<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 June 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 July 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 report 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 Six Months Ended
June 30 June 30
1995 1994 1995 1994
Revenues $ 859.6 $ 822.6 $1,668.9 $1,626.9
-------- -------- -------- --------
Operating Expenses
Employee-related expenses 199.9 218.3 399.6 427.0
Depreciation and amortization 129.7 137.8 258.5 265.3
Other operating expenses 250.5 239.7 494.3 472.5
Restructuring (credit) charge -- -- (76.9) 137.8
Taxes other than income taxes 22.5 20.7 39.7 40.8
-------- -------- -------- --------
602.6 616.5 1,115.2 1,343.4
-------- -------- -------- --------
Operating income 257.0 206.1 553.7 283.5
Interest expense 29.9 26.0 58.6 50.8
Other income, net (2.5) (3.8) (2.4) (3.8)
-------- -------- -------- --------
Income before income taxes 229.6 183.9 497.5 236.5
Income taxes 83.6 64.4 184.4 82.3
-------- -------- -------- --------
Net income 146.0 119.5 313.1 154.2
Reinvested earnings (deficit),
beginning of period (575.9) 70.0 (608.5) 133.2
Less, dividends 141.9 104.5 276.4 202.4
-------- -------- -------- --------
Reinvested earnings (deficit),
end of period $ (571.8) $ 85.0 $ (571.8) $ 85.0
======== ======== ======== ========
See Notes to Condensed Financial Statements.
<PAGE>3
Form 10-Q Part I Illinois Bell Telephone Company
CONDENSED BALANCE SHEETS
(Dollars in Millions)
June 30, 1995 Dec. 31, 1994
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments $ 0.1 $ 7.1
Receivables, net
Customers 605.2 628.4
Ameritech and affiliates 6.9 28.0
Other 26.3 39.8
Material and supplies 12.5 11.8
Prepaid and other 72.4 23.7
-------- --------
723.4 738.8
-------- --------
Property, plant and equipment 8,362.6 8,196.1
Less, accumulated depreciation 4,594.6 4,386.6
-------- --------
3,768.0 3,809.5
-------- --------
Investments, principally in affiliates 80.1 89.1
Other assets and deferred charges 251.3 159.9
-------- --------
Total assets $4,822.8 $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)
June 30, 1995 Dec. 31, 1994
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech $ 573.5 $ 476.7
Other 31.2 31.2
Accounts payable
Ameritech Services, Inc. (ASI) 90.7 247.5
Ameritech and affiliates 19.3 24.3
Other 124.4 235.5
Other current liabilities 502.4 398.9
-------- --------
1,341.5 1,414.1
-------- --------
Long-term debt 1,061.7 1,062.2
-------- --------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes 170.9 146.0
Unamortized investment tax credits 67.8 75.2
Postretirement benefits other than pensions 921.1 918.0
Long-term payable to ASI 27.3 29.1
Other 99.5 56.4
-------- --------
1,286.6 1,224.7
-------- --------
Shareowner's equity
Common shares - ($20 per 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 (571.8) (608.5)
-------- --------
1,133.0 1,096.3
-------- --------
Total liabilities and shareowner's equity $4,822.8 $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)
Six Months Ended
June 30
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 313.1 $ 154.2
Adjustments to net income
Restructuring (credit) charge, net of tax (46.4) 83.0
Depreciation and amortization 258.5 265.3
Deferred income taxes, net (5.6) (0.2)
Investment tax credits, net (7.4) (8.1)
Interest during construction (1.3) (1.4)
Provision for uncollectibles 20.2 22.7
Change in accounts receivable 37.4 (42.1)
Change in material and supplies (1.7) 1.7
Change in certain other current assets (37.9) 3.1
Change in accounts payable (272.9) (22.6)
Change in certain other current liabilities 82.6 (9.8)
Change in certain other noncurrent
assets and liabilities 20.9 (12.8)
Other (2.3) 4.7
------- ------
Net cash from operating activities 357.2 437.7
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (218.3) (247.5)
Proceeds from disposals of
property, plant and equipment 3.9 0.5
Other investing activities, net 0.4 --
------- ------
Net cash from investing activities (214.0) (247.0)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net 96.8 122.2
Issuance of long-term debt -- 196.1
Retirements of long-term debt (0.5) (300.7)
Dividend payments (246.5) (204.2)
------- ------
Net cash from financing activities (150.2) (186.6)
------- ------
Net (decrease) increase in cash and
temporary cash investments (7.0) 4.1
Cash and temporary cash investments at
beginning of period 7.1 14.7
------- ------
Cash and temporary cash investments at
end of period $ 0.1 $ 18.8
======== ========
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)
JUNE 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. Approximately
11,500 employees are expected to leave under this program, including 3,258
employees of the Company. 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 leave the business
during a designated period that corresponds to contract expiration in 1995.
