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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)......FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-8612
AMERITECH CORPORATION
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A DELAWARE CORPORATION I.R.S. Employer No.
36-3251481
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30 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
TELEPHONE NUMBER 312-750-5000
Securities registered pursuant to Section 12(b) of the Act: Common Stock (Par
Value $1.00 Per Share) Preference Stock Purchase Rights
Securities registered pursuant to Section 12(g) of the Act: None
Exchanges on which registered: Common Stock: New York, Chicago, Boston, Pacific
and Philadelphia Preference Stock Purchase Rights: New York
Based on the average sales price on February 28, 1994, the aggregate market
value of the voting stock held by non-affiliates was $22,074,804,907.
At February 28, 1994, 547,626,021 common shares and preference stock
purchase rights were outstanding.
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 / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy statement or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [x].
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the registrant's annual report to security holders for the year
ended December 31, 1993 (Part II).
(2) Portions of the registrant's definitive proxy statement dated March 1, 1994
issued in connection with the annual meeting of shareowners (Part III).
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TABLE OF CONTENTS
PART I
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ITEM PAGE
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1. Business........................................................................ 1
2. Properties...................................................................... 11
3. Legal Proceedings............................................................... 12
4. Submission of Matters to a Vote of Security Holders............................. 12
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters........... 14
6. Selected Financial and Operating Data........................................... 14
7. Management's Discussion and Analysis of Financial Condition and Results of 14
Operations......................................................................
8. Financial Statements and Supplementary Data..................................... 14
9. Changes in and Disagreements with Accountants on Accounting and Financial 14
Disclosure......................................................................
PART III
10. Directors and Executive Officers of the Registrant.............................. 15
11. Executive Compensation.......................................................... 15
12. Security Ownership of Certain Beneficial Owners and Management.................. 15
13. Certain Relationships and Related Transactions.................................. 15
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................ 15
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PART I
ITEM 1. BUSINESS.
THE COMPANY
Ameritech Corporation (Ameritech or the Company), incorporated in 1983
under the laws of the State of Delaware, with its principal executive offices at
30 South Wacker Drive, Chicago, Illinois 60606 (telephone number 312-750-5000),
is a leading supplier of full service communications and advanced information
services, primarily to 12 million customers in the Midwest. It also has
interests in New Zealand, Hungary, Norway, Poland and other international areas.
Ameritech is the parent of Illinois Bell Telephone Company; Indiana Bell
Telephone Company, Incorporated; Michigan Bell Telephone Company; The Ohio Bell
Telephone Company; and Wisconsin Bell, Inc.; hereinafter referred to as the
"landline telephone companies," as well as several other communications
businesses.
In 1993, Ameritech restructured its five geographically based landline
telephone companies and two other related businesses into a structure of
customer-specific business units supported by a single, regionally coordinated
network unit. The five Bell companies continue to function as legal entities,
owning Bell company assets in each state, and continue to be regulated by the
individual state public utility commissions. Products and services are now
marketed under a single common brand identity, "Ameritech," rather than using
the "Bell" name. While the Ameritech logo is now used to identify all the
Ameritech companies, the landline telephone companies are sometimes regionally
identified and hereinafter referred to by using "Ameritech" with the name of the
state in which they operate, for example, "Ameritech Illinois."
TELECOMMUNICATIONS
Ameritech is engaged in the business of furnishing a wide variety of
advanced telecommunications services, including local exchange and toll service,
network access and telecommunications products, to 12 million business and
residential customers in the Great Lakes region. Exchange telecommunications
service refers to intraLATA service, defined below, which includes usage
services as well as local service.
In connection with the divestiture described below, all Bell System
territory within the continental United States was divided into 161 geographical
areas which have been termed Local Access and Transport Areas (LATAs). These
LATAs are generally centered on a city or other identifiable community of
interest, and each LATA marks the boundary within which the former Bell
operating communications company subsidiaries (Bell Companies) of American
Telephone and Telegraph Company (AT&T) may provide telephone service. Since
January 1, 1984, the Bell Companies have provided two basic types of
telecommunications services. First, the Bell Companies transport
telecommunications traffic between telephones and other customer premises
equipment located within the same LATA (intraLATA service), which can include
toll service as well as local service. Second, the Bell Companies provide
exchange access service, which links a subscriber's telephone or other equipment
to the network of transmission facilities of interexchange carriers, which in
turn provide telecommunications service between LATAs (interLATA service).
AMERITECH'S BUSINESS UNITS AND NETWORK SERVICES
The following is a description of the business and network services units
at March 30, 1994.
Local, regional and national business advertisers seeking to reach
businesses or households with information are the customers of the Advertising
Services Unit which connects buyers and sellers of goods and services by
providing advertising in printed telephone directories, specialized printed
guides and electronic advertising services across the United States and Europe.
The Cellular Services Unit provides cellular and other wireless
communications to customers using Ameritech's nearly 1 million cellular lines
and 500,000 paging units in eight Midwestern states and Hawaii.
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This unit also identifies and pursues new wireless services such as data
transmission and personal communications services (PCS).
The Consumer Services Unit provides communications services for 10.8
million residential customers.
The Custom Business Services Unit offers to 200 of Ameritech's largest and
most sophisticated customers custom communications and information technology
solutions, as well as the full complement of Ameritech products, through a
single, dedicated sales and service account team well versed in the
sophisticated business needs of each customer.
The Enhanced Business Services Unit offers packaged communications
solutions to more than 50,000 medium-sized and large business customers. These
innovative solutions are tailored to the needs of specific industries, such as
health care, education, manufacturing, government and financial services.
The Small Business Services Unit delivers innovative telecommunications
solutions for approximately 1 million small businesses in the Ameritech region.
Customers of the Information Industry Services Unit are the more than 2,500
communications network and information services providers that buy services from
Ameritech and use them as components in offerings to their own customers. This
unit assists these customers as they use the Ameritech network and other
innovative services that enable them to offer their customers new ways to obtain
and share information.
The Leasing Services Unit supports the sale of Ameritech products and
services by providing competitive, value-added financing, primarily to large and
medium-sized businesses and government units. Ameritech has financed more than
$1 billion worth of equipment and services since 1984.
The Long Distance Industry Services Unit provides network access through
switched and special access services, as well as other service options such as
end user billing, to approximately 140 long distance companies.
The Pay Phone Services Unit makes it easier for "people in motion" to
communicate while on the go. Customers are the millions of callers who use
Ameritech's more than 200,000 pay phones for coin, calling card and operator
assisted calls, and over 100,000 agents who have Ameritech pay phones on their
premises.
For local exchange carriers, including 263 in the Ameritech region, the
Telephone Industry Services Unit provides products and services including
access, usage, directory assistance, operator services and 800 data base access.
This unit also manages the costs of the services that Ameritech purchases from
the independent telephone companies in the region.
The International Unit focuses technological and financial strength on
business opportunities in communications and information systems around the
world. With interests in Poland, Norway, Hungary and New Zealand, this unit
invests in entities that provide customers with cellular services, telephone
services and pay TV services.
Supporting the 12 business units, the Network Services Unit builds and
maintains an advanced network and information technology infrastructure to meet
business unit service expectations, and those of their customers, while
improving overall cost performance.
INVESTMENTS IN INTERNATIONAL MARKETS
In December 1993, Ameritech, with its partner, Deutsche Bundespost Telekom
of Germany (Deutsche Telekom), Europe's largest communications carrier,
announced a major expansion of its international presence with an investment in
MATAV, the Hungarian telephone company. Ameritech and Deutsche Telekom will have
equal ownership totaling approximately 30 percent of the company. The Hungarian
government owns the majority of the remaining 70 percent. Ameritech and its
partner were selected by the Hungarian government from among several other
leading telecommunications companies. MATAV, which is the principal provider of
local, long distance and international telephone service and the controlling
shareowner in a cellular venture using GSM (Global System for Mobile
Communications) digital technology, is the first state-owned telecommunications
company to be privatized in Eastern and Central Europe.
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MATAV has approximately 1.5 million customer lines in a country of 10.5 million
people. MATAV plans to double the number of lines by the year 2000. Ameritech
may increase its investment in MATAV if the government proceeds with plans to
reduce its holdings.
In September 1993, Ameritech and its partners in the Norwegian firm NetCom
GSM inaugurated service to Oslo, the central and eastern areas of Norway and
several other major cities, on the first privately supplied cellular
communications system in the country. In 1992, Ameritech and Singapore Telecom,
the government-owned telecommunications and postal operator in Singapore, agreed
to acquire an equal interest in NetCom totaling an effective 49.9 percent. Their
agreement with NetCom includes a management service contract under which
Ameritech and Singapore Telecom provide their skills and expertise in
constructing and operating the system. Nationwide coverage by the NetCom system
is expected within four years. NetCom officials estimate that the usage of GSM
service in Norway currently is growing at 35 percent per year and that service
could be extended to 700,000 Norwegian customers over the next 10 years. Norway
is one of the leaders in Europe in per capita use of mobile telephones.
In June 1992, an Ameritech consortium began operating a cellular system in
Poland after being selected by that country's government in an international
competitive bidding process. Ameritech and France Telecom, in partnership with
Telekomunikacja Polska S.A., Poland's state-owned telephone company, created the
joint venture, Polska Telefonia Komorkowa (PTK), to build the nationwide
cellular system. The government's terms for the cellular license include 51
percent ownership of the joint venture by Telekomunikacja Polska, with Ameritech
and France Telecom taking equal shares of the remainder. The cellular network
developed by PTK, which markets the system under the name "Centertel," was
serving Warsaw and 15 other major cities by the end of 1993 and is expected to
cover the entire country within four years.
In September 1990, Ameritech and Bell Atlantic Corporation (Bell Atlantic)
purchased Telecom Corporation of New Zealand Limited (New Zealand Telecom), New
Zealand's state-owned principal supplier of domestic and international
telecommunications services, including mobile telephone and directory services,
to 1.5 million customers. At the time of the purchase, the New Zealand
government required Ameritech and Bell Atlantic to agree to reduce their
combined ownership position of New Zealand Telecom to not more than 49.9 percent
of the then outstanding shares by September 12, 1994. After stock sales, which
were completed by September 1993, Ameritech has a 24.8 percent interest in the
company.
Ameritech and Bell Atlantic, along with two leading cable television system
operators, Tele-Communications, Inc. and Time Warner's American Television and
Communications unit, own a 51 percent interest in Sky Network Television Limited
of New Zealand (Sky). Sky provides multi-channel pay television services in New
Zealand, using three UHF channels for movies, sports and news programming in a
number of areas including Greater Auckland, the country's largest metropolitan
market, Wellington, the capital of New Zealand, and other cities. Ameritech owns
a 24.5 percent interest in the partnership which holds the 51 percent interest
in Sky.
OTHER BUSINESS DEVELOPMENTS
In December 1993, Ameritech entered into an agreement with General Electric
Company (GE) under which Ameritech will invest approximately $472 million in a
new company that will include the assets of GE Information Services, a global
leader in electronic commerce and electronic data interchange (EDI). Ameritech's
investment will be in the form of a four-year convertible debenture, which, if
legal restrictions are removed, will convert into a 30 percent equity position.
The new company will develop and market on a worldwide basis information
services products that facilitate intercompany communication and electronic
commerce, a business that is growing at a double-digit pace. Electronic commerce
links companies and internal organizations to each other and to customers,
suppliers, banks, financial services providers and distributors in virtual
electronic trading communities to simplify day-to-day transactions. Typical
electronic commerce applications involve order entry and processing, invoicing,
electronic payment, inventory management, cargo tracking, E-mail, electronic
catalogs and point-of-sale data gathering. The transaction is scheduled to close
in 1994.
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Ameritech, in an arrangement with Household International, Inc.
(Household), offers a no fee, dual-purpose credit card and calling card, the
Ameritech CompleteSM Card. Consumers may use the card to charge telephone calls
as well as retail goods and services. The Complete card has no annual fee,
competitive interest rates, and a 10 percent cash back offer from Household for
all calling card calls made by dialing "0" plus the telephone number. Under the
arrangement between the companies, Household owns and finances the credit card
receivables and Ameritech funds certain marketing expenses. Since its
introduction in 1991, the Complete card has attracted approximately 700,000
cardholders.
RESEARCH AND DEVELOPMENT
Ameritech owns an equal one-seventh interest in Bell Communications
Research, Inc. (Bellcore) with the other six regional holding companies
(collectively, the RHCs) formed in connection with the court-ordered divestiture
described below. Bellcore furnishes the RHCs with technical assistance, such as
network planning, engineering and software development (including applied
research), provided most effectively on a centralized basis. Bellcore is also a
central point of contact for coordinating the efforts of the RHCs in meeting
national security and emergency preparedness requirements of the Federal
government.
CONSENT DECREE AND LINE OF BUSINESS RESTRICTIONS
On August 24, 1982, the U.S. District Court for the District of Columbia
(Court) approved and entered a consent decree entitled "Modification of Final
Judgment" (Consent Decree), which arose out of antitrust litigation brought by
the Department of Justice (DOJ), and which required AT&T to divest itself of
ownership of those portions of its wholly owned Bell Companies that related to
exchange telecommunications, exchange access and printed directory advertising,
as well as AT&T's cellular mobile communications business. On August 5, 1983,
the Court approved a Plan of Reorganization (Plan) outlining the method by which
AT&T would comply with the Consent Decree. Pursuant to the Consent Decree and
the Plan, effective January 1, 1984, AT&T divested itself of, by transferring to
Ameritech, its 100 percent ownership of the exchange telecommunications,
exchange access and printed directory advertising portions of the Ameritech
landline telephone companies as well as a cellular mobile communications service
company.
The Consent Decree, as originally approved by the Court in 1982, provided
that the Bell Companies could not, directly or through an affiliated enterprise,
provide interLATA telecommunications services or information services,
manufacture or provide telecommunications products, or provide any product or
service, except exchange telecommunications and exchange access service, that is
not a natural monopoly service actually regulated by tariff. The Consent Decree
allowed the Bell Companies to provide printed directory advertising and to
provide, but not manufacture, customer premises equipment.
The Consent Decree provided that the Court could grant a waiver to a Bell
Company or its affiliates to engage in an otherwise prohibited line of business
upon a showing to the Court that there is no substantial possibility that the
Bell Company could use its monopoly power to impede competition in the market it
seeks to enter. The Court has, from time to time, granted waivers to Ameritech's
landline telephone companies and the other Bell Companies to engage in various
activities.
The Court's order approving the Consent Decree provided for periodic
reviews of the restrictions imposed by it. Following the first triennial review,
in decisions handed down in September 1987 and March 1988, the Court continued
the prohibitions against Bell Company manufacturing of telecommunications
products and provision of interLATA services. The rulings allowed limited
provision of information services by transmission of information and provision
of information gateways, but excluded generation or manipulation of information
content. In addition, the rulings eliminated the need for a waiver for entry
into non-telephone related businesses.
In April 1990, a Federal appeals court affirmed the Court's decision
continuing the restriction on Bell Company entry into interLATA services and the
manufacture of telecommunications equipment, but directed the Court to review
its ruling that restricted RHC involvement in the information services business
and to determine whether removal of the information services restriction would
be in the public interest. In July 1991, the Court lifted the information
services ban, but stayed the effect of the decision pending outcome of
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the appeals process. Soon after, the stay was lifted on appeal and in July 1993,
the U.S. Court of Appeals unanimously upheld the Court's order allowing the Bell
Companies to produce and package information for sale across business and home
phone lines. In November 1993, the U.S. Supreme Court declined to review the
lower court ruling.
Members of Congress and the White House are intensifying efforts to enact
legislative reform of telecommunications policy in order to stimulate the
development of a modern national information infrastructure to bring the
benefits of advanced communications and information services to the American
people.
CAPITAL EXPENDITURES
Capital expenditures represent the single largest use of Company funds. By
reinvesting in the telecommunications core business, the Company expects to be
able to introduce new products and services, respond to ever increasing
competitive challenges and increase the operating efficiency and productivity of
the network.
Capital expenditures by all the Ameritech companies since January 1, 1989,
were approximately as follows:
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(DOLLARS IN MILLIONS)
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1989.......................................... $ 2,015
1990.......................................... $ 2,154
1991.......................................... $ 2,200
1992.......................................... $ 2,267
1993.......................................... $ 2,108
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Responding to the market needs for cost-effective technology, Ameritech's
capital expenditures for landline telephone operations decreased $265 million in
1993. The cellular services portion of the Company's capital expenditures
increased $106 million in 1993 resulting from plans to expand service and offer
new data and digital services. Network modernization expenditures occurred in
all the states where the Company provides service.
Expanding on the aggressive deployment plan it began in 1992, in January
1994 Ameritech unveiled a multi-billion dollar plan for a digital network to
deliver video services. The Company is launching a digital video network
upgrade, subject to certain regulatory approvals, that by the end of the decade
will enable 6 million customers in its region to access interactive information
and entertainment services, as well as traditional cable TV services, from their
homes, schools, offices, libraries and hospitals. The video network upgrade will
increase Ameritech's capital spending over the next 15 years by $4.4 billion, to
a total of approximately $29 billion. The Company expects to fund most of this
amount by reducing capital expenditures in its core landline business. Capital
expenditures anticipated in the first three years of the video upgrade total
approximately $400 million. The video network concept, along with other
competitive concerns, is discussed on page 10.
Anticipated capital expenditures for the Company including all subsidiaries
approximate $1.9 billion for 1994. This amount excludes any capital expenditures
that may occur in 1994 related to the above described video network upgrade
program.
CUSTOMER LINES
As of December 31, 1993, 66 percent of the Company's customer lines were
served by digital switches and virtually all its lines had been converted to
equal access. In addition, the Company had installed 802,000 miles of
fiber-optic lines. The number of customer lines in the Ameritech region served
by the Ameritech landline telephone companies increased 3.3 percent from 17.0
million at December 31, 1992 to 17.6 million at December 31, 1993, including
business lines, which grew 6.1 percent from 5.1 million to 5.4 million, and
residential line service, which increased 2 percent from 11.4 million to 11.6
million. As of December 31, 1993, there were 295 customer lines in service per
landline telephone company employee.
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Sizable areas within the five-state region are served by nonaffiliated
telecommunications companies. Ameritech does not furnish local service in those
areas or localities served by such companies.
The following table sets forth the number of customer lines served by
Ameritech at the end of the year:
CUSTOMER LINES IN SERVICE
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1993 1992 1991 1990 1989
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(IN THOUSANDS)
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Ameritech Illinois.................................. 5,763 5,586 5,460 5,360 5,232
Ameritech Indiana................................... 1,855 1,770 1,711 1,670 1,619
Ameritech Michigan.................................. 4,563 4,431 4,314 4,242 4,150
Ameritech Ohio...................................... 3,481 3,380 3,314 3,268 3,214
Ameritech Wisconsin................................. 1,898 1,834 1,785 1,738 1,684
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Total........................................ 17,560 17,001 16,584 16,278 15,899
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REGULATORY ENVIRONMENT
FCC Regulatory Jurisdiction
The Ameritech landline telephone companies are subject to the jurisdiction
of the Federal Communications Commission (FCC) with respect to intraLATA
interstate services, interstate access services and other matters. The FCC
prescribes for communications companies a uniform system of accounts, rules for
apportioning costs between regulated and non-regulated services, depreciation
rates (for interstate services) and the principles and standard procedures
(separations procedures) used to separate property costs, revenues, expenses,
taxes and reserves between those applicable to interstate services under the
jurisdiction of the FCC and those applicable to services under the jurisdiction
of the respective state regulatory authorities.
For certain companies, including the Ameritech landline telephone
companies, interstate services regulated by the FCC are covered by a price cap
plan. The plan creates incentives to improve productivity over benchmark levels
in order to retain higher earnings. Price cap regulation sets maximum limits on
the prices that may be charged for telecommunications services but also provides
for a sharing of productivity gains. Earnings in excess of 12.25 percent will
result in prospective reductions of the price ceilings on interstate services.
In January 1994, the FCC began a scheduled fourth-year comprehensive review
of price cap regulation for local exchange companies.
Intrastate Rates and Regulation
The Ameritech landline telephone companies, in providing communications
services, are also subject to regulation by state commissions in all of the
states in which they operate with respect to intrastate rates and services,
depreciation rates (for intrastate services), issuance of securities and other
matters. The increasing effects of competitive market forces are being
recognized by state legislatures and state regulatory agencies. Legislation has
been passed in the Company's five state region which will permit reduced
regulation or deregulation of telephone companies and services as they become
competitive.
Intrastate rate restructuring and repricing activities have been or are
being undertaken by all Ameritech landline telephone companies, which are
intended to alter the traditional pricing methods by de-averaging and
restructuring rates towards cost-based pricing. In addition, Ameritech has
actively pursued a policy of incentive regulation at the state and federal
levels. No general intrastate rate increases have been authorized for the
landline telephone companies since 1985. Presently, there are no pending
requests for general rate increases.
Unless otherwise indicated, the changes in revenues resulting from the
principal changes in intrastate rates since January 1, 1990, referred to below,
are stated on an annual basis and are estimates without adjustment for
subsequent changes in volumes of business.
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In May 1992, the Illinois General Assembly voted to revise the Universal
Telephone Service Protection Law of 1985. The new law enables the Illinois
Commerce Commission (ICC) to approve alternative regulation of any type, subject
to explicit policy goals. In addition, the law transfers authority over
intraLATA equal access dialing arrangements to the ICC. In the realm of
competitive pricing, the law requires that telephone companies providing
essential facilities impute the rate charged for those facilities to themselves
and that telephone companies are required to apportion overhead and embedded
costs between competitive and noncompetitive services. The law remains in effect
until July 1, 1999. In December 1992, Ameritech Illinois filed a petition with
the ICC proposing a price regulation plan which features a price cap mechanism
under which future rate changes would be subject to a predetermined formula
reflecting factors such as inflation and productivity improvement. If the plan
is adopted, increases in basic residential rates will be prohibited for a
three-year period. A decision by the ICC is expected during the second quarter
of 1994.
In March 1990, the Michigan Public Service Commission (MPSC) issued an
order in which it adopted an incentive regulation plan authorizing Ameritech
Michigan a return-on-equity range of 12.25 percent to 13.25 percent. The order
also established the following sharing arrangement: earnings between 13.25
percent and 14.25 percent to be shared 25 percent with customers, 25 percent
with Ameritech Michigan, and 50 percent dedicated to special construction
programs; earnings between 14.25 percent and 17.25 percent to be shared 25
percent with customers, 50 percent with Ameritech Michigan, and 25 percent to
construction; earnings above 17.25 percent to be shared 75 percent with
customers and 25 percent with Ameritech Michigan. The MPSC action resulted in a
revenue reduction of about $18.5 million annually. Of this amount, $14.5 million
resulted from the change in authorized return. The Michigan Telecommunications
Act of 1991 (Act), which became effective as of January 1, 1992 for a four-year
period, removes traditional rate-of-return regulation as of that date. It gives
Ameritech Michigan flexibility to adjust prices and introduce new services
without regulatory approval. The law capped basic local residential service
rates at current levels for two years and allows for expedited approval of
increases in such rates after that period if the increase does not exceed a
formula related to the Consumer Price Index (CPI). The law allows new usage
charges for local calls in excess of a monthly call allowance for most
residential customers. Long distance (toll) rates are capped for the four-year
life of the Act at those in effect at the end of 1991, unless carrier access
charges are increased during that period. The Act instituted a streamlined
system for changes to basic rates, depending on the size of the change. Rate
changes which do not exceed 1 percent less than the change in the CPI may be put
in place after 90 days notice unless the MPSC takes further action, but proposed
rate changes greater than 1 percent less than the CPI change require MPSC
approval. As a direct response to this new pricing flexibility, Ameritech
Michigan immediately reduced intraLATA message toll rates by $20 million
effective January 1, 1992. An additional reduction of over $20 million was
implemented in December 1992. Two new calling plans were introduced in 1992.
Overall, the reductions and discount plans will amount to a cut of more than 12
percent in prices residence and business customers pay for long distance calls
within LATAs.
In September 1990, Ameritech Wisconsin adopted a Public Service Commission
of Wisconsin (PSCW) approved innovative regulatory plan, effective October 1,
1990, under which the rate-of-return on equity is set at 13.75 percent and the
company's revenues are not subject to refund. This trial plan, which was to
remain in effect until December 31, 1993, has been extended while the PSCW
reviews a new price regulation plan. In February 1994, bills were introduced in
the Wisconsin legislature that, if passed, would replace rate-of-return
regulation with price regulation for companies choosing it. In September 1992,
Ameritech Wisconsin eliminated business Touch-Tone charges reducing local
service revenues by approximately $4 million annually. In March 1993, the PSCW
reached a decision concerning inside wire and moratorium refund issues. In April
1993, Ameritech Wisconsin commenced refunding $22.5 million to residence,
business customers and interexchange carriers in the form of credits and rate
reductions.
In January 1993, the Public Utilities Commission of Ohio (PUCO) adopted new
rules governing the rates and services of local exchange companies, including a
process to change rates with faster, less tedious PUCO review. The new
guidelines established a procedure for companies to file individual plans for
alternative regulation. In June 1993, Ameritech Ohio filed its "Advantage Ohio"
price regulation plan with the PUCO. Under the plan, future overall rate changes
would be subject to price ceilings based on inflation, Ameritech Ohio's
productivity and service quality, and significant tax law or accounting rule
changes. The
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plan will also provide for the ability to flexibly price competitive services
and discretionary services within the boundary of the price ceilings. The
proposed plan will include significant infrastructure investment and pricing
commitments. The PUCO's decision on the plan is expected in 1994.
