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 16, 1996
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
Item 7. Financial Statements and Exhibits
On January 17, 1996, Ameritech reported that the fourth quarter of 1995
produced its best revenue growth ever and its ninth consecutive quarter of
double-digit profit growth excluding one-time items. Fourth-quarter 1995
revenues rose a record 11.0% to $3.5 billion, up from $3.2 billion in the
fourth quarter of 1994. Fourth-quarter profits rose 12.5% to $501.0 million,
up from $445.2 million, as earnings per share rose 11.1% to 90 cents, up from
81 cents per share, before one-time events.
The quarter capped a year of record results for Ameritech, including the
company's best-ever revenues and profits. Revenues reached a new high of $13.4
billion in 1995, up 6.8% from $12.6 billion in 1994. Profits climbed to $1.89
billion in 1995, up 11.9% from $1.69 billion in 1994, and earnings per share
rose 11.1% to $3.41 in 1995, up from $3.07 in 1994, before one-time events.
Ameritech's record fourth-quarter growth was spurred by:
- - a 46% rise in cellular customers from 1.3 million to 1.9 million over
12 months;
- - more than doubling the number of customers who use Caller ID, growth in
sales of other products, and 4.5% growth in access lines;
- - a 9.1% increase in minutes of use in the fourth quarter; and
- - added revenues from security monitoring services, which Ameritech
began providing in December 1994.
Comparisons between 1995 and 1994 are affected by one-time events in both
years. Results for 1995 include a $134.5 million pretax restructuring credit
($78.7 million after-tax or 14 cents a share), related to net settlement gains
of $266.3 million associated with lump-sum payments from the nonmanagement
pension plan to former employees, partially offset by $73.7 million associated
with increased force costs related to the restructuring started in 1994 and
planned work force reductions due to data center consolidations, as well as a
$58.1 million charge to write down certain data processing equipment to net
realizable value. Results from 1995 also include a $41.3 million after-tax
gain or 8 cents a share from an exchange of cellular interests. Results for
1994 include after-tax charges of $455.8 million or 83 cents a share for work
force adjustments, $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 regulatory accounting.
Key initiatives driving Ameritech's continuing double-digit growth are:
- - achieving price regulation (versus rate-of-return regulation) in all its
jurisdictions. Federal and state regulators no longer limit the company's
profits; instead they limit prices of basic services. And the company is
now free to direct capital where it can create the most value for customers
and investors;
- - continuing productivity gains in the core communications business.
Ameritech leads the industry in productivity with 373 lines per
telephone company employee, up 10.0% from 339 lines in 1994;
- - becoming the second-largest security monitoring company in the
United States, by acquiring companies with 320,000 customers, in an
industry that's growing 12% annually;
- - launching a new managed services venture with partner IBM, to
pursue a $28 billion market that's growing 15% a year as companies
increasingly elect a single point of contact for managing desktop
computing and communications; and
- - expanding into high-potential international markets through a newly
awarded privatization in Belgium, a larger stake in Matav of
Hungary, and a new venture with Chinacom, in addition to earlier
international investments.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in millions, except per share amounts)
Three Months Ended
December 31 %
1995 (1) 1994 (1) Change
(Unaudited) (Unaudited)
Revenues $3,531.8 $ 3,181.2 11.0%
Operating expenses (2) (4) 2,880.1 2,470.8 16.6%
Operating income 651.7 710.4 (8.3)%
Other income, net (79.0) (42.7) 85.0%
Interest expense 112.7 111.3 1.3%
Income before income taxes
and extraordinary item 618.0 641.8 (3.7)%
Income taxes 205.3 212.7 (3.5)%
Income before extraordinary item 412.7 429.1 (3.8)%
Extraordinary item (3) -- (2,234.0) n/a
Net income (loss) $ 412.7 $(1,804.9) n/a
Average common shares
outstanding (000) 553,957 551,031 0.5%
Earnings per common share before
extraordinary item $0.74 $0.78 (5.1)%
Earnings per common share after
extraordinary item $0.74 $(3.28) n/a
Dividends declared per
common share $0.53 $0.50 6.0%
(1) Income before one-time adjustments rose 12.5 percent to $501.0
million from $445.2 million in the fourth quarter of 1994.
Earnings per share before one-time adjustments grew 11.1 percent
to 90 cents, up from 81 cents in the fourth quarter of 1994.
See notes (2), (3) and (4) for details of one-time adjustments.
(2) 1995 results include a $131.8 million pretax restructuring
charge ($88.3 million after-tax or $0.16 per share) reflecting a
$73.7 million charge for planned work force reductions due to
data center consolidations, as well as increased force costs
related to the work force restructuring started in 1994. Also
reflected is a $58.1 million charge that was recorded to write
down certain data processing equipment to net realizable value
in connection with information technology restructuring.
(3) 1994 results include an extraordinary noncash charge of $3.8
billion ($2.2 billion after-tax or $4.06 per share) related to
discontinuing application of FAS 71, "Accounting for the Effects
of Certain Types of Regulation".
