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 June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-2222
ILLINOIS BELL TELEPHONE COMPANY
(Incorporated under the laws of the State of Illinois)
225 W. Randolph Street, Chicago, Illinois 60606
I.R.S. Employer Identification Number 36-1253600
Telephone - Area Code 312-727-9411
THE REGISTRANT, A WHOLLY-OWNED SUBSIDIARY OF AMERITECH CORPORATION, MEETS
THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM
10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT
PURSUANT TO GENERAL INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
---- ----
At July 31, 1994, 81,938,121 common shares were outstanding.
Form 10-Q - Part I Illinois Bell Telephone Company
PART I - FINANCIAL INFORMATION
The following financial statements have been prepared by Illinois Bell
Telephone Company (the Company) pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of the
Company, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair statement of results for each period
shown. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such SEC
rules and regulations. The Company believes that the disclosures made are
adequate to make the information presented not misleading. These financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's latest Annual Report on Form 10-K
and the quarterly report on Form 10-Q previously filed in the current year.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(Millions of Dollars)
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
---- ---- ---- ----
Revenues. . . . . . . . . . . . $ 812.0 $ 763.0 $1,604.2 $1,493.5
Operating expenses
Employee-related expenses. . . 218.3 215.9 427.0 436.7
Depreciation and amortization. 137.8 127.8 265.3 255.1
Other operating expenses . . . 229.1 194.3 449.8 383.4
Restructuring charge . . . . . - - 137.8 -
Taxes other than income taxes. 20.7 19.5 40.8 42.9
------- ------- ------- -------
605.9 557.5 1,320.7 1,118.1
Operating income. . . . . . . . 206.1 205.5 283.5 375.4
Interest expense. . . . . . . . 26.8 31.3 52.2 60.7
Other (income) expense, net . . (4.6) (1.9) (5.2) (2.3)
------- ------- ------- -------
Income before income taxes. . . 183.9 176.1 236.5 317.0
Income taxes. . . . . . . . . . 64.4 62.0 82.3 112.0
------- ------- ------- -------
Net income. . . . . . . . . . . 119.5 114.1 154.2 205.0
Reinvested earnings,
beginning of period. . . . . . 70.0 113.8 133.2 114.5
Less dividends. . . . . . . . . 104.5 103.6 202.4 195.2
------- ------- ------- -------
Reinvested earnings,
end of period. . . . . . . . . $ 85.0 $ 124.3 $ 85.0 $ 124.3
======= ======= ======= =======
See Notes to Condensed Consolidated Financial Statements.
Form 10-Q - Part I Illinois Bell Telephone Company
CONDENSED CONSOLIDATED BALANCE SHEETS
(Millions of Dollars)
June 30, 1994 December 31, 1993
(Unaudited) (Derived from
audited financial
statements)
ASSETS
Current assets
Cash and temporary cash investments . $ 18.8 $ 14.7
Receivables, net
Customers. . . . . . . . . . . . . . 628.9 591.6
Ameritech and affiliates . . . . . . 24.1 40.9
Other. . . . . . . . . . . . . . . . 29.7 30.8
Material and supplies . . . . . . . . 13.9 15.6
Prepaid and other . . . . . . . . . . 8.4 12.1
-------- --------
723.8 705.7
-------- --------
Telecommunications plant. . . . . . . . 8,331.6 8,223.7
Less, accumulated depreciation. . . . . 3,310.8 3,185.2
-------- --------
5,020.8 5,038.5
-------- --------
Investments, principally in affiliates. 81.8 86.8
Other assets and deferred charges . . . 271.9 345.2
-------- --------
Total assets. . . . . . . . . . . . . . $6,098.3 $6,176.2
======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech. . . . . . . . . . . . . . $ 616.4 $ 494.2
Other. . . . . . . . . . . . . . . . 1.2 100.3
Accounts payable
Ameritech and affiliates . . . . . . 75.6 79.3
Other. . . . . . . . . . . . . . . . 308.4 321.5
Other current liabilities . . . . . . 433.6 404.6
-------- --------
1,435.2 1,399.9
-------- --------
Long-term debt. . . . . . . . . . . . . 1,072.9 1,077.0
-------- --------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes. . . 576.3 587.1
Unamortized investment tax credits . . 101.8 109.9
Postretirement benefits other
than pensions . . . . . . . . . . . . 851.8 815.7
Long-term payable to affiliate (ASI)
for SFAS 106 adoption . . . . . . . . 29.1 30.9
Other. . . . . . . . . . . . . . . . . 241.4 317.7
-------- --------
1,800.4 1,861.3
-------- --------
Shareholder's equity
Common shares - ($20 par value; 100,000,000
shares authorized; 81,938,121 issued and
outstanding). . . . . . . . . . . . . 1,638.8 1,638.8
Proceeds in excess of par value. . . . 66.0 66.0
Reinvested earnings. . . . . . . . . . 85.0 133.2
-------- --------
1,789.8 1,838.0
-------- --------
Total liabilities and shareholder's equity $6,098.3 $6,176.2
======== ========
See Notes to Condensed Consolidated Financial Statements.
