<PAGE>1
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 September 30, 1995
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 Number - (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 October 31, 1995, 81,938,121 common shares were outstanding.
<PAGE>2
Form 10-Q Part I Illinois Bell Telephone Company
Part I - Financial Information
------------------------------
The following condensed 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 reports on Form 10-Q previously filed in the current
year.
CONDENSED STATEMENTS OF INCOME AND REINVESTED EARNINGS (DEFICIT)
(Millions of Dollars)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
Revenues............................ $ 872.7 $ 840.7 $2,541.6 $2,467.6
-------- -------- -------- --------
Operating Expenses
Employee-related expenses ........ 204.2 215.0 603.8 642.0
Depreciation and amortization .... 134.7 132.8 393.2 398.1
Other operating expenses ......... 258.5 251.7 752.8 724.2
Restructuring (credit) charge .... 5.8 75.9 (71.1) 213.7
Taxes other than income taxes .... 22.0 22.4 61.7 63.2
-------- -------- -------- --------
625.2 697.8 1,740.4 2,041.2
-------- -------- -------- --------
Operating income.................... 247.5 142.9 801.2 426.4
Interest expense.................... 30.1 27.3 88.7 78.1
Other income, net................... (1.6) (2.4) (4.0) (6.2)
-------- -------- -------- --------
Income before income taxes.......... 219.0 118.0 716.5 354.5
Income taxes........................ 78.8 40.6 263.2 122.9
-------- -------- -------- --------
Net income.......................... 140.2 77.4 453.3 231.6
Reinvested earnings (deficit)
beginning of period .............. (571.8) 85.0 (608.5) 133.2
Less, dividends ................ -- 25.1 276.4 227.5
-------- -------- -------- --------
Reinvested earnings (deficit),
end of period .................... $ (431.6) $ 137.3 $ (431.6) $ 137.3
======== ======== ======== ========
See Notes to Condensed Financial Statements.
<PAGE>3
Form 10-Q Part I Illinois Bell Telephone Company
CONDENSED BALANCE SHEETS
(Dollars in Millions)
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments ........ $ 0.1 $ 0.1
Investment in Ameritech funding pool ....... -- 7.0
--------- ---------
0.1 7.1
Receivables, net
Customers ................................ 656.2 628.4
Ameritech and affiliates ................. 51.9 28.0
Other .................................... 23.7 39.8
Material and supplies ...................... 10.3 11.8
Prepaid and other .......................... 79.0 23.7
--------- ---------
821.2 738.8
--------- ---------
Property, plant and equipment................ 8,452.6 8,196.1
Less, accumulated depreciation............... 4,701.3 4,386.6
--------- ---------
3,751.3 3,809.5
--------- ---------
Investments, primarily in affiliates......... 82.9 89.1
Other assets and deferred charges............ 266.6 159.9
--------- ---------
Total assets................................. $ 4,922.0 $4,797.3
========= =========
See Notes to Condensed Financial Statements.
<PAGE>4
Form 10-Q Part I Illinois Bell Telephone Company
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech ............................... $ 594.8 $ 476.7
Other ................................... 1.2 31.2
Accounts payable
Ameritech Services, Inc. (ASI) .......... 167.6 247.5
Ameritech and affiliates ................ 26.7 24.3
Other ................................... 147.4 235.5
Other current liabilities ................ 347.4 398.9
--------- ---------
1,285.1 1,414.1
--------- ---------
Long-term debt............................. 1,061.6 1,062.2
--------- ---------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes......... 171.8 146.0
Unamortized investment tax credits........ 64.2 75.2
Postretirement benefits other than pensions 933.9 918.0
Long-term payable to ASI.................. 27.3 29.1
Other..................................... 104.9 56.4
--------- ---------
1,302.1 1,224.7
--------- ---------
Shareowner'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 deficit........................ (431.6) (608.5)
--------- ---------
1,273.2 1,096.3
--------- ---------
Total liabilities and shareowner's equity.. $ 4,922.0 $ 4,797.3
========= =========
See Notes to Condensed Financial Statements.