As a result of an agreement on a settlement with the Indiana Utility
Regulatory Commission (IURC), Touch-Tone rates were reduced by $6 million in
1992. In Indiana, state law permits the IURC to adopt alternatives to
rate-of-return regulation. In February 1994, Ameritech Indiana and consumer
representatives announced a wide-ranging agreement to speed development of an
advanced communications system in Indiana, make Indiana a national leader in the
use of technology to improve education, provide Ameritech regulatory
flexibility, remove the cap on earnings, reduce local phone charges, and cap
basic rates for three years. The agreement, reached in settlement of Ameritech
Indiana's "Opportunity Indiana" regulatory reform initiative, which was proposed
in May 1993, still requires approval of the IURC.
ACCESS CHARGE ARRANGEMENTS
Interstate Access Charges
The Ameritech landline telephone companies provide access services for the
origination and termination of interstate telecommunications. The access charges
are of three types: common line, switched access and trunking.
The common line portion of interstate revenue requirements are recovered
through monthly subscriber line charges and per minute carrier common line
charges. The carrier common line rates include recovery of transitional and
long-term support payments for distribution to other local exchange carriers.
Transitional support payments were made over a four-year period which ended on
April 1, 1993. Long-term support payments will continue indefinitely.
Effective January 1, 1994, rates for local transport services were
restructured and a new "trunking" service category was created. Trunking
services consist of two types: those associated with the local transport element
of switched access and those associated with special access. Trunking services
associated with switched access handle the transmission of traffic between a
local exchange carrier's serving wire center and an Ameritech end office where
local switching occurs. Trunking services associated with special access handle
the transmission of telecommunications services between any two
customer-designated premises or between a customer-designated premise and an
Ameritech end office where multiplexing occurs. High volume customers generally
use the flat-rated dedicated facilities associated with special access, while
usage-sensitive rates apply for lower-volume customers that utilize a common
switching center.
Local transport rate elements for switched services assess a flat monthly
rate and a mileage-sensitive rate for the physical facility between the
customer's point of termination and the end office, a usage-sensitive and
mileage-sensitive rate assessed for the facilities between the end office
through the access tandem to the customer's serving wire center, and a minute of
use charge assessed to all local transport. The flat rate transport rates and
structure generally mirror special access rate elements. Customers can order
direct transport between the serving wire center and the access tandem or end
office, and tandem switched transport between the access tandem and the end
office.
Special access charges are monthly charges assessed to customers for access
to interstate private line service. Charges are paid for local distribution
channels, interoffice mileage and optional features and functions.
State Access Charges
Compensation arrangements required in connection with origination and
termination of intrastate communications by interexchange carriers are subject
to the jurisdiction of the state regulatory commissions. The Ameritech landline
telephone companies currently provide access services to interexchange carriers
authorized by the state regulatory commissions to provide service between local
serving areas pursuant to tariffs which generally parallel the terms of the
interstate access tariffs. In the event interexchange carriers are authorized by
the state regulatory commissions to provide service within their local serving
areas, the
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<PAGE> 11
Ameritech landline telephone companies intend to provide access service under
the same tariffs applicable to intrastate services provided by such carriers
between the landline telephone companies' local serving areas.
Separate arrangements govern compensation between Ameritech telephone
companies and independent telephone companies for jointly provided
communications within Ameritech's local serving areas and associated independent
telephone company exchanges. These arrangements are subject to the jurisdiction
of the FCC and the state regulatory commissions.
COMPETITION
Regulatory, legislative and judicial decisions and technological advances,
as well as heightened customer interest in advanced telecommunications services,
have expanded the types of available communications services and products and
the number of companies offering such services. Market convergence, already a
reality, is expected to intensify.
The FCC has taken a series of steps that are expanding opportunities for
companies to compete with local exchange carriers in providing services under
the FCC's jurisdiction. In September 1992, the FCC mandated that local exchange
carriers provide network access for special transmission paths to competitive
access providers, interexchange carriers and end users. In February 1993,
Ameritech filed a tariff with the FCC, which was effective in May, making
possible this type of interconnection. In August 1993, the FCC issued an order
that permits competitors to interconnect to local telephone company switches.
Under the new rules, certain telephone companies must allow all interested
parties to terminate their switched access transmission facilities at telephone
company central offices, wire centers, tandem switches and certain remote nodes.
Ameritech filed a tariff in November 1993 to effect that change in February
1994.
Ameritech is seeking opportunities to compete on an equal footing. Although
the Company is barred from providing interLATA and nationwide cable services,
its competitors are not. Cellular telephone and other wireless technologies are
poised to bypass Ameritech's local access network. Cable providers, who
currently serve more than 80 percent of American homes, could provide telephone
service and have expressed their desire to do so. Certain interexchange carriers
and competitive access providers have demonstrated interest in providing local
exchange service. Ameritech's plan is to facilitate competition in the local
exchange business in order to compete in the total communications marketplace.
CUSTOMERS FIRST: AMERITECH'S ADVANCED UNIVERSAL ACCESS PLAN
In 1993, Ameritech embarked on a long-range restructuring with the intent
of dramatically changing the way it serves its customers, and in the process
altered its corporate framework, expanding the nature and scope of its services
and supporting the development of a fully competitive marketplace. In March,
Ameritech filed a plan with the FCC to change the way local telecommunications
services are provided and regulated and to furnish a policy framework for
advanced universal access to modern telecommunications services -- voice, data
and video information. This effort is called the Customer First Plan.
Ameritech proposes to facilitate competition in the local exchange business
by allowing other service providers to purchase components of its network and to
repackage them with their own services for resale, in exchange for the freedom
to compete in both its existing and currently prohibited businesses. Ameritech
has requested regulatory reforms to match the competitive environment as well as
support of its efforts to remove restraints, such as the interLATA service
restriction, which currently restrict its participation in the full
telecommunications marketplace. In addition, the Company asks for more
flexibility in pricing new and competitive services and replacement of caps on
earnings with price regulation. Under the plan, customers would be able to
choose from competitive providers for local service as they now can choose a
provider for interexchange service.
To demonstrate conclusively the substantial customer and economic benefits
of full competition, in December 1993 Ameritech proposed a trial of its plan,
beginning in 1995. The Company has petitioned the DOJ to recommend Federal
District Court approval of a waiver of the long distance restriction of the
Consent Decree so that Ameritech can offer interexchange service. At the same
time, Ameritech would facilitate the
9
<PAGE> 12
development of local communications markets by unbundling the local network and
integrating competitors' switches. The trial would begin in Illinois in the
first quarter of 1995 and would last indefinitely. Other states could be added
over time. If the trial is approved by the DOJ, the request must be acted on by
the Court which retains jurisdiction over administering the terms of the Consent
Decree. In February 1994, Ameritech filed tariffs with the ICC that propose
specific rates and procedures to open the local network in Illinois. Approval
could take up to 11 months.
The Company has received broad support for the plan from Midwest elected
officials, national and Midwest business leaders and education, health industry,
economic development and consumer leaders. The national and local offices of the
Communications Workers of America (CWA) and the International Brotherhood of
Electrical Workers (IBEW) also support the plan.
Ameritech has alternative regulatory proposals pending with the state
regulatory commissions in its region to support implementation of the plan.
These proposals are discussed on pages 7 and 8 in Intrastate Rates and
Regulation.
MICHIGAN INTRALATA LONG DISTANCE SERVICE ORDER
On July 31, 1992, MCI Telecommunications Corporation (MCI) filed a
complaint with the MPSC seeking "1+" intraLATA dialing parity for all toll
competitors of Ameritech Michigan alleging that current dialing arrangements
violated the Michigan Telecommunications Act. Callers in Michigan must currently
dial "10" plus a three digit access code to use the services of Ameritech's
intraLATA toll competitors. The MPSC dismissed MCI's complaint finding no
statutory violations. However, as a result of subsequent proceedings in the
case, on February 24, 1994, the MPSC issued an order requiring implementation of
"1+" intraLATA toll dialing parity in Michigan. The effective date of the order
is to be concurrent with receipt of relief from the Consent Decree interLATA
service restriction sought under the Customers First Plan, but in any event, no
later than January 1, 1996. The order also called for establishing an industry
task force to consider all factors necessary to establish full intraLATA toll
competition. The task force will develop a deployment schedule, identify the
costs for deployment and determine the methodology to recover those costs. The
task force is required to file its findings with the MPSC by September 23, 1994.
Ameritech believes that the MPSC has not considered all relevant factors in
rendering its decision. Accordingly, Ameritech Michigan has filed a petition for
a rehearing with the MPSC as a first step in bringing further clarification to
the issues.
In 1993, Ameritech Michigan recorded $695.8 million of long distance
revenue, of which approximately $634 million resulted from intraLATA long
distance service. Customer response to dialing parity and the effect on
Ameritech Michigan's intraLATA long distance revenue is uncertain. However,
Ameritech Michigan estimates that approximately 50% of any long distance revenue
lost, which could be significant, would be offset by additional access revenue.
AMERITECH'S VIDEO NETWORK CONCEPT
In January 1994, Ameritech filed plans with the FCC to construct a digital
video network upgrade that could reach 6 million customers by the end of the
decade. Ameritech is pursuing alliances and partnerships that will position it
as a key participant in the emerging era of interactive video experiences.
Pending FCC approval of Ameritech's plan and clearing of other regulatory
hurdles, the construction of the first phase of the network could begin as soon
as the fourth quarter of 1994. The new network, which will be separate from
Ameritech's core local communications network, could be expanded to
approximately 1 million additional Midwest customers in each of the next five
years.
Ameritech will be only one of many users of the broadband network. A
multitude of competing video information providers, businesses, institutions,
interexchange carriers and video telephony customers will also have access to
the technology.
With the new system, customers will have access to a virtually unlimited
variety of programming sources. These will include basic broadcast services,
similar to today's cable service, and advanced interactive services
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<PAGE> 13
such as video on demand, home healthcare, interactive educational software,
distance learning, interactive games and shopping, and a variety of other
entertainment and information services that can be accessed from homes, offices,
schools, hospitals, libraries and other public and private institutions.
CABLE/TELCO CROSSOWNERSHIP BAN
In November 1993, Ameritech filed motions in two federal courts seeking
freedom from the ban on providing video services in its own service area. The
Company asked U.S. District Courts in Illinois and Michigan to declare
unconstitutional the provisions of the Cable Act of 1984 that bar the RHCs from
providing cable TV service in areas where they hold monopolies on local phone
service. Only Bell Atlantic has won the right to enter the video services
business. The U.S. District Court that permitted entry to Bell Atlantic denied
the requests of Ameritech and the other RHCs.
Legislation has been introduced in Congress that would repeal the
crossownership ban.
EMPLOYEE RELATIONS
As of December 31, 1993, the Ameritech companies employed 67,192 persons, a
decrease from 71,300 at December 31, 1992. During 1993, approximately 1,700
management employees left the payroll as a result of voluntary and involuntary
workforce reduction programs and 900 nonmanagement employees took advantage of a
Supplemental Income Protection Program (SIPP) established under labor agreements
to voluntarily exit the workforce. Additional restructuring was done by normal
attrition. Some reductions were partially offset by workforce additions due to
acquisitions and growth.
On March 25, 1994, Ameritech announced that it will reduce its
nonmanagement workforce by 6,000 employees by the end of 1995. Under terms of
agreements between Ameritech, the CWA and the IBEW, Ameritech is implementing 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,
Ameritech's network business unit is offering financial incentives under terms
of its current contracts with the CWA and IBEW to selected nonmanagement
employees who elect to leave the business before the end of 1995. Reduction of
the workforce results from technological improvements, consolidations, and
initiatives identified by management to balance its cost structure with emerging
competition.
Approximately 48,000 employees are represented by unions. Of those so
represented, about 71 percent are represented by the CWA and about 29 percent
are represented by the IBEW, both of which are affiliated with the AFL-CIO.
In July and August 1993, the Ameritech landline telephone companies and
Ameritech Services, the wholly owned centralized procurement and support
subsidiary of the landline telephone companies, reached agreement with the two
unions on a workforce transition plan for assigning union-represented employees
to the newly established business units. The separate agreements with the CWA
and the IBEW extend existing union contracts with the landline telephone
companies and Ameritech Services to the new units. The pacts address a number of
force assignment, employment security and union representation issues. In 1995,
when union contracts are due to expire, the parties will negotiate regional
contracts.
ITEM 2. PROPERTIES.
The properties of the Company do not lend themselves to description by
character and location of principal units. At December 31, 1993, central office
equipment represented 37 percent of its consolidated investment in
telecommunications plant; land and buildings (occupied principally by central
offices) represented 11 percent; telecommunications instruments and related
wiring and equipment, including private branch exchanges, substantially all of
which are on the premises of customers, represented 2 percent; and connecting
lines which constitute outside plant, the majority of which are on or under
public roads, highways or streets and the remainder of which are on or under
private property, represented 40 percent.
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<PAGE> 14
Substantially all of the installations of central office equipment and
administrative offices are located in buildings owned by the Ameritech landline
telephone companies situated on land held in fee. Many garages and business
offices and some installations of central office equipment and administrative
offices are in rented quarters.
ITEM 3. LEGAL PROCEEDINGS.
PRE-DIVESTITURE CONTINGENT LIABILITIES AGREEMENT
The Plan provides for the recognition and payment of liabilities that are
attributable to pre-divestiture events (including transactions to implement the
divestiture) but that do not become certain until after divestiture. These
contingent liabilities relate principally to litigation and other claims with
respect to the former Bell System's rates, taxes, contracts, equal employment
matters, environmental matters and torts (including business torts, such as
alleged violations of the antitrust laws).
With respect to such liabilities, AT&T and the Bell Companies will share
the costs of any judgment or other determination of liability entered by a court
or administrative agency, the costs of defending the claim (including attorneys'
fees and court costs) and the cost of interest or penalties with respect to any
such judgment or determination. Except to the extent that affected parties may
otherwise agree, the general rule is that responsibility for such contingent
liabilities will be divided among AT&T and the Bell Companies on the basis of
their relative net investment (defined as total assets less reserves for
depreciation) as of the effective date of divestiture. Different allocation
rules apply to liabilities which relate exclusively to pre-divestiture
interstate or intrastate operations.
Although complete assurance cannot be given as to the outcome of any
litigation, in the opinion of the Company's management any monetary liability or
financial impact to which the Company would be subject after final adjudication
of all of the foregoing actions would not be material in amount to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders in the fourth quarter
of the fiscal year covered by this report.
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<PAGE> 15
EXECUTIVE OFFICERS OF THE COMPANY (AS OF MARCH 1, 1994)
The following table sets forth, as to the executive officers of Ameritech,
their ages, their offices with Ameritech and the period during which they have
held such offices.
<TABLE>
<CAPTION>
HELD
NAME AGE OFFICE SINCE
- ---------------------------------------------- --- -------------------------------------- -----
<S> <C> <C> <C>
William L. Weiss*............................. 64 Chairman of the Board 1994
Richard C. Notebaert**........................ 46 President and Chief Executive Officer 1994
Richard H. Brown***........................... 46 Vice Chairman 1993
Louis J. Rutigliano+.......................... 55 Vice Chairman 1991
John A. Edwardson............................. 44 Executive Vice President and Chief 1991
Financial Officer
Thomas P. Hester.............................. 56 Executive Vice President and General 1991
Counsel
W. Patrick Campbell........................... 48 Executive Vice President -- Corporate 1994
Strategy and Business Development
Walter S. Catlow.............................. 49 Executive Vice President -- 1994
International
Martha L. Thornton............................ 58 Senior Vice President -- Human 1989
Resources
Terry L. Bruce................................ 49 Vice President -- Federal Relations 1993
Gary R. Edson................................. 38 Vice President -- Business Development 1993
Betty F. Elliott.............................. 48 Vice President and Comptroller 1991
Joel S. Engel................................. 58 Vice President -- Technology 1993
Richard W. Pehlke............................. 40 Vice President and Treasurer 1994
Thomas J. Quarles............................. 44 Vice President and Associate General 1991
Counsel
Lawrence E. Strickling........................ 42 Vice President -- Public Policy 1993
Kelly R. Welsh................................ 41 Vice President and Associate General 1993
Counsel
Bruce B. Howat................................ 49 Secretary 1983
</TABLE>
- -------------------------
* Member of the Board of Directors, Chairman of the Executive Committee
** Member of the Board of Directors and the Finance Committee
*** Member of the Board of Directors
+ Member of the Board of Directors, the Finance Committee and the Executive
Committee
Prior to the most recent election to office with Ameritech, the above
officers held high-level managerial positions within Ameritech for more than the
past five years, except for Mr. Bruce, Mr. Edwardson, Mr. Edson, Mr. Welsh and
Mr. Campbell. Prior to joining Ameritech, Mr. Bruce was a four-term member of
the U.S. House of Representatives from Illinois. Mr. Edwardson was Chief
Financial Officer of United (Airlines) Employee Acquisition Corp. from 1990 to
1991 and Executive Vice President and Chief Financial and Administrative Officer
of IMCERA Group, Inc. from 1989 to 1990. Mr. Edson was with the Office of the
U.S. Trade Representative as chief of staff and counselor and then as general
counsel from 1989 to 1993. Mr. Welsh was chief legal officer for the City of
Chicago from 1989 to 1993 and, prior to that, was an attorney with Mayer, Brown
and Platt, a Chicago-based law firm. Mr. Campbell was President of Columbia
TriStar Home Video, a Sony Pictures Entertainment Company, from 1989 to 1994.
Mrs. Thornton and Mr. Rutigliano have announced plans to retire in April
and June 1994, respectively.
Officers are elected annually but may be removed at any time at the
discretion of the Board of Directors.
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<PAGE> 16
PART II
ITEMS 5 THROUGH 8.
There were 956,338 owners of record of Ameritech Common Stock as of
December 31, 1993. Ameritech Common Stock is listed on the New York, Boston,
Chicago, Pacific, Philadelphia, London, Tokyo, Amsterdam, Basel, Geneva and
Zurich stock exchanges. The rest of the information required by these items is
included in the Financial Review section on pages 16 through 22, pages 24
through 37, and on page 40 of the Company's annual report to security holders
for the year ended December 31, 1993. Such information is incorporated by
reference pursuant to General Instructions G(2).
In March 1994, Ameritech announced plans to reduce its nonmanagement
workforce by 6,000 employees by the end of 1995. This program, discussed on page
11, will result in a charge to first quarter 1994 earnings of approximately $530
million, or $335 million and $.60 per share on an after-tax basis. A significant
portion of the program cost will be funded by the pension plan, whereas
financial incentives to be paid by Ameritech will require company funds of
approximately $140 million. Settlement gains, which result from terminated
employees accepting lump-sum payments from the pension plan, will be reflected
in income as employees leave the payroll. Ameritech believes this program will
reduce its employee-related costs by approximately $300 million on an annual
basis upon completion of this program.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
No disagreements with accountants on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure
occurred during the period covered by this annual report.
PART III
ITEMS 10 THROUGH 13.
Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure in Part I of this report since the
Company did not furnish such information in its definitive proxy statement dated
March 1, 1994, prepared in accordance with Schedule 14A.
The other information required by these items is included in the Company's
definitive proxy statement in the last two paragraphs on the first page, on
pages 2 through 4, in the section on Compensation of Directors on page 6, in the
section on Officer and Director Stock Ownership on page 7, and in the section on
Executive Compensation on pages 10 through 18, and is incorporated herein by
reference pursuant to General Instructions G(3).
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<PAGE> 17
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed as a part of the report:
<TABLE>
<CAPTION>
PAGES
-----
<S> <C> <C>
(1) Financial Statements *:
Selected Financial and Operating Data
Report of Independent Public Accountants
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Shareowners' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
Report of Independent Public Accountants 20
V -- Property, Plant and Equipment 21
VI -- Accumulated Depreciation 22
VIII -- Allowance for Uncollectibles 23
X -- Supplementary Income Statement Information
</TABLE>
* Incorporated herein by reference to the appropriate portions of the Company's
annual report to security holders for the year ended December 31, 1993
Schedules other than those listed above have been omitted because the
required information is contained in the financial statements and notes thereto,
or because such schedules are not required or applicable. Separate financial
statements of subsidiaries not consolidated and 50 percent or less owned persons
are omitted since no such entity constitutes a "significant subsidiary" pursuant
to the provisions of Regulation S-X, Article 3-09.
Exhibits identified in parentheses below, on file with the SEC, are
incorporated herein by reference as exhibits hereto.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<S> <C> <C>
3a -- Certificate of Incorporation of the Company as amended on April 26, 1991 (Exhibit
3a to Form 10-K for 1991, File No. 1-8612).
3b -- By-Laws of the Company, as amended on April 15, 1992 (Exhibit 3b to Form 10-K for
1992, File No. 1-8612).
4b -- No instrument which defines the rights of holders of long and intermediate term
debt of the Company and all of its consolidated subsidiaries is filed herewith
pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation,
the Company hereby agrees to furnish a copy of any such instrument to the SEC
upon request.
10a -- Reorganization and Divestiture Agreement between American Telephone and Telegraph
Company and the Company and Affiliates, dated as of November 1, 1983 (Exhibit 10a
to Form 10-K for 1983, File No. 1-8612).
10b -- Agreement Concerning Contingent Liabilities, Tax Matters and Termination of
Certain Agreements, among American Telephone and Telegraph Company, Bell System
Operating Companies, Regional Holding Companies and Affiliates dated as of
November 1, 1983 (Exhibit 10j to Form 10-K for 1983, File No. 1-8612).
10aa -- Ameritech Senior Management Short Term Incentive Plan as amended and restated
effective as of January 1, 1992 (Exhibit 10aa to Form 10-K for 1991, File No.
1-8612).
</TABLE>
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<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<S> <C> <C>
10bb -- Ameritech Long Term Incentive Plan as amended and restated effective as of
January 1, 1992 (Exhibit 10bb to Form 10-K for 1991, File No. 1-8612).
10bb-1 -- First Amendment to Long Term Incentive Plan.
10cc -- Ameritech Senior Management Life Insurance Plan Agreements (Exhibit 10cc to Form
10-K for 1990, File No. 1-8612).
10dd -- Ameritech Senior Management Long Term Disability Plan as amended and restated
effective as of January 1, 1992 (Exhibit 10dd to Form 10-K for 1991, File No.
1-8612).
10ee -- Ameritech Senior Management Transfer Program as amended and restated effective as
of January 1, 1992 (Exhibit 10ee to Form 10-K for 1991, File No. 1-8612).
10ff -- Ameritech Perquisite Program (Exhibit 10ff to Form 10-K for 1991, File No.
1-8612).
10gg -- Ameritech Deferred Compensation Plan for Non-Employee Directors (Exhibit 10gg to
Form 10-K for 1985, File No. 1-8612).
10gg-1 -- First Amendment of Deferred Compensation Plan for Non-Employee Directors (Exhibit
10gg-1 to Form 10-K for 1986, File No. 1-8612).
10gg-2 -- First Amendment of American Information Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors effective as of January 1, 1989
(Exhibit 10gg-2 to Form 10-K for 1988, File No. 1-8612).
10gg-3 -- Second Amendment of American Information Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors (Exhibit 10gg-3 to Form 10-K for
1990, File No. 1-8612).
10gg-4 -- Third Amendment of American Information Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors (Exhibit 10gg-4 to Form 10-K for
1990, File No. 1-8612).
10gg-5 -- Fourth Amendment of American Information Technologies Corporation Deferred
Compensation Plan for Non-Employee Directors (Exhibit 10gg-5 to Form 10-K for
1992, File No. 1-8612).
10hh -- Ameritech Plan for Non-Employee Directors' Travel Accident Insurance (Exhibit
10hh to Registration Statement No. 2-87838).
10ii -- Ameritech Management Supplemental Pension Plan as amended through the Seventh
Amendment (Exhibit 10ii to Form 10-K for 1991, File No. 1-8612).
10ii-1 -- Eighth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit
10ii-1 to Form 10-K for 1991, File No. 1-8612).
10ii-2 -- Ninth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit 10ii-2
to Form 10-K for 1991, File No. 1-8612).
10ii-3 -- Tenth Amendment to Ameritech Management Supplemental Pension Plan.
10ii-4 -- Eleventh Amendment to Ameritech Management Supplemental Pension Plan.
10ii-5 -- Twelfth Amendment to Ameritech Management Supplemental Pension Plan.
10jj -- Ameritech Senior Management Retirement and Survivor Protection Plan as amended
and restated effective as of January 1, 1992 (Exhibit 10jj to Form 10-K for 1991,
File No. 1-8612).
10jj-1 -- First Amendment to Ameritech Senior Management Retirement and Survivor Protection
Plan (Exhibit 10jj-1 to Form 10-K for 1992, File No. 1-8612).
10jj-2 -- First Administrative Amendment to Ameritech Senior Management Retirement and
Survivor Protection Plan (Exhibit 10jj-2 to Form 10-K for 1992, File No. 1-8612).
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<S> <C> <C>
10jj-3 -- Second Administrative Amendment to Ameritech Senior Management Retirement and
Survivor Protection Plan.
10jj-4 -- Fourth Administrative Amendment to Ameritech Senior Management Retirement and
Survivor Protection Plan.