In addition, certain business units are offering financial incentives under
terms of the current contracts with the CWA and IBEW to selected
nonmanagement employees who leave the business before the end of 1995. See
additional discussion in Management's Discussion and Analysis below.
As a result of the restructuring, a pretax charge of $137.8, or $83.0 after-
tax, was recorded in the first quarter 1994. In the first quarter 1995, a
gain of $76.9 or $46.4 after-tax, was recorded resulting primarily from
settlement gains from lump sum pension payments from the Ameritech pension
plan to former employees. Settlement gains were not recorded in the second
quarter of 1995 as they were not significant. The cumulative gross program
costs through June 30, 1995 totaled $290.9, partially offset by settlement
gains of $171.3 for an aggregate pretax net program cost of $119.6, or
$72.0 after-tax. At June 30, 1995, the remaining severance accrual was
$8.8.
As of June 30, 1995, 3,198 employees have left the Company as a result of
the restructuring, with 60 expected to leave later in 1995.
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 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
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 occured 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 Illinos 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 six months
of 1995 as compared with the first six months of 1994:
Results of Operations
Revenues
Total revenues in the first six months of 1995 were $1,668.9 and were
$1,626.9 for the same period in 1994. The following paragraphs explain the
components of that change.
Local service
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $963.8 $955.6 $8.2 0.9
The increase in local service revenues in the first six months of 1995 was
primarily attributable to higher network volumes which increased local
service revenues by $32.2. The increased network usage volumes resulted
principally from growth in the number of access lines, which increased 4.2
percent to 6,106,908 as of June 30, 1995 as compared with June 30, 1994, as
well as increased volumes 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 $26.8, $42.6 of which resulted
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.
<PAGE>8
Form 10-Q Part I Illinois Bell Telephone Company
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Network access
June 30 Increase Percent
1995 1994 (Decrease) Change
Interstate
Six Months Ended $385.0 $365.9 $ 19.1 5.2
Intrastate
Six Months Ended $ 43.2 $ 46.4 $ (3.2) (6.9)
The increase in interstate network access revenues for the six months ended
June 30, 1995 was primarily due to higher network usage, which resulted in
additional revenues of $31.2, and a reduction in NECA common line pool
support payments of $9.0. Partially offsetting these revenue increases
were net rate reductions of $19.0. Minutes of use related to interstate
calls increased 5.9 percent in 1995. See additional discussion below
regarding Ameritech's interstate access rate reductions.
The decrease in intrastate network access revenues for the six months ended
June 30, 1995 was primarily due to rate reductions of $6.2 which resulted
from regulatory proceedings which adopted certain regulatory freedoms as
previously discussed. Higher network usage resulted in additional revenues
of $3.3 which partially offset these decreases. Minutes of use related to
intrastate calls increased 13.4 percent in 1995.
