<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, 1996
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 - (800) 257-0902
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, 1996, 81,938,121 common shares were outstanding.
<PAGE>2
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 ACCUMULATED DEFICIT
(Dollars in Millions)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
--------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues........................ $ 918.8 $ 859.6 $ 1,815.9 $ 1,668.9
--------- --------- --------- ---------
Operating expenses
Employee-related expenses..... 198.5 199.9 402.3 399.6
Depreciation and amortization. 141.2 129.7 281.9 258.5
Other operating expenses...... 310.0 250.5 602.8 494.3
Restructuring credit.......... -- -- -- (76.9)
Taxes other than income taxes. 19.6 22.5 39.1 39.7
--------- --------- --------- ---------
669.3 602.6 1,326.1 1,115.2
--------- --------- --------- ---------
Operating income................ 249.5 257.0 489.8 553.7
Interest expense................ 28.5 29.9 56.6 58.6
Other income, net .............. 2.4 2.5 5.9 2.4
--------- --------- --------- ---------
Income before income taxes...... 223.4 229.6 439.1 497.5
Income taxes.................... 91.8 83.6 176.7 184.4
--------- --------- --------- ---------
Net income...................... 131.6 146.0 262.4 313.1
Accumulated deficit,
beginning of period........... (465.3) (575.9) (465.8) (608.5)
Less, dividends............. 145.1 141.9 275.4 276.4
--------- --------- --------- ---------
Accumulated deficit,
end of period................. $ (478.8) $ (571.8) $ (478.8) $ (571.8)
========= ========= ========= =========
See Notes to Condensed Financial Statements.
<PAGE>3
CONDENSED BALANCE SHEETS
(Dollars in Millions)
June 30, 1996 Dec. 31, 1995
------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
- ------
Current assets
Cash and temporary cash investments......... $ 0.2 $ 0.3
Receivables, net
Customers................................. 807.3 745.8
Ameritech and affiliates.................. 43.8 39.5
Other..................................... 35.0 29.9
Material and supplies....................... 13.4 17.8
Prepaid and other........................... 15.1 26.4
--------- ---------
914.8 859.7
--------- ---------
Property, plant and equipment................ 8,632.6 8,444.7
Less, accumulated depreciation............... 4,864.6 4,689.4
--------- ---------
3,768.0 3,755.3
--------- ---------
Investments, primarily in affiliates......... 81.0 85.5
Other assets and deferred charges............ 286.2 279.8
--------- ---------
Total assets................................. $ 5,050.0 $ 4,980.3
========= =========
See Notes to Condensed Financial Statements.
<PAGE>4
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
June 30, 1996 Dec. 31, 1995
------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech................................. $ 823.2 $ 544.0
Other..................................... 1.6 1.3
Accounts payable
Ameritech Services, Inc. (ASI)............ 149.2 197.0
Ameritech and affiliates.................. 25.5 11.9
Other..................................... 214.4 225.1
Other current liabilities.................. 237.3 362.0
--------- ---------
1,451.2 1,341.3
--------- ---------
Long-term debt.............................. 1,063.0 1,061.2
--------- ---------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes.......... 217.6 220.8
Unamortized investment tax credits......... 55.2 61.0
Postretirement benefits
other than pensions...................... 917.4 932.5
Long-term payable to ASI................... 25.5 27.3
Other ..................................... 94.1 97.2
--------- ---------
1,309.8 1,338.8
--------- ---------
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
Accumulated deficit........................ (478.8) (465.8)
--------- ---------
1,226.0 1,239.0
--------- ---------
Total liabilities and shareowner's equity... $ 5,050.0 $ 4,980.3
========= =========
See Notes to Condensed Financial Statements.
