<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 March 31, 1997
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 April 30, 1997, 81,938,121 common shares were outstanding.
<PAGE>2
Part I - Financial Information
------------------------------
CONDENSED STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31
----------------
1997 1996
---- ----
Revenues
Local service...................... $ 537.2 $ 510.5
Interstate network access.......... 195.5 191.0
Intrastate network access.......... 32.7 24.5
Long distance services............. 56.5 64.1
Other.............................. 106.5 107.0
--------- ---------
928.4 897.1
--------- ---------
Operating expenses
Employee-related expenses.......... 200.0 203.8
Depreciation and amortization...... 148.8 140.7
Other operating expenses........... 314.4 292.8
Taxes other than income taxes...... 22.4 19.5
--------- ---------
685.6 656.8
--------- ---------
Operating income..................... 242.8 240.3
Interest expense..................... 28.7 28.1
Other income, net ................... 2.0 3.5
--------- ---------
Income before income taxes........... 216.1 215.7
Income taxes......................... 83.7 84.9
--------- ---------
Net income........................... 132.4 130.8
Accumulated deficit,
beginning of period................ (383.6) (465.8)
Less, dividends declared......... 134.0 130.3
--------- ---------
Accumulated deficit,
end of period...................... $ (385.2) $ (465.3)
========= =========
See Notes to Condensed Financial Statements.
Page 2
<PAGE>3
CONDENSED BALANCE SHEETS
(Dollars in Millions)
March 31, 1997 Dec. 31, 1996
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
Current assets
Cash and temporary cash investments......... $ -- $ --
Receivables, net
Customers................................. 773.7 836.9
Ameritech and affiliates.................. 2.8 53.0
Other..................................... 60.7 23.4
Material and supplies....................... 14.4 18.7
Prepaid and other........................... 16.7 17.0
--------- ---------
868.3 949.0
--------- ---------
Property, plant and equipment................ 8,943.7 8,836.9
Less, accumulated depreciation............... 5,127.8 5,007.0
--------- ---------
3,815.9 3,829.9
--------- ---------
Investments, primarily in affiliates......... 75.7 85.6
Other assets and deferred charges............ 329.0 325.8
--------- ---------
Total assets................................. $ 5,088.9 $ 5,190.3
========= =========
See Notes to Condensed Financial Statements.
Page 3
<PAGE>4
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
March 31, 1997 Dec. 31, 1996
-------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech................................. $ 591.2 $ 735.3
Other..................................... 51.3 51.5
Accounts payable
Ameritech Services, Inc. (ASI)............ 177.7 178.7
Ameritech and affiliates.................. 30.4 20.8
Other..................................... 226.0 244.1
Other current liabilities.................. 357.5 292.1
--------- ---------
1,434.1 1,522.5
--------- ---------
Long-term debt.............................. 1,012.0 1,012.3
--------- ---------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes.......... 240.9 244.9
Unamortized investment tax credits......... 47.4 49.6
Postretirement benefits
other than pensions...................... 917.7 921.1
Long-term payable to ASI................... 23.6 25.5
Other ..................................... 93.6 93.2
--------- ---------
1,323.2 1,334.3
--------- ---------
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........................ (385.2) (383.6)
--------- ---------
1,319.6 1,321.2
--------- ---------
Total liabilities and shareowner's equity... $ 5,088.9 $ 5,190.3
========= =========
See Notes to Condensed Financial Statements.
Page 4
<PAGE>5
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Three Months Ended
March 31
-------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 132.4 $ 130.8
Adjustments to net income
Depreciation and amortization............... 148.8 140.7
Deferred income taxes, net.................. (3.2) (13.3)
Investment tax credits, net................. (2.2) (2.9)
Capitalized interest........................ (0.7) (0.9)
Change in accounts receivable, net.......... 76.1 (30.6)
Change in material and supplies............. 1.6 1.8
Change in certain other current assets...... 0.3 6.1
Change in accounts payable.................. (9.5) (59.4)
Change in certain other current
liabilities................................ 64.6 102.9
Change in certain other noncurrent
assets and liabilities..................... (8.1) (20.1)
Other operating activities, net............ 10.3 8.3
-------- --------
Net cash from operating activities............ 410.4 263.4
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................... (134.1) (126.7)
Proceeds from disposals of
property, plant and equipment................ 2.1 1.1
Other investing activity...................... -- (0.1)
-------- --------
Net cash from investing activities............ (132.0) (125.7)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net................... (144.1) 144.4
Issuance of long-term debt.................... -- 3.0
Retirements of long-term debt................. (0.3) (0.7)
Dividend payments............................. (134.0) (284.5)
-------- --------
Net cash from financing activities............ (278.4) (137.8)
-------- --------
Net decrease in cash and
temporary cash investments................... -- (0.1)
Cash and temporary cash investments,
beginning of period.......................... -- 0.3
-------- --------
Cash and temporary cash investments,
end of period................................ $ -- $ 0.2
======== ========
See Notes to Condensed Financial Statements.