Form 10-Q - Part I Illinois Bell Telephone Company
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of Dollars)
(Unaudited)
For the Six Months Ended
June 30,
1994 1993
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . $ 154.2 $ 205.0
Adjustments to net income:
Restructuring charge, net of tax . . . . . 83.0 --
Depreciation and amortization. . . . . . . 265.3 255.1
Deferred income taxes, net . . . . . . . . (0.2) 12.4
Investment tax credits, net. . . . . . . . (8.1) (9.1)
Interest during construction . . . . . . . (1.4) (0.9)
Provision for uncollectibles . . . . . . . 22.7 18.0
Increase in accounts receivable. . . . . . (42.1) (23.3)
Decrease in material and supplies. . . . . 1.7 5.8
Decrease (increase) in certain other
current assets . . . . . . . . . . . . . 3.1 (2.5)
(Decrease) increase in accounts payable . . (16.8) 1.6
Decrease in accrued taxes. . . . . . . . . (5.8) (19.3)
(Decrease) increase in certain other
current liabilities. . . . . . . . . . . (9.8) 26.5
Change in certain other noncurrent assets
and liabilities. . . . . . . . . . . . . (12.8) (18.7)
Other. . . . . . . . . . . . . . . . . . . 4.7 0.4
-------- --------
Net cash from operating activities . . . . . 437.7 451.0
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures . . . . . . . . . . . . (247.5) (255.2)
Proceeds from (cost of) disposals of
telecommunications plant . . . . . . . . . 0.5 (2.5)
-------- --------
Net cash from investing activities . . . . . (247.0) (257.7)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net. . . . . . . . . 122.2 (201.2)
Issuance of long-term debt . . . . . . . . . 196.1 197.5
Retirements of long-term debt. . . . . . . . (300.7) (0.9)
Dividend payments. . . . . . . . . . . . . . (204.2) (184.3)
-------- --------
Net cash from financing activities . . . . . (186.6) (188.9)
-------- --------
Net increase in cash and temporary
cash investments. . . . . . . . . . . . . . 4.1 4.4
Cash and temporary cash investments at
beginning of period . . . . . . . . . . . . 14.7 17.6
-------- --------
Cash and temporary cash investments at end
of period . . . . . . . . . . . . . . . . . $ 18.8 $ 22.0
======== ========
See Notes to Condensed Consolidated Financial Statements.
Form 10-Q - Part I Illinois Bell Telephone Company
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Millions of Dollars)
(A) LONG-TERM DEBT
On January 12, 1994, the Company redeemed all $300.0 of the principal
amounts outstanding of its thirty-one year, 8% debentures, due December 10,
2004. The debentures were redeemed at 101.85% plus interest accrued to the
redemption date. Expenses associated with this call, recorded in 1993,
were $6.5, including a call premium of $5.6.
On February 4, 1994, the Company issued debt of $200.0. These issues
included $100.0 of debentures at 6-5/8%, due February 1, 2025 (noncallable
until 2004) and $100.0 of notes at 5-4/5%, due February 1, 2004. The
proceeds from these issues were used to repay outstanding notes payable.