<PAGE>5
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Six Months Ended
June 30
-------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 262.4 $ 313.1
Adjustments to net income
Restructuring credit, net of tax............ -- (46.4)
Depreciation and amortization............... 281.9 258.5
Deferred income taxes, net.................. (7.4) (5.6)
Investment tax credits, net................. (5.8) (7.4)
Capitalized interest........................ (1.8) (1.3)
Provision for uncollectibles................ 41.1 20.2
Change in accounts receivable............... (112.0) 37.4
Change in material and supplies............. (0.2) (1.7)
Change in certain other current assets...... 11.3 (37.9)
Change in accounts payable.................. (44.9) (272.9)
Change in certain other current
liabilities ............................. 33.5 82.6
Change in certain other noncurrent
assets and liabilities..................... (29.9) 20.9
Other....................................... 4.6 (2.3)
-------- --------
Net cash from operating activities............ 432.8 357.2
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................... (285.9) (218.3)
Proceeds from disposals of
property, plant and equipment................ 1.5 3.9
Other investing activity...................... 0.1 0.4
-------- --------
Net cash from investing activities............ (284.3) (214.0)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net................... 279.2 96.8
Issuance of long-term debt.................... 3.0 --
Retirements of long-term debt................. (1.1) (0.5)
Dividend payments............................. (429.7) (246.5)
-------- --------
Net cash from financing activities............ (148.6) (150.2)
-------- --------
Net decrease in cash and
temporary cash investments................... (0.1) (7.0)
Cash and temporary cash investments,
beginning of period.......................... 0.3 7.1
-------- --------
Cash and temporary cash investments,
end of period................................ $ 0.2 $ 0.1
======== ========
See Notes to Condensed Financial Statements.
<PAGE>6
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
JUNE 30, 1996
NOTE 1: Work Force Restructuring
As announced in March 1994, the Company's parent, Ameritech
Corporation, restructured its existing nonmanagement work force,
reducing the work force by 11,500 employees during 1994 and 1995,
including 3,503 at the Company. As a result of the restructuring, the
Company recorded a gain of $76.9 million or $46.4 million after-tax in
the first six months of 1995, resulting primarily from settlement
gains from lump sum pension payments from the Ameritech Pension Plan
to former employees. No restructuring charges or credits were recorded
in the first six months of 1996.
The Company recorded additional restructuring charges in the fourth
quarter of 1995, primarily for the consolidation of data centers and
additional work force reductions. The total accrual amount remaining
related to work force restructuring charges was not significant as of
June 30, 1996. See further discussion in Management's Discussion and
Analysis below.
<PAGE>7
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 1996 as compared with the first six months of 1995.
Results of Operations
---------------------
Revenues
--------
Total revenues in the first six months of 1996 were $1,815.9 million
and were $1,668.9 million for the same period in 1995, an increase of
$147.0 million. The following paragraphs explain the components of
this increase.
----------------------------------------------------------------------
Local service
-------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $1,049.8 $ 963.8 $ 86.0 8.9
The increase in local service revenues for the six months ended June
30, 1996 was due primarily to higher network usage volumes, which
increased local service revenues by $91.5 million. The increased
network usage volumes resulted primarily from growth in the number of
access lines, which increased 4.4 percent to 6,373,000 as of June 30,
1996 as compared with 6,107,000 at June 30, 1995, and greater sales of
call management services, such as Call Forwarding and Caller ID. This
increase was partially offset by a decrease of $7.4 million due to net
rate decreases.
----------------------------------------------------------------------
Network access
--------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Interstate
----------
Six Months Ended $ 385.4 $ 385.0 $ 0.4 0.1
Intrastate
----------
Six Months Ended $ 41.5 $ 43.2 $ (1.7) (3.9)
The increase in interstate network access revenues for the six months
ended June 30, 1996 was primarily attributable to volume increases,
resulting in a revenue increase of $29.4 million, partially offset by
net rate reductions of $26.6 million, as well an increase in National
Exchange Carrier Association common line support payments. Minutes of
use related to interstate calls increased 9.4 percent in the first six
months of 1996 compared with the prior year period.
<PAGE>8
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Network access (cont'd.)
------------------------
The decrease in intrastate network access revenues for the six months
ended June 30, 1996 was due primarily to a refund of $8.0 million to
interexchange carriers related to payphone use fees, as well as rate
decreases of $3.3 million. These decreases were partially offset by
volume increases of $9.6 million. Minutes of use related to
intrastate calls increased 16.8 percent in the six months ended June
30, 1996 compared with the prior year period.
----------------------------------------------------------------------
Long distance service
---------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 135.0 $ 117.3 $ 17.7 15.1
The increase in long distance service revenues for the six months
ended June 30, 1996 is due primarily to higher network usage.
----------------------------------------------------------------------
Other
-----
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 204.2 $ 159.6 $ 44.6 27.9
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 for the six months ended June 30, 1996 was due to
growth in voice messaging, equipment sales and other nonregulated
services of $36.5 million, as well as rate increases in inside wire
installation and maintenance services of $10.2 million. These
increases were partially offset by a decrease in billing and
collection services, as certain long distance carriers began billing
their own customers in 1996.
