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, 1994
or
( ) Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
Commission file number 1-6746
INDIANA BELL TELEPHONE COMPANY, INCORPORATED
An Indiana I.R.S. Employer
Corporation No. 35-0407820
240 North Meridian Street, Indianapolis, Indiana 46204
Telephone Number 317 265-2266
_________________________________
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, 1994, 13,490,876 common shares were outstanding.
<PAGE>
PART 1 - FINANCIAL INFORMATION
The following financial statements have been prepared by the Indiana Bell
Telephone Company, Incorporated (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 presentation of results of
operations, financial position, and cash flows 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
(Dollars in Millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1994 1993 1994 1993
------ ------ ------ ------
REVENUES $288.8 $282.4 $867.5 $826.7
------ ------ ------ ------
OPERATING EXPENSES
Employee-related expenses 60.0 62.4 180.3 186.3
Depreciation and amortization 54.2 55.5 160.0 164.8
Other operating expenses 86.3 84.8 256.3 227.5
Restructuring charges 36.0 -- 104.9 --
Taxes other than income taxes 11.8 10.8 35.2 33.6
------ ------ ------ ------
248.3 213.5 736.7 612.2
------ ------ ------ ------
OPERATING INCOME 40.5 68.9 130.8 214.5
Interest expense 4.7 6.8 13.2 22.5
Other (income) expense, net (1.2) (0.9) (3.6) 1.1
------ ------ ------ ------
INCOME BEFORE INCOME TAXES 37.0 63.0 121.2 190.9
Income taxes 14.8 19.6 42.4 61.0
------ ------ ------ ------
NET INCOME 22.2 43.4 78.8 129.9
REINVESTED EARNINGS,
BEGINNING OF PERIOD 217.2 247.0 250.8 239.8
LESS, DIVIDENDS 42.1 38.0 132.3 117.3
------ ------ ------ ------
REINVESTED EARNINGS,
END OF PERIOD $197.3 $252.4 $197.3 $252.4
====== ====== ====== ======
See Notes to Condensed Financial Statements.
<PAGE>
CONDENSED BALANCE SHEETS
(Dollars in Millions)
Sept. 30, 1994 Dec. 31, 1993
(Unaudited) (Derived from
Audited
Financial
ASSETS Statements)
Current assets
Cash and temporary cash investments $ 1.6 $ 0.6
Receivables
Customers and agents 191.5 160.9
Ameritech and affiliates 12.0 16.6
Other 5.1 9.5
Material and supplies 8.3 6.1
Prepaid and other 11.1 12.7
-------- --------
229.6 206.4
-------- --------
Telecommunications plant 3,032.6 2,982.9
Less: accumulated depreciation 1,434.6 1,320.6
-------- --------
1,598.0 1,662.3
-------- --------
Investments, principally in affiliates 38.8 31.1
-------- --------
Other assets and deferred charges 55.9 87.7
-------- --------
TOTAL ASSETS $1,922.3 $1,987.5
======== ========
See Notes to Consolidated Financial Statements.
<PAGE>
CONDENSED BALANCE SHEETS
(Dollars in Millions)
Sept. 30, 1994 Dec. 31, 1993
(Unaudited) (Derived from
Audited
Financial
LIABILITIES AND SHAREOWNER'S EQUITY Statements)
Current liabilities
Debt maturing within one year
Ameritech $ 266.8 $ 75.0
Other 0.3 220.1
Accounts payable
Ameritech Services, Inc. (ASI)-affiliate 54.7 19.9
Ameritech and affiliates 11.2 13.4
Other 79.9 62.8
Other current liabilities 165.0 178.0
-------- --------
577.9 569.2
-------- --------
Long-term debt 86.0 85.2
-------- --------
Deferred credits and
other long-term liabilities
Accumulated deferred income taxes 141.6 163.1
Unamortized investment tax credits 30.7 34.5
Postretirement benefits
other than pensions 262.7 224.1
Long-term payable to affiliate (ASI)
for SFAS No. 106 adoption 8.8 9.4
Other 52.3 86.2
-------- --------
496.1 517.3
-------- --------
Shareowner's equity
Common stock ($40 par value; 15,000,000
shares authorized; 13,490,876 issued
and outstanding) 539.6 539.6
Proceeds in excess of par value 25.4 25.4
Reinvested earnings 197.3 250.8
-------- --------
762.3 815.8
-------- --------
TOTAL LIABILITIES AND
SHAREOWNER'S EQUITY $1,922.3 $1,987.5
======== ========
See Notes to Condensed Financial Statements.