10kk -- Ameritech Senior Management Supplemental Savings and Deferral Plan as amended and
restated effective as of January 1, 1992 (Exhibit 10kk to Form 10-K for 1991,
File No. 1-8612).
10ll -- Ameritech Stock Retirement Plan for Non-Employee Directors (Exhibit 10ll to Form
10-K for 1986, File No. 1-8612).
10ll-1 -- First Amendment of Ameritech Stock Retirement Plan for Non-Employee Directors
(Exhibit 10ll-1 to Form 10-K for 1988, File No. 1-8612).
10ll-2 -- Second Amendment of Ameritech Stock Retirement Plan for Non-Employee Directors
(Exhibit 10ll-2 to Form 10-K for 1989, File No. 1-8612).
10mm -- Agreement Regarding Change in Control dated as of January 19, 1994 between the
Company and Richard C. Notebaert, together with a schedule identifying other
documents.
10nn -- Ameritech Senior Management Severance Pay Plan as amended and restated effective
as of January 1, 1992 (Exhibit 10nn to Form 10-K for 1991, File No. 1-8612).
10oo -- Ameritech 1989 Long Term Incentive Plan as amended and restated effective as of
January 1, 1992 (Exhibit 10oo to Form 10-K for 1991, File No. 1-8612).
10oo-1 -- First Amendment to 1989 Long Term Incentive Plan.
10pp -- Ameritech (Subsidiary) Senior Management Short Term Incentive Plan as amended and
restated effective January 1, 1992 (Exhibit 10pp to Form 10-K for 1991, File No.
1-8612).
10qq -- Ameritech (Subsidiary) Senior Management Transfer Program as amended and restated
effective as of January 1, 1992 (Exhibit 10qq to Form 10-K for 1991, File No.
1-8612).
10rr -- Ameritech Key Management Life Insurance Plan (Exhibit 10rr to Form 10-K for 1991,
File No. 1-8612).
10rr-1 -- First Administrative Amendment to Ameritech Key Management Life Insurance Plan.
10ss -- Ameritech Estate Preservation Plan (Exhibit 10ss to Form 10-K for 1991, File No.
1-8612).
10ss-1 -- First Administrative Amendment to Ameritech Estate Preservation Plan.
10tt -- Ameritech Senior Management Severance Pay Trust as amended through the First
Amendment (Exhibit 10tt to Form 10-K for 1991, File No. 1-8612).
10tt-1 -- Second Amendment to Ameritech Senior Management Severance Pay Trust (Exhibit
10tt-1 to Form 10-K for 1991, File No. 1-8612).
10uu -- Ameritech Management Employees Benefit Protection Trust as amended through the
First Amendment (Exhibit 10uu to Form 10-K for 1991, File No. 1-8612).
10uu-1 -- Second Amendment to Ameritech Management Employees Benefit Protection Trust
(Exhibit 10uu-1 to Form 10-K for 1991, File No. 1-8612).
10vv -- Employment Agreement dated as of October 21, 1992 between the Company and William
L. Weiss (Exhibit 10vv to Form 10-K for 1992, File No. 1-8612).
10ww -- Agreement Regarding Change in Control dated as of January 19, 1994 between the
Company and Richard H. Brown, together with schedule identifying other documents.
11a -- Statement re: computation of primary earnings per share.
11b -- Statement re: computation of fully diluted earnings per share.
12 -- Computation of ratio of earnings to fixed charges for the five years ended
December 31, 1993.
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<S> <C> <C>
13 -- Portions of Ameritech's annual report to security holders for the year ended
December 31, 1993.
21 -- Subsidiaries of the Company.
23 -- Consent of Arthur Andersen & Co.
24 -- Powers of Attorney.
99a -- Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the
Ameritech Savings Plan for Salaried Employees, to be filed by amendment.
99b -- Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the
Ameritech Savings and Security Plan (Non-Salaried Employees), to be filed by
amendment.
99c -- Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the Old
Heritage Advertising & Publishers, Inc. Profit Sharing Plan, to be filed by
amendment.
99d -- Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the
DonTech Profit Participation Plan, to be filed by amendment.
</TABLE>
Ameritech will furnish, without charge, to a security holder upon request a
copy of the annual report to security holders and the proxy statement, portions
of which are incorporated by reference, and will furnish any other exhibit at
cost.
(b) Reports on Form 8-K:
On December 29, 1993, the Company filed a Current Report on Form 8-K dated
December 15, 1993, to report on Item 5, Other Events, approval of a two-for-one
split in the form of a 100 percent stock dividend of the Company's Common Stock,
payable to owners of record at the close of business on December 31, 1993.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMERITECH CORPORATION
By /s/ BETTY F. ELLIOTT
----------------------------------
(Betty F. Elliott,
Vice President and Comptroller)
March 30, 1994
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
R. C. Notebaert*
President and
Chief Executive Officer
PRINCIPAL FINANCIAL OFFICER:
J. A. Edwardson*
Executive Vice President
and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
B. F. Elliott *By /s/ BETTY F. ELLIOTT
Vice President and --------------------------------
Comptroller (Betty F. Elliott,
for herself and as
Attorney-in-Fact)
DIRECTORS:
R. H. Brown*
D. C. Clark*
R. M. Gillett*
H. H. Gray* March 30, 1994
J. A. Henderson*
S. B. Lubar*
L. M. Martin*
J. B. McCoy*
R. C. Notebaert*
J. D. Ong*
A. B. Rand*
L. J. Rutigliano*
W. L. Weiss*
19
<PAGE> 22
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
Ameritech Corporation
We have audited in accordance with generally accepted auditing standards
the financial statements included in Ameritech Corporation's annual report to
shareowners incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 28, 1994. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The financial statement
schedules listed in Item 14(a)(2) are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
January 28, 1994
20
<PAGE> 23
AMERITECH CORPORATION
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------------- --------- ---------- ---------- ---------- ---------
ADDITIONS OTHER
BALANCE AT COST RETIREMENTS CHANGES BALANCE
BEGINNING -- NOTE -- NOTE -- NOTE END OF
CLASSIFICATION OF PERIOD (A) (B) (C) PERIOD
- -------------------------------------------- --------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR 1993
Land........................................ $ 131.3 $ 3.9 $ 0.3 $ 0.0 $ 134.9
Buildings................................... 2,845.3 132.7 22.7 0.6 2,955.9
Computer and Other Office Equipment......... 1,780.2 203.4 289.8 5.1 1,698.9
Vehicles and Other Work Equipment........... 541.7 66.3 42.1 0.2 566.1
Central Office Equipment.................... 10,669.0 1,197.9 960.0 (1.4) 10,905.5
Information Origination/Termination
Equipment................................. 489.6 37.6 12.1 0.1 515.2
Cable and Wire Facilities................... 11,187.1 529.8 121.3 0.0 11,595.6
Capitalized Lease Assets.................... 70.3 87.9 11.2 (0.1) 146.9
Miscellaneous Other Property................ 146.2 36.6 22.0 (2.5) 158.3
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment in
Service................................... 27,860.7 2,296.1 1,481.5 2.0 28,677.3
Under Construction.......................... 509.4 (66.4) 0.0 (2.9) 440.1
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment... $28,370.1 $2,229.7 $1,481.5 $ (0.9) $29,117.4
--------- ---------- ---------- ---------- ---------
--------- ---------- ---------- ---------- ---------
YEAR 1992
Land........................................ $ 126.8 $ 4.9 $ 0.4 $ -- $ 131.3
Buildings................................... 2,786.7 132.2 23.8 (49.8) 2,845.3
Computer and Other Office Equipment......... 1,537.2 299.2 92.6 36.4 1,780.2
Vehicles and Other Work Equipment........... 510.1 72.1 40.8 0.3 541.7
Central Office Equipment.................... 10,472.8 957.9 762.1 0.4 10,669.0
Information Origination/Termination
Equipment................................. 500.4 36.8 47.7 0.1 489.6
Cable and Wire Facilities................... 10,721.6 569.9 104.4 -- 11,187.1
Capitalized Lease Assets.................... 67.1 11.3 8.1 -- 70.3
Miscellaneous Other Property................ 111.1 38.6 16.6 13.1 146.2
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment in
Service................................... 26,833.8 2,122.9 1,096.5 0.5 27,860.7
Under Construction.......................... 323.8 186.4 0.3 (0.5) 509.4
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment... $27,157.6 $2,309.3 $1,096.8 $ 0.0 $28,370.1
--------- ---------- ---------- ---------- ---------
--------- ---------- ---------- ---------- ---------
YEAR 1991
Land........................................ $ 118.4 $ 12.2 $ 1.1 $ (2.7) $ 126.8
Buildings................................... 2,443.9 376.6 33.8 -- 2,786.7
Computer and Other Office Equipment......... 1,417.7 286.6 167.7 .6 1,537.2
Vehicles and Other Work Equipment........... 490.0 64.7 44.7 .1 510.1
Central Office Equipment.................... 9,919.1 1,099.7 582.2 36.2 10,472.8
Information Origination/Termination
Equipment................................. 961.2 31.1 455.5 (36.4) 500.4
Cable and Wire Facilities................... 10,273.5 594.1 145.9 (0.1) 10,721.6
Capitalized Lease Assets.................... 73.3 5.7 12.0 0.1 67.1
Miscellaneous Other Property................ 107.4 23.7 20.5 0.5 111.1
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment in
Service................................... 25,804.5 2,494.4 1,463.4 (1.7) 26,833.8
Under Construction.......................... 565.4 (217.3) 23.3 (1.0) 323.8
--------- ---------- ---------- ---------- ---------
Total Property, Plant and Equipment... $26,369.9 $2,277.1 $1,486.7 $ (2.7) $27,157.6
--------- ---------- ---------- ---------- ---------
--------- ---------- ---------- ---------- ---------
</TABLE>
NOTES TO SCHEDULE V
(a) Additions, other than to Buildings, include material purchased from
Ameritech Services, Inc., a wholly owned centralized procurement subsidiary
of the Ameritech landline telephone companies (see Notes to Consolidated
Financial Statements in the Company's annual report to security holders for
the year ended December 31, 1993). Additions shown also include (1) the
original cost (estimated if not known) of reused material, which is
concurrently credited to Material and Supplies, and (2) Interest during
construction. Transfers between the classifications listed are included in
Column C.
(b) Items of telecommunications plant when retired or sold are deducted from the
property accounts at the amounts at which they are included therein,
estimated if not known.
(c) Comprised principally, for all years, of the reclassification between plant
categories.
21
<PAGE> 24
AMERITECH CORPORATION
SCHEDULE VI -- ACCUMULATED DEPRECIATION
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- ------------------------------------------ --------- ----------- --------- -------- --------
ADDITIONS
CHARGED
TO
BALANCE EXPENSES BALANCE
BEGINNING -- OTHER END OF
CLASSIFICATION OF PERIOD NOTE(A) RETIREMENTS CHANGES PERIOD
- ------------------------------------------ --------- --------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
YEAR 1993
Buildings................................. $ 682.0 $ 85.7 $ 33.0 $ 0.0 $ 734.7
Computer and Other Office Equipment....... 845.1 251.9 191.5 0.8 906.3
Vehicles and Other Work Equipment......... 202.2 61.7 40.3 0.0 223.6
Central Office Equipment.................. 4,342.8 1,058.4 927.1 (1.4 ) 4,472.7
Information Origination/Termination
Equipment............................... 296.0 29.1 12.9 (0.1 ) 312.1
Cable and Wire Facilities................. 4,584.2 565.2 142.9 (1.8 ) 5,004.7
Capitalized Lease Assets.................. 40.3 12.8 10.6 0.1 42.6
Miscellaneous Other Property.............. 42.8 25.4 14.9 1.3 54.6
--------- --------- ----------- ------- ---------
Total Accumulated Depreciation..... $11,035.4 $2,090.2 $ 1,373.2 $ (1.1 ) $11,751.3
--------- --------- ----------- ------- ---------
--------- --------- ----------- ------- ---------
YEAR 1992
Buildings................................. $ 632.7 $ 82.8 $ 33.6 $ 0.1 $ 682.0
Computer and Other Office Equipment....... 689.5 243.2 89.2 1.6 845.1
Vehicles and Other Work Equipment......... 182.3 56.0 36.2 0.1 202.2
Central Office Equipment.................. 4,099.2 976.2 733.4 0.8 4,342.8
Information Origination/Termination
Equipment............................... 313.8 30.3 46.9 (1.2 ) 296.0
Cable and Wire Facilities................. 4,184.4 530.5 130.7 0.0 4,584.2
Capitalized Lease Assets.................. 38.2 9.7 8.0 0.4 40.3
Miscellaneous Other Property.............. 31.4 19.1 7.9 0.2 42.8
--------- --------- ----------- ------- ---------
Total Accumulated Depreciation..... $10,171.5 $1,947.8 $ 1,085.9 $ 2.0 $11,035.4
--------- --------- ----------- ------- ---------
--------- --------- ----------- ------- ---------
YEAR 1991
Buildings................................. $ 598.2 $ 79.5 $ 45.0 $ 0.0 $ 632.7
Computer and Other Office Equipment....... 629.6 209.5 152.6 3.0 689.5
Vehicles and Other Work Equipment......... 172.3 53.0 42.3 (0.7 ) 182.3
Central Office Equipment.................. 3,667.0 956.7 556.8 32.3 4,099.2
Information Origination/Termination
Equipment............................... 769.0 29.5 454.2 (30.5 ) 313.8
Cable and Wire Facilities................. 3,813.0 527.6 163.1 6.9 4,184.4
Capitalized Lease Assets.................. 38.9 10.1 10.2 (0.6 ) 38.2
Miscellaneous Other Property.............. 29.7 12.2 10.3 (0.2 ) 31.4
--------- --------- ----------- ------- ---------
Total Accumulated Depreciation..... $ 9,717.7 $1,878.1 $ 1,434.5 $ 10.2 $10,171.5
--------- --------- ----------- ------- ---------
--------- --------- ----------- ------- ---------
</TABLE>
NOTES TO SCHEDULE VI
(a) The Company's provision for depreciation is based principally on the
straight-line remaining life and the straight-line equal life group methods
of depreciation applied to individual categories of plant with similar
characteristics. The Company is allowed by regulatory authorities to use
reserve deficiency amortization in conjunction with the remaining life
method. For years 1993, 1992 and 1991, depreciation expressed as a
percentage of average depreciable plant was 7.4 percent, 7.2 percent and 7.3
percent, respectively.
(b) The Company's amount for additions charged to expenses (column C above) does
not agree with the amounts reported on the face of the consolidated
statements of income under the caption "depreciation and amortization." The
difference relates primarily to the amortization of intangibles.
22
<PAGE> 25
AMERITECH CORPORATION
SCHEDULE VIII -- ALLOWANCE FOR UNCOLLECTIBLES
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
------ --------- ---------- --------- --------- ---------
CHARGED
BALANCE TO OTHER BALANCE
BEGINNING CHARGED TO ACCOUNTS DEDUCTIONS END
DESCRIPTION OF PERIOD EXPENSES -- NOTE(A) -- NOTE(B) OF PERIOD
- ----------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Year 1993.................................. $ 126.3 $154.3 $ 165.1 $ 311.0 $ 134.7
Year 1992.................................. 124.6 131.7 139.9 269.9 126.3
Year 1991.................................. 134.7 165.0 137.2 312.3 124.6
</TABLE>
- -------------------------
(a) Includes principally amounts previously written off which were credited
directly to this account when recovered and amounts related to
interexchange carrier receivables which are being billed by the Company.
(b) Amounts written off as uncollectible.
AMERITECH CORPORATION
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Taxes other than income taxes
Property..................................................... $ 336.5 $ 340.6 $ 315.3
Gross receipts............................................... 167.9 169.1 189.5
Other........................................................ 73.7 75.5 76.7
-------- -------- --------
Total.......................................................... $ 578.1 $ 585.2 $ 581.5
-------- -------- --------
-------- -------- --------
Maintenance and repair expense................................. $1,728.8 $1,737.4 $1,647.3
-------- -------- --------
Advertising expense............................................ $ 204.4 $ 158.1 $ 110.1
-------- -------- --------
</TABLE>
- -------------------------
Note: All other possible applicable items did not meet the one percent sales
test and therefore are excluded.
23
<PAGE> 26
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER
- --------------
<S> <C> <C>
3a - Certificate of Incorporation of the Company as amended on April 26, 1991 (Exhibit 3a to Form 10-K for
1991, File No. 1-8612).
3b - By-Laws of the Company, as amended on April 15, 1992 (Exhibit 3b to Form 10-K for 1992, File No. 1-8612).
4b - No instrument which defines the rights of holders of long and intermediate term debt of the Company and
all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A).
Pursuant to this regulation, the Company hereby agrees to furnish a copy of any such instrument to the SEC
upon request.
10a - Reorganization and Divestiture Agreement between American Telephone and Telegraph Company and the Company
and Affiliates, dated as of November 1, 1983 (Exhibit 10a to Form 10-K for 1983, File No. 1-8612).
10b - Agreement Concerning Contingent Liabilities, Tax Matters and Termination of Certain Agreements, among
American Telephone and Telegraph Company, Bell System Operating Companies, Regional Holding Companies and
Affiliates dated as of November 1, 1983 (Exhibit 10j to Form 10-K for 1983, File No. 1-8612).
10aa - Ameritech Senior Management Short Term Incentive Plan as amended and restated effective as of January 1,
1992 (Exhibit 10aa to Form 10-K for 1991, File No. 1-8612).
10bb - Ameritech Long Term Incentive Plan as amended and restated effective as of January 1, 1992 (Exhibit 10bb
to Form 10-K for 1991, File No. 1-8612).
10bb-1 - First Amendment to Long Term Incentive Plan.
10cc - Ameritech Senior Management Life Insurance Plan Agreements (Exhibit 10cc to Form 10-K for 1990, File No.
1-8612).
10dd - Ameritech Senior Management Long Term Disability Plan as amended and restated effective as of
</TABLE>
<PAGE> 27
<TABLE>
<S> <C> <C>
January 1, 1992 (Exhibit 10dd to Form 10-K for 1991, File No. 1-8612).
10ee - Ameritech Senior Management Transfer Program as amended and restated effective as of January 1, 1992
(Exhibit 10ee to Form 10-K for 1991, File No. 1-8612).
10ff - Ameritech Perquisite Program (Exhibit 10ff to Form 10-K for 1991, File No. 1-8612).
10gg - Ameritech Deferred Compensation Plan for Non-Employee Directors (Exhibit 10gg to Form 10-K for 1985, File
No. 1-8612).
10gg-1 - First Amendment of Deferred Compensation Plan for Non-Employee Directors (Exhibit 10gg-1 to Form 10-K for
1986, File No. 1-8612).
10gg-2 - First Amendment of American Information Technologies Corporation Deferred Compensation Plan for
Non-Employee Directors effective as of January 1, 1989 (Exhibit 10gg-2 to Form 10-K for 1988, File
No. 1-8612).
10gg-3 - Second Amendment of American Information Technologies Corporation Deferred Compensation Plan for
Non-Employee Directors (Exhibit 10gg-3 to Form 10-K for 1990, File No. 1-8612).
10gg-4 - Third Amendment of American Information Technologies Corporation Deferred Compensation Plan for
Non-Employee Directors (Exhibit 10gg-4 to Form 10-K for 1990, File No. 1-8612).
10gg-5 - Fourth Amendment of American Information Technologies Corporation Deferred Compensation Plan for
Non-Employee Directors (Exhibit 10gg-5 to Form 10-K for 1992, File No. 1-8612).
10hh - Ameritech Plan for Non-Employee Directors' Travel Accident Insurance (Exhibit 10hh to Registration
Statement No. 2-87838).
10ii - Ameritech Management Supplemental Pension Plan as amended through the Seventh Amendment (Exhibit 10ii to
Form 10-K for 1991, File No. 1-8612).
10ii-1 - Eighth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit 10ii-1 to Form 10-K for
1991, File No. 1-8612).
</TABLE>
<PAGE> 28
<TABLE>
<S> <C> <C>
10ii-2 - Ninth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit 10ii-2 to Form 10-K for
1991, File No. 1-8612).
10ii-3 - Tenth Amendment to Ameritech Management Supplemental Pension Plan.
10ii-4 - Eleventh Amendment to Ameritech Management Supplemental Pension Plan.
10ii-5 - Twelfth Amendment to Ameritech Management Supplemental Pension Plan.
10jj - Ameritech Senior Management Retirement and Survivor Protection Plan as amended and restated effective as
of January 1, 1992 (Exhibit 10jj to Form 10-K for 1991, File No. 1-8612).
10jj-1 - First Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan (Exhibit 10jj-1
to Form 10-K for 1992, File No. 1-8612).
10jj-2 - First Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan
(Exhibit 10jj-2 to Form 10-K for 1992, File No. 1-8612).
10jj-3 - Second Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan.
10jj-4 - Fourth Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan.
10kk - Ameritech Senior Management Supplemental Savings and Deferral Plan as amended and restated effective as of
January 1, 1992 (Exhibit 10kk to Form 10-K for 1991, File No. 1-8612).
10ll - Ameritech Stock Retirement Plan for Non-Employee Directors (Exhibit 10ll to Form 10-K for 1986, File
No. 1-8612).
10ll-1 - First Amendment of Ameritech Stock Retirement Plan for Non-Employee Directors (Exhibit 10ll-1 to Form
10-K for 1988, File No. 1-8612).
10ll-2 - Second Amendment of Ameritech Stock Retirement Plan for Non-Employee Directors (Exhibit 10ll-2 to Form
10-K for 1989, File No. 1-8612).
10mm - Agreement Regarding Change in Control dated as of January 19, 1994 between the Company and Richard
</TABLE>
<PAGE> 29
<TABLE>
<S> <C> <C>
C. Notebaert, together with a schedule indentifying
other documents.
10nn - Ameritech Senior Management Severance Pay Plan as amended and restated effective as of January 1, 1992 (Exhibit
10nn to Form 10-K for 1991, File No. 1-8612).
10oo - Ameritech 1989 Long Term Incentive Plan as amended and restated effective as of January 1, 1992 (Exhibit 10oo
to Form 10-K for 1991, File No. 1-8612).
10oo-1 - First Amendment to 1989 Long Term Incentive Plan.
10pp - Ameritech (Subsidiary) Senior Management Short Term Incentive Plan as amended and restated effective January 1,
1992 (Exhibit 10pp to Form 10-K for 1991, File No. 1-8612).
10qq - Ameritech (Subsidiary) Senior Management Transfer Program as amended and restated effective as of January 1,
1992 (Exhibit 10qq to Form 10-K for 1991, File No. 1-8612).
10rr - Ameritech Key Management Life Insurance Plan (Exhibit 10rr to Form 10-K for 1991, File No. 1-8612).
10rr-1 - First Administrative Amendment to Ameritech Key Management Life Insurance Plan.
10ss - Ameritech Estate Preservation Plan (Exhibit 10ss to Form 10-K for 1991, File No. 1-8612).
10ss-1 - First Administrative Amendment to Ameritech Estate Preservation Plan.
10tt - Ameritech Senior Management Severance Pay Trust as amended through the First Amendment (Exhibit 10tt to Form
10-K for 1991, File No. 1-8612).
10tt-1 - Second Amendment to Ameritech Senior Management Severance Pay Trust (Exhibit 10tt-1 to Form 10-K for 1991,
File No. 1-8612).
10uu - Ameritech Management Employees Benefit Protection Trust as amended through the First Amendment (Exhibit
10uu to Form 10-K for 1991, File No. 1-8612).
10uu-1 - Second Amendment to Ameritech Management Employees Benefit Protection Trust (Exhibit 10uu-1 to Form 10-K for
1991, File No. 1-8612).
</TABLE>
<PAGE> 30
<TABLE>
<S> <C> <C>
10vv - Employment Agreement dated as of October 21, 1992 between the Company and William L. Weiss (Exhibit 10vv
to Form 10-K for 1992, File No. 1-8612).
10ww - Agreement Regarding Change in Control dated as of January 19, 1994 between the Company and Richard H.
Brown, together with schedule identifying other documents.
11a - Statement re: computation of primary earnings per share.
11b - Statement re: computation of fully diluted earnings per share.
12 - Computation of ratio of earnings to fixed charges for the five years ended December 31, 1993.
13 - Portions of Ameritech's annual report to security holders for the year ended December 31, 1993.
21 - Subsidiaries of the Company.
23 - Consent of Arthur Andersen & Co.
24 - Powers of Attorney.
99a - Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the Ameritech Savings Plan for
Salaried Employees, to be filed by amendment.
99b - Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the Ameritech Savings and Security
Plan (Non-Salaried Employees), to be filed by amendment.
99c - Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the Old Heritage Advertising &
Publishers, Inc. Profit Sharing Plan, to be filed by amendment.
99d - Form 11-K Annual Report for the fiscal year ended December 31, 1993 of the DonTech Profit Participation
Plan, to be filed by amendment.
</TABLE>
<PAGE> 1
EXHIBIT 10bb-1
FIRST AMENDMENT TO
LONG TERM INCENTIVE PLAN
(As Amended and Restated Effective as of January 1, 1992)
Pursuant to the second sentence of paragraph I-10 of the Ameritech
Long Term Incentive Plan (the "Plan"), the Compensation Committee of the Board
of Directors of Ameritech Corporation hereby amends the Plan as follows:
1. By adding after the words "For all purposes of the Plan, other
than Part VI" in the third sentence of paragraph II-1 of the Plan the
following: "and except as provided in the fourth sentence of this paragraph
II-1,".
