<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
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
(Incorporated under the laws of the State of Indiana)
240 North Meridian Street, Indianapolis, Indiana 46204
I.R.S. Employer Identification Number 35-0407820
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.
YesX No
---- ----
At October 31, 1996, 13,490,876 common shares were outstanding.
<PAGE>2
Part I - Financial Information
------------------------------
The following condensed financial statements have been prepared by
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
statement of results for each period shown. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such SEC rules and
regulations. The Company believes that the disclosures made are
adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's latest Annual
Report on Form 10-K and the quarterly reports on Form 10-Q previously
filed in the current year.
CONDENSED STATEMENTS OF INCOME AND REINVESTED EARNINGS
(Dollars in Millions)
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
--------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
Revenues........................ $ 310.5 $ 306.0 $ 927.2 $ 896.7
--------- --------- --------- ---------
Operating expenses
Employee-related expenses..... 54.0 56.0 162.1 167.4
Depreciation and amortization. 47.2 48.0 137.2 143.1
Other operating expenses...... 99.4 90.6 295.0 278.7
Restructuring credit.......... -- (2.7) -- (39.2)
Taxes other than income taxes. 12.3 11.8 34.5 35.7
--------- --------- --------- ---------
212.9 203.7 628.8 585.7
--------- --------- --------- ---------
Operating income................ 97.6 102.3 298.4 311.0
Interest expense................ 3.9 4.4 11.0 13.4
Other income, net .............. 1.3 0.7 3.1 1.2
--------- --------- --------- ---------
Income before income taxes...... 95.0 98.6 290.5 298.8
Income taxes.................... 33.4 36.0 103.6 109.6
--------- --------- --------- ---------
Net income...................... 61.6 62.6 186.9 189.2
Reinvested earnings,
beginning of period........... 99.1 56.3 66.4 30.2
Less, dividends declared.... 58.8 55.5 151.4 156.0
--------- --------- --------- ---------
Reinvested earnings,
end of period................. $ 101.9 $ 63.4 $ 101.9 $ 63.4
========= ========= ========= =========
See Notes to Condensed Financial Statements.
<PAGE>3
CONDENSED BALANCE SHEETS
(Dollars in Millions)
Sept. 30, 1996 Dec. 31, 1995
------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
ASSETS
- ------
Current assets
Cash and temporary cash investments......... $ 0.1 $ 0.1
Receivables, net
Customers................................. 222.4 214.9
Ameritech and affiliates.................. 12.5 17.1
Other..................................... 4.0 8.1
Material and supplies....................... 3.4 4.3
Prepaid and other........................... 7.0 11.8
--------- ---------
249.4 256.3
--------- ---------
Property, plant and equipment................ 3,175.7 3,085.0
Less, accumulated depreciation............... 1,974.4 1,892.8
--------- ---------
1,201.3 1,192.2
--------- ---------
Investments, primarily in affiliates......... 37.5 37.5
Other assets and deferred charges............ 87.6 82.2
--------- ---------
Total assets................................. $ 1,575.8 $ 1,568.2
========= =========
See Notes to Condensed Financial Statements.
<PAGE>4
CONDENSED BALANCE SHEETS (continued)
(Dollars in Millions)
Sept. 30, 1996 Dec. 31, 1995
------------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
LIABILITIES AND SHAREOWNER'S EQUITY
Current liabilities
Debt maturing within one year
Ameritech................................. $ 63.8 $ 150.6
Other..................................... 0.2 0.3
Accounts payable
Ameritech Services, Inc. (ASI)............ 49.1 56.8
Ameritech and affiliates.................. 15.3 11.8
Other..................................... 57.4 78.3
Other current liabilities.................. 109.0 162.5
--------- ---------
294.8 460.3
--------- ---------
Long-term debt.............................. 234.0 85.8
--------- ---------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes.......... 47.7 46.2
Unamortized investment tax credits......... 19.3 21.8
Postretirement benefits
other than pensions...................... 263.9 269.2
Long-term payable to ASI................... 7.7 8.3
Other ..................................... 41.5 45.2
--------- ---------
380.1 390.7
--------- ---------
Shareowner's equity
Common shares - ($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........................ 101.9 66.4
--------- ---------
666.9 631.4
--------- ---------
Total liabilities and shareowner's equity... $ 1,575.8 $ 1,568.2
========= =========
See Notes to Condensed Financial Statements.
