FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------------
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) of
--- THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission File No. 2-39373
---------------------------------------
The Lincoln Telephone and Telegraph Company
(Exact name of registrant as specified in its charter)
Delaware 47-0223220
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1440 M Street, Lincoln, Nebraska 68508
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 402-474-2211
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 and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at September 30, 1995
$3.125 par value 1,000 Shares
PART I - FINANCIAL INFORMATION
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
The following financial statements of The Lincoln Telephone and Telegraph
Company (LT&T) have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in the opinion of
management, include all adjustments necessary for a fair statement of income
for each period shown. All such adjustments made are of a normal recurring
nature except when noted as extraordinary or nonrecurring. 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. Management believes that the disclosures made are adequate and
that the information is fairly presented. The results for the interim
periods are not necessarily indicative of the results for the full year.
These financial statements should be read in conjunction with the financial
statements and notes thereto in the 1994 Annual Report on Form 10-K and in
this year's prior Quarterly Reports on Form 10-Q, which are incorporated by
reference.
-1-
Item 1 - Financial Statements
<TABLE>
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
BALANCE SHEETS
Sep. 30, 1995 Dec. 31, 1994
(Unaudited) (Audited)
(Dollars in Thousands)
<CAPTION>
ASSETS
<S> <C> <C>
Current assets $ 57,270 $ 65,269
Property and equipment less accumulated
depreciation and amortization 241,811 240,537
Investments and other assets 3,457 3,517
Deferred charges 20,261 18,429
-------- --------
Total assets $322,799 $327,752
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Notes payable to banks $ 9,000 $ 17,000
Accounts payable and accrued liabilities 35,886 38,912
-------- --------
Total current liabilities 44,886 55,912
Deferred credits and other long-term liabilities 83,897 84,281
Long-term debt 44,000 44,000
Preferred stock, 5%, redeemable 4,499 4,499
Stockholder's equity 145,517 139,060
-------- --------
Total liabilities and stockholder's equity $322,799 $327,752
======== ========
</TABLE>
-2-
<TABLE>
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1995 1994 1995 1994
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Telephone operating revenues:*
Local network services $17,905 $17,022 $52,853 $50,209
Access services 14,073 12,593 40,136 37,911
Long distance services 3,249 3,545 9,873 10,168
Other wireline communications
services 5,921 6,223 17,641 18,022
------- -------- -------- --------
Total telephone operating
revenues 41,148 39,383 120,503 116,310
Wireless communications revenues 3,833 3,025 10,827 8,235
Telephone equipment sales and
services 1,720 1,836 5,600 5,579
------- -------- -------- --------
Total operating revenues 46,701 44,244 136,930 130,124
------- -------- -------- --------
Operating expenses:
Depreciation 8,361 7,828 24,488 23,547
Additional non-recurring
depreciation on cellular
equipment** -- -- -- 3,398
Other operating expenses 21,209 20,731 64,982 62,031
Restructuring charge 1,552 -- 1,552 --
Taxes, other than payroll
and income 844 908 2,518 2,721
-------- -------- -------- --------
Total operating expenses 31,966 29,467 93,540 91,697
-------- -------- -------- --------
Operating Income 14,735 14,777 43,390 38,427
-------- -------- -------- --------
Non-operating income and expense:
Income from interest and other
nvestments 345 482 1,202 1,327
Interest expense and other
deductions 1,435 1,536 4,529 4,681
-------- -------- -------- --------
Net non-operating expense 1,090 1,054 3,327 3,354
-------- -------- -------- --------
(Continued on the following page)
-3-
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
STATEMENTS OF EARNINGS (Cont'd)
(UNAUDITED)
Three Months Ended Nine Months Ended
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1995 1994 1995 1994
(Dollars in Thousands)
Income before income
taxes 13,645 13,723 40,063 35,073
Income taxes 5,266 5,300 15,437 13,494
-------- -------- -------- --------
Net income 8,379 8,423 24,626 21,579
Preferred dividends 57 57 169 169
-------- -------- -------- --------
Earnings available for
common shares $ 8,322 $ 8,366 $24,457 $21,410
======== ======== ======== ========
*Certain reclassifications have been made to the historical statements of
earnings to conform to the current presentation.