<PAGE>
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Nine Months Ended
September 30
1994 1993
(Unaudited)
CASH FLOWS PROVIDED FROM OPERATING ACTIVITIES:
Net income $ 78.8 $129.9
Adjustments to net income
Restructuring charges, net of tax 65.2 --
Depreciation and amortization 160.0 164.8
Deferred income taxes, net (5.6) (8.6)
Investment tax credits, net (3.8) (5.4)
Interest during construction (0.6) (0.4)
Provision for uncollectibles 7.1 6.0
Increase in accounts receivable (28.7) (19.9)
Increase in material and supplies (3.2) (0.6)
Decrease in certain other current assets 1.6 4.8
Increase (decrease) in accounts payable 57.6 (22.0)
Decrease in accrued taxes (24.1) (2.9)
Decrease in certain other
current liabilities (30.4) (7.5)
Change in certain other noncurrent
assets and liabilities (16.7) 9.7
Other 8.9 (3.3)
------ ------
Net cash provided from operating activities 266.1 244.6
------ ------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures (96.3) (108.9)
Proceeds from disposal of
telecommunications plant 2.1 2.0
Additional investments in affiliate (ASI) -- (3.0)
Other investments (2.6) --
------ ------
Net cash used in investing activities (96.8) (109.9)
------ ------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Intercompany financing - net 191.8 82.1
Issuance of long-term debt 1.0 --
Retirements of long-term debt (220.1) (100.1)
Cost of refinancing long-term debt (8.7) (3.7)
Dividend payments (132.3) (117.3)
------ ------
Net cash used in financing activities (168.3) (139.0)
------ ------
Net increase (decrease) in cash and
temporary cash investments 1.0 (4.3)
Cash and temporary cash investments,
beginning of period 0.6 10.2
------ ------
Cash and temporary cash investments,
end of period $ 1.6 $ 5.9
====== ======
See Notes to Condensed Financial Statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1994
(Dollars in Millions)
A. Work Force Restructuring
On March 25, 1994, the Company's parent, Ameritech, announced plans to
reduce its existing nonmanagement work force by 6,000 employees by the end
of 1995, including approximately 780 at the Company. Under terms of
agreements between Ameritech, the Communication Workers of America (CWA)
and the International Brotherhood of Electrical Workers (IBEW), Ameritech
implemented an enhancement to the Ameritech Pension Plan by adding three
years to the age and the net credited service of eligible nonmanagement
employees who leave the business during a designated period that ends in
mid-1995. In addition, certain of the Company's business units are
offering financial incentives under terms of the current contracts with the
CWA and the IBEW to selected nonmanagement employees who leave the business
before the end of 1995.
This program resulted in a first quarter 1994 charge of $68.9 or $42.8
after-tax to reflect the cost of the restructuring. This charge reduced
the Company's prepaid pension asset by $39.6 for pension enhancements and
curtailment losses. The charge also included a curtailment loss of $17.1
related to Statement of Financial Accounting Standards (SFAS No. 106),
"Employers' Accounting for Postretirement Benefits Other than Pensions,"
and an additional severance accrual of $12.2.
Employee response to the pension enhancement program and other financial
incentives being offered by the Company has exceeded the Company's initial
expectations. As a result, the Company expects its existing nonmanagement
work force to be reduced by approximately 1,300 through next year instead
of the approximately 780 originally estimated in March.
The Company recorded an additional charge in the third quarter of 1994 of
$36.0 or $22.4 after-tax for the additional program participants and for
revised participant demographics. The third quarter charge included
settlement gains of $15.5 associated with lump sum pension payments made by
the pension trust through September 30, 1994. This $36.0 charge reduced
the Company's prepaid pension asset by $4.3 for pension enhancement and
curtailment losses, net of the settlement gains. The charge also included
$20.9 for curtailment losses related to SFAS No. 106 and an additional
severance accrual of $10.8.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(Dollars in Millions)
The following is a discussion and analysis of the results of operations of
the Company for the nine-month period ended September 30, 1994, as compared
to the same period in the prior year. Results for the nine months ended
September 30, 1994 are not necessarily indicative of the results for the
entire year.
Revenues
Total revenues in the first nine months of 1994 were $867.5 and were $826.7
for the same period in 1993, or an increase of $40.8 or 4.9 percent. The
following paragraphs explain the components of that change:
Increase
1994 1993 (Decrease) % Change
Local service $396.3 $378.2 $18.1 4.8
Higher network usage increased local service revenues by $24.7. Increased
network usage resulted principally from growth in the number of customer
lines, which increased 3.9 percent to 1,902,827 from 1,832,280 as of
September 30, 1993, and from increased sales of custom calling features
(e.g., Call Forwarding, Caller ID, etc.). Partially offsetting these
increases was the effect of rate reductions of $6.5 as a result of the
Opportunity Indiana Plan (see Other Information for more details).