Page 5
<PAGE>6
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
March 31, 1997
NOTE 1: Preparation of Interim Financial Statements
The condensed financial statements of Illinois Bell Telephone Company
(Illinois Bell or the Company) have been prepared in accordance with
the rules and regulations of the Securities and Exchange Commission
(SEC). These financial statements include estimates and assumptions
that affect the reported amounts of assets and liabilities and the
amounts of revenues and expenses. Actual amounts could differ from
those estimates. In the Company's opinion, these statements 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.
NOTE 2: Pending Acquisition
On April 8, 1997, the Company entered into a definitive agreement
with Sprint Corporation (Sprint) under which a subsidiary of the
Company will purchase a portion of the assets of Sprint's local
exchange business in Illinois (Central Telephone Company of Illinois
or Centel) for approximately $160 million. Under terms of the
agreement, the subsidiary will purchase Centel's telephone assets
used to serve approximately 136,000 residential and business customer
access lines in a small portion of Chicago and part or all of ten
Chicago suburbs. The transaction is expected to be concluded in
1997, pending regulatory approval.
Page 6
<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 three months of 1997 as compared with the first three months of
1996.
Results of Operations
- ---------------------
Revenues
- --------
Total revenues in the first three months of 1997 were $928.4 million
and were $897.1 million for the same period in 1996, an increase of
$31.3 million. The increase was primarily attributable to growth in
access lines and sales of call management services, as well as
increases in switched minutes of use resulting from higher network
usage volumes. These increases were partially offset by net rate
reductions.
- ---------------------------------------------------------------------
Local service
- -------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 537.2 $ 510.5 $ 26.7 5.2
Local service revenues include basic monthly service fees and usage
charges, fees for call management services, installation and
connection charges and public phone revenues. The increase in local
service revenues for the three months ended March 31, 1997 was due
largely to higher network usage volumes, resulting primarily from
access line growth of 3.1 percent over the prior year period. Second
line additions by residential and small business customers
contributed to the increase in access lines. Sales of call
management services, such as Call Forwarding, Call Waiting and Caller
ID continued to grow as well, fueled by customer demand for
additional flexibility and convenience. These increases were
partially offset by rate decreases pursuant to alternative
regulation.
There were 6,534,000 access lines in service as of March 31, 1997
compared with 6,335,000 as of March 31, 1996.
- ---------------------------------------------------------------------
Network access
- --------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Interstate
- ----------
Three Months Ended $ 195.5 $ 191.0 $ 4.5 2.4
Intrastate
- ----------
Three Months Ended $ 32.7 $ 24.5 $ 8.2 33.5
Network access revenues are fees charged to interexchange carriers
that use the Company's local landline communications network to
connect customers to their long distance network. In addition, end
users pay flat rate access fees to connect to the long distance
network. These revenues are generated from both interstate and
intrastate services.
Page 7
<PAGE>8
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Network access (cont'd.)
- ------------------------
The increase in interstate network access revenues for the three
months ended March 31, 1997 was due primarily to an increase in
network minutes of use, resulting from overall growth in the volume
of calls handled for interexchange carriers. Greater demand for
dedicated services by Internet service providers and other high-
capacity users also contributed to the increase. These revenue
increases were partially offset by rate reductions. Interstate
minutes of use for the three months ended March 31, 1997 increased by
7.2 percent over the comparable prior year period.
The increase in intrastate network access revenues for the three
months ended March 31, 1997 was due primarily to volume increases,
largely resulting from increased network usage by alternative
providers of intraLATA toll service in Illinois. These volume
increases were largely offset, however, by decreases in revenue from
intraLATA long distance service, as discussed below. Rate decreases
also partially offset the volume increases. Minutes of use related
to intrastate calls increased by 46.9 percent in the first three
months of 1997 compared with the prior-year period.
- ---------------------------------------------------------------------
Long distance service
- ---------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 56.5 $ 64.1 $ (7.6) (11.9)
Long distance service revenues are derived from customer calls to
locations outside of their local calling areas, but within the same
Local Access and Transport Area (LATA). The decrease in long
distance service revenues for the three months ended March 31, 1997
resulted primarily from other telecommunications carriers choosing to
bill their own customers for local toll calling. Previously, these
carriers had allowed the Company to collect these revenues in
exchange for the payment of access charges to complete the calls on
the carriers' networks. As a result, this revenue decrease was
substantially offset by a corresponding decrease in access charge
expenses. As discussed in intrastate network access above, increased
competition from alternative intraLATA toll providers, resulting from
the implementation of Dial 1+ capability in Illinois, also
contributed to the decrease.