2. By adding the following sentence after the third sentence of
paragraph II-1 of the Plan: "If a Participant elects to pay the purchase price
upon exercise of a Stock Option by delivery of the Participant's irrevocable
instructions to a broker to promptly pay the option price upon receipt of the
certificate representing the shares as permitted by paragraphs II-3 and III-3
(sometimes referred to as a "Cashless Exercise"), the "Fair Market Value" of
each share of Common Stock purchased upon exercise of such Stock Option shall
be the price at which such shares are sold by such broker in such Cashless
Exercise."
* * * * * *
The foregoing is a true and correct copy of an amendment adopted by the
Compensation Committee of the Board of Directors of Ameritech Corporation on
August 20, 1993.
/s/ BRUCE B. HOWAT
----------------------
Bruce B. Howat
Corporate Secretary
<PAGE> 1
Exhibit 10ii-3
TENTH AMENDMENT
TO
AMERITECH MANAGEMENT SUPPLEMENTAL PENSION PLAN
RESOLVED, that pursuant to the authority granted to this Committee,
the Ameritech Management Supplemental Pension Plan (the "Supplemental Plan"),
is hereby amended by adding the following as Supplement A to the Supplemental
Plan, effective as of the date or dates indicated therein:
"SUPPLEMENT A
TO
AMERITECH MANAGEMENT SUPPLEMENTAL PENSION PLAN
Anything in the Supplemental Plan to the contrary notwithstanding, (A)
any Eligible Employee (as that term is defined in Supplement G of the Pension
Plan) who terminates employment between September 24, 1991 and December 30,
1991, who is eligible for a deferred vested pension under Paragraph 1(b) of
Section 4 of the Pension Plan and who elects under Subsection 3.5 of the
Supplemental Plan to receive his supplemental pension benefits under the
Supplemental Plan in a lump sum, or (B) any Eligible Employee (as that term is
defined in Supplement G of the Pension Plan) who retires between December 15,
1991 and December 30, 1991, who is eligible for a service pension under
Paragraph 1(a) of Section 4 of the Pension Plan and who elects under Subsection
3.5 of the Supplemental Plan to receive his supplemental pension benefits under
the Supplemental Plan in a lump sum, shall be entitled to make such election in
writing under Subsection 3.5 of the Supplemental Plan no later than December
10, 1991, in lieu of the election date or dates otherwise specified with
respect to such Eligible Employee in Subsection 3.5 of the Supplement Plan."
<PAGE> 1
EXHIBIT 10ii-4
ELEVENTH AMENDMENT
TO
AMERITECH MANAGEMENT SUPPLEMENTAL PENSION PLAN
RESOLVED, that pursuant to the authority granted to this Committee,
the Ameritech Management Supplemental Pension Plan (the "Plan") is hereby
amended as follows effective as of April 1, 1993:
1. To add the following as the second sentence of Section 2:
"An individual shall also commence participating in the Supplemental
Plan as of the first date on which such individual ceases to be a
Senior Management Employee (as defined in the Ameritech Senior
Management Retirement and Survivor Protection Plan) if such individual
is a former Senior Management Employee who is no longer entitled to a
supplemental benefit under the Ameritech Senior Management Retirement
and Survivor Protection Plan by reason of the final sentence of
subsection 2.1 of that Plan and such individual's Modified
Compensation (as defined in subsection 3.1) includes awards or salary
deferrals as described in item (ii) of subsection 3.1."
2. To delete subsection 3.1(a) in its entirety and substitute the
following therefor:
"(a) the amount of the benefit payment (expressed in the form of the
benefit payable to or on account of the individual under the Pension
Plan) that would have been payable to or on account of the individual
under the Pension Plan as of that date, determined without regard to
the limitations imposed by either section 401(a)(17) or 415 of the
Code, and determined as if the individual's compensation under the
Pension Plan were equal to the individual's Modified Compensation (as
defined below);" and
3. To add the following as the final paragraph of subsection 3.1:
"An individual's Modified Compensation as of any date shall be equal
to the amount that would be the individual's compensation as of the
date under the Pension Plan if it included:
(i) the amount of any incentive compensation or bonus deferred under
the Ameritech Senior Management Supplemental Savings and Deferral
Plan, and
<PAGE> 2
(ii) solely with respect to any former Senior Management
Employee (as defined in the Ameritech Senior Management Retirement and
Survivor Protection Plan) who is no longer entitled to a supplemental
benefit under the Ameritech Senior Management Retirement and Survivor
Protection Plan by reason of the final sentence of subsection 2.1 of
that Plan, the amount of such individual's actual awards under
Ameritech's or an Employer's Senior Management Short Term Incentive
Plan, and the amount of any salary deferrals under the Ameritech
Senior Management Supplemental Savings and Deferral Plan, (all without
regard to any deferral of such incentive compensation, bonus, awards
or salary under the Ameritech Senior Management Supplemental Savings
and Deferral Plan)."
I, Carol J. Ogren, Secretary of the Ameritech Benefit Plan Committee,
hereby certify that the foregoing is a correct copy of a resolution
adopted by the Ameritech Benefit Plan Committee on April 22, 1993, and
that the resolution has not been changed or repealed.
/s/ CAROL J OGREN
--------------------
Secretary
<PAGE> 1
Exhibit 10ii-5
TWELFTH AMENDMENT
TO
AMERITECH MANAGEMENT SUPPLEMENTAL PENSION PLAN
RESOLVED, that pursuant to the authority granted to this Committee,
the Ameritech Management Supplemental Pension Plan (the "Supplemental Plan"),
is hereby amended as follows effective as of the date or dates indicated:
1. Effective as of August 18, 1993, to delete the term "30th" from
subsection 3.5(d) of the Supplemental Plan and to substitute therefor
the term "60th"; and
2. Effective immediately, to add the following at the end of subsection
3.1 of the Supplemental Plan:
"The term "Affected Participant" as used in this subsection shall mean
any former Senior Management Employee (as defined in the Ameritech
Senior Management Retirement and Survivor Protection Plan (the "Senior
Management Plan")) who received a lump sum payment of his interest
under the Senior Management Plan pursuant to Supplement A of the
Senior Management Plan and who is now participating in this
Supplemental Plan.
The benefits to which an Affected Participant or his surviving spouse
is otherwise entitled under this Supplemental Plan in the form of a
lump sum shall be reduced by an amount based upon the amount paid to
the Affected Participant or to the grantor trust established by the
Affected Participant in accordance with Supplement A of the Senior
Management Plan, and the amount withheld therefrom for the payment of
taxes, but calculated using the interest assumption then being used to
calculate lump sum payments under the Pension Plan. No adjustment
shall be made to the amount of the reduction to reflect earnings or
losses on amounts previously paid. If an Affected Participant's or
surviving spouse's benefits under the Supplemental Plan are not paid
in the form of a lump sum, the amount of such benefits shall be
determined by converting the net lump sum that would be payable in
accordance with the first sentence of this paragraph (after reduction
by the amount specified above) to an actuarially equivalent amount
based upon the rates, tables and factors then utilized under the
Supplemental Plan to determine lump sum amounts. If the amount of the
reduction exceeds
<PAGE> 2
the benefits to which the Affected Participant or
his surviving spouse would otherwise be entitled under the
Supplemental Plan, no benefits shall be paid to such Affected
Participant or surviving spouse under the Supplemental Plan and no
amount shall be owed from the Affected Participant or surviving spouse
to the Supplemental Plan or Ameritech."
I, Carol J. Ogren, Secretary of the Ameritech Benefit Plan Committee,
hereby certify that the foregoing is a correct copy of a resolution
adopted by the Ameritech Benefit Plan Committee on September 23, 1993,
and that the resolution has not been changed or repealed.
/s/ CAROL J. OGREN
---------------------
Secretary
<PAGE> 1
Exhibit 10jj-3
SECOND ADMINISTRATIVE AMENDMENT
TO
AMERITECH SENIOR MANAGEMENT
RETIREMENT AND SURVIVOR PROTECTION PLAN
Pursuant to authority reserved to Ameritech Corporation, the Ameritech Senior
Management Retirement and Survivor Protection Plan (As Amended and Restated
Effective as of January 1, 1992) (the "Plan") is hereby amended effective as of
April 1, 1993, as follows:
1. To delete the last sentence of subsection 2.1 in its entirety and to
substitute the following therefor: "A former Senior Management
Employee who on or after April 1, 1993 no longer is at a level or
holds a position described in the preceding sentence shall cease to be
a Plan Participant for all purposes under the Plan effective as of the
date such individual ceases to be at such a level or hold such a
position; provided, that any former Senior Management Employee who
ceased to be a Senior Management Employee before April 1, 1993 shall
cease to be a Plan Participant for all purposes under this Plan when
the amount of any salary deferrals, any awards deferred under the
annual bonus plans of the Company or a Subsidiary and any actual
awards under the Incentive Plans (without regard to any deferral of
such salary or awards under the Ameritech Senior Management
Supplemental Savings and Deferral Plan) earned or deferred while such
individual was a Senior Management Employee shall no longer be
included in such individual's Modified Compensation as defined in
subsection 3.1 of this Plan;" and
<PAGE> 2
2. To delete Section 7.3 in its entirety and to substitute the following
therefor: "7.3. Participation Rights. No action under this Section
7 shall reduce or impair the interests of individuals in benefits
being paid under the Plan at the date of amendment or termination, as
the case may be."
Dated: March _____, 1993 AMERITECH CORPORATION
By:/s/Martha L. Thornton
----------------------------
Senior Vice President -
Human Resources
Concur: /s/ Thomas P. Hester
------------------------
Executive Vice President
and General Counsel
<PAGE> 1
Exhibit 10jj-4
FOURTH ADMINISTRATIVE AMENDMENT
TO
AMERITECH SENIOR MANAGEMENT
RETIREMENT AND SURVIVOR PROTECTION PLAN
(As Amended and Restated Effective as of January 1, 1992)
Pursuant to authority reserved to Ameritech Corporation, the Ameritech
Senior Management Retirement and Survivor Protection Plan (As Amended and
Restated Effective as of January 1, 1992) (the "Plan") is hereby amended
effective as of August 18, 1993 to delete the term "30th" from paragraph (c)
of subsection 6.6 of the Plan and to substitute therefor the term "60th."
Dated: October 21, 1993
AMERITECH CORPORATION
Concur: By: /s/ Martha L. Thornton
------------------------------
Senior Vice President -
/s/ Thomas P. Hester Human Resources
- ------------------------------
Executive Vice President and
General Counsel
<PAGE> 1
Exhibit 10mm
AGREEMENT REGARDING
CHANGE IN CONTROL
This Agreement entered into as of the 19th day of January, 1994 by and
between Ameritech Corporation, a Delaware corporation (the "Company"), and
Richard C. Notebaert (the "Executive"),
WITNESSETH THAT:
WHEREAS, the Company wishes to induce the Executive to remain in its
employ, to provide fair and equitable treatment and a competitive compensation
package to the Executive, and to assure continued attention of the Executive to
his duties without any distraction arising out of uncertain personal
circumstances in a change in control environment; and
WHEREAS, the Company recognizes that in the event of a change in
control of the Company it is likely that the Executive's authorities, duties
and responsibilities would be substantially altered; and
WHEREAS, the Company and the Executive accordingly desire to enter into
this Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, it is hereby agreed by and between the parties as follows:
1. Term of Agreement. The "Term" of this Agreement shall commence on
the date hereof and shall continue through December 31, 1994; provided,
however, that on such date and on each December 31 thereafter, the Term of this
Agreement shall automatically be extended for one additional year (but not
beyond the Executive's attainment of age 65) unless, not later than the
preceding November 1 the Company shall have given notice that it does not wish
to extend the Term; and provided, further, that if a Change in Control (as
defined in paragraph 2 below) shall have occurred during the original or any
extented Term of this Agreement, the Term of this Agreement shall continue for
a period of twenty-four months beyond the month in which such Change in Control
occurs, but not beyond the Executive's attainment of age 65.
2. Change in Control. For purposes of this Agreement, the term
"Change in Control" means a change in the beneficial ownership of the Company's
voting stock or a change in the composition of the Company's Board of Directors
which occurs as follows:
<PAGE> 2
(a) any "person" (as such term is used in Section 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934) other than:
(i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or
(ii) the Executive or any person acting in concert with the
Executive
is or becomes a beneficial owner (as defined in rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of stock of
Company representing 20% or more of the total voting power of the
Company's then outstanding stock; provided, however, that this
subparagraph (a) shall not apply to any tender offer made pursuant to
an agreement with the Company approved by the Company's Board of
Directors and entered into before the offeror has become a beneficial
owner of stock of the Company representing 5% or more of the combined
voting power of the Company's then outstanding stock;
(b) a tender offer is made for the stock of the Company, and the person
making the offer owns or has accepted for payment stock of the
Company representing 20% or more of the total voting power of the
Company's then outstanding stock; provided, however, that this
subparagraph (b) shall not apply to any tender offer made pursuant
to an agreement with the Company approved by the Company's Board of
Directors and entered into before the offeror has become a beneficial
owner of stock of the Company representing 5% or more of the combined
voting power of the Company's then outstanding stock;
(c) during any period of 24 consecutive months there shall cease to be a
majority of the Board of Directors comprised as follows: individuals
who at the beginning of such period constitute the Board of Directors
and any new director(s) whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by
a vote of at least two-third (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved; or
(d) the stockholders of the Company approved a merger or consolidation of
the Company with any other company other than:
2
<PAGE> 3
(i) a merger or consolidation which would result in the Company's
voting stock outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting stock of the surviving entity) more than
70% of the combined voting power of the Company's or such surviving
entity's outstanding voting stock immediately after such merger or
consolidation; or
(ii) a merger or consolidation which would result in the directors of
the Company who were directors immediately prior thereto
continuing to constitute at least 50% of the directors of the
surviving entity immediately after such merger or consolidation.
For purposes of subparagraph (d) above, the phrase "surviving entity" shall
mean only an entity in which all the Company's stockholders who are
stockholders immediately before the merger or consolidation (other than
stockholders exercising dissenter rights) become stockholders by the terms
of the merger or consolidation, and the phrase "directors of the Company who
were directors immediately prior thereto" shall not include (A) any director
of the Company who was designated by a person who has entered into an
agreement with the Company to effect a transaction described in subparagraph
(a) or subparagraph (d) above, or (B) any director who was not a director at
the beginning of the 24-consecutive-month period preceding the date of such
merger or consolidation, unless his election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors who were directors before the
beginning of such period.
3. Compensation After a Change in Control. During any period in which the
Executive is employed by the Company after a Change in Control, there shall be
no reduction in the base salary, long and short term incentives and bonuses,
employee benefits (including medical insurance, disability income protection,
and life insurance and death benefits), fringe benefits and perquisites to
which the Executive was entitled prior to the Change in Control.
4. Severence Payments. Subject to the provisions of paragraphs 5 and 6
below, in the event that the Executive's employment with the Company is
voluntarily terminated by the Executive or involuntarily terminated by the
Company for any reason other than death, Disability (as defined below) or Just
Cause (as defined below) during the twenty-four month period following a
Change in Control, the Executive shall continue to receive all medical
insurance, disability income protection, life insurance coverage and death
benefits, fringe benefits and perquisites to which the
3
<PAGE> 4
Executive was entitled prior to the Change in Control for period of not less
than the 24 consecutive months immediately following the date of his
termination of employment, and shall be entitled to a lump sum payment in cash
no later than ten business days and no earlier than two business days after the
date of termination equal to the sum of:
(a) an amount equal to 2.99 (or, if less, the number of years
remaining until the Executive's attainment of age 65) times the
Executive's annual salary rate in effect immediately prior to the
Change in Control;
(b) an amount equal to 2.99 (or, if less, the number of years
remaining until the Executive's attainment of age 65) times the
Executive's short term incentive award and other bonuses payable
for the calendar year preceding the Change in Control; and
(c) the actuarial equivalent of the additional pension benefits which
the Executive would have accrued under the terms of the Ameritech
Management Pension Plan, the Ameritech Senior Management
Retirement and Survivor Protection Plan and each other tax-
qualified or nonqualified defined benefit pension plan maintained
by the Company (determined without regard to any termination or
any amendment adversely affecting the Executive which is adopted
on or after a Change in Control or in contemplation of a Change
in Control) if, on the date of Termination, the Executive had
been credited with two additional years of service and two
additional years of compensation at his annual base salary rate
and target short term incentive award in effect on the date of
the Change in Control for benefit accrual purposes and were two
years older than his actual age on such date; provided, however,
that the additional service, compensation and age credits under
this paragraph (c) shall be proportionately reduced if the
Executive is at least age 63 on the date of termination and
eliminated if the Executive is age 65 or older on such date. For
purposes of this subparagraph (c), actuarial equivalence shall be
determined in accordance with the terms of the Ameritech Senior
Management Retirement and Survivor Protection Plan for purposes
of lump sum payments under that plan, but without regard to any
amendment of that plan adopted on or after a Change in Control or
in contemplation of a Change in Control which would reduce the
amount of such lump sum payment.
For purposes of this Agreement, the Executive's employment with the Company
shall be deemed to have been involuntarily terminated by the Company if the
Executive's duties and responsibilities are significantly
4
<PAGE> 5
diminished by the Company without the Executive's consent. For purposes of
this Agreement, the term "Disability" means an incapacity, due to physical
injury or illness or mental illness, causing a Participant to be unable to
perform his duties for the Company on a full-time basis for a period of at
least six consecutive months and the term "Just Cause" means willful misconduct,
dishonesty, conviction of a felony or excessive absenteeism not related
to illness or disability.
5. Tax Limitations. If any payments under this Agreement, after taking
in account all other payments to which the Executive is entitled from the
Company, or any affiliate thereof, are more likely than not to result in a loss
of a deduction to the Company by reason of section 2800 of the Internal Revenue
Code of 1986 or any successor provision to that section, such payments shall be
reduced by the least amount required avoid such loss of deduction. If the
Executive and the Company shall disagree as to whether a payment under
this Agreement is more likely than not to result in the loss of a deduction,
the matter shall be resolved by an opinion of tax counsel chosen by the
Company's independent auditors. The Company shall pay the fees and expenses
of such counsel, and shall make available such information as may be
reasonably requested by such counsel to prepare the opinion.
If, by reason of the limitations of this paragraph 5, the maximum amount
payable to the Executive under paragraph 4 above cannot be determined prior
to the due date for such payment, the Company shall pay on the due date the
minimum amount which it in good faith determines to be payable and shall pay
the remaining amount, with interest calculated at the rate prescribed by
section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as soon as such
remaining amount is determined in accordance with this paragraph 5.
6. Source of Payments and Withholding. Any amount payable under the
terms of this Agreement shall be paid from the general assets of the Company or
from one or more trusts, the assets of which are subject to the claims of the
Company's general creditors. All payments to the Executive under this
Agreement will be subject to all applicable withholding of state and federal
taxes.
7. Arbitration of All Disputes. Any controversy or claim arising out of
or relating to this Agreement or the breach thereof shall be settled by
arbitration in the City of Chicago, in accordance with the laws of the State of
Illinois, by three arbitrators, one of whom shall be appointed by the Company,
one by the Executive and third of whom shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of
a third arbitrator, then the third arbitrator shall be appointed by the Chief
Judge of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the
5
<PAGE> 6
selection of arbitrators which shall be as provided in this paragraph 11.
Judgment upon the award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. In the event that it shall be necessary or
desirable for the Executive to retain legal counsel or incur other costs and
expenses in connection with enforcement of his rights under this Agreement, the
Company shall pay (or the Executive shall be entitled to recover from the
Company, as the case may be) his reasonable attorneys' fees and costs and
expenses in connection with enforcement of his rights (including the
enforcement of any arbitration award in court). Payments shall be made to the
Executive at the time such fees, costs and expenses are incurred. If, however,
the arbitrators shall determine that, under the circumstances, payment by the
Company of all or part of any such fees and costs and expenses would be unjust,
the Executive shall repay such amounts to the Company in accordance with the
order of with the order of the arbitrators.
8. Mitigation and Set-Off. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amonts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of this employment with the Company, or any
amounts which might have been earned by the Executive in other employment had
he sought such other employment.
9. Severance Pay Plan. During the Term of this Agreement, the Executive
shall not participate in or have any rights under either the Ameritech Senior
Management Severance Pay Plan or the Ameritech Management Employees Severance
Pay Plan.
10. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate or in any way create a lien upon any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts, or by
operation of law. Nothing in this paragraph shall limit the Executive's rights
or powers to dispose of his property by will or limit any rights or powers
which his executor or administrator would otherwise have.
11. Governing Law. The provisions of this Agreement shall be construed
in accordance with the laws of the State of Illinois.
12. Amendment. This Agreement may be amended or canceled by mutual
agreement of the parties in writing without the consent of any other person
and, so long as the Executive lives, no person, other than the
6
<PAGE> 7
parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof.
13. Successors to the Company. This Agreement shall be binding upon
and inure to the benefit of the Company and any successor of the Company. The
Company will require any successor (whether director or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no succession had taken place.
14. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in two or more
counterparts, any one of which shall be deemed the original without reference
to the others.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the date and year first above written.
/s/Richard C. Notebaert
----------------------
Executive
Ameritech Corporation
By: /s/ Bruce B. Howat
-------------------
Its: Secretary
ATTEST:
/s/ Marilyn S. Sprocker
- ---------------------------
Assistant Secretary
7
<PAGE> 8
Schedule to Exhibit 10mm
Ameritech Corporation has an identical Agreement Regarding Change In Control
dated January 19, 1994 with William L. Weiss, which superseded and replaced an
Agreement Regarding Change In Control dated January 1, 1989 between Ameritech
and Mr. Weiss.
<PAGE> 1
Exhibit 10oo-1
FIRST AMENDMENT TO
1989 LONG TERM INCENTIVE PLAN
(As Amended and Restated Effective as of January 1, 1992)
Pursuant to the second sentence of paragraph I-12 of the Ameritech
1989 Long Term Incentive Plan (the "Plan"), the Compensation Committee of the
Board of Directors of Ameritech Corporation hereby amends the Plan as follows:
1. By adding after the words "For all purposes of the Plan," in
the first sentence of paragraph I-7 of the Plan the following: "except as
provided in the second sentence of this paragraph I-7,".
2. By adding the following sentence after the first sentence of
paragraph I-7 of the Plan: "If a Participant elects to pay the purchase price
upon exercise of a Stock Option by delivery of the Participant's irrevocable
instructions to a broker to promptly pay the option price upon receipt of the
certificate representing the shares as permitted by paragraph II-3 (sometimes
referred to as a "Cashless Exercise"), the "Fair Market Value" of each share of
Common Stock purchased upon exercise of such Stock Option shall be the price at
which such shares are sold by such broker in such Cashless Exercise."
* * * * * *
The foregoing is a true and correct copy of an amendment adopted by the
Compensation Committee of the Board of Directors of Ameritech Corporation on
August 20, 1993.
/s/ Bruce B. Howat
--------------------------
Bruce B. Howat
Corporate Secretary
<PAGE> 1
Exhibit 10rr-1
FIRST ADMINISTRATIVE AMENDMENT
TO
AMERITECH KEY MANAGEMENT LIFE INSURANCE
(Effective as of July 1, 1990)
Pursuant to authority reserved to Ameritech Corporation, the Ameritech Key
Management Life Insurance Plan (Effective as of July 1, 1990) (the "Plan") is
hereby amended effective as of October 1, 1993 to add the following as
paragraph 6.3 of the Plan:
"6.3 Administrative Amendments. The Company's Senior Vice
President - Human Resources, or such other officer of the Company
as may from time to time be primarily responsible for human
resources matters, may, with the concurrence of the Company's
Executive Vice President and General Counsel, make minor or
administrative amendments to the Plan."
Dated: November 30, 1993
AMERITECH CORPORATION
Concur: By: /s/ Martha L. Thornton
----------------------------------------
Senior Vice President -
Human Resources
/s/ Thomas P. Hester
- -------------------------------------
Executive Vice President and
General Counsel
<PAGE> 1
Exhibit 10ss-1
FIRST ADMINISTRATIVE AMENDMENT
TO
AMERITECH ESTATE PRESERVATION PLAN
(Effective as of July 1, 1990)
Pursuant to authority reserved to Ameritech Corporation, the Ameritech Estate
Preservation Plan (Effective as of July 1, 1990) (the "Plan") is hereby amended
effective as of October 1, 1993 as follows:
1. To add the following as paragraph 6.3 of the Plan:
"6.3 Administrative Amendments. The Company's Senior Vice
President - Human Resources, or such other officer of the Company
as may from time to time be primarily responsible for human
resources matters, may, with the concurrence of the Company's
Executive Vice President and General Counsel, make minor or
administrative amendments to the Plan;" and
2. To delete subparagraph (v) of paragraph 4.8(a) in its entirety and to
substitute therefor the following:
"(v) the latest of:
(A) the date the Participant's employment with the Company
or a Subsidiary terminates after the Participant has
reached age 65 and on or after the date upon which the
Participant becomes retirement eligible, or
(B) the date the Participant reaches age 65 for any
Participant whose employment with the Company or a
Subsidiary terminates on or after the date upon which the
Participant becomes retirement eligible but before the
Participant has reached age 65, or
(C) the date immediately before the date fifteen (15) years
after the policy date of the Estate Preservation Policy
(as defined therein).
<PAGE> 2
For purposes of subparagraph (C) above, all years during which
any Estate Preservation Policy is in effect with respect to a
Participant, whether or not consecutive, shall be aggregated."
