AMERITECH CORP /DE/, 10-K, 1995-03-23

AMERITECH CORP /DE/
10-K, 1995-03-23
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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, 1994

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

Commission File Number 1-8612

AMERITECH CORPORATION

A Delaware Corporation I.R.S. Employer No.
36-3251481

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

Exchanges on which registered:
Common Stock: New York, Chicago, Boston, Pacific and Philadelphia
Preference Stock Purchase Rights: New York

Securities registered pursuant to Section 12(g) of the Act: None

Based on the average sales price on February 28, 1995, the aggregate
market value of the voting stock held by nonaffiliates was $23,486,763,950.

At February 28, 1995, 552,629,740 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, 1994 (Part II).

(2) Portions of the registrant's definitive proxy statement dated March 1,
1995 issued in connection with the annual meeting of shareowners
(Part III).

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TABLE OF CONTENTS

PART I

1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 14
- ------------------

Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

PART II

5. Market for Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6. Selected Financial and Operating Data . . . . . . . . . . . . . . . . . . . . . . . . . 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . 16
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 16

PART III

10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . 16
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . 16

PART IV

14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>

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PART I

Item 1. Business.

The Company

Ameritech Corporation (Ameritech or the Company), a holding company
incorporated in 1983 under the laws of the State of Delaware, has its principal
executive offices at 30 South Wacker Drive, Chicago, Illinois 60606 (telephone
number 312-750-5000). The Company is a leading global supplier of full-service
communications services and advanced information services.

1994 was the first full year in which Ameritech operated its
redesigned business within the framework of a customer-specific business unit
strategy, delivering specialized services to various categories of customers,
each with unique requirements. The functions of the business units, which
include consumer, business, cellular, advertising and leasing services, as well
as services provided to other companies in the telecommunications industry,
overlap the legal entities which form the infrastructure of the Company. The
products and services of all the companies are marketed under the "Ameritech"
brand identity, but the Company's five landline telephone subsidiaries remain
responsible within their respective service areas for providing phone and other
telecommunications services, subject to regulation by the Federal
Communications Commission (FCC) and the five respective state public utility
commissions.

Operations Under Line-of-Business Restrictions

The operations of Ameritech and its subsidiaries are subject to the
requirements of a consent decree entitled "Modification of Final Judgment"
(Consent Decree) approved by the United States District Court for the District
of Columbia (Court) in August 1982. The Consent Decree arose out of antitrust
litigation brought by the Department of Justice (DOJ) and required AT&T Corp.
(AT&T), formerly named American Telephone and Telegraph Company, to divest
itself of those assets relating to exchange telecommunications, exchange access
functions, printed directories and cellular mobile communications. The Consent
Decree, together with the Court approved Plan of Reorganization (Plan),
outlined the method of divestiture and established restrictions on the
post-divestiture activities of the seven regional holding companies (RHCs),
including Ameritech, formed to receive AT&T's divested assets. Effective
January 1, 1984, AT&T transferred to Ameritech its 100% ownership of the
exchange telecommunications, exchange access and printed directory advertising
portions of Illinois Bell Telephone Company; Indiana Bell Telephone Company,
Incorporated; Michigan Bell Telephone Company; The Ohio Bell Telephone Company
and Wisconsin Bell, Inc. (referred to collectively as the "Ameritech landline
telephone subsidiaries"), as well as a cellular mobile communications company.

The Consent Decree, as originally approved, prohibited the RHCs from
providing long-distance telecommunications services or information services,
manufacturing telecommunications equipment, or providing 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 RHCs to provide printed directory advertising and to
provide, but not manufacture, customer premises equipment.

Over time, the Court granted waivers to the RHCs to engage in
otherwise prohibited lines of business upon a showing to the Court that there
was no substantial possibility that the company could use its monopoly power to
impede competition in the market it sought to enter. In decisions handed down
in September 1987 and March 1988, the Court continued prohibitions relating to
equipment manufacture and long-distance 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 July 1991, the Court lifted the
information services ban, but stayed the effect of the decision pending outcome
of 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 RHCs 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.

In July 1994, four of the RHCs (Ameritech was not a participant) filed
a motion in the Court to vacate the entire Consent Decree. The filing was
supported by numerous affidavits from consultants to

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the companies which largely suggested that RHC entry into restricted markets
would not impede competition in those markets, but actually spur competition
and result in lower prices for consumers. After a brief review by the Court,
the matter was referred to the DOJ which has taken comments from interested
parties as part of an extensive fact finding effort. The DOJ's recommendation
is expected in late 1995 or early 1996. Ameritech is pursuing its own unique
strategy to enter new businesses. The Company's Customers First plan is
discussed in the section on Competition.

Several bills have been introduced in Congress which have called for
the modification or elimination of restrictions set by the Consent Decree. It
is impossible for Ameritech to predict either the probability of passage or the
impact of any new legislation on the business.

Ameritech's Core Business

In 1994, more than 90% of Ameritech's profit and revenues were from
its core business of telephone, cellular, paging, data, leasing and advertising
services.

Landline Telephone Services

Ameritech furnishes a wide variety of advanced telecommunications
services, including local exchange and toll service, network access and
telecommunications products, to 13 million business, residential and
communications company customers in an operating area comprised of 35 Local
Access and Transport Areas (LATAs) in Illinois, Indiana, Michigan, Ohio and
Wisconsin. These LATAs are generally centered on a city or other identifiable
community of interest, and each LATA marks the boundary within which each
Ameritech landline telephone subsidiary may provide telephone service. The
companies provide two basic types of telecommunications services. First, they
transport telecommunications traffic between a subscriber's equipment and the
telephone exchange offices located within the same LATA (intraLATA service).
These services include local exchange, private line and intraLATA toll services
(including 800 and special services for data, radio and video transport).
Second, they provide exchange access service, which links a subscriber's
telephone or other equipment to the network of transmission facilities of
long-distance carriers, which in turn provide telecommunications service
between LATAs (interLATA, or long-distance, service). Some sizable areas
within the states in which Ameritech operates are served by nonaffiliated
telephone companies. Ameritech does not furnish local service in the areas
served by such companies.

Ameritech provides billing and collection services for several
companies, including billing for long-distance services offered by certain
long-distance carriers. The Company also provides directory assistance, local
and toll operator services, including collect calls, third number billing,
person-to-person and calling card calls, and offers such digital network
services as voice-mail, on-line database access and fax messaging, document
sharing functions and video-conferencing for desktop computers.

As of December 31, 1994, 74% of the Ameritech'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 919 thousand miles of
fiber-optic cable. The number of customer access lines in the Ameritech region
increased by a record 3.9% from 17.6 million at December 31, 1993 to 18.2
million at December 31, 1994, primarily the result of second line additions as
residential customers installed fax machines, modems and other equipment.
Business lines grew 6.9% from 5.4 million to 5.8 million, and residential lines
increased 2.4% from 11.6 million to 11.9 million. Productivity increased 14.9%
to 339 access lines in service per telephone company employee, making Ameritech
the most productive of the RHCs.

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The following table sets forth the number of access lines served by
Ameritech at the end of each of the last five years:

<TABLE>
<CAPTION>
Access lines in service
(in thousands)

1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>

Illinois . . . . . . . . . . . . . . . . . . . . 5,983 5,763 5,586 5,460 5,360
Indiana . . . . . . . . . . . . . . . . . . . . . 1,924 1,855 1,770 1,711 1,670
Michigan . . . . . . . . . . . . . . . . . . . . 4,747 4,563 4,431 4,314 4,242
Ohio . . . . . . . . . . . . . . . . . . . . . . 3,609 3,481 3,380 3,314 3,268
Wisconsin. . . . . . . . . . . . . . . . . . . . 1,976 1,898 1,834 1,785 1,738
------- ------- ------- ------- -------
Total lines . . . . . . . . . . . . . . . . 18,239 17,560 17,001 16,584 16,278
% increase over prior year . . . . . . . . . . . 3.9 3.3 2.5 1.9 2.4
</TABLE>

Cellular and Other Wireless Services

Ameritech provides cellular and other wireless communications to
customers using Ameritech's nearly 1.3 million cellular lines in Hawaii,
Illinois, Indiana, Michigan, Missouri, Ohio and Wisconsin. Ameritech's
cellular business is operated through wholly owned subsidiaries which are
either general or limited partners of partnerships holding FCC licenses and
providing cellular service in the licensed service area. In 1994, the Company
added 439,000 cellular customers to its base, a record 51% increase over the
prior year. Subscribers to Ameritech's international wireless joint ventures
increased in 1994 to 111,000, more than three times the customer base a year
earlier. Ameritech has formed strategic cellular partnerships in Poland and
Norway and has investments in other cellular providers, discussed in the
section on Domestic and International Growth Opportunities.

The development of the information age has caused an explosion in the
market for managing, storing, processing and using information. Consequently,
the requirement of the network to transport data, in addition to voice
messages, is rapidly increasing. Ameritech's wireless data solutions help
mobile workers respond to their customers faster by enabling the worker to
access computer information at the office, send in information or check a
database. Ameritech is the first cellular company in the Midwest to introduce
Cellular Digital Packet Data, or CDPD, a new wireless data technology that
provides customers with more reliable transmissions, quicker access times and
added security and cost savings for data applications. This new technology is
used in situations where small bursts of information are transmitted over the
cellular network, such as E-mail transmissions, credit card verifications and
meter readings. Currently, the service is available in the Chicago area, with
plans to deploy CDPD in other parts of the Midwest in the near future.

In 1994, Ameritech became the first cellular carrier in the country to
offer its customers the ability to use cellular phones in both North America
and Europe. The Ameritech Cellular International Network employs the Global
System for Mobile Communications (GSM), the widely accepted standard for
digital cellular communication. A customer traveling overseas can make and
take calls on a cellular phone much the same as he or she does domestically.
The service can be used in Europe or anywhere GSM technology is available.

The Company currently provides local and nationwide paging services to
customers using approximately 635,000 paging units, a 24% increase over 1993,
in Illinois, Indiana, Michigan, Missouri, Minnesota, Ohio and Wisconsin. In
November 1994, Ameritech won the narrowband personal communications services
(PCS) regional license to offer two-way paging in the Midwest. The Company
plans to offer 2-way paging and data services to customers in 15 states
beginning in 1996. The return paging channel will allow users of two-way
pagers to acknowledge a page and, eventually, to provide a detailed response.

Ameritech participated in the FCC's auction of broadband PCS licenses
and ultimately won licenses in the Cleveland and Indianapolis major trading
areas. The Company will pay $158.1 million for these licenses, which cover
almost 8 million potential customers and will provide an effective complement
to the Company's existing cellular and landline networks. Ameritech plans to
offer wireless service to customers in 1995. The Company anticipates
participating in future FCC auctions of broadband PCS basic trading area
licenses.

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Leasing Services

Ameritech, through its leasing company subsidiary, has provided
competitive, value-added financing to approximately 3,500 customers in all 50
states, primarily large and medium-sized businesses and governmental units.
The Company has financed more than $1.3 billion worth of equipment and services
since 1984.

Advertising Services

Ameritech provides directory and electronic advertising opportunities
to local, regional and national businesses throughout the Great Lakes region
and serves as a directory and marketing consultant. The Company publishes more
than 450 Ameritech PagesPlus[R] white and yellow pages directories in Indiana,
Wisconsin, Ohio and Michigan, and, in partnership with Donnelley Directory, in
Illinois and northwestern Indiana, with a total distribution of over 40
million. Utilizing new audiotex technology, Custom Connect[TM] audiotex,
available 24 hours a day, 7 days a week, provides consumers and advertisers
with a whole range of information opportunities accessible through special
phone numbers. Consumers can call for up-to-date information including news,
sports and weather, as well as information about specific products or services.
Advertisers can provide consumers with updated messages about their businesses,
such as sales, discounts and special hours.

Ameritech Industrial Purchasing Guides[R], targeted to buyers of
industrial products, are published for several regions of the United States.
The Ameritech Business Search[TM] white and yellow page directories, with
circulation over 2 million copies, are a focused business reference source
containing products and services a business user needs. CD-ROM technology
allows Ameritech Business Search[TM] users to access vast quantities of
listings and advertising information. Users can search by product, service or
geographic area and customize their search criteria to quickly review large
amounts of data. "Wer liefert was?," a German subsidiary, publishes and
distributes business purchasing guides in six European countries.

Ameritech is developing other products and services to keep up with
the accelerating pace of information technology.

New Services

Ameritech plans to expand into the fast-growing areas of interactive
and long-distance services. Interactive services are expected to grow
at double-digit rates from now through the year 2001. Long-distance service is
a $8 billion market in the Midwest region.

Interactive Services

In December 1994, the FCC approved Ameritech's request to begin
building a state-of-the-art digital video network capable of delivering
multicast and interactive services to 6 million customers by the year 2001.
The Company plans to spend $4.4 billion over the next 15 years to build the new
network, which will be separate from Ameritech's local communications network.
A computer network, fiber-optic and coaxial cable will be used to connect the
homes, businesses, libraries and schools in the service territory.

In phase I of the video network project, Ameritech plans to offer
service to about 1.2 million potential customers by the end of 1996 in 134
communities in its Midwest region. The network could be expanded to
approximately 1 million additional potential customers in each of the next five
years. Construction is expected to begin as soon as the Company secures
permits from the local communities.

Ameritech will be only one of many users of the broadband network. A
multitude of competing video information providers, businesses, institutions,
long-distance carriers and video telephony customers will also have access to
the technology. Under the FCC's action, Ameritech will act as a common
carrier, transmitting programs from all sources willing to pay a transmission
fee. Some of these programs could be supplied by ventures in which Ameritech
has a financial interest. Although Federal regulations prevent the Company
from providing its own programming, Ameritech is pursuing alliances and
partnerships that will position it as a key participant in the emerging era of
interactive video experiences, exploring a variety of services with many
different suppliers of traditional cable TV offerings,

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video-on-demand, home health care, interactive educational courses, distance
learning, interactive games and shopping and other entertainment and
information services.

For example, Ameritech has invested in Peapod LP, an interactive home
grocery shopping and delivery service. Using a personal computer, more than
11,000 customers in the Chicago and San Francisco areas can choose from
thousands of grocery items and schedule home delivery at their convenience. In
1995, Peapod expects to expand its service into several new markets.

Ameritech and Random House have expanded their ownership of Worldview
Systems Corporation, the leading supplier of electronic travel and
entertainment information, forming a joint venture to deliver electronic travel
information products and services. Ameritech and Random House each now own
more than 40% of Worldview Systems, with the remainder reserved for the firm's
management team. The company's first product, Fodor's Worldview Travel Update,
offers customers, via fax, on-line information services or mail, time-sensitive
destination information that complements Fodor's extensive catalogue of printed
guidebooks.

In 1994, Ameritech, The Walt Disney Company, Bell South Corporation
and SBC Communications Inc. (formerly Southwestern Bell Corporation) announced
the signing of a memorandum of understanding that set forth principles for the
formation of a joint venture to develop, market and deliver traditional and
interactive video programming to consumers. Under the memorandum, the parties
are working on a business plan for providing video services to the home. The
services could ultimately include existing broadcast and satellite television
networks, as well as movies-on-demand, interactive home shopping, educational
programs, games, travel assistance and more. The proposed venture would also
develop a navigator to allow customers to access these services with ease. The
full scope of the project and a definitive joint venture agreement are still
being negotiated.

Ameritech has made an investment in General Electric Information
Services (GEIS), a wholly owned subsidiary of General Electric Company (GE) and
a leader in the global electronic commerce market, a business that is rapidly
growing. 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.
Presently, GEIS serves 30,000 customers in 35 countries. Ameritech's $472.5
million investment is in the form of a four-year interest bearing convertible
debenture which, if legal restrictions are removed, converts into a 30% equity
interest in GEIS. The debenture has been guaranteed as to repayment by GE.
Ameritech may extend the term of the debenture by one year under certain
circumstances.

Long-distance Services

Barred from offering long-distance service by the Consent Decree, in
October 1994 Ameritech took another step in its efforts to provide a full range
of communications services by requesting Illinois Commerce Commission (ICC)
certification to offer long-distance services throughout Illinois. In its
filing with the ICC, Ameritech requested permission to offer long-distance
service using its own network facilities or network capacity obtained from
other sources. The Company intends to offer a broad range of long-distance
services, from consumer short- and long-haul long-distance, to 800 service and
special high-capacity services used by large businesses.

In March 1993, Ameritech unveiled its Customers First plan, becoming
the first company in the U.S. communications industry to voluntarily offer to
open its local network to competitors. In the plan, filed with the FCC and the
ICC, Ameritech proposed 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. Ameritech wants 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. Ameritech
believes this action is a predicate for entry into a currently prohibited
business - long-distance service. In addition, the Company has asked for
modifications to the current price cap rules and FCC approval to collect, in a
competitively neutral manner, the social subsidies currently embedded in the
rates the Company charges long-distance carriers for network access. Under the
plan, customers would be able to choose from competitive providers for local
service as they now can choose a provider for long-distance service.

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Ameritech currently is awaiting authorization from the DOJ and the
U.S. District Court in Washington D.C. to proceed with a trial in certain areas
of the Ameritech region under which it would provide both local and
long-distance services, demonstrating conclusively the substantial customer and
economic benefits of full competition. In January 1995, ICC hearing examiners
issued a proposed order concerning implementation of the plan in the Chicago
area, which the Company largely endorsed. To speed the DOJ's recommendation
and the court's decision concerning the Company's entry into the long-distance
market, Ameritech agreed to open its Illinois local phone network to
competition without tying this agreement to its request to provide
long-distance service. Ameritech is awaiting the ICC's final order.

Domestic and International Growth Opportunities

In August 1994, Ameritech signed a seven-year agreement with
Electronic Data Systems Corp. (EDS) to operate voice communications equipment,
including telephones, faxes and modems, used at nearly 300 EDS and EDS customer
locations in the United States. Under the agreement, Ameritech is one of
several subcontractors providing services to Dallas-based EDS as that company
continues to operate and manage one of the largest private communications
networks in the world. The contract will extend Ameritech's reach to more than
40 states, far beyond the Midwest region it traditionally has served.

Since 1990, Ameritech has invested approximately $1.2 billion in
Germany, New Zealand, Hungary, Poland, and Norway, and has established offices
in China, the Czech Republic and Portugal. The Company expects to continue to
invest in international expansion.

In October 1990, Ameritech acquired 90% of "Wer liefert was?" (Who
supplies what?), the leading German publisher of business purchasing guides.
The company distributes guides to 70,000 customers in Germany, Austria,
Switzerland, Belgium, Luxembourg and the Netherlands. In 1994, revenues grew
more than 10%.

The Company has invested in two of the world's largest privatizations
in New Zealand and Hungary. 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 local,
long-distance, cellular, satellite TV and directory services, to 1.6 million
customers. After public offerings and private sales of the stock of New
Zealand Telecom required by the government at the time of the acquisition,
Ameritech and Bell Atlantic each have a 24.8% interest in the company. During
1994, restructuring helped New Zealand Telecom improve its efficiency and
boosted profits by 17%.

In December 1993, Ameritech and its partner, Deutsche Bundespost
Telekom of Germany (Deutsche Telekom), Europe's largest communications carrier,
invested in MATAV, the Hungarian telecommunications company. Ameritech and
Deutsche Telekom have equal ownership totaling approximately 30% of the
company. The Hungarian government owns most of the remaining 70%. MATAV is
the principal provider of local, long-distance and international telephone
service and the controlling shareowner in a cellular venture using GSM digital
technology. MATAV has approximately 1.8 million access lines in a country of
10.5 million people. With almost 700,000 customers on the waiting list for
service, MATAV plans to increase the number of lines in service to 3 million by
the year 2000.

Since June 1992, an Ameritech consortium has operated a cellular
system, Centertel, in Poland. 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. Telekomunikacja Polska owns 51% of the joint
venture, with Ameritech and France Telecom holding equal shares of the
remainder. In 1994, Centertel expanded its network to cover all major cities
and highways in Poland, and its customer base 190% to approximately 39,000.

Since September 1993, Ameritech and its partners in NetCom GSM have
provided digital cellular service in Norway. In I992, 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%. Their agreement with NetCom includes a management service contract
under which Ameritech and Singapore Telecom provide their skills and expertise
in operating the system. Nationwide coverage by the NetCom system is expected
within three years. NetCom officials estimate that the usage of GSM service in
Norway currently is growing at 35% per year and that service could be

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extended to 700,000 Norwegian customers over the next 5 years. Norway is
second highest in the world in per capita use of mobile telephones.

Other Business Interests

Ameritech, in an arrangement with Household International, Inc.
(Household), offers a no fee, dual-purpose credit card and calling card, the
Ameritech Complete[SM] Card. The Complete Card is offered as either a Visa or
MasterCard. Consumers may use the card to charge telephone calls as well as
goods and services. The Complete Card has no annual fee and competitive
interest rates, a 10% cash back offer from Household for all calling card calls
made by dialing "0" plus the telephone number, and a second cash back feature
on credit card purchases of up to 1% with no limit on how much cash can be
earned. 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
nearly one million cardholders and membership has grown by 30% annually.