- ---------------------------------------------------------------------
Other
- -----
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 106.5 $ 107.0 $ (0.5) (0.5)
Other revenues include revenues derived from directory advertising,
billing and collection services, inside wire installation and
maintenance services and other miscellaneous services. The decrease
in other revenues for the three months ended March 31, 1997 was due
primarily to a decrease in revenues from equipment sales and other
nonregulated services, as well as a decrease in miscellaneous
operating revenues. These decreases were partially offset by
increases in revenues from inside wiring installation and maintenance
and billing and collection services.
Page 8
<PAGE>9
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Operating expenses
- ------------------
Total operating expenses for the three months ended March 31, 1997
increased by $28.8 million or 4.4 percent to $685.6 million. The
increase resulted primarily from increases in other operating
expenses, such as uncollectibles and contract services, as well as
depreciation expense, partially offset by a decrease in employee-
related expenses, as discussed below.
- ---------------------------------------------------------------------
Employee-related expenses
- -------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 200.0 $ 203.8 $ (3.8) (1.9)
The decrease in employee-related expenses for the three months ended
March 31, 1997 was primarily due to decreases in wages and salaries
expense, reflecting lower overtime and force levels, partially offset
by higher wage rates. This decrease was partially offset by an
increase in employee benefit expenses.
There were 14,773 employees as of March 31, 1997, compared with
14,885 as of March 31, 1996.
- ---------------------------------------------------------------------
Depreciation and
amortization
- ------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 148.8 $ 140.7 $ 8.1 5.8
The increase in depreciation and amortization expense for the three
months ended March 31, 1997 was due to higher average plant balances
and the use of higher depreciation rates in certain plant categories
due to the use of shorter depreciable lives for newer technologies.
- ---------------------------------------------------------------------
Other operating expenses
- ------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 314.4 $ 292.8 $ 21.6 7.4
The increase in other operating expenses for the three months ended
March 31, 1997 was due to increases in uncollectibles and other
expenses related to increased sales efforts for call management
services, such as voice messaging and other nonregulated services.
Higher contract and affiliated services expenses related primarily to
systems programming and reengineering also contributed to the
increase. These increases were partially offset by decreases in cost
of sales and advertising expenses, due to the timing of planned
marketing campaigns, as well as decreases in access charge expenses
and right-to-use fees for switching system software.
Page 9
<PAGE>10
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Taxes other than income taxes
- -----------------------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 22.4 $ 19.5 $ 2.9 14.9
Taxes other than income taxes consist of property taxes, gross
receipts taxes and other taxes not directly related to earnings. The
increase in taxes other than income taxes for the three months ended
March 31, 1997 was primarily due to higher capital stock taxes and a
surcharge imposed for emergency 911 service.
- ---------------------------------------------------------------------
Other Income and Expenses
- -------------------------
Interest expense
- ----------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 28.7 $ 28.1 $ 0.6 2.1
The increase in interest expense for the three months ended March 31,
1997 was due to increased miscellaneous interest expense, partially
offset by a decrease in interest on balances in the Ameritech short-
term funding pool.
- ---------------------------------------------------------------------
Other income, net
- -----------------
Change
March 31 Income Percent
------------
(dollars in millions) 1997 1996 (Expense) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 2.0 $ 3.5 $ (1.5) (42.9)
Other income, net includes equity in earnings of affiliates, interest
income and other nonoperating items. The decrease in other income,
net for the three months ended March 31, 1997 was due primarily to
decreased equity earnings from Ameritech Services, Inc. (ASI), as
well as an increase in nonoperating expenses, partially offset by
increased interest income.
Page 10
<PAGE>11
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Income taxes
- ------------
March 31 Increase Percent
------------
(dollars in millions) 1997 1996 (Decrease) Change
------------------- ---- ---- -------- ------
Three Months Ended $ 83.7 $ 84.9 $ (1.2) (1.4)
The decrease in income taxes for the three months ended March 31,
1997 was due primarily to the effect of additional deferred taxes
recorded in the first quarter of 1996 resulting from the Company's
discontinuance of regulatory accounting. Excluding the effects of
this item, income taxes increased in line with pretax earnings.
- ---------------------------------------------------------------------
Ratio of earnings to fixed charges
- ----------------------------------
The ratio of earnings to fixed charges for the three months ended
March 31 was 7.61 in 1997 and 7.93 in 1996.