<PAGE>5
CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
(Unaudited)
Nine Months Ended
September 30
-------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 186.9 $ 189.2
Adjustments to net income
Restructuring credit, net of tax............ -- (24.5)
Depreciation and amortization............... 137.2 143.1
Deferred income taxes, net.................. 1.3 (2.9)
Investment tax credits, net................. (2.5) (4.0)
Capitalized interest........................ (0.8) (0.3)
Provision for uncollectibles................ 24.3 9.1
Change in accounts receivable............... (23.1) (15.5)
Change in material and supplies............. (3.6) (1.8)
Change in certain other current assets...... 4.8 5.7
Change in accounts payable.................. (25.1) (8.0)
Change in certain other current
liabilities................................ 5.3 (32.2)
Change in certain other noncurrent
assets and liabilities..................... (15.4) 22.0
Other....................................... 0.1 (1.0)
-------- --------
Net cash from operating activities............ 289.4 278.9
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.......................... (142.4) (105.2)
Proceeds from disposals of
property, plant and equipment................ 1.6 2.4
Other investing activity...................... -- 0.2
-------- --------
Net cash from investing activities............ (140.8) (102.6)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany financing, net................... (86.8) (76.1)
Issuance of long-term debt.................... 148.4 --
Retirements of long-term debt................. (0.2) (0.2)
Dividend payments............................. (210.0) (100.5)
-------- --------
Net cash from financing activities............ (148.6) (176.8)
-------- --------
Net decrease in cash and
temporary cash investments................... -- (0.5)
Cash and temporary cash investments,
beginning of period.......................... 0.1 0.5
-------- --------
Cash and temporary cash investments,
end of period................................ $ 0.1 $ --
======== ========
See Notes to Condensed Financial Statements.
<PAGE>6
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Dollars in Millions)
SEPTEMBER 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 1,344 at the Company. As a result of the restructuring, the
Company recorded a gain of $39.2 million or $24.5 million after-tax in
the first nine 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 nine 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 remaining accrual related to
work force restructuring charges was not significant as of September
30, 1996. See further discussion in Management's Discussion and
Analysis below.
NOTE 2: Long-Term Debt
On August 20, 1996, the Company issued $150.0 million of noncallable,
7.3% debentures due August 15, 2026. The proceeds from this issue
were used to repay outstanding balances in the Ameritech short-term
funding pool. Following this debt issuance, the Company had $75
million remaining available for issuance of unsecured debt securities
under a registration statement filed with the SEC.
NOTE 3: Reclassifications
Certain reclassifications were made to the December 31, 1995 balances
to correspond to the presentation as of September 30, 1996.
<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 nine
months of 1996 as compared with the first nine months of 1995.
Results of Operations
---------------------
Revenues
--------
Total revenues in the first nine months of 1996 were $927.2 million
and were $896.7 million for the same period in 1995. The increase was
primarily attributable to growth in access lines and switched minutes
of use resulting in higher network usage volumes, as well as increased
sales of equipment and other nonregulated services. These increases
were partially offset by rate reductions and a decrease in revenues
from directory advertising.
----------------------------------------------------------------------
Local service
-------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 469.6 $ 423.2 $ 46.4 11.0
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 nine months ended September 30, 1996 was due
primarily to higher network usage volumes, resulting principally from
growth in the number of access lines, which increased 4.2 percent to
2,081,000 as of September 30, 1996, compared to 1,998,000 at September
30, 1995. Increased sales of call management services, such as Call
Forwarding, Call Waiting and Caller ID, also contributed to the
increase.