Dated: November 30, 1993
AMERITECH CORPORATION
Concur: By: /s/ Martha L. Thornton
---------------------------------------
Senior Vice President -
/s/ Thomas P. Hester Human Resources
- ----------------------------
Executive Vice President and
General Counsel
<PAGE> 1
Exhibit 10ww
AGREEMENT REGARDING
CHANGE IN CONTROL
This Agreement entered into as of the 19th day of January, 1994 by and
between Ameritech Corporation, a Delaware corporation (the "Company"), and
Richard H. Brown (the "Executive"),
WITNESSETH THAT:
WHEREAS, the Company wishes to induce the Executive to remain in its
employ, to provide fair and equitable treatment and a competitive compensation
package to the Executive, and to assure continued attention of the Executive to
his duties without any distraction arising out of uncertain personal
circumstances in a change in control environment; and
WHEREAS, the Company recognizes that in the event of a change in
control of the Company it is likely that the Executive's authorities, duties
and responsibilities would be substantially altered; and
WHEREAS, the Company and the Executive accordingly desire to enter
into this Agreement on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, it is hereby agreed by and between the parties as follows:
1. Term of Agreement. The "Term" of this Agreement shall
commence on the date hereof and shall continue through December 31, 1994;
provided, however, that on such date and on each December 31 thereafter, the
Term of this Agreement shall automatically be extended for one additional year
(but not beyond the Executive's attainment of age 65) unless, not later than
the preceding November 1 the Company shall have given notice that it does not
wish to extend the Term; and provided, further, that if a Change in Control
(as defined in paragraph 2 below) shall have occurred during the original or
any extended Term of this Agreement, the Term of this Agreement shall continue
for a period of twenty-four months beyond the month in which such Change in
Control occurs, but not beyond the Executive's attainment of age 65.
2. Change in Control. For purposes of this Agreement, the term
"Change in Control" means a change in the beneficial ownership of the
<PAGE> 2
Company's voting stock or a change in the composition of the Company's
Board of Directors which occurs as follows:
(a) any "person" (as such term is used in Section 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) other than:
(i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or
(ii) the Executive or any person acting in concert with the
Executive
is or becomes a beneficial owner (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or
indirectly, of stock of the Company representing 20% or more of
the total voting power of the Company's then outstanding stock;
provided, however, that this subparagraph (a) shall not apply
to any tender offer made pursuant to an agreement with the
Company approved by the Company's Board of Directors and
entered into before the offeror has become a beneficial owner
of stock of the Company representing 5% or more of the
combined voting power of the Company's then outstanding stock;
(b) a tender offer is made for the stock of the Company, and the
person making the offer owns or has accepted for payment stock
of the Company representing 20% or more of the total voting
power of the Company's then outstanding stock; provided,
however, that this subparagraph (b) shall not apply to any
tender offer made pursuant to an agreement with the Company
approved by the Company's Board of Directors and entered into
before the offeror has become a beneficial owner of stock of
the Company representing 5% or more of the combined voting
power of the Company's then outstanding stock;
(c) during any period of 24 consecutive months there shall cease
to be a majority of the Board of Directors comprised as
follows: individuals who at the beginning of such period
constitute the Board of Directors and any new director(s) whose
election by the Board of Directors or nomination for election
by the Company's stockholders was approved by a vote of at
least two-third (2/3) of the directors then still in office
who either were directors at the beginning of the
2
<PAGE> 3
period or whose election or nomination for election was previously
so approved; or
(d) the stockholders of the Company approve a merger or consolidation of
the Company with any other company other than:
(i) a merger or consolidation which would result in the Company's voting
stock outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
stock of the surviving entity) more than 70% of the combined voting
power of the Company's or such surviving entity's outstanding voting
stock immediately after such merger or consolidation; or
(ii) a merger or consolidation which would result in the directors of the
Company who were directors immediately prior thereto continuing to
constitute at least 50% of the directors of the surviving entity
immediately after such merger or consolidation.
For purposes of subparagraph (d) above, the phrase "surviving entity" shall
mean only an entity in which all of the Company's stockholders who are
stockholders immediately before the merger or consolidation (other than
stockholders exercising dissenter rights) become stockholders by the terms of
the merger or consolidation, and the phrase "directors of the Company who were
directors immediately prior thereto" shall not include (A) any director of the
Company who was designated by a person who has entered into an agreement with
the Company to effect a transaction described in subparagraph (a) or
subparagraph (d) above, or (B) any director who was not a director at the
beginning of the 24-consecutive-month period preceding the date of such merger
or consolidation, unless his election by the Board of Directors or nomination
for election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors who were directors before the beginning of
such period.
3. Compensation After a Change in Control. During any period
in which the Executive is employed by the Company after a Change in Control,
there shall be no reduction in the base salary, long and short term incentives
and bonuses, employee benefits (including medical insurance, disability income
protection, and life insurance and death benefits), fringe benefits and
perquisites to which the Executive was entitled prior to the Change in Control.
3
<PAGE> 4
4. Severance Payments. Subject to the provisions of paragraphs 5
and 6 below, in the event that (i) the Executive's employment with the Company
is involuntarily terminated by the Company for any reason other than death,
Disability (as defined below) or Just Cause (as defined below) during the
twenty-four month period following a Change in Control or (ii) the Executive's
employment with the Company is terminated by the Executive for any reason
during the thirty-day period beginning on the first anniversary of a Change in
Control, the Executive shall continue to receive all medical insurance,
disability income protection, life insurance coverage and death benefits,
fringe benefits and perquisites to which the Executive was entitled prior to
the Change in Control for a period of not less than the 24 consecutive months
immediately following the date of his termination of employment, and shall be
entitled to a lump sum payment in cash no later than ten business days and no
earlier than two business days after the date of termination equal to the sum
of:
(a) an amount equal to 2.99 (or, if less, the number of years remaining
until the Executive's attainment of age 65) times the Executive's
annual salary rate in effect immediately prior to the Change in
Control;
(b) an amount equal to 2.99 (or, if less, the number of years remaining
until the Executive's attainment of age 65) times the Executive's
short term incentive award and other bonuses payable for the calendar
year preceding the Change in Control; and
(c) the actuarial equivalent of the additional pension benefits which the
Executive would have accrued under the terms of the Ameritech
Management Pension Plan, the Ameritech Senior Management Retirement
and Survivor Protection Plan and each other tax-qualified or
nonqualified defined benefit pension plan maintained by the Company
(determined without regard to any termination or any amendment
adversely affecting the Executive which is adopted on or after a
Change in Control or in contemplation of a Change in Control) if,
on the date of Termination, the Executive had been credited with two
additional years of service and two additional years of compensation
at his annual base salary rate and target short term incentive award
in effect on the date of the Change in Control for benefit accrual
purposes and were two years older than his actual age on such date;
provided, however, that the additional service, compensation and age
credits under this paragraph (c) shall be proportionately reduced if
the Executive is at least age 63 on the date of termination and
eliminated if
4
<PAGE> 5
the Executive is age 65 or older on such date. For
purposes of this subparagraph (c), actuarial equivalence shall be
determined in accordance with the terms of the Ameritech Senior
Management Retirement and Survivor Protection Plan for purposes of
lump sum payments under that plan, but without regard to any amendment
of that plan adopted on or after a Change in Control or in
contemplation of a Change in Control which would reduce the amount of
such lump sum payment.
For purposes of this Agreement, the Executive's employment with the Company
shall be deemed to have been involuntarily terminated by the Company if the
Executive's duties and responsibilities are significantly diminished by the
Company without the Executive's consent. For purposes of this Agreement, the
term "Disability" means an incapacity, due to physical injury or illness or
mental illness, causing a Participant to be unable to perform his duties for
the Company on a full-time basis for a period of at least six consecutive
months and the term "Just Cause" means willful misconduct, dishonesty,
conviction of a felony or excessive absenteeism not related to illness or
disability.
5. Tax Limitations. If any payments under this Agreement,
after taking in account all other payments to which the Executive is entitled
from the Company, or any affiliate thereof, are more likely than not to result
in a loss of a deduction to the Company by reason of section 280G of the
Internal Revenue Code of 1986 or any successor provision to that section, such
payments shall be reduced by the least amount required to avoid such loss of
deduction. If the Executive and the Company shall disagree as to whether
a payment under this Agreement is more likely than not to result in the loss of
a deduction, the matter shall be resolved by an opinion of tax counsel chosen
by the Company's independent auditors. The Company shall pay the fees and
expenses of such counsel, and shall make available such information as may be
reasonably requested by such counsel to prepare the opinion. If, by reason of
the limitations of this paragraph 5, the maximum amount payable to the
Executive under paragraph 4 above cannot be determined prior to the due date
for such payment, the Company shall pay on the due date the minimum amount
which it in good faith determines to be payable and shall pay the remaining
amount, with interest calculated at the rate prescribed by section
1274(b)(2)(B) of the Internal Revenue Code of 1986, as soon as such remaining
amount is determined in accordance with this paragraph 5.
6. Source of Payments and Withholding. Any amount payable under
the terms of this Agreement shall be paid from the general assets
5
<PAGE> 6
of the Company or from one or more trusts, the assets of which are subject to
the claims of the Company's general creditors. All payments to the Executive
under this Agreement will be subject to all applicable withholding of state and
federal taxes.
7. Arbitration of All Disputes. Any controversy or claim arising
out of or relating to this Agreement or the breach thereof shall be settled by
arbitration in the City of Chicago, in accordance with the laws of the State of
Illinois, by three arbitrators, one of whom shall be appointed by the Company,
one by the Executive and third of whom shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the appointment of a
third arbitrator, then the third arbitrator shall be appointed by the Chief
Judge of the United States Court of Appeals for the Seventh Circuit. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this paragraph 11. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. In the event that it shall be necessary or desirable for the
Executive to retain legal counsel or incur other costs and expenses in
connection with enforcement of his rights under this Agreement, the Company
shall pay (or the Executive shall be entitled to recover from the Company, as
the case may be) his reasonable attorneys' fees and costs and expenses in
connection with enforcement of his rights (including the enforcement of any
arbitration award in court). Payments shall be made to the Executive at the
time such fees, costs and expenses are incurred. If, however, the arbitrators
shall determine that, under the circumstances, payment by the Company of all or
a part of any such fees and costs and expenses would be unjust, the Executive
shall repay such amounts to the Company in accordance with the order of the
arbitrators.
8. Mitigation and Set-Off. The Executive shall not be required
to mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
owed to the Company by the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive in other employment had
he sought such other employment.
9. Severance Pay Plan. During the Term of this Agreement,
the Executive shall not participate in or have any rights under either the
Ameritech Senior Management Severance Pay Plan or the Ameritech Management
Employees Severance Pay Plan.
6
<PAGE> 7
10. Non-Alienation. The Executive shall not have any right to
pledge, hypothecate, anticipate or in any way create a lien upon any amounts
provided under this Agreement; and no benefits payable hereunder shall be
assignable in anticipation of payment either by voluntary or involuntary acts,
or by operation of law. Nothing in this paragraph shall limit the Executive's
rights or powers to dispose of his property by will or limit any rights or
powers which his executor or administrator would otherwise have.
11. Governing Law. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Illinois.
12. Amendment. This Agreement may be amended or canceled
by mutual agreement of the parties in writing without the consent of any other
person and, so long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.
13. Successors to the Company. This Agreement shall be
binding upon and inure to the benefit of the Company and any successor of the
Company. The Company will require any successor (whether director or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no succession had taken place.
14. Severability. In the event that any provision or portion of
this Agreement shall be determined to be invalid or unenforceable for any
reason, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in two or
more counterparts, any one of which shall be deemed the original without
reference to the others.
7
<PAGE> 8
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name and on its behalf, and its
corporate seal to be hereunto affixed and attested by its Secretary, all as of
the date and year first above written.
Richard H. Brown
----------------------------------------
Executive
Ameritech Corporation
By Bruce B. Howat
-------------------------------------
Its Secretary
-------------------------------------
ATTEST:
Marilyn S. Spracker
- --------------------------
Assistant Secretary
8
<PAGE> 9
Schedule to Exhibit 10ww
Ameritech Corporation has an identical Agreement Regarding Change In Control
dated January 19, 1994 with each of John A. Edwardson, Thomas P. Hester, Louis
J. Rutigliano and Martha L. Thornton. The agreement with Mr. Rutigliano
superseded and replaced an Agreement Regarding Change In Control dated
September 1, 1989 between Ameritech and Mr. Rutigliano.
<PAGE> 1
EXHIBIT 11a
Ameritech Corporation
Computation for Primary Earnings Per Share
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net Income (Loss) after
cumulative effect of change in
accounting principles $1,512,798,000 ($400,361,000) $1,165,520,000
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of
shares outstanding 544,076,354 536,559,890 531,039,508
Additional dilutive effect of
outstanding options (as
determined by the application
of the treasury stock method) 1,503,542 550,218 638,026
--------- ------- -------
Weighted average shares
outstanding on which primary
earnings per share are based 545,579,896 537,110,108 531,677,534
Primary earnings per share $2.77 ($0.75) $2.19
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
This calculation is submitted in accordance with Regulation S-K, Item 601
(b)II, although not required by footnote 2 to paragraph 14 of Accounting
Principles Board opinion No. 15 because it results in dilution of less than
three percent.
Note: All share amounts have been restated for two-for-one stock split
effective December 31, 1993.
<PAGE> 2
EXHIBIT 11a
Ameritech Corporation
Computation for Primary Earnings Per Share
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income before cumulative effect
of change in accounting
principles $1,512,798,000 $1,346,083,000 $1,165,520,000
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of
shares outstanding 544,076,354 536,559,890 531,039,508
Additional dilutive effect of
outstanding options (as
determined by the application
of the treasury stock method) 1,503,542 550,218 638,026
--------- ------- -------
Weighted average shares
outstanding on which primary
earnings per share are based 545,579,896 537,110,108 531,677,534
Primary earnings per share $2.77 $2.51 $2.19
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
This calculation is submitted in accordance with Regulation S-K, Item 601
(b)II, although not required by footnote 2 to paragraph 14 of Accounting
Principles Board opinion No. 15 because it results in dilution of less than
three percent. Accordingly, reported EPS does not consider dilutive
securities.
Note: All share amounts have been restated for two-for-one stock split
effective December 31, 1993.
<PAGE> 1
EXHIBIT 11b
Ameritech Corporation
Computation of Fully Diluted Earnings Per Share
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Net Income (Loss) after
cumulative effect of change in
accounting principles $1,512,798,000 ($400,361,000) $1,165,520,000
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of
shares outstanding 544,076,354 536,559,890 531,039,508
Additional dilutive effect of
outstanding options (as
determined by the application
of the treasury stock method) 1,503,542 1,389,716 691,882
--------- --------- -------
Weighted average shares
outstanding on which fully
diluted earnings per share are based 545,579,896 537,949,606 531,731,390
Fully diluted earnings per
share $2.77 (0.74) $2.19
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
This calculation is submitted in accordance with Regulation S-K, Item 601
(b)II, although not required by footnote 2 to paragraph 14 of Accounting
Principles Board opinion No. 15 because it results in dilution of less than
three percent.
Note: All share amounts have been restated for two-for-one stock split
effective December 31, 1993.
<PAGE> 2
Exhibit 11b
Ameritech Corporation
Computation of Fully Diluted Earnings Per Share
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Income before cumulative effect
of change in accounting
principles $1,512,798,000 $1,346,083,000 $1,165,520,000
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of
shares outstanding 544,076,354 536,559,890 531,039,508
Additional dilutive effect of
outstanding options (as
determined by the application
of the treasury stock method) 1,503,542 1,389,716 691,882
--------- --------- -------
Weighted average shares
outstanding on which fully
diluted earnings per share are based 545,579,896 537,949,606 531,731,390
Fully diluted earnings per
share $2.77 2.50 $2.19
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
This calculation is submitted in accordance with Regulation S-K, Item 601(b)II,
although not required by footnote 2 to paragraph 14 of the Accounting
Principles Board opinion No. 15 because it results in dilution of less than
three percent. Accordingly, reported EPS does not consider dilutive
securities.
Note: All share amounts have been restated for two-for-one stock split
effective December 31, 1993.
<PAGE> 1
EXHIBIT 12
Ameritech Corporation
Computation of Ratio of Earnings to Fixed Charges
Years Ending December 31, 1993, 92, 91, 90 and 89
(Dollars in Millions)
EARNINGS
- --------
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income Before Interest, Income
Taxes and Cumulative Effect of
Change in Accounting Principles
$2,686.8 $2,476.9 $2,224.3 $2,285.0 $2,186.3
Portion of Rent Expense
Representing Interest Expense
65.4 65.4 71.0 69.9 57.4
Michigan Single Business Tax
27.6 25.2 25.6 25.6 24.8
-------- -------- -------- -------- --------
TOTAL EARNINGS $2,779.8 $2,567.5 $2,320.9 $2,380.5 $2,268.5
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
FIXED CHARGES
-------------
Interest Expense $464.3 $503.2 $567.9 $474.5 $401.4
Portion of Rent Expense
Representing Interest Expense
65.4 65.4 71.0 69.9 57.4
-------- -------- -------- -------- --------
TOTAL FIXED CHARGES $529.7 $568.6 $638.9 $544.4 $458.8
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Ratio of Earnings to Fixed
Charges 5.25 4.52 3.63 4.37 4.94
</TABLE>
<PAGE> 1
EXHIBIT 13
Financial Review
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(Discussion that follows gives retroactive effect to the two-for-one stock
split effective December 31, 1993.)
(dollars in millions, except per share amounts)
Overview
1993 was a year of many successes for Ameritech in meeting the needs of the
company's customers and shareowners. Ameritech restructured its five
geographically based landline telephone operating companies and two other
related businesses into a structure of customer-specific business units
supported by a single, regionally coordinated network unit. The company's
marketing effort was also streamlined to that of a single common brand
identity, "Ameritech." Products and services are no longer being marketed using
the "Bell" name -- a change designed to enhance market awareness and customer
loyalty.
From a financial perspective, 1993 was the most successful year in the
company's history. Net income was $1,512.8 million and earnings per share were
$2.78, increases of 12.4 percent and 10.8 percent, respectively, when compared
with 1992 results before accounting changes. Revenue growth of 5.0 percent
resulted from record setting access line growth of 3.3 percent, cellular
subscriber growth of 46.8 percent and solid increases in calling volumes. The
decision to refinance $1.6 billion in long-term debt at lower interest rates,
plus a continuing focus on productivity improvement (costs and expenses,
excluding depreciation, increased by only 2.5 percent), contributed to the
excellent earnings performance in 1993. Results in 1993 include $24.7 million,
or $.05 per share, from the sale of shares of New Zealand Telecom, net of
restructuring costs at that company.
Earnings per share, before accounting changes
[Graph illustrating earnings per share over a five year period
from 1988 to 1993 is filed under separate cover of Form SE]
1993 was also an outstanding year for developing new opportunities that should
enhance the company's ability to meet customer needs for new types of
electronic communications. For example, the company announced an alliance
(scheduled to close in 1994) with General Electric Company involving GE's
existing global electronic commerce business unit, which is experiencing
significant revenue growth. Additionally in January 1994, the company unveiled
a multibillion dollar program to launch a digital video network upgrade that by
the end of the decade could be available to 6 million customers. The network
will provide customer access to interactive information and entertainment
services, as well as traditional cable television service. The company plans to
begin marketing this new service in late 1994, subject to approval by the
Federal Communications Commission (FCC).
On the international front, in December 1993 the company purchased a 15 percent
interest in MATAV, the Hungarian telephone company. MATAV is Hungary's
principal provider of landline telephone communications and international long
distance, as well as cellular services supported by GSM digital technology. The
Hungarian investment represents a rare growth opportunity because of the low
1.5 million access line penetration among that country's population of 10.5
million. The goal of the Hungarian government is to double the number of access
lines by
<PAGE> 2
the year 2000, which the company believes is realistic given the
estimated 13-year waiting period for a landline telephone. The company's
investment in Hungary increases its presence in Europe, where it already has
interests in cellular ventures in Norway and Poland. The Norway cellular
venture, also using GSM digital technology, became operational in September
1993.
In support of developing a fully competitive marketplace, Ameritech also
undertook a number of important public policy initiatives in 1993. In March the
company filed its "Customers First Plan" with the FCC. The plan proposes to
facilitate competition in the local exchange business in return for removal of
the interLATA long distance ban and greater flexibility in FCC rules. In
December the company proposed that the plan be implemented on a trial basis
beginning in January 1995 in Illinois and in additional states thereafter. The
Customers First Plan and other initiatives, together with certain competitive
concerns, are discussed more completely beginning on Page 21.
Management's primary commitment to its shareowners is to increase shareowner
value over time. In December, Ameritech's Board of Directors approved a 4.3
percent increase in the quarterly dividend and a two-for-one stock split. Both
actions demonstrate the company's confidence in its ability to generate
sustainable growth in the future.
Over the past 10 years, the company has produced a total return on its
shareowners' investment of 535 percent, significantly greater than that of the
S&P 500. Management continues to have 6 to 8 percent average annual growth in
earnings per share as one of its key long-term financial goals, though the
alliances described above and entry into video services may slow earnings
growth in the near term.
The following sections provide a more detailed discussion of Ameritech's
results of operations over the past three years, as well as its financial
condition and discussion of accounting changes for postretirement and
postemployment costs that resulted in a net loss for 1992.
<PAGE> 3
Financial Review
Results of Operations
Revenues
Total revenues increased by 5.0 percent to $11.7 billion in 1993. This was
attributable to higher calling volumes, due to access line growth and increased
business at the cellular communications and information system sales
operations. Rate reductions and refunds partially offset the increase.
In 1992, total revenues increased 3.1 percent to $11.2 billion, due to an
improved economy, which helped produce higher calling volumes and lower
uncollectible revenues. Also contributing were growth and acquisitions at the
cellular communications and information system sales operations. Rate
reductions and refunds partially offset the increase.
Distribution of revenues, 1993
[The pie chart illustrating the distribution of revenues is filed under
separate cover of Form SE]
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Local service $5,065.3 $5,012.5 $52.8 1.1%
</TABLE>
Local service revenues include the basic monthly service fee and usage charges,
fees for custom-calling features, public phone revenues, and installation and
connection charges. Local service rates are generally regulated by state public
service commissions.
Access lines--percent increase
[The graph illustrating the increase in access lines over a five year period
from 1988 to 1993 is filed under separate cover of Form SE]
Higher calling volumes increased local service revenues by $179.1 million
during 1993. The increased calling volumes resulted principally from growth in
the number of access lines, which increased 3.3 percent. Partially offsetting
this increase was a 1993 reclassification of $119.9 million to the long
distance revenue category in Michigan to comply with a state regulatory ruling.
In 1992, local service revenues increased $126.4 million or 2.6 percent.
Increased calling volumes, resulting from a 2.5 percent increase in the number
of access lines, were partially offset by a change in classification of excise
taxes in Illinois.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
Network access
<S> <C> <C> <C> <C>
Interstate access $2,118.2 $2,041.2 $77.0 3.8%
Intrastate access $622.5 $612.6 $9.9 1.6%
</TABLE>
Network access revenues are fees charged to interexchange carriers, such as
AT&T and MCI, that use the local telecommunication network to provide long
distance services to their customers. In addition, end users pay flat rate
access fees to connect to the local network to obtain long distance service.
These revenues are generated from both interstate and intrastate services.
Interstate network access services
<PAGE> 4
are subject to regulation by the FCC, which has established a
"price-cap" plan to regulate the company's network access services. The plan
creates incentives to improve productivity over benchmark levels in order to
retain higher earnings. The interstate rate of return for 1993 has not been
finalized; however, for 1992, as reported to the FCC, it was 12.79 percent. This
return is higher than the FCC authorized rate of return for local exchange
carriers of 11.25 percent. Under the FCC's price-cap plan, investors are
entitled to retain 100 percent of all earnings between 11.25 percent and 12.25
percent, and 50 percent of earnings between 12.26 percent and 16.25 percent.
Interstate network access revenues increased $77.0 million in 1993 due
primarily to increased calling volumes of $101.0 million. This increase was
partially offset by rate reductions. Minutes of use related to interstate calls
increased by 4.5 percent.
Interstate network access revenues increased $48.6 million or 2.4 percent in
1992. Increased calling volumes, which produced revenues of $79.1 million, were
partially offset by rate reductions and interexchange carrier settlements.
Intrastate network access revenues increased $9.9 million in 1993 when compared
with 1992, due primarily to increased calling volumes, which produced revenues
of $36.6 million, partially offset by rate reductions. Minutes of use related
to intrastate calls increased by 11.3 percent.
In 1992 intrastate network access revenues increased $56.6 million or 10.2
percent due to increased calling volumes, which produced revenues of $41.9
million, and interexchange carrier settlements.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Long distance service $1,400.5 $1,251.6 $148.9 11.9%
</TABLE>
Long distance service revenues result when a customer makes a call to a
location outside of his or her local calling area but within the same service
area. The rates the company charges customers for this service are generally
governed by the public service commission in each state.
<PAGE> 5
Financial Review
The increase in long distance service revenues for 1993 was attributable to
volume growth and the reclassification of revenues from local service in
Michigan as previously discussed, partially offset by rate reductions.
