Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 Number 1-3435
NEW YORK TELEPHONE COMPANY
Incorporated under the laws of the State of New York
I.R.S. Employer Identification Number 13-5275510
1095 Avenue of the Americas, New York, New York 10036
Telephone Number (212) 395-2121
THE REGISTRANT, A WHOLLY OWNED SUBSIDIARY OF NYNEX 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 THE
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 .
<PAGE>
Form 10-Q Part I New York Telephone Company
PART I - FINANCIAL INFORMATION
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(In Millions) (Unaudited)
<CAPTION>
For The Three Months Ended
March 31,
1995 1994
<S> <C> <C>
OPERATING REVENUES
Local service $1,192.1 $1,168.2
Long distance 86.2 88.3
Network access 567.6 567.6
Other 83.8 95.4
Total operating revenues 1,929.7 1,919.5
OPERATING EXPENSES
Maintenance and support 599.6 628.0
Depreciation and amortization 358.1 367.2
Marketing and customer services 231.3 249.7
Taxes other than income taxes 200.4 200.0
Provision for uncollectibles 21.8 21.2
Other 212.0 147.6
Total operating expenses 1,623.2 1,613.7
Operating income 306.5 305.8
Other income - net 4.2 3.3
Interest expense 83.9 74.7
Earnings before Income taxes 226.8 234.4
Income taxes 72.2 72.2
NET INCOME $ 154.6 $ 162.2
Retained Earnings
Beginning of period $ 702.2 $1,082.0
Net income 154.6 162.2
Dividends (180.5) (181.3)
End of period $ 676.3 $1,062.9
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Form 10-Q Part I New York Telephone Company
<TABLE>
CONSOLIDATED BALANCE SHEETS
(In Millions)
<CAPTION>
March 31, December 31,
1995 1994
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and temporary cash investments $ 27.3 $ 23.1
Receivables (net of allowance of $130.3
and $133.6, respectively) 1,511.5 1,484.4
Deferred charges 59.9 39.0
Deferred income taxes 28.9 105.1
Inventory 100.6 73.5
Prepaid expenses and other 107.0 57.2
Total current assets 1,835.2 1,782.3
Telephone plant - at cost 20,354.1 20,129.6
Less: accumulated depreciation 8,395.3 8,106.9
11,958.8 12,022.7
Deferred charges and other 1,459.3 1,491.2
Total Assets $15,253.3 $15,296.2
LIABILITIES AND SHARE OWNER'S EQUITY
Current liabilities:
Accounts payable $ 1,803.3 $ 1,996.4
Short-term debt 406.2 294.2
Dividends payable 180.5 181.2
Taxes accrued 132.5 72.9
Advance billing and customers' deposits 179.8 178.3
Interest accrued 65.2 74.7
Total current liabilities 2,767.5 2,797.7
Long-term debt 3,971.1 3,972.4
Deferred income taxes 1,425.2 1,611.3
Unamortized investment tax credits 205.7 212.5
Other long-term liabilities and deferred
credits 2,104.3 1,896.9
Total liabilities
10,473.8 10,490.8
Commitments and contingencies (Notes (e)
and (f))
Share owner's equity:
Common stock - one share, without par value 4,103.2 4,103.2
Retained earnings 676.3 702.2
Total share owner's equity 4,779.5 4,805.4
Total Liabilities and Share Owner's Equity $15,253.3 $15,296.2
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Form 10-Q Part I New York Telephone Company
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions) (Unaudited)
<CAPTION>
For The Three Months Ended
March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 154.6 $ 162.2
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 358.1 367.2
Allowance for funds used during
construction - equity component (4.6) (4.7)
Change in operating assets and liabilities:
Receivables (27.1) 59.2
Current Deferred charges, Current Deferred
income taxes, Inventory and
Prepaid expenses and other (21.6) 2.5
Accounts payable, Taxes Accrued,
Advance billing and customers'
deposits and Interest accrued (141.5) (15.6)
Deferred income taxes and Unamortized
investment tax credits (192.9) (115.2)
Other long-term liabilities and
deferred credits 207.4 31.7
Other - net 19.7 (16.5)
Total adjustments 197.5 308.6
Net cash provided by operating
activities 352.1 470.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (277.1) (266.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from NYNEX 111.9 (590.2)
Dividends paid to NYNEX (181.2) (181.0)
Issuance of long-term debt - 593.5
Repayment of long-term debt and
capital leases (1.5) (1.4)
Net cash used in financing
activities (70.8) (179.1)
Net increase in Cash and
temporary cash investments 4.2 25.0
Cash and temporary cash investments at
beginning of period 23.1 7.5
Cash and temporary cash investments at
end of period $ 27.3 $ 32.5
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Form 10-Q Part I New York Telephone Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(a) BASIS OF PRESENTATION - The consolidated financial
statements have been prepared by New York Telephone Company (the
"Company"), a wholly owned subsidiary of NYNEX Corporation
("NYNEX"), pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC") and, in the
opinion of Management, include all adjustments (consisting only
of normal recurring adjustments) necessary for a fair
presentation of the financial information for each period shown.