<PAGE>5
Form 10-Q Part I Illinois Bell Telephone Company
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Nine Months Ended
September 30
------------
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 453.3 $ 231.6
Adjustments to net income
Restructuring (credit) charge, net of tax ...... (42.8) 128.8
Depreciation and amortization .................. 393.2 398.1
Deferred income taxes, net ..................... (2.9) 4.3
Investment tax credits, net .................... (11.0) (12.1)
Interest during construction ................... (1.8) (2.6)
Provision for uncollectibles ................... 31.4 35.1
Change in accounts receivable .................. (67.0) (79.2)
Change in material and supplies ................ (0.4) (2.9)
Change in certain other current assets ......... 7.3 (0.3)
Change in accounts payable ..................... (165.6) (9.9)
Change in certain other current liabilities .... 4.7 (47.2)
Change in certain other noncurrent
assets and liabilities........................ 20.4 (17.9)
Other .......................................... 5.7 1.3
-------- --------
Net cash from operating activities............... 624.5 627.1
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures............................. (338.3) (356.0)
Proceeds from disposals of
property, plant and equipment ................. 7.2 0.3
Other investing activities, net ................. 0.8 --
-------- --------
Net cash from investing activities............... (330.3) (355.7)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net...................... 118.1 141.9
Issuance of long-term debt....................... -- 196.1
Retirements of long-term debt.................... (30.9) (300.9)
Dividend payments................................ (388.4) (308.8)
-------- --------
Net cash from financing activities............... (301.2) 271.7
-------- --------
Net decrease in cash and
temporary cash investments .................... (7.0) (0.3)
Cash and temporary cash investments
at beginning of period ........................ 7.1 14.7
-------- --------
Cash and temporary cash investments
at end of period .............................. $ 0.1 $ 14.4
======== ========
See Notes to Condensed Financial Statements.
<PAGE>6
Form 10-Q Part I Illinois Bell Telephone Company
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
SEPTEMBER 30, 1995
NOTE 1: Work Force Restructuring
During March 1994, the Company's parent, Ameritech Corporation, announced
its plan to reduce its existing nonmanagement work force. As of September
30, 1995, 3,503 employees have left the Company as a result of the
restructuring. Under terms of agreements between Ameritech, the
Communications 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 both the age and the net
credited service of eligible nonmanagement employees who left the business
during a designated period, which expired in the third quarter of 1995. In
addition, certain business units offered financial incentives to selected
nonmanagement employees. See additional discussion in Management's
Discussion and Analysis below.
As a result of the restructuring, a pretax charge of $213.7, or $128.8
after-tax, was recorded in the first nine months of 1994. In the first
nine months of 1995, a gain of $71.1 or $42.8 after-tax, was recorded
resulting primarily from settlement gains from lump sum pension payments
from the Ameritech pension plan to former employees. The cumulative gross
program cost through September 30, 1995 totaled $320.2, partially offset by
settlement gains of $194.8 for an aggregate pretax net program cost of
$125.4 or $75.6 after-tax. At September 30, 1995, the remaining severance
accrual was $5.0.
NOTE 2: Discontinuation of FAS 71 and Reclassifications
As discussed more fully in the 1994 Annual Report on Form 10-K, during the
fourth quarter of 1994 the Company incurred an extraordinary noncash
after-tax charge of $728.6 as a result of its decision to discontinue the
application of Statement of Financial Accounting Standards No. 71 (FAS 71),
"Accounting for the Effects of Certain Types of Regulation."
The principal component of the above charge related to a determination that
telephone plant asset lives prescribed by regulators were too long and
analog switches were obsolete. The net effect of this determination is
causing 1995 depreciation expense to decrease. Long-term, depreciation
expense will likely increase as the effects of shorter lives on plant
assets and future plant additions offset the discontinuation of
depreciation of analog switches.
Certain additional financial statement impacts occurred as a result of the
discontinuance of FAS 71, including the reclassification of the provision
for uncollectibles, previously shown as a reduction in other revenues, to
other operating expenses.