----------------------------------------------------------------------
Network access
--------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Interstate
----------
Nine Months Ended $ 190.4 $ 182.9 $ 7.5 4.1
Intrastate
----------
Nine Months Ended $ 59.4 $ 67.4 $ (8.0) (11.9)
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>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 nine months
ended September 30, 1996 was due primarily to an increase in network
minutes of use, resulting from overall growth in the volume of calls
handled for interexchange carriers, partially offset by rate
decreases. Minutes of use related to interstate calls increased 8.1
percent in the first nine months of 1996 compared with the prior year
period.
The decrease in intrastate network access revenues for the nine months
ended September 30, 1996 was due primarily to rate decreases,
partially offset by volume increases due to higher network usage.
Minutes of use related to intrastate calls increased 12.9 percent in
the first nine months of 1996 compared with the prior year period.
----------------------------------------------------------------------
Long distance service
---------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 115.2 $ 114.4 $ 0.8 0.7
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 increase in long distance
service revenues for the nine months ended September 30, 1996 was due
primarily to increased revenues related to credit card and third
number billings, as well as rate increases, partially offset by volume
decreases.
----------------------------------------------------------------------
Other
-----
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 92.6 $ 108.8 $ (16.2) (14.9)
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 nine months ended September 30,
1996 was largely attributable to a decrease in directory advertising
revenues due to a renegotiated listing and directory services
agreement with Ameritech Publishing, Inc. (API), an Ameritech
subsidiary doing business as Ameritech Advertising Services. The
renegotiated agreement resulted in a revenue decrease of $37.1 million
in the nine months ended September 30, 1996 compared with the prior
year period. This decrease was partially offset by growth in voice
messaging and sales of equipment and other nonregulated services, as
well as an increase in inside wire installation and maintenance
revenues.
<PAGE>9
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Operating expenses
------------------
Total operating expenses for the nine months ended September 30, 1996
increased $43.1 million, or 7.4 percent to $628.8 million. The
increase was primarily attributable to the work force restructuring,
which resulted in a credit of $39.2 million in the first nine months
of 1995 related to noncash settlement gains from the pension plan.
----------------------------------------------------------------------
Employee-related expenses
-------------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 162.1 $ 167.4 $ (5.3) (3.2)
The decrease in employee-related expenses for the nine months ended
September 30, 1996 was due primarily to decreases in benefits and
other employee-related expenses, due primarily to renegotiated
contracts with health care providers, as well as decreases resulting
from lower work force levels. These decreases were partially offset
by wage rate increases.
There were 4,070 employees at September 30, 1996, compared with 4,200
at September 30, 1995.
----------------------------------------------------------------------
Depreciation and
amortization
------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 137.2 $ 143.1 $ (5.9) (4.1)
The decrease in depreciation and amortization for the nine months
ended September 30, 1996 was primarily attributable to two major asset
categories becoming fully depreciated in 1995 requiring no further
depreciation accruals in 1996. This decrease was partially offset by
depreciation on higher average plant balances for the other asset
categories, as well as the effect of higher depreciation rates in
certain asset categories due to shorter depreciable lives established
in 1994.
<PAGE>10
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other operating expenses
------------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 295.0 $ 278.7 $ 16.3 5.8
The increase in other operating expenses for the nine months ended
September 30, 1996 was due primarily to cost of sales increases
related to equipment sales, as well as increases in uncollectibles and
other expenses related to increased sales efforts for equipment and
call management services, such as voice messaging. These increases
were partially offset by a decrease in right-to-use fees for switching
system software, as well as a decrease in advertising expenses due to
the timing of planned marketing campaigns.