Certain information and footnote disclosures normally included in
consolidated 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 to make the
information presented not misleading. Certain information in the
consolidated financial statements for 1994 has been reclassified
to conform to the current year's presentation. The results for
interim periods are not necessarily indicative of the results for
the full year. These consolidated financial statements should be
read in conjunction with the consolidated financial statements
and notes thereto included in the Company's 1994 Annual Report on
Form 10-K.
(b) CASH AND TEMPORARY CASH INVESTMENTS - The Company's cash
management policy is to make funds available in banks when checks
are presented. At March 31, 1995, the Company had recorded in
Accounts payable checks outstanding but not yet presented for
payment of $42.9 million.
(c) ADOPTION OF FINANCIAL ACCOUNTING STANDARDS - Effective
January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 116, "Accounting for Contributions
Received and Contributions Made" ("Statement No. 116"). The
effect of implementing Statement No. 116 on the Company's results
of operations and financial position was insignificant.
(d) SUPPLEMENTAL INFORMATION - The following information is
provided in accordance with Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows":
<TABLE>
<CAPTION>
For the
Three Months Ended
March 31,
1995 1994
(In Millions)
<S> <C> <C>
Income tax payments (refunds) $ 46.9 $(40.4)
Interest payments $ 83.2 $ 62.8
</TABLE>
(e) REVENUES SUBJECT TO POSSIBLE REFUND - Several state and
federal regulatory matters, including affiliate transactions
issues in the Company's 1990 intrastate rate case ($201.8
million), service issues in the Company's incentive regulation
proceeding ($50.0 million), and other matters ($30.5 million),
may possibly require the refund of a portion of the revenues
collected in the current and prior periods. As of March 31,
1995, the
<PAGE>
Form 10-Q Part I New York Telephone Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
aggregate amount of such revenues that was estimated to be
subject to possible refund was approximately $282.3 million, plus
related interest. The outcome of each pending matter, as well as
the time frame within which each will be resolved, is not
presently determinable.
(f) LITIGATION AND OTHER CONTINGENCIES - It is probable that
local tax claims aggregating approximately $225 million in tax
and $161 million in associated interest will be asserted against
the Company for the period 1984 through the first quarter of
1995. The claims relate to the taxability of the Company's
interstate and intrastate network access revenues. The current
status is that these matters have been identified as possible
audit adjustments by the taxing authority, and the Company is
presenting its arguments against those adjustments. While the
Company's counsel cannot give assurance as to the outcome,
counsel believes that the Company has strong legal positions in
these matters.
Various other legal actions and regulatory proceedings are
pending that may affect the Company, including matters involving
Racketeer Influenced and Corrupt Organizations Act, antitrust,
tort, contract and tax deficiency claims. While counsel cannot
give assurance as to the outcome of any of these matters, in the
opinion of Management based upon the advice of counsel, the
ultimate resolution of these matters in future periods is not
expected to have a material effect on the Company's financial
position but could have a material effect on annual operating
results.
<PAGE>
Form 10-Q Part I New York Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
The following Management's Narrative Analysis of Results of
Operations is provided pursuant to General Instruction H(2) to
Form 10-Q.