<PAGE>7
Form 10-Q Part I Illinois Bell Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(Dollars in Millions)
The following is a discussion and analysis of the changes in revenues,
operating expenses and other income and expenses for the first nine months
of 1995 as compared with the first nine months of 1994:
Results of Operations
- ---------------------
Revenues
- --------
Total revenues in the first nine months of 1995 were $2,541.6 and were
$2,467.6 for the same period in 1994. The following paragraphs explain the
components of that change.
- ---------------------------------------------------------------------------
Local Service
- -------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 1,473.4 $ 1,441.0 $ 32.4 2.2
The increase in local service revenues in the first nine months of 1995 was
primarily attributable to higher network usage volumes which increased
local service revenues by $64.4. The increased network usage volumes
resulted principally from growth in the number of access lines, which
increased 4.6 percent to 6,184,767 as of September 30, 1995 as compared
with 5,914,536 at September 30, 1994, and greater sales of special calling
features, such as Call Forwarding and Caller ID. These revenue increases
were partially offset by net rate reductions of $34.8, primarily resulting
from regulatory proceedings which adopted price regulation in place of rate-
of-return regulation and removed limits on intrastate earnings. See
additional discussion below regarding future rate reductions and a
contingency that will negatively affect revenues recorded in the fourth
quarter of 1995.
- ---------------------------------------------------------------------------
Network access
- --------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Interstate
- ----------
Nine Months Ended $ 571.2 $ 553.7 $ 17.5 3.2
Intrastate
- ----------
Nine Months Ended $ 67.8 $ 69.4 $ (1.6) (2.3)
The increase in interstate network access revenues for the nine months
ended September 30, 1995 was primarily due to higher network usage, which
resulted in additional revenues of $42.3, and a reduction in National
Exchange Carrier Association common line pool support payments of $8.4.
Partially offsetting these revenue increases were net rate reductions of
<PAGE>8
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Network access (cont'd.)
- ------------------------
$26.6. Minutes of use related to interstate calls increased 6.5 percent in
1995. See additional discussion below regarding Ameritech's interstate
access rate reductions.
The decrease in intrastate network access revenues for the nine months
ended September 30, 1995 was primarily due to rate reductions of $10.4
which resulted from regulatory proceedings which adopted certain regulatory
freedoms as previously discussed. Higher network usage resulted in
additional revenues of $9.3 which partially offset these decreases.
Minutes of use related to intrastate calls increased 12.7 percent in 1995.
- ---------------------------------------------------------------------------
Long distance service
- ---------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 181.8 $ 170.1 $ 11.7 6.9
The increase in long distance service revenues for the nine months ended
September 30, 1995 was attributable to net rate increases of $2.8 and
higher network usage of $9.7.
- ---------------------------------------------------------------------------
Other
- -----
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 247.4 $ 233.4 $ 14.0 6.0
Other revenues include revenues derived from directory advertising, billing
and collection services, inside wire installation and maintenance services
and other miscellaneous services. The increase in other revenues was
primarily due to rate increases in inside wire installation and maintenance
services of $19.5, as well as growth in voice messaging and other
nonregulated services of $5.2. Partially offsetting these increases was a
decrease of $6.5 in intercompany rent revenues from a change in methodology
in the way the Company accounts for these revenues. In 1995, these
revenues were reflected as credits to expense, whereas in 1994, such
amounts were included in other revenues. Also contributing to the decrease
was a decrease in billing and collection services revenues of $5.1.
<PAGE>9
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Operating expenses
- -------------------
Total operating expenses for the nine months ended September 30, 1995
decreased by $300.8 or 14.7 percent to $1,740.4. The decrease was almost
entirely attributable to the 1994 work force restructuring, which resulted
in a credit of $71.1 in the first nine months of 1995 related primarily to
the settlement gains previously discussed in Note 1, compared with a charge
of $213.7 in the first nine months of 1994.