At December 31, 1993 debt maturing within one year reflected the redemption
of the $300.0, net of the $200.0 of debt issued by the Company.
(B) WORK FORCE RESTRUCTURING
On March 25, 1994, the Company's parent (Ameritech Corporation) announced
that it will reduce its nonmanagement work force by 6,000 employees by
the end of 1995. Under terms of agreements between the Company, the
Communication Workers of America (CWA) and the International Brotherhood of
Electrical Workers (IBEW), Ameritech implemented an enhancement to the
Ameritech Pension Plan by adding three years to the age and the net
credited service of eligible nonmanagement employees who leave the business
during a designated period that ends in mid-1995. In addition, certain of
the Company's business units are offering financial incentives under terms
of its current contracts with the CWA and the IBEW to selected
nonmanagement employees who leave the business before the end of 1995.
This program resulted in a first quarter charge of $137.8 or $83.0 after-
tax. The charge reduced the Company's prepaid pension asset by $79.2 for
pension enhancements and curtailment losses. The charge also includes a
curtailment loss of $34.2 related to Statement of Financial Accounting
Standards (SFAS) No. 106 ("Employers' Accounting for Postretirement
Benefits Other than Pensions") and a severance accrual of $24.4.
In June, Ameritech completed the first phase of its restructuring plan,
having solicited volunteers to leave the Company. The response to date is
exceeding expectations. Ameritech management is in the process of
evaluating the specific job functions and locations of the employees who
have requested to leave under the plan to ensure that service to customers
will not be adversely affected. The task is complex as the intended 6,000
employee force reduction represents approximately twelve percent of the
nonmanagement work force. Accordingly, insufficient information currently
exists to adjust the restructuring accrual. Ameritech expects to complete
this process in the third quarter and the Company will increase its
restructuring accrual to the appropriate level. The adjustment could be
material.
Form 10-Q - Part I Illinois Bell Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
The following is a discussion and analysis of the changes in revenues,
operating expenses and other income and expenses for the first six months
of 1994 as compared to the first six months of 1993:
Results of Operations (Millions of Dollars)
- - -------------------------------------------
Revenues
- - --------
Increase
1994 1993 (Decrease) % Change
Local service . . . . . . . $955.6 $904.6 $51.0 5.6%
Higher network usage increased local service revenues by $41.0. Increased
volumes were primarily attributed to growth in the number of customer
lines, which increased 3.2% to 5,862,534 from 5,679,527 the previous year,
as well as greater sales of calling features (e.g., Call Forwarding, Caller
ID, etc.). In addition, local message revenues increased by $10.0 due to a
change in the method of recording transactions between the Company and
independent telephone companies for jointly provided telecommunications.
These revenues, along with long distance service revenues, were previously
offset by access charge payments to independent telephone companies.
Increase
1994 1993 (Decrease) % Change
Network Access
Interstate . . . . . . . . $365.9 $339.7 $ 26.2 7.7%
Intrastate . . . . . . . . $ 46.4 $ 38.6 $ 7.8 20.2%
Interstate access revenues increased by $27.3 due to growth of customer
lines, switched access minutes of use and special access circuits.
Additionally, revenues increased by $10.7 due to lower National Exchange
Carrier Association support payments and revenue sharing accruals. These
increases were offset by lower revenues of $11.8 primarily due to rate
reductions. Intrastate access revenues increased by $12.3 due primarily to
growth of switched access minutes of use, offset by $4.5 due to rate
reductions for switched access services.
Increase
1994 1993 (Decrease) % Change
Long distance service . . . $ 111.5 $ 83.3 $ 28.2 33.9%
Long distance service revenues were higher by $19.9 primarily due to the
previously discussed change in the method of recording transactions between
the Company and independent telephone companies, and by $8.3 due to higher
intrastate and intraLATA interstate network usage.