Research and Development

Ameritech owns an equal one-seventh interest in Bell Communications
Research, Inc. (Bellcore) with the other six RHCs. 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.

Regulatory Environment - Federal

The Ameritech landline telephone subsidiaries are subject to the
jurisdiction of the FCC with respect to interstate services. The FCC
prescribes for communications companies a uniform system of accounts, rules for
apportioning costs between regulated and nonregulated services, and the
principles and standard procedures (separations procedures) used to separate
regulated property costs, revenues, expenses, taxes and reserves between those
applicable to interstate services under the jurisdiction of the FCC and those
applicable to intrastate services under the jurisdiction of the respective
state regulatory authorities.

Access Services

Ameritech provides access services that allow long-distance carriers
and other customers to originate and terminate interstate and intrastate
telecommunications services using the facilities of the Company. These charges
recover the Company's access-related costs allocated to the two jurisdictions
under the FCC's jurisdictional cost allocation rules. Access charges are of
four types: common line, switched access, trunking and special access. There
are no common line charges applicable to intrastate operations.

The common line portion of interstate costs is recovered through
separate charges applied to end users (monthly end user common line charges)
and the long-distance carriers. The FCC has authorized end user common line
charges of up to $3.50 per access line per month for residential and single
line business customers and up to $6.00 per access line per month for multiple
line business customers.

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 customer's premises 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, the transmission of two or more signals over a single
channel, occurs. Special access charges are monthly charges assessed to
customers for access to private line services.

Effective January 1, 1991, the FCC adopted a new system for regulating
the interstate rates of local exchange carriers, including Ameritech,
establishing a price cap mechanism that sets maximum limits on the prices they
can charge. The limits are adjusted each year to reflect inflation, a
productivity

7
<PAGE> 10

factor and certain other cost changes. Local exchange carriers subject to
price caps have increased flexibility to change the prices of existing services
within certain groupings of interstate services. Local exchange carriers which
operate under price caps are allowed to elect annually by April 1 a
productivity offset factor of 3.3% or 4.3%. If the lower offset is chosen,
such carriers will be allowed to earn up to a 12.25% overall rate of return
without sharing. If such carriers earn between 12.25% and 16.25%, half of the
earnings in this range will be flowed through to customers in the form of a
lower price cap index in the following year. All earnings over 16.25% would be
flowed through to customers. If such carriers elect a 4.3% productivity
offset, all earnings below 13.25% may be retained, earnings up to 17.25% would
be shared, and earnings over 17.25% would flow through to customers. Since
price caps were implemented, Ameritech has chosen the 3.3% offset.

In February 1994, the FCC initiated its review of price cap
regulation. The FCC identified three broad sets of issues for examination
including those related to the basic goals of price cap regulation, the
operation of price caps and the transition of local exchange services to a
fully competitive market. In the course of this proceeding, Ameritech has
advocated the elimination of earnings sharing, increased pricing flexibility,
and no change to the productivity factor.

Other Matters

In June 1994, the U.S. Court of Appeals for the District of Columbia
overturned a 1992 FCC decision requiring local exchange carriers to provide
space within their central office switching centers for physical collocation by
competitive access providers, long-distance carriers and end users. The court
also told the FCC to reconsider its requirement that local exchange carriers
allow competitors to arrange virtual collocation, interconnection adjacent to
but not in a central office. In light of this decision, Ameritech has
re-examined its collocation policy and is now offering virtual collocation.

Also in June 1994, the FCC adopted revised licensing rules for PCS in
preparation for the auction of spectrum frequencies available for PCS which
began in late 1994 and concluded in March 1995. The Company's plans for PCS
services are covered in the sections on Cellular and Other Wireless Services
and Competition.

In December 1994, the Company received FCC approval to begin
construction of its video dial tone network, discussed in the section on New
Services.

Regulatory Environment - State

The Ameritech landline telephone subsidiaries are also subject to
regulation by state commissions in all of the states in which they operate with
respect to certain intrastate rates and services, issuance of securities and
other matters. Ameritech's regulatory environment is recognized as one of the
nation's most progressive. In 1994, through regulatory action in Illinois,
Indiana and Ohio, and legislation in Wisconsin, Ameritech became the first
regional company to replace rate of return regulation with pure price
regulation throughout its region. Price regulation was previously achieved in
Michigan in 1992. Following is a summary by state of recent regulatory reform.

Illinois

In May 1992, legislation permitting new forms of regulation was passed
by the Illinois General Assembly. The new law enabled the ICC to approve
alternative regulation of any type, subject to explicit policy goals. In
addition, the law transferred authority over state intraLATA equal access
dialing arrangements to the ICC. In the realm of competitive pricing, the law
required that telephone companies providing essential facilities impute the
rate charged for those facilities to themselves and that they apportion
overhead and embedded costs between competitive and noncompetitive services.
The law remains in effect until July 1, 1999.

In October 1994, the ICC largely approved Ameritech's Advantage
Illinois initiative. The order called for an immediate rate reduction of $93
million on specified services and set a five-year cap at current levels on
basic residential service rates and residential calling rates. Under the plan,
all noncompetitive services are assigned to one of four service categories and
price changes are based on a formula which considers inflation,
service/quality, a productivity offset plus a factor to allow for costs which
are outside the Company's control. Additional pricing flexibility continues to
be available for services classified as competitive. The plan also calls for
an end to the ICC's oversight of intrastate

8
<PAGE> 11

depreciation rates. The Ameritech companies have made a $3 billion
infrastructure commitment over five years. Ameritech has filed an appeal of
this order on several bases, including implementation of $51 million in rate
reductions based on revenues received from the partnership with Donnelley
Directory for directory publication. Other parties have also appealed the
Commission's decision.

Indiana

In June 1994, the Indiana Utility Regulatory Commission (IURC)
approved Ameritech's Opportunity Indiana plan. Under the plan, market based
pricing and flexibility has been instituted for competitive services, including
Centrex, dedicated communications services, 800, WATS, operator services and
business intraLATA toll service. Monthly rates for basic local residential
service will decrease by $2.21 over the next two years and remain capped until
January 1, 1998. Charges for Touch-Tone service were eliminated, retroactive
to May 1, 1994. IURC oversight of depreciation is suspended for the term of
the plan. In addition, Ameritech will invest up to $120 million in
infrastructure over the next six years to extend advanced communications links
to interested schools, hospitals and major government centers. During the same
period, Ameritech will contribute another $30 million in the form of grants to
public and private schools in its service area in Indiana for equipment,
software and training so the schools can take advantage of advanced network
applications.

Michigan

Under the Michigan Telecommunications Act of 1991, effective January
1, 1992 for a four-year period, there is no cap on earnings or depreciation.
The prices of basic services, defined as residence and business access lines
and local calling, are subject to a price cap formula based on the Consumer
Price Index (CPI minus 1%) and can be changed upon Michigan Public Service
Commission (MPSC) approval within a period from 90 days (for changes within the
index) to 210 days (for changes falling outside the index). IntraLATA toll
prices are capped through December 31, 1995 at December 31, 1991 levels.
Intrastate access rates cannot exceed the levels for the comparable interstate
access services without MPSC approval. Prices of many other services (e.g.
custom calling, advanced custom calling, Caller ID and voice mail private line)
can be changed immediately upon notice to customers. Ameritech has committed
to a $2 billion construction-related program in Michigan extending through
1995.

Ohio

In November 1994, the Public Utilities Commission of Ohio (PUCO)
announced approval of the Advantage Ohio price regulation plan, implemented in
January 1995. Under the plan, future overall rate changes are subject to price
ceilings based on inflation, a productivity factor of 3%, service quality and
significant tax law or accounting rule changes. Rates for all services are
capped in 1995 and rates for basic access lines and usage are capped for an
additional five years. The plan provides for the ability to flexibly price
competitive services and discretionary services. A series of rate reductions
totaling $84.4 million will be phased in over six years including the
elimination of Touch Tone charges, reductions in the rates for residential
local usage and access lines, reductions in carrier access, and the deaveraging
of business access line rates. Under the plan, the PUCO no longer oversees
depreciation. The plan includes an $18 million grant program for distance
learning equipment for schools in Ohio and $2.2 million to set up 14 public
computer centers around the state. The Company has also committed to meeting
certain benchmarks for the deployment of advanced technology, including
inter-office fiber optics, digital switching, Signal System 7 (SS7), an
interactive video network and ISDN.

Wisconsin

In June 1994, the Wisconsin legislature passed a new
telecommunications bill which establishes a pricing formula for regulated
services, including residential and small business access lines, local calls
and basic intraLATA calls. The formula considers inflation, service quality
and infrastructure investment, plus a productivity offset. Prices for other
services are not subject to Public Service Commission of Wisconsin (PSCW)
approval and PSCW and customer notice requirements are relaxed. Depreciation
rates will be set within a range of rates established by the PSCW. The Company
filed tariffs to adopt price regulation effective September 1, 1994. The new
bill calls for the Company to reduce basic residential and single-line business
rates by 10% for a period of three years, after which time price increases will
be controlled by the pricing formula established in the legislation. Prices
were reduced by $35 million on an annualized basis - $14 million for
residential and single-line business customers and $21 million for carrier
access charges. An additional $10 million carrier access charge reduction will
be

9
<PAGE> 12

phased in over the next two years. Under terms of the bill, Ameritech will
spend at least $700 million on new equipment and technology over a five year
period.

Other Matters

In addition to the regulatory developments discussed above, Ameritech
is a party to various proceedings pending before the state commissions which
involve, among other things, terms and conditions of services provided by the
Company, local exchange service competition, intraLATA dialing parity, terms
for interconnecting networks, and reciprocal compensation arrangements
(compensation to be exchanged with competitive local service providers for
terminating other carriers' calls).

Competition

General

The telecommunications industry is undergoing significant changes.
Local exchange and long-distance service companies, cable TV companies,
cellular service companies, computer concerns and the entertainment and
information services industries are converging, forming alliances and
positioning to provide a variety of services. 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, as well as the number of
companies offering such services. Market convergence, already a reality, is
intensifying.

Ameritech has positioned itself for success in the competitive market
through a number of initiatives. The Company has aggressively promoted its
Customers First plan, agreeing to open its network to all competitors in
exchange for being allowed to enter the long-distance market. Such a trade-off
is a core principle of legislation that was considered by Congress in 1994 and
will be debated again in 1995. The Company has been successful in achieving
more flexibility on profits and pricing throughout the region. New regulatory
policies allow the Company to keep profits resulting from improved efficiency,
typically in exchange for a commitment to freeze or lower the price of basic
phone service. Achieving price regulation in the region and recognizing
increased competition, Ameritech adopted accounting used by competitive
companies, discontinuing the use of Statement of Financial Accounting Standard
No. 71 (FAS 71), "Accounting for the Effects of Certain Types of Regulation,"
and increasing its depreciation reserve by $3.7 billion to reflect lower values
for assets in a competitive market. Internally, the Company has streamlined
its processes, reduced staffing and cut other costs to become the most
efficient of the RHCs.

Local Market

New technologies have opened up competition in the local market.
These technologies include coaxial cable used to deliver cable TV, fiber-optic
cable used to upgrade the capacity of the current telephone network, and
cellular telephone systems.

MFS Communications Company, Inc. (MFS) and Teleport Communications
Group, Inc. (Teleport) have each built fiber optic networks in Chicago and some
outlying suburbs. MFS and Teleport have permission in Illinois to offer local
phone services in addition to other services, such as direct connections to
long-distance carriers and private-line links among branch offices. US Signal,
Inc. has permission to offer local phone services in Grand Rapids, Michigan.

Additional certification requests are pending. MCI Communications
Corp. (MCI), backed by investor British Telecom, plans to begin offering local
phone service in Chicago, Detroit, Indianapolis, Cleveland, Dayton and
Columbus, starting in 1996. MFS has applied to provide local and long-distance
service to medium and small businesses in Cleveland's business district and
other parts of Ohio, and has applied for certification to provide local service
in the Detroit metropolitan area, both by mid-1995. Time Warner Cable, Inc.
plans to compete with Ameritech in 37 Ohio counties.

Sprint Communications Co. (Sprint), in partnership with several cable
companies, using Motorola, Inc. (Motorola) technology, is conducting a test in
Illinois with hopes of offering residential service over coaxial cable in the
Chicago area by early 1996. Using Scientific-Atlanta, Inc. technology, Jones
Intercable, Inc. and MCI plan to complete a two-year trial in Illinois before
offering service more broadly.

10
<PAGE> 13
AT&T and other long-distance companies are pursuing Ameritech's toll
call business, promoting discounts to encourage customers to use their service
instead of Ameritech's. The Company has responded with advertising to counter
those initiatives.

Wireless Services

The FCC licenses two carriers in each cellular market area and these
carriers compete directly with each other to provide cellular service to end
users and resellers. SBC Communications Inc. provides cellular service in
Illinois, Indiana and Missouri. AirTouch Communications, Inc. (AirTouch) has
cellular operations in Michigan and Ohio. In Wisconsin and Indiana, BellSouth
Enterprises also provides cellular service, and in Hawaii, Ameritech's
competition in cellular is GTE Corporation (GTE). Ameritech's paging
operations experience competition from one or more providers in the markets in
which service is provided.

In 1994, a number of companies allied to form expanded cellular
networks. AT&T acquired McCaw Cellular Communications, Inc., the largest
domestic cellular communications company, creating the possibility of a
wireless network with nationwide presence and brand-name recognition. US West,
Inc. (US West) and AirTouch plan to merge their cellular operations, as do Bell
Atlantic and NYNEX Corporation (NYNEX). The combined US West/AirTouch and Bell
Atlantic/NYNEX entities subsequently allied their cellular networks and agreed
to jointly bid for PCS licenses. In addition, Sprint formed a joint venture
with cable companies TCI, Comcast Corp. and Cox Cable Communications, Inc. to
offer alternative wireless and landline local telephone service.

In March 1995, the FCC concluded its auction, which began in late
1994, of over 2,000 licenses for PCS. Various telecommunications groups,
including almost all the nation's largest telephone and cable companies,
competed for licenses to offer PCS in Ameritech's service region. At the
conclusion of the PCS major trading area license auctions, AT&T, the Sprint
consortium, the Bell Atlantic/NYNEX/AirTouch/US West consortium and GTE are
the winners of PCS licenses in Ameritech's coverage area. Later this year, the
FCC anticipates auctioning four licenses in smaller serving areas overlapping
the licenses currently being offered. The Company may also face additional
competition from wireless technology that may be developed and introduced in
the future.

Though most wireless calls still need to interconnect with the
existing wire-based telecommunications infrastructure, legislation permitting
cable TV companies to enter the local voice communications market would provide
a competing wireline infrastructure for cellular service providers. Alliances
have been formed between other RHCs and large cable concerns which are
operating cable TV systems throughout the United States.

In addition, the FCC has awarded licenses to several companies which
hope to launch low earth orbit satellites that could be reached directly by a
new generation of telephones, paging devices and fax machines.

Cable TV

In this highly competitive era, the cable industry is consolidating in
the hands of a few companies anxious to compete with the telephone companies as
the two industries converge. In October 1994, a U.S. District Court in
Illinois ruled in favor of Ameritech in the Company's challenge, filed in
November 1993, to the video programming ban of the Cable Communications Policy
Act of 1984. Ameritech initially filed motions in federal courts in Michigan
and Illinois questioning the constitutionality of provisions that bar companies
from providing cable TV services and traditional video programming where they
also provide local telephone service. The cases subsequently were consolidated
in the Illinois court. The court's ruling applies throughout Ameritech's five
state region. Ameritech was the fourth RHC to win the right to provide cable
services.

Video Dial Tone Networks

While Ameritech has received approval from the FCC to begin
constructing an advanced, broadband video and interactive services network,
numerous phone and cable companies have started or plan to start interactive,
video-on-demand trials.

11
<PAGE> 14

Advertising

Innovative new products and services provide even more opportunities
for advertisers to get their message to potential customers. Competitors are
the traditional media mix - television, radio, direct mail, billboards,
interactive on-line services, newspaper and magazine advertising - in addition
to numerous other directory publishers in the Ameritech region.

Regulatory Relief Strategy

Regulatory reform continues to be one of the most significant issues
facing the telecommunications industry today. The Company believes that relief
from regulation will benefit customers and ultimately shareowners by enabling
the industry to compete effectively and meet customers' expanding needs. To
that end, Ameritech has offered its Customers First plan, which proposes
facilitation of local exchange competition in exchange for three regulatory
freedoms: relief from the Consent Decree long-distance ban; modifications to
the FCC price cap rules; and authority to collect social subsidies currently
embedded in the rates the Company charges long-distance carriers for access to
the local network.

In an effort to speed federal approval of its request to enter the
long-distance market, Ameritech has endorsed in large part the January 25, 1995
recommendations of the ICC concerning implementation of the plan, agreeing to
open its local phone business in Illinois to full competition without tying
this agreement to its request to provide long-distance service. A final ruling
from the ICC is anticipated in the near future. A recommendation from the DOJ
and a court ruling on the Company's request to offer long-distance services are
expected later this year.

Patents, Trademarks and Licenses

Ameritech and its affiliates own, have licenses to use, and licenses
others to use various patents, copyrights, trademarks and other intellectual
property which are necessary for them to conduct their present business
operations. It is not anticipated that any of such property will be subject to
expiration or nonrenewal of rights which would materially and adversely affect
Ameritech or its affiliates.

Employee Relations

As of December 31, 1994, the Ameritech companies employed 63,594
persons, a decrease from 67,192 at December 31, 1993. Work force restructuring
at the Ameritech landline telephone subsidiaries reduced staffing by
approximately 6,000 employees. This decrease was partially offset by staff
additions resulting from an acquisition in 1994 of a security monitoring
business and from cellular business expansion.

In late 1994, Ameritech updated its estimate of the results of the
early retirement offer it made to its nonmanagement employees earlier in the
year, bringing the total number of expected employee retirements and
resignations to 11,500 by August 1995. Under terms of agreements between
Ameritech, the Communications Workers of America (CWA) and the International
Brotherhood of Electrical Workers (IBEW), Ameritech implemented an enhancement
to the Ameritech pension plan by adding three years to the age and the net
credited service of eligible nonmanagement employees who will leave the
business during a designated period ending in 1995. In addition, certain of
the Company's business units are 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. In 1994, 1,200
management employees left the payroll as a result of an involuntary work force
program.

Reduction of the work force reflects recognition of technological
improvements, consolidations and initiatives to balance cost structure with
emerging competition. The Company has announced plans to hire more people by
the end of 1995 to help maintain quality service levels, and, as necessary,
will add staff with the requisite skills to accommodate the Company's growth
and entry into new business areas.

Approximately 41,000 employees are represented by unions. Of those so
represented, about 71% are represented by the CWA and about 29% are represented
by the IBEW, both of which are affiliated with the AFL-CIO. When current
contracts expire in June and August 1995, new contracts will be negotiated
regionally.

12
<PAGE> 15

Item 2. Properties.

The properties of the Company do not lend themselves to description by
character and location of principal units. At December 31, 1994, the Company's
investment in property, plant and equipment consisted of the following:

<TABLE>
<S> <C>
Land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10%
Central office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Cable, wiring and conduit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Under construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----
100%
</TABLE>

Central office equipment includes analog and digital switching
equipment, transmission equipment and related facilities. Buildings includes
principally central offices. Cable, wiring and conduit constitute outside
plant, and includes poles as well as cable, conduit and wiring primarily on or
under public roads, highways or streets or on or under private property.
Substantially all of the installations of central office equipment and
administrative offices are located in buildings owned by the Ameritech landline
telephone subsidiaries and situated on property they own. Many garages and
business offices and some installations of central office equipment and
administrative offices are in leased quarters.

As a result of an extensive review of Company assets and an assessment
of future needs, Ameritech is selling, or will no longer use in the business,
certain real estate across the region, thereby reducing costs and improving
asset utilization.

Capital Investment Plans

Capital expenditures (by all the Ameritech companies), the single
largest use of Company funds, were as follows for the last five years:

<TABLE>
<CAPTION>
(Dollars in Millions)

Ameritech expects to maintain capital spending at about $2 billion per
year. Responding to the market's request for efficient and productive
networks, the Company's capital expenditures for property, plant and equipment
for its landline telephone operations decreased about $100 million in 1994 as
capital was deployed more cost effectively and with greater focus on the
requirements of customers. The cellular services portion decreased $45 million
in 1994 as its infrastructure matures. Network modernization expenditures
occurred in all the states where the Company provides service.

The Company's video dial tone network program will increase
Ameritech's capital spending over the next 15 years by $4.4 billion (for
network components including fiber optic cable, servers, switches and
subscriber equipment). The Company expects to fund a significant portion of
this amount by continuing to reduce capital expenditures in its landline
telephone business while maintaining its current high quality of service to
customers.