- ---------------------------------------------------------------------------
Employee-related expenses
- -------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 603.8 $ 642.0 $ (38.2) (6.0)
The decrease in employee-related expenses for the nine months ended
September 30, 1995 was attributable primarily to the effect of work force
reductions over the past year of $53.0, as well as reduced bonus accruals
and other benefits of $2.9. Partially offsetting these decreases were the
effects of higher wage rates and increased overtime payments of $17.7.
During September, 1995, union agreements were ratified by the
Communications Workers of America (CWA) and the International Brotherhood
of Electrical Workers (IBEW). The new contracts and wage increases were
retroactive to June 25, 1995 for the IBEW and August 6, 1995 for the CWA.
The contracts include basic wage increases of 10.9 percent (compounded)
over three years. In addition, the contracts provided for a signing bonus
of $500 to each eligible employee upon ratification. Both contracts
address wages, benefits, pensions, employment security, training and
retraining and other conditions of employment. Most of the Company's
nonmanagement work force (about 85 percent of total employees) is
represented by the two unions.
There were 14,747 employees at September 30, 1995, compared with 16,553 at
September 30, 1994.
- ---------------------------------------------------------------------------
Depreciation and
amortization
- ----------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 393.2 $ 398.1 $ (4.9) (1.2)
The decrease in depreciation and amortization expense for the nine months
ended September 30, 1995 was primarily due to the cessation of depreciation
of analog switches determined to be obsolete in connection with the
discontinuance of Statement of Financial Accounting Standards No. 71 (FAS
71), "Accounting for the Effects of Certain Types of Regulation," in the
fourth quarter of 1994. This decrease was partially offset by the increase
in depreciation rates as a result of shortening telephone plant lives
following the discontinuation of FAS 71. See Note 2 for further details.
<PAGE>10
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other operating expenses
- ------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 752.8 $ 724.2 $ 28.6 3.9
The increase in other operating expenses for the nine months ended
September 30, 1995 was primarily attributable to higher affiliate services
expenses of $32.6, resulting from increased project billings from Ameritech
Services, Inc. (ASI). Advertising expenses increased $9.8 resulting from
increased marketing and sales efforts. Contract and professional services
also increased $19.9 at the Company. These increases were partially offset
by a net decrease of $33.7 in expenses for material and supplies, switching
system software and other expenses.
- ---------------------------------------------------------------------------
Restructuring (credit) charge
- -----------------------------
September 30
------------ Percent
1995 1994 Change Change
---- ---- ------ ------
Nine Months Ended $ (71.1)$ 213.7 $ (284.8) n/a
As discussed in Note 1, Ameritech announced in March 1994 that it intended
to significantly reduce its nonmanagement work force by the end of 1995.
Reduction of the work force results from the Company's implementation of
technological improvements, consolidations and initiatives to balance the
Company's cost structure with emerging competition. Pretax charges of
$213.7 related to the then anticipated work force reduction were recorded
in the first nine months of 1994. Noncash net settlement gains of $71.1
were recorded in the first nine months of 1995 primarily associated with
lump-sum pension payments to former employees. Future settlement gains
(estimated at $1.8) are anticipated.
Actual employee reductions by quarter were: 451 in the second quarter of
1994, 822 in the third quarter of 1994, 1,427 in the fourth quarter of
1994, 99 in the first quarter of 1995, 399 in the second quarter of 1995
and 305 in the third quarter of 1995, for a total of 3,503. Cash
requirements to fund the financial incentives (principally contractual
termination payments totaling approximately $57.2) are being met as
prescribed by applicable collective bargaining agreements. Certain of
these collective bargaining agreements required contractual termination
payments to be paid in a manner other than lump-sum, thus requiring cash
payments beyond an employee's termination date.
This program reduced annual employee-related costs by approximately $50
thousand per departing employee. The savings are being partially offset by
the hiring of new employees with better matched skills to accommodate
growth, ensure high quality customer service and meet staffing requirements
for new business opportunities.
<PAGE>11
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Taxes other than income taxes
- -----------------------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 61.7 $ 63.2 $ (1.5) (2.4)
The decrease in taxes other than income taxes for the nine months ended
September 30, 1995 is primarily attributable to lower capital stock taxes
of $3.0. Partially offsetting this decrease is an increase in property
taxes of $2.0.
