SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 28, 1994
AMERITECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-8612 36-325148
Commission File Number IRS Employer ID No.
30 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices)
Registrant's telephone number, including area code: (312)750-5000
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Item 5. Other Events
On November 28, 1994, Ameritech Corporation (the "Company") announced
that it will discontinue the application of Statement of Financial
Accounting Standards No. 71 ("SFAS No. 71"), "Accounting for the
Effects of Certain Types of Regulation." As a result, the Company
will record in the fourth quarter an extraordinary noncash charge of
approximately $2.25 billion after taxes, or about $4.08 per share.
Under SFAS No. 71, the Company's five telephone subsidiaries have
accounted for the effects of regulation by depreciating
telecommunications plant using asset lives prescribed by regulators
and deferring certain costs and recognizing certain liabilities
("regulatory assets and liabilities").
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 has
periodically reviewed these criteria and, in light of recent changes
in its competitive and regulatory environments, concluded that
continued application of SFAS No. 71 was no long appropriate.
As a result of the discontinuation of applying SFAS No. 71, the
Company recognized a noncash, after-tax extraordinary charge of $2.25
billion by reducing the net carrying value of its telecommunications
plant and eliminated regulatory assets and liabilities from its
balance sheet. The adjustment to telecommunications plant was about
$3.7 billion and was recorded as an increase to the accumulated
depreciation balance. The discontinuation of applying SFAS No. 71
does not affect the accounting and reporting followed by the telephone
subsidiaries to state and federal regulators.
When adjusting its net telecommunications plant, the Company gave
effect to shorter, more economically realistic lives. To follow is a
summary of average lives before and after the discontinuance of SFAS
No. 71.
Asset Category Before After
-------------- ------ -----
Digital switching 17 7
Analog switching up to 4 obsolete
Circuit accounts 8-12 7
Copper and fiber 20-32 15
All other various various
In addition to the SFAS No. 71 discontinuance, the Company announced
that it will reduce certain asset values, primarily for real estate
that it plans to sell or no longer use in the business. The reduction
of $61.3 million after taxes, reflects the disposition value of these
assets. Disposition of these assets will not have a material effect
on the revenues or expenses of the Company in the future.
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Pursuant to the requirements of the Securities and Exchange Act
of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: December 1, 1994
AMERITECH CORPORATION
By /s/ Bruce B. Howat
Bruce B. Howat
Secretary