**See comments under "Cellular Activities," pages 7 & 8.
</TABLE>
-4-
<TABLE>
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
Sept 30, 1995 Sept 30, 1994
(Dollars in Thousands)
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net income $ 24,626 $ 21,579
-------- --------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 24,512 26,968
Deferred income taxes (329) (1 297)
Changes in assets and liabilities
resulting from operating activites:
Receivables (4,116) (3,008)
Materials, supplies and other assets (2,109) 1,132
Accounts payable and accrued expenses (2,866) 978
Other Liabilities (716) (1,243)
-------- --------
Total adjustments 14,376 23,530
-------- --------
Net cash provided by operating
activities 39,002 45,109
-------- --------
Cash flows from investing activities:
Expenditures for property and equipment (27,837) (19,126)
Net salvage on retirements 2,075 899
-------- --------
Net capital additions (25,762) (18,227)
Purchases and sales of investments and
other assets, net 57 (1,154)
Purchases of temporary investments (1,903) (12,799)
Maturities and sales of temporary
investments 11,469 17,980
-------- --------
Net cash used for investing
activities (16,139) (14,200)
-------- --------
Cash flows used for financing activities:
Dividends to stockholders (17,669) (16,168)
Proceeds from issuance of note payable
to bank -- 1,000
Payments on note payable to bank (8,000) (12,000)
-------- --------
(Continued on following page)
-5-
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
Sept 30, 1995 Sept 30, 1994
(Dollars in Thousands)
Net cash used in financing
activities (25,669) (27,168)
-------- --------
Net increase (decrease) in cash and cash
equivalents (2,806) 3,741
Cash and cash equivalents, beginning of year 17,270 11,646
-------- --------
Cash and cash equivalents, end of quarter $14,464 $15,387
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ 2,974 $ 3,015
======== ========
Income taxes paid $17,315 $17,008
======== ========
</TABLE>
-6-
THE LINCOLN TELEPHONE AND TELEGRAPH COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
Principles of Consolidation and Organization
The Form 10-Q reflects the operations of The Lincoln Telephone and Telegraph
Company (the Company, herein sometimes called LT&T). The Company is a
wholly-owned subsidiary of Lincoln Telecommunications Company. The Company
provides local and long distance telephone service in 22 southeastern
counties of Nebraska. It further provides cellular telecommunications
services in the Lincoln Metropolitan Statistical Area (MSA) (which includes
all of Lancaster County in Nebraska) under the name of Lincoln Telephone
Cellular.
The Company's telephone operations follow accounting for regulated
enterprises prescribed by statement of Financial Accounting Standard (FAS)
No. 71, Accounting for the Effects of Certain Types of Regulation. The
effect of FAS No. 71 results in regulatory assets of approximately
$11,831,000 and $13,745,000 at September 30, 1995 and 1994, respectively,
and regulatory liabilities of approximately $9,503,000 and $11,318,000 at
September 30, 1995 and 1994, respectively.
The Company presently gives accounting recognition to the actions of
regulators where appropriate, as prescribed by FAS No. 71, "Accounting for
the Effects of Certain Types of Regulation." Under FAS No. 71, the Company
records certain assets and liabilities because of the actions of regulators.
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. In the event the Company
determines that it no longer meets the criteria for following FAS No. 71,
the accounting impact to the Company would be a one-time non-cash charge to
operations of an amount which would be material to the consolidated
financial statements. Criteria that give rise to the discontinuance of FAS
No. 71 include increasing competition, which restricts the Company's ability
to establish prices to recover specific costs, possible obsolescence driven
by accelerating technology, and a significant change in the manner in which
rates are set by regulators from cost-based regulation to another form of
regulation. The Company periodically reviews these criteria to ensure that
continuing application of FAS No. 71 is appropriate.