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Network Access
Interstate $181.9 $169.0 $12.9 7.6
Intrastate $ 78.0 $ 80.6 $(2.6) (3.2)
Interstate
The increase in interstate network access revenues was primarily
attributable to higher network usage, which resulted in additional revenues
of $14.0. Additionally, revenues increased by $3.1 due to lower National
Exchange Carrier Association support payments and by $2.7 as a result of
revenue sharing accruals in 1993. These increases were partially offset by
lower revenues of $7.8 due to rate reductions.
Minutes of use related to interstate calls for the nine months ended
September 30, 1994 increased 6.7 percent.
Intrastate
Intrastate access revenues decreased by $5.9 due to rate reductions as a
result of the Opportunity Indiana Plan and $3.1 related to other rate
reductions, partially offset by volume related increases of $6.0 primarily
due to increased minutes of use and customer lines.
Minutes of use related to intrastate calls for the nine months ended
September 30, 1994 increased 15.9 percent.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Long distance $113.3 $110.5 $2.8 2.5
The increase in long distance service revenues was primarily attributable
to a change in the method in which independent company settlements are
recorded (access expenses are no longer treated as revenue offsets),
resulting in increased revenues of $4.4. The increase was partially offset
by volume-related decreases of $1.8 related to WATS and private line
revenues.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Other revenue $98.0 $88.4 $9.6 10.9
Other revenues include revenues derived from directory advertising, billing
and collection services, inside wire installation and maintenance services
and other miscellaneous services. These revenues are net of the Company's
provision for uncollectibles. The increase in other revenues was primarily
attributable to an increase in inside wire revenue of $3.7 (primarily as a
result of a rate increase) and $3.2 related to late payment charges.
Partially offsetting these increases was an increase in the provision for
uncollectibles of $1.1 resulting from higher accounts receivable balances
and increased write-off experience.
___________________________________________________________________________
Operating Expenses
Total operating expenses were $736.7 in the first nine months of 1994 and
$612.2 in the first nine months of 1993, or an increase of $124.5 or 20.3
percent. These results include restructuring charges of $104.9 for the
nine months ended September 30, 1994. The increase is comprised of the
following:
Increase
1994 1993 (Decrease) % Change
Employee-related expenses $180.3 $186.3 $(6.0) (3.2)
The decrease in employee-related expenses can be primarily attributed to
decreases in wages, benefits and other expenses of $13.9 primarily related
to work force reductions. Also contributing to the decrease was an
increase in pension credits of $2.5. Partially offsetting these decreases
were increases in basic wage rates of $6.0, postretirement benefits
expenses of $3.1 and increased overtime payments of $1.3.
The Company's work force decreased to 4,711 as of September 30, 1994 from
5,208 as of September 30, 1993 as a result of work force reduction
programs.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Depreciation and amortization $160.0 $164.8 $(4.8) (2.9)
Depreciation expense for the nine months ended September 30, 1994 decreased
primarily as a result of retirements of analog electronic switching
equipment and accruals of $3.3 in the first six months of 1993 in
anticipation of favorable rate represcription results. These were
partially offset by changes in rates and plant additions.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Other operating expenses $256.3 $227.5 $28.8 12.7
Other operating expenses consist of contract services, services from
affiliates, materials and supplies, access charge and advertising expenses
and other miscellaneous expenses. The increase is primarily attributable
to an increase of $24.6 in payments for services provided by affiliated
companies due primarily to a transfer of certain work functions to ASI and
Ameritech Information Systems, Inc. (an affiliate). Also contributing to
the increase was $7.5 in higher access charges which prior to March 1993,
were an offset to revenue (see long distance revenues discussion), a $2.8
increase in right-to-use fees, and a $1.7 increase in other expenses.
Partially offsetting these increases was a decrease in contract services
fees of $7.8 related to computer and other professional services.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Restructuring charges $104.9 $-- $104.9 --
As discussed more fully in Note A to the Financial Statements, Ameritech
(the Company's parent) announced on March 25, 1994 that it will reduce its
existing nonmanagement work force by 6,000 employees by the end of 1995.