Form 10-Q - Part I Illinois Bell Telephone Company
Increase
1994 1993 (Decrease) % Change
Other . . . . . . . . . . . $124.8 $ 127.3 $ (2.5) (2.0)%
Other revenues include revenues derived from directory advertising, billing
and collection services, inside wire installation and maintenance services
and other miscellaneous services. These revenues are net of the Company's
provision for uncollectibles. The decrease in other revenues was due to a
$4.7 increase in the provision for uncollectible accounts resulting from
higher accounts receivable balances, offset by an increase in other
revenues of $2.2. The increase in other revenues was primarily due to
growth of voice messaging and wire maintenance services.
Operating Expenses
- - ------------------
Increase
1994 1993 (Decrease) % Change
Employee-related expenses . $427.0 $436.7 $ (9.7) (2.2)%
Employee-related expenses include employee salaries, benefits and other
employee-related expenses. Wage rate increases were completely offset by
lower accruals for employee bonuses and salary savings created from a
reduced work force as a result of voluntary and involuntary programs. The
Company's work force decreased to 17,213 at June 30, 1994 from 18,466 at
June 30, 1993.
Increase
1994 1993 (Decrease) % Change
Depreciation
and amortization . . . . . $265.3 $255.1 $ 10.2 4.0%
The increase in depreciation expense is primarily due to increased
interstate rates effective January 1, 1994, resulting from the Company's
1994 Federal Communications Commission depreciation represcription.
Increase
1994 1993 (Decrease) % Change
Other operating expenses. . $449.8 $383.4 $ 66.4 17.3%
The increase in other operating expenses is primarily due to a $36.1
increase in access charge expenses, resulting from a change in the method
of recording transactions between the Company and independent telephone
companies for jointly provided telecommunications. These charges
previously offset local service and long distance service revenues. Also
contributing to the increase were higher expenses of $47.6 for affiliated
services, material and supplies and other miscellaneous expenses. These
increases were offset by a $15.8 decrease in contract service expense,
resulting primarily from reduced right-to-use and professional service
fees.
Form 10-Q - Part I Illinois Bell Telephone Company
Increase
1994 1993 (Decrease) % Change
Restructuring charge. . . . $137.8 $ -- $137.8 --%
As discussed more fully in Note (B) to the Condensed Consolidated Financial
Statements, Ameritech announced on March 25, 1994 that it will reduce its
nonmanagement work force by 6,000 employees by the end of 1995, including
1,560 at the Company. Reduction of the work force results from
technological improvements, consolidations, and initiatives identified by
management to balance its cost structure with emerging competition.
This program resulted in a first quarter 1994 charge of $137.8 ($83.0 on an
after-tax basis). A significant portion of the program's cost will be
funded by the Ameritech Pension Plan, whereas financial incentives to be
paid by the Company will require Company funds of approximately $38.3.
Settlement gains of an estimated $55.0, which result from lump-sum payments
from the Ameritech Pension Plan, will be reflected in income as payments
are made by the Ameritech Pension Plan (none recorded as of June 30, 1994).
Settlement gains are noncash in nature and result from the funded status of
the Ameritech Pension Plan.
Ameritech originally advised the Company that it expected approximately
two-thirds of the 1,560 employees would leave the payroll in 1994 with the
balance departing by the end of the third quarter of 1995. Four hundred
fifty-one employees left the payroll in the second quarter of 1994 under
this plan. As previously discussed in Note (B), the program has generated
more requests to leave the payroll than originally planned requiring
revision to the expected number and timing of employees leaving the payroll
which should be quantifiable in the third quarter of 1994. Ameritech will
manage the departure of all employees to minimize disruption within its
business and to its customers. Cash requriements of the Company to fund
the financial incentives (principally contractual termination payments)
will be met as prescribed by applicable collective bargaining agreements.
Certain of these collective bargaining agreements require contractual
termination payments to be paid to employees in a manner other than lump-
sum, thus requiring cash payments beyond an employee's termination date.
The Company believes this program will reduce its employee-related costs by
approximately $50,000 per terminated employee on an annual basis. However,
these anticipated savings may be partially offset by growth in new
businesses and the cost of adding other employees with different skills.