(2) Cellular Activities
Due to changes in technology, customer growth, and usage demand for cellular
services Lincoln Telephone Cellular has purchased a new cellular telephone
system to replace certain existing analog systems.
The system is expected to increase capacity and performance and became
operational in April 1995.
-7-
The implementation of these system upgrades caused the early retirement of
certain existing analog equipment prior to the expiration of its anticipated
useful life. As a result, the Company wrote down the value of these assets
by approximately $3,398,000 in the first quarter of 1994, and $363,000 in
the fourth quarter of 1994. The after-tax impact of this one-time non-cash
charge to earnings was $2,267,000.
(3) Operator Services Force Reduction
During the third quarter, the Company announced its decision to reduce its
operator service workforce from 140 to approximately 50 employees by the
beginning of 1996. The remaining force will handle the Company's long
distance operator service needs. The Company offered retirement and
separation incentives along with out-placement services to those employees
affected by the force adjustment. These actions resulted in a pre-tax non-
recurring charge of $1,552,000 or $936,000 after the income tax effect,
reducing third quarter earnings per share by $0.03. Savings resulting from
new procedures are expected to offset this non-recurring charge within two
years.
(4) Income Taxes
Total income tax expense for the three- and nine-month periods ended
September 30, 1995 and 1994 was $5,266,000 and $5,300,000; and $15,437,000
and $13,494,000, respectively, and was comprised solely of income taxes on
income from continuing operations. Income tax expense (benefit)
attributable to income from continuing operations for the nine-month periods
ended September 30, 1995 and 1994 consists of the following:
Nine Months Ended September 30,
1995 1994
------------ ------------
Current
U.S. Federal $13,507,000 $12,726,000
State and local 3,017,000 2,842,000
------------ ------------
16,524,000 15,568,000
Deferred
U.S. Federal (417,000) (1,273,000)
State and local 181,000 (6,000)
------------ ------------
(236,000) (1,279,000)
Investment tax credits (851,000) (795,000)
------------ ------------
$15,437,000 $13,494,000
============ ============
-8-
Income tax expense differed from the amounts computed by applying the U. S.
Federal income tax rate of 35 percent to pretax income from continuing
operations as stated in the following:
Nine Months Ended September 30,
1995 1994
------------ -------------
Computed "expected" tax
expense $14,022,000 $12,276,000
Increase (reduction) in
income taxes resulting from:
State and local taxes, net
of Federal tax benefit 2,079,000 1,843,000
Non-taxable interest income (46,000) (80,000)
Amortization of regulatory
deferred charges 1,436,000 1,436,000
Amortization of regulatory
deferred liabilities 1,343,000 (1,418,000)
Amortization of investment
tax credits (851,000) (795,000)
Other, net 140,000 232,000
------------ ------------
$15,437,000 $13,494,000
============ ============
The significant components of deferred income tax expense (benefit)
attributable to income from continuing operations for the nine-month periods
ended September 30, 1995 and 1994 were the following:
Nine Months Ended September 30,
1995 1994
------------ -------------
Deferred tax expense (benefit) $ (329,000) $(1,297,000)
Amortization of regulatory
deferred charges 1,436,000 1,436,000
Amortization of regulatory
deferred liabilities (1,343,000) (1,418,000)
------------ ------------
$ (236,000) $(1,279,000)
============ ============
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1995 and December 31, 1994 are presented in the following:
-9-
September 30, 1995 December 31, 1994
------------------ -----------------
Deferred tax assets:
Accumulated post-retirement
benefit cost $17,308,000 $16,739,000
Regulatory deferred credits 4,163,000 4,857,000
Other 2,197,000 2,214,000
------------- -------------
Total gross deferred tax assets 23,668,000 23,810,000
Less valuation allowance 0 0
------------- -------------
Net deferred tax assets $23,668,000 $23,810,000
============= =============
Deferred tax liabilities:
Plant and equipment, principally
due to depreciation differences $38,465,000 $38,577,000
Regulatory deferred charges 3,145,000 3,527,000
Other 1,297,000 1,274,000
-------------- -------------
Total gross deferred tax
liabilities 42,907,000 43,378,000
-------------- -------------
Net deferred tax liabilities $19,239,000 $19,568,000
============== ============
As a result of the nature and amount of the temporary differences which give
rise to the gross deferred tax liabilities and the Company's expected
taxable income in future years, no valuation allowance for deferred tax
assets as of December 31, 1994 and September 30, 1995 was necessary.