In 1992, long distance revenues decreased $42.5 million or 3.3 percent
attributable to lower rates, primarily in Ohio, of $41.4 million and higher
independent telephone company settlements. Volume increases partially offset
the decrease.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Directory and other $2,503.9 $2,235.1 $268.8 12.0%
</TABLE>
Directory and other revenues are derived from publishing telephone directories,
cellular communications, paging services, lease financing, billing and
collection services, and telephone equipment sales and installation. As
reflected above, directory and other revenues are net of the company's
provision for uncollectibles.
1993 revenue growth was attributable primarily to cellular subscriber growth of
46.8 percent and the effect of increased business at the information system
sales operation.
In 1992, directory and other revenues increased $145.5 million or 7.0 percent.
This increase was attributable to increased cellular and information system
sales operation revenues due to growth and acquisitions as well as decreased
uncollectible revenues.
Cellular subscribers
[The graph illustrating the increase in cellular subscribers over a five year
period from 1988 to 1993 is filed under separate cover of Form SE]
Operating Expenses
Total operating expenses in 1993 increased $343.2 million or 3.9 percent from
1992. The increase was primarily attributable to increased depreciation and
amortization expense due to an expanded plant base and increased rates, and
increased cost of sales at the cellular and information system sales operation
due to growth. Offsetting these increases were decreased employee-related
expenses due to the work force reductions that occurred over the past year.
Total operating expenses in 1992 decreased $27.4 million or 0.3 percent from
1991. The decrease was primarily attributable to restructuring charges totaling
$187.0 million recorded in 1991. Partially offsetting this decrease was higher
depreciation and amortization expense resulting from acquisitions and an
expanded plant base.
The company has changed the presentation of its operating expenses in the
consolidated statements of income to facilitate a better understanding of its
operating results. Prior year amounts have been reclassified to conform with
this presentation.
Distribution of operating expenses, 1993
[The pie chart illustrating the distribution of operating expenses in 1993 is
filed under separate cover of Form SE]
<PAGE> 6
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Employee-related
expenses $3,560.3 $3,584.8 $(24.5) (0.7)%
</TABLE>
The decrease in 1993 in employee-related expenses was primarily attributable to
the effect of work force reductions over the past year. Offsetting these
decreases were the effects of higher wages, increased overtime payments and
increased costs related to postretirement benefits.
In 1992, employee-related expenses decreased $10.3 million or 0.3 percent. The
decrease was primarily attributable to increased pension credits due to the
continuing favorable investment performance and the funded status of the
company's pension plans.
There were 67,192 employees on December 31, 1993, and 71,300 on December 31,
1992. Voluntary and involuntary work force reductions reduced the management
work force by about 1,700 employees in 1993 and 3,000 in 1992. Reductions in
the nonmanagement work force account for most of the remaining decrease in
employees in 1993.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Depreciation and
amortization $2,162.1 $2,031.3 $130.8 6.4%
</TABLE>
The increase in depreciation and amortization expense in 1993 resulted from
continued expansion of the telephone plant investment base of $75.3 million,
growth at the company's cellular operation of $20.0 million, and $55.4 million
due to increased depreciation rates, mostly in Ohio. Partially offsetting
these increases was $29.1 million related to the completion in 1992 of certain
fixed asset amortization adjustments, primarily in Ohio and Wisconsin.
In 1992, depreciation and amortization expense increased $116.6 million, or 6.1
percent. The increase in 1992 was due to continued expansion of
<PAGE> 7
Financial Review
the plant investment base and acquisitions and growth at the company's
unregulated operations, partially offset by the completion in 1991 of certain
fixed asset amortization adjustments primarily in Michigan and Ohio.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Other operating
expenses $2,851.7 $2,607.7 $244.0 9.4%
</TABLE>
The increase in other operating expenses in 1993 was primarily attributable to
increased contract services, right-to-use fees, access expenses paid to
independent telephone companies, advertising expenses and an accrual to further
streamline the nonmanagement work force. Increased cost of sales at the
cellular and information system sales operations due to acquisitions and growth
contributed to the increase. Partially offsetting these increases were several
fourth-quarter 1992 items including a $47.0 million charge for market
realignment and advertising costs and $8.0 million for the net write-down of
certain unregulated assets. The company continued voluntary and involuntary
separation programs that saw approximately 1,700 management employees leave the
payroll in 1993. The majority of these employees were from the landline
telephone operations. The net cost of this 1993 program, along with termination
benefits and settlement and curtailment gains from the pension plan, was a
credit to this expense category of $33.3 million.
Other operating expenses decreased 5.0 percent or $137.4 million in 1992. This
decrease was due primarily to a 1991 restructuring charge of $187.0 million.
Excluding this restructuring charge, other operating expenses increased 1.9
percent. This was due to the fourth-quarter 1992 items discussed above;
increased costs at the landline telephone companies associated with contract
services and claims accruals for billing of interexchange carriers; increases
in cost of sales associated with the acquisition of two software companies; and
higher promotion, advertising and acquisition costs at the cellular operation.
Partially offsetting these items were expense savings in certain unregulated
operations due to the 1991 write-down of assets and intangibles. The company
initiated a voluntary and involuntary separation program in 1992 that saw about
3,000 management employees leave the payroll. The net cost of this program,
along with other pension plan transfers, termination benefits and settlement
and curtailment gains from the pension plan, was a credit to this expense
category of $12.4 million in 1992.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Taxes other than
income taxes $578.1 $585.2 $(7.1) (1.2)%
</TABLE>
The $7.1 million decrease in taxes other than income taxes for 1993 was
primarily attributable to lower capital stock taxes and decreased property
taxes.
In 1992, taxes other than income taxes increased $3.7 million or 0.6 percent.
This increase was primarily attributable to higher property taxes offset by the
reclassification and adoption of excise taxes in Illinois to replace previously
enacted gross receipts taxes.
<PAGE> 8
Other Income and Expenses
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Interest expense $464.3 $503.2 $(38.9) (7.7)%
</TABLE>
The decrease in interest expense during 1993 was due primarily to the calling
of certain long-term debt totaling $1.6 billion and the refinancing at lower
fixed rates on $900.0 million of that called debt, the effect of lower
short-term interest rates and the reduction in debt due to the application of
proceeds received from the sale of New Zealand Telecom shares. During 1992
interest expense decreased $64.7 million due primarily to lower debt levels,
expenses related to a 1991 IRS settlement and lower interest rates. Partially
offsetting these decreases were increases related to the corporate-owned life
insurance program and the costs associated with financing acquisitions.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Other income, net $128.6 $132.9 $(4.3) (3.2)%
</TABLE>
Other income, net includes earnings related to Ameritech's investments (when
the equity method of accounting is followed), interest during construction
(which represents the capitalized cost of funds used to finance certain major
construction projects), interest income and other nonoperating items.
The significant components of other income during the two years included the
following items related to the company's investment in New Zealand Telecom--an
$85.7 million pretax gain in 1993 ($61.7 million after-tax) from the sale of
shares, and 1993 equity method income of $29.0 million (reflecting a $42.0
million restructuring charge) compared with $67.4 million in 1992. Other income
in 1993 also included a favorable impact of $18.8 million resulting from the
leveraged employee stock ownership plans (LESOPs). Offsetting these income
items were costs (call premiums, write-offs of unamortized deferred costs)
associated with the early extinguishment of debt of $66.3 million in 1993 and
$32.2 million in 1992, and interest earned in 1992 from an IRS settlement of
$41.0 million.
Other income, net decreased $109.4 million in 1992. The decrease was primarily
attributable to the 1991 gain of $81.3 million related to the sale of a portion
of New Zealand Telecom and the increased costs associated with early retirement
of debt in 1992 of $25.2 million. Other income in
<PAGE> 9
Financial Review
1992 also included $41.0 million of interest income earned from an IRS
settlement.
<TABLE>
<CAPTION>
Increase Percent
1993 1992 (Decrease) Change
<S> <C> <C> <C> <C>
Income taxes $709.7 $627.7 $82.0 13.1%
</TABLE>
The increase in income taxes in 1993 was due primarily to higher pretax income
and an increase in the federal tax rate. Partially offsetting the increase were
higher investment tax credit amortization in Michigan due to a revision of
depreciation rates and the realization of previously unrecognized tax benefits
on prior year unregulated asset write-downs.
The increase in income taxes in 1992 of $136.8 million was primarily
attributable to higher pretax income and lower investment tax credit
amortization.
Change in Accounting Principles
The company changed its accounting for income taxes effective January 1, 1993,
as required by Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." The impact of adoption on the company's
financial statements was not significant.
As more fully discussed in Note 4 to the consolidated financial statements,
effective January 1, 1992, the company adopted SFAS No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 112,
"Employers' Accounting for Postemployment Benefits." As a result of
implementing these standards the company recorded an after-tax noncash charge
of approximately $1.8 billion in 1992. This charge caused the company to have a
loss in 1992.
Liquidity and Capital Resources
Management believes that the company has adequate internal and external
resources available to finance its business development, network expansion,
dividends, acquisitions and investments.
Uses of cash
[The pie chart illustrating uses of cash in 1993 and 1992 are filed under
separate cover on Form SE]
Cash Flows from Operating Activities
Cash flow from operations was $3,188.6 million in 1993, a decrease of $99.7
million from 1992. The reason for the decrease is primarily certain
nonrecurring items in both years.
Cash Flows from Investing Activities
Capital expenditures continue to represent the single largest use of company
funds. Management believes that by investing in the telecommunications core
business, such effort will facilitate introduction of new products and
services, respond to ever increasing competitive challenges and increase the
operating efficiency and productivity of the network.
<PAGE> 10
Ameritech's capital expenditures for landline telephone operations
decreased $265 million in 1993. The cellular services portion of the company's
capital expenditures increased $106 million in 1993 resulting from plans to
increase coverage and offer new data and digital services. Overall, Ameritech's
total capital expenditures decreased in 1993 to $2,108 million from $2,267
million in 1992.
Rapid modernization of the landline network continued throughout 1993 as
demonstrated by the following year-end information.
<TABLE>
<CAPTION>
1993 1992
<S> <C> <C>
Lines served by digital switching 66% 53%
Lines served by ISDN switching 50% 26%
Lines served by advanced signaling (SS7) 79% 66%
Customers within 12,000 feet of fiber 75% 65%
Fiber-optic cable, in miles (000s) 802 586
</TABLE>
Cash flows from investing activities in 1993 also include $280.6 million as a
result of sales of a portion of the company's investment in New Zealand
Telecom. In addition, the company invested $437.5 million for a 15 percent
share in the Hungarian telephone company (see Note 2 to the consolidated
financial statements on Page 30).
Cash Flows from Financing Activities and Other Activities
To take advantage of lower long-term interest rates, the company called $1.6
billion of long-term debt in 1993 and issued $900 million of long-term debt.
While costs associated with the early extinguishment of debt in 1993 were $66.3
million, these refinancings will result in a reduction of approximately $30
million in annual interest payments in future years. Total debt (long- and
short-term) at the end of 1993 decreased $11.9 million from 1992. As of
December 31, 1993, the company's debt maturing within one year includes debt
that was called in anticipation of refinancing at more favorable interest
rates.
The company's debt ratio decreased to 46.0 percent as of December 31, 1993,
compared with 48.9 percent as of December 31, 1992. The decreased debt levels,
as discussed above, along with increased reinvested earnings account for the
decrease.
As a result of an agreement with General Electric Company (see Note 2 to the
consolidated financial statements on Page 30) the company intends to invest
approximately $472 million in 1994 into a newly formed company. The company
plans to fund this commitment with debt financing.
As previously noted, in January 1994, the company announced a program, subject
to FCC approval, to enter the interactive information and entertainment service
business. The company expects to invest
<PAGE> 11
Financial Review
approximately $4.4 billion over the next 15 years (network upgrades including
fiber optics, servers, switches and customer premise equipment) to deliver
these new services. The company believes it can fund most of this amount by
reducing capital expenditures in its core landline business, as evidenced in
1993, while maintaining its current high quality of service to customers.
Dividends
The company paid $999.4 million in 1993 in dividends. This was a $56.7 million
or 6.0 percent increase over 1992. The company believes that its dividend
policy is consistent with the needs of both shareowners and the business.
Dividends declared per share
[The graph illustrating dividends declared per share over the five year period
from 1988 to 1993 is filed under separate cover of Form SE]
Financing Options
As of December 31, 1993, the company maintained available lines of credit
totaling $1.3 billion, a committed credit facility of $1.0 billion and shelf
registrations for issuance of up to $2.0 billion in unsecured debt securities.
Funding for Postretirement Benefits
Among the initiatives taken by the company to contain its future liability for
postretirement benefit costs are a managed health care network and the creation
of certain trust accounts to fund health care and group life insurance benefits
for retirees. The trusts currently have more than $1.1 billion in assets to
fund these benefits. The company intends to continue to fund the nonmanagement
VEBA and is exploring other available funding and cost containment
alternatives. Specifically, in 1993, the company utilized approximately $90
million in excess pension plan assets to help pay the nonmanagement retiree
health care obligation. The Internal Revenue Code allows such transfers through
1995. The company has not determined whether it will make any additional
transfers in 1994 or 1995.
Stock Repurchase Program
The company's Board of Directors authorized management to repurchase up to 20
million shares of Ameritech common stock through 1994 on the open market or
through private transactions. No significant purchases have been made since the
program was approved by the Board in 1991.
Other Matters
Regulatory Environment
Customer demand, technology and the preferences of policymakers are all coming
together to increase competition in the local exchange business. The effects
of increasing competition are apparent in the marketplace Ameritech serves. For
example, about half of the intraLATA long distance service purchased by large-
and medium-sized business customers in its region is sold by carriers other
than Ameritech. Similarly, competitive access providers are active in the
region and either operate or plan to operate in many cities throughout the
region, including Chicago, Columbus, Milwaukee, Indianapolis and the Detroit
<PAGE> 12
area. In Illinois, one competitive access provider MFS Communications Company,
Inc. has requested regulatory authority to provide full local exchange service.
Also, in June 1993 the FCC's order that allows competitive access providers to
interconnect in more liberal ways with Ameritech facilities for interstate
special access was implemented in the four Ameritech states that had not
already done so.
Ameritech has recognized this trend, and its regulatory/public policy
activities are focused on achieving a framework that allows for expanding
competition while providing a fair opportunity for all carriers, including
Ameritech, to succeed. The cornerstone of this effort is Ameritech's "Customers
First Plan" that was filed with the FCC on March 1, 1993. In a subsequent
filing with the U.S. Department of Justice, Ameritech proposed that the
Customers First Plan be implemented on a trial basis beginning in January 1995
in Illinois and in additional states thereafter.
In the Customers First Plan, the company has proposed to facilitate competition
in the local telephone business. In exchange, Ameritech has requested three
regulatory changes. First, Ameritech has requested relief from the Modification
of Final Judgment (MFJ) interLATA ban. Such relief would mean that Ameritech
would be allowed to offer all long distance services. Second, Ameritech has
requested a number of modifications in the FCC's price cap rules. These
modifications would apply only to Ameritech and would eliminate any obligation
on Ameritech's part to refund, in the form of future rate reductions,
interstate earnings in excess of 12.25 percent. The modifications would also
provide Ameritech increased ability to price its interstate access services in
a manner appropriate to competitive conditions. Third, Ameritech has requested
FCC authority to collect, in a competitively neutral manner, the social
subsidies currently embedded in the rates that Ameritech charges long distance
carriers for access to the local network.
Ameritech expects the U.S. Department of Justice to issue a recommendation and
for the U.S. District Court to rule on Ameritech's request for interLATA relief
in 1994. Ameritech's proposal is also pending before the FCC for those aspects
of the plan (including any trial) that are under FCC jurisdiction. Ameritech
has also been working with the state regulatory agencies throughout its region
to prepare for implementation of the Customers First Plan. The first state
proceedings will begin in early 1994.
Besides its activities designed to achieve new business opportunities and a
fair way to introduce competition into the local exchange business, Ameritech
has proceedings active in three states Illinois, Indiana and Ohio to replace
rate of return regulation with price regulation plans. In Illinois, the record
is closed and an order is expected in early 1994.
<PAGE> 13
Financial Review
In Indiana and Ohio, the proceedings are ongoing.
Ameritech has also filed with the Wisconsin Public Service Commission to
implement a price regulation plan to replace the current three year plan (which
has been extended). In addition, the Wisconsin legislature is expected to
consider in 1994 legislation that would allow Ameritech to elect price
regulation in Wisconsin.
The Ameritech landline telephone companies have continued to implement price
reforms that will allow them to compete effectively both now and in the future.
For example, the subsidy that is collected from interexchange carriers to
access the local network for long distance calls was reduced in 1993. In
September 1993, the Public Utilities Commission of Ohio permitted Ameritech to
de-average intraLATA toll rates in Ohio. Implementation began at the end of
1993. In the interstate arena, Ameritech has been permitted by the FCC to
de-average its prices for dedicated facilities based on traffic density.
Ameritech has implemented a de-averaged price structure, and over time the
prices will be put in place as competitive conditions warrant. De-averaging
means that the prices charged in specific areas (for example, downtown Chicago)
can be more reflective of local competitive conditions. A de-averaged price
structure for intrastate special access service is in place in Illinois,
Indiana, Michigan and Ohio. In December 1993, the FCC approved Ameritech's plan
to implement prices for switched access transport that are much more closely
aligned with costs. This price reform is essential for Ameritech to remain
competitive as the FCC implements its requirements to allow more liberal
interconnection to these facilities in a manner similar to what it did for
special access services. While the price reform is already in place, the more
liberal interconnections are expected to be implemented in early 1994. The
local transport price reform has been implemented in four of the five Ameritech
state jurisdictions as well.
The company believes that competition is best for customers and for
shareowners but only if it is implemented in a manner that provides a fair
opportunity for all players, including Ameritech. This balance is essential in
order for customers in the region to benefit from expanding competition and for
Ameritech to remain a strong player in the local exchange portion of the
industry. The regulatory changes that the company and its regulators are
putting in place are designed to accomplish exactly that.
Regulatory Accounting
As described in Note 1 to the consolidated financial statements on Page 29, the
company complies with the provisions of SFAS No. 71, "Accounting for the
Effects of Certain Types of 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 that could be material. Criteria that give rise to the discontinuance
of SFAS No. 71 include (1) increasing competition that 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 periodically reviews
these criteria to ensure that continuing application of SFAS No. 71 is
appropriate.
<PAGE> 14
Year-end market price of common stock
[The graph illustrating year-end market price of common stock from 1984 to 1993
is filed under separate cover of Form SE]
Business Units
During 1993, the company restructured its business into separate units
supported by a single network unit. The units cross current legal entities. In
1994, as the business units begin to mature and their results are validated,
the company expects to report additional financial information about the units.
Based upon preliminary analysis, 1993 revenues would be attributed to the
business units as follows:
Consumer 33%
Custom, enhanced and small business 29
Long distance* 17
Advertising 8
Cellular, including paging 5
All other 8
----
100%
*Long distance as a business unit closely relates to the revenue categories of
interstate and intrastate network access.
<PAGE> 15
Financial Review
Report of Independent Public Accountants
Board of Directors
Ameritech Corporation
We have audited the accompanying consolidated balance sheets of Ameritech
Corporation (a Delaware corporation) and subsidiaries as of December 31, 1993
and 1992 and the related consolidated statements of income, shareowners' equity
and cash flows for each of the three years in the period ended December 31,
1993. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Ameritech
Corporation and subsidiaries as of December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in Note 4 to the consolidated financial statements, the company
changed its method of accounting for certain postretirement and postemployment
benefits in 1992.
Arthur Andersen & Co.
Chicago, Illinois
January 28, 1994
<PAGE> 16
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
Ameritech Corporation and Subsidiaries
<TABLE>
<CAPTION>
Year ended December 31
----------------------
(dollars in millions,
except per share amounts) 1993 1992 1991
<S> <C> <C> <C>
Revenues $11,710.4 $11,153.0 $10,818.4
Operating Expenses
Employee-related expenses 3,560.3 3,584.8 3,595.1
Depreciation and amortization 2,162.1 2,031.3 1,914.7
Other operating expenses 2,851.7 2,607.7 2,745.1
Taxes other than income taxes 578.1 585.2 581.5
9,152.2 8,809.0 8,836.4
Operating income 2,558.2 2,344.0 1,982.0
Interest expense 464.3 503.2 567.9
Other income, net (128.6) (132.9) (242.3)
Income before income taxes and
cumulative effect of change
in accounting principles 2,222.5 1,973.7 1,656.4
Income taxes 709.7 627.7 490.9
Income before cumulative effect
of change in accounting principles 1,512.8 1,346.0 1,165.5
Cumulative effect of change in
accounting principles -- (1,746.4) --
Net income (loss) $ 1,512.8 (400.4) $1,165.5
Earnings per common share*
Income before cumulative effect of
change in accounting principles $ 2.78 $ 2.51 $ 2.19
Cumulative effect of change
in accounting principles -- (3.26) --
Net income (loss) $ 2.78 $ (0.75) $ 2.19
Average common shares
outstanding (millions)* 544.1 536.6 531.0
</TABLE>
*Gives retroactive effect for two-for-one stock split effective December 31,
1993.
The accompanying notes are an integral part of the financial statements.
<PAGE> 17
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Ameritech Corporation and Subsidiaries
<TABLE>
<CAPTION>
As of December 31
(dollars in millions) 1993 1992
<S> <C> <C>
Assets
Current assets
Cash and temporary cash investments $155.9 $92.4
Receivables, less allowance for
uncollectibles of $134.7 and
$126.3, respectively 2,068.9 1,952.3
Material and supplies 133.7 177.6
Prepaid and other 268.2 296.9
2,626.7 2,519.2
Property, plant equipment
In service 28,677.3 27,860.7
Under construction 440.1 509.4
29,117.4 28,370.1
Less, accumulated depreciation 11,751.3 11,035.4
17,366.1 17,334.7
Investments, primarily international 1,219.0 931.9
Other assets and deferred charges 2,215.9 2,031.9
Total assets $23,427.7 $22,817.7
Liabilities and Shareowners' Equity
Current liabilities
Debt maturing within one year 2,601.6 $2,117.8
Accounts payable 1,210.6 1,336.2
Other current liabilities 1,873.1 1,785.1
5,685.3 5,239.1
Long-term debt 4,090.4 4,586.1
Deferred credits and other long-term liabilities
Accumulated deferred income taxes 1,889.4 1,799.5
Unamortized investment tax credits 354.3 428.7
Postretirement benefits other than pensions 2,519.7 2,590.7
Other 1,044.0 1,181.4
5,807.4 6,000.3
Shareowners' equity
Common stock, par value $1; 1.2 billion
shares authorized, 587,612,000 issued 587.6 587.6
Proceeds in excess of par value 5,454.8 5,378.0
Reinvested earnings 3,455.3 2,955.7
Treasury stock, at cost (40,969,000 shares
in 1993 and 47,268,000 in 1992) (1,105.0) (1,272.8)
Deferred compensation (468.5) (507.7)
Currency translation adjustments (76.3) (137.8)
Unearned compensation, restricted stock awards (3.3) (10.8)
7,844.6 6,992.2
Total liabilities and shareowners' equity $23,427.7 $22,817.7
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE> 18
Consolidated Financial Statements
Consolidated Statements of Shareowners' Equity
Ameritech Corporation and Subsidiaries
Shareowners' Equity
<TABLE>
<CAPTION>
Proceeds
in Excess
Common of Par Reinvested Treasury
(dollars in millions) Total Stock Value Earnings Stock
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1990 $7,732.4 $587.6 $5,321.9 $4,058.6 $(1,579.0)
Net income 1,165.5 1,165.5
Dividends declared (911.4) (911.4)
Treasury stock
Purchases (37.4) (37.4)
Issuances
Employee benefit plans 62.5 6.7 55.8
Dividend reinvestment and
stock purchase plan 115.3 16.7 98.6
Reduction of LESOP debt 58.4
Other (19.2) 1.7
Translation adjustments (69.1)
Balances, December 31, 1991 8,097.0 587.6 5,347.0 4,312.7 (1,462.0)
Net loss (400.4) (400.4)
Dividends declared (956.6) (956.6)
Treasury stock
Purchases (0.5) (0.5)
Issuances
Employee benefit plans 87.5 3.6 83.9
Dividend reinvestment and
stock purchase plan 118.0 20.8 97.2
Other 8.7 0.1 8.6
Reduction of LESOP debt 61.5
Other 16.6 6.5
Translation adjustments (39.6)
Balances, December 31, 1992 6,992.2 587.6 5,378.0 2,955.7 (1,272.8)
Net income 1,512.8 1,512.8
Dividends declared (1,013.2) (1,013.2)
Treasury stock
<CAPTION>
Currency
Trans- Common Treasury
Deferred lation Unearned Shares Common
Compen- Adjust- Compen- Issued Shares
sation ments sation (000) (000)
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1990 $(627.6) $(29.1) $ --- 587,612 58,960
Net income
Dividends declared
Treasury stock
Purchases 1,136
Issuances
Employee benefit plans (2,082)
Dividend reinvestment a
stock purchase plan (3,668)
Reduction of LESOP debt 58.4
Other (20.9)
Translation adjustments (69.1)
Balances, December 31, 1991 (569.2) (98.2) (20.9) 587,612 54,346
Net loss
Dividends declared
Treasury stock
Purchases 16
Issuances
Employee benefit plans (3,162)
Dividend reinvestment a
stock purchase plan (3,610)
Other (322)
Reduction of LESOP debt 61.5
Other 10.1
Translation adjustments (39.6)
Balances, December 31, 1992 (507.7) (137.8) (10.8) 587,612 47,268
Net income
Dividends declared
Treasury stock
</TABLE>
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Purchases (1.9) (1.9)
Issuances
Employee benefit plans 109.5 23.9 85.6
Dividend reinvestment and
stock purchase plan 122.2 38.2 84.0
Other 0.1 0.1
Reduction of LESOP debt 39.2 39.2
Other 22.2 14.7
Translation adjustments 61.5
Balances, December 31, 1993 $7,844.6 $587.6 $5,454.8 $3,455.3 $(1,105.0) $(468.5)
<CAPTION>
<S> <C> <C> <C> <C>
Purchases
Issuances 53
Employee benefit plans (3,230)
Dividend reinvestment and
stock purchase plan (3,118)
Other (4)
Reduction of LESOP debt
Other 7.5
Translation adjustments 61.5
Balances, December 31, 1993 $(76.3) $(3.3) 587,612 40,969
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 20
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF CASH FLOWS
Ameritech Corporation and Subsidiaries
<TABLE>
<CAPTION>
Year ended December 31
----------------------
(dollars in millions) 1993 1992 1991
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $1,512.8 $ (400.4) $ 1,165.5
Adjustments to net income (loss)
Cumulative effect of change
in accounting principles -- 1,746.4 --
Depreciation and amortization 2,162.1 2,031.3 1,914.7
Deferred income taxes, net (9.6) 2.6 (83.7)
Investment tax credits, net (74.4) (64.3) (75.3)
Interest during construction (11.3) (7.6) (22.9)
Provision for uncollectibles 154.3 131.7 165.0
Change in certain current assets (235.5) (40.6) (304.3)
Change in certain liabilities 24.8 16.0 139.2
Change in certain noncurrent
assets and liabilities (333.1) (112.7) (51.3)
Gain from sale of investment
in Telecom Corporation of
New Zealand Limited (85.7) -- (81.3)
Other 84.2 (14.1) 38.4
Net cash from operating activities 3,188.6 3,288.3 2,804.0
Cash Flows from Investing Activities
Capital expenditures, net (2,092.4) (2,236.5) (2,152.2)
Additional investments including
acquisitions of new companies (471.2) (31.8) (617.9)
Proceeds from the sale of
investment in Telecom Corporation
of New Zealand Limited 280.6 -- 395.5
Other investing activities, net 3.2 (10.2) 52.6
Net cash from investing activities (2,279.8) (2,278.5) (2,322.0)
Cash Flows from Financing Activities
Net Change in short-term debt 493.4 (55.7) 137.4
Issuance of long-term debt 925.1 649.1 195.0
Retirement of long-term debt (1,458.4) (807.1) (123.9)
Dividend payments (999.4) (942.7) (901.8)
Repurchase of common stock (0.4) (0.5) (38.9)
Proceeds from reissuance of
treasury stock 226.4 209.7 154.2
Other financing activities, net (32.0) 4.5 2.1
Net cash from financing activities (845.3) (942.7) (575.9)
Net increase (decrease) in cash
and temporary cash investments 63.5 67.1 (93.9)
Cash and temporary cash investments,
beginning of year 92.4 25.3 119.2
Cash and temporary cash investments,
end of year $ 155.9 $ 92.4 $ 25.3
</TABLE>
<PAGE> 21
Notes to Consolidated Financial Statements
(dollars in millions, except per share amounts)
1. Significant Accounting Policies
Consolidation
The consolidated financial statements include the accounts of Ameritech
Corporation and all of its majority-owned subsidiaries. All significant
intercompany transactions have been eliminated except as discussed below.