- ---------------------------------------------------------------------------
Other Income and Expenses
- -------------------------
Interest expense
- ----------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 88.7 $ 78.1 $ 10.6 13.6
The increase in interest expense for the nine months ended September 30,
1995 was primarily due to the increase in short-term interest of $7.7 on
borrowings from the Ameritech short-term pool, as well as increased
miscellaneous interest expenses, such as that related to corporate-owned
life insurance and other programs, and a reduction in capitalized interest
during construction.
- ---------------------------------------------------------------------------
Other income, net
- -----------------
September 30 Change
------------ (Income) Percent
1995 1994 Expense Change
---- ---- ------- ------
Nine Months Ended $ (4.0)$ (6.2) $ 2.2 (35.5)
Other income, net includes equity earnings in affiliates, interest income
and other nonoperating items. The change in other income, net results
primarily from decreased equity earnings from ASI.
- ---------------------------------------------------------------------------
Income taxes
- ------------
September 30
------------ Increase Percent
1995 1994 (Decrease) Change
---- ---- ---------- ------
Nine Months Ended $ 263.2 $ 122.9 $ 140.3 114.2
The increase in income taxes for the nine months ended September 30, 1995
was due primarily to the change in pretax income as a result of the work
force restructuring credit of $71.1 ($42.8 after-tax) in the first nine
months of 1995 as compared to the work force restructuring charge of $213.7
($128.8 after-tax) in the first nine months of 1994. Excluding these
items, income taxes increased in line with the earnings of the business.
<PAGE>12
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Ratio of earnings to fixed charges
- ----------------------------------
The ratio of earnings to fixed charges for the nine months ended September
30 was 8.29 in 1995 and 5.11 in 1994. The ratio in 1995 was favorably
affected by a credit of $71.1 for work force restructuring (see prior
discussion of this item). The ratio in 1994 was adversely affected by a
$213.7 charge for work force restructuring. The work force restructuring
program has largely been funded by the Ameritech Pension Plan. After
adjustment to remove the effects of the work force restructuring, the ratio
is more indicative of the Company's ability to meet its debt funding
requirements.
- ---------------------------------------------------------------------------
Illinois rate reductions
- ------------------------
Effective July 13, 1995, the Company reduced rates by $39.8 annually under
the adjustment process of a price regulation plan approved by the Illinois
Commerce Commission (Commission) in October 1994. These rate reductions
primarily impact local service revenues.
- ---------------------------------------------------------------------------
Interstate access rate reduction
- --------------------------------
On July 18, 1995, the Federal Communications Commission (FCC) approved
Ameritech's request for price regulation without sharing of earnings
effective January 1, 1995. As a result, the total annual reduction in
prices that the Company charges long distance companies for local
connections increased to $34.5 effective August 1, 1995. The current year
impact is expected to be a reduction in interstate access revenues of
$14.7, which represents an increase of $5.2 over the 1995 reduction
otherwise required under the FCC's interim price cap rules.
- ---------------------------------------------------------------------------
Contingency
- ------------
During October 1995, the Illinois Commerce Commission denied earlier
filings of the Company related to the "competitive" classification for
business Band B and C usage and business operator assistance and credit
card surcharges and ordered rates reduced to prior levels and refunds, as
applicable. The estimated refund amount calculated through December 1,
1995 is estimated to be $46.5 pretax ($28.0 after-tax). On November 8,
1995, the Commission rejected the Company's petition for a rehearing of the
order, but granted the Company's petition for stay regarding rate
reductions and refunds for business customers with twelve or more lines.
The Company will be required to refund $24.9 related to business customers
with under twelve lines for these services whereas the remaining $21.6 may
need to be refunded in the future. Revenues in the fourth quarter of 1995
will be adjusted to reflect the likely revenue reduction.
<PAGE>13
Form 10-Q Part II 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
Nine Months Ended September 30, 1995 and September 30, 1994.
