1996, and Decision
No. 15229 was issued by the PUC on December 12, 1996. In its decision, the PUC
ordered the Company, among many other things, to discount all retail services at
a rate of 15% and offer unbundled network elements at a price based on the
Company's total element long run incremental cost (TELRIC) increased by 10% for
joint and common costs, with both parties filing an interconnection agreement
within 30 days. On January 10, 1997, the Company filed a complaint for
declaratory and injunctive relief in the U.S. District Court. On February 13,
1997, the Company and AT&T jointly filed a draft interconnection agreement which
reflected areas of dispute and proposed language by each company and on February
26, 1997, both companies filed
3
<PAGE> 5
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
comments regarding this proposed language with the PUC. On April 18, 1997, the
PUC issued Decision No. 15528, which resolved the differences between the
parties. An executed agreement was filed on May 8, 1997, in accordance with
this decision. The decision also stated that the parties may continue to
negotiate and modify the results of the arbitration provided that the parties
come to full agreement on any further negotiated issue and no further issues
are submitted to the PUC for resolution.
On October 16, 1996, GST Telecom Hawaii (GST) petitioned the PUC for
arbitration, which was ultimately withdrawn on November 8, 1996. On November
27, 1996, an interconnection agreement between the Company and GST was filed
with approval granted by the PUC in Decision and Order No. 15283. A revised
interconnection agreement was filed with the PUC on January 16, 1997, with the
E911 and Telecommunications Relay Service (TRS) agreements filed on January 16,
and January 24, 1997, respectively. On March 24, 1997, GST filed a petition for
arbitration of unresolved issues, specifically relating to the rates, terms and
conditions of access and interconnection to dark fiber for the purpose of
mutual restoration of each company's interisland cable system. The Company
filed its response to this petition on April 14, 1997.
Sprint Corporation (Sprint) petitioned the PUC for arbitration in September
1996 on many of the same issues that were submitted by AT&T. Hearings were held
on December 2, and 3, 1996, and on January 17, 1997, the PUC issued Decision
No. 15316 which reaffirmed decisions issued in the previous arbitration
proceedings. The Company filed, under protest, an interconnection agreement
with the PUC on February 24, 1997. Sprint is seeking to adopt the provisions of
the AT&T agreement in lieu of the negotiated agreement ordered by the PUC. The
Company filed its opposition on February 27, 1997 seeking approval of the
arbitrated agreement submitted in compliance with the PUC's decision. On March
7, 1997, the PUC issued Order No. 15428, which ordered that an interconnection
agreement be filed with the PUC in the same format as the Company's
interconnection agreement with AT&T along with each parties' proposals on
disputed issues. On April 3, 1997, the PUC denied the Company's motion for
reconsideration of Order No. 15428 and ordered both parties to file their own
version of the interconnection agreement if a joint agreement could not be
filed. Both companies filed their individually proposed agreements on
April 11, 1997.
On April 4, 1997, PrimeCo Personal Communications, L.P. (PrimeCo) filed a
petition for arbitration on the issues of rates for transport, termination and
transit. In the petition, PrimeCo requested a sixty-day abeyance and on April
21, 1997, the Company informed the PUC that the Company and PrimeCo had reached
an agreement in principle on all unresolved issues.
Communications Infrastructure
On May 11, 1993, the PUC initiated a communications infrastructure proceeding
which was intended to investigate such issues as: what markets should be opened
to competition; who should be allowed to compete in those markets; and what
rules, if any, should apply. As part of this proceeding, on May 17, 1996, the
PUC formally adopted administrative rules governing telecommunications
competition and establishing a universal service fund in Hawaii. Since June 3,
1996, the effective date of the new rules, the PUC has granted certificates of
authority to numerous applicants to operate as resellers of telecommunications
services and has others pending.
On December 12, 1996, the PUC issued a decision on the petition of AT&T for
arbitration with the Company concerning interconnection of AT&T's facilities
and equipment with the Company's network. Pursuant to this ruling, many of the
issues contained in this AT&T arbitration proceeding were deferred to the
communications infrastructure docket for resolution of final rates.