Results of Operations
For the three months ended March 31, 1995 and 1994, net income
was $154.6 and $162.2 million, respectively. Results for the
first quarter of 1995 included an after-tax charge of $22.0
million for pension enhancements, for approximately 270 employees
who elected during the quarter to leave the Company under
retirement incentives and for the Company's allocation from
Telesector Resources Group, Inc. ("Telesector Resources") for its
pension enhancements. A portion of the year-end 1993 accrual for
severance was utilized on a per employee basis, and the
incremental costs of the pension enhancements were recorded.
Results for the first quarter of 1994 did not include charges for
retirement incentives.
Operating revenues increased $10.2 million over the first quarter
of 1994 principally due to: 1) growth in access lines and sales
of calling features, 2) interstate rate reductions, and 3) a
reduction in directory licensing agreement revenues.
Operating expenses, excluding the pension enhancement charges,
decreased $24.3 million, or 1.5%, from the first quarter of 1994
as force reductions and process re-engineering continued.
State Regulatory Matters
As previously reported (see the Company's Annual Report on Form
10-K for the year ended December 31, 1994), on September 26,
1994, the Company, the New York State Department of Public
Service Staff and 15 other parties filed a proposed Regulatory
Plan (the "Plan") for approval by the New York State Public
Service Commission ("NYSPSC"). The Plan would modify the manner
in which the Company is regulated by the NYSPSC over the next
five to seven years. The Plan was developed by the parties in
the third phase of the incentive regulation proceeding that the
NYSPSC instituted in 1992. In the first phase of the proceeding,
the NYSPSC ordered the Company's rates to be reduced by $170
million annually, effective January 1, 1994, and required that an
additional $153 million of revenues annually be set aside for
short-term service incentive plans and a longer term plan for
performance-based earnings incentives and network improvements to
be determined in the proceeding. The NYSPSC's decision on the
Plan is expected in the second quarter of 1995.
The Company and the NYSPSC agreed to a service quality plan for
1994 ("the Service Plan"). In the Service Plan, the Company
committed to achieve certain measurable levels of customer
service, or, failing to achieve those levels, accept a penalty,
the amount of which would be determined by the achieved service
performance levels. Based on service performance results through
December 31, 1994, it is probable that the Company will incur a
penalty
<PAGE>
Form 10-Q Part I New York Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
obligation. The precise amount of the penalty obligation cannot
be determined pending further NYSPSC action regarding the waiver
of certain service results for the period in question, but it is
estimated that the obligation will be in the range of $40 to $50
million. The Service Plan is silent as to how the Company must
satisfy any obligation. The ultimate resolution as to the
disposition of the Service Plan obligation through an additional
capital investment to improve infrastructure, a refund to
ratepayers, or other means, will be made by the NYSPSC in the
future. The NYSPSC may allow all interested parties the
opportunity to state their positions.
<TABLE>
Operating Revenues
Operating revenues for the three months ended March 31, 1995
increased $10.2 million over the same period last year. This
increase is comprised of the following:
<CAPTION>
Increase (Decrease)
(In Millions)
<S> <C>
Local service $23.9
Long distance (2.1)
Network access -
Other (11.6)
$10.2
</TABLE>
Local service revenues are earned from the provision of local
exchange, local private line and local public network services.
The increase in Local service revenues was primarily due to
increased demand, driven by growth in access lines and sales of
calling features.
Long distance revenues are earned from the provision of services
beyond the local
service area, but within the local access and transport area
("LATA"), and include public and private network switching. The
decrease in Long distance revenues was primarily attributable to
a decrease in demand for private line and wide area
telecommunications services as a result of increased competition
and customer shifts to lower priced services offered by the
Company.
Network access revenues are earned from the provision of exchange
access services primarily to interexchange carriers. Switched
access revenues decreased a net $3 million principally due to a
reduction in interstate rates partially offset by increased
demand. Special access revenues increased $3 million primarily
due to increased demand.
<PAGE>
Form 10-Q Part I New York Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Other revenues are earned from the provision of products and
services other than Local service, Long distance and Network
access. The decrease in Other revenues was due principally to a
$7 million decrease in billing and collection revenues pursuant
to the contract with AT&T Corp. ("AT&T"), and a net $6 million
decrease in revenues related to the directory licensing agreement
with NYNEX Information Resources Company ("Information
Resources") as a result of Information Resources' pension
enhancement costs recorded in the first quarter of 1995 lowering
their pretax earnings.