27 Financial Data Schedule.
(b) Reports on Form 8-K
--------------------
No Form 8-K was filed by the registrant during the quarter which
this report is filed.
<PAGE>14
Form 10-Q Part II 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: November 13, 1995 /s/ Cheryl K. Wooley
--------------------
Cheryl K. Wooley
Vice President
State Finance Organizations
(Principal Financial Officer)
<PAGE>15
EXHIBIT 12
ILLINOIS BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Nine Months Ended
September 30
------------
1995 1994
---- ----
1. EARNINGS
--------
a) Income before interest cost
and income taxes....................... $ 807.0 $ 435.2
b) Portion of rental expense
representative of the
interest factor (1).................... 7.8 5.5
-------- --------
Total 1(a) through 1(b) ................... $ 814.8 $ 440.7
-------- --------
2. FIXED CHARGES
a) Total interest cost including
capital lease obligations.............. $ 90.5 $ 80.7
b) Portion of rental expense
representative of the
interest factor (1).................... 7.8 5.5
-------- --------
Total 2(a) through 2(b) ................... $ 98.3 $ 86.2
-------- --------
3. RATIO OF EARNINGS TO FIXED CHARGES ........ 8.29 5.11
==== ====
- ---------------
(1) One-third of rental expense is considered to be the amount
representing return on capital.
(2) The results for the first nine months of 1995 reflect a $71.1 pretax
credit primarily from settlement gains resulting from lump-sum pension
payments from the pension plan to former employees who left the
business in the nonmanagement work force restructuring. Results for
the first nine months of 1994 reflect a $213.7 pretax charge
associated with the nonmanagement force restructuring. Costs of the
work force restructuring program have largely been funded from the
Ameritech Pension Plan.
(3) Interest cost includes capitalized interest expense.
(4) Earnings have not been adjusted to reflect the timing of dividends
received and equity in earnings of unconsolidated affiliates since the
effect on an annual basis has been insignificant.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ILLINOIS BELL TELEPHONE COMPANY'S SEPTEMBER 30, 1995 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 100
<SECURITIES> 0<F1>
<RECEIVABLES> 775,400
<ALLOWANCES> 43,600
<INVENTORY> 10,300
<CURRENT-ASSETS> 821,200
<PP&E> 8,452,600
<DEPRECIATION> 4,701,300
<TOTAL-ASSETS> 4,922,000
<CURRENT-LIABILITIES> 1,285,100
<BONDS> 1,061,600
<COMMON> 1,638,800
0
0
<OTHER-SE> (365,600)
<TOTAL-LIABILITY-AND-EQUITY> 4,922,000
<SALES> 0<F2>
<TOTAL-REVENUES> 2,541,600
<CGS> 0<F3>
<TOTAL-COSTS> 1,740,400
<OTHER-EXPENSES> (4,000)
<LOSS-PROVISION> 31,400
<INTEREST-EXPENSE> 88,700
<INCOME-PRETAX> 716,500
<INCOME-TAX> 263,200
<INCOME-CONTINUING> 453,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 453,300
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>SECURITIES ARE NOT MATERIAL AND THEREFORE HAVE NOT BEEN STATED SEPARATELY
IN THE FINANCIAL STATEMENTS. THIS AMOUNT IS INCLUDED IN THE CASH TAG.
<F2>NET SALES OF TANGIBLE PRODUCTS IS NOT MORE THAN 10% OF TOTAL OPERATING
REVENUES AND THEREFORE HAS NOT BEEN STATED SEPARATELY IN THE FINANCIAL
STATEMENTS PURSUANT TO REGULATION S-X, RULE 5-03(B). THIS AMOUNT IS
INCLUDED IN THE "TOTAL REVENUES" TAG.
<F3>COST OF TANGIBLE GOODS SOLD IS INCLUDED IN COST OF SERVICE AND PRODUCTS
IN THE FINANCIAL STATEMENTS AND THE "TOTAL COST" TAG, PURSUANT TO
REGULATION S-X, RULE 5-03(B).
</FN>
</TABLE>