13
<PAGE> 16

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, under agreements entered into at
divestiture, AT&T and the former Bell operating companies of AT&T (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. Effective
in 1994, Ameritech and the other six RHCs agreed to discontinue sharing of new
pre-divestiture claims and certain existing claims other than claims relating
to environmental matters. AT&T is not a party to this agreement.

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.

14
<PAGE> 17

EXECUTIVE OFFICERS OF THE COMPANY (AS OF MARCH 1, 1995)

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>

Richard C. Notebaert* . . . . . . . . . . 47 Chairman, President and
Chief Executive Officer 1994
Richard H. Brown** . . . . . . . . . . . 47 Vice Chairman 1993
Oren G. Shaffer . . . . . . . . . . . . . 52 Executive Vice President and
Chief Financial Officer 1994
Thomas P. Hester . . . . . . . . . . . . 57 Executive Vice President and
General Counsel 1991
W. Patrick Campbell . . . . . . . . . . . 48 Executive Vice President --
Corporate Strategy and
Business Development 1994
Walter S. Catlow . . . . . . . . . . . . 50 Executive Vice President --
International 1994
Walter M. Oliver . . . . . . . . . . . . 49 Senior Vice President --
Human Resources 1994
Thomas J. Reiman . . . . . . . . . . . . 45 Senior Vice President -- State and
Government Affairs 1994
Rita P. Wilson . . . . . . . . . . . . . 48 Senior Vice President --
Corporate Communications 1994
Gary R. Lytle . . . . . . . . . . . . . . 51 Vice President -- Federal
Relations 1994
Betty F. Elliott . . . . . . . . . . . . 49 Vice President and Comptroller 1991
Joel S. Engel . . . . . . . . . . . . . . 59 Vice President -- Technology 1993
Richard W. Pehlke . . . . . . . . . . . . 41 Vice President and Treasurer 1994
Lawrence E. Strickling . . . . . . . . . 43 Vice President -- Public Policy 1993
Kelly R. Welsh . . . . . . . . . . . . . 42 Vice President and Associate 1993
General Counsel
Bruce B. Howat . . . . . . . . . . . . . 50 Secretary 1983
</TABLE>
- ------------------

* Member of the Board of Directors and Chairman of the Executive
Committee

** Member of the Board of Directors and member of the Finance 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. Welsh, Mr. Campbell, Mr. Shaffer, Mrs.
Wilson and Mr. Oliver. Before joining Ameritech, 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 and Chief Executive Officer of Columbia TriStar Home Video, a
Sony Pictures Entertainment Company, from 1989 to 1994. Previously, Mr.
Campbell held a variety of management positions at Norelco, SCM Corporation and
McGraw Edison. Mr. Shaffer served as Chief Financial Officer and President of
Virgo Cap Inc., a private investment firm, from 1992 to 1994. Previously, Mr.
Shaffer was Chief Financial Officer, Executive Vice President and a member of
the Board of Directors of The Goodyear Tire & Rubber Co., where he worked from
1968 to 1992. Mrs. Wilson was Senior Vice President - Corporate Relations and
a member of the Board of Directors of Allstate Insurance Company from 1990 to
1994 after various operations positions at Allstate beginning in 1974.

Officers are elected annually but may be removed at any time at the
discretion of the Board of Directors.

15
<PAGE> 18

PART II

Items 5 through 8.

There were 922,432 owners of record of Ameritech Common Stock as of
December 31, 1994. 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 24 through 33, pages 34
through 48, and on page 53 of the Company's annual report to security holders
for the year ended December 31, 1994. Such information is incorporated by
reference pursuant to General Instructions G(2).

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, 1995, prepared in accordance with Schedule 14A.

The other information required by these items is included in the
Company's definitive proxy statement on pages 2 through 4, in the section on
Officer and Director Stock Ownership on pages 5 and 6, in the section on
Compensation of Directors on page 6, and in the section on Executive
Compensation on pages 10 through 19, and is incorporated herein by reference
pursuant to General Instructions G(3).

16
<PAGE> 19

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) Documents filed as part of the report:

<TABLE>
<CAPTION>
Pages
-----
<S> <C> <C>
(1) Financial Statements:
Selected Financial and Operating Data . . . . . . . . . . . . . . . . . . . . *24
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . *34
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . *35
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . *36
Consolidated Statements of Shareowners' Equity . . . . . . . . . . . . . . . *37
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . *38
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . *39-48

(2) Financial Statement Schedule:
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . 23
II -- Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . 24
</TABLE>

* Incorporated herein by reference to the appropriate portions of the
Company's annual report to security holders for the year ended
December 31, 1994

Financial Statement Schedules other than the one 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% 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>

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 -- 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).

10c -- 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).

10c-1 -- First Amendment Long Term Incentive Plan (Exhibit 10bb-1 to Form 10-K for 1993, File No. 1-8612).

10d -- Ameritech Senior Management Life Insurance Plan Agreements (Exhibit 10cc to Form 10-K for 1990, File No. 1-8612).

</TABLE>

17
<PAGE> 20

<TABLE>
<S> <C>
10e -- 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).

10e-1 -- First Administrative Amendment to Ameritech Senior Management Long Term Disability Plan, to be filed by amendment.

10f -- 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).

10g -- Ameritech Perquisite Program (Exhibit 10ff to Form 10-K for 1991, File No. 1-8612).

10h -- Ameritech Deferred Compensation Plan for Non-Employee Directors (Exhibit 10gg to Form 10-K for 1985, File No. 1-8612).

10h-1 -- First Amendment of Deferred Compensation Plan for Non-Employee Directors (Exhibit 10gg-1 to Form 10-K for 1986, File
No. 1-8612).

10h-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).

10h-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).

10h-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).

10h-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).

10i -- Ameritech Plan for Non-Employee Directors' Travel Accident Insurance (Exhibit 10hh to Registration Statement No.
2-87838).

10j -- Ameritech Management Supplemental Pension Plan as amended through the Seventh Amendment (Exhibit 10ii to Form 10-K
for 1991, File No. 1-8612).

10j-1 -- Eighth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit 10ii-1 to Form 10-K for 1991, File No.
1-8612).

10j-2 -- Ninth Amendment of Ameritech Management Supplemental Pension Plan (Exhibit 10ii-2 to Form 10-K for 1991, File No.
1-8612).

10j-3 -- Tenth Amendment to Ameritech Management Supplemental Pension Plan (Exhibit 10ii-3 to Form 10-K for 1993, File No.
1-8612).

10j-4 -- Eleventh Amendment to Ameritech Management Supplemental Pension Plan (Exhibit 10ii-4 to Form 10-K for 1993, File No.
1-8612).

10j-5 -- Twelfth Amendment to Ameritech Management Supplemental Pension Plan (Exhibit 10ii-5 to Form 10-K for 1993, File No.
1-8612).

10j-6 -- Thirteenth Amendment to Ameritech Management Supplemental Pension Plan.

10k -- 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).

10k-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).
</TABLE>

18
<PAGE> 21
<TABLE>
<S> <C>

10k-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).

10k-3 -- Second Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan (Exhibit
10jj-3 to Form 10-K for 1993, File No. 1-8612).

10k-4 -- Fourth Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan (Exhibit
10jj-4 to Form 10-K for 1993, File No. 1-8612).

10k-5 -- Fifth Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan.

10k-6 -- Sixth Administrative Amendment to Ameritech Senior Management Retirement and Survivor Protection Plan, to be filed
by amendment.

10l -- 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).

10l-1 -- First Administrative Amendment to Ameritech Senior Management Supplemental Savings and Deferral Plan, to be filed by
amendment.

10m -- Ameritech Stock Retirement Plan for Non-Employee Directors (Exhibit 10ll to Form 10-K for 1986, File No. 1-8612).

10m-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).

10m-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).

10n -- 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 (Exhibit 10mm to Form 10-K for 1993, File No. 1-8612).

10o -- 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).

10o-1 -- First Administrative Amendment to the Ameritech Senior Management Severance Pay Plan.

10o-2 -- Second Administrative Amendment to the Ameritech Senior Management Severance Pay Plan, to be filed by amendment.

10p -- 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).

10p-1 -- First Amendment to 1989 Long Term Incentive Plan (Exhibit 10oo-1 to Form 10-K for 1993, File No. 1-8612).

10q -- 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).

10r -- 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).

10s -- Ameritech Key Management Life Insurance Plan (Exhibit 10rr to Form 10-K for 1991, File No. 1-8612).

10s-1 -- First Administrative Amendment to Ameritech Key Management Life Insurance Plan (Exhibit 10rr-1 to Form 10-K for
1993, File No. 1-8612).
</TABLE>

19
<PAGE> 22
<TABLE>
<S> <C>

10s-2 -- Second Administrative Amendment to Ameritech Key Management Life Insurance Plan, to be filed by amendment.

10t -- Ameritech Estate Preservation Plan (Exhibit 10ss to Form 10-K for 1991, File No. 1-8612).

10t-1 -- First Administrative Amendment to Ameritech Estate Preservation Plan (Exhibit 10ss-1 to Form 10-K for 1993, File No.
1-8612).

10t-2 -- First Amendment to Ameritech Estate Preservation Plan, to be filed by amendment.

10u -- Ameritech Senior Management Severance Pay Trust as amended through the First Amendment (Exhibit 10tt to Form 10-K for
1991, File No. 1-8612).

10u-1 -- Second Amendment to Ameritech Senior Management Severance Pay Trust (Exhibit 10tt-1 to Form 10-K for 1991, File No.
1-8612).

10v -- Ameritech Management Employees Benefit Protection Trust as amended through the First Amendment (Exhibit 10uu to Form
10-K for 1991, File No. 1-8612).

10v-1 -- Second Amendment to Ameritech Management Employees Benefit Protection Trust (Exhibit 10uu-1 to Form 10-K for 1991,
File No. 1-8612).

10w -- 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).

10x -- Agreement Regarding Change in Control dated as of January 19, 1994 between the Company and Richard H. Brown, together
with schedule identifying other documents (Exhibit 10ww to Form 10-K for 1993, File No. 1-8612).

10y -- Agreement Regarding Change in Control dated as of January 19, 1994 between the Company and Thomas P. Hester.

10z -- Agreement Regarding Change in Control dated as of September 9, 1994 between the Company and W. Patrick Campbell.

10aa -- Agreement Regarding Change in Control dated as of September 9, 1994 between the Company and Walter M. Oliver.

10bb -- Agreement Regarding Change in Control dated as of January 1, 1995 between the Company and Oren G. Shaffer, to be
filed by amendment.

10cc -- Agreement Regarding Change in Control dated as of January 1, 1995 between the Company and Rita P. Wilson, to be
filed by amendment.

10dd -- Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-1 -- First Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-2 -- Second Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-3 -- Third Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-4 -- Fourth Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-5 -- Fifth Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-6 -- Sixth Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

10dd-7 -- Seventh Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

</TABLE>

20
<PAGE> 23
<TABLE>
<S> <C>

10dd-8 -- Eighth Amendment to Ameritech Mid-Career Pension Plan, to be filed by amendment.

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, 1994.

13 -- Portions of Ameritech's annual report to security holders for the year ended December 31, 1994.

21 -- Subsidiaries of the Company.

23 -- Consent of Arthur Andersen LLP.

24 -- Powers of Attorney.

27 -- Financial Data Schedule for the year ended December 31, 1994.

99a -- Form 11-K Annual Report for the fiscal year ended December 31, 1994 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, 1994 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, 1994 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 1, 1994, the Company filed a Current Report on Form 8-K
dated November 28, 1994, to report on Item 5, Other Events, Ameritech's
discontinuation of the use of Statement of Financial Accounting Standards No.
71 (FAS 71), "Accounting for the Effects of Certain Types of Regulation," and
on the resulting extraordinary, noncash charge recorded in the fourth quarter
of 1994.

On February 1, 1995, Ameritech filed another Current Report, dated
January 18, 1995, to report on Item 5, Other Events, Ameritech's earnings for
the fourth quarter and at year end 1994.

21
<PAGE> 24

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 21, 1995

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:
O. G. Shaffer*
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*
M. R. Goodes*
H. H. Gray* March 21, 1995
J. A. Henderson*
S. B. Lubar*
L. M. Martin*
A. C. Martinez*
R. C. Notebaert*
J. D. Ong*
A. B. Rand*
J. A. Unruh*

22
<PAGE> 25

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 February 3, 1995. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The
financial statement schedule listed in Item 14(a)(2) is the responsibility of
the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states 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 LLP
Chicago, Illinois
February 3, 1995

23
<PAGE> 26

SCHEDULE II

AMERITECH CORPORATION
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ALLOWANCE FOR UNCOLLECTIBLES
(Dollars in Millions)

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
---------- ---------- ---------------------------- ---------- ----------
Additions
----------------------------
Balance at Charged Charged Balance
beginning to to other at end of
Classification of period expense(a) accounts(b) Deductions(c) period
-------------- ----------- ----------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>

Year 1994 . . . . . . . . . . . $134.7 $171.1 $178.1 $336.6 $147.3
Year 1993 . . . . . . . . . . . 126.3 154.3 165.1 311.0 134.7
Year 1992 . . . . . . . . . . . 124.6 131.7 139.9 269.9 126.3
</TABLE>
- -----------------
(a) Excludes direct charges and credits to expense on the statements of
income and reinvested earnings related to interexchange carrier
receivables.

(b) Includes principally amounts previously written off which were
credited directly to this account when recovered and amounts related to
long-distance carrier receivables which are being billed by the
Company.

<PAGE> 1
Exhibit 10j-6

THIRTEENTH 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 effective as of January 1, 1995, as follows:

1. To delete paragraph (a) of subsection 3.5 in its entirety and to
substitute the following therefor:

"(a) An election of a lump sum payment must be filed with the
Committee by the later of (i) sixty (60) days after the date
on which the individual terminates employment with the
Participating Companies and Ameritech affiliates or (ii) sixty
(60) days after the date on which the individual is notified
of his right to elect a lump sum under this Supplemental Plan.
A lump sum payment timely elected by an individual shall be
paid to him no earlier than ninety (90) days after the date on
which the individual terminates employment with the
Participating Companies and Ameritech affiliates.

If an individual fails to make a timely election of a lump sum
payment, his benefits shall be paid to him, in lump sum form,
beginning no earlier than ninety (90) days after the later of
(i) the date on which the individual terminates employment
with the Participating Companies and Ameritech affiliates or
(ii) the date on which the Participant is notified of his
right to elect a lump sum under the Plan."

2. To delete paragraphs (b), (c), (d), and (e) of subsection 3.5 in their
entirety and to renumber paragraphs (f), (g), (h), (i) and (j) of
subsection 3.5 as paragraphs (b), (c), (d), (e) and (f);

<PAGE> 2

3. To delete the following phrase from newly renumbered paragraph (b):
"or, in the case of an individual making an election under paragraph
(d), as of the date the lump sum distribution is made under paragraph
(d)."

4. To delete newly renumbered paragraph (c) in its entirety and to
substitute the following therefor:

"(c) An individual may rescind the election of a lump sum
distribution at any time up to and including the date
as of which the individual could have elected a lump sum
payment under paragraph (a) of this subsection 3.5."

I, Harry A. Malone, 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 February 15, 1995, and that the
resolution has not been changed or repealed.

/s/ H. A. Malone
------------------------
Secretary

<PAGE> 1
Exhibit 10k-5

FIFTH 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 January 1, 1995, as follows:

1. To delete paragraph (a) of subsection 6.6 in its entirety and to
substitute the following therefor:

"(a) An election of a lump sum payment must be filed with the
Committee by the later of (i) sixty (60) days after the date
on which the Participant terminates employment with the
Company and its Subsidiaries or (ii) sixty (60) days after the
date on which the Participant is notified of his right to
elect a lump sum under the Plan. A lump sum payment timely
elected by a Participant shall be paid to him no earlier than
ninety (90) days after the date on which the Participant
terminates employment with the Company and its subsidiaries.

If a Participant fails to make a timely election of a lump sum
payment, his benefits shall be paid to him, in a single life
annuity form with no survivor benefits if he is not then
married, or in a survivor annuity form if he is then married,
beginning no earlier than ninety (90) days after the later of
(i) the date on which the Participant terminates employment
with the Company and its subsidiaries, or (ii) the date on
which the Participant is notified of his right to elect a lump
sum under the Plan."

2. To delete paragraphs (b), (c) and (d) of subsection 6.6 in their
entirety and to renumber paragraphs (e), (f), (g), (h) and (i) of
subsection 6.6 as paragraphs (b), (c), (d), (e) and (f);

<PAGE> 2

3. To delete the following phrase from newly renumbered paragraph (b):
"or, in the case of an individual making an election under paragraph
(c), as of the date the lump sum distribution is made under paragraph
(c)."

4. To delete newly renumbered paragraph (c) in its entirety and to
substitute the following therefor:

"(c) A Participant may rescind the election of a lump sum
distribution at any time up to and including the date as of
which the Participant could have elected a lump sum payment
under paragraph (a) of this subsection 6.6."

Dated: May 16, 1994 AMERITECH CORPORATION

By: /s/ Walter M. Oliver
-------------------------
Senior Vice President -
Human Resources

Concur:

/s/ Thomas P. Hester
- ---------------------------
Executive Vice President
and General Counsel

<PAGE> 1
Exhibit 10o-1

FIRST AMENDMENT (ADMINISTRATIVE)
TO
AMERITECH SENIOR MANAGEMENT
SEVERANCE PAY PLAN

Pursuant to authority reserved to Ameritech Corporation, the Ameritech
Senior Management Severance Pay Plan (As Amended and Restated Effective as of
January 1, 1992) (the "Plan") is hereby amended effective as of May1, 1994 to
delete the number "36" from subsections 3.2 and 4.1(a) of the Plan and to
substitute therefor the number "24".

Dated: May 16, 1994 AMERITECH CORPORATION

By: /s/ Walter M. Oliver
-------------------------
Senior Vice President -
Human Resources

Concur:

/s/ Thomas P. Hester
- -------------------------
Executive Vice President
and General Counsel

<PAGE> 1

Exhibit 10y

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
Thomas P. Hester (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 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

<PAGE> 2
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 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.

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

2
<PAGE> 3

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 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

3
<PAGE> 4

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 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.

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.

4
<PAGE> 5

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.

5
<PAGE> 6

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/ Thomas P. Hester
--------------------
Executive

Ameritech Corporation

By /s/ Bruce B. Howat
----------------------
Its Secretary

ATTEST:

/s/ Marilyn S. Spracker
- ------------------------
Assistant Secretary

<PAGE> 1

Exhibit 10z

AGREEMENT REGARDING
CHANGE IN CONTROL

This Agreement entered into as of the 9th day of September, 1994
by and between Ameritech Corporation, a Delaware corporation (the "Company"),
and W. Patrick Campbell (the "Executive"),

WITNESSETH THAT:

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:

(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

<PAGE> 2

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;

(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

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

2
<PAGE> 3

(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
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.

3
<PAGE> 4

4
<PAGE> 5

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.

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.

5
<PAGE> 6

/s/ W. Patrick Campbell
-----------------------
Executive

Ameritech Corporation

By /s/ Bruce B. Howat
-----------------------
Its Secretary

ATTEST:

/s/ Marilyn S. Spracker
- -----------------------
Assistant Secretary

<PAGE> 1

Exhibit 10aa

AGREEMENT REGARDING
CHANGE IN CONTROL

This Agreement entered into as of the 9th day of September, 1994
by and between Ameritech Corporation, a Delaware corporation (the "Company"),
and Walter M. Oliver (the "Executive"),

WITNESSETH THAT:

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:

(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

<PAGE> 2

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;

(d) the stockholders of the Company approve a merger or
consolidation of the Company with any other company other than:

2
<PAGE> 3
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 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.

3
<PAGE> 4

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.

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.

4
<PAGE> 5

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.

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.