----------------------------------------------------------------------
Restructuring credit
--------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ -- $ (39.2) $ 39.2 n/a
As discussed in Note 1, the Company significantly reduced its
nonmanagement work force during 1994 and 1995 by 1,344 employees. New
employees with different skills were added during this period to
accommodate growth and meet staffing requirements for new business
opportunities. As of September 30, 1995, all 1,344 employees had left
the Company, with 249 leaving in the first nine months of 1995. A
pretax, noncash settlement gain of $39.2 million was recorded in the
first nine months of 1995, associated with lump-sum pension payments
to former employees. No restructuring credits were recorded in the
first nine months of 1996.
----------------------------------------------------------------------
Taxes other than income taxes
-----------------------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 34.5 $ 35.7 $ (1.2) (3.4)
Taxes other than income taxes consist of property taxes, gross
receipts taxes and other nonincome based taxes. The decrease in taxes
other than income taxes for the nine months ended September 30, 1996
was due primarily to decreases in property taxes resulting from
successful appeals of 1996 assessed valuations, partially offset by an
increase in gross receipts taxes due to a higher level of taxable base
for these taxes.
<PAGE>11
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other Income and Expenses
-------------------------
Interest expense
-----------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 11.0 $ 13.4 $ (2.4) (17.9)
The decrease in interest expense for the nine months ended September
30, 1996 is due primarily to a decrease in interest on borrowings from
the Ameritech short-term funding pool. The Company issued $150
million of long-term debt in August 1996 to reduce short-term
borrowings (see Note 2). This decrease was partially offset by an
increase in interest on long-term debt.
----------------------------------------------------------------------
Other income, net
-----------------
Change
September 30 Income Percent
------------
(dollars in millions) 1996 1995 (Expense) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 3.1 $ 1.2 $ 1.9 n/m
Other income, net includes equity in earnings of affiliates, interest
income and other nonoperating items. The increase in other income,
net in the nine months ended September 30, 1996 was due primarily to
increased equity earnings from Ameritech Services, Inc. (ASI).
----------------------------------------------------------------------
Income taxes
------------
September 30 Increase Percent
------------
(dollars in millions) 1996 1995 (Decrease) Change
------------------- ---- ---- -------- ------
Nine Months Ended $ 103.6 $ 109.6 $ (6.0) (5.5)
The decrease in income taxes for the nine months ended September 30,
1996 was due primarily to the tax effect ($14.7 million) associated
with the work force restructuring credit recorded in the first nine
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 nine months ended
September 30 was 22.16 in 1996 and 20.49 in 1995. The ratio in 1995
was favorably affected by a pretax credit of $39.2 million for work
force restructuring (see prior discussion of this item).
<PAGE>12
Management's Discussion and Analysis
of Results of Operations (cont'd.)
Other Matters
--------------
Telecommunications Act of 1996
------------------------------
The Telecommunications Act of 1996 (the 1996 Act) was enacted 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,
provides the framework for additional competition in the Company's
traditional local exchange markets.
On August 8, 1996, the Federal Communications Commission (FCC) adopted
rules to implement the local competition provisions of the 1996 Act.
Among other things, the rules require local exchange carriers to
provide interconnection to any requesting telecommunications carrier at
any technically feasible point and equal in quality to that provided
for the local exchange carriers' own operations. The rules also
require each local exchange carrier to provide these other carriers
access to network elements on an unbundled basis, and to offer for
resale any telecommunications services that it provides at retail to
subscribers who are not telecommunications carriers. The FCC's rules
address mechanisms for pricing of interconnection, unbundled network
elements and reselling of telecommunications services and prescribe
that the individual state regulatory authorities develop specific rates
and procedures consistent with general rules and guidelines established
by the FCC.
In September 1996, several local exchange carriers, including
Ameritech, filed appeals of the FCC interconnection order in the U.S.
Court of Appeals for the District of Columbia. In their appeals, the
local exchange carriers argue, among other things, that the FCC
exceeded its authority over state regulatory commissions, that the
rules setting national pricing standards violate the 1996 Act, and that
the order will force local exchange carriers to sell elements of their
networks below cost. Several companies also requested a stay of the
FCC's order pending the outcome of the appeals, while others, including
Ameritech, opposed the stay and requested only an expedited review of
the order.