<TABLE>
Operating Expenses
Operating expenses for the three months ended March 31, 1995
increased
$9.5 million over the same period last year. This increase is
comprised of the following:
<CAPTION>
Increase (Decrease)
(In Millions)
<S> <C>
Depreciation and amortization $ (9.1)
Taxes other than income taxes 0.4
All other:
Business restructuring charges
recorded in 1995 33.8
Employee related (19.7)
Other 4.1
$ 9.5
</TABLE>
Depreciation and amortization decreased $9.1 million from the
same period last year due principally to a change in interstate
depreciation rates which lowered expense, partially offset by an
increase in depreciable plant investment.
Business restructuring charges recorded in 1995 consisted of
incremental costs related to pension enhancements. In the first
quarter of 1995, $33.8 million of pretax charges ($22.0 million
after-tax) was recorded for approximately 120 management and 150
nonmanagement employees who elected during the quarter to leave
under retirement incentives and for the Company's allocation from
Telesector Resources. The components of the pretax charges are
as follows: $23.2 million ($15.1 million after-tax) for pension
enhancements, $1.6 million ($1.0 million after-tax) for
associated postretirement medical benefits, $6.2 million
($4.0 million after-tax) for charges allocated to the Company
from Telesector Resources for its pension enhancements and $2.8
million ($1.9 million after-tax) for its associated
postretirement medical benefits. Much of the cost of the
enhancements will be funded by NYNEX's pension plans.
<PAGE>
Form 10-Q Part I New York Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Employee related costs consist primarily of wages, payroll taxes,
and employee benefits. Wages and payroll taxes decreased $26
million principally due to
reductions in the Company's work force attributable to the
Company's force reduction program and the transfer of employees
to Telesector Resources associated with re-engineering the way
service is delivered to customers (see Other operating expenses
below), partially offset by increases in salary and wage rates.
Benefit expenses increased a net $6 million primarily due to
increased amortization of deferred pension costs pursuant to an
NYSPSC approved plan, a decrease in pension expense resulting
from plan amendments and active plan experience, and a net
increase in medical costs for retirees principally due to the
requirements of the collective bargaining agreements and other
medical plan amendments partially offset by the effect of force
reductions.
Other operating expenses consist primarily of contracted and
centralized services, rent and other general and administrative
costs. The increase was due principally to a $33 million
increase in charges from affiliated companies primarily
attributable to increases in Telesector Resources' contracted and
centralized services and salary and wage rates, and the transfer
of employees from the Company to Telesector Resources (see
Employee related costs above). This increase was partially
offset by a $12 million decrease in expenses primarily due to the
transfer of functions to Telesector Resources (see Employee
related costs above) and to the Company's force reduction
program. In addition, there was a $7 million decrease in bad
debt expense recognized pursuant to provisions of the billing and
collection contract, primarily with AT&T, a $3 million decrease
in right to use fees resulting from decreased software deployment
and a $3 million decrease in rental expense primarily
attributable to the Company's building consolidation and lease
termination efforts.
Interest Expense
Interest expense for the three months ended March 31, 1995
increased $9.2 million over the same period last year. This
increase was due principally to a $7 million increase in interest
on funded debt as a result of the issuance of $600 million of
long-term debt in February 1994, a $3 million increase in
interest due to interest on the revenue set aside as ordered by
the NYSPSC (see State Regulatory Matters), and higher short-term
interest rates.
Income Taxes
Income taxes did not change from the same period last year.
Increases resulted from a decrease in amortization of investment
tax credits and a lower level of excess deferred tax reversals,
using the average rate assumption method, which had been deferred
at a rate higher than the current statutory rate. These
increases were offset by a decrease in pretax income.
<PAGE>
Form 10-Q Part I New York Telephone Company
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Current Status of Business Restructuring
<TABLE>
Reserve Utilization in 1995
<CAPTION>
The restructuring reserve balance at March 31, 1995, which does
not include the liability recorded at year-end for postretirement
medical benefits associated with employees' leaving the Company
under the business restructuring, was approximately $363 million.