5
<PAGE> 6
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/ Walter M. Oliver
--------------------------------
Executive

Ameritech Corporation

By /s/ Bruce B. Howat
--------------------------------
Its Secretary

ATTEST:

/s/ Marilyn S. Spracker
- -----------------------
Assistant Secretary

<PAGE> 1

Exhibit 11a

Ameritech Corporation
Computation for Primary Earnings Per Share

<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Net Income (Loss) after extraordinary item
and cumulative effect of change in accounting
principles ($1,063,613,000) $1,512,798,000 ($400,361,000)
=============== ============= =============

Weighted average number of shares outstanding
549,238,304 544,076,354 536,559,890
Additional dilutive effect of outstanding
options (as determined by the application of
the treasury stock method)
1,518,175 1,503,542 550,218
--------------- ------------- -------------
Weighted average shares outstanding on which
primary earnings per share are based
550,756,479 545,579,896 537,110,108
Primary earnings per share ($1.93) $2.77 ($0.75)
=============== ============= =============
</TABLE>

This calculation is submitted in accordance with Regulation S-K,
Item 601 (b)11, 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>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Income before extraordinary item and
cumulative effect of change in accounting
principles $1,170,426,000 $1,512,798,000 $1,346,083,000
============== ============== ==============

Weighted average number of shares outstanding
549,238,304 544,076,354 536,559,890
Additional dilutive effect of outstanding
options (as determined by the application of
the treasury stock method)
1,518,175 1,503,542 550,218
-------------- -------------- --------------
Weighted average shares outstanding on which
primary earnings per share are based
550,756,479 545,579,896 537,110,108
Primary earnings per share $2.13 $2.77 $2.51
============== ============== ==============
</TABLE>

This calculation is submitted in accordance with Regulation S-K,
Item 601 (b)11, 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 for Fully Diluted Earnings Per Share

Weighted average number of shares outstanding
549,238,304 544,076,354 536,559,890
Additional dilutive effect of outstanding
options (as determined by the application of
the treasury stock method)
1,606,099 1,503,542 1,389,716
--------------- -------------- -------------
Weighted average shares outstanding on which
primary earnings per share are based
550,844,403 545,579,896 537,949,606
Primary earnings per share ($1.93) $2.77 ($0.74)
=============== =============== ==============
</TABLE>

This calculation is submitted in accordance with Regulation S-K, Item 601
(b)11, 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 for Fully Diluted Earnings Per Share

Weighted average number of shares outstanding
549,238,304 544,076,354 536,559,890
Additional dilutive effect of outstanding
options (as determined by the application of
the treasury stock method)
1,606,099 1,503,542 1,389,716
-------------- -------------- --------------
Weighted average shares outstanding on which
primary earnings per share are based
550,844,403 545,579,896 537,949,606
Primary earnings per share $2.12 $2.77 $2.50
============== ============== ==============
</TABLE>

This calculation is submitted in accordance with Regulation S-K, Item 601
(b)11, 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 12

Ameritech Corporation
Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
Years Ending December 31, 1994, 93, 92, 91 and 90

<TABLE>
<CAPTION>
Earnings 1994 1993 1992 1991 1990
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before interest, income taxes,
extraordinary item and cumulative effect of
change in accounting principles . . . . .
$2,189.5 $2,686.8 $2,476.9 $2,224.3 $2,285.0
Preferred dividends (4) . . . . . . . . . 2.3 -- -- -- --
Portion of rent expense representing
interest . . . . . . . . . . . . . . . . 63.9 65.4 65.4 71.0 69.9
Michigan Single Business Tax . . . . . . 32.9 27.6 25.2 25.6 25.6
-------- -------- -------- -------- --------

Total Earnings (1) (2) (3) . . . . . . . $2,288.6 $2,779.8 $2,567.5 $2,320.9 $2,380.5
======== ======== ======== ======== ========

Fixed Charges
-------------

Interest cost . . . . . . . . . . . . . . $448.0 $464.3 $503.2 $567.9 $474.5
Preferred dividends . . . . . . . . . . . 2.3 -- -- -- --
Portion of rent expense representing
interest . . . . . . . . . . . . . . . . 63.9 65.4 65.4 71.0 69.9
-------- -------- -------- -------- --------

Total Fixed Charges . . . . . . . . . . . $514.2 $529.7 $568.6 $638.9 $544.4
======== ======== ======== ======== ========

Ratio of Earnings to Fixed Charges and
Preferred Dividends . . . . . . . . . . . 4.45 5.25 4.52 3.63 4.37
</TABLE>

(1) The results for 1994 reflect a $728.1 million pretax charge for work
force restructuring (see MD&A discussion of this charge). This charge
will be funded primarily from the Ameritech Pension Plan.

(2) Earnings are income before income taxes and fixed charges. Since the
Michigan Single Business Tax ("the Tax") and rental expense have been
deducted, the Tax and the one-third portion of rental expense
considered to be fixed charges are added back.

(3) Earnings have not been adjusted to reflect the timing of dividends
received and equity in earnings of unconsolidated affiliates as the
effect on an annual basis has been insignificant.

(4) For purposes of above computation, the preferred stock dividend
requirement is increased to an amount representing the pretax earnings
which would be required to cover the dividend requirements.

<PAGE> 1
Selected Financial and Operating Data EXHIBIT 13

At December 31 or for the year ended
Ameritech Corporation and Subsidiaries

(dollars in millions,
except per share amounts) 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Local service . . . . . . . . . . . . . $ 5,337 $ 5,065 $ 5,012 $ 4,886
Interstate network access . . . . . . . 2,218 2,118 2,041 1,993
Intrastate network access . . . . . . . 612 623 613 556
Long-distance . . . . . . . . . . . . . 1,456 1,401 1,252 1,294
Directory, cellular and other . . . . . 2,946 2,658 2,367 2,254
---------------------------------------------------------
TOTAL . . . . . . . . . . . . . . . . . . 12,569 11,865 11,285 10,983
---------------------------------------------------------
OPERATING EXPENSES(1) . . . . . . . . . . 10,540 9,307 8,941 9,001
---------------------------------------------------------
OPERATING INCOME . . . . . . . . . . . . 2,029 2,558 2,344 1,982
Interest expense . . . . . . . . . . . . 435 453 495 545
Other (income) expense, net . . . . . . . (147) (117) (125) (219)
Income taxes . . . . . . . . . . . . . 571 709 628 491
---------------------------------------------------------
Income before special
accounting items(2) . . . . . . . . . . 1,170 1,513 1,346 1,165
Special accounting items(2) . . . . . . . (2,234) - (1,746) -
---------------------------------------------------------
NET INCOME (LOSS) . . . . . . . . . . . . $ (1,064) $ 1,513 $ (400) $ 1,165
---------------------------------------------------------
EARNINGS (LOSS) PER SHARE(3)
Income before special
accounting items(2) . . . . . . . . . $ 2.13 $ 2.78 $ 2.51 $ 2.19
Special accounting items(2) . . . . . . (4.07) - (3.26) -
---------------------------------------------------------
NET INCOME (LOSS) . . . . . . . . . . . $ (1.94) $ 2.78 $ (0.75) $ 2.19
---------------------------------------------------------
Dividends declared per share(3) . . . . . $ 1.94 $ 1.86 $ 1.78 $ 1.72
Dividends paid per share(3) . . . . . . . $ 1.92 $ 1.84 $ 1.76 $ 1.70
Average common shares
outstanding (000)(3) . . . . . . . . . 549,238 544,076 536,560 531,040
Total assets(4) . . . . . . . . . . . . . $ 19,947 $ 23,428 $ 22,818 $ 22,290
Property, plant and
equipment, net(4) . . . . . . . . . . $ 13,455 $ 17,366 $ 17,335 $ 16,986
Capital expenditures . . . . . . . . . . $ 1,955 $ 2,108 $ 2,267 $ 2,200
Long-term debt . . . . . . . . . . . . . $ 4,448 $ 4,090 $ 4,586 $ 4,964
Return on average equity(5) . . . . . . . (13.6)% 20.1% (5.9)% 14.5%
Return on average total
capital(5) . . . . . . . . . . . . . (4.6)% 13.1% 0.2% 10.6%
Market price per common
share(3) . . . . . . . . . . . . . . . $ 40.38 $ 38.38 $ 35.63 $ 31.75
Access lines (000) . . . . . . . . . . . 18,239 17,560 17,001 16,584
Cellular subscribers (000) . . . . . . . 1,299 860 586 483
Employees . . . . . . . . . . . . . . . . 63,594 67,192 71,300 73,967
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) Substantial increase in operating expenses in 1994 is due to
nonmanagement work force restructuring charges of $728 million.

(2) Special accounting items represent extraordinary charge and cumulative
effect of change in accounting principles. 1994 amount represents the
after-tax extraordinary charge for the discontinuance of FAS 71, while the
1992 amount is a change in accounting principles for FAS106 and 112.

(3) Gives retroactive effect to all stock splits.

(4) Substantial reduction in total assets and shareowners' equity in 1994 is
due principally to the discontinuance of FAS 71.

(5) Return on average equity and return on average total capital are
calculated using weighted average monthly amounts.

24
<PAGE> 2

(dollars in millions,
except per share amounts) 1990 1989 1988 1987 1986 1985 1984
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Local service . . . . . . . . $ 4,789 $ 4,679 $ 4,521 $ 4,494 $ 4,491 $ 4,365 $ 4,230
Interstate network access . . 2,009 1,942 1,958 1,798 1,881 1,791 1,553
Intrastate network access . . 559 541 583 573 606 628 550
Long-distance . . . . . . . . 1,336 1,259 1,240 1,149 1,093 1,062 993
Directory, cellular and other 2,080 1,895 1,712 1,609 1,394 1,289 1,128
--------------------------------------------------------------------------------
TOTAL . . . . . . . . . . . . . 10,773 10,316 10,014 9,623 9,465 9,135 8,454
--------------------------------------------------------------------------------
OPERATING EXPENSES(1) . . . . . 8,584 8,161 7,882 7,358 7,047 6,856 6,316
--------------------------------------------------------------------------------
OPERATING INCOME. . . . . . . . 2,189 2,155 2,132 2,265 2,418 2,279 2,138
Interest expense. . . . . . . . 454 384 366 351 361 386 417
Other (income) expense, net . . (76) (14) (52) 8 (10) (4) (55)
Income taxes. . . . . . . . . . 557 547 581 718 929 819 785
--------------------------------------------------------------------------------
Income before special
accounting items(2) . . . . . 1,254 1,238 1,237 1,188 1,138 1,078 991
Special accounting items(2) . . - - - - - - -
--------------------------------------------------------------------------------
NET INCOME (LOSS) . . . . . . . $ 1,254 $ 1,238 $ 1,237 $ 1,188 $ 1,138 $ 1,078 $ 991
--------------------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE(3)
Income before special
accounting items(2). . . . . $ 2.37 $ 2.30 $ 2.27 $ 2.12 $ 1.97 $ 1.84 $ 1.69
Special accounting items(2) . - - - - - - -
--------------------------------------------------------------------------------
NET INCOME (LOSS) . . . . . . $ 2.37 $ 2.30 $ 2.27 $ 2.12 $ 1.97 $ 1.84 $ 1.69
--------------------------------------------------------------------------------
Dividends declared per share(3) $ 1.61 $ 1.49 $ 1.38 $ 1.28 $ 1.20 $ 1.10 $ 1.00
Dividends paid per share(3) . . $ 1.58 $ 1.46 $ 1.35 $ 1.25 $ 1.16 $ 1.08 $ 1.00
Average common shares
outstanding (000)(3). . . . . 530,584 539,470 544,422 561,120 578,556 586,600 584,572
Total assets(4) . . . . . . . . $ 21,715 $ 19,833 $ 19,163 $ 18,780 $ 18,739 $ 18,149 $ 17,635
Property, plant and
equipment, net(4) . . . . . . $ 16,652 $ 16,296 $ 16,078 $ 15,962 $ 15,822 $ 15,401 $ 15,053
Capital expenditures. . . . . . $ 2,154 $ 2,015 $ 1,895 $ 1,956 $ 2,076 $ 1,991 $ 1,747
Long-term debt. . . . . . . . . $ 5,074 $ 5,069 $ 4,487 $ 4,388 $ 4,497 $ 4,518 $ 4,799
Return on average equity(5) . . 16.3% 15.8% 15.8% 15.5% 14.9% 14.7% 14.3%
Return on average total
capital(5) . . . . . . . . . 11.8% 11.9% 12.0% 11.7% 11.4% 11.4% 11.1%
Market price per common
share(3). . . . . . . . . . . $ 33.38 $ 34.00 $ 23.88 $ 21.13 $ 22.00 $ 17.75 $ 12.75
Access lines (000). . . . . . . 16,278 15,899 15,469 15,094 14,755 14,555 14,337
Cellular subscribers (000). . . 326 242 146 87 57 37 17
Employees . . . . . . . . . . . 75,780 77,326 77,334 78,510 77,538 74,883 77,514
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Substantial increase in operating expenses in 1994 is due to nonmanagement
work force restructuring charges of $728 million.

(3) Gives retroactive effect to all stock splits.

(4) Substantial reduction in total assets and shareownersG equity in 1994 is
due principally to the discontinuance of FAS 71.

(5) Return on average equity and return on average total capital are calculated
using weighted average monthly amounts.

25
<PAGE> 3

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

(dollars in millions, except per share amounts)

OVERVIEW

The following discussion reflects the historical view of the company with a
view toward the future.

In 1994, several key initiatives were successfully implemented which better
positioned the company for competition. These included: adoption of accounting
for competitive enterprises after receiving price regulation in our five
states, the benefits of work force restructuring, and approval in December to
construct a video dial tone network. The company determined that, due to its
changed regulatory environment and emerging competition, it should discontinue
use of accounting rules for regulated companies and adopt accounting rules
applicable to competitive enterprises. As a result, an extraordinary after-tax
noncash charge of $2.2 billion ($4.07 per share) was recorded, as net fixed
assets were deemed to be underdepreciated due primarily to unrealistic
depreciation lives assigned by regulators (see page 30). Going forward, the
company's financial statements reflect more realistic estimates of depreciable
lives and conventional accounting rules.

[LINE GRAPH]
ACCESS LINE GROWTH
(in percent)

1994 was also the first full year of operating under an organizational
strategy that assigns each customer to a business unit. Previously, the company
structured its business around geographically based subsidiaries (Illinois
Bell, Ohio Bell, etc.) through which it continues to raise capital. The company
believes it operates in only one industry segment, telecommunications. However,
by assigning customers to specific business units, customer service and cost
effectiveness are enhanced. Specifically, business unit reengineering enabled a
reduction in the company's core landline telephone business work force of about
11,500 employees. Although this required an after-tax restructuring charge of
$455.8 million in 1994, it positioned the company for lower future operating
costs, as discussed more fully on page 29.

1994 earnings, when normalized for the aforementioned extraordinary item
and restructuring charges, coupled with a write-down of certain assets
(discussed on page 29) by $61.3 million after-tax, were $1,687.6 million or
$3.07 per share. This compares to normalized 1993 earnings of $1,488.4 million
or $2.74 per share. This is an increase in earnings of $199.2 million, or
13.4%, and an increase in earnings per share of $.33 per share or 12.0%.
Normalized items in 1993 relate to a gain from the sale of New Zealand Telecom
shares and the company's share of a restructuring charge at that company.
Reported earnings were a loss of $1,063.6 million, or $1.94 per share in 1994,
and net income of $1,512.8 million in 1993 or $2.78 per share. Cash provided by
operations increased to $3,429.8 million in 1994 from $3,188.6 million in 1993,
an increase of $241.2 million, or 7.6%.

The strong Midwest economy provided a catalyst for the companys success in
1994. Core business operations continued to show strong results with landline
telephone business revenues increasing 4.5% to $9.6 billion. A major portion of
that growth reflects marketing success for custom calling features such as
caller ID and call waiting. Access line growth was 3.9% in 1994, resulting in
part from second line additions as residences installed fax machines, modems
and other uses. Cellular customers increased by 51.0% from a year ago.
Advertising and promotion costs incurred throughout the business in 1994 were
$242.5 million and $204.4 million in 1993 and assisted revenue growth.

International investments represent 5.4% of the company's assets at
December 31, 1994. Such investments are accounted for by using the equity
method of accounting, as required by generally accepted accounting principles
and, accordingly, do not contribute to recorded revenues of the company. The
company's allocable share of the operating results of its international
investments is included in other income in the company's consolidated statement
of income. The company estimates its pro rata share of revenues in 1994 from
these international investments at about US$550 million. The company believes
these investments will continue to enhance net income. Management has adopted a
general strategy of forming strategic alliances with partners in its foreign
investments to mitigate risk and share expertise.

In May 1994, $472.5 million was invested in the form of a loan to a
General Electric Company (GE) subsidiary that provides sophisticated electronic
commerce, which is a high-growth market. The loan converts to a 30% equity
position if certain regulatory relief is granted to the company. Currently, the
investment yields the company a return in the form of interest income. However,
upon conversion, the company will record 30% of the income of that GE
subsidiary, which will be reduced by amortization of intangibles resulting from
assuming an equity position in that company. Accordingly, after conversion
Ameritech earnings may initially not be enhanced; however, long-term
expectations are for significant growth in electronic commerce.

26
<PAGE> 4

Management's long-term goal is double-digit growth in revenues and
earnings. In December, Ameritech's Board of Directors approved a 4.2% increase
in the quarterly dividend and extended the authorization to repurchase shares
of Ameritech stock over the next three years.

Over the past 11 years, the company has produced a total return on its
shareowners' investment of 601%, significantly greater than that of the S&P
500. Long-term, above average shareowner return remains a key financial goal.

The following discusses Ameritech's financial condition and results of
operations over the past three years. The discontinuation of certain regulated
accounting practices in 1994, as well as accounting changes for postretirement
and postemployment costs in 1992, resulted in a net loss in 1994 and 1992.

RESULTS OF OPERATIONS

REVENUES Total revenues increased by 5.9% to $12.6 billion in 1994. This
increase was primarily attributable to higher landline telephone network usage
resulting from access line growth, growth in custom calling features and
increases in switched access minutes of use and toll messages, as well as
volume-related increases in the cellular business due to subscriber growth.
Rate reductions implemented as a result of various state regulatory agreements
for landline telephone services, primarily in the network access revenue
categories, partially offset these increases.

[LINE GRAPH]
REVENUE GROWTH
(in percent)

In 1993, total revenues increased 5.1% to $11.9 billion due to higher
network usage and increased cellular communications and information systems
sales, partially offset by rate reductions and refunds.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
<S> <C> <C> <C> <C>
Local service . . . . . . . . . . . . . . . . . . . . . $ 5,337.0 $ 5,065.3 $ 271.7 5.4
</TABLE>

Local service revenues include basic monthly service fees and usage charges,
fees for custom-calling features, public phone revenues and installation and
connection charges. Local services rates generally have been regulated by the
state public service commissions. Through regulatory proceedings in Illinois,
Indiana and Ohio and legislation in Wisconsin, price regulation was achieved in
1994. Price regulation was previously achieved in Michigan. In exchange for
certain regulatory freedoms, the company agreed to certain rate reductions and
moratoriums on price increases for two to six years. Rate reductions will
affect 1995 revenues by about $165 million. All intrastate limits on earnings
have been removed.

Higher network usage increased local service revenues by $252.4
million during 1994. The increase in calling volumes principally resulted from
3.9% growth in the number of access lines, fueled by second line additions as
well as greater sales of custom calling features. The increase was also
attributable to a change in the method in which independent company settlements
were recorded in Illinois, which accounted for $20.9 million of the increase,
and the impact of $11.3 million from the new Extended Community Calling plan
(ECC) in Wisconsin, which reclassified portions of long-distance usage to local
service usage. These increases were partially offset by net rate reductions of
$8.3 million.

In 1993, local service revenues increased $52.8 million or 1.1%.
Higher network usage, which increased local service revenues by $179.1 million,
resulted principally from access line growth of 3.3%. Partially offsetting this
increase was a reclassification of $119.9 million to the long-distance revenue
category in Michigan.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Network access
Interstate access . . . . . . . . . . . . . . . . $ 2,217.7 $ 2,118.2 $ 99.5 4.7
Intrastate access . . . . . . . . . . . . . . . . $ 612.4 $ 622.5 $ (10.1) (1.6)

</TABLE>
Network access revenues are fees charged to interexchange carriers, such as
AT&T and MCI, that use the company's local telecommunications 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 revenues increased $99.5 million in 1994 due
primarily to higher network usage, which resulted in additional revenues of
$149.0 million, as well as reductions in National Exchange Carrier Association
(NECA) support payments of $44.8 million. Revenue sharing accrual differences
contributed $8.5 million to the 1994 revenue increases. These increases were
partially offset by rate reductions of $100.0 million. Minutes of use related
to interstate calls increased by 6.4%.

Interstate network access revenues increased $77.0 million in 1993 due
primarily to increased network usage, which produced revenues of $101.0
million, partially offset by rate

27
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS

reductions. Minutes of use related to interstate calls increased by 4.5% in
1993.

Intrastate network access revenues decreased $10.1 million in 1994. This
decrease was primarily attributable to net rate reductions of $69.8 million,
partially offset by increased revenues of $59.3 million primarily attributable
to higher network usage. Minutes of use related to intrastate calls increased
by 12.7%.

In 1993 intrastate network access revenues increased $9.9 million or 1.6%
due primarily to increased network usage, which produced revenues of $36.6
million, partially offset by rate reductions. Minutes of use related to
intrastate calls increased 11.3%.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Long-distance . . . . . . . . $ 1,456.0 $ 1,400.5 $ 55.5 4.0
</TABLE>

Long-distance revenues are derived from customer calls to locations outside of
the local calling area but within the same service area. The increase in
long-distance revenues for 1994 was attributable to a change in the method in
which independent company settlements were recorded in Illinois, which
accounted for $57.1 million of the increase, and volume related increases of
$29.7 million. Partially offsetting these increases was the impact from the ECC
plan in Wisconsin (previously discussed) which reclassified certain
long-distance usage to lower-priced local service usage. The ECC plan
effectively lowered 1994 long-distance revenues by $31.0 million.
In 1993, long-distance revenues increased $148.9 million or 11.9%
attributable to volume growth and the reclassification of certain local service
revenues in Michigan (previously discussed).