Basis of Accounting
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. In compliance with Statement of
Financial Accounting Standards No. 71, "Accounting for the Effects of Certain
Types of Regulation" (SFAS No. 71), the Ameritech Bell companies give
accounting recognition to the actions of regulators where appropriate. Such
actions can provide reasonable assurance of the existence of an asset, reduce
or eliminate the value of an asset or impose a liability. Actions of a
regulator can also eliminate a liability previously imposed by the regulator.
The Ameritech Bell companies are Illinois Bell Telephone Company; Indiana Bell
Telephone Company, Incorporated; Michigan Bell Telephone Company; The Ohio Bell
Telephone Company; and Wisconsin Bell, Inc.
Property, Plant and Equipment
Property, plant and equipment are stated at original cost. The original cost of
telecommunication plant acquired from Ameritech Services, Inc., a wholly owned
centralized procurement and support subsidiary of the Ameritech Bell companies,
includes a return on investment to Ameritech Services, Inc. that is not
eliminated in consolidation.
The provision for depreciation is based principally on straight-line remaining
life and straight-line equal life group methods of depreciation applied to
individual categories of plant with similar characteristics.
Generally, when depreciable plant is retired, the amount at which such plant
has been carried in property, plant and equipment is charged to accumulated
depreciation. The cost of maintenance and repair of plant is charged to
expense.
Material and Supplies
Inventories of new and reusable material and supplies are stated at the lower
of cost or market with cost generally determined on an average-cost basis.
Income Taxes
Ameritech and its subsidiaries file a consolidated federal income tax return.
Effective January 1, 1993, the company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109). The new
accounting method is essentially a refinement of the liability method already
followed by the company and, accordingly, did not have a significant impact on
the company's financial statements upon adoption.
<PAGE> 22
Deferred tax assets and liabilities are based on differences between the
financial statement bases of assets and liabilities and the tax bases of those
same assets and liabilities. Under the liability method, deferred tax assets and
liabilities at the end of each period are determined using the statutory tax
rates in effect when these temporary differences are expected to reverse.
Deferred income tax expense is measured by the change in the net deferred income
tax asset or liability during the year. The company also provides deferred
income taxes on undistributed equity earnings from foreign investments.
The Ameritech Bell companies use the deferral method of accounting for
investment tax credits. Therefore, credits earned prior to the repeal of the
investment tax credit by the Tax Reform Act of 1986, and also certain
transitional credits earned after the repeal, are being amortized as reductions
in tax expense over the life of the plant that gave rise to the credits.
Temporary Cash Investments
Temporary cash investments are stated at cost, which approximates market value.
The company considers all highly liquid, short-term investments with an
original maturity of three months or less to be cash equivalents.
Translation Adjustments
The assets and liabilities relating to the company's share of significant
foreign operations are translated to U.S. dollars at year-end exchange rates.
Revenues and expenses are translated to U.S. dollars using average rates for
the year. Translation adjustments are accumulated and recorded as a separate
component of shareowners' equity.
2. Investments
Telecom Corporation of New Zealand Limited
On September 12, 1990, Ameritech and Bell Atlantic Corporation purchased all of
the shares of Telecom Corporation of New Zealand Limited (New Zealand Telecom),
the state-owned telephone company in New Zealand, for approximately $2.5
billion.
After stock sales required by the New Zealand government in the purchase
agreement, which were completed in September 1993, the company's share of
ownership is 24.8 percent.
The company's long-term investment in New Zealand Telecom ($610.4 million as of
December 31, 1993) is accounted for under the equity method. The portion of
the company's investment that was required to be sold was accounted for under
the cost method. Goodwill of approximately $290 million associated with this
investment is being amortized by the straight-line method over a period of 40
years.
Stock sales of New Zealand Telecom in 1993 resulted in an after-tax gain of
$61.7 million, and a stock sale in 1991 resulted in an after-tax gain of $73.6
million.
<PAGE> 23
Notes to Consolidated Financial Statements
Other Investments
On December 22, 1993, the company made an investment of $437.5 million, for a
15 percent share, in the Hungarian telephone company, MATAV. The company's
investment will be accounted for using the equity method, since the company
exercises significant operating influence. Based on preliminary analysis,
approximately 50 percent of the investment represents goodwill, which will be
amortized by the straight-line method over a period of 40 years.
In December 1993, the company signed a definitive agreement with General
Electric Company to invest approximately $472 million in a newly formed
company. General Electric will contribute the assets of its General Electric
Information Services division, a global leader in electronic data interchange
and electronic commerce. The company's investment will be in the form of a
four-year convertible debenture, which, if legal restrictions are removed, will
convert into a 30 percent equity position. The transaction is scheduled to
close in 1994.
During 1993, 1992 and 1991, the company made several other investments and
acquisitions totaling approximately $33.7, $31.8 and $617.9 million,
respectively. The 1991 amount includes about $500 million to acquire a St.
Louis-based cellular and paging company. The acquisitions have been accounted
for as purchases.
3. Income Taxes
The components of income tax expense follow:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Federal
Current $713.7 $626.4 $568.4
Deferred, net (24.4) (14.3) (91.1)
Investment tax credits, net (74.4) (64.3) (75.3)
Total 614.9 547.8 402.0
State and local
Current 80.0 63.0 81.5
Deferred, net 14.8 16.9 7.4
Total 94.8 79.9 88.9
Total income tax expense $709.7 $627.7 $490.9
</TABLE>
Deferred income tax expense (credit) results principally from temporary
differences caused by the change in the book and tax bases of property, plant
and equipment due to the use of different depreciation methods and lives for
financial reporting and income tax purposes. Total income taxes paid were
$774.4, $712.2, and $616.6 million in 1993, 1992 and 1991, respectively.
The following is a reconciliation between the statutory federal income tax rate
for each of the past three years and the company's effective tax rate:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Statutory tax rate 35.0% 34.0% 34.0%
State income taxes, net of
federal benefit 2.8 2.7 3.5
Reduction in tax expense due to
amortization of investment
tax credits (3.3) (3.3) (4.5)
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Effect of adjusting deferred income tax
balances due to tax law changes (1.1) --- ---
Benefit of tax rate differential
applied to reversing
temporary differences (2.2) (2.4) (3.5)
Other 0.7 0.8 0.1
Effective tax rate 31.9% 31.8% 29.6%
</TABLE>
The Revenue Reconciliation Act of 1993, enacted in August 1993, increased the
statutory federal income tax rate for 1993 to 35 percent. In accordance with
the liability method of accounting, the company adjusted, on the enactment
date, its deferred income tax balances not subject to regulatory accounting
prescribed by SFAS No. 71 (see Note 1). The result was a reduction in deferred
income tax expense of $23.4 million, primarily from increasing the deferred tax
assets associated with SFAS Nos. 106 and 112 (see Note 4).
As of December 31, 1993, the company had a regulatory asset of $429.2 million
(reflected in other assets and deferred charges) related to the cumulative
amount of income taxes on temporary differences previously flowed through to
ratepayers. In addition, on that date, the company had a regulatory liability
of $710.3 million (reflected in other long-term liabilities) related to the
reduction of deferred taxes resulting from the change in the federal statutory
income tax rate to 35 percent and deferred taxes provided on unamortized
investment tax credits. These amounts will be amortized over the regulatory
lives of the related depreciable assets concurrent with recovery in rates. The
accounting for and the impact on future net income of these amounts will depend
on the rate-making treatment authorized in future regulatory proceedings.
<PAGE> 25
Notes to Consolidated Financial Statements
As of December 31, 1993 and 1992 the components of long-term accumulated
deferred income taxes were as follows:
<TABLE>
<CAPTION>
1993 1992
Deferred tax assets
<S> <C> <C>
Postretirement and postemployment benefits $970.4 $971.6
SFAS No. 71 accounting 237.1 362.8
Other, net 137.2 134.9
1,344.7 1,469.3
Deferred tax liabilities
Accelerated depreciation 2,940.9 2,967.4
Other 293.2 301.4
3,234.1 3,268.8
Net deferred tax liability $1,889.4 $1,799.5
</TABLE>
Deferred income taxes in current assets and liabilities are not shown as they
are not significant.
4. Employee Benefit Plans
Pension Plans
The company maintains noncontributory defined pension and death benefit plans
covering substantially all employees. The pension benefit formula used in the
determination of pension cost is based on the average compensation earned
during the five highest consecutive years of the last 10 years of employment
under the management plan and a flat dollar amount per year of service under
the nonmanagement plan. The company's funding policy is to contribute an amount
up to the maximum that can be deducted for federal income tax purposes.
However, due to the funded status of the plans, no contributions have been made
for the years reported below.
Pension expense was determined using the projected unit credit actuarial method
in accordance with Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions" (SFAS No. 87). The resulting pension
credits are primarily attributable to favorable investment performance and the
funded status of the plans.
The components of pension cost (credits) follow:
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Benefits earned during the year $221.4 $218.5 $192.9
Interest cost on projected
benefit obligation 585.0 591.6 653.5
Actual return on plan assets (1,426.1) (734.3) (2,232.7)
Net amortization and deferral 512.6 (186.3) 1,319.3
Net pension credits $(107.1) $(110.5) $(67.0)
</TABLE>
The funded status of the plans follows:
<TABLE>
1993 1992
<S> <C> <C>
Actuarial present value of accumulated
plan benefits
Vested $7,383.7 $7,531.8
Nonvested 1,055.2 1,054.7
Total $8,438.9 $8,586.5
Fair value of plan assets $12,397.4 $12,193.4
Actuarial present value of projected
benefit obligation (9,262.3) (9,466.8)
Unrecognized net asset resulting from
</TABLE>
<PAGE> 26
<TABLE>
<S> <C> <C>
initial adoption of SFAS No. 87 (1,499.7) (1,666.7)
Unrecognized net gains (1,627.7) (1,211.1)
Unrecognized prior service cost 343.9 396.3
Prepaid pension cost $351.6 $245.1
</TABLE>
The assets of the pension plans consist principally of debt and equity
securities, fixed income instruments and real estate. The assumed long-term
rate of return on plan assets used in determining pension cost was 7.25 percent
for 1993, 1992 and 1991. The assumed discount rate used to determine the
projected benefit obligation as of December 31, 1993 and 1992 was 5.8 percent,
while the assumed rate of increase in future compensation levels, also used in
the determination of the projected benefit obligation, was 4.5 percent in 1993
and 1992.
Postretirement Benefits Other Than Pensions
Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" (SFAS No. 106). SFAS No. 106 requires the cost of
postretirement benefits granted to employees be accrued as expense over the
period in which the employee renders service and becomes eligible to receive
benefits. The cost of postretirement health care and life insurance benefits
for current and future retirees was recognized as determined under the
projected unit credit actuarial method.
In adopting SFAS No. 106, the company elected to immediately recognize,
effective January 1, 1992, the transition obligation for current and future
retirees. The transition amount was $2.6 billion net of the then estimated fair
value of plan assets of $825 million. The charge to income was $1.65 billion
net of a deferred tax benefit of $950 million.
As defined by SFAS No. 71, a regulatory asset associated with the recognition
of the transition obligation was not recorded because of uncertainties as to
the timing and extent of recovery in the rate-making process.
The company sponsors noncontributory defined benefit postretirement plans for
substantially all of its retirees and their eligible dependents. Contributions
for health care benefits are made to voluntary employee
<PAGE> 27
Notes to Consolidated Financial Statements
benefit association trust funds (VEBAs). The company also maintains retirement
funding accounts (RFAs) to provide life insurance benefits. The company intends
to continue to fund the nonmanagement VEBA and is exploring other available
funding and cost-containment alternatives for its entire postretirement
obligation. Specifically, during 1993 the company utilized approximately $90
million in excess pension plan assets to help pay the nonmanagement retiree
health care obligation. Funding of the management VEBA was suspended effective
in 1994 primarily due to a tax rate increase from 31.0 percent to 39.6 percent
on its investment income. The nonmanagement VEBA and RFAs earn income without
tax. Plan assets consist principally of corporate securities and bonds. The
components of postretirement benefit cost for 1993 and 1992 follow:
<TABLE>
<CAPTION>
1993 Health Life Total
<S> <C> <C> <C>
Benefits earned during the year $ 62.8 $ 6.6 $ 69.4
Interest on accumulated postretirement
benefit obligation (APBO) 252.3 29.8 282.1
Actual return on plan assets (43.3) (20.2) (63.5)
Net amortization and deferral 4.1 (15.8) (11.7)
Postretirement benefit cost $275.9 $ 0.4 $276.3
<CAPTION>
1992 Health Life Total
<S> <C> <C> <C>
Benefits earned during the year $ 58.3 $ 7.3 $ 65.6
Interest on APBO 223.8 28.4 252.2
Actual return on plan assets (23.6) (35.1) (58.7)
Net amortization and deferral (2.8) 0.2 (2.6)
Postretirement benefit cost $255.7 $ 0.8 $256.5
</TABLE>
The funded status of the plans as of December 31, 1993 and 1992, follows:
<TABLE>
<CAPTION>
APBO attributable to
1993 Health Life Total
<S> <C> <C> <C>
Retirees and dependents $2,072.0 $297.4 $2,369.4
Fully eligible active
plan participants 376.5 1.0 377.5
Other active plan participants 1,304.4 149.1 1,453.5
Total APBO 3,752.9 447.5 4,200.4
Fair value of plan assets 715.7 459.7 1,175.4
APBO in excess of (less than)
plan assets 3,037.2 (12.2) 3,025.0
Unrecognized net loss (462.0) (43.3) (505.3)
Accrued (prepaid) postretirement
benefit obligation $2,575.2 $(55.5) $2,519.7
</TABLE>
<TABLE>
<CAPTION>
APBO attributable to
1992 Health Life Total
<S> <C> <C> <C>
Retirees and dependents $1,753.8 $267.0 $2,020.8
Fully eligible active
plan participants 297.8 45.4 343.2
Other active plan participants 1,099.4 99.7 1,199.1
Total APBO 3,151.0 412.1 3,563.1
Fair value of plan assets 499.2 461.1 960.3
APBO in excess of (less than)
plan assets 2,651.8 (49.0) 2,602.8
</TABLE>
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
Unrecognized net loss (5.2) (6.9) (12.1)
Accrued (prepaid) postretirement
benefit obligation $2,646.6 $(55.9) $2,590.7
</TABLE>
The assumed discount rate used to measure the accumulated postretirement
benefit obligation as of December 31, 1993 was 7.0 percent and was 7.5 percent
as of December 31, 1992. The assumed rate of future increases in compensation
levels was 4.5 percent in 1993 and 1992. The expected long-term rate of return
on plan assets was 7.25 percent in 1993 and 1992 on VEBAs and 8.0 percent in
1993 and 1992 on RFAs. The assumed health care cost trend rate in 1993 was 9.6
percent and 10 percent in 1992 and is assumed to decrease gradually to 4.0
percent in 2007 and remain at that level. The assumed health care cost trend
rate is 9.2 percent for 1994. The health care cost trend rate has a significant
effect on the amounts reported for costs each year as well as on the
accumulated postretirement benefit obligation. Specifically, increasing the
assumed health care cost trend rate by one percentage point in each year would
increase the aggregate of the service and interest cost components for 1993 by
$50.1 million, and would have increased the accumulated postretirement benefit
obligation as of December 31, 1993, by $502.2 million.
During 1991, the cost of postretirement health care benefits for retirees was
$242.1 million.
As of December 31, 1993, the company had approximately 48,000 retirees eligible
to receive health care and group life insurance benefits.
Postemployment Benefits
Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standards No. 112, "Employers Accounting for Postemployment
Benefits" (SFAS No. 112). SFAS No. 112 requires employers to accrue the future
cost of certain benefits such as workers' compensation, disability benefits and
health care continuation coverage. A one-time charge related to adoption of
this statement was recognized as a change in accounting
<PAGE> 29
Notes to Consolidated Financial Statements
principle, effective as of January 1, 1992. The charge was $101.6 million, net
of a deferred tax benefit of $58.5 million. Previously, the company used the
cash method to account for such costs. Current expense levels are dependent
upon actual claim experience, but are not materially different than prior
charges to income.
Leveraged Employee Stock Ownership Plans
In 1989, the company created leveraged employee stock ownership plans (LESOPs)
within its existing employee savings plans. To fund the LESOPs, the Trustee for
the savings plans issued $665.0 million of debt, at 8.1 percent interest,
payable in semiannual installments through 2001, which the company guaranteed.
The Trustee used the proceeds to purchase at fair market value 22,566,276
shares of the company's common stock from the company's treasury. The trusts
repay the notes, including interest, with funds from the company's
contributions to the savings plans and from dividends paid on the shares of
company common stock held by the Trustee. The interest rate on this debt
decreased to 8.03 percent effective January 1, 1993, due to the increased
federal income tax rate.
As a result of the company's unconditional guarantee, the notes of the trusts
are recorded as long-term debt and as deferred compensation in the company's
balance sheets. Deferred compensation represents a reduction of shareowners'
equity. As the Trustee makes principal payments, the company reduces the debt
and deferred compensation. As of December 31, 1993, the company had $416.5
million in long-term debt and $52.0 million included in long-term debt maturing
within one year as a result of the company's guarantee.
The company maintains savings plans that cover substantially all of its
employees. Under these plans, the company matches a certain percentage of
eligible contributions made by the employees. The LESOP provisions of the
savings plans became effective January 1, 1990. Under these provisions, company
matching contributions are allocated to employees in company stock from the
LESOP trusts. Employees are not allowed to switch the company matching
contributions from company stock to alternative investments for the life of the
LESOPs except under certain circumstances. Company stock is released for
allocation to employees in the proportion that principal and interest paid in a
year bears to the total principal and interest due over the life of the notes.
Company matching contributions to the plans are recorded as compensation
expense. Any change in the required contribution as a result of leveraging this
obligation is recorded as a gain or loss in other income. The amount expensed
and contributed to the LESOPs for 1993 and 1992 totaled $50.8 million and $72.1
million, respectively. Interest expense incurred by the savings plans for 1993
and 1992 was $39.2 million and $45.2 million, respectively. Dividends paid on
shares of stock held by the Trustee used to partially satisfy debt repayment
requirements were $40.1 million and $39.2 million for 1993 and 1992,
respectively.
Work Force Reductions
During 1993, about 1,200 management employees left the company involuntarily
and another 500 employees left voluntarily. The net cost of these reductions
including termination benefits, settlement and curtailment gains from the
pension plan, was a credit to expense of $33.3 million. The involuntary
termination plan remains in effect until June 30, 1994.
<PAGE> 30
During 1992, about 3,000 management employees left the company through a
voluntary early retirement program and involuntary terminations. The net cost
of this program, along with other transfers from the pension plan, including
termination benefits, settlement and curtailment gains from the pension plan,
was a credit to expense of $12.4 million.
During 1991, the company offered most of its management employees an early
retirement program under which approximately 2,100 employees left the payroll.
The net cost of the program, including termination benefits and a settlement
gain from the pension plan, was $12.0 million.
Funding of the above termination benefits was primarily from the management
pension plan, except for the 1993 involuntary program.
5. Financial Instruments
The following table presents the estimated fair value of the company's
financial instruments as of December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
Carrying Fair Carrying Fair
Value Value Value Value
<S> <C> <C> <C> <C>
Cash and temporary
cash investments $ 155.9 $ 155.9 $ 92.4 $ 92.4
Debt 6,676.1 6,821.1 6,773.2 6,779.3
Other assets 301.1 323.6 383.0 446.8
Other liabilities 89.6 89.2 79.3 78.8
</TABLE>
The following methods and assumptions were used to estimate the fair value of
financial instruments:
Cash and Temporary Cash Investments
The carrying value approximates fair value because of the short-term maturity
of these instruments.
Debt
The carrying amount (including accrued interest) of the company's debt maturing
within one year approximates fair value because of the short- term maturities
involved. The fair value of the company's long-term debt was estimated based on
the year-end quoted market price for the same or similar issues.
<PAGE> 31
Notes to Consolidated Financial Statements
Other Assets and Liabilities
These financial instruments consist primarily of long-term receivables, other
investments, financial contracts and customer deposits. The fair values of
these items were based on expected cash flows or, if available, quoted market
prices.
Financial Contracts
Primarily to hedge exposure to adverse exchange rate risks, the company enters
into foreign currency options, forward exchange contracts and swaps. Related
gains and losses are reflected in net income. At December 31, 1993, and 1992,
the company had contracts giving it the right to deliver foreign currency
valued at $11.1 million and $81.1 million, respectively. At December 31, 1993
and 1992, the company had also entered into interest rate swap agreements to
change the interest rate on $115.0 million and $80.0 million, respectively, of
short-term commercial paper to a fixed rate over one to five years. Related
interest income and expense is included in net income. The company is exposed
to credit risk in the unlikely event of nonperformance by counterparties.
6. Debt Maturing Within One Year
Debt maturing within one year is included as debt in the computation of debt
ratios and consists of the following as of December 31:
<TABLE>
<CAPTION>
Amounts
1993 1992 1991
<S> <C> <C> <C>
Notes payable
Bank loans $179.0 $210.0 $171.8
Commercial paper 1,984.4 1,460.7 1,500.9
Other 18.8 18.3 44.3
Long-term debt maturing within
one year 419 .4 428 .8 256 .2
Total $2,601.6 $2,117.8 $1,973.2
Average notes payable outstanding
during the year $1,673.4 $1,557.2 $1,597.1
Maximum notes payable at any
month-end during the year $2,182.5 $1,774.3 $1,772.2
<CAPTION>
Weighted Average Interest Rates
1993 1992 1991
<S> <C> <C> <C>
Notes payable
Bank loans 3.1% 5.3% 6.6%
Commercial paper 3.1% 3.9% 5.7%
Other 3.1% 3.6% 4.8%
Average notes payable outstanding
during the year* 3.1% 4.0% 6.1%
</TABLE>
*Computed by dividing the average daily face amount of notes payable into the
aggregate related interest expense.