----------------------------------------------------------------------
Operating expenses
------------------
Total operating expenses for the six months ended June 30, 1996
increased by $210.9 million or 18.9 percent to $1,326.1 million. The
increase was partially attributable to work force restructuring, which
resulted in a credit of $76.9 million in the first six months of 1995
related to noncash settlement gains for the pension plan. Total
operating expenses also increased in the first quarter of 1996 due to
increases in depreciation expense and other operating expenses, such
as advertising and contract and professional services, as discussed
below.
<PAGE>9
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Employee-related expenses
-------------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 402.3 $ 399.6 $ 2.7 0.7
The increase in employee-related expenses for the six months ended
June 30, 1996 was primarily due to increases in wage rates, incentive
bonuses and overtime expenses, and an increase in payroll taxes.
These increases were partially offset by decreases in medical and
postretirement benefit expenses, as well as a decrease resulting from
work force reductions.
There were 15,190 employees at June 30, 1996, compared with 14,965 at
June 30, 1995.
----------------------------------------------------------------------
Depreciation and
amortization
------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 281.9 $ 258.5 $ 23.4 9.1
The increase in depreciation and amortization expense for the six
months ended June 30, 1996 was due to higher depreciation in the
intrabuilding cable asset category, as well as higher average plant
balances and the use of higher depreciation rates in certain plant
categories related to new technologies.
----------------------------------------------------------------------
Other operating expenses
------------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 602.8 $ 494.3 $ 108.5 22.0
The increase in other operating expenses for the six months ended June
30, 1996 was due to increases in advertising, uncollectible and other
expenses of $47.9 million related to increased sales efforts for
equipment and call management services such as voice messaging and
other nonregulated services, an increase of $33.5 million in contract
and affiliated services related primarily to systems programming and
reengineering, and cost of sales increases.
<PAGE>10
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Restructuring credit
--------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ -- $ (76.9) $ 76.9 n/a
As discussed in Note 1, the Company significantly reduced its
nonmanagement work force during 1994 and 1995 by 3,503 employees. New
employees with different skills were added during this period to
accommodate growth and meet staffing requirements for new business
opportunities. As of June 30, 1995, 3,198 employees had left the
Company, with 498 leaving in the first six months of 1995. A pretax,
noncash settlement gain of $76.9 million was recorded in the first six
months of 1995, associated with lump-sum pension payments to former
employees. No restructuring charges or credits were recorded in the
first six months of 1996.
----------------------------------------------------------------------
Taxes other than income taxes
-----------------------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 39.1 $ 39.7 $ (0.6) (1.5)
The decrease in taxes other than income taxes for the six months ended
June 30, 1996 was primarily due to a decrease in property taxes
resulting from favorable legislation involving property tax reforms,
partially offset by higher capital stock taxes due to the effects of a
favorable true-up adjustment recorded in the first six months of 1995.
----------------------------------------------------------------------
Other Income and Expenses
-------------------------
Interest expense
-----------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 56.6 $ 58.6 $ (2.0) (3.4)
The decrease in interest expense for the six months ended June 30,
1996 was due to a decrease in interest on borrowings from the
Ameritech short-term pool, as well as decreased miscellaneous interest
expense and increased capitalized interest.
<PAGE>11
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other income, net
-----------------
Change
June 30 Income Percent
----------
(dollars in millions) 1996 1995 (Expense) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 5.9 $ 2.4 $ 3.5 n/m
Other income, net includes equity in earnings of affiliates, interest
income and other nonoperating items. The increase in other income,
net for the six months ended June 30, 1996 was due primarily to
increased equity earnings from ASI and increased interest income.
----------------------------------------------------------------------
Income taxes
------------
June 30 Increase Percent
----------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Six Months Ended $ 176.7 $ 184.4 $ (7.7) (4.2)
The decrease in income taxes for the six months ended June 30, 1996
was due primarily to the tax effect ($30.5 million) associated with
the work force restructuring credit recorded in the first six months
of 1995. Excluding the effects of this item, income taxes increased
in line with earnings of the business.
----------------------------------------------------------------------
Ratio of earnings to fixed charges
----------------------------------
The ratio of earnings to fixed charges for the six months ended June
30 was 7.99 in 1996 and 8.78 in 1995. The ratio in 1995 was favorably
affected by a credit of $76.9 million for work force restructuring
(see prior discussion of this item). The work force restructuring
program was largely funded by the Ameritech Pension Plan.