___________________________________________________________________________
Long distance service
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $117.3 $111.5 $ 5.8 5.2
The increase in long distance service revenues for the six months ended
June 30, 1995 was primarily attributable to net rate increases of $2.1 and
by $3.6 due to higher intrastate network usage.
___________________________________________________________________________
Other
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $159.6 $147.5 $ 12.1 8.2
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 of $12.2, as well as growth
in voice messaging and wire maintenance services. Partially offsetting
these increases was a decrease of $2.1 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.
<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 six months ended June 30, 1995 decreased
by $228.2 or 17.0 percent. The decrease was almost entirely attributable
to the 1994 work force restructuring, which resulted in a credit of $76.9
in the first quarter of 1995 related to the settlement gains previously
discussed compared with a first quarter 1994 charge of $137.8.
___________________________________________________________________________
Employee-related expenses
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $399.6 $427.0 $(27.4) (6.4)
The decrease in employee-related expenses for the six months ended
June 30, 1995 was attributable primarily to the effect of work force
reductions over the past year of $36.6, as well as reduced bonus accruals
and other benefits of $12.6. Partially offsetting these decreases were the
effects of higher wage rates, increased overtime payments and other
benefits of $21.8.
There were 14,965 employees at June 30, 1995, compared with 17,213 at
June 30, 1994.
___________________________________________________________________________
Depreciation and
amortization
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $258.5 $265.3 $ (6.8) (2.6)
The decrease in depreciation and amortization expense for the six months
ended June 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.
<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
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $494.3 $472.5 $ 21.8 4.6
The increase in other operating expenses for the six months ended
June 30, 1995 was primarily attributable to higher affiliate services
expenses of $38.1, resulting from increased billings from Ameritech
Services, Inc. (ASI) as business unit expenses, primarily for contract and
professional services, and advertising expenses of $8.1, resulting from
increased marketing efforts. Contract and professional services also
increased $10.7 at the Company. These increases were partially offset by a
net decrease of $35.1 in expenses for material and supplies, switching
system software and other expenses.
___________________________________________________________________________
Restructuring (credit) charge
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $(76.9) $137.8 $(214.7) n/a
As discussed in Note 1, Ameritech announced in March 1994 that it intended
to reduce its nonmanagement work force by 6,000 employees (1,560 at the
Company) 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 cost structure with emerging competition.
Ameritech currently expects its nonmanagement work force to be reduced by
about 11,500 employees through 1995 instead of the 6,000 originally
estimated in March 1994, including 3,258 at the Company. A pretax charge
of $137.8 related to the original estimated work force reduction was
recorded in the first quarter of 1994, with additional charges later in
1994. A noncash settlement gain of $76.9 was recorded in the first quarter
of 1995 associated with lump-sum pension payments to former employees.
Future settlement gains (estimated at $14.0) 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 and 399 in the second quarter of
1995. Employee reductions of 60 are expected in the third quarter of 1995.
Cash requirements to fund the financial incentives (principally contractual
termination payments totaling approximately $54.7) are being met as
prescribed by applicable collective bargaining agreements. Certain of
these collective bargaining agreements require 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 will reduce annual employee-related costs by approximately $50
thousand per departing employee. The projected 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
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $ 39.7 $ 40.8 $ (1.1) (2.7)
The decrease in taxes other than income taxes for the six months ended June
30, 1995 is primarily attributable to lower capital stock taxes of $2.5.
Partially offsetting this decrease is an increase in property taxes of
$1.4.
___________________________________________________________________________
Other Income and Expenses
Interest expense
June 30 (Increase) Percent
1995 1994 Decrease Change
Six Months Ended $ 58.6 $ 50.8 $ 7.8 15.4
The increase in interest expense for the six months ended June 30, 1995 was
primarily due to the increase in short-term interest rates, partially
offset by lower average debt balances.