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Directory, cellular
and other . . . . . . . $ 2,946.4 $ 2,658.2 $ 288.2 10.8
</TABLE>

Directory, cellular and other revenues include telephone directory publishing,
cellular communications, paging services, lease financing, billing and
collection services, and telephone equipment sales and installation.

1994 revenue growth was primarily attributable to cellular and paging
subscriber growth of 51.0% and 24.0%, respectively. Also contributing to the
increase was demand growth and price increases in other nonregulated services,
such as inside wire maintenance at the landline telephone subsidiaries and
revenue growth in the directory business.

In 1993, directory, cellular and other revenues increased $291.4 million
or 12.3%. This increase was primarily attributable to cellular subscriber
growth of 46.8% and increased information systems sales.

OPERATING EXPENSES Total operating expenses in 1994 increased $1,233.7 million
or 13.3% from 1993. This increase was primarily attributable to restructuring
charges of $728.1 million in 1994, as well as increases in advertising
expenses, access charges and contract and professional services. Also
contributing to the increase were additional expenses related to growth in the
cellular business, as well as a charge of $69.3 million ($61.3 million
after-tax) for certain real estate and other assets which the company is
selling or no longer plans to use in the business.

[LINE GRAPH]
REVENUE PER EMPLOYEE
(in thousands of dollars)

Total operating expenses in 1993 increased $365.8 million or 4.1%
from 1992. The increase was due primarily to increased depreciation and
amortization expense reflecting an expanded plant base and higher rates, and
increased cost of sales from cellular and information systems due to growth.
Partially offsetting these increases were decreased employee-related expenses
due to work force reductions that occurred in 1992.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Employee-related
expenses . . . . . . . $ 3,612.3 $ 3,560.3 $ 52.0 1.5
</TABLE>

The increase in employee-related expenses in 1994 was primarily attributable to
the effects of higher wage rates, increased overtime payments, higher incentive
accruals and postretirement benefits. Partially offsetting the increases were
the effects of work force reductions over the past year and increased pension
credits of $99.2 million.

In 1993, employee-related expenses decreased $24.5 million or 0.7%.
The decrease was primarily attributable to the effect of work force reductions
in 1993, partially offset by the effects of higher wage rates, increased
overtime payments and increased costs related to postretirement benefits.

There were 63,594 employees at December 31, 1994, compared with
67,192 at December 31, 1993. Work force restructuring at the landline telephone
subsidiaries resulted in a net decline of about 6,000 employees. This decrease
was partially offset by new employees at the cellular business and the added
work force resulting from an alarm monitoring company acquired in December
1994.

28
<PAGE> 6

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Depreciation and
amortization . . . . . . . $ 2,204.7 $ 2,162.1 $ 42.6 2.0
</TABLE>

The increase in depreciation and amortization expense in 1994 resulted from
continued expansion of the telephone plant investment base of $27.0 million,
growth-related increases in the company's cellular business of $22.0 million,
and $14.8 million due to increased interstate rates in Illinois. Effective in
the fourth quarter of 1994, the company discontinued the application of FAS 71,
which slowed the increase in depreciation expense (see page 30).

In 1993, depreciation and amortization expense increased $130.8
million or 6.4%. The increase in 1993 was due to continued expansion of the
plant investment base, growth at the company's cellular business, and increased
depreciation rates, primarily in Ohio, partially offset by the completion of
certain fixed asset amortization adjustments in Ohio and Wisconsin.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- -------
<S> <C> <C> <C> <C>
Other operating
expenses . . . . . . . . . . $ 3,418.2 $ 3,006.0 $ 412.2 13.7
</TABLE>

The increase in other operating expenses in 1994 was primarily attributable to
increased contract and professional services, a change in the method in which
access expenses are recorded in Illinois with independent telephone companies,
increased advertising at cellular and landline telephone subsidiaries and
growth-related cost of sales in the cellular and information systems sales.
Increased uncollectibles contributed $28.8 million to the increase, which
results in part from higher revenues. In addition, this cost category includes
the $69.3 million charge for the reduction in certain asset values, primarily
real estate, previously discussed. The increase was moderated by a net credit
of $55.5 million from a management separation program. The credit results from
pension settlement and curtailment gains exceeding severance costs.

Other operating expenses increased 9.7% or $266.6 million in 1993. This
increase was primarily attributable to increased contract services,
right-to-use fees for switching system software, access charges paid to
independent telephone companies, advertising expenses and an accrual to further
streamline the nonmanagement work force. Also contributing to the increase were
increases in cost of sales at the cellular and information system sales
operations. Partially offsetting the increase were several 1992 items including
a $47.0 million charge for market realignment and $8.0 million for the net
write-down of certain unregulated assets. 1993 results also included a net
credit of $33.3 million resulting from settlement and curtailment gains from
the pension plan, net of special termination benefits, under work force
separation programs.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Restructuring charges . . . . . $ 728.1 $ -- $ 728.1 n/a
</TABLE>

As discussed more fully in Note 6 to the consolidated financial statements, the
company announced on March 25, 1994, that it intended to reduce its existing
nonmanagement work force by 6,000 employees by the end of 1995. Reduction of
the work force results from the company's implementation of technological
improvements, consolidations and initiatives to balance its cost structure with
emerging competition. The company now expects its nonmanagement work force to
be reduced by about 11,500 employees through 1995 instead of the 6,000
originally estimated in March. Charges related to the original 6,000 employees
were recorded in the first quarter, and additional charges, net of settlement
gains, were recorded in the third and fourth quarters to reflect acceptance of
the plan by the additional employees. After recording offsetting noncash
settlement gains of $342.0 million associated with lump-sum pension payments
through December 31, 1994, total restructuring charges recorded in 1994 were
$728.1 million. Additional settlement gains (estimated at $300 million) are
anticipated in the future.

The 1994 program was recorded by quarter as follows:

<TABLE>
<CAPTION> Net
Gross Program Cost
Program Settlement ---------------------------
Quarter Cost Gains Pretax After-tax
- -------- ------ --------- --------- ---------
<S> <C> <C> <C> <C>
First . . . . . . . . . . . . $ 530.0 $ -- $ 530.0 $ 332.8
Second. . . . . . . . . . . . -- -- -- --
Third . . . . . . . . . . . . 392.0 121.9 270.1 168.2
Fourth. . . . . . . . . . . . 148.1 220.1 (72.0) (45.2)
----- ----- ------- -------
Totals. . . . . . . . . . . . $ 1,070.1 $ 342.0 $ 728.1 $ 455.8
</TABLE>

Actual employee reductions by quarter in 1994 were: 1,595 in the second
quarter, 2,281 in the third quarter and 5,239 in the fourth quarter. Estimates
for 1995 are 290 in the first quarter, 900 in the second quarter and 1,195 in
the third quarter. Cash requirements of the company to fund the financial
incentives (principally contractual termination payments totaling approximately
$246.8 million) are being met as prescribed by applicable collective bargaining
agreements. Certain of these collective bargaining agreements require
contractual termination payments to be paid in a manner other than lump-sum,
thus requiring cash payments beyond an employee's termination date.
The company believes this program will reduce its annual employee-related
costs by approximately $50,000 per departing employee. The projected savings
will be partially offset by the hiring of new employees with better matched
skills to accommodate growth, ensure high quality customer service and meet
staffing requirements for new business opportunities.

29
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ------------ ------
<S> <C> <C> <C> <C>
Taxes other than
income taxes . . . . . . $ 576.9 $ 578.1 $ (1.2) (0.2)
</TABLE>

The decrease in taxes other than income taxes was primarily attributable to
decreases in property taxes in Michigan as a result of state legislation
enacted in December 1993, which reduced the property valuation upon which the
company is taxed. Gross receipts and capital stock taxes also decreased by $8.6
million. These decreases were offset by property tax increases in other states.
In 1993, taxes other than income taxes decreased $7.1 million or 1.2%.
This decrease was primarily attributable to lower capital stock taxes and
decreased property taxes.

OTHER INCOME AND EXPENSES

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Interest expense . . . . . . . $ 434.8 $ 453.0 $ (18.2) (4.0)
</TABLE>

The decrease in interest expense during 1994 was due primarily to the calling
of certain long-term debt in 1993. This called debt was refinanced in part at
lower long-term interest rates and by instruments with lower short-term
interest rates as compared with the original called debt. Also contributing to
the decrease was the full year impact of the application of proceeds from the
sale of New Zealand Telecom shares in July 1993 and lower interest charges
related to corporate-owned life insurance programs. Partially offsetting these
decreases were increases related to the funding of the company's investment of
$437.5 million in the Hungarian telecommunications company, MATAV, in December
1993 and the company's May 1994 convertible debt investment of $472.5 million
in a newly formed subsidiary of GE. Also offsetting these decreases was the
effect of higher short-term interest rates throughout 1994.
During 1993, interest expense decreased $42.6 million or 8.6% due
primarily to the calling of certain long-term debt totaling $1.6 billion and
the refinancing at lower interest rates of $900.0 million of the called debt,
the effect of lower short-term interest rates and reduction of debt due to the
application of proceeds from the sale of the New Zealand Telecom shares.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Other income, net . . . . . . $ 146.9 $ 117.3 $ 29.6 25.2
</TABLE>

Other income, net includes earnings related to Ameritech's investments (when
the equity method of accounting is followed), interest income and other
nonoperating items.

Other income, net increased in 1994 as a result of certain nonrecurring
transactions reflected in 1993 results. 1993 results included $66.3 million in
costs (call premiums and unamortized deferred costs) incurred in connection
with the early extinguishment of debt. Partially offsetting these costs were
two items related to the company's investment in New Zealand Telecom. The
company realized an $85.7 million gain ($61.7 million after-tax) on the sale of
shares. Also, 1993 equity earnings were reduced by $42.0 million after giving
effect to a restructuring at New Zealand Telecom.
Other income, net decreased $8.0 million or 6.4% in 1993. The decrease
was primarily the result of lower equity earnings in New Zealand Telecom of
$29.0 million compared with $67.4 million in 1992 as a result of the $42.0
million New Zealand Telecom restructuring charge discussed above. The costs
related to the early extinguishment of debt were $66.3 million in 1993 compared
with $32.2 million in 1992. 1992 results also included $41.0 million in
interest income from an IRS settlement, which was nonrecurring in nature.

<TABLE>
<CAPTION>
Increase Percent
1994 1993 (Decrease) Change
---- ---- ---------- ------
<S> <C> <C> <C> <C>
Income taxes . . . . . . . . . $ 571.0 $ 709.7 $ (138.7) (19.5)
</TABLE>

The decrease in income taxes in 1994 was due primarily to lower pretax income
as a result of work force restructuring charges of $728.1 million ($455.8
million after-tax).
The increase in income taxes in 1993 was due primarily to higher pretax
income and an increase in the federal tax rate. The increase was partially
offset by higher investment tax credit amortization in Michigan due to a
revision of depreciation lives and the realization of previously unrecognized
tax benefits on prior year unregulated asset write-downs.

EXTRAORDINARY ITEM - FAS 71

As described in Note 2 to the consolidated financial statements, the company
discontinued applying Statement of Financial Accounting Standards No. 71 (FAS
71), "Accounting for the Effects of Certain Types of Regulation" in the fourth
quarter of 1994. The company determined that it no longer met the criteria for
following FAS 71 due to changes in the manner in which the company is regulated
and the heightened competitive environment. The accounting impact to the
company was an extraordinary noncash after-tax charge of $2.2 billion.
As a result of the discontinuation of applying FAS 71, the company
expects 1995 depreciation expense to approximate 1994 levels. The landline
telephone subsidiaries will experience a decrease in depreciation due to a
lower net plant base. This decrease will be largely offset by higher
depreciation in other businesses. Depreciation expense in 1996 and beyond will
likely be higher as the effects of shorter lives intensifies in the landline
telephone subsidiaries.

30
<PAGE> 8

Certain additional financial statement impacts occur as a result of no
longer following FAS 71. Specifically, future effective income tax rates are
expected to increase as a result of the elimination of excess deferred tax
balances previously amortized as a reduction to tax expense over the lives of
the related assets. In addition, business transactions will be recorded
following their economic substance, and regulatory assets and liabilities
pursuant to FAS 71 will no longer be recognized. The company also made certain
retroactive reclassifications to its consolidated statements of income to
conform to the presentation of unregulated enterprises. Specifically, the
provision for uncollectibles, previously shown as a reduction in other
revenues, has been reclassified to other operating expenses. Further, interest
during construction, previously a component of other income, has been
reclassified as a reduction of interest expense. These changes had no impact on
net income. Determination of future uncollectibles and capitalized interest
expense is not expected to change materially.
Although company recorded assets and net equity were substantially
reduced as a result of the discontinuance of application of FAS 71, no material
impact on future cash flows is anticipated. Further, income taxes, a major
expense of the company, will be payable by the company following the same
schedule and amounts as before. The rating agencies that report on the company
reviewed the company's assessment that no material future cash flow impact
results from discontinuance of FAS 71 and reaffirmed their credit ratings.

CHANGE IN ACCOUNTING PRINCIPLES

The company changed its accounting for income taxes effective January 1, 1993,
as required by FAS 109, "Accounting for Income Taxes." The impact of adoption
on the company's financial statements was not significant.
As more fully discussed in Note 6 to the consolidated financial
statements, effective January 1, 1992, the company adopted FAS 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and FAS 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
reported loss in 1992.

SIGNIFICANT BALANCE SHEET CHANGES

Certain amounts shown on the company's 1994 consolidated balance sheet are
substantially different from a year ago due to the following. First, the
effects from the discontinuance of FAS 71 (all noncash) resulted in lower
equity, net plant, deferred income taxes, and regulated assets and liabilities,
all of which are detailed in Note 2 to the consolidated financial statements.
Secondly, strong cash flow from operations facilitated a reduction in debt of
$346 million, even after investing $472.5 million with GE. Finally, the
company's FAS 106 obligation increased by about $360 million as a result of the
nonmanagement work force reduction.

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.

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flow from operations was $3,429.8 million in 1994, an increase of $241.2
million from 1993, primarily reflecting strong revenue gains partially offset
by an increase in receivables and other current assets.

[LINE GRAPH]
CASH FLOW FROM OPERATIONS
(in millions of dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures continue to represent
the single largest use of company funds. Management believes that investment in
the telecommunications core business will facilitate introduction of new
products and services, enhance responsiveness to ever increasing competitive
challenges and increase the operating efficiency and productivity of the
network.
Capital spending is being deployed based on customer needs and the
company's vision for the future. Investments in technologies that will enable
the company to provide customers with new products and services represent a
high priority. Capital spending in the core landline telephone business
declined by $265 million in 1993 and further declined by $100 million in 1994
as capital was deployed more cost effectively and with greater focus on the
requirements of customers. Further, capital spending decreased $45 million
compared with 1993 levels in the cellular business as its infrastructure
matures.
On December 23, 1994, the company received Federal Communications
Commission (FCC) approval of its plans to build a video dial tone network.
Substantial capital will be required in 1995 (about $300 million) and future
years to

31
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS

deploy this network for the company's entrance into interactive television
services. The company expects to invest approximately $4.4 billion over the
next 15 years (for network components such as fiber optics, servers, switches
and customer premises equipment) to deliver these new services. The company
believes it can fund a significant portion of this amount by continuing to
reduce capital expenditures in its core landline telephone business while
maintaining its current high quality of service to customers. The video dial
tone network, which is separate from Ameritech's core local communications
network, is initially expected to reach approximately 1.2 million customers in
Illinois, Indiana, Michigan, Ohio and Wisconsin by the end of 1996, and by the
year 2001, it is expected to reach six million customers. The company expects
to begin offering services to consumers by the end of 1995, providing them with
a competitive alternative to cable television. The company is also exploring a
variety of interactive services with many different suppliers and has made
investments in businesses offering home shopping services and on-line travel
services. Ameritech also has announced its intention to create a joint venture
with The Walt Disney Company, SBC Communications and BellSouth Corporation to
develop interactive programming.
Rapid modernization of the landline telephone network
continued throughout 1994 as demonstrated by the following year-end
information.

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Lines served by digital switching . . . . . . . 74% 66%
Lines served by ISDN switching. . . . . . . . . 68% 50%
Lines served by advanced signaling (SS7). . . . 89% 75%
Customers within 12,000 feet of fiber . . . . . 85% 75%
Fiber-optic cable miles (000s). . . . . . . . . 919 802
</TABLE>

Cash flows from investing activities in 1994 also included a $472.5 million
investment in a newly formed subsidiary of GE and a return of capital from New
Zealand Telecom of $67.1 million.
Cash flows from investing activities in 1993 included $280.6 million
resulting from sales of a portion of the company's investment in New Zealand
Telecom. In addition, in 1993, the company invested $437.5 million for a 15%
share in MATAV.

CASH FLOWS FROM FINANCING AND OTHER ACTIVITIES

To take advantage of lower interest rates, the company completed debt
refinancings initiated in 1993 with the calling of certain outstanding debt
issues. Illinois Bell issued $200 million of long-term debt in early 1994 to
complete this refinancing. The company funded its GE investment principally by
issuing $450 million of new debt by Ameritech Capital Funding Corporation.

The company's debt ratio increased to 51.2% as of December 31, 1994,
compared with 46.0% as of December 31, 1993, primarily as a result of the $2.2
billion after-tax extraordinary charge which reduced equity.

DIVIDENDS The company paid dividends of $1,053.1 million in 1994. This was a
$53.7 million or 5.4% increase over 1993. The company believes that its
dividend policy is consistent with the need to provide shareowners an
appropriate return while providing the company with the necessary flexibility
to invest in a competitive environment.

FINANCING OPTIONS As of December 31, 1994, the company maintained available
lines of credit totaling $1.2 billion, a committed credit facility of $1.0
billion and shelf registrations for issuance of up to $1.2 billion in unsecured
debt securities.

HEDGING Ameritech will on occasion use hedging transactions to manage the
foreign currency risk resulting from the cash flows of the company's
international investments. There were no material hedging transactions in 1994.
In both 1993 and 1992, the company purchased currency forward contracts on the
New Zealand currency in order to eliminate currency risk on anticipated
proceeds from the required sell-down of shares of New Zealand Telecom.

FUNDING FOR POSTRETIREMENT BENEFITS Among the initiatives taken by the company
to contain its 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
$1.2 billion in assets to fund these benefits. The company intends to continue
to fund the nonmanagement trust 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 company did not make any
transfers in 1994 and has not determined whether it will make any future
transfers.

STOCK REPURCHASE PROGRAM The company's Board of Directors has periodically
authorized management to repurchase shares of Ameritech common stock in the
open market or through private transactions. As of December 31, 1994,
management has the authority to repurchase up to 20 million shares through
1997. No significant purchases were made during the three years ended December
31, 1994.

OTHER MATTERS

REGULATORY ENVIRONMENT During 1994 the company became the first regional
company to completely replace rate of return regulation with price regulation
throughout its region. The

32
<PAGE> 10

various state price regulation plans eliminate the company's obligation to
share earnings with customers and allow the company greater flexibility to vary
prices to meet the needs of a competitive marketplace. The plans also provide
the company additional freedom in establishing intrastate depreciation rates by
either eliminating or suspending commission oversight over depreciation, or by
allowing the company to establish depreciation rates within a range of rates.
Certain of the plans relax commission requirements for price changes and new
service introductions. In return for these freedoms, the company agreed to
reduce the rates for some services and "cap" the rates of certain basic
services for a specified period of time. The company also committed to invest
to improve the telecommunications infrastructure in each state.
The marked trend toward increased local exchange competition across the
region accelerated during 1994 with competitive access providers seeking and
procuring full service certification -- MFS Communications Company, Inc. and
Teleport Communications Group, Inc. in Chicago and US Signal in Grand Rapids.
At the close of the year, additional certification requests were pending in
Chicago (MCI), Detroit (MCI, MFS and Teleport), Indianapolis (MCI), Cleveland
and Columbus (MCI and MFS) and Dayton (MCI), as well as several counties in
Ohio (Time Warner). In addition, both MCI and a Teleport/TCI/Motorola
consortium have announced a trial of cable and local exchange service in
Illinois.
Ameritech's regulatory and public policy activities remain focused on
achieving a framework that allows for expanding competition while providing a
fair opportunity for all carriers, including the company, to succeed. The
cornerstone of this effort remains the Ameritech Customers First Plan which was
filed with the FCC and the U.S. Department of Justice (DOJ) in 1993, and in the
State of Illinois early in 1994.
The Plan proposes a facilitation of local exchange competition in exchange
for three regulatory freedoms. First, the company has requested relief from the
Modification of Final Judgment long-distance ban. A proposal to allow the
company to offer all long-distance services on a trial basis is currently being
reviewed by the DOJ. Second, the company has requested a number of
modifications to the current FCC price cap rules. These modifications would
apply only to the company and would eliminate any obligation on its part to
refund, in the form of future rate reductions, interstate earnings in excess of
12.25%. The modifications would also provide the company increased ability to
price its interstate access services in a manner appropriate to competitive
conditions. Third, the company has requested FCC authority to collect, in a
competitively neutral manner, the social subsidies currently embedded in the
rates that the company charges long-distance carriers for access to the local
network.
The company is seeking the recommendations and approvals to offer
long-distance services in 1995 from the DOJ and the Illinois Commerce
Commission (ICC), and an order from the U.S. District Court thereafter.