Page 11
<PAGE>12
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other Matters
- --------------
Competition and the Telecommunications Act of 1996
- --------------------------------------------------
The Company's local service markets have been opened to competition
from interexchange carriers and other local service providers, as
required by the Telecommunications Act of 1996 (the 1996 Act).
Interconnection agreements that the Company has signed require it to
allow access to network elements at cost-based rates or services at
discounted, wholesale rates. These agreements may result in some
downward pressure on local service revenues, as a portion of the
Company's revenue shifts from local service at retail rates to
network access at wholesale rates.
The 1996 Act was also designed to bring renewed scrutiny of the
current universal service funding policy. Historically, network
access charges have been used to help local exchange carriers ensure
universal basic telephone service to all customers. The FCC is
expected to review and possibly modify this policy during 1997. Any
modifications by the FCC may result in changes to the Company's
revenue stream related to network access charges.
The Company has signed a significant number of interconnection and
resale agreements with competitors, paving the way for entry into
the interLATA long distance market. However, FCC rules require that
interLATA long distance service be offered by a separate subsidiary
of Ameritech. Accordingly, Ameritech's entry into this market will
not generate long distance revenues for Illinois Bell. As a result,
the potential revenue decline brought by local service competition
will not be offset at the Company by gains in long distance revenue.
It is impossible to predict the specific impact of the Telecom Act
and other changes in the industry on Illinois Bell's business or
financial condition. Notwithstanding the potential for an adverse
effect on its revenue streams, the Company intends to pursue growth
opportunities in its local exchange business.
- ---------------------------------------------------------------------
Illinois rate reductions
- ------------------------
On April 1, 1997, the Company filed its proposal for the annual rate
changes required by the alternative regulation order approved by the
Commission in October 1994. The Company is proposing a $38.9 million
annual reduction based on criteria set forth in the order. The
change will be implemented in July 1997 after the Commission review
process is complete. These rate reductions will primarily impact
local service revenues.
Page 12
<PAGE>13
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Private Securities Litigation Reform Act Safe Harbor Statement
- --------------------------------------------------------------
Except for historical information contained herein, the above
discussion contains certain forward-looking statements that
involve potential risks and uncertainties. The Company's future
results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences
include, but are not limited to, changes in economic and market
conditions, effects of state and federal regulation and the impact
of new technologies. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to
revise or update these forward-looking statements to reflect
events or circumstances that arise after the date hereof or to
reflect the occurrence of unanticipated events.
Page 13
<PAGE>14
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
three months ended March 31, 1997 and March 31, 1996.
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
<PAGE>15
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: May 6, 1997 /s/ Ronald G. Pippin
----------------------
Ronald G. Pippin
Comptroller
Page 15
EXHIBIT 12
ILLINOIS BELL TELEPHONE COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Three Months Ended
March 31
---------------
1997 1996
---- ----
1. EARNINGS
a) Income before interest expense,
income taxes and undistributed
equity earnings .................... $ 254.7 $ 252.0
b) Portion of rental expense
representative of the
interest factor (1)................. 4.7 3.2
-------- --------
Total 1(a) and 1(b)..................... $ 259.4 $ 255.2
-------- --------
2. FIXED CHARGES
a) Total interest expense including
capital lease obligations........... $ 28.7 $ 28.1
b) Capitalized interest................. 0.7 0.9
c) Portion of rental expense
representative of the
interest factor (1)................. 4.7 3.2
-------- --------
Total 2(a) through 2(c)................. $ 34.1 $ 32.2
-------- --------
3. RATIO OF EARNINGS TO FIXED CHARGES....... 7.61 7.93
===== =====
(1) One-third of rental expense is considered to be the amount representing
return on capital.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ILLINOIS BELL TELEPHONE COMPANY'S MARCH 31, 1997 FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0<F1>
<RECEIVABLES> 918,600
<ALLOWANCES> (81,400)
<INVENTORY> 14,400
<CURRENT-ASSETS> 868,300
<PP&E> 8,943,700
<DEPRECIATION> 5,127,800
<TOTAL-ASSETS> 5,088,900
<CURRENT-LIABILITIES> 1,434,100
<BONDS> 1,012,000
0
0
<COMMON> 1,638,800
<OTHER-SE> (319,200)
<TOTAL-LIABILITY-AND-EQUITY> 5,088,900
<SALES> 0<F2>
<TOTAL-REVENUES> 928,400
<CGS> 0<F3>
<TOTAL-COSTS> 685,600
<OTHER-EXPENSES> (2,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,700
<INCOME-PRETAX> 216,100
<INCOME-TAX> 83,700
<INCOME-CONTINUING> 132,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,400
<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>
