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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 18, 1995
AMERITECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation)
1-8612 36-3251481
Commission File Number IRS Employer ID No.
30 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices)
Registrant's telephone number, including area code: (312)750-5000
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Item 7. Financial Statements and Exhibits
On January 18, 1995, Ameritech Corporation (Ameritech) reporting
strong operating results for 1994, posting record revenues resulting
from record growth in cellular customers and access lines. Revenues
rose to a new high of $12.6 billion, up 5.9% from $11.9 billion in
1993. Amertiech added 439,000 cellular customers during 1994, up 51%
from 1993 to almost 1.3 million customers. Access lines rose a record
3.9% to 18.2 million.
Ameritech generated profits of $1.69 billion in 1994, up 13.4%
from $1.49 billion in 1993, before one-time events and an extraordinary
accounting charge. Earnings per share climbed to $3.07, up from $2.74
in 1993, before one-time events and the extraordinary accounting
charge.
Reported earnings for 1994 were a loss of $1.06 billion or $1.94 a
share, including one-time events and the extraordinary accounting
charge.
Comparisons between 1994 and 1993 are affected by one-time events
in both years. Results for 1994 included after-tax charges of $455.8
million or 83 cents a share for work force adjustment, $61.3 million or
11 cents a share to reduce certain asset values, and an extraordinary
non-cash after-tax charge of $2.2 billion or $4.07 a share for
discontinuance of the FAS 71 accounting method. One-time events in 1993
included a charge of $37.3 million or 7 cents a share for restructuring
at Telecom Corporation of New Zealand, and a one-time gain of $61.7
million or 11 cents a share from the sale of shares in Telecom
Corporation of New Zealand.
Because of the discontinuance of FAS 71, Ameritech has
reclassified bad debt expense from revenue to expense in both 1994 and
1993.
In the fourth quarter of 1994, Ameritech revenues rose 4.1% to
$3.2 billion, up from $3.0 billion in the fourth quarter of 1993.
Fourth-quarter profits rose to $455.2 million, up 11.8% before one-time
events and the extraordinary charge. Reported earnings in the fourth
quarter were a loss of $1.8 billion, including one-time events and the
accounting change. Earnings per share in the fourth quarter were 81
cents, up 11% from 73 cents in the fourth quarter of 1993, before one-
time events and the accounting change. Including the one-time events
and accounting change, fourth-quarter earnings per share were a loss of
$3.28.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three Months Ended
December 31 %
1994 (1) 1993 Change
-------- -------- ------
(Unaudited) (Unaudited)
Revenues (4) $ 3,181.2 $3,056.6 4.1%
Operating expenses (3) (4) 2,470.8 2,361.5 4.6%
--------- --------
Operating income 710.4 695.1 2.2%
Other income, net (4) (42.7) (13.5) 216.3%
Interest expense (4) 111.3 106.3 4.7%
--------- --------
Income before income taxes
and extraordinary item 641.8 602.3 6.6%
Income taxes 212.7 204.1 4.2%
--------- --------
Income before extraordinary item 429.1 398.2 7.8%
Extraordinary item (2) (2,234.0) -- n/a
--------- --------
Net income (loss) $(1,804.9) $ 398.2 n/a
--------- --------
Average common shares
outstanding (000) (5) 551,031 546,270 0.9%
Earnings per common share (5) $(3.28) $0.73 n/a
Dividends declared per
common share (5) $0.50 $0.48 4.2%
(1) Income before the extraordinary item and one-time adjustments
rose 11.8 percent to $445.2 million from $398.2 million in the
fourth quarter of 1993. Earnings per share before one-time
adjustments grew 11.0 percent to 81 cents, up from 73 cents in
the third quarter of 1993. See notes 2 and 3 for details of
one-time adjustments.
(2) 1994 results include an extraordinary non-cash charge of $3.8
billion ($2.2 billion after-tax or $4.06 per share) related to
the discontinuation of applying the accounting provisions of
FAS 71, "Accounting for the Effects of Certain Types of
Regulation".
(3) 1994 results include a $72.0 million pretax credit ($45.2
million after-tax or $0.08 per share) related to work force
restructuring, and a $69.3 million pretax charge ($61.3 million
after-tax or $0.11 per share) for certain real estate and other
assets which the company is selling or no longer plans to use
in the business.
(4) The Company has made certain reclassifications to conform its
financial reporting to that followed by unregulated
enterprises. Specifically, the Company's provision for
uncollectibles, previously shown as a reduction against
revenues, has been reclassified to operating expenses.
Further, interest during construction, previously a component
of Other income, net has been reclassified to reduce interest
expense.
(5) All 1993 share and per share data have been restated to reflect
the two-for-one stock split effective December 31, 1993.