Increase
1994 1993 (Decrease) % Change
Taxes other
than income taxes. . . . . $ 40.8 $ 42.9 $ (2.1) (4.9)%
Taxes other than income taxes decreased $4.7 due to lower capital stock and
gross receipts taxes, offset by higher property and other taxes of $2.5.
Form 10-Q - Part I Illinois Bell Telephone Company
Other Income and Expenses
- - -------------------------
Increase
1994 1993 (Decrease) % Change
Interest expense. . . . . . $52.2 $60.7 $ (8.5) (14.0)%
Interest expense on long-term debt decreased by $16.1 as a result of lower
long-term debt outstanding. This decrease was offset by an increase in
short-term interest expense of $8.0, resulting primarily from higher
average notes payable.
Increase
1994 1993 (Decrease) % Change
Other income, net. . . . . $(5.2) $ (2.3) $ (2.9) 126.1%
Other income, net increased primarily due to higher Ameritech Services,
Inc. (ASI) earnings.
Increase
1994 1993 (Decrease) % Change
Income taxes. . . . . . . . $82.3 $112.0 $(29.7) (26.5)%
Income taxes decreased primarily as a result of lower pre-tax income, due
principally to the work force restructuring charge of $137.8 (or $83.0
after-tax). Excluding the effect of the restructuring charge, income taxes
increased in line with increased earnings of the business.
Results for the six months ended June 30, 1994 are not necessarily
indicative of the results for the entire year.
Form 10-Q - Part I Illinois Bell Telephone Company
Other Matters
- - -------------
Regulatory Proceedings
- - ----------------------
On December 1, 1992, the Company submitted an alternative regulation
proposal to the Illinois Commerce Commission (ICC). Under the proposal,
rate of return regulation would be eliminated and replaced by a price
regulation mechanism, under which future rate changes for noncompetitive
services would be subject to a predetermined formula reflecting changes in
inflation, the Company's historic productivity and actual service quality
performance. The proposal would not affect the Company's ability to set
prices for services which are classified as competitive services by the
ICC, and the Company would also be able to determine its own depreciation
rates. If the proposal is adopted by the ICC, the Illinois Public
Utilities Act would require that basic residential rates cannot be
increased for three years following the proposal's effective date.
In July 1993, the ICC Staff and the Citizens Utility Board (CUB) filed
testimony in the proceeding recommending rate reductions in the range of
$100.0 to $200.0. The Company disagreed with the Staff's and CUB's
recommendations and filed its response in September 1993. Additional
rebuttal testimony was filed in October 1993. The record was closed at the
end of November 1993. On May 3, 1994, the ICC hearing examiner issued a
proposed order which approved price regulation and grants the Company
flexibility to adjust depreciation rates as it deems necessary without
prior ICC approval. The proposed order sets initial depreciation rates
going into the alternative regulation plan that will increase the Company's
annual intrastate depreciation expense by about $80.0. Most of this
increase will be in the form of increased amortization over a five-year
period. In addition, the proposed order would reduce the Company's annual
revenue by $38.0 through the elimination of touch-tone charges, and
recommends that basic residential rates be capped for a five-year period.
A final decision is not expected to be rendered by the ICC until the fourth
quarter 1994.
In November 1991, the ICC began a reconnaissance management audit of the
Company. The audit consisted of a broad-based review of the Company's
management and operations. The ICC Staff concluded that, on an overall
basis, the Company is well-managed and ranks above average. Due to the
scope and difficulty in reviewing the Company's affiliated relationships,
the ICC ordered a focused management audit of the Company's affiliated
interest transactions. A final report on the focused audit was issued in
July 1993 that generally found that the Company was a relatively low cost
provider of telecommunications services and that it obtained efficient
services from its affiliates. Presently, the Company is working with the
ICC Staff to reach closure on the remaining outstanding reconnaissance
audit recommendations.
Form 10-Q - Part I Illinois Bell Telephone Company
Regulatory Accounting
- - ---------------------
The Company presently gives accounting recognition to the actions of
regulators where appropriate, as prescribed by SFAS No. 71, "Accounting
for the Effects of Certain Types of Regulation." Under SFAS No. 71, the
Company records certain assets and liabilities because of actions of
regulators. Further, amounts charged to operations for depreciation
expense reflect estimated useful lives and methods prescribed by
regulators rather than those that might otherwise apply to nonregulated
enterprises. The Company cannot presently quantify, without a complete
historical assessment of its competitive and regulatory environments, what
the financial statement impact would have been had depreciation expense
been determined absent regulation.