[LINE GRAPH]
YEAR-END STOCK PRICE
(in dollars, adjusted for stock splits)

84 85 86 87 88 89
- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
12.75 17.75 22.00 21.13 23.88 34.00

90 91 92 93 94
- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C>
33.38 31.75 35.63 38.38 40.38

</TABLE>

The company has continued to implement price reforms and service
initiatives that will enhance the company's ability to compete effectively both
now and in the future. In both the federal and state jurisdictions the company
has expanded its ability to "deaverage" the prices of its services and
increased the number of services which offer volume and term discount plans.
Deaveraging means that prices charged in specific areas (for example, downtown
Chicago) can be more reflective of local competitive conditions. These pricing
reforms are essential for the company to compete effectively as the FCC
implemented requirements in 1994 resulting in more liberal interconnection by
competitors to the company's network.

BUSINESS UNITS Although the company continues to operate solely in the
telecommunications industry segment, it restructured its business in 1993 into
separate units supported by a single network unit. The units cross current
legal entities. The business units became fully operational in 1994, serving
customers in the units specified below. Revenues by business unit are as
follows:

<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Consumer . . . . . . . . . . . . . . . . . 33% 33%
Custom, enhanced and small business. . . . 28 29
Long distance* . . . . . . . . . . . . . . 16 17
Advertising. . . . . . . . . . . . . . . . 8 8
Cellular, including paging . . . . . . . . 7 5
All other. . . . . . . . . . . . . . . . . 8 8
---- ----
Total . . . . . . . . . . . . . . . . 100% 100%
</TABLE>
* Long distance as a business unit closely relates to the revenue categories
of interstate and intrastate network access, excluding end user
charges.

33
<PAGE> 11

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, 1994
and 1993, and the related consolidated statements of income, shareowners'
equity and cash flows for each of the three years in the period ended December
31, 1994. 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, 1994 and 1993, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the consolidated financial statements, the
company discontinued applying the provisions of Statement of Financial
Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation," in 1994. As discussed in Note 6, the company changed its method of
accounting for certain postretirement and postemployment benefits in 1992.

ARTHUR ANDERSEN LLP
Chicago, Illinois

February 3, 1995

34
<PAGE> 12

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME
Ameritech Corporation and Subsidiaries

<TABLE>
<CAPTION>
Year ended December 31
----------------------------------------------------
(dollars in millions, except per share amounts) 1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES . . . . . . . . . . . . . . . . . . . . $ 12,569.5 $ 11,864.7 $ 11,284.7
OPERATING EXPENSES
Employee-related expenses . . . . . . . . . . 3,612.3 3,560.3 3,584.8
Depreciation and amortization . . . . . . . . 2,204.7 2,162.1 2,031.3
Other operating expenses . . . . . . . . . . . 3,418.2 3,006.0 2,739.4
Restructuring charges . . . . . . . . . . . . 728.1 -- --
Taxes other than income taxes . . . . . . . . 576.9 578.1 585.2
-------- --------- ---------
10,540.2 9,306.5 8,940.7
-------- --------- ---------
OPERATING INCOME . . . . . . . . . . . . . . . . 2,029.3 2,558.2 2,344.0
Interest expense . . . . . . . . . . . . . . . . 434.8 453.0 495.6
Other income, net . . . . . . . . . . . . . . . . (146.9) (117.3) (125.3)
-------- --------- ---------
Income before income taxes, extraordinary item
and cumulative effect of change in
accounting principles . . . . . . . . . . . . 1,741.4 2,222.5 1,973.7
Income taxes . . . . . . . . . . . . . . . . . . 571.0 709.7 627.7
-------- --------- ---------
Income before extraordinary item and cumulative
effect of change in accounting principles . . 1,170.4 1,512.8 1,346.0
Extraordinary item . . . . . . . . . . . . . . . (2,234.0) -- --
Cumulative effect of change
in accounting principles . . . . . . . . . . . -- -- (1,746.4)
-------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . $ (1,063.6) $ 1,512.8 $ (400.4)
-------- --------- ---------
EARNINGS (LOSS) PER COMMON SHARE
Income before extraordinary item and
cumulative effect of change in accounting
principles . . . . . . . . . . . . . . . . $ 2.13 $ 2.78 $ 2.51
Extraordinary item . . . . . . . . . . . . . . (4.07) -- --
Cumulative effect of change in accounting
principles . . . . . . . . . . . . . . . . . -- -- (3.26)
-------- --------- ---------
NET INCOME (LOSS) . . . . . . . . . . . . . . $ (1.94) $ 2.78 $ (0.75)
-------- --------- ---------
Average common shares outstanding (millions) . . 549.2 544.1 536.6
-------- --------- ---------
</TABLE>

The accompanying notes are an integral part of the financial statements.

35
<PAGE> 13

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
Ameritech Corporation and Subsidiaries

<TABLE>
<CAPTION>
As of December 31
--------------------------------
(dollars in millions) 1994 1993
----------- -------------
<S> <C> <C>
ASSETS
Current assets
Cash and temporary cash investments . . . . . . . . . $ 73.7 $ 155.9
Receivables, less allowance for uncollectibles of
$147.3 and $134.7, respectively . . . . . . . . . . 2,300.0 2,068.9
Material and supplies . . . . . . . . . . . . . . . . 203.7 133.7
Prepaid and other . . . . . . . . . . . . . . . . . . 313.2 268.2
----------- ----------
2,890.6 2,626.7
----------- ----------
Property, plant and equipment
In service. . . . . . . . . . . . . . . . . . . . . . 29,200.4 28,677.3
Under construction. . . . . . . . . . . . . . . . . . 345.3 440.1
----------- ----------
29,545.7 29,117.4
Less, accumulated depreciation. . . . . . . . . . . . 16,091.2 11,751.3
----------- ----------
13,454.5 17,366.1
----------- ----------
Investments, primarily international . . . . . . . . . . 1,197.0 1,170.2
----------- ----------
Other assets and deferred charges. . . . . . . . . . . . 2,404.7 2,264.7
----------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . $ 19,946.8 $ 23,427.7
----------- ----------

LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities
Debt maturing within one year . . . . . . . . . . . . $ 1,898.3 $ 2,601.6
Accounts payable. . . . . . . . . . . . . . . . . . . 1,546.3 1,210.6
Other . . . . . . . . . . . . . . . . . . . . . . . . 1,711.5 1,873.1
----------- ----------
5,156.1 5,685.3
----------- ----------
Long-term debt . . . . . . . . . . . . . . . . . . . . . 4,447.9 4,090.4
----------- ----------
Deferred credits and other long-term liabilities
Accumulated deferred income taxes . . . . . . . . . . 611.0 1,889.4
Unamortized investment tax credits. . . . . . . . . . 255.8 354.3
Postretirement benefits other than pensions . . . . . 2,915.0 2,519.7
Other . . . . . . . . . . . . . . . . . . . . . . . . 505.9 1,044.0
----------- ----------
4,287.7 5,807.4
----------- ----------
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 . . . . . . . . . . . 5,520.9 5,454.8
Reinvested earnings . . . . . . . . . . . . . . . . . 1,325.3 3,455.3
Treasury stock, at cost (36,150,000 shares in 1994
and 40,969,000 in 1993) . . . . . . . . . . . . . . (977.0) (1,105.0)
Deferred compensation . . . . . . . . . . . . . . . . (396.0) (468.5)
Currency translation adjustments. . . . . . . . . . . (15.9) (76.3)
Other, net. . . . . . . . . . . . . . . . . . . . . . 10.2 (3.3)
----------- ----------
6,055.1 7,844.6
----------- ----------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY . . . . . . . $ 19,946.8 $ 23,427.7
----------- ----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

36
<PAGE> 14

CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
AMERITECH CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
Shareowners' Equity
---------------------------------------------------------------------------------------
Common Treasury
Proceeds in Currency Shares Common
Common Excess of Reinvested Treasury Deferred Translation Other, Issued Shares
(dollars in millions) Total Stock Par Value Earnings Stock Compensation Adjustments net (000) (000)
- --------------------- ----- ------ --------- ---------- -------- ------------ ----------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances,
December 31, 1991. . . $ 8,097.0 $ 587.6 $ 5,347.0 $ 4,312.7 $ (1,462.0) $ (569.2) $ (98.2) $ (20.9) 587,612 54,346
Net loss . . . . . . . . (400.4) (400.4)
Dividends declared
($1.78 per share) . . (956.6) (956.6)
Treasury Stock
Purchases . . . . . . (0.5) (0.5) 16
Issuances
Employee benefit plans 87.5 3.6 83.9 (3,162)
Dividend reinvestment
and stock purchase
plan. . . . . . . . 118.0 20.8 97.2 (3,610)
Other. . . . . . . . 8.7 0.1 8.6 (322)
Reduction of LESOP debt. 61.5
Other. . . . . . . . . . 16.6 6.5 61.5 10.1
Translation adjustments. (39.6) (39.6)
--------- ------- --------- --------- -------- -------- ------- ----- ------- ------

Balances,
December 31, 1992. . . 6,992.2 587.6 5,378.0 2,955.7 (1,272.8) (507.7) (137.8) (10.8) 587,612 47,268
Net income . . . . . . . 1,512.8 1,512.8
Dividends declared
($1.86 per share) . . (1,013.2) (1,013.2)
Treasury Stock
Purchases . . . . . . (1.9) (1.9) 53
Issuances
Employee benefit plans 109.5 23.9 85.6 (3,230)
Dividend reinvestment
and stock purchase
plan. . . . . . . . 122.2 38.2 84.0 (3,118)
Other. . . . . . . . 0.1 0.1 (4)
Reduction of LESOP debt. 39.2 39.2
Other. . . . . . . . . . 22.2 14.7 7.5
Translation adjustments. 61.5 61.5
--------- ------- --------- --------- -------- -------- ------- ----- ------- ------

Balances,
December 31, 1993. . . 7,844.6 587.6 5,454.8 3,455.3 (1,105.0) (468.5) (76.3) (3.3) 587,612 40,969
Net loss . . . . . . . . (1,063.6) (1,063.6)
Dividends declared
($1.94 per share) . . (1,066.4) (1,066.4)
Treasury Stock
Purchases . . . . . . (3.6) (3.6) 88
Issuances
Employee benefit plans 36.0 5.0 31.0 (1,179)
Dividend reinvestment
and stock purchase
plan. . . . . . . . 149.9 49.6 100.3 (3,715)
Other. . . . . . . . (0.7) (1.0) 0.3 (13)
Reduction of LESOP debt. 72.5 72.5
Other. . . . . . . . . . 26.0 12.5 13.5
Translation adjustments. 60.4 60.4
--------- ------- --------- --------- -------- -------- ------- ----- ------- ------

Balances,
December 31, 1994. . . $ 6,055.1 $ 587.6 $ 5,520.9 $ 1,325.3 $ (977.0) $ (396.0) $ (15.9) $ 10.2 587,612 36,150
--------- ------- --------- --------- -------- -------- ------- ----- ------- ------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE> 15

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS
AMERITECH CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
Year ended December 31
----------------------------------------------
(dollars in millions) 1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) . . . . . . . . . . . . . . . . $ (1,063.6) $ 1,512.8 $ (400.4)
Adjustments to net income (loss)
Extraordinary item . . . . . . . . . . . . . . . 2,234.0 -- --
Cumulative effect of change in. . . . . . . . . .
accounting principles -- -- 1,746.4
Restructuring charges, net of tax . . . . . . . . 455.8 -- --
Depreciation and amortization . . . . . . . . . . 2,204.7 2,162.1 2,031.3
Deferred income taxes, net. . . . . . . . . . . . 69.6 (9.6) 2.6
Investment tax credits, net . . . . . . . . . . . (52.2) (74.4) (64.3)
Interest during construction. . . . . . . . . . . (13.3) (11.3) (7.6)
Provision for uncollectibles. . . . . . . . . . . 183.1 154.3 131.7
Change in accounts receivable . . . . . . . . . . (407.4) (227.8) (32.3)
Change in material and supplies . . . . . . . . . (76.3) 17.3 (3.6)
Change in other current assets. . . . . . . . . . (30.2) (25.0) (4.7)
Change in accounts payable. . . . . . . . . . . . 331.8 (114.5) 131.3
Change in certain other current liabilities . . . (159.4) 139.3 (115.3)
Change in certain noncurrent assets
and liabilities . . . . . . . . . . . . . . . . (276.8) (333.1) (112.7)
Gain from sale of shares in Telecom
Corporation of New Zealand Limited. . . . . . . . -- (85.7) --
Other . . . . . . . . . . . . . . . . . . . . . . 30.0 84.2 (14.1)
-------- -------- -------
NET CASH FROM OPERATING ACTIVITIES 3,429.8 3,188.6 3,288.3
-------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures, net . . . . . . . . . . . . (1,876.6) (2,092.4) (2,236.5)
Additional investments including acquisitions
of new companies. . . . . . . . . . . . . . . . (589.6) (471.2) (31.8)
Proceeds from sale of shares in
Telecom Corporation of New Zealand Limited. . . -- 280.6 --
Other investing activities, net . . . . . . . . . 74.0 3.2 (10.2)
-------- -------- -------
Net cash from investing activities. . . . . . . . (2,392.2) (2,279.8) (2,278.5)
-------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in short-term debt . . . . . . . . . . (416.2) 493.4 (55.7)
Issuance of long-term debt. . . . . . . . . . . . 645.3 925.1 649.1
Retirement of long-term debt. . . . . . . . . . . (568.7) (1,458.4) (807.1)
Dividend payments . . . . . . . . . . . . . . . . (1,053.1) (999.4) (942.7)
Repurchase of common stock. . . . . . . . . . . . (3.6) (0.4) (0.5)
Proceeds from reissuance of treasury stock. . . . 187.7 226.4 209.7
Issuance of preferred stock in subsidiary . . . . 85.0 -- --
Other financing activities, net . . . . . . . . . 3.8 (32.0) 4.5
-------- -------- -------
NET CASH FROM FINANCING ACTIVITIES. . . . . . . . (1,119.8) (845.3) (942.7)
-------- -------- -------
Net increase (decrease) in cash and temporary
cash investments. . . . . . . . . . . . . . . . . (82.2) 63.5 67.1
Cash and temporary cash investments,
beginning of year . . . . . . . . . . . . . . . . 155.9 92.4 25.3
-------- -------- -------
Cash and temporary cash investments, end of year . . $ 73.7 $ 155.9 $ 92.4
-------- -------- -------
</TABLE>

The accompanying notes are an integral part of the financial statements.

38
<PAGE> 16

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 (Ameritech or the company) and all of its majority-owned
subsidiaries. All significant intercompany transactions have been eliminated.

BASIS OF ACCOUNTING The consolidated financial statements have been prepared in
accordance with generally accepted accounting principles (GAAP). In the fourth
quarter of 1994, Ameritech discontinued accounting for its landline telephone
subsidiaries under Statement of Financial Accounting Standards No. 71 (FAS 71),
"Accounting for the Effects of Certain Types of Regulation" (see Note 2). The
Ameritech landline telephone subsidiaries 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
principally at original cost. 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. As a result of the discontinuation of applying FAS 71 in 1994,
the company recognized shorter, more economically realistic lives and increased
its accumulated depreciation balance by $3.7 billion (see Note 2).
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 FAS 109, "Accounting
for Income Taxes." The new accounting method is essentially a refinement of the
liability method previously followed by the company and, accordingly, did not
have a significant impact on the company's financial statements upon adoption.
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 landline telephone subsidiaries 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.

RECLASSIFICATIONS The company has made certain reclassifications to its
financial statements. The more significant ones are as follows. The company's
provision for uncollectibles, previously shown as a reduction in other
revenues, has been reclassified to other operating expenses. Further, interest
capitalized during construction, previously a component of other income, has
been reclassified to reduce interest expense. These changes have been applied
retroactively and were made to correspond to financial reporting for
unregulated enterprises.

2. DISCONTINUATION OF REGULATORY ACCOUNTING - FAS 71

On a regular basis management has evaluated the continued applicability of FAS
71. In the fourth quarter of 1994, having achieved price regulation in all five
states in which it operates and recognizing increased competition, the company
concluded that GAAP prescribed by FAS 71 was no longer appropriate. This change
in regulation from traditional rate-base, rate of return regulation means that
all intrastate revenues, or about $8 billion, are now regulated on prices
rather than profits.
As a result of the discontinuation of applying FAS 71, the company recorded
a fourth-quarter extraordinary noncash after-tax charge of $2.2 billion. The
following table is a summary of the extraordinary charge.

39
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
Millions of Dollars
------------------------------------
Pretax After-Tax
-------- ----------
<S> <C> <C>
Increase to the accumulated
depreciation balance . . . . . . . . . . . . . . . . $ 3,658.5 $ 2,288.5
Elimination of other net
regulatory assets. . . . . . . . . . . . . . . . . . 126.2 77.9
Tax-related net regulatory liabilities. . . . . . . . . -- (86.1)
Accelerated amortization of tax credits . . . . . . . . -- (46.3)
-------- ----------
$ 3,784.7 $ 2,234.0
-------- ----------
</TABLE>

The adjustment of $3.7 billion to net telecommunications plant was necessary
since estimated useful lives and depreciation methods historically prescribed
by regulators did not keep up with the rapid pace of technological changes in
the company and differed significantly from those used by unregulated
enterprises. Plant balances were adjusted by increasing the accumulated
depreciation balance. The increase to the accumulated depreciation balance was
determined by a discounted cash flow analysis which considered technological
changes, capital requirements, and estimated impacts of future competition. To
corroborate this study, a depreciation reserve study was also performed that
identified inadequate accumulated depreciation levels by individual asset
categories. The company believes these levels developed over the years as a
result of the systematic underdepreciation of assets resulting from the
regulatory process.
When adjusting its net telecommunications plant, the company gave effect to
shorter, more economically realistic lives. The following is a summary of
average lives before and after the discontinuation of FAS 71.

<TABLE>
<CAPTION>
Asset Category Before After
- --------------- ----------- --------
<S> <C> <C>
Central office equipment
Digital switching . . . . . . . . . . . . . . . . . 17 7
Analog switching. . . . . . . . . . . . . . . . . . up to 4 obsolete
Circuit accounts. . . . . . . . . . . . . . . . . . 8-12 7
Copper and fiber cable
and wire facilities . . . . . . . . . . . . . . . . 20-32 15
All other. . . . . . . . . . . . . . . . . . . . . . . various various
</TABLE>

The discontinuance of FAS 71 also required the company to eliminate from its
consolidated balance sheet, prepared for financial reporting purposes, the
effects of any actions of regulators that had been recognized as assets and
liabilities pursuant to FAS 71, but would not have been recognized as assets
and liabilities by enterprises in general.
The elimination of other net regulatory assets primarily related to certain
deferred vacation pay, debt financing costs, and certain deferred assets being
reduced under regulatory principles, as well as certain other costs deferred
and recognized as expense in accounting periods other than those required under
GAAP, absent FAS 71.
The tax-related adjustments were required to adjust excess deferred tax
levels to the currently enacted statutory rates and to eliminate tax-related
regulatory assets and liabilities. Prior to the discontinuance of FAS 71, the
company had recorded deferred income taxes on the cumulative amount of tax
benefits previously flowed through to ratepayers and recorded a regulatory
asset for the same amount ($429.2 million at December 31, 1993). Also the
company had recorded a regulatory liability for the difference between deferred
taxes recorded at higher historical tax rates compared with those currently
enacted and deferred taxes provided on unamortized investment tax credits
($710.3 million at December 31, 1993). These regulatory assets and liabilities
were grossed up for the tax effect anticipated when collected in future rates.
At the time the company discontinued the application of FAS 71, the above
tax-related regulatory assets and liabilities were eliminated and deferred tax
balances adjusted to reflect application of FAS 109 consistent with other
unregulated enterprises.
The landline telephone subsidiaries use the deferral method of accounting
for investment tax credits and amortize the credits as a reduction to tax
expense over the life of the asset that gave rise to the tax credit. As asset
lives were shortened, the investment tax credits deemed already earned were
credited to income ($46.3 million).
The effects on the company's consolidated financial statements going forward
without FAS 71 are discussed on pages 30-31.