(5) Postretirement Benefits
In addition to the Company's defined benefit pension plan, the Company
sponsors a health care plan (Plan) that provides postretirement medical and
other benefits to employees who meet minimum age and service requirements
upon retirement.
The following table presents the Plan's status reconciled with amounts
recognized in the Company's balance sheet at December 31, 1994:
Accumulated Postretirement Benefit Obligation:
Retirees $30,872,000
Fully eligible active plan participants 11,508,000
Other active plan participants 7,276,000
-------------
$49,656,000
Plan assets at fair market value --
Unrecognized prior service cost (164,000)
Unrecognized net loss (7,969,000)
-------------
Accrued postretirement benefit cost
recognized in the balance sheet $41,523,000
=============
For purposes of measuring the benefit obligation, a discount rate of 8.0%
and an 11.7% annual rate of increase in the per capita cost of covered
benefits (i.e., health care cost trend rate) was assumed for 1994. The
projected rates for 1995 are 8.0% and 11.8%, respectively. This rate of
increase was assumed to decrease gradually to 5.5% by the year 2004.
-10-
The Company has not designated any assets to fund Plan obligations. Net
periodic postretirement benefit costs for the nine-month periods ended
September 30, 1995 and 1994 include the following components:
Nine Months Ended September 30,
1995 1994
------------ ------------
Service cost $ 268,000 $ 300,000
Interest cost 2,896,000 2,719,000
Unrecognized prior service cost 8,000 --
Amortization of unrecognized loss 14,700 119,000
------------- ------------
Net periodic postretirement
benefit costs $ 3,319,000 $ 3,138,000
For purposes of measuring the benefit costs, a discount rate of 8.0% and an
11.8% annual rate of increase in the health care cost trend rate was assumed
for 1995, 8.0% and 11.7% for 1994. This rate of increase was assumed to
decrease gradually to 5.5% by the year 2004. The health care cost trend
rate assumptions have a significant effect on the amounts reported.
(6) Temporary Investments
Effective December 31, 1994, the Company adopted Statement of Financial
Accounting Standards (FAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities. The Company will apply the provisions of this
accounting standard prospectively.
FAS No. 115 requires fair value reporting for certain investments in debt
and equity securities. Pursuant to FAS No. 115, the Company has classified
all of its investments as "available for sale" at September 30, 1995. This
information is summarized as follows:
Estimated
Amortized Gross Unrealized Market
Cost Gains Losses Value
--------- ------ ------- ---------
Equity Securities $ 1,415,000 41,000 (31,000) 1,425,000
U.S. Government
obligations 508,000 -- (20,000) 488,000
U.S. Government agency
obligations 5,532,000 107,000 (155,000) 5,484,000
Corporate debt
securities 3,306,000 15,000 (275,000) 3,046,000
----------- ------- --------- ----------
$10,762,000 162,000 (467,000) 10,444,000
=========== ======= ========= ===========
The net unrealized loss on investments available for sale is not reported
separately as a component of stockholders' equity due to its insignificance
to the consolidated balance sheet at September 30, 1995.