___________________________________________________________________________
Other income, net
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $ (2.4) $ (3.8) $ 1.4 n/a
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
June 30 Increase Percent
1995 1994 (Decrease) Change
Six Months Ended $184.4 $ 82.3 $102.1 n/a
The increase in income taxes for the six months ended June 30, 1995 was due
primarily to the change in pretax income as a result of the work force
restructuring credit of $76.9 ($46.4 after-tax) in the first quarter of
1995 as compared to the work force restructuring charge of $137.8 ($83.0
after-tax) in the first quarter of 1994. Excluding these items, income
taxes increased in line with the earnings in 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 six months ended June 30 was
8.67 in 1995 and 5.23 in 1994. The ratio in 1995 was favorably affected by
a credit of $76.9 for work force restructuring (see prior discussion of
this item). The ratio in 1994 was adversely affected by a $137.8 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 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 in October 1994. These rate reductions will 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. By receiving FCC approval of Ameritech's waiver
request effective January 1, 1995, 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.
___________________________________________________________________________
Labor negotiations
The Company's nonmanagement workforce (about 85 percent of total employees)
is represented principally by two labor unions with expiring labor
contracts. The International Brotherhood of Electrical Workers contract
originally expired in June 1995 but has been extended until August 9, 1995.
The Communications Workers of America (CWA) contract was set to expire
on August 5, 1995, but has been extended indefinitely. The extention may be
canceled by either the Company or the CWA with 24 hour notice. Membership
of both unions have authorized a work stoppage. Negotiations with both
unions continue and management believes a satisfactory resolution will
be achieved.
<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
Six Months Ended June 30, 1995 and June 30, 1994.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No Form 8-K was filed by the registrant during the quarter for
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: August 7, 1995 /s/ Richard A. Kuzmar
Richard A. Kuzmar
Vice President and Comptroller
(Principal Financial Officer)
<PAGE>15
EXHIBIT 12
ILLINOIS BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Six Months Ended
June 30
1995 1994
1. EARNINGS
a) Income before interest cost
and income taxes $557.4 $288.7
b) Portion of rental expense
representative of the
interest factor (1) 5.0 3.7
------ ------
Total 1(a) through 1(b) $562.4 $292.4
------ ------
2. FIXED CHARGES
a) Total interest cost including
capital lease obligations $ 59.9 $ 52.2
b) Portion of rental expense
representative of the
interest factor (1) 5.0 3.7
------ ------
Total 2(a) through 2(b) $ 64.9 $ 55.9
------ ------
3. RATIO OF EARNINGS TO FIXED CHARGES 8.67 5.23
_______________ ==== ====
(1) One-third of rental expense is considered to be the amount
representing return on capital.
(2) The results for the first six months of 1995 reflect a first quarter
1995 $76.9 pretax credit primarily from settlement gains resulting from
lump-sum pension payments from the pension plan to former employees
associated with the nonmanagement work force restructuring. Results
for the first six months of 1994 reflect a first quarter 1994 $137.8
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 as 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 June 30, 1995 financial statements
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 100
<SECURITIES> 0<F1>
<RECEIVABLES> 686,100
<ALLOWANCES> 47,700
<INVENTORY> 12,500
<CURRENT-ASSETS> 723,400
<PP&E> 8,362,600
<DEPRECIATION> 4,594,600
<TOTAL-ASSETS> 4,822,800
<CURRENT-LIABILITIES> 1,341,500
<BONDS> 1,061,700
<COMMON> 1,638,800
0
0
<OTHER-SE> (505,800)
<TOTAL-LIABILITY-AND-EQUITY> 4,822,800
<SALES> 0<F2>
<TOTAL-REVENUES> 1,668,900
<CGS> 0<F3>
<TOTAL-COSTS> 1,115,200
<OTHER-EXPENSES> (2,400)
<LOSS-PROVISION> 20,200
<INTEREST-EXPENSE> 58,600
<INCOME-PRETAX> 497,500
<INCOME-TAX> 184,400
<INCOME-CONTINUING> 313,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 313,100
<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>