In the first quarter of 1995, the Company reduced 1993
restructuring reserves by approximately $59 million in the
following categories:
<S> <C> <C> <C>
Severance
Management $10
Nonmanagement 2
Total Severance $12
Severance transferred to
Telesector Resources 7
Process Re-engineering:
Systems redesign:
Customer contact -
Customer provisioning -
Customer operations 1
Customer support -
Total systems redesign $ 1
Work center consolidation -
Branding 1
Relocation -
Training -
Re-engineering implementation -
Subtotal 2
Telesector Resources allocated reserves:
Systems re-engineering 30
Re-engineering implementation 8
Work center consolidation -
Total allocated 38
Total process re-engineering 40
Total $59
</TABLE>
The severance reduction amount is comprised of severance reserves
transferred to the pension liability on a per employee basis as a
result of employees' leaving under the pension enhancements as
opposed to severance provisions as previously accrued for. $7
million was transferred from the Company to Telesector Resources
to cover severance costs associated with employees who
transferred from the Company to Telesector Resources and
subsequently left under the pension enhancements.
Cost Savings
During the first quarter of 1995, the Company experienced a
reduction in wages of approximately $38 million as well as a $16
million reduction in costs allocated from Telesector Resources as
a result of employees' leaving under retirement incentives.
<PAGE>
Form 10-Q Part I New York Telephone Company
Financing
At March 31, 1995, the Company had $250 million of unissued,
unsecured debt securities registered with the SEC.
<PAGE>
Form 10-Q Part II New York Telephone Company
PART II - OTHER INFORMATION
Item 5. Other Information
Federal Regulatory Matters
Price Caps
On March 30, 1995, the Federal Communications Commission
("FCC") announced interim changes in the price cap rules
for local exchange carriers ("LECs") pending a further
notice of proposed rulemaking that the FCC hopes to
complete by early 1996. The FCC price cap formula
adjusts the limits on access price levels ("price cap
index" or "PCI") upward for inflation, downward for
productivity improvement and up or down for exogenous
costs. Under the interim rules each LEC will choose one
of three productivity factor offsets to be used in
setting its price cap index. LECs adopting the highest
productivity factor will retain all interstate earnings.
The two other options entail sharing of earnings and will
allow an LEC to achieve a maximum interstate rate of
return of either 14.25% or 12.75%.
The FCC also determined that the original 3.3%
productivity factor adopted in 1991 and used since then
by most LECs was understated. Accordingly, the FCC's
order requires those LECs, including New York Telephone
Company ("the Company"), to make up front reductions to
"reinitialize" their respective PCIs. The FCC also
revised the criteria for including exogenous cost changes
in the calculation of the PCI. As a result, the LECs
will be required to recalculate their PCIs on a
prospective basis to exclude cost increases due to
changes in the accounting treatment of Other
Postemployment Benefit expenses.
The Company and New England Telephone and Telegraph
Company (collectively, the "Telephone Companies") are
scheduled to file tariffs in May 1995 to implement the
fifth annual update to the price cap rates, including the
adjustments ordered by the FCC. The tariffs, which are
to become effective August 1, 1995, will reduce the
Telephone Companies' interstate access rates by
approximately $79 million for the tariff period ending
June 30, 1996.
The FCC gave the LECs additional pricing flexibility in
certain service categories and announced its intention to
examine broader questions of regulatory reform, including
the elimination of earnings sharing and a transition to a
streamlined regulatory structure, in the further notice
of proposed rulemaking.
Other Federal Regulatory Matters
Tariff revisions filed by the Telephone Companies with
the FCC became effective on April 29, 1995, to recover an
additional $2.3 million of exogenous costs resulting from
the implementation of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for
<PAGE>
Form 10-Q Part II New York Telephone Company
Postretirement Benefits Other Than Pensions". Collection
of these revenues is subject to possible refund pending
resolution of the FCC's Common Carrier Bureau
investigation (see the Company's Annual Report on Form 10-
K for the year ended December 31, 1994).
On May 2, 1995, the Telephone Companies filed their
response to the FCC's March 3, 1995 Order to Show Cause
in connection with an audit of costs reported by the LECs
to the National Exchange Carrier Association. In that
response the Telephone Companies argued that no
forfeitures or price cap reductions should be imposed,
and that their internal processes are in compliance with
the FCC's rules.
On May 4, 1995, the FCC approved, with modifications, the
Universal Service Preservation Plan ("USPP") filed by the
Telephone Companies in December 1993. As approved, the
USPP applies only in the New York City metropolitan area.