Reduction of the work force results from technological improvements,
consolidations, and initiatives identified by management to balance its
cost structure with emerging competition. Originally the Company expected
approximately 780 employees to leave the payroll, but approximately 1,300
are now expected to leave the business. A charge for 780 employees was
recorded in the first quarter and an additional charge was recorded in the
third quarter to reflect acceptance of the plan by a total of approximately
1,300 employees.
This program resulted in a first quarter 1994 charge of $68.9 ($42.8 on an
after-tax basis) and an additional charge of $36.0 ($22.4 on an after-tax
basis) in the third quarter of 1994 for a total charge of $104.9 ($65.2 on
an after-tax basis). The additional charge of $36.0 includes the effect of
$15.5 in settlement gains (discussed below) associated with lump-sum
pension payments through September 30, 1994. A significant portion of the
program's cost will be funded by the Ameritech Pension Plan, whereas
financial incentives to be paid by the Company will require Company funds
of approximately $25.0. Settlement gains (estimated to exceed
approximately $40.0 in total), which result from lump-sum payments from the
Ameritech Pension Plan, are being reflected in income as payments are made
by the Ameritech Pension Plan. Settlement gains are noncash in nature and
result from the funded status of the Ameritech Pension Plan.
The Company originally estimated that 780 employees were expected to leave
under the program. The Company currently estimates that, including the
approximately additional 520 employees, that approximately 950 will leave
under the program in 1994 and approximately 350 in 1995. These employee
reductions by quarter are as follows: 220 (actual) in the second quarter
of 1994, 271 (actual) in the third quarter of 1994, 459 (estimated) in the
fourth quarter of 1994, 20 (estimated) in the first quarter of 1995, 175
(estimated) in the second quarter of 1995, and 155 (estimated) in the third
quarter of 1995. As previously discussed in Note A to the Financial
Statements, the program has generated more employee requests to accept the
incentives offered than originally planned, requiring revision to the
expected number and timing of employees terminating employment. The
Company is managing the departure of all employees to minimize disruption
within its business and to its customers, while still accommodating the
individual employee's acceptance of the program. Cash requirements of the
Company to fund the financial incentives (principally contractual
termination payments) will be met as prescribed by applicable collective
bargaining agreements. Certain of these collective bargaining agreements
require contractual termination payments to be paid to employees in a
manner other than lump-sum, thus requiring cash payments beyond an
employee's termination date.
The Company believes this program will reduce its employee-related costs by
approximately $50,000 per departing employee on an annual basis. The
projected savings will be partially offset by the hiring of new employees
to accommodate growth and ensure high quality customer service, and to meet
staffing requirements for new business opportunities.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Taxes other than income taxes $35.2 $33.6 $1.6 4.8
The increase is attributable to an increase in the gross receipts tax of
$0.9 due to increased revenue and a $0.6 increase in property tax expense.
_________________________________________________________________________
OTHER INCOME AND EXPENSES
Increase
1994 1993 (Decrease) % Change
Interest expense $13.2 $22.5 $(9.3) (41.3)
The decrease in interest expense is primarily attributable to a $15.9
decrease in interest related to long-term debt resulting from refinancing
activity in late 1993, partially offset by $6.6 in higher short-term
interest from borrowings from the Ameritech short-term funding pool needed
to fund the refinancings, as well as higher interest rates on those short-
term borrowings.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Other (income) expense - net $(3.6) $1.1 $(4.7) --
The increase in other income is primarily attributable to bond call expense
of $3.7 recorded in the second quarter of 1993. In addition, the Company
recorded increased earnings related to its investment in ASI.
___________________________________________________________________________
Increase
1994 1993 (Decrease) % Change
Income taxes $42.4 $61.0 $(18.6) (30.5)
Income taxes decreased primarily as a result of lower pretax income, due
principally to the work force restructuring charge of $104.9 (or $65.3
after-tax). Excluding the effect of the restructuring charge, income taxes
generally increased in line with the increased earnings of the Company.
___________________________________________________________________________
OTHER INFORMATION
Opportunity Indiana
On June 30, 1994, the Indiana Utility Regulatory Commission approved the
settlement agreements in Ameritech's Opportunity Indiana Plan (the Plan).
Under the Plan, traditional rate of return regulation is eliminated and
replaced by a price regulation mechanism. The Plan gives the Company the
ability to set prices for competitive services and the ability to determine
its own depreciation rates. The Company agreed to cap basic exchange rates
at current levels through the end of 1997.