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Twelve Months Ended
December 31 %
1994 (1) 1993 (1) Change
--------- -------- ------
Revenues (5) $12,569.5 $11,864.7 5.9%
Operating expenses (3) (5) 10,540.2 9,306.5 13.3%
--------- ---------
Operating income 2,029.3 2,558.2 (20.7)%
Other income, net (4) (5) (146.9) (117.3) 25.2%
Interest expense (5) 434.8 453.0 4.0%
--------- ---------
Income before income taxes
and extraordinary item 1,741.4 2,222.5 21.6%
Income taxes 571.0 709.7 (19.5)%
--------- ---------
Income before extraordinary item 1,170.4 1,512.8 (22.6)%
Extraordinary item (2) (2,234.0) -- n/a
--------- ---------
Net income (loss) $(1,063.6) $ 1,512.8 n/a
--------- ---------
Average common shares
outstanding (000) (6) 549,238 544,076 0.9%
Earnings per common share (6) $(1.94) $2.78 n/a
Dividends declared per
common share (6) $1.94 $1.86 4.3%
(1) Income before the extraordinary item and one-time adjustments
rose 13.4 percent to $1,687.5 million in 1994 from $1,488.4
million in 1993. Earnings per share before the extraordinary
item and one-time adjustments grew 12.0 percent to $3.07, up
from $2.74 in 1993. See notes 2 and 3 for details of one-time
adjustments.
(2) 1994 results include an extraordinary noncash charge of $3.8
billion ($2.2 billion after-tax or $4.07 per share) related to
the discontinuation of applying the accounting provisions of
FAS 71, "Accounting for the Effects of Certain Types of
Regulation".
(3) 1994 results include $728.1 million in pretax charges ($455.8
million after-tax or $0.83 per share) related to work force
restructuring, as well as a $69.3 million pretax charge ($61.3
million after-tax or $0.11 per share) for certain real estate
and other assets which the company is selling or no longer
plans to use in the business.
(4) 1993 results include a $42.3 million pretax charge ($37.3
million after-tax or $0.07 per share) related to restructuring
at Telecom Corporation of New Zealand. Also included in 1993
results was a $85.7 million pretax gain ($61.7 million
after-tax or $0.11 per share) related to the sale of shares of
Telecom Corporation of New Zealand.
(5) The Company has made certain reclassifications to conform its
financial reporting to that followed by unregulated
enterprises. Specifically, the Company's provision for
uncollectibles, previously shown as a reduction against
revenues, has been reclassified to operating expenses.
Further, interest during construction, previously a component
of Other income, has been reclassified to reduce interest
expense.
(6) All 1993 share and per share data have been restated to reflect
the two-for-one stock split effective December 31, 1993.
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CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
Change from
Dec. 31 Dec. 31 Dec. 31
1994 1993 1993
------- ------- -------
ASSETS
Current assets $ 2,890.6 $ 2,626.7 $ 263.9
Property, plant and equipment, net 13,454.5 17,366.1 (3,911.6)
Investments, primarily international 1,197.0 1,170.2 26.8
Other assets and deferred charges 2,400.0 2,264.7 135.3
--------- --------- ---------
Total assets $19,942.1 $23,427.7 $(3,485.6)
--------- --------- ----------
LIABILITIES AND SHAREOWNERS' EQUITY
Debt maturing within one year $ 1,868.3 $ 2,601.6 $ (733.3)
Other current liabilities 3,307.7 3,083.7 224.0
Long-term debt 4,477.9 4,090.4 387.5
Deferred credits and
other long-term liabilities 4,233.1 5,807.4 (1,574.3)
Shareowners' equity 6,055.1 7,844.6 (1,789.5)
--------- --------- ----------
Total liabilities and
shareowners' equity $19,942.1 $23,427.7 $(3,485.6)
--------- --------- ----------
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SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
(Dollars in millions)
Dec. 31 Dec. 31 %
1994 1993 Change
------- ------- ------
Debt ratio 51.2% 46.0% n/a
Customer lines (000's) 18,239 17,560 3.9%
Employees 63,594 67,192 (5.4)%
Telephone company employees 53,815 59,439 (9.5)%
Customer lines per telephone
company employee 339 295 14.9%
Return to average
equity - annualized Qtr. n/m 20.4% --
YTD (13.6)% 20.1% --
Return to average equity
before extraordinary
item - annualized Qtr. 21.2% (1) 20.4% 3.9%
YTD 14.4% (1) 20.1% (28.4)%
Return to average total
capital - annualized Qtr. n/m 13.5% --
YTD (4.6)% 13.1% --
Return to average total
capital before
extraordinary item -
annualized Qtr. 14.2% (1) 13.5% 5.2%
YTD 10.4% (1) 13.1% (20.6)%
Construction activity Qtr. $ 612.4 $ 565.5 8.3%
YTD $1,955.2 $2,108.4 (7.3)%
n/m = not meaningful
(1) Adjusted for fourth quarter 1994 after-tax extraordinary charge
of $2.2 billion related to the discontinuation of applying
FAS 71.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Dated: February 1, 1995
AMERITECH CORPORATION
By /s/ Bruce B. Howat
Bruce B. Howat
Secretary