4
<PAGE> 6
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On April 2, 1997, the PUC issued a prehearing order to resolve all remaining
issues in the communications infrastructure proceeding on an accelerated time
frame. These issues are: 1) total service resale and wholesale pricing; 2)
unbundled network elements; 3) transport and termination; 4) physical and
virtual collocation; 5) access to poles, ducts, conduits and rights-of-way; 6)
"most favored nation clause"; 7) intrastate access tariff; 8) undepreciated
plant balance; 9) rate rebalancing; and 10) universal service fund program. The
evidentiary hearings on these issues are expected to take place during the
third quarter of 1997.
Competition
On March 1, 1996, the PUC ordered the Company to implement 1+ and 0+ equal
access within the state by May 1, 1996. On March 11, 1996, the Company filed a
motion for stay of proceedings and for reconsideration of the PUC's order. On
April 19, 1996, the PUC denied the Company's motion for stay of the order.
Effective July 10, 1996, the Company implemented 1+ and 0+ equal access.
During the first quarter of 1995, the PUC authorized AT&T, Sprint and MCI to
provide interisland toll service on a 10XXX basis, and reserved the right to
modify or rescind the authority depending on the impact of the Company. Since
then, the PUC has granted certificates of authority to approximately 50
carriers to provide for interexchange telecommunications services in Hawaii,
including Time Warner Communications and GST Pacwest.
Pay telephones in Hawaii have also opened up to competition. On January 31,
1997, the PUC issued an order granting certificates of authority to those who
previously filed to operate as pay telephone providers in Hawaii.
Rural Service Plans
In September 1992, the PUC initiated an investigation of the Company's
provision of telephone service in the rural areas in the state. On November 2,
1994, the PUC issued its ruling in this proceeding, requesting the Company to
convert all existing rural multi-party lines to single-party over a three-year
period. The ruling further allowed the Company to collect one-half of the cost
of conversion from existing multi-party customers choosing to convert to
single-party service. The estimated remaining costs of up to $20.2 will be
recovered from general ratepayers statewide through a three-year monthly
surcharge. On February 24, 1995, the PUC approved the Company's Rural Service
Plan (RSP). On September 1, 1995, the Company began assessing a three-year
general ratepayer surcharge, while issuing its first offers to convert
customers to single-line service in those rural areas that were upgraded
pursuant to the RSP 1995 construction schedule. Construction activities under
the RSP will continue through 1997.
The PUC opened a docket on December 12, 1994, and ordered the Company to show
cause why the PUC should not authorize an alternate telecommunications provider
for the rural areas of the state. On December 13, 1995, the PUC issued a
decision allowing a telecommunications carrier other than the Company to seek
authorization to provide service in the Ka'u area on the island of Hawaii. The
PUC accepted bid proposals through May 15, 1996 from carriers, including the
Company, who were interested in serving the first rural area for which an
alternative telecommunications provider may be authorized. The PUC selected
TelHawaii Incorporated (TelHawaii) as the alternative provider and carrier of
last resort (COLR) in the Ka'u area of the island of Hawaii, effective May 31,
1997. The PUC further required the Company and TelHawaii to negotiate all
necessary agreements including, as required or appropriate, an agreement for
the transfer to or use by TelHawaii of the Company's assets and agreements for
extended area service, directory assistance and publications, interconnection,
enhanced 911, and telecommunications relay services. The Company intends to
continue offering a competitive alternative for Ka'u customers even after
TelHawaii begins providing alternative telecommunications services as a COLR.
5
<PAGE> 7
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On July 25, 1996, the Company filed a Motion for Reconsideration/Clarification
of the PUC's July 15, 1996 order selecting TelHawaii as the alternative
provider of telecommunications services and as the COLR in the Ka'u area of the
island of Hawaii. On August 16, 1996, the Company filed its Notice of Appeal of
the PUC's orders. The Company is appealing the PUC's order on the basis that
the Company opposes the effective taking of its property by forced sale of its
assets in Ka'u and that the order is contrary to the Telecommunications Act. On
September 5, 1996, the Company filed an Expedited Motion for Stay Pending
Appeal and an Emergency Motion for Temporary Stay Pending Supreme Court Review
of the Expedited Motion.
On September 16, 1996, the PUC ordered the Company to show cause why it should
not pay a fine for not complying with the PUC's prior order to respond to
information requests issued by TelHawaii. A hearing was held on September 30,
1996, with an order from the PUC assessing a $0.3 million fine on the Company.