The amortized cost and estimated market value of debt securities at
September 30, 1995, by contractual maturity, are shown in the following.
Expected maturities will differ from the contractual maturities because
borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.
-11-
Estimated
Amortized Market
Cost Value
----------- -----------
Due after three months through
five years $ 7,507,000 $ 7,223,000
Due after five years through
ten years 1,840,000 1,796,000
----------- -----------
$ 9,347,000 $ 9,019,000
=========== ===========
The gross realized gains and losses on the sale of securities were
insignificant to the consolidated financial statements for the quarter ended
September 30, 1995. The Company does not invest in securities classified as
held to maturity or traded securities.
-12-
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Total capital additions to telephone plant for 1995 are projected to be
$42,185,000. During the three- and nine-month periods ended September 30,
1995 and 1994, capital additions exceeded cash provided by operating
activities, less dividends paid. Short-term borrowings and temporary
investments are used to fund the additions in excess of cash provided by
operating activities. These additions included $11,396,000 of the cost of
the new cellular telephone switch put in operation in April 1995.
Short-term borrowings of $35,000,000 were completed July 6, 1993. These
borrowings were used to fund the call of long-term First Mortgage Bond
Issues G, I, and J. This short-term debt was reduced to $9,000,000 by
September 30, 1995. No long-term borrowings are anticipated for the balance
of 1995.
Results of Operations
Revenues
Third Quarter 1995 Nine Months 1995
Increase (Decrease) Increase (Decrease)
Over Third Over Nine
Quarter 1994 Months 1994
------------------- -------------------
Operating Revenues:
Local network services 5.2% 5.3%
Access services 11.8% 5.9%
Long distance services (8.3%) (2.9%)
Other wireline communications
services (4.9%) (2.1%)
Total telephone operating
revenues 4.5% 3.6%
Wireless communication services 26.7% 31.5%
Telephone equipment sales
and service (6.3%) .4%
Total operating revenues 5.6% 5.2%
All comparisons hereinafter made are of the third quarter and nine-month
periods for 1995 with the same periods in 1994. The adjustments included
are all of a normal recurring nature except when noted as extraordinary or
nonrecurring.
Local network services revenue increased $833,000 (5.2%) and $2,644,000
(5.3%), respectively. Basic local services revenue increased $666,000
(5.4%) and $1,828,000 (5.0%) led by strong growth in small business, PBX
and Centrex services revenue for the three- and nine-month periods.
Landline access lines in service grew by 7,640 (3.1%) from September 30,
1994. Revenue from Custom Calling-CLASS services increased $109,000
(38.3%) and $282,000 (32.5%), respectively.
-13-
Access services revenue increased $1,480,000 (11.8%) and $2,225,000 (5.9%),
respectively. Interstate access service revenues increased $1,235,000
(16.5%) and $1,254,000 (5.4%), respectively, principally due to the
expiration of a liability for the 1991-92 monitoring period and new tariffs
which became effective in the third quarter. Intrastate access services
revenues have increased uniformly due to increased traffic $235,000 (4.6%)
and $971,000 (6.5%) for the three- and nine-month periods. Overall minutes
of use increased by 7.1% and 7.3%, respectively.
Long distance revenue decreased $296,000 (8.3%) and $296,000 (2.9%) for the
three- and nine-month periods.
Other wireline communications services, consisting of directory advertising
and sales carrier billing and collections, data communications, and
miscellaneous items, decreased $302,000 (4.9%) and $381,000 (2.1%),
respectively.
Wireless communications services revenues increased $808,000 (26.7%) and
$2,592,000 (31.5%) reflectively. Through nine months in 1995, 5,306
new cellular customers were added.
Total operating revenues increased $2,457,000 (5.6%) and $6,806,000 (5.2%)
for the three- and nine-month periods ended September 30, 1995 over the same
periods in 1994.