Following the FCC's denial of the requests for a stay, a motion for a
stay was filed by certain parties in the U.S. Court of Appeals for the
Eighth Circuit (the Court) in St. Louis, which had been selected to
hear the challenges to the FCC's order. On September 27, 1996, the
Court ordered a temporary stay of the new rules pending the hearing of
oral arguments from local exchange carriers and the FCC. On October
15, 1996, after hearing the oral arguments, the Court issued a partial
stay of the FCC's order, saying that the pricing provisions and the
"pick and choose" rule related to unbundled network elements could not
take effect until the Court conducts a full review of the order and
rules on the merits of the case. On November 1, 1996, the Court lifted
the stay on three aspects of the pricing rules that apply primarily to
cellular service providers. The FCC has indicated that it will appeal
the Court's decision to the U.S. Supreme Court.
It will not be possible to determine what effect the 1996 Act and the
FCC rules implementing it will have on the Company's results of
operations until the challenges to the rules have been resolved and the
Indiana Utility Regulatory Commission (IURC) has acted on the matter
within its jurisdiction under the 1996 Act.
<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
Nine Months ended September 30, 1996 and September 30,
1995.
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K, dated November 4, 1996 was filed
under Item 5, Other Events and Item 7, Financial Statements and
Exhibits to file a conformed copy of the executed Indenture
dated as of August 1, 1996 between the Registrant and Harris
Trust and Savings , as Trustee.
<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.
INDIANA BELL TELEPHONE COMPANY, INCORPORATED
--------------------------------------------
(Registrant)
Date:November 7, 1996 /s/ Laurie L. Streling
--------------------------
Laurie L. Streling
Comptroller
State Finance Organization
(Principal Accounting Officer)
EXHIBIT 12
INDIANA BELL TELEPHONE COMPANY, INCORPORATED
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Nine Months Ended
September 30
-------------
1996 1995
---- ----
1. EARNINGS
a) Income before interest expense,
income taxes and undistributed
equity earnings (2)................. $ 301.7 $ 313.9
b) Portion of rental expense
representative of the
interest factor (1)................. 1.9 1.7
-------- --------
Total 1(a) through 1(b)................. $ 303.6 $ 315.6
-------- --------
2. FIXED CHARGES
a) Total interest expense including
capital lease obligations........... $ 11.0 $ 13.4
b) Capitalized interest................. 0.8 0.3
c) Portion of rental expense
representative of the
interest factor (1)................. 1.9 1.7
-------- --------
Total 2(a) through 2(c)................. $ 13.7 $ 15.4
-------- --------
3. RATIO OF EARNINGS TO FIXED CHARGES....... 22.16 20.49
===== =====
(1) One-third of rental expense is considered to be the amount
representing return on capital.
(2) The results for the first nine months of 1995 reflect a $39.2
million pretax credit primarily from settlement gains resulting
form 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
INDIANA BELL TELEPHONE COMPANY, INCORPORATED'S SEPT. 30,1996 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-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 100
<SECURITIES> 0<F1>
<RECEIVABLES> 238,900
<ALLOWANCES> 0
<INVENTORY> 3,400
<CURRENT-ASSETS> 249,400
<PP&E> 3,175,700
<DEPRECIATION> 1,974,400
<TOTAL-ASSETS> 1,575,800
<CURRENT-LIABILITIES> 294,800
<BONDS> 234,000
0
0
<COMMON> 539,600
<OTHER-SE> 127,300
<TOTAL-LIABILITY-AND-EQUITY> 1,575,800
<SALES> 0<F2>
<TOTAL-REVENUES> 927,200
<CGS> 0<F3>
<TOTAL-COSTS> 628,800
<OTHER-EXPENSES> (3,100)
<LOSS-PROVISION> 23,500
<INTEREST-EXPENSE> 11,000
<INCOME-PRETAX> 290,500
<INCOME-TAX> 103,600
<INCOME-CONTINUING> 186,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186,900
<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>