The Company paid the fine under protest on October 3, 1996, and filed a Motion
for Reconsideration of the PUC's order on October 3, 1996 due to the legal
grounds for noncompliance with the PUC's order. On November 8, 1996, the
Company also filed a motion requesting the PUC consider issuing a clarification
order and an order granting mitigation and abatement of fines and penalties
levied. On December 23, 1996, the PUC issued Order No. 15266 denying the
Company's motion for reconsideration and motion for clarification and directed
the parties to continue negotiation of "sale or use" of the Ka'u facilities. On
January 22, 1997, the Company filed an appeal of this order with the Hawaii
Supreme Court. On January 31, 1997, the PUC instituted investigations, as a
result of petitions filed by rural area communities, to determine whether the
telecommunications service provided by the Company in the South Kona and Puna
districts of the island of Hawaii is adequate.
Interstate and International Services
On December 20, 1996, the Company filed an application requesting approval to
transfer certain property to the newly established GTE Hawaiian Tel
International entity. The transfer of property will be done in accordance with
an FCC Order released on October 22, 1996 which allows the Company to be
reclassified as a nondominant provider of International Message Telephone
Service (IMTS), subject to certain safeguards which the Company must first
satisfy.
The safeguards include the establishment of a separate legal entity with
separate books of account, no sharing of transmission or switching facilities
with an affiliated local-exchanbge carrier (LEC), the acquiring of services from
the LEC on a tariffed basis, and the treatment as a nonregulated affiliate under
the FCC's joint cost and affiliate transaction rules. As a nondominant IMTS
provider, the Company will have the ability to effectively compete with other
nondominant carriers in the Hawaii IMTS market.
On April 18, 1997, AT&T issued its statement of position on the Company's
application that was filed on December 20, 1996. On April 25, 1997, the
Consumer Advocate issued its statement of position recommending approval of the
application. The Company is in the process of preparing comments to both of
these position statements.
6
<PAGE> 8
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
On April 18, 1997, the FCC published its Second Report and Order (the Order)
containing rules for the provision of interexchange services originating in the
LEC's local-exchange area. The Order modified the safeguards required for the
Company to be classified as nondominant for IMTS by allowing the separate legal
entity to acquire unbundled network elements or exchange services from its
affiliated LEC as provided in agreements approved under Section 252 of the
Communications Act of 1934, as amended. The Order also gives the Company and
Micronesian Telecommunications Corporation, a subsidiary of the Company, one
year from the release date of the Order to comply with the safeguards in
the Order.
Initiatives
In May 1997, the Company's parent, GTE, announced initiatives to become a
leading national provider of telecommunications services, including the
acquisition of BBN Corporation, a leading provider of end-to-end Internet
solutions. In addition, GTE announced a strategic alliance with Cisco Systems,
Inc. to jointly develop enhanced data and Internet services for customers; and,
the purchase of a national, state-of-the-art fiber-optic network from Qwest
Communications.
In May 1997, GTE Media Ventures Incorporated, a separate of subsidiary of GTE,
purchased substantially all of the assets of O'ahu Wireless Cable, Inc. O'ahu
Wireless currently offers 25 channels of video programming to approximately
3,800 customers on the island of Oahu.