Operating Expenses
Third Quarter 1995 Nine Months 1995
Increase (Decrease) Increase (Decrease)
Over Third Over Nine
Quarter 1994 Months 1994
------------------- -------------------
Depreciation 6.8% 4.0%
Additional nonrecurring
depreciation on cellular
equipment -- (100.0%)
Other operating expenses 2.3% 4.8%
Restructuring charge -- --
Taxes, other than payroll
and income (7.0%) (7.5%)
Total operating expenses 8.5% (2.0%)
All comparisons hereinafter made are of the third quarter and nine-month
periods for 1995 with the same periods in 1994. The adjustments included
are all of a normal recurring nature except when noted as extraordinary or
nonrecurring.
The restructuring charge of $1,522,000 is due to the Operator Services
workforce reduction discussed previously on page 8.
Total operating expenses increased $2,499,000 (8.5%) for the three-month
period ended September 30, 1995 over the same period in 1994, and increased
$1,843,000 (2.0%) for the nine-month period compared to the same nine-month
period in 1994.
-14-
Non-Operating Income (Expense)
Third Quarter 1995 Nine Months 1995
Increase (Decrease) Increase (Decrease)
Over Third Over Nine
Quarter 1994 Months 1994
------------------- -------------------
Income from interest and
other investments (28.4%) (9.4%)
Interest expense and other
deductions (6.6%) (3.2%)
Net non-operating expenses 3.4% (.8%)
Interest expense and other deductions decreased slightly $101,000 (6.6%) and
$152,000 (3.2%) for the third quarter and nine-month periods when compared
to 1994.
Income Taxes
Income taxes decreased $34,000 (.6%) and increased $1,943,000 (14.4%) for
the three- and nine-month periods over the same periods in 1994. The third
quarter decrease is the result of the restructuring charge discussed
previously on page 8. The nine-month increase is primarily due to increased
income. For a detailed explanation of the increase, see table on page 8.
-15-
PART II - OTHER INFORMATION
Item 1-4 - Not applicable
Item 5 - Labor Agreements
Three-year agreements between LT&T and the Communications
Workers of America (CWA) expired on October 15, 1995.
A new three-year agreement was reached on October 16,
1995, and became effective immediately. The contract
includes a general wage increase of 10.9% over the three-year
period.
Item 6 - a) Not applicable
b) During the quarter ended September 30, 1995, the
Registrant did not file a Form 8-K.
-16-
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.
The Lincoln Telephone and Telegraph Company
(Registrant)
November 14, 1995 /s/ Robert L. Tyler
Date..................... ......................................
(Signature)
Robert L. Tyler, Senior Vice President-
Chief Financial Officer
November 14, 1995 /s/ Michael J. Tavlin
Date..................... ......................................
(Signature)
Michael J. Tavlin, Vice President-
Treasurer
-17-
Form 10-Q
Exhibit Index
Exhibit Title Page No.
27 Financial Data Schedule
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000059584
<NAME> LINCOLN TELEPHONE & TELEGRAPH COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 14464
<SECURITIES> 10551
<RECEIVABLES> 27092
<ALLOWANCES> 104
<INVENTORY> 4715
<CURRENT-ASSETS> 57269
<PP&E> 469048
<DEPRECIATION> 227237
<TOTAL-ASSETS> 322799
<CURRENT-LIABILITIES> 44886
<BONDS> 44000
<COMMON> 3
0
4499
<OTHER-SE> 145514
<TOTAL-LIABILITY-AND-EQUITY> 322799
<SALES> 2131
<TOTAL-REVENUES> 136930
<CGS> 1911
<TOTAL-COSTS> 43391
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 88
<INTEREST-EXPENSE> 4529
<INCOME-PRETAX> 40063
<INCOME-TAX> 15437
<INCOME-CONTINUING> 24626
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24457
<EPS-PRIMARY> 24.457
<EPS-DILUTED> 24.457
</TABLE>