Under the Plan, the Company agreed to rate reductions totaling $57.5
between May 1994 and June 1996 ($27.7, $13.5, and $16.3 for 1994, 1995, and
1996, respectively). In addition, the Company agreed to invest $120.0 over
the next six years to provide an advanced communications system
infrastructure for schools, hospitals and major government centers and to
make available an additional $30.0 during that period for equipment and
training for schools to take advantage of the advanced system. The Plan
also provides for instant mirroring of intrastate access rates with
interstate rates and removes resale restrictions on all services except
flat rate basic local service and Centrex.
___________________________________________________________________________
Effects of Regulatory Accounting
The Company presently gives accounting recognition to the actions of
regulators where appropriate, as prescribed by Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types
of Regulation" (SFAS No. 71). Under SFAS No. 71, the Company records
certain assets and liabilities because of actions of regulators. Further,
amounts charged to operations for depreciation expense reflect estimated
useful lives and methods prescribed by regulators rather than those that
might otherwise apply to unregulated enterprises. The Company cannot
presently quantify, without a complete historical assessment of its
competitive and regulatory environments, what the financial statement
impact would have been had depreciation expense been determined absent
regulation.
In the event the Company determines that it no longer meets the criteria
for following SFAS No. 71, the accounting impact to the Company would be an
extraordinary noncash charge to operations of an amount which would be
material. Criteria that give rise to the discontinuance of SFAS No. 71
include (1) increasing competition which restricts the Company's ability to
establish prices to recover specific costs, and (2) a significant change in
the manner in which rates are set by regulators from cost-based regulation
to another form of regulation. The Company is currently reviewing these
criteria in light of the changes in its regulatory environment and
increasing competition as appropriate to ensure the continuing application
of SFAS No. 71 is still appropriate.
___________________________________________________________________________
Ratio of Earnings to Fixed Charges
The Company's ratio of earnings to fixed charges for the nine months ended
September 30 was 7.38 in 1994 and 7.63 in 1993. The ratio in 1994 was
adversely affected by pretax charges of $104.9 for work force restructuring
(see prior discussion of these charges). These charges will be primarily
funded from the Ameritech Pension Plan. The Company believes its ratio in
1994 is not indicative of a significant change in its ability to fund its
debt.
<PAGE>
PART 2 - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
12 Statement re: Computation of ratio of earnings to fixed
charges for the nine months ended September 30, 1994 and
1993.
27 Financial data schedule for the nine months ended
September 30, 1994.
(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>
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.
Indiana Bell Telephone Company, Incorporated
Date: November 10, 1994 By: /s/ Cheryl K. Wooley
Cheryl K. Wooley
Vice President - Comptroller
(Principal Financial Officer)
<PAGE>
EXHIBIT 12
INDIANA BELL TELEPHONE COMPANY, INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars)
Nine Months Ended September 30,
1994 1993
------ ------
1. Earnings
(a) Income before interest expense
and income taxes $134.5 $213.5
(b) Portion of rental expense
representative of the
interest factor (i) 5.8 6.3
------ ------
Total 140.3 219.8
------ ------
2. Fixed Charges
(a) Total interest deductions 13.2 22.5
(b) Portion of rental expense
representative of the
interest factor (i) 5.8 6.3
------ ------
Total $ 19.0 $ 28.8
------ ------
3. Ratio (1. divided by 2.) 7.38 7.63
==== ====
(i) The Company considers 1/3 of rental expense to be the amount
representing return on capital.
NOTE: The results for the first nine months of 1994 reflect a $104.9
pretax charge for work force restructuring (see Management's
Discussion and Analysis of Results of Operations for a discussion
of this charge). This charge will be funded primarily from the
Ameritech Pension Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
INDIANA BELL TELEPHONE COMPANY, INCORPORATED'S SEPTEMBER 30, 1994
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-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 1,600
<SECURITIES> 0
<RECEIVABLES> 214,600
<ALLOWANCES> 6,000
<INVENTORY> 8,300
<CURRENT-ASSETS> 229,600
<PP&E> 3,032,600
<DEPRECIATION> 1,434,600
<TOTAL-ASSETS> 1,922,300
<CURRENT-LIABILITIES> 577,900
<BONDS> 86,000
<COMMON> 539,600
0
0
<OTHER-SE> 222,700
<TOTAL-LIABILITY-AND-EQUITY> 1,922,300
<SALES> 0<F1>
<TOTAL-REVENUES> 867,500
<CGS> 0<F2>
<TOTAL-COSTS> 736,700
<OTHER-EXPENSES> (3,600)
<LOSS-PROVISION> 7,100
<INTEREST-EXPENSE> 13,200
<INCOME-PRETAX> 121,200
<INCOME-TAX> 42,400
<INCOME-CONTINUING> 78,800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,800
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
<FN>
<F1>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.
<F2>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>