The FCC's action will allow the Company to reduce its
switched access rates and to shift some of the revenues
lost from this rate reduction to flat, per-line charges
applicable to access lines in this area and to other rate
elements. These actions should improve the ability of
the Company to compete more effectively with alternative
providers of local telephone service. It is anticipated
that the initial rate changes made pursuant to the USPP
will not reduce overall access revenues.
Effects of Regulatory Accounting
The Telephone Companies currently account for their
operations in accordance with the provisions of Statement
of Financial Accounting Standards No. 71, "Accounting for
the Effects of Certain Types of Regulation" ("Statement
No. 71"). The provisions of Statement No. 71 are
followed when the regulation of an enterprise's rates is
intended to permit recovery of the enterprise's costs and
such rates are likely to be collected from customers.
This process can create assets or liabilities solely by
the action of the regulatory authorities. Under
Statement No. 71, companies generally depreciate plant
and equipment over lives approved by regulators.
Statement No. 71 also requires deferral of certain costs
and obligations based on approvals received from
regulators. In the event that the recoverability of
costs through rates becomes unlikely or uncertain,
whether resulting from competitive effects or specific
regulatory actions, Statement No. 71 would no longer
apply. NYNEX Corporation and the Telephone Companies
continually assess their position and the recoverability
of their telecommunications assets with respect to
Statement No. 71 and believe that Statement No. 71 still
applies. However, it is possible that events in the
industry, the markets in which the Telephone Companies
operate and the possible effects of regulatory and
legislative initiatives could change the Telephone
Companies' position in the near future. In that event,
implementation of Statement of Financial Accounting
Standards No. 101, "Regulated Enterprises - Accounting
for the Discontinuation
<PAGE>
Form 10-Q New York Telephone Company
of Application of FASB Statement No. 71" ("Statement No.
101"), would require the write-off of previously
established regulatory assets and liabilities, including
the adjustment of certain plant balances to reflect the
difference between recorded depreciation and the amount
of depreciation that would have been recorded had the
Telephone Companies not been subject to rate regulation.
The impact of such a change would result in a material
non-cash charge and would be reported as an extraordinary
item. This charge could also include an adjustment to
the carrying value of telephone plant if it is
determined, using a projected cash flow approach, that
impairment exists. While the effect of implementing
Statement No. 101 cannot be precisely estimated at this
time, Management believes that the total non-cash effect
of the accounting change on the Company's net income
would be between $2.2 and $2.8 billion.
Other
On April 13, 1995, it was announced that the seven
regional holding Companies ("RHCs"), including NYNEX
Corporation, have decided to pursue the disposition of
Bell Communications Research, Inc. ("Bellcore"). Each of
the RHCs owns an equal interest in Bellcore. A final
decision regarding the disposition of their interests and
the structure of such a transaction will be subject to
obtaining satisfactory financial and other terms and
necessary approvals.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number
(27) Financial Data Schedule
(b) Reports on Form 8-K
No Report on Form 8-K was filed by the registrant during
the quarter for which this report is filed.
<PAGE>
Form 10-Q New York Telephone Company
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.
New York Telephone Company
Mel Meskin
Mel Meskin
Vice President - Finance and Treasurer
(Principal Financial and Accounting
Officer)
May 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000071689
<NAME> NEW YORK TELEPHONE COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 27
<SECURITIES> 0
<RECEIVABLES> 1,512
<ALLOWANCES> 130
<INVENTORY> 101
<CURRENT-ASSETS> 1,835
<PP&E> 20,354
<DEPRECIATION> 8,395
<TOTAL-ASSETS> 15,253
<CURRENT-LIABILITIES> 2,768
<BONDS> 3,971
<COMMON> 4,103
0
0
<OTHER-SE> 676
<TOTAL-LIABILITY-AND-EQUITY> 15,253
<SALES> 0
<TOTAL-REVENUES> 1,930
<CGS> 0
<TOTAL-COSTS> 1,623
<OTHER-EXPENSES> (4)
<LOSS-PROVISION> 22
<INTEREST-EXPENSE> 84
<INCOME-PRETAX> 227
<INCOME-TAX> 72
<INCOME-CONTINUING> 155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