7
<PAGE> 9
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------------ ------------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,806 $ 20,154
Receivables, less allowances of $5,444 and $6,066 157,931 144,710
Inventories and supplies 12,199 5,906
Deferred income tax benefits 5,327 6,202
Prepaid taxes and other 13,955 24,613
------------------ ------------------
Total current assets 193,218 201,585
------------------ ------------------
Property, plant and equipment, at cost 2,020,679 2,049,370
Accumulated depreciation (1,197,295) (1,226,897)
------------------ ------------------
Total property, plant and equipment, net 823,384 822,473
------------------ ------------------
------------------
Employee benefit plans and other assets 183,826 176,927
------------------ ------------------
Total assets $ 1,200,428 $ 1,200,985
================== ==================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Short-term obligations, including current maturities $ 77,336 $ 49,600
Accounts payable 696 19,728
Affiliate payables and accruals 17,804 30,733
Taxes payable -- 1,797
Accrued interest 5,261 12,793
Accrued payroll costs 26,716 29,070
Other 43,689 47,053
------------------ ------------------
Total current liabilities 171,502 190,774
------------------ ------------------
Long-term debt 512,797 513,016
Deferred income taxes 99,566 98,687
Other liabilities 65,514 59,121
------------------ ------------------
Total liabilities 849,379 861,598
------------------ ------------------
Shareholder's equity:
Common stock (10,000,000 shares issued) 250,000 250,000
Additional paid-in capital 91,146 91,146
Retained earnings (deficit) 9,903 (1,759)
------------------ ------------------
Total shareholder's equity 351,049 339,387
------------------ ------------------
Total liabilities and shareholder's equity $ 1,200,428 $ 1,200,985
================== ==================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
8
<PAGE> 10
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------------
1997 1996
------------------ ------------------
(Thousands of Dollars)
<S> <C> <C>
OPERATIONS
Net income $ 11,662 $ 5,488
Adjustments to reconcile net income
to net cash from operations:
Depreciation and amortization 30,361 30,791
Deferred income taxes 2,593 1,086
Provision for uncollectible accounts 2,723 2,253
Changes in current assets and current liabilities (55,243) 15,162
Other - net (1,358) (6,264)
------------------ ------------------
Net cash from (used in) operations (9,262) 48,516
------------------ ------------------
INVESTING
Capital expenditures (29,365) (18,480)
Purchase of MTC stock -- (450)
------------------ ------------------
Cash used in investing (29,365) (18,930)
------------------ ------------------
FINANCING
Long-term debt retired (743) (35,551)
Increase in short-term obligations, excluding current maturities 28,349 6,358
Dividends (5,327) --
------------------ ------------------
Net cash from (used in) financing 22,279 (29,193)
------------------ ------------------
Increase (decrease) in cash and cash equivalents (16,348) 393
Cash and cash equivalents:
Beginning of period 20,154 4,515
------------------ ------------------
End of period $ 3,806 $ 4,908
================== ==================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
9
<PAGE> 11
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) 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
financial statements and the notes thereto included in the Company's 1996
Annual Report on Form 10-K.
10
<PAGE> 12
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-K
12 Statement re: Calculation of the Consolidated Ratio of Earnings
to Fixed Charges
27 Financial Data Schedule
(b) The Company filed no reports on Form 8-K during the first quarter of
1997.
11
<PAGE> 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, thereunto duly authorized.
GTE Hawaiian Telephone Company
Incorporated
---------------------------------------
(Registrant)
Date: May 14, 1997 William M. Edwards, III
----------------------------- ---------------------------------------
William M. Edwards, III
Vice President - Controller
(Principal Accounting Officer)
12
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------------------ --------------------------------------------------------------------------------
<S> <C>
12 Statement re: Calculation of the Consolidated Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
</TABLE>
<PAGE> 1
Exhibit 12
GTE Hawaiian Telephone Company Incorporated and Subsidiaries
STATEMENT OF THE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1997
--------------
<S> <C>
Net earnings available for fixed charges:
Income from continuing operations $ 11,662
Add - Income taxes 6,878
- Fixed charges 11,168
--------------
Adjusted earnings $ 29,708
==============
Fixed charges:
Interest expense $ 10,180
Portion of rent expense
representing interest 988
--------------
Adjusted fixed charges $ 11,168
==============
RATIO OF EARNINGS TO FIXED CHARGES 2.66
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,806
<SECURITIES> 0
<RECEIVABLES> 163,375
<ALLOWANCES> 5,444
<INVENTORY> 12,199
<CURRENT-ASSETS> 193,218
<PP&E> 2,020,679
<DEPRECIATION> 1,197,295
<TOTAL-ASSETS> 1,200,428
<CURRENT-LIABILITIES> 171,502
<BONDS> 512,797
0
0
<COMMON> 250,000
<OTHER-SE> 101,049
<TOTAL-LIABILITY-AND-EQUITY> 1,200,428
<SALES> 149,946
<TOTAL-REVENUES> 149,946
<CGS> 61,484
<TOTAL-COSTS> 122,439
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,303
<INCOME-PRETAX> 18,540
<INCOME-TAX> 6,878
<INCOME-CONTINUING> 11,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,662
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