3. 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%. Stock sales of New Zealand Telecom in 1993 resulted in an
after-tax gain of $61.7 million.
The company's long-term investment in New Zealand Telecom is accounted for
under the equity method. Goodwill of approximately $290 million associated with
this investment is being amortized by the straight-line method over a period of
40 years. The portion of the company's investment that was required to be sold
was accounted for under the cost method.
The company owned 469,060,000 shares of New Zealand Telecom at December 31,
1994. Shares of New Zealand Telecom are publicly traded and, as of December 30,
1994, the closing

40
<PAGE> 18

price of such shares was about US$3.21 per share. The aggregate market value of
Ameritech's investment is difficult to ascertain as the New Zealand Telecom
shares are thinly traded with approximately 50% of the company owned by
Ameritech and Bell Atlantic Corporation.
During the first quarter of 1994 the company received a distribution of cash
totaling $67.1 million from New Zealand Telecom. This resulted from a capital
restructuring by New Zealand Telecom effected by canceling about 20% of its
outstanding shares, increasing its debt level, and making a special capital
distribution to shareholders.

OTHER INVESTMENTS On December 22, 1993, the company made an investment of
$437.5 million for a 15% share in the Hungarian telecommunications company,
MATAV. The company's investment is being accounted for using the equity
method, since the company exercises significant operating influence. Goodwill
of approximately $210 million is being amortized by the straight-line method
over a period of 40 years.
During 1994, 1993 and 1992, the company made several other investments and
acquisitions totaling approximately $117.1, $33.7 and $31.8 million,
respectively. The acquisitions have been accounted for as purchases. The
investments in 1994 include a security monitoring business with revenues of
about $35 million acquired in December. Ameritech will offer its security
monitoring services through a newly formed subsidiary, Ameritech Monitoring
Services. Ameritech Monitoring Services will design, install, monitor and
maintain security systems for approximately 44,000 customers, primarily in the
Midwest.
A summary of the company's investments follows:
<TABLE>
<CAPTION>
1994 1993
------- --------
<S> <C> <C>
New Zealand Telecom . . . . . . . . . . . . . . . . . . $ 629.5 $ 610.4
MATAV . . . . . . . . . . . . . . . . . . . . . . . . . 409.4 437.5
Other international investments . . . . . . . . . . . . 31.3 38.3
------- --------
Total international investments. . . . . . . . . . . 1,070.2 1,086.2
Domestic investments. . . . . . . . . . . . . . . . . . 126.8 84.0
------- --------
Total investments. . . . . . . . . . . . . . . . . . $ 1,197.0 $ 1,170.2
------- --------
</TABLE>

OTHER TRANSACTIONS On May 2, 1994, Ameritech invested $472.5 million in a newly
formed subsidiary of the General Electric Company (GE). The new subsidiary
received a contribution from GE of the principal net assets of its General
Electric Information Services division, a global leader in electronic data
interexchange and electronic commerce, in exchange for all of the voting common
stock. Ameritech's investment is in the form of a four-year interest bearing
convertible debenture which, if legal restrictions are removed, converts into a
30% equity interest in the new company. The debenture has been guaranteed as to
repayment by GE. Ameritech may extend the term of the debenture by one year
under certain circumstances. The debenture has been classified as other assets
and deferred charges in the accompanying consolidated balance sheet.

4. INCOME TAXES

The components of income tax expense follow:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -------
<S> <C> <C> <C>
Federal
Current. . . . . . . . . . . . . . . . . . . . . . . $ 733.4 $ 713.7 $ 626.4
Deferred, net. . . . . . . . . . . . . . . . . . . . (196.3) (24.4) (14.3)
Investment tax credits, net. . . . . . . . . . . . . (52.2) (74.4) (64.3)
------- ------ -------
Total . . . . . . . . . . . . . . . . . . . . . . . . 484.9 614.9 547.8
------- ------ -------
State and local
Current. . . . . . . . . . . . . . . . . . . . . . . 92.6 80.0 63.0
Deferred, net. . . . . . . . . . . . . . . . . . . . (6.5) 14.8 16.9
------- ------ -------
Total. . . . . . . . . . . . . . . . . . . . . . . . 86.1 94.8 79.9
------- ------ -------
Total income
tax expense. . . . . . . . . . . . . . . . . . . . . $ 571.0 $ 709.7 $ 627.7
------- ------ -------
</TABLE>

Total income taxes paid were $903.6, $774.4 and $712.2 million in 1994, 1993
and 1992, 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>
1994 1993 1992
------- ------ -------
<S> <C> <C> <C>
Statutory tax rate . . . . . . . . . . . . . . . . . . . . 35.0% 35.0% 34.0%
State income taxes, net of
federal benefit . . . . . . . . . . . . . . . . . . . . 3.2 2.8 2.7
Reduction in tax expense
due to amortization of
investment tax credits. . . . . . . . . . . . . . . . . (2.8) (3.3) (3.3)
Effect of adjusting deferred
income tax balances due
to tax law changes. . . . . . . . . . . . . . . . . . . -- (1.1) --
Benefit of tax rate differential
under FAS 71 applied to reversing
temporary differences . . . . . . . . . . . . . . . . . (3.0) (2.2) (2.4)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 0.7 0.8
------- ------ -------
Effective tax rate . . . . . . . . . . . . . . . . . . . . 32.8% 31.9% 31.8%
------- ------ -------
</TABLE>

The Revenue Reconciliation Act of 1993, enacted in August 1993, increased the
statutory federal income tax rate to 35%. In accordance with the liability
method of accounting, the company adjusted, on the enactment date, its deferred
income tax balances. The result was a reduction in deferred income tax expense
of $23.4 million, primarily from increasing the deferred tax assets associated
with FAS 106 and 112 (see Note 6).

41
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 1994 and 1993, the components of long-term accumulated
deferred income taxes were as follows:
<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Deferred tax assets
Postretirement and postemployment
benefits . . . . . . . . . . . . . . . . . . . $ 1,148.6 $ 970.4
FAS 71 accounting . . . . . . . . . . . . . . . . -- 237.1
Other . . . . . . . . . . . . . . . . . . . . . . 141.2 137.2
--------- ---------
1,289.8 1,344.7
--------- ---------
Deferred tax liabilities
Accelerated depreciation . . . . . . . . . . . . 1,488.2 2,940.9
Prepaid pension cost . . . . . . . . . . . . . . 170.7 64.9
Other . . . . . . . . . . . . . . . . . . . . . . 241.9 228.3
--------- ---------
1,900.8 3,234.1
--------- ---------
Net deferred tax liability . . . . . . . . . . . . . $ 611.0 $ 1,889.4
========= =========
</TABLE>

Deferred income taxes in current assets and liabilities are not shown as they
are not significant. The company has valuation allowances against certain
deferred tax assets aggregating $65.0 million in 1994 and $54.0 million in
1993.

5. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are as follows:

<TABLE>
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . $ 140.0 $ 146.9
Buildings. . . . . . . . . . . . . . . . . . . . . . 2,993.1 2,751.3
Central office equipment . . . . . . . . . . . . . . 11,490.5 11,570.2
Cable, wiring and conduit. . . . . . . . . . . . . . 11,954.8 11,632.9
Other. . . . . . . . . . . . . . . . . . . . . . . . 2,622.0 2,576.0
--------- ----------
29,200.4 28,677.3
Under construction . . . . . . . . . . . . . . . . . 345.3 440.1
29,545.7 29,117.4
Less, accumulated depreciation . . . . . . . . . . . (16,091.2) (11,751.3)
----------- ----------
$ 13,454.5 $ 17,366.1
=========== ==========
</TABLE>

Depreciation expense on fixed assets was $2,104.2, $2,073.8, $1,926.8 million
in 1994, 1993 and 1992, respectively. The large increase in the accumulated
depreciation balance in 1994 was due primarily to the discontinuation of
applying FAS 71.

6. 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 FAS 87, "Employers' Accounting for Pensions." The
resulting pension credits are primarily attributable to past favorable
investment performance and the funded status of the plans.
The components of pension cost (credits) follow:

<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Benefits earned during
the year . . . . . . . . . . . . . . . . . . . . . $ 214.6 $ 221.4 $ 218.5
Interest cost on projected
benefit obligation . . . . . . . . . . . . . . . . 524.2 585.0 591.6
Actual return on
plan assets. . . . . . . . . . . . . . . . . . . . 73.0 (1,426.1) (734.3)
Net amortization
and deferral . . . . . . . . . . . . . . . . . . . (1,018.1) 512.6 (186.3)
---------- ---------- ---------
Net pension credits . . . . . . . . . . . . . . . . . $ (206.3) $ (107.1) $ (110.5)
---------- ---------- ---------
</TABLE>

The funded status of the plans follows:
<TABLE>
<CAPTION>
1994 1993
---------- ------------
<S> <C> <C>
Actuarial present value of
accumulated plan benefits
Vested . . . . . . . . . . . . . . . . . . . . . . $ 6,076.0 $ 7,383.7
Nonvested. . . . . . . . . . . . . . . . . . . . . 869.3 1,055.2
---------- ----------
Total. . . . . . . . . . . . . . . . . . . . . . . $ 6,945.3 $ 8,438.9
---------- ----------
Fair value of plan assets . . . . . . . . . . . . . . $ 10,867.9 $ 12,397.4
Actuarial present value of
projected benefit obligation . . . . . . . . . . . (7,540.4) (9,262.3)
Unrecognized net asset resulting
from initial adoption of FAS 87. . . . . . . . . . (1,173.8) (1,499.7)
Unrecognized net gains. . . . . . . . . . . . . . . . (1,945.4) (1,627.7)
Unrecognized prior service cost . . . . . . . . . . . 270.8 343.9
---------- ----------
Prepaid pension cost. . . . . . . . . . . . . . . . . $ 479.1 $ 351.6
========== ==========
</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% for
1994, 1993 and 1992. The assumed discount rate used to determine the projected
benefit obligation as of December 31, 1994, was 7.2% and 5.8% as of December
31, 1993, while the assumed rate of increase in future compensation levels,
also used in the determination of the projected benefit obligation, was 4.5% in
1994 and 1993.

POSTRETIREMENT BENEFITS OTHER THAN PENSIONS Effective January 1, 1992, the
company adopted FAS 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions."

<PAGE> 20

FAS 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 FAS 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, net of a deferred tax benefit of
$950 million, was $1.65 billion.
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 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. 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% to
39.6% on its investment income. The nonmanagement VEBA and the RFAs earn income
without tax. Plan assets consist principally of corporate securities and bonds.
The components of postretirement benefit cost follow:

<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Retiree health care plans
Benefits earned
during the year . . . . . . . . . . . . . . . . . $ 75.5 $ 62.8 $ 58.3
Interest cost on accumulated
postretirement benefit
obligation (APBO) . . . . . . . . . . . . . . . . 258.2 252.3 223.8
Actual return on plan assets. . . . . . . . . . . . 10.9 (43.3) (23.6)
Net amortization and deferral . . . . . . . . . . . (53.1) 4.1 (2.8)
---------- ---------- ---------
291.5 275.9 255.7
---------- ---------- ---------
Retiree life plans
Benefits earned
during the year . . . . . . . . . . . . . . . . . 8.0 6.6 7.3
Interest cost on APBO . . . . . . . . . . . . . . . 30.6 29.8 28.4
Actual return on plan assets. . . . . . . . . . . . (21.2) (20.2) (35.1)
Net amortization and deferral . . . . . . . . . . . (13.1) (15.8) 0.2
---------- ---------- ---------
4.3 0.4 0.8
---------- ---------- ---------
Total postretirement
benefit cost . . . . . . . . . . . . . . . . . . . $ 295.8 $ 276.3 $ 256.5
========== ========== =========
</TABLE>

The APBO of the plans as of December 31, 1994 and 1993, follows:

<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Retiree health care plans
Retirees and dependents . . . . . . . . . . . . . . $ 2,303.9 $ 2,072.0
Fully eligible active plan
participants . . . . . . . . . . . . . . . . . . 270.0 376.5
Other active plan participants. . . . . . . . . . . 1,081.6 1,304.4
--------- ----------
Total APBO . . . . . . . . . . . . . . . . . . . . 3,655.5 3,752.9
Fair value of plan assets . . . . . . . . . . . . . 764.0 715.7
--------- ----------
APBO in excess of plan assets . . . . . . . . . . . 2,891.5 3,037.2
Unrecognized net gain (loss) . . . . . . . . . . . 74.4 (462.0)
--------- ----------
Accrued postretirement health
care benefit obligation . . . . . . . . . . . . . 2,965.9 2,575.2
--------- ----------
Retiree life plans
Retirees and dependents . . . . . . . . . . . . . 258.5 297.4
Fully eligible active plan
participants . . . . . . . . . . . . . . . . . . 1.0 1.0
Other active plan participants . . . . . . . . . . 115.5 149.1
--------- ----------
Total APBO . . . . . . . . . . . . . . . . . . . . 375.0 447.5
Fair value of plan assets . . . . . . . . . . . . . 450.0 459.7
--------- ----------
Plan assets greater than APBO . . . . . . . . . . . (75.0) (12.2)
Unrecognized net gain (loss). . . . . . . . . . . . 24.1 (43.3)
--------- ----------
Prepaid postretirement life
benefit obligation . . . . . . . . . . . . . . . (50.9) (55.5)
--------- ----------
Total accrued postretirement
benefit obligation, net . . . . . . . . . . . . . . $ 2,915.0 $ 2,519.7
========= ==========
</TABLE>

The assumed discount rate used to measure the accumulated postretirement
benefit obligation as of December 31, 1994, was 8.5% and 7.0% in 1993. The
assumed rate of increase in future compensation levels was 4.5% in 1994 and
1993. The expected long-term rate of return on plan assets was 7.25% in 1994,
and 1993 for the VEBAs and 8.0% in 1994 and 1993 for the RFAs. The assumed
health care cost trend rate in 1994 was 9.2% and 9.6% in 1993 and is assumed to
decrease gradually to 4.0% in 2007 and remain at that level. The assumed health
care cost trend rate is 8.8% for 1995. 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 1994 by
$53.0 million, and would have increased the accumulated postretirement benefit
obligation as of December 31, 1994, by $448.8 million.
As of December 31, 1994, the company had approximately 54,800 retirees
eligible to receive health care and group life insurance benefits.

43
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

POSTEMPLOYMENT BENEFITS Effective January 1, 1992, the company adopted FAS 112,
"Employers' Accounting for Post-employment Benefits." FAS 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 FAS 112 was recognized as a change in
accounting principle, effective as of January 1, 1992. The charge, net of a
deferred tax benefit of $58.5 million, was $101.6 million. 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% 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. These shares are considered to be outstanding for earnings
per share purposes. The Trustee repays the notes, including interest, with
funds from the company's contributions to the savings plans, from dividends
paid on the shares of company common stock held by the Trustee and with new
loans from the company. The interest rate on this debt decreased to 8.03%
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
consolidated 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, 1994, the
company had $341.2 million in long-term debt and $54.8 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 LESOP debt.
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 1994 and 1993 totaled $56.0 million and $50.8
million, respectively. Interest expense incurred by the savings plans for 1994
and 1993 was $33.3 million and $39.2 million, respectively. Dividends paid on
shares of stock held by the Trustee used to partially satisfy debt repayment
requirements were $41.4 million and $40.1 million for 1994 and 1993,
respectively. As of December 31, 1994, 11,231,943 shares have been allocated or
been committed to employee accounts, leaving 11,334,333 shares unallocated. At
December 31, 1993, 9,036,954 shares were allocated or committed to employee
accounts, leaving 13,529,322 shares unallocated.
In 1994, the company entered into an agreement to lend up to $99.0 million
to one of the trusts through December 1, 2004. The Trustee borrowed $11.0
million at 7.8% from the company under this agreement in 1994 and $17.9 million
at 8.6% in 1995. The loan agreement was made to ensure the financial
arrangements to be provided employees remain consistent with the original
intent of the LESOP.

NONMANAGEMENT WORK FORCE RESTRUCTURING During 1994, Ameritech announced its
plan to reduce its existing nonmanagement work force. Approximately 11,500
employees will leave the company under this program. Under terms of agreements
between Ameritech, the Communication Workers of America (CWA) and the
International Brotherhood of Electrical Workers (IBEW), Ameritech implemented
an enhancement to the Ameritech Pension Plan by adding three years to both 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,
certain of the company's business units are offering financial incentives under
terms of the current contracts with the CWA and the IBEW to selected
nonmanagement employees who leave the business before the end of 1995.
The company recorded charges in 1994 of $728.1 million, or $455.8 million
after-tax, to reflect the cost of restructuring. These charges reduced the
company's prepaid pension asset by $168.6 million for pension enhancements and
curtailment losses, net of settlement gains. The charges also included
curtailment losses of $360.7 million related to FAS 106, and additional
severance accruals of $198.8 million. The charges reflect settlement gains of
$342.0 million associated with lump sum pension payments through year-end. At
December 31, 1994,

44
<PAGE> 22

the company's remaining severance accrual was $173.5 million.
As of December 31, 1994, approximately 9,100 employees had left the company
under this program, with 2,400 to leave in 1995.

MANAGEMENT WORK FORCE REDUCTIONS During 1994, about 1,200 management employees
left the company involuntarily. The net cost of these reductions, including
termination benefits, settlement and curtailment gains from the pension plan,
was a net credit to expense of $55.5 million.
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.
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.
Funding of the 1992 termination benefits was primarily from the management
pension plan. The involuntary plans are funded from company operations and
required cash payments of $41.2 and $38.3 million in 1994 and 1993,
respectively.

7. FINANCIAL INSTRUMENTS AND DERIVATIVES
The following table presents the estimated fair value of the company's
financial instruments as of December 31, 1994 and 1993:

<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Cash and temporary
cash investments . . . . . $ 73.7 $ 73.7 $ 155.9 $ 155.9
Debt . . . . . . . . . . . . 6,360.2 5,898.5 6,676.1 6,821.1
Other assets . . . . . . . . 833.6 846.8 301.1 323.6
Other liabilities . . . . . . 176.2 165.6 89.6 89.2
</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. Fair value includes the effect of interest rate swaps discussed below.

OTHER ASSETS AND LIABILITIES These financial instruments consist primarily of
long-term receivables, other investments, financial contracts, customer
deposits, and preferred stock of subsidiary. The fair values of these items
were based on expected cash flows, available market prices or market
comparables.

FINANCIAL CONTRACTS, INCLUDING DERIVATIVES The company occasionally enters into
foreign currency forward contracts to hedge exposure to adverse exchange risk.
Also, interest rate swaps are used to better match debt obligations of the
company with receivables from its leasing activity as a lessor. Related gains
and losses are reflected in net income. At December 31, 1994 and 1993, the
company had contracts giving it the right to deliver foreign currency valued at
$9.0 million and $11.1 million, respectively. At December 31, 1994 and 1993,
the company had also entered into interest rate swap agreements to change the
interest rate on notional amounts of $253.0 million and $115.0 million.
Interest expense is adjusted to give effect to obligations under the swaps. The
company is exposed to credit risk in the unlikely event of nonperformance by
counterparties. At December 31, 1994, the fair value of these interest rate
swaps was a gain of $7.2 million.
The company uses derivatives in a limited way as a tool to manage the
company's financial risk. Their use is restricted primarily to hedging assets
and obligations already held by the company and they generally are used to
protect cash of the company rather than generate income or engage in
speculative activity. Leveraged derivatives are strictly prohibited.

8. 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>
1994 1993
--------- -----------
<S> <C> <C>
Notes payable
Bank loans . . . . . . . . . . . . . . . . . . . . $ 116.5 $ 179.0
Commercial paper . . . . . . . . . . . . . . . . . 1,630.6 1,984.4
Other . . . . . . . . . . . . . . . . . . . . . . 19.7 18.8
Long-term debt maturing
within one year. . . . . . . . . . . . . . . . . . 131.5 419.4
--------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 1,898.3 $ 2,601.6
--------- -----------
Weighted average interest
rate on notes payable,
year-end . . . . . . . . . . . . . . . . . . . . . 4.2% 3.1%
========= ===========
</TABLE>

The company has a committed revolving credit facility 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 during the three years ended December 31, 1994. In
addition, Ameritech has entered into uncommitted agreements with a number of
banks for lines of credit totaling $1.2 billion. The interest rates

45
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

on these lines are negotiable at the time of borrowing. There was $112.6
million outstanding under these agreements as of December 31, 1994. 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.

9. LONG-TERM FINANCING

LONG-TERM DEBT Long-term debt consists principally of debentures issued by the
Ameritech landline telephone subsidiaries. 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 reflected in 1993
amounts:

<TABLE>
<CAPTION>
Interest Rates Maturities 1994 1993
- -------------- ----------- ---------- ----------
<S> <C> <C> <C>
4.375%-6.0%* . . . . . . . . . . . . . . . . . . . . 1996-2025 $ 1,175.0 $ 755.0
6.125%-8.0% . . . . . . . . . . . . . . . . . . . . 2002-2024 2,345.0 2,345.0
8.125%-9.0% . . . . . . . . . . . . . . . . . . . . 1997-2026 333.7 340.7
9.1%-10.0% . . . . . . . . . . . . . . . . . . . . . 1996-2016 205.8 207.6
--------- -----------
4,059.5 3,648.3
LESOP (Note 6) 341.2 416.5
Capital lease obligations . . . . . . . . . . . . . 85.6 79.2
Other . . . . . . . . . . . . . . . . . . . . . . . 1.5 0.8
Unamortized discount, net** . . . . . . . . . . . . (39.9) (54.4)
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 4,447.9 $ 4,090.4
========== ==========
</TABLE>

* Includes $450.0 million issued in 1994, tied to floating LIBOR rate.
** Change due principally to the discontinuation of FAS 71.