(4) 1994 results include a $72.0 million pretax credit ($45.2
million after-tax or $0.08 per share) related to workforce
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 sold or no longer plans to use in the
business.
Twelve Months Ended
December 31 %
1995 (1) 1994 (1) Change
Revenues $13,427.8 $12,569.5 6.8%
Operating expenses (2) (4) 10,124.8 10,540.2 (3.9)%
Operating income 3,303.0 2,029.3 62.8%
Other income, net (2) (260.0) (146.9) 77.0%
Interest expense 468.9 434.8 7.8%
Income before income taxes
and extraordinary item 3,094.1 1,741.4 77.7%
Income taxes 1,086.5 571.0 90.3%
Income before extraordinary item 2,007.6 1,170.4 71.5%
Extraordinary item (3) -- (2,234.0) n/a
Net income (loss) $ 2,007.6 $(1,063.6) n/a
Average common shares
outstanding (000) 553,622 549,238 0.8%
Earnings per common share before
extraordinary item $3.63 $2.13 70.4%
Earnings per common share after
extraordinary item $3.63 $(1.94) n/a
Dividends declared per
common share $2.03 $1.94 4.6%
(1) Income before one-time adjustments rose 11.9 percent to $1,887.6
million in 1995 from $1,687.5 million in 1994. Earnings per
share before one-time adjustments grew 11.1 percent to $3.41, up
from $3.07 in 1994. See notes (2), (3) and (4) for details of
one-time adjustments.
(2) 1995 results include a $134.5 million pretax restructuring
credit ($78.7 million after-tax or $0.14 per share) related to
net settlement gains of $266.3 million associated with lump-sum
pension payments from the nonmanagement pension plan to former
employees, partially offset by $73.7 million associated with
increased force costs related to the restructuring started in
1994, as well as planned work force reductions due to data
center consolidations. Also reflected is a $58.1 million charge
that was recorded to write down certain data processing
equipment to net realizable value. 1995 results also include a
$65.8 million pretax gain ($41.3 million after-tax or $0.08 per
share) resulting from the exchange of minority interests in
certain cellular partnerships in Indianapolis, Cleveland and
Rockford for cash and a minority interest in the Ameritech
Detroit/Flint cellular partnership. This transaction was
necessitated by Ameritech's successful bid for the personal
communications services (PCS) licenses in Indianapolis and
Cleveland.
(3) 1994 results include an extraordinary noncash charge of $3.8
billion ($2.2 billion after-tax or $4.07 per share) related to
the discontinuing the application of FAS 71, "Accounting for the
Effects of Certain Types of Regulation".
(4) 1994 results include $728.1 million in pretax charges ($455.8
million after-tax or $0.83 per share) related to workforce
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 sold or no longer plans to
use in the business.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
Change from
Dec. 31 Dec. 31 Dec. 31
1995 1994 1994
ASSETS
Current assets $ 3,461.4 $ 2,890.6 $ 570.8
Property, plant and equipment, net 13,456.8 13,454.5 2.3
Investments, primarily international 1,497.0 1,197.0 300.0
Other assets and deferred charges 3,596.0 2,404.7 1,191.3
Total assets $22,011.2 $19,946.8 $2,064.4
LIABILITIES AND SHAREOWNERS' EQUITY
Debt maturing within one year $ 2,137.9 $ 1,898.3 $ 239.6
Other current liabilities 3,714.2 3,257.8 456.4
Long-term debt 4,513.2 4,447.9 65.3
Deferred credits and
other long-term liabilities 4,631.4 4,287.7 343.7
Shareowners' equity 7,014.5 6,055.1 959.4
Total liabilities and
shareowners' equity $22,011.2 $19,946.8 $2,064.4
SELECTED FINANCIAL AND OPERATING DATA
(Unaudited)
(Dollars in millions)
Dec. 31 Dec. 31 %
1995 1994 Change
Debt ratio 48.7% 51.2% n/a
Customer lines (000's) 19,057 18,239 4.5%
Employees 65,345 63,594 2.8%
Telephone company employees 51,093 53,815 (5.1)%
Customer lines per telephone
company employee 373 339 10.0%
Return to average
equity - annualized Qtr. 23.3% n/m --
YTD 29.5% (13.6)% --
Return to average equity
before extraordinary
item - annualized Qtr. 23.3% 21.2% (1) 9.9%
YTD 29.5% 14.4% (1) 104.9%
Return to average total
capital - annualized Qtr. 14.9% n/m --
YTD 18.2% (4.6)% --
Return to average total
capital before
extraordinary item -
annualized Qtr. 14.9% 14.2% (1) 4.9%
YTD 18.2% 10.4% (1) 75.0%
Construction activity Qtr. $ 807.4 $ 612.4 31.8%
YTD $2,176.1 $1,955.2 11.3%
n/m = not meaningful
(1) Adjusted for fourth quarter 1994 after-tax extraordinary charge
of $2.2 billion related to discontinuing the application of
FAS 71.
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: January 17, 1996 AMERITECH CORPORATION
By /s/ Bruce B. Howat
Bruce B. Howat
Secretary