In May 1991, the company established a $2.0 billion committed revolving credit
facility that was renewed in 1992, and again in 1993 to a level of $1.0
billion. The fees for this facility range up to 1/8 of 1 percent per annum.
There has not been any usage of this facility. In addition, Ameritech has
entered into uncommitted agreements with a number of banks for lines of credit
totaling $1.3 billion. The interest rates on these lines are negotiable at the
time of borrowing. There was
<PAGE> 32
$179.0 million outstanding under these agreements
as of December 31, 1993. There are no significant commitment fees or material
compensating balance requirements associated with any of these lines of credit.
These lines, as well as the revolving credit facility, are available for
support of commercial paper borrowing and to meet short-term cash needs.
7. Long-Term Debt
Long-term debt consists principally of debentures issued by the Ameritech Bell
companies.
The following table sets forth interest rates and other information on
long-term debt outstanding at December 31, after giving effect to refinancings
in January 1994:
<TABLE>
<CAPTION>
Interest Rates Maturities 1993 1992
<S> <C> <C> <C>
3.25%--6.0% 1995--2007 $755.0 $700.0
6.125%--8.0% 2002--2025 2,345.0 2,093.0
8.125%--9.0% 1995--2026 340.7 1,127.7
9.1%--10.0% 1995--2016 207.6 210.3
3,648.3 4,131.0
LESOP (Note 4) 416.5 490.5
Capital lease obligations 79.2 24.7
Other 0.8 0.9
Unamortized discount, net (54.4) (61.0)
Total $4,090.4 $4,586.1
</TABLE>
Scheduled maturities of long-term debt include $39.6 million due in 1995, $41.9
million due in 1996, $55.9 million due in 1997 and $104.0 million due in 1998.
Assets of Illinois Bell, comprising approximately $8,223.7 million of total
gross property, plant and equipment, are subject to lien under mortgage bonds
with outstanding balances of $330.0 million.
The company, through a wholly owned subsidiary, Ameritech Capital Funding
Corporation, has filed a registration statement with the Securities and
Exchange Commission (SEC) for the issuance of up to $1.0 billion in unsecured
debt securities for general corporate purposes. As of December 31, 1993, $357.8
million of these securities had been issued and $155.0 million were
outstanding.
The company, through its Ameritech Bell companies, has registered with the SEC
the issuance of up to $1.4 billion in unsecured debt securities for corporate
purposes. As of December 31, 1993, none of these securities had been issued;
however, $200 million were issued subsequent to year-end.
<PAGE> 33
Notes to Consolidated Financial Statements
8. Lease Commitments
The company leases certain facilities and equipment used in its operations
under both operating and capital leases. Rental expense under operating leases
was $196.2, $196.3 and $213.0 million for 1993, 1992 and 1991, respectively. As
of December 31, 1993, the aggregate minimum rental commitments under
noncancelable leases were approximately as follows:
<TABLE>
<CAPTION>
Years Operating Capital
<S> <C> <C>
1994 $90.1 $34.0
1995 76.7 31.9
1996 60.0 29.2
1997 49.2 23.3
1998 39.5 8.9
Thereafter 222.7 8.7
Total minimum rental commitments $538.2 136.0
Less: executory costs 3.9
interest costs 22.5
Present value of minimum lease payments $109.6
</TABLE>
9. Shareowners' Equity
Stock Split
On December 15, 1993, the company's board of directors approved a two-for-one
stock split, effected by declaring a 100 percent stock dividend, effective
December 31, 1993. The split shares were distributed in January 1994. All share
and per share data in the consolidated financial statements and notes have been
restated for all periods presented to reflect this stock split.
Shareowners' Rights
The certificate of incorporation of Ameritech authorizes the issuance of 1.2
billion shares of common stock, 30 million shares of preferred stock (par value
$1 per share) and 30 million shares of preference stock (par value $1 per
share).
One preference stock purchase right is attached to each share of the company's
common stock. Under certain circumstances, each right may be exercised to
purchase one one-hundredth of a share of Series A Junior Participating
Preference Stock, $1 par value, at a price of $125. If a person acquires, or
announces a tender offer for, 20 percent or more of the company's common stock,
rights become exercisable for common stock of the company having a market value
of two times the exercise price. If the company is acquired in a merger or
similar transaction, the rights may be exercised to purchase common stock of
the surviving company, having a market value of two times the exercise price.
The rights, which are nonvoting, are redeemable by the company for $.01 per
right and expire on December 31, 1998, or upon consummation of certain merger
transactions. Until the occurrence of certain events, the rights are attached
to and trade with shares of the company's common stock. As of December 31,
1993, 546,642,992 rights were outstanding.
Stock Plans
The company, through its Long Term Incentive Plan and the 1989 Long Term
Incentive Plan (the plans), grants incentive compensation to its officers and
other employees in the form of stock options, stock
<PAGE> 34
appreciation rights, restricted stock and performance awards. The
incentives granted are based upon terms and conditions, subject to certain
limitations, determined by a committee of the Board of Directors, which
administers the plans. The Long Term Incentive Plan and the 1989 Long Term
Incentive Plan authorize the issuance of up to 20,752,976 and 40,000,000 shares
of common stock, respectively, over 10-year periods.
Stock options may be granted under the plans as either incentive stock options
or nonqualified stock options. Options have not been granted at less than fair
market value as of the date of grant (however, nonqualified options may be
granted at not less than 50 percent of fair market value under the 1989 Long
Term Incentive Plan) and have a maximum life of 10 years and one day from the
date of grant. Stock appreciation rights may be granted independently or in
tandem with stock options and permit the optionee to receive stock, cash or a
combination thereof equal to the amount by which the fair market value on the
exercise date exceeds the option price. Stock options granted on or following
December 16, 1987, are exercisable after one year, in equal increments over the
following three years.
Information with respect to options granted under the plans is as follows:
<TABLE>
<CAPTION>
Incentive Nonqualified
Stock Options Stock Options
Shares Price Shares Price
<S> <C> <C> <C> <C>
Outstanding,
December 31, 1991 86,696 $20.14 13,278,172 $29.67
Granted -- -- 466,272 $33.35
Exercised 59,908 $19.93 2,403,866 $25.34
Canceled or expired -- -- 1,586,560 $31.67
Outstanding, --
December 31, 1992 26,788 $20.59 9,754,018 $30 .59
Granted -- 359,904 $41.35
Exercised 11,520 $20.59 2,487,098 $30.28
Canceled or expired -- -- 293,236 $29.00
Outstanding,
December 31, 1993 15,268 $20.59 7,333,588 $31.29
</TABLE>
As of December 31, 1993, incentive stock options for 15,268 shares and
nonqualified stock options for 4,250,690 shares were exercisable at average
prices of $20.59 and $29.94, respectively. All stock appreciation rights
granted under the plans have been issued in tandem with nonqualified stock
options. Stock appreciation rights granted prior to 1987 have been capped at
$29.938. The exercise of a nonqualified option or a stock appreciation right
cancels the related right or option. No stock appreciation rights have been
issued after December 31, 1990.
<PAGE> 35
Notes to Consolidated Financial Statements
During 1991, the company issued, to certain key employees, performance based
restricted stock under its existing 1989 Long Term Incentive Plan. The
employees earn, without cost to them, Ameritech stock over three years,
although restrictions generally continue for two additional years. As of
December 31, 1993, 593,932 shares had been awarded under this plan. The company
also has 175,696 shares of nonperformance based restricted stock issued under
this plan. Shareowners' equity reflects deferred compensation for the unvested
stock awarded. This amount is reduced and charged against operations (together
with any change in market price) as the employees vest in the stock.
10. Additional Financial Information
<TABLE>
<CAPTION>
December 31
1993 1992
<S> <C> <C>
Consolidated balance sheets
Other current liabilities
Accrued payroll $ 170.8 $ 167.3
Accrued taxes 507.3 521.0
Advance billings and customer deposits 378.9 359.2
Dividends payable 262.4 248.6
Accrued interest 107.6 109.2
Other 446.1 379.8
Total $1,873.1 $1,785.1
</TABLE>
<TABLE>
<CAPTION>
1993 1992 1991
Consolidated statements of income
<S> <C> <C> <C>
Interest expense
Interest on long-term debt $336.0 $358.2 $365.5
Interest on notes payable 54.4 65.1 96.4
Other 73.9 79.9 106.0
Total $464.3 $503.2 $567.9
</TABLE>
Interest paid, net of amounts capitalized was $456.1, $485.9 and $460.4 million
in 1993, 1992 and 1991, respectively.
<TABLE>
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Taxes other than income taxes
Property $ 336.5 $ 340.6 $ 315.3
Gross receipts 167.9 169.1 189.5
Other 73.7 75.5 76.7
Total $ 578.1 $ 585.2 $ 581.5
Maintenance and repair expense $1,728.8 $1,737.4 $1,647.3
Depreciation percentage of
average depreciable property,
plant and equipment 7.4% 7.2% 7.3%
</TABLE>
Revenues from AT&T, principally for interstate network access and billing and
collection service, comprised approximately 10, 12 and 12 percent of
consolidated revenues in 1993, 1992 and 1991, respectively. No other customer
accounted for more than 10 percent of revenues.
11. Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
Net Earnings
Calendar Operating Income (Loss)
Quarter Revenues Income (Loss) Per Share
1993
<S> <C> <C> <C> <C>
1st $2,796.5 $594.0 $300.0 $0.55
</TABLE>
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
2nd 2,950.8 648.7 389.6 0.72
3rd 2,946.8 620.4 425.0 0.78
4th 3,016.3 695.1 398.2 0.73
Total $11,710.4 $2,558.2 $ 1,512.8 $ 2.78
1992
1st $2,690.8 $ 563.0 $(1,409.4) $(2.64)
2nd 2,805.9 611.1 343.0 0.64
3rd 2,813.2 597.6 330.5 0.61
4th 2,843.1 572.3 335.5 0.62
Total $11,153.0 $2,344.0 $ (400.4) $(0.75)
</TABLE>
Several significant income and expense items were reported in the fourth
quarters of 1993 and 1992, the net result of which in both years was not
material to the respective quarters or years. In 1993, the company recognized
gains from a work force resizing and its LESOP, and charges for the early
retirement of debt. In 1992, the company recognized higher costs and charges
resulting from its market realignment efforts, the early retirement of debt,
the net write-down of certain unregulated assets and increased advertising.
These costs were offset by gains resulting primarily from work force resizing
and higher than expected pension credits.
First quarter 1992 results reflect charges related to the adoption of SFAS Nos.
106 and 112 for certain postretirement and postemployment benefits, as
discussed in Note 4 above. The charges totaled approximately $1.8 billion,
after taxes, or $3.27 per share ($3.26 per share when calculated on average
common shares outstanding for all of 1992).
All adjustments necessary for a fair statement of results for each period have
been included.
<PAGE> 37
Six-Year Summary
Selected Financial and Operating Data
Ameritech Corporation and Subsidiaries
<TABLE>
<CAPTION>
(dollars in millions,
except per share amounts) 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C>
Revenues
Local service $ 5,065.3 $ 5,012.5 $ 4,886.1 $ 4,788.8 $ 4,679.0 $ 4,521.4
Interstate network
access 2,118.2 2,041.2 1,992.6 2,008.8 1,941.4 1,957.9
Intrastate network
access 622.5 612.6 556.0 559.1 540.7 583.3
Long distance 1,400.5 1,251.6 1,294.1 1,336.3 1,259.3 1,239.8
Directory and other 2,503.9 2,235.1 2,089.6 1,969.5 1,790.9 1,600.9
Total 11,710.4 11,153.0 10,818.4 10,662.5 10,211.3 9,903.3
Operating expenses 9,152.2 8,809.0 8,836.4 8,473.5 8,056.6 7,771.1
Operating income 2,558.2 2,344.0 1,982.0 2,189.0 2,154.7 2,132.2
Interest expense 464.3 503.2 567.9 474.5 401.4 384.0
Other income, net (128.6) (132.9) (242.3) (96.0) (31.6) (70.4)
Income taxes 709.7 627.7 490.9 556.7 546.7 581.2
Income before cumulative
effect of change in
accounting principles 1,512.8 1,346.0 1,165.5 1,253.8 1,238.2 1,237.4
Cumulative effect of
change in accounting
principles -- (1,746.4) -- -- -- --
Net income (loss) $ 1,512.8 $ (400.4) $ 1,165.5 $ 1,253.8 1,238.2 $ 1,237.4
Earnings per share*
Income before cumulative
effect of change in
accounting principles $ 2.78 $ 2.51 $ 2.19 $ 2.37 $ 2.30 $ 2.27
Cumulative effect of change
in accounting principles -- (3.26) -- -- -- --
Net income (loss) $ 2.78 $ (0.75) $ 2.19 $ 2.37 $ 2.30 $ 2.27
Dividends declared
per share* $ 1.86 $ 1.78 $ 1.72 $ 1.61 $ 1.49 $ 1.38
Average common shares
outstanding (000)* 544,076 536,560 531,040 530,584 539,470 544,422
Total assets $23,427.7 $22,817.7 $22,289.7 $21,715.1 $19,833.0 $19,163.0
Property, plant
and equipment, net $17,366.1 $17,334.7 $16,986.1 $16,652.2 $16,295.5 $16,077.5
Capital expenditures $ 2,108.4 $ 2,266.6 $ 2,200.3 $ 2,154.2 $ 2,014.6 $ 1,894.9
Long-term debt $ 4,090.4 $ 4,586.1 $ 4,964.4 $ 5,074.4 $ 5,069.3 $ 4,487.2
Debt ratio 46.0% 48.9% 46.1% 46.7% 42.1% 38.7%
Pretax interest coverage 6.69 5.71 4.57 5.27 5.64 5.73
Shareowners' equity $ 7,844.6 $ 6,992.2 $ 8,097.0 $ 7,732.4 $ 7,685.9 $ 7,843.5
Return to average
equity** 20.1% (5.9)% 14.5% 16.3% 15.8% 15.8%
Return on average
total capital** 13.1% 0.2% 10.6% 11.8% 11.9% 12.0%
Market price per common
share at December 31* $ 38.38 $ 35.63 $ 31.75 $ 33.38 $ 34.00 $ 23.94
Access lines (000) 17,560 17,001 16,584 16,278 15,899 15,469
Employees 67,192 71,300 73,967 75,780 77,326 77,334
Access lines per telephone
company employee 295 267 250 234 223 215
</TABLE>
*Gives retroactive effect for two-for-one stock split, effective December 31,
1993.
**Return to average equity and return on average total capital are calculated
using weighted average monthly amounts.
<PAGE> 1
<TABLE>
AMERITECH SUBSIDIARIES Exhibit 21
at March 30, 1994
<S> <C>
Illinois Bell Telephone Company Illinois
Illinois Bell Administration Center, Inc. Illinois
Indiana Bell Telephone Company, Incorporated Indiana
Michigan Bell Telephone Company Michigan
The Ohio Bell Telephone Company Ohio
Wisconsin Bell, Inc. Wisconsin
Ameritech Services, Inc.* Delaware
Ameritech Center Phase I, Inc. ** Delaware
Ameritech Credit Corporation Delaware
Ameritech Development Corporation Delaware
Ameritech Mobile Communications, Inc. Delaware
Ameritech Mobile Services, Inc. Delaware
Ameritech Mobile Services of Wisconsin, Inc. Delaware
Ameritech Mobile Phone Service of Chicago, Inc. Illinois
Ameritech Mobile Phone Service of Cincinnati, Inc. Delaware
Ameritech Mobile Phone Service of Detroit, Inc. Delaware
Ameritech Mobile Phone Service of Illinois, Inc. Illinois
Ameritech Mobile Comm. of Wisconsin, Inc. Wisconsin
Metrocom Communications, Inc. Delaware
AMC Mexican Holdings, Inc. Delaware
AMCI Partnership Holdings, Inc. Delaware
Ameritech Mobile Data, Inc. Delaware
LFB, Inc. Colorado
Siegel, Inc. Delaware
CCP (L.P.)*** Missouri
CyberTel Financial Corporation Delaware
CyberTel Corporation Delaware
CyberTel St. Louis Paging Corporation Delaware
CyberTel Cellular Management Co. Delaware
CyberTel RSA Cellular (L.P.) Delaware
CyberTel Minneapolis Paging Corp. Delaware
CyberTel Cellular Telephone Co. (L.P.)**** Delaware
GSAA, Inc. Delaware
Gensub, Inc. Delaware
BBD Holdings Ltd. Delaware
Hawaiian Cellular Properties, Inc. Delaware
Ameritech Publishing, Inc. Delaware
Ameritech Publishing of Illinois, Inc. Illinois
Ameritech Publishing International, Inc. Delaware
Ameritech Publishing Enterprises, Inc. Delaware
Ameritech Industrial Infosource, Inc. Delaware
Wer Liefert Was? Germany
Ameritech Publishing Ventures, Inc. Delaware
Ameritech Enterprise Holdings, Inc. Delaware
Ameritech Information Systems, Inc. Delaware
Health Network Ventures, Inc. Delaware
Ameritech Health Connections, Inc. Delaware
Ameritech Knowledge Data, Inc. Delaware
NOTIS Systems, Inc. Delaware
Dynix Corporation Utah
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
Dynix, Incorporated Utah
Dynix Marquis, Inc. Utah
Retro Link Associates, Inc. Utah
DMI Promack, Inc. Utah
Dynix Library Systems, Inc. Canada
Chrysalis Pathways, Inc. Canada
Dynix Library Systems Limited U.K.
Dynix Library Systems Limited Ireland
Dynix (France) S.A. France
Dynix (Nederlands)B.V. Netherlands
Dynix (Deutscheland) GmbH Germany
Ameritech E.G.A., Inc. Delaware
Wisconsin Health Information Network, Inc. Delaware
Ameritech Advanced Data Services of Illinois, Inc. Delaware
Ameritech Advanced Data Services of Indiana, Inc. Delaware
Ameritech Advanced Data Services of Ohio, Inc. Delaware
Ameritech Advanced Data Services of Michigan, Inc. Delaware
Ameritech Advanced Data Services of Wisconsin, Inc. Delaware
Ameritech Properties Corporation Delaware
Starline Properties Corporation Delaware
Ameritech Capital Funding Corporation Delaware
Ameritech Bell Group, Inc. Delaware
Ameritech International, Inc. Delaware
Ameritech Australia PTY Limited Australia
Polska Telefonia Komorkowa Poland
Netcom GSM+ Norway
MATAV++ Hungary
Ameritech International Holdings Co. Delaware
Ameritech New Zealand Limited Delaware/
New Zealand
Ameritech New Zealand Funding Corporation Delaware
Ameritech New Zealand Investments, Inc. Delaware
Ameritech Holdings Limited New Zealand
Telecom Corporation of New Zealand Limited New Zealand
HKP Partners of New Zealand (Gen. P.) New Zealand
Sky Network Television Limited New Zealand
Ameritech Direct Communications, Inc. Delaware
Ameritech InfoServe, Inc. Delaware
Ameritech International- Hong Kong Delaware
American Information Technologies Corporation Nevada
Ameritech Corporation Nevada
Ameritech Credit Corporation Nevada
</TABLE>
* Jointly owned by the Ameritech landline telephone
companies
** Jointly owned by Ameritech Services, Inc. (49%) and
Ameritech Corporation (51%)
*** AMCI has an approximate 36% interest
**** Gensub, Inc. has a 7.5% interest and McCaw has a 15%
interest
+ 49.9% interest with Singapore Telecom. Majority ownership is
held by Arkla A.S. and Comvik International A.S.
++ The consortium MagyarCom, of which Ameritech is a
member, owns 3,126,845 shares of MATAV. Ameritech's
approximate ownership interest is 15.14%
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
Ameritech Corporation
As independent public accountants, we hereby consent to incorporation by
reference of our reports dated January 28, 1994, included (or incorporated by
reference) in this Form 10-K for the year ended December 31, 1993, into
Ameritech Corporation's previously filed Registration Statement File Nos.
33-26366, 2-97037, 33-30593, 33-32705, 33-34006, 33-36790, 33-47608, 33-49036,
33-51771 and 33-51773.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
Chicago, Illinois
March 30, 1994
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is an Officer and Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.C.
NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of them,
as attorneys for the undersigned and in the undersigned's name, place and stead
as an Officer and a Director of the Company, to execute and file the Annual
Report, and thereafter to execute and file any amendment or amendments thereto
on Form 8, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents and
purposes, as the undersigned might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day of
March, 1994.
/s/ RICHARD H. BROWN
--------------------
Richard H. Brown
Vice Chairman
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Richard H.
Brown to me known and known to be the person described in and who executed the
foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994.
/s/ ANN L. KITTELL
-----------------------
Notary Public
[Official Seal]
<PAGE> 2
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day of
March, 1994.
/s/ DONALD C. CLARK
-------------------
Donald C. Clark
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Donald C. Clark
to me known and known to be the person described in and who executed the
foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994.
/s/ ANN L. KITTELL
---------------------------
Notary Public
[Official Seal]
<PAGE> 3
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, and Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ RICHARD M. GILLETT
----------------------
Richard M. Gillett
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Richard M.
Gillett to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 4
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, and Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 16th day
of March, 1994.
/s/ HANNA HOLBORN GRAY
----------------------
Hanna Holborn Gray
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Hanna Holborn
Gray to me known and known to be the person described in and who executed the
foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 5
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ JAMES A. HENDERSON
----------------------
James A. Henderson
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me James A.
Henderson to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 6
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ SHELDON B. LUBAR
----------------------
Sheldon B. Lubar
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Sheldon B.
Lubar to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 7
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 16th day
of March, 1994.
/s/ LYNN M. MARTIN
----------------------
Lynn M. Martin
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Lynn M.
Martin to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 8
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Exchange Act of
1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H.
BROWN, R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON AND B.F. ELLIOTT, and
each of them, as attorneys for the undersigned and in the undersigned's name,
place and stead as a Director of the Company, to execute and file the Annual
Report, and thereafter to execute and file any amendment or amendments thereto
on Form 8, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents and
purposes, as the undersigned might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th
day of March, 1994.
/s/ JOHN B. McCOY
---------------------------
John B. McCoy
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me John B.
McCoy to me known and known to be the person described in and who executed the
foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994.
/s/ ANN L. KITTELL
----------------------------------
Notary Public
[Official Seal]
<PAGE> 9
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), proposes to file shortly with the Securities and
Exchange Commission, under the provisions of the Securities Exchange Act of
1934, as amended, an Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H.
BROWN, R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and
each of them, as attorneys for the undersigned and in the undersigned's name,
place and stead as a Director of the Company, to execute and file the Annual
Report, and thereafter to execute and file any amendment or amendments thereto
on Form 8, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents and
purposes, as the undersigned might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th
day of March, 1994.
/s/ J.D. ONG
---------------------------
John D. Ong
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me John D.
Ong to me known and known to be the person described in and who executed the
foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994.
/s/ ANN L. KITTELL
----------------------------------
Notary Public
[Official Seal]
<PAGE> 10
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is a Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as a Director of the Company, to execute and file the Annual Report, and
thereafter to execute and file any amendment or amendments thereto on Form 8,
hereby giving and granting to said attorneys full power and authority to do and
perform all and every act and thing whatsoever requisite and necessary to be
done in and about the premises as fully, to all intents and purposes, as the
undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ A. BARRY RAND
----------------------
A. Barry Rand
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me A. Barry
Rand to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 11
Exhibit 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is an Officer and Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, J.A. EDWARDSON and B.F. ELLIOTT, and each of them, as attorneys
for the undersigned and in the undersigned's name, place and stead as an
Officer and Director of the Company, to execute and file the Annual Report,
and thereafter to execute and file any amendment or amendments thereto on Form
8, hereby giving and granting to said attorneys full power and authority to do
and perform all and every act and thing whatsoever requisite and necessary to
be done in and about the premises as fully, to all intents and purposes, as
the undersigned might or could do if personally present at the doing thereof,
hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ LOUIS J. RUTIGLIANO
----------------------
Louis J. Rutigliano
Vice Chairman and Director
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me Louis J.
Rutigliano to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
<PAGE> 12
EXHIBIT 24
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, AMERITECH CORPORATION, a Delaware corporation (hereinafter referred
to as the "Company"), proposes to file shortly with the Securities and Exchange
Commission, under the provisions of the Securities Exchange Act of 1934, as
amended, an Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (the "Annual Report"); and
WHEREAS, the undersigned is an Officer and Director of the Company;
NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.H. BROWN,
R.C. NOTEBAERT, L.J. RUTIGLIANO, J.A. EDWARDSON and B.F. ELLIOTT, and each of
them, as attorneys for the undersigned and in the undersigned's name, place and
stead as an Officer and Director of the Company, to execute and file the Annual
Report, and thereafter to execute and file any amendment or amendments thereto
on Form 8, hereby giving and granting to said attorneys full power and
authority to do and perform all and every act and thing whatsoever requisite
and necessary to be done in and about the premises as fully, to all intents
and purposes, as the undersigned might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys may
or shall lawfully do, or cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th day
of March, 1994.
/s/ W. L. WEISS
----------------------
W. L Weiss
Chairman
STATE OF ILLINOIS )
COUNTY OF COOK )
On the 16th day of March, 1994, personally appeared before me William L.
Weiss to me known and known to be the person described in and who executed
the foregoing instrument and such person duly acknowledged that such person
executed and delivered the same for the purpose therein expressed.
WITNESS my hand and official seal this 16th day of March, 1994
/s/ ANN L. KITTELL
----------------------
Notary Public
[Official Seal]