Other Matters
--------------
Telecommunications Act of 1996
------------------------------
The Telecommunications Act of 1996 was signed into law on February 8,
1996. This legislation defines the conditions under which Ameritech,
including the Company, will be permitted to offer interLATA long
distance service and provides certain mechanisms intended to
facilitate local exchange competition. This legislation, in addition
to allowing Ameritech to offer interLATA long distance services
through an affiliate, will allow competitors into the Company's
traditional local exchange markets. Management believes the
legislation gives Ameritech an opportunity to expand its revenue base
by providing long distance services, while retaining lower-margin
access revenues as other local service providers, acting as resellers,
continue to use the Company's network facilities.
On August 1, 1996 the Federal Communications Commission adopted rules
by which competitors will connect to local network facilities. The
rules address, among other things, unbundling of network elements,
pricing for interconnection and unbundled elements, and resale of
network services. The Company has not yet determined the impact of
the new rules.
<PAGE>12
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Dial 1+
-------
The Company implemented intra-MSA presubscription on April 7, 1996
pursuant to the Customers First Order issued by the Illinois Commerce
Commission (the Commission) on April 7, 1995. Presubscription allows
customers to select one carrier for inter-MSA interstate calling and a
second carrier for nonlocal intra-MSA calls. Nonlocal intra-MSA calls
include all Band C calls (more than 15 miles) plus intra-MSA toll
calls between the Company's territory and that of an independent
company. As a result, the Company's customers may now select an
alternate long distance carrier for Band C calls by dialing 1 before
the regular phone number.
----------------------------------------------------------------------
Illinois rate reductions
------------------------
Effective July 11, 1996, the Company reduced rates by $31.0 million
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.
----------------------------------------------------------------------
Wholesale/Resale Order
-----------------------
On June 26, 1996, the Illinois Commerce Commission approved an Order
establishing wholesale prices to be made available to resellers.
Based on the discount from retail levels required, the Company may
experience lower operating margins. The potential impact cannot be
quantified because the demand shift to resellers is unknown.
<PAGE>13
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, 1996 and June 30, 1995.
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
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, 1996 /s/ Laurie L. Streling
----------------------
Laurie L. Streling
Comptroller
State Finance Organization
(Principal Accounting Officer)
EXHIBIT 12
ILLINOIS BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Six Months Ended
June 30
-------------
1996 1995
---- ----
1. EARNINGS
a) Income before interest expense,
income taxes and undistributed
equity earnings (2)................. $ 500.0 $ 564.6
b) Portion of rental expense
representative of the
interest factor (1)................. 4.8 5.0
-------- --------
Total 1(a) through 1(b)................. $ 504.8 $ 569.6
-------- --------
2. FIXED CHARGES
a) Total interest expense including
capital lease obligations........... $ 56.6 $ 58.6
b) Capitalized interest................. 1.8 1.3
c) Portion of rental expense
representative of the
interest factor (1)................. 4.8 5.0
-------- --------
Total 2(a) through 2(c)................. $ 63.2 $ 64.9
-------- --------
3. RATIO OF EARNINGS TO FIXED CHARGES....... 7.99 8.78
===== =====
(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 $76.9 million
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.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ILLINOIS BELL TELEPHONE COMPANY'S JUNE 30, 1996 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 200
<SECURITIES> 0<F1>
<RECEIVABLES> 886,100
<ALLOWANCES> 0
<INVENTORY> 13,400
<CURRENT-ASSETS> 914,800
<PP&E> 8,632,600
<DEPRECIATION> 4,864,600
<TOTAL-ASSETS> 5,050,000
<CURRENT-LIABILITIES> 1,451,200
<BONDS> 1,063,000
0
0
<COMMON> 1,638,800
<OTHER-SE> (412,800)
<TOTAL-LIABILITY-AND-EQUITY> 5,050,000
<SALES> 0<F2>
<TOTAL-REVENUES> 1,815,900
<CGS> 0<F3>
<TOTAL-COSTS> 1,326,100
<OTHER-EXPENSES> (5,900)
<LOSS-PROVISION> 41,100
<INTEREST-EXPENSE> 56,600
<INCOME-PRETAX> 439,100
<INCOME-TAX> 176,700
<INCOME-CONTINUING> 262,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,400
<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>