In the event the Company determines that it no longer meets the criteria
for following SFAS No. 71, the accounting impact to the Company would be
an extraordinary noncash charge to operations of an amount which would
likely be material. Criteria that give rise to the discontinuance of SFAS
No. 71 include (1) increasing competition which restricts the Company's
ability to establish prices to recover specific costs, and (2) a
significant change in the manner in which rates are set by regulators from
cost-based regulation to another form of regulation. The Company
periodically reviews these criteria to ensure the continuing application of
SFAS No. 71 is still appropriate.
Ratio of Earnings to Fixed Charges of the Company
- - -------------------------------------------------
The Company's ratio of earnings to fixed charges for the six months ended
June 30 was 5.23 in 1994 and 5.83 in 1993. The ratio in 1994 was adversely
affected by a first quarter charge of $137.8 for work force restructuring
(see prior discussion of this charge). This charge will be primarily
funded from the Ameritech Pension Plan. The Company believes its ratio in
1994 is not indicative of a significant change in its ability to fund its
debt.
Shelf Registration
- - ------------------
On August 17, 1993, the Company filed a shelf registration statement with
the Securities and Exchange Commission for the issuance of up to $550.0 in
unsecured debt securities to be used to retire long-term indebtedness. As
of August 12, 1994, $200.0 of debt securities had been issued under this
shelf registration.
Form 10-Q - Part I Illinois Bell Telephone Company
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits
--------
12 Computation of Ratio of Earnings to Fixed Charges for the
Six Months Ended June 30, 1994 and June 30, 1993.
(b) Reports on Form 8-K
-------------------
On February 4, 1994, the Company filed a Current Report on Form
8-K dated February 4, 1994 to file pursuant to Item 7, Financial
Statements and Exhibits, certain financial information
concerning the Company and its subsidiary. On February 4, 1994,
the Company filed a Current Report on Form 8-K dated January 28,
1994 to file pursuant to Item 5, Other Events, (a) copies of an
Underwriting Agreement and a Pricing Agreement executed in
connection with a proposed offering of debentures by the Company
to issue pursuant to the Registration Statement on Form S-3
(File No 33-50007) filed by the Company on August 17, 1993,
together with a form of Officer's Certificate and a form of
debentures and (b) an Underwriting Agreement and a Pricing
Agreement executed in connection with a proposed offering of
notes by the Company to be issued pursuant to the Registration
Statement, together with a form of Officer's Certificate and a
form of notes.
Form 10-Q - Part I Illinois Bell Telephone Company
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.
ILLINOIS BELL TELEPHONE COMPANY
--------------------------------
(Registrant)
Date: August 12, 1994 /s/ Richard A. Kuzmar
------------------------- --------------------------------
Richard A. Kuzmar
Vice President - Controller
(Principal Accounting Officer)
Exhibit 12
ILLINOIS BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars)
For the Six Months Ended
June 30,
1994 1993
---- ----
1. EARNINGS
a) Income before interest
expense and income taxes . . . . . . $288.7 $377.7
b) Portion of rental expense
representative of the
interest factor (1). . . . . . . . . 3.7 4.9
------ ------
Total 1(a) through 1(b) . . . $292.4 $382.6
------ ------
2. FIXED CHARGES
a) Total interest expense
including capital lease
obligations. . . . . . . . . . . . . $ 52.2 $60.7
b) Portion of rental expense
representative of the
interest factor (1). . . . . . . . . 3.7 4.9
------ ------
Total 2(a) through 2(b) . . . $ 55.9 $ 65.6
------ ------
3. RATIO OF EARNINGS TO FIXED CHARGES. . . . 5.23 5.83
======= ======
- - ---------------------
(1) The Company considers one-third of rental expense to be the amount
representing return on capital.