Scheduled maturities of long-term debt include $40.0 million due in 1996,
$283.5 million due in 1997, $329.0 million due in 1998 and $155.5 million due
in 1999.
Assets of Illinois Bell, comprising approximately $8,196.1 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, 1994, $808.0
million of these securities had been issued and $605.0 million were
outstanding.
The company, through its Ameritech landline telephone subsidiaries, has
registered with the SEC the issuance of up to $1.4 billion in unsecured debt
securities for corporate purposes. As of December 31, 1994, $200 million had
been issued.

PREFERRED STOCK ISSUANCE BY SUBSIDIARY Ameritech New Zealand Funding
Corporation (New Zealand Funding), a wholly owned subsidiary of the company,
issued, through a private placement, 850,000 shares of Series A Preferred Stock
on September 29, 1994, for $85.0 million. Dividends accrue on the Series A
Preferred Stock at the annual rate of 7.04%, payable quarterly and cumulative
from the date of issuance. The shares are subject to mandatory redemption on
August 1, 2001, at $100 per share and are subject to earlier redemption at a
premium, beginning in 1999, at the option of New Zealand Funding. The preferred
stock is included in other long-term liabilities in the accompanying
consolidated balance sheets.

10. 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 $181.6, $196.2 and $196.3 million for 1994, 1993 and 1992, respectively. As
of December 31, 1994, the aggregate minimum rental commitments under
noncancelable leases were approximately as follows:

<TABLE>
<CAPTION>
Years Operating Capital
- ----- --------- -------
<S> <C> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . $ 101.2 $ 45.2
1996 . . . . . . . . . . . . . . . . . . . . . . . . 82.7 42.8
1997 . . . . . . . . . . . . . . . . . . . . . . . . 71.8 36.2
1998 . . . . . . . . . . . . . . . . . . . . . . . . 65.0 13.1
1999 . . . . . . . . . . . . . . . . . . . . . . . . 50.2 1.6
Thereafter . . . . . . . . . . . . . . . . . . . . . 235.7 7.2
------- -----
Total minimum rental commitments . . . . . . . . . . $ 606.6 146.1
Less: executory costs . . . . . . . . . . . . . . ======= 3.1
interest costs . . . . . . . . . . . . . . 20.2
Present value of minimum -------
lease payments . . . . . . . . . . . . . . . . . $ 122.8
=======
</TABLE>

11. OTHER INCOME, NET
The components of other income are as follows:

<TABLE>
<CAPTION>
(Income) expense
--------------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Equity earnings of affiliates,
primarily New Zealand
Telecom* . . . . . . . . . . . . . . . . . . . . . $ (89.7) $ (23.8) $ (67.4)
Gain from sale of shares in
New Zealand Telecom . . . . . . . . . . . . . . . -- (85.7) --
Early extinguishment of
debt costs . . . . . . . . . . . . . . . . . . . . -- 66.3 32.2
Interest on company owned
life insurance and
related programs . . . . . . . . . . . . . . . . (54.2) (54.6) (48.3)
Interest income on IRS
audit settlement . . . . . . . . . . . . . . . . . -- -- (41.0)
Gain on LESOP . . . . . . . . . . . . . . . . . . . . (15.0) (18.8) --
Other . . . . . . . . . . . . . . . . . . . . . . . . 12.0 (0.7) (0.8)
-------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ (146.9) $ (117.3) $ (125.3)
======== ======== ========
</TABLE>

* Includes the company's share ($42.0 million) of a restructuring charge at
New Zealand Telecom in 1993.

46
<PAGE> 24

12. SHAREOWNERS' EQUITY

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% or more of the company's common
stock, the 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, 1994, 551,460,656 rights were outstanding.

STOCK PLANS The company, through its 1989 Long Term Incentive Plan (the plan),
grants incentive compensation to its officers and other employees in the form
of stock options, stock 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 plan. The 1989 Long Term Incentive Plan authorizes the issuance
of up to 40,000,000 shares of common stock over a 10-year period.
Stock options may be granted under the plan 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% 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. Beginning in 1994, the company awarded grants of
nonqualified stock options with dividend equivalents that will be distributed
in the form of shares upon exercise of the options.

Information regarding options granted under the Long Term Incentive Plan,
which expired in 1994, and the 1989 Long Term Incentive Plan 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 $ 31.21
Granted . . . . . . . . . . . . . . . . . . . . . . . . -- -- 5,886,985 $ 39.96
Exercised . . . . . . . . . . . . . . . . . . . . . . . 4,200 $ 20.59 1,196,462 $ 30.93
Canceled or expired . . . . . . . . . . . . . . . . . . -- -- 725,612 $ 37.82
------- ------ --------- -------
Outstanding,
December 31, 1994 . . . . . . . . . . . . . . . . . 11,068 $ 20.59 11,298,499 $ 34.38
======= ======= ========== =======
</TABLE>

As of December 31, 1994, incentive stock options for 11,068 shares and
nonqualified stock options for 5,598,448 shares were exercisable at average
prices of $20.59 and $30.57, 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.
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, 1994, 364,161 shares were outstanding under the plan. Under the
Long Term Incentive Plan, which expired in 1994, 91,584 shares of nonperformance
based restricted stock remained outstanding as of December 31, 1994.
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.

47
<PAGE> 25

13. Quarterly Financial Information (unaudited)
<TABLE>
<CAPTION>
Net Earnings
Operating Income (Loss)
Calendar Revenues Income (Loss) Per Share
- --------- ------- --------- ---------- ---------
<S> <C> <C> <C> <C>
1994
1st Quarter . . . . . . . . . . . . . . . . . . . . . $ 3,033.9 $ 140.9 $ 43.8 $ 0.08
2nd Quarter . . . . . . . . . . . . . . . . . . . . . 3,184.4 745.6 446.6 0.81
3rd Quarter . . . . . . . . . . . . . . . . . . . . . 3,170.0 432.4 250.9 0.46
4th Quarter . . . . . . . . . . . . . . . . . . . . . 3,181.2 710.4 (1,804.9) (3.28)
---------- --------- ----------
Total $ 12,569.5 $ 2,029.3 $ (1,063.6) $ (1.94)
========== ========= ========== =======
1993
1st Quarter . . . . . . . . . . . . . . . . . . . . . $ 2,834.2 $ 594.0 $ 300.0 $ 0.55
2nd Quarter . . . . . . . . . . . . . . . . . . . . . 2,988.1 648.7 389.6 0.72
3rd Quarter . . . . . . . . . . . . . . . . . . . . . 2,985.8 620.4 425.0 0.78
4th Quarter . . . . . . . . . . . . . . . . . . . . . 3,056.6 695.1 398.2 0.73
---------- --------- ----------
Total $ 11,864.7 $ 2,558.2 $ 1,512.8 $ 2.78
========== ========= ========== =======
</TABLE>

Total nonmanagement work force restructuring charges in 1994 were $728.1
million or $455.8 million after-tax as follows: $530.0 million or $332.8
million after-tax in the first quarter, $270.1 million or $168.2 million
after-tax in the third quarter, and a net credit of $72.0 million or $45.2
million after-tax in the fourth quarter. The credit in the fourth quarter
results from pension settlement gains. The fourth quarter of 1994 also includes
a $2.2 billion after-tax extraordinary charge related to the discontinuance of
applying FAS 71 or $4.06 per share ($4.07 per share when calculated on average
common shares outstanding for all of 1994), as discussed in Note 2 above.
Earnings for the fourth quarter of 1994 before the extraordinary charge were
$429.1 million or $.78 per share.
Several other significant income and expense items were reported in the
fourth quarter of both years, the net result of which in both years was not
material to the respective quarter or years except as follows. The fourth
quarter of 1994 includes a $69.3 million ($61.3 million after-tax) charge
related to the reduction of certain asset values, primarily real estate. In
1993, the company recognized a charge of $37.5 million for the early retirement
of debt.
All adjustments necessary for a fair statement of results for each period
have been included.

14. ADDITIONAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
December 31
-------------------------
1994 1993
---- ----
<S> <C> <C>
Consolidated balance sheets
Other current liabilities
Accrued payroll . . . . . . . . . . . . . . . . . . $ 193.5 $ 170.8
Accrued taxes . . . . . . . . . . . . . . . . . . 373.5 507.3
Advance billings and
customer deposits . . . . . . . . . . . . . . . . 397.4 378.9
Dividends payable . . . . . . . . . . . . . . . . . 277.3 262.4
Accrued interest . . . . . . . . . . . . . . . . . 109.4 107.6
Other . . . . . . . . . . . . . . . . . . . . . . . 360.4 446.1
--------- ---------
Total $ 1,711.5 $ 1,873.1
========= =========

</TABLE>

<TABLE>

1994 1993 1992
------- ------ ---------
<S> <C> <C> <C>
Consolidated statements of income
Capitalized interest . . . . . . . . . . . . . . . . . $ (13.3) $ (11.3) $ (7.6)
Provision for uncollectibles . . . . . . . . . . . . . 183.1 154.3 131.7
Advertising and
promotion costs . . . . . . . . . . . . . . . . . . 242.5 204.4 158.1
======= ======= =====
</TABLE>

Interest paid, net of amounts capitalized was $433.3, $456.1 and $485.9 million
in 1994, 1993 and 1992, respectively.

Revenues from AT&T Corp., principally for interstate network access and
billing and collection service, comprised approximately 9%, 10% and 11% of
consolidated revenues in 1994, 1993 and 1992, respectively. No other customer
accounted for more than 10% of revenues.

<PAGE> 1
Exhibit 21

AMERITECH CORPORATION
SUBSIDIARIES

<TABLE>
<S> <C>
AMERITECH CORPORATION Delaware
Illinois Bell Telephone Company (d/b/a Ameritech Illinois) Illinois
Illinois Bell Administration Center, Inc. Illinois
Indiana Bell Telephone Company, Incorporated (d/b/a Ameritech Indiana) Indiana
Michigan Bell Telephone Company (d/b/a Ameritech Michigan) Michigan
The Ohio Bell Telephone Company (d/b/a Ameritech Ohio) Ohio
Wisconsin Bell, Inc. (d/b/a Ameritech Wisconsin) Wisconsin
Ameritech Services, Inc. (Jointly owned by the AOCs) Delaware
Ameritech Center Phase I, Inc. (Jointly owned by AIT and ASI) Delaware
Ameritech Advanced Data Services of Illinois, Inc. Delaware
Ameritech Advanced Data Services of Indiana, Inc. Delaware
Ameritech Advanced Data Services of Michigan, Inc. Delaware
Ameritech Advanced Data Services of Ohio, Inc. Delaware
Ameritech Advanced Data Services of Wisconsin, Inc. Delaware
Ameritech Bell Group, Inc. Delaware
Ameritech Capital Funding Corporation Delaware
Ameritech Credit Corporation Delaware
Ameritech Development Corporation Delaware
Ameritech Direct Communications, Inc. Delaware
Ameritech Enterprise Holdings, Inc. Delaware
Ameritech Global Link, Inc. Delaware
Ameritech Information Industry Services, Inc. Delaware
Ameritech Information Systems, Inc. Delaware
Ameritech EGA, Inc. Delaware
Ameritech Health Connections, Inc. Delaware
Ameritech Health Information Management Corporation of Ohio Delaware
Ameritech Health Information Management Corporation of Tennessee Delaware
Ameritech Knowledge Data, Inc. Delaware
Dynix Corporation Utah
Dynix, Incorporated Utah
Dynix Marquis, Inc. Utah
Retro Link Associates, Inc. Utah
DMI Promark, Inc. Utah
Dynix Library Systems, Inc. Canada
Dynix Library Systems (UK), Ltd. U.K.
Dynix Library Systems (Ireland), Ltd. Ireland
Dynix (France), S.A. France
Dynix (Deuschland), GmbH Germany
Dynix (Nederland), B.V. Netherlands
Dynix (Chile), Limitada Chile
Health Network Ventures, Inc. Delaware
NOTIS Systems, Inc. Delaware
Wisconsin Health Information Network, Inc. Delaware
Ameritech InfoServe, Inc. Delaware
Ameritech International, Inc. Delaware
Wer Liefert Was? Germany
Wer liefert was AG Germany
Wer liefert Was? Ges.m.b.H. Germany
Ameritech Australia PTY Limited Australia
Ameritech International Holdings Company Delaware
Ameritech International Business Development Corporation Delaware
Ameritech International - Hong Kong, Inc. Delaware

</TABLE>
<PAGE> 2

<TABLE>
<S> <C>
Polska Telefonia Komorkowa Poland
Starline Insurance Company Vermont
Ameritech Long Distance Industry Services, Inc. Delaware
Ameritech Mobile Communications, Inc. Delaware
Ameritech Mobile Communications of Wisconsin, Inc. Wisconsin
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 Services, Inc. Delaware
Ameritech Mobile Services of Wisconsin, Inc. Delaware
Metrocom Communications, Inc. Delaware
AMCI Partnership Holdings, Inc. Delaware
Ameritech Mobile Data, Inc. Delaware
AMC Mexican Holdings, Inc. Delaware
CyberTel Financial Corporation Delaware
CyberTel Corporation Delaware
CyberTel Cellular Management Company Delaware
CyberTel Minneapolis Paging Corporation Delaware
CyberTel St. Louis Paging Corporation Delaware
GSAA, Inc. Delaware
Gensub, Inc. Delaware
Hawaiian Cellular Properties, Inc. Delaware
Ohio Paging Units, Inc. Delaware
Ameritech Monitoring Services, Inc. Delaware
Ameritech New Zealand Funding Corporation Delaware
Ameritech New Zealand Investments, Inc. Delaware
Ameritech Holdings Limited New Zealand
HKP Partners of New Zealand New Zealand
Sky Network Television Limited New Zealand
Telecom Corporation of New Zealand Limited New Zealand
Ameritech New Zealand Limited Delaware/New Zealand
Ameritech Payphone Services, Inc. Delaware
Ameritech Payphone Services of Illinois, Inc. Illinois
Ameritech Payphone Services of Indiana, Inc. Indiana
Ameritech Payphone Services of Ohio, Inc. Ohio
Ameritech Payphone Services of Michigan, Inc. Michigan
Ameritech Payphone Services of Wisconsin, Inc. Wisconsin
Ameritech Properties Corporation Delaware
Ameritech Publishing, Inc. Delaware
Ameritech Industrial Infosource, Inc. Delaware
Ameritech Publishing of Illinois, Inc. Illinois
Consumer Direct Access, Inc. California
Ameritech Wireless Communications, Inc. Delaware
American Information Technologies Corporation Nevada
Ameritech Communications, Inc. Nevada
Ameritech Corporation Nevada
Ameritech Credit Corporation Nevada

</TABLE>

<PAGE> 1

Exhibit 23

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors
Ameritech Corporation

As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated February 3, 1995 included (or incorporated by
reference) in this Form 10-K for the year ended December 31, 1994, 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 LLP
-------------------------------
Arthur Andersen LLP

Chicago, Illinois
March 21, 1995

<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, 1994 (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,
O. G. SHAFFER 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 15th day
of March, 1995.

/s/ Richard C. Notebaert
-----------------------------------
Richard C. Notebaert
Chairman and Chief Executive Officer

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, personally appeared before me Richard C
Notebaert 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 2

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an Officer and Director of the Company;

NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.C
NOTEBAERT, O.G. SHAFFER 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 15th day of
March, 1995.

/s/ Richard H. Brown
-----------------------------------
Richard H. Brown
Vice Chairman

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 3

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an Officer of the Company;

NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.C
NOTEBAERT, R.H. BROWN 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 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 15th day
of March, 1995.

/s/ Oren G. Shaffer
----------------------------------
Oren G. Shaffer
Executive Vice President and
Chief Financial Officer

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15h day of March, 1995, personally appeared before me Oren G.
Shaffer 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 4

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an Officer of the Company;

NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.C
NOTEBAERT, R.H. BROWN and O.G. SHAFFER, and each of them, as attorneys for the
undersigned and in the undersigned's name, place and stead as an Officer 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 15th day
of March, 1995.

/s/ Betty F. Elliott
---------------------------------
Betty F. Elliott
Vice President and Comptroller

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15h day of March, 1995, personally appeared before me Betty
F.Elliott 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 15th day of March, 1995.

/s/ Judy L. Anker
---------------------------------
Notary Public

<PAGE> 5

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS R.C
NOTEBAERT, R.H. BROWN, O.G. SHAFFER 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 15th day of
March, 1995.

/s/ Donald C. Clark
----------------------------------
Donald C. Clark

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 6

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ Melvin R. Goodes
----------------------------------
Melvin R. Goodes

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, personally appeared before me Melvin R.
Goodes 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 7

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 15th day
of March, 1995.

/s/ Hanna Holborn Gray
----------------------------------
Hanna Holborn Gray

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 8

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ James A. Henderson
----------------------------------
James A. Henderson

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 9

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

NOW, THEREFORE, THE UNDERSIGNED HEREBY CONSTITUTES AND APPOINTS
R.C. NOTEBAERT, R.H. BROWN, O.G. SHAFFER 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 15th day
of March, 1995.

/s/ Sheldon B. Lubar
----------------------------------
Sheldon B. Lubar

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 10

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 15th day
of March, 1995.

/s/ Lynn M. Martin
----------------------------------
Lynn M. Martin

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<PAGE> 11

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ Arthur C. Martinez
-----------------------------------
Arthur C. Martinez

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, personally appeared before me Arthur C.
Martinez 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 12

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ John B. McCoy
-----------------------------------
John B. McCoy

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 13

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ John D. Ong
-----------------------------------
John D. Ong

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 14

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ A. Barry Rand
-----------------------------------
A. Barry Rand

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, 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 15th day of March, 1995.

/s/ Judy L. Anker
-----------------------------------
Notary Public

<PAGE> 15

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a Director of the Company;

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 15th day of
March, 1995.

/s/ James A. Unruh
----------------------------------
James A. Unruh

STATE OF ILLINOIS )
COUNTY OF COOK )

On the 15th day of March, 1995, personally appeared before me James A.
Unruh 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 15th day of March, 1995.

/s/ Judy L. Anker
----------------------------------
Notary Public

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
AMERITECH CORPORATION'S DECEMBER 31, 1994 CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 73,700
<SECURITIES> 0<F1>
<RECEIVABLES> 2,447,300
<ALLOWANCES> 147,300
<INVENTORY> 203,700
<CURRENT-ASSETS> 2,890,600
<PP&E> 29,545,700
<DEPRECIATION> 16,091,200
<TOTAL-ASSETS> 19,946,800
<CURRENT-LIABILITIES> 5,156,100
<BONDS> 4,447,900
<COMMON> 587,600
0
0
<OTHER-SE> 5,467,500
<TOTAL-LIABILITY-AND-EQUITY> 19,946,800
<SALES> 0<F2>
<TOTAL-REVENUES> 12,569,500
<CGS> 0<F3>
<TOTAL-COSTS> 10,540,200
<OTHER-EXPENSES> (146,900)
<LOSS-PROVISION> 183,100
<INTEREST-EXPENSE> 434,800
<INCOME-PRETAX> 1,741,400
<INCOME-TAX> 571,000
<INCOME-CONTINUING> 1,170,400
<DISCONTINUED> 0
<EXTRAORDINARY> (2,234,000)
<CHANGES> 0
<NET-INCOME> (1,063,600)
<EPS-PRIMARY> (1.94)
<EPS-DILUTED> (1.94)
<FN>
<F1>SECURITIES ARE NOT MATERIAL AND THEREFORE HAVE NOT BEEN STATED
SEPARATELY IN THE FINANCIAL STATEMENTS. THIS AMOUNT IS INCLUDED IN
THE "CASH" TAG.
<F2>NET SALES OF TANGIBLE PRODUCTS IS NOT MORE THAN 10% OF TOTAL
OPERATING REVENUES AND THEREFORE HAS NOT BEEN STATED SEPARATELY IN THE
FINANCIAL STATEMENTS PURSUANT TO REGULATION S-X, RULE 5-03(B). THIS
AMOUNT IS INCLUDED IN THE "TOTAL REVENUES" TAG.
<F3>COST OF TANGIBLE GOODS SOLD IS INCLUDED IN COST OF SERVICE AND
PRODUCTS IN THE FINANCIAL STATEMENTS AND THE "TOTAL COST" TAG, PURSUANT
TO REGULATION S-X, RULE 5-03(B).
</FN>

</TABLE>